As year ends, Alaska’s slow recovery from pandemic continues

As the end of 2022 approaches Alaska’s economy is slowly recovering from the 2020-2021 pandemic shocks but at one of the slowest rates in the nation.

If economic strength is measured by job growth, the most reliable indicator, November’s latest estimate from the state labor department is telling – a 1.6 percent gain.

It could have been better. Employers say they are still having trouble finding workers, which tells us that the job numbers would be higher if positions could be filled.

The underlying industrial and commercial strength is there but we just can’t capitalize on it. Why not? State economist Neal Fried believe it is mostly demographics.

Alaska is losing working-age people to other states and there is insufficient in-migration to replace them. This is a trend that has been underway for years but the cumulative impact is now apparent, slowing economic growth compared with what could have been. Alaska’s recovery from the pandemic is among the slowest in the nation.

Fried presented the trends at the Resource Development Council’s November conference in Anchorage: In 2013, when the state’s oil-fueled economy was robust, 48, 544 people moved into Alaska and 40,551 left. By 2019, following three years of recession sparked by sharp declines in oil prices and state oil income, things were reversed: 42,971 left that year and 35,431 came to the state, and in 2020 (the year of the pandemic) 44,674 moved out and 37,202 came in. In 2021 the trend softened, with 40,544 leaving and 37,217 moving to the state.

It’s too early for 2022 data but the underlying driving force seems unchanged: A strong Lower 48 economy drawing people out of the state and a weak Alaska economy bringing them here. Long-term population trends fit this pattern, too: Census data for the Anchorage metro area, which includes Mat-Su (where there has been growth) shows a 0.6 percent population decline between 2016 and 2021 vs. a U.S. average of 2.5 percent growth over the same period.

Fried also said the age distribution within the population data is also telling: As working-age people retire with many staying, the proportion of young and middle-aged in the workforce declines relative to older Alaskans, many who are retired. Of all these trends affecting the workforce the low in-migration of people appears more important, Fried told the RDC. That’s because these tend to be younger, working-age people with families. Absent something to significantly reverse things like a big Alaska mega-project (a gas pipeline would do the trick), Fried said the shrinking workforce trend is likely to continue for the long term. There are some positive signs, at least near-term.

Alaska employment was up 1.7 percent in November over the same month of 2021. The rate of growth year-over-year is slowing, however, as the effect of 2022 gains in seasonal industries like tourism wear off. October job growth was 2 percent, for example. However, November private sector growth was a healthier 2.4 percent. Government was down 0.4 percent, so overall private sector revitalization is driving growth.

An important trend is also that high-wage occupations are showing some strength. Petroleum was up 500 from November a year ago, although still far below 2015 employment before the oil price crash and 2020 pandemic. Construction up 400, and professional and business services jobs were up 700.

This last category includes engineers and environmental consulting and is thus an indicator of coming construction project development work. The data is preliminary and based on the labor department’s surveys of employers, labor economists have said. It is revised later when employers submit actual workforce data, which is required. Monthly figures serve as a trend indicator only. Meanwhile, Anchorage, which constitutes half of the state’s economy, is working on an economic revitalization plan.

Anchorage Economic Development Corp., the regional economic development group, holds its 2023 Economic Forecast Luncheon on Jan, 25. It will feature TIP Strategies, an Austin, Texas consulting firm, in a review of AEDC’s new CHOOSE Anchorage framework for economic revitalization. The plan was completed in November.