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Alaska job losses have been slowing
ISER study assesses impact of oil price fluctuations on economies of Alaska and other oil states, and on employment levels Alan Bailey Petroleum News
In a study into the impact of fluctuating oil prices on the economies of Alaska and other oil states, researchers from the University of Alaska Anchorage Institute of Social and Economic Research have found that the recession resulting from the downturn in oil prices in 2014 has lasted longer in Alaska and North Dakota than in other oil producing states such as Oklahoma, Louisiana and Wyoming. And it appears that, of the oil states, Alaska, Wyoming, Oklahoma and North Dakota are most dependent on the oil sector, a report from the ISER study says.
Alaska unemployment Following 34 months of negative economic growth in Alaska, the overall employment level in the state in June 2018 was at 96.6 percent of its level in June 2014, the report says. Unpacking this overall picture indicates that the oil and gas industry has been the hardest hit sector of the economy: Employment in this sector in June 2018 stood at 75.5 percent of its June 2014 size. Employment in the sector did increase in April and May of this year, but the June employment level proved lower that in June 2017.
By comparison, construction employment in June 2018 was 86.4 percent of the June 2014 level; business and professional services 91.6 percent; and retail 95 percent. Between July 2015 and July 2018 total job losses in the state amounted to 12,500, about 3.42 percent of the state’s labor force.
An analysis of annual employment changes in the private sector shows that in the current Alaska recession the maximum year-on-year job loss recorded for June was 2.21 percent of the workforce and happened in 2016. The rate of loss has been slowing since then to 0.82 percent in June 2017 and 0.60 percent in June 2018.
Oil price and employment levels The researchers also analyzed the mathematical relationship between the oil price and employment levels in oil states, finding that on average a 10 percent change in the oil price results in a 1.7 percent change in employment over periods of more than a year after an oil price shock. However, while Alaska, Louisiana and Oklahoma tend to respond symmetrically to both positive and negative shocks, North Dakota and Wyoming are more sensitive to negative shocks than to positive shocks. And the length of time taken for a state’s economy to respond to a price shock tends to vary from one state to another.
The researchers reported that, while states like Alaska that have a strong dependence on the oil industry are unsurprisingly experiencing the longest and deepest recessions, the various indicators point to Alaska being in the tail end of its recession. The future of Alaska’s economic development will depend on the success of the state’s traditional economic sectors combined with the pursuit of new opportunities, and by ensuring that more of the economic value generated in the state remains in the state, the report says.
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