CONTRACTOR COMMUNIT Y Want a Crystal Ball for Construction? The Architecture Billings Index, published by the American Institute of Architects (AIA), is an economic indicator for nonresidential construction activity, with a lead time of approximately 9–12 months. Investment groups like Wells Fargo, media outlets, firms of all sizes, and business leaders rely on this leading monthly economic indicator to assess business conditions and predict and track the market.
By region of the country, business conditions remained softest at firms located in the Northeast in December. The decline in firm billings was slightly less serious at firms located in the South, while conditions softened further at firms located in the Midwest and West. Want more insight like this? Keep the AIA in mind.
Independent Contractor Rule On January 6, 2021, the U.S. Department of Labor announced a final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA). ASA responded to this rule and per the rule it would do the following:
• Reaffirms an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee). • Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself: • The nature and degree of control over the work. • The worker’s opportunity for profit or loss based on initiative and/or investment.
2020 firm profitability averaged 6.7 percent. Business conditions at architecture firms backslid in December, ending a tough year on a disappointing note. The AIA’s Architecture Billings Index (ABI) score declined to 42.6 for the month, indicating that more firms saw declining billings in December than in November. However, firms do remain relatively optimistic about 2021, and the indicators of future work tend to support that. Inquiries into new projects at firms increased for the fifth month in a row in December, and while the pace of growth was slower than in September and October, it still means that most firms are having project discussions with potential clients.
6
J A N U A R Y
2 0 2 1
T H E
C O N T R A C T O R ’ S
C O M P A S S
