ALASKA EMPLOYMENT SCENE: EMPLOYMENT SHOWS STABLE GROWTH

By Neal Gilbertsen, Alaska Economic Trends, May 2002, V. 22, N. 5, Page 26.

Heading into February, Alaska was enjoying the lowest seasonally adjusted unemployment rate since 1990. While the 5.9% rate was slightly above the national rate of 5.6%, it was the second lowest of the five Pacific states. Only Hawaii, at the height of its tourist season, enjoyed a lower seasonally adjusted rate, 4.7%. By contrast, job losses in the high tech sector raised the seasonally adjusted rate of unemployment in Oregon (8%) and Washington (7.5%) to the highest and second highest in the nation.

Alaska’s February unadjusted rate of unemployment was the lowest ever recorded, at 7.3%. This was a decrease of two tenths of a percentage point from January and well below the February 2001 rate of 8.3%. Most areas of the state saw small decreases in unemployment rates, although Anchorage experienced a slight increase from 4.8% to 4.9%.

Labor force not keeping pace with job growth
Employment growth from February 2001 to February 2002 has been slow, (1.7%.) Labor force growth has been even slower. The low unemployment rate is, at least in part, an artifact of this difference in growth rates. While a higher percentage of Alaskans are working, this does not indicate much economic expansion. Rather it means that growth in the labor force has not kept pace with the modest rate at which the economy has grown. This results in a tight labor market that is good news for workers, but presents difficulties for employers. Alaska’s labor force has increased 3.7% since 1997. In the same time frame, Alaska’s economy added 26,300 jobs for a total increase of 10.4%.

The reasons underlying the slower growth rate of the labor force seem tied to the booming economy of the lower 48 during this period. Relatively fewer workers came to Alaska in search of employment, while more Alaskans accepted positions out of state. As job opportunities and wages increased in the contiguous states, worker migration to Alaska slowed. The difficulty seafood processors have had attracting summer workers in recent years exemplifies this situation.

While the national recession seems to have ended, the steeply increased rates of unemployment in Oregon, Washington and California are likely to continue through much of 2002. If this is the case, Alaska can anticipate increased numbers of displaced workers from the Pacific coast states moving north in search of employment. Initial reports from seafood processors indicate that the labor shortage of the last few years has evaporated, and that they have more applications for employment than available jobs.

High unemployment still dogs rural areas
Not all areas of the state have shared in the low unemployment rates. As usual, urban Alaskans fared far better than their rural neighbors. The Yukon-Koyukuk Census Area had the highest unemployment with 18.4%, but was followed closely by Prince of Wales at 17.1%, Yakutat at 16.7%, Wade Hampton at 16.1%, Haines at 15.1%, Skagway-Hoonah-Angoon at 15%, Bristol Bay at 14.8% and Wrangell-Petersburg at 14.1%. Southeastern Alaska’s prominence in this group is underscored by Ketchikan’s February unemployment rate of 11.4%, a full one percent increase
over 2001.

Some regional economies, like Southeastern Alaska, have not shared equitably in the admittedly moderate economic growth that has characterized the last decade. Declines in the lumber and wood products industry employment continue to follow a long term trend. Low ex-vessel prices in the fisheries have also impacted the region’s economy. As a result, Southeastern Alaska’s employment grew at a rate of only three-tenths of one percent in 2001, compared with statewide growth of 2.1%.

Alaska escapes effects of national recession
Still, Alaska seems to have been insulated from the effects of the short national recession that began in March 2001 and deepened following the tragic events of September 11. Just as the state did not share in the high tech growth of the 1990s, which contributed to the prosperity of California, Oregon and Washington, it did not share in the economic setbacks those states have recently experienced.

Because Alaska’s economy is highly seasonal, it is too early to say whether the cautiously optimistic trends of this fall and winter will translate into higher employment later in the year. While the outlook for a normal tourist season seems to be improving, much uncertainty remains. Will potential visitors be put off by increased security measures? Will the economic downturn of 2001affect willingness to spend? The answers to these questions will certainly impact Alaska’s economy.

Other questions dance on the horizon. As this article is being written, turmoil in the Middle East continues. As Alaskans know, that distant region plays a major role in establishing world oil prices. Should the Israeli-Palestinian conflict escalate, or phase two of America’s war on terrorism involve military action in Iraq, the impact on Alaska’s oil industry could be of major
consequence to the state.

An adage says, “Life is uncertain. Eat dessert first.” At least for the present, Alaska seems to have something good on its plate.

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