Neal Fried

Neal Fried

Alaska’s economy is muddling along but one of the state’s chief labor economists wants it to muddle a little faster.

The state is emerging from a three-year recession, but the recovery is weak, says Neal Fried, economist at the state Department of Labor and Workforce Development.

Fried told the Resource Development Council annual conference in Anchorage that a continued out-migration of working-age adults is “a little concerning.”

Oil employment also should be increasing faster, given the level of new investments by the industry, he said.

Between 2017 and 2018 there were 7,577 Alaskans who moved out of state, net of the number who moved to Alaska. In the prior period, 2016 to 2017, there were 8,165 who left Alaska.

Much of the state’s economy is flat or in every slow growth, as measured by employment, but an uptick in total jobs is being led by petroleum and construction, two sectors hard hit in the recent recession.

The surge in construction appears robust but the number of people working in the industry are still low compared with a few years ago. Construction jobs were up 750 for the first 10 months of 2019 compared with the same 10-month period of 2018.

“What’s behind this (the construction uptick) is the military base work in Interior Alaska and that will largely be completed in the next two years,” Fried told the RDC. “We are expecting to see declines in construction in 2021,” he said, although unexpected events could change that.

Meanwhile, Fried said he thinks the increase in oil and gas employment seems weak so far, given the amount of new investment in North Slope projects. Petroleum jobs were up 350 for the first 10 months of 2019 compared with the same 10-month period of 2018.

Petroleum job numbers still have long way to go before they match the industry’s peaks in 2014 and 2015. A sharp drop in oil prices in late 2015 led to layoffs in the industry and sharp cuts to state construction spending in the following three years.

The modest increases in oil employment could be linked to cost-cutting and efficiency initiatives by producing companies and contractors in 2016 and 2017 as well as adoption of new technologies like horizontal drilling that allow oil to be produced with less construction of surface infrastructure.

Meanwhile, what would seem to be positive news – a 4 percent increase in total Alaska wages paid in the first half of 2019 compared with 2018 – is mainly an effect of the growth in higher wage jobs in oil and construction.

Wage income was generally stagnant in other sectors of the economy.

However, on a true positive note, the state’s visitor industry is expected to set another record in 2020 for the sixth year in a row, Fried told the RDC. Almost 1.4 million cruise ship visitors are expected next year, up from 1.31 million this year and 1.16 million in 2018.

Cruise ship visitors are the main driver in Alaska tourism.

showed robust growth in 2019 and that is likely to continue as long as the Lower 48 economy remains strong, stimulating recreational travel.

Meanwhile, total Alaska employment for the first 10 months of 2019 appears to be up 0.5 percent or 1,800 jobs according to preliminary estimates, Fried told the RDC. That compares to a loss of 1,200 jobs in 2018, or 0.5 percent, he said.

Alaska statewide unemployment, as measured by the number of Alaskans filing with the labor department for unemployment benefits, is gradually declining to 6.2 percent. While it is high in contrast with national unemployment of 3.6 percent, the Alaska rate is within its normal historical range.

Falling unemployment in a weak economy also reflects fewer workers looking for jobs, one effect of the outmigration of working-age adults. That means employers seeking to fill positions have fewer applicants to choose from.

While petroleum and construction are showing modest increases other resource industries like fishing are somewhat down, employing about 16,400 compared with approximately 17,000 in the previous year.

Mining employment is stable, however, at an estimated 3,111 jobs in 2019 compared with 3,106 in 2018.

Uniformed military personnel stationed in Alaska appear stable, however, at 21,214 in 2018 compared with 21,042 in 2017. Those numbers will increase with new personnel due to arrive at Eielson Air Force Base, however.

Other indicators reflect a generally stable economy, Fried told the RDC. Average home values show little change between 2018 and 2019, at $327,480 for 2019 and $331,637 in 2018. New home construction is trending down, however, to 1,659 units built in 2018 against 2,159 in 2017.

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