Recession persists for Anchorage as state economy recovers
Anchorage’s economy is expected to grow slightly in 2020 but despite incremental recovery statewide in 2019, the city continues to be mired in a mild recession, according to data published Wednesday by the Anchorage Economic Development Corp.
AEDC President Bill Popp said the city ultimately lost approximately 300 jobs last year leading to a fifth year of recession based on preliminary data for the second half of the year. He added that the final numbers are more likely to increase the job-loss total if it changes at all.
The economic advocacy group a year ago projected slight job growth for Anchorage in 2019 but state budget cuts and a prolonged fiscal debates in Juneau resulted in direct government job losses as well as a broader economic uncertainty that made some employers hesitant to invest, Popp said.
He spoke Wednesday at AEDC’s annual economic forecast luncheon.
Anchorage’s unemployment rate averaged 5.1 percent for the year, which often is not indicative of a declining economy but hints at labor force issues, according to Popp.
In an interesting departure from the status of its largest city, statewide Alaska added more than 2,000 jobs last year, according to preliminary data from the state Labor Department. The growth followed three years of losses brought on by the sharp drop in oil prices in 2015.
Anchorage retailers shed approximately 400 jobs last year, which Popp said was largely due to the cultural shift to online shopping impacting national retail chains. He noted Anchorage lost Pier 1 Imports, Bed, Bath and Beyond and its locally beloved downtown Nordstrom store last year.
Anchorage also lost roughly 400 state and local government jobs last year; primarily the result of Gov. Mike Dunleavy’s cuts to the University of Alaska budget and lower enrollment at the Anchorage School District, according to Popp.
The city’s health care sector also lost about 100 jobs in 2019, marking the first contraction in Anchorage’s health care industry in 15 years, Popp said.
Anecdotally, it’s believed the uncertainty stemming from last year’s debate over the Medicaid budget between the Legislature and Dunleavy and the governor’s subsequent Medicaid vetoes has curtailed hiring in health care, according to Popp.
Those losses exceeded small gains in the oil and gas and tourism industries and growth of about 400 jobs in the construction trades partially due to earthquake repairs, he said.
AEDC leaders expect Anchorage to add approximately 100 jobs next year despite continued reductions in state government and a loss of 200 jobs in oil and gas employment mainly from Hilcorp Energy’s pending acquisition of BP’s Alaska assets.
Popp said it’s common to see a slight decline in jobs through such a transition as some employees head elsewhere for work with the seller — in this case BP — and others retire or head to different fields. Overall, AEDC predicts the sector will lose about 200 jobs this year.
Hilcorp Alaska Vice President Dave Wilkins said at the AEDC event that the company has agreed to hire roughly 800 current BP employees and plans to add another 100 to 200 jobs to its Alaska workforce over the year.
It’s unclear at this point if the major oilfield transaction will ultimately result in job losses or gains.
While Anchorage’s economy is slowly trending upward in the near term, Popp said some demographic data combined with a growing concern among employers adds up to potential long-term challenges for the city.
Outmigration is significantly outpacing in-migration and births, which has led to a gradual but steady population decline in Anchorage of 9,200 residents since peaking in 2013 at 301,000 people, according to Labor Department data. AEDC expects the city will lose another 1,000 people in 2020.
Similarly, Anchorage’s workforce has shrunk by about 10,000 individuals since 2011 to 149,000, according to AEDC.
Popp said that upwards of 20,000 people per year have left Anchorage to move Outside between 2014 and 2018, when the most recent data is available. However, an average of only 16,000 people moved to the city from Outside to replace them.
“That’s a loss of talent; that’s a loss of future opportunity; that’s a loss of retirees. It’s a mix of population,” he said.
Additional research into job postings in the city — which are on the rise — indicates Anchorage employers have “an intention to hire, an intention to invest,” Popp said to the crowd of mostly business professionals, “but if you don’t have people to fill those jobs that you the business community are creating, they’re not jobs, they’re just good intentions.”
He reiterated a position long held by AEDC that Anchorage as a whole needs to be more proactive in attracting young and skilled workers.
“Communities across the United States are competing with communities across the United States to attract and retain workforce,” Popp said, adding that livability and an ample workforce are major factors in determining where companies are investing. “If you don’t have a policy and strategy in place as a community you are not on the radar for national businesses in the coming decade because having to transport a workforce into an area do to business is the most expensive option you could possibly expect to have.”
Elwood Brehmer can be reached at [email protected].