Commercial construction is helping build more than Alabama’s skylines. According to a new study released by Associated Builders and Contractors of Alabama, the industry has become a major force behind the state’s economy, generating more than $20 billion in economic activity, supporting over 223,000 jobs, producing $13.5 billion in earnings and generating hundreds of millions of dollars in tax revenue.
Researchers say the industry’s impact extends well beyond construction sites, benefiting businesses and communities across Alabama.
The study, conducted by economist Dr. M. Keivan Deravi on behalf of ABC of Alabama, found commercial construction accounts for 4.7% of Alabama’s gross domestic product and generates economic activity that reaches far beyond the construction industry itself.
Deravi said the findings highlight the industry’s growing importance to Alabama’s economy.
“Commercial construction represents 4.7% of Alabama’s GDP and is a cornerstone of the state’s economic foundation. A contribution of that magnitude is a major player by any standard,” Deravi said.
The study found construction activity creates a ripple effect throughout Alabama’s economy, supporting a wide range of businesses that supply materials, transportation, professional services and financial support.
While construction accounted for 56% of the economic impact measured in the report, the benefits also flowed to other areas of the economy. The study found services accounted for 12% of the industry’s broader economic impact, followed by manufacturing at 10%, transportation and trade at 8% each and finance at 3%.
The report points to continued growth in the sector over the past decade. According to the study, commercial construction’s total economic impact increased from $11.9 billion in 2015 to more than $20.1 billion in 2023, representing a 17% increase over 2021 levels.
The study projects that figure will climb to $23.2 billion by 2025, suggesting the industry remains on an upward trajectory as Alabama continues to attract new business investment.
“In 2023 alone, the sector generated $746 million in state tax revenue, and with total economic output projected to reach $23.2 billion by 2025, the industry’s trajectory shows no signs of slowing down,” Deravi said.
Gov. Kay Ivey praised the study’s findings and pointed to the role construction plays in supporting Alabama’s economic development efforts.
“Since I took office in 2017, Alabama has seen investments totaling more than $69 billion, which has created 100,000 jobs and counting. Alabama is certainly on the move, and our commercial construction workforce is a major part of building our state up, not just here at home, but worldwide,” Ivey said.
The governor also emphasized the industry’s impact on workers and communities across the state.
“This $20.1 billion-plus industry is supporting more than 223,000 jobs and is a key economic driver in our state. We are not just creating jobs, we are making real, lasting economic impacts that will better the future of our state,” said Governor Ivey. “Whether you are building a home, expanding your office or even looking for a new job, all facets of our lives are impacted by the construction workforce.”
ABC of Alabama Board Chairman Ed Hauser said the study demonstrates the industry’s importance to Alabama’s economy.
“The numbers in this study speak for themselves. Commercial construction creates over $20 billion in economic output across Alabama and supports nearly a quarter of a million jobs,” said Hauser, who also serves as senior vice president of Brasfield & Gorrie. “This industry is a backbone of our state’s economy, and we are proud of the role our members play in that growth every single day.”
The study found the industry generated approximately $746 million in state tax revenue in 2023, including $401 million in income taxes, $294 million in sales and use taxes and $50 million in utility taxes.
Tim Harrison, immediate past chairman of ABC of Alabama and president of Harrison Construction, said those revenues provide benefits that reach communities across the state.
“What often gets overlooked is the fiscal impact this industry has on everyday Alabamians, generating $746 million in state tax revenue in 2023 alone. That money flows directly into our schools, our infrastructure, and our communities. That is a contribution worth celebrating,” Harrison said.
With economic output projected to exceed $23 billion by 2025, the study suggests commercial construction will continue to play a major role as Alabama attracts new manufacturing, industrial and commercial investments in the years ahead.
Sherri Blevins is a staff writer for Yellowhammer News. You may contact her at [email protected].
