Bicycle lights are much smaller and less bright than flashing construction lights (and there are often many more lights at construction sites).

The advantage of a blinking rear light is that flashing is more noticible from a longer distance and it allows following drivers more time to identify the thing as a cyclist. A steady small red light could be identified as many other things (even a driveway reflector). Another advantage is that it conserves a lot of battery power (which means it would allow a brighter LED for the same battery size).