AJOC EDITORIAL: Restoring Alaska-hire is nothing to brag about
Accompanied by a strange amount of back-patting and revisionist history, Gov. Bill Walker issued a press release June 10 announcing the restoration of Alaska-hire requirements for state-funded construction projects.
In an op-ed his office circulated June 11, Walker wrote that he was “proud” to restore the requirement that 90 percent of the jobs on state-funded infrastructure projects go to Alaska residents first.
Here’s the catch: the only reason Walker can restore the Alaska-hire requirement is because the state unemployment rate was 6.7 percent in April compared to the national average of 5.4 percent in the same month.
The Alaska-hire requirement was suspended statewide in August 2013 when the state unemployment rate was 6.5 percent and the national average was 7.3 percent; the determination is required every two years and at the time the state unemployment rate had been less than the national rate for four years.
That had never happened before in state history, and under state law the “zone of underemployment” that allows Alaska-hire requirements to kick in only applies when the unemployment rate is significantly greater than the national average.
At the time, 15 areas around the state with greater unemployment rates than the national average retained their Alaska-hire requirements. It was only the statewide designation that was suspended.
In his press release, Walker’s office described the Alaska-hire requirement as being “terminated” in 2013.
In his op-ed, Walker wrote, “Unfortunately, statewide Alaska hire requirements were eliminated in 2013. I’m proud to restore Alaska Hire, in the nonpartisan spirit of putting Alaskans first.”
“Terminated,” “eliminated” and “unfortunately” are odd ways to describe a decision that was mandated under a state law that all governors are sworn to follow.
Does Walker really think it was “unfortunate” in 2013 that Alaska’s unemployment rate was better than the national average?
Is he really “proud” that Alaska has reverted to its traditional status of having higher unemployment than the nation as a whole?
Walker blames “sharply declining” public sector employment and some layoffs in the oil and gas sector for Alaska’s unemployment rate diverging from the national average, but in reality the difference is only 0.2 percentage points from 6.5 percent in 2013 compared to 6.7 percent now.
The fact is Alaska typically has a greater rate than the national average because of widespread poverty in rural areas and the seasonal nature of commercial fishing, the state’s largest private employer.
Portraying the 2013 determination as anything other than upholding state law is a mischaracterization of the action by the Labor Department under former Gov. Sean Parnell.
Here is what the former Labor Commissioner Dianne Blumer wrote in her own op-ed at the time: “According to state law, the Employment Preference Determination is in effect through June 30, 2015. The department will make a determination again in two years based on new unemployment data. My hope is that Alaska’s economy will be even stronger and there will not be a need for any zones of underemployment.”
Leaving aside Blumer’s clear statement that nothing was being “terminated” or “eliminated,” Walker is treating the restoration of Alaska-hire requirements as some kind of an achievement.
That is quite a contrast from the expressed goal of the previous administration to keep the state unemployment rate less than the national average.
Walker also spent part of his op-ed talking about depressed oil prices and smaller capital budgets being a reality, but soon after wrote: “The Port MacKenzie rail extension, a $120 million project, probably will go to bid and be subject to Alaska Hire over the next year. So will the Seward Meridian Parkway extension, a $30 million project.”
For some perspective, only $7.7 million of the 2016 capital budget was unrestricted general funds of the type that could fund an Alaska-hire qualified project. The $150 million total for the two projects Walker mentioned is equal to the entire capital budget he proposed this year, which was stripped down to little more than generating federal matching funds.
It does not seem very realistic to portray $120 million to complete Port MacKenzie as being imminently funded given the state’s budget situation, but not much else from this announcement made sense, either.