The costs to complete construction projects in the state of Florida are about to increase dramatically as builders, suppliers and subcontractors deal with four major government issues set to take place in the last three months of the year. The fear of many in the construction industry is that these cost increases are so much they will create havoc in an already bad labor market. More importantly, many smaller construction companies simply cannot handle the costs and will be forced out of business. As regulations increase and competition decreases, prices go up.

Because of the Florida Supreme Court rulings in Castellenos vs. Next Door Company and Westphal vs. City of St. Petersburg, the 2004 workers’ compensation insurance reforms were virtually wiped out. The fallout is dramatic as workers’ compensation rates for companies in the state of Florida are poised to increase 19.6 percent on Oct. 1. This will be particularly painful for the construction industry because labor is a greater percentage of the total contracted cost for most projects.

Health insurance for workers in the construction industry is also projected to increase dramatically because premiums for the Affordable Care Act (Obamacare) are projected to increase 19.1 percent in 2017. The vast majority of builders and subcontractors in the construction industry are not large enough to offer medical insurance to their employees, so many rely on Obamacare. This large increase will force some out of the industry in search of more traditional jobs that can offer coverage, while others will be forced to increase labor rates.

As of Dec. 1, the new overtime rules from the Department of Labor go into effect, which doubles the salary exempt minimal wage from $455 per week to $913 — that’s $47,476 per year. Companies that have department or mid-level managers that make less than $913 per week will have to be placed on an hourly wage and paid overtime premiums. Many believe this will wipe out many younger, mid-level managers while adding to labor costs, making the labor shortage more difficult to manage.

Not to be outdone, the Occupational Safety and Health Administration (OSHA) is lifting their fines and penalties by 78 percent, with a major emphasis in enforcement focused on the construction industry. Serious violations and Failure to Abate fines are going from $7,000 to $12,471, while willful or repeated citations will go from $70,000 to $124,709. These new rules came into effect on Aug. 1, and a fine of this magnitude will mean bankruptcy for a smaller construction company. Stories of large fines for builders are already being heard, and this new focus on safety to comply with OSHA regulations comes with a big cost.

None of these government issues include the new state and local regulations or increases in impact and building fees. At every corner, government is truly getting another piece out of the construction industry. No business, especially those in the construction industry, is able to absorb these types of cost increases.

Don Magruder is the CEO of Ro-Mac Lumber & Supply Inc. He is also the host of the Around the House radio show heard every Monday at noon on My790AM WLBE in Leesburg.