Alaska job losses slow, population down

February Economic Trends article points to recession tapering, but migration into the state falling in wake of 2014 oil price crash

Alan Bailey

Petroleum News

The lead article in February’s Alaska Economic Trends, published by the Alaska Department of Labor and Workforce Development, indicates that the rate of job losses in the state is slowing, as the recession that followed the 2014 oil price crash works its way through the economy. But since 2013 about 35,000 more people have left the state than have moved to the state, with a net out-migration having happened in each of those six years, Dan Robinson, economist and chief of Research and Analysis, said in “4 Things to Know in 2019, Understanding Alaska’s big picture three years into recession.”

Since the job count peaked in 2015, there has been a cumulative total loss of 12,700 jobs, with the result of returning the overall job count to the level last seen in March 2011. The Anchorage area has been particularly hard hit, given the high concentration of oil and gas related employment in the city. For similar reasons there have been relatively high job losses in the North Slope Borough, Fairbanks, Juneau and on the Kenai Peninsula.

On the other hand, some parts of the state, in particular the Matanuska-Susitna Borough, have seen job gains. Most of these gains can be attributed to the expansion of health care services. However, the Mat-Su Borough has also seen significant population growth, Robinson said.

Issues the state government has been facing in dealing with its fiscal woes have impacted all state residents to some extent, he said. While Permanent Fund dividends have been altered, state-funded services face an uncertain future.

Fewer moving to Alaska

With job availability often being a prime motive for people to migrate between states, the job losses in Alaska would likely have deterred some people from moving to the state. On the other hand, with an older, rooted population in Alaska when compared with the state’s previous major recession in the 1980s, people have been more reluctant to leave the state than previously: That likely explains the robustness of the state’s housing market during the current recession, Robinson said.

The current negative migration trend is worrying, especially if it persists, he said, as an extended loss of population would raise issues regarding decisions being made over size of state government, how the government is funded, and the future of the Permanent Fund and the Permanent Fund dividend.

Economy falling behind

States such as Texas and Oklahoma that have major oil production also have more diversified economies and have thus been able to absorb the oil price fall without an overall loss of jobs, he said.

The unusual length of the recession in Alaska is attributed to structural shifts taking place in the state’s economy, Robinson noted, with Alaska being in “an already long and messy transition” away from almost total dependence on oil-related revenue for the funding of state government. The state moved, in 2018, to tap earnings from the Permanent Fund as a revenue source, with much work remaining to be done in balancing the state’s finances.

All possible ways of bringing the state’s fiscal situation into balance have advantages and disadvantages. But, unless some difficult decisions are made, the Alaska economy will continue to struggle, Robinson said.

The winners and losers in Alaska’s economy

Health care booming

Restaurants also came high on the list, with a gain of 8,053 jobs, a 77 percent increase since 1990. Jobs in local government, including K through 12 schooling, increased by about 9,000. The tourism industry also saw major gains, with the number of cruise ship passengers, for example, doubling between 1995 and 2017. Mining has grown, with jobs in that industry increasing from 933 in 1990 to 2,465 in 2017, Fried wrote.

Global trade transportation through Anchorage International Airport has increased substantially over the years, making this airport the busiest in the country in terms of landed cargo weight. Cargo carriers such as UPS and FedEx have increased their total workforce in Alaska from 957 to 2,265.

Other industries that have seen notable job gains include care services for the elderly, and computer systems design, Fried wrote.

Federal government job losses

Forestry and logging in Alaska have also seen major job losses, as a consequence of changing federal timber policies and competition in the industry. Logging employment reached 4,000 in 1989 but had slumped to just 220 total jobs by 2017.

Thanks to job losses of around 4,000 in the oil industry during the recent recession, some oil-related industries appear in the list of job losers. Oil industry employment peaked in 2015, Fried wrote.

Legal services came quite high in the job losses count for Alaska, despite seeing modest job gains elsewhere in the United States. Many of the losses in Alaska have related to employment for legal support staff, rather than for lawyers. And legal work associated with the Exxon Valdez disaster inflated the 1990 job count.

Traditional media, such as newspapers, have seen job declines in Alaska, as has been noted elsewhere in the country. And, curiously, unlike restaurants, bars in Alaska have seen job declines — Fried suggested that the standalone bars represented by this data have lost out to competition from establishments that also serve food.

The growing use of informal clothing has hit dry cleaning and laundry services. And the widespread use of the Internet has hit employment in the travel reservation business, Fried wrote.

—ALAN BAILEY