|
Alaska economy slowest to recover from COVID, Neal Fried tells RDC
Kristen Nelson Petroleum News
Alaska’s economy has been the slowest in the country to cover from the COVID pandemic, Neal Fried, senior economist with the Alaska Department of Labor and Workforce Development, told the Resource Development Council’s 43rd Annual Alaska Resources Conference Nov. 16.
The oil and gas industry in the state has been the slowest industry to recover, he said, with some 7,500 direct employees currently - back to about 2005 levels - far from the peak in 2014 of some 15,300 jobs. (Department of Labor figures show pre-COVID oil and gas employment, February-March 2019, at some 10,000.)
Nationally, recovery is moving back to pre-COVID levels, Fried said, with more jobs than anytime in history and more people employed than ever.
Meanwhile, Alaska lags badly - at 47th in recovery to pre-pandemic levels.
Fried cited two major reasons.
Alaska’s economy didn’t have much momentum going into COVID because the state was just coming out of recession while the rest of the country was red hot.
And Alaska still has the most seasonal economy in the country. COVID hit just as the state’s economy usually begins to fire up, he said, with the visitor industry particularly hard hit. Hawaii, he noted, is at the bottom of the recovery list.
Strangest economy Fried said Alaska has “the strangest and weirdest economy that I’ve ever seen - and I’ve been following this economy for a very, very, very long time.”
What’s so strange? More employers looking for workers than there are workers looking for jobs.
Unemployment, which hit 12.2% in the state in May 2020, a “record high,” was followed by a record low unemployment rate of 3.5% this August and September, he said.
“We have the lowest unemployment rate that we’ve ever had basically in our history.”
The number of unemployed and the number of job openings pretty much tracked each other before COVID, but with COVID, job openings dropped drastically and the number of those looking for work jumped.
Now, however, there are more job openings than job seekers. There was a little period of normality in 2021, Fried said, then this huge gap developed.
Fried said he knows employers hate him, because he talks about the opportunities out there - if you don’t like your job, go look for another one, he says.
Demographics The problem in Alaska is the population, he said, an area which typically gets short shrift.
From 2010 to 2021 the number of Alaskans in what is considered prime working ages of 15 to 64 got smaller.
In the 2016-18 recession, he said, there weren’t a lot of people who couldn’t find jobs in Alaska. Strange for a recession.
When the Alaska economy underperforms the U.S. economy, which it has been doing for the last decade, fewer people move to Alaska. When there’s opportunity close to home, you’re less likely to move. So, with the rest of the country doing well, it’s hard to attract workers to Alaska.
That’s the most powerful force, he said.
Then there’s labor force participation, which is more extreme in Alaska. The number of Alaskans of working age participating in the labor force has been in decline for a very long time.
Baby boomer state The biggest reason for the drop in Alaska labor force participation, Fried said, is the aging of the baby boomers.
“This was a baby boomer state,” he said, with the largest number of people coming to the state in the 1970s and 1980s.
He said when he started work in Alaska there were 5,000 to 7,000 seniors; now there are more than 100,000.
Then there is out migration.
The state’s population fell slightly from 2017 to 2020, then turned positive in 2021, he said.
But significant for employment, Alaska is one of the few states with a larger population loss in the 18-64 age group - only Wyoming and West Virginia had more in the 2013-21 period.
Migration Alaska tops the list of states in the amount of migration it sees, more turnover than any other state, some 10% every year. A lot of that churn is military, he said, but Alaska is very dependent on a mobile workforce.
And in the last few years, there has been more out-migration than in-migration, as fewer people have moved into the state than moved out.
In addition to the national economy being better than Alaska’s, Fried said, nationally people are not moving as much as they were. Mobility is at the lowest level it has ever been, he said, further reducing migration to Alaska.
- KRISTEN NELSON
| 