Presentation takes a look at Mat-Su and Anchorage economies

PALMER — Northrim Bank presented an imperfect look at the Anchorage and Mat-Su economies through Bill Popp, President and CEO of the Anchorage Economic Development Corporation since 2007.

Prior to Popp’s presentation on the numbers and variables impacting the intertwined Mat-Su and Anchorage economies, Northrim Bank presented a check to Mat-Su College for $5,000.

Popp began by comparing the Beauty and the Beast set pieces on the stage around him to use as a metaphor for the major economies in southcentral Alaska.

“There is no way to extract Anchorage from Mat-Su from Anchorage. We are in this together whether we like it or not,” said Popp.

Popp began by discussing the Gross Domestic Product (GDP) numbers in both the Mat-Su and Anchorage, saying that it would be a mistake to use GDP as a single measure growth. Popp’s chart showed the Mat-Su’s GDP rising and falling dramatically, but coming out of the recession began in 2015. The number one sector driving Mat-Su GDP is real estate, followed closely by health care and construction. Popp valued the totality of the Alaskan economy at $55 billion, with the Mat-Su Accounting for five percent of the state’s total economy at $2.6 billion. Popp called the number impressive for a community of this size but noted that it is still a young economy in comparison to Anchorage which has $25.4 billion in GDP. The top drivers of Anchorage’s economy are transportation, mining oil and gas, and real estate in that order. Popp noted that unemployment numbers also may not provide the entire story as a rapidly decreasing workforce has also dropped the unemployment rate. The Mat-Su increased jobs by 3.1 percent with a seven percent average unemployment rate, adding 800 more jobs with an average wage of 42,738. However, Popp noted that he hears complaints from businesses in all economic sectors complaining about a lack of qualified candidates to bolster the workforce.

“Most economists I talk to are happier when we’re at around five percent unemployment range because then that gives you a ready pool of unemployed labor that you can pull from as an employer to put people to work to fill jobs that you’re trying to fill,” said Popp.

Popp showed the industry numbers in the Mat-Su with health care taking the top spot. Health care jobs grew by 154 jobs or 2.6 percent with over 4,500 jobs in the Mat-Su. Retail positions followed in second and construction in third, but Popp warned of a national retail trend where for every two brick-and-mortar shops opening, three close.

Popp called this ‘the Amazon effect’ and noted that Anchorage retailers are hurting for more employees where Mat-Su retailers have the advantage of a consumer base that wants their goods locally. Sectors in the Mat-Su with the highest average wages are led by utilities at $89,092, mining oil and gas, and construction. In comparison, Popp’s numbers showed Anchorage as having lost 300 jobs last year.

“This number of 300 jobs down will probably increase from 5-700 jobs down for the end of the year which is not where we want to be. It’s another year of recession. The first two years of the recession were the oil industry collapse driven recession for our state. The last three years were the policy driven recession created by the inability of the state government to come up with a plan that would give business confidence in what taxes were going to be, levels of govt services were going to be and all the other elements that come with that and it created uncertainty in the business community,” said Popp.

Anchorage job loss was down .2 percent with a 5.1 average unemployment percentage. Popp noted that this was the first time he could find in recorded history where at 4.8 percent, Anchorage was below five percent unemployment in the fourth quarter. Anchorage’s average wage is $59,866. Popp juxtaposed the decrease in unemployment with the rapid increase in employers need to hire. Popp said that Anchorage is losing it’s labor force faster than they are losing jobs.

“Our problem is in Anchorage is that that labor force shrinkage has accelerated dramatically over the last five years,” said Popp.

Popp then noted that increase in outmigration doubled in September and continued through the end of the year, tying that to the release of the Permanent Fund Dividend. Popp said that four out of the six top barriers to the growth of business are related to labor shortages.

“The top ten barriers to business growth, number is the condition of the state economy which in effect is what’s going on with the state government,” said Popp.

Popp showed numbers of surveys of the business community and what solutions they believed would help. After last year’s top priority was to cut state spending, this year 72 percent of the business community supported reductions to the PFD.

“Businesses mindset is starting to change, lean more towards different solutions than the one that they thought was the solution a year ago,” said Popp. “There is a belief in the biz community that it needs to be adjusted.”

Popp also noted that 16,000 Mat-Su Valley residents commute to Anchorage and 3,200 commute from Anchorage to the Valley, equating to nearly 10 percent of each labor force. Popp’s slideshow with more economic data on both Anchorage and the Mat-Su can be found at www.aedcweb.com.