Modest job growth for Southeast Alaska in 2014
January 09, 2014
Mali Abrahamson, a Department of Labor economist in Juneau, found that relatively small government job losses in Southeast Alaska will mostly offset scattered private sector gains during the year. Abrahamson specializes in the employment and wages of Southeast and Southwest economic regions. In the absence of any large foundational changes to the Southeast region’s economy in 2014, Abrahamson reported that three main factors are expected to influence 2014’s numbers: 1) lack of population growth, 2) disproportionately retirement-age workers, and 3) piecemeal ongoing recovery in several private-sector industries. Southeast’s economic strengths in 2014 will be fishing and tourism, while government and surprisingly health care will be weak spots she reported. The mild growth will be a directional change from 2013, when Southeast lost jobs for the first time since 2009.
Economy changed in the ’90s Between statehood and the early 1990s, Southeast added jobs at about 800 per year reported Abrahamson. In the last two decades, which included the declines of the timber and pulp industries and the population loss that followed, growth slowed to about 150 jobs a year on average.
A shifting age structure Two big questions for Southeast’s future, noted Abrahamson, are how much of its growing retirement-age population will stay and who will replace them at work. The age group in their prime working years, ages 25 to 54, grew from 2009 to 2011, possibly related to the opening of Kensington Mine near Juneau, but that growth slowed in 2012. Overall, population projections are mostly flat through 2015 and show an increasingly older population, which means fewer workers Abrahamson noted.
Government plays major role Government is Southeast’s biggest economic driver, providing 35 percent of jobs and 43 percent of wages, but federal and local jobs have fallen since 2010 reported Abrahamson. Government jobs pay 40 percent more on average than the private sector and tend to be year-round, so those declines have a larger-than-average impact on the region’s economy. According to Abrahamson, with the exception of 2010, when the temporary hiring of Census workers raised job numbers, federal government employment has been shrinking in Southeast since 2004, primarily due to reductions in Forest Service jobs within the U.S. Department of Agriculture. This differs from other parts of the state where the defense-related jobs play a more important role and where federal government numbers have been more affected by sequestration and tighter federal budgets. Another difference is that Southeast’s losses have been more gradual and long-term.
Local government cutbacks have also become the norm over the past three years, decreasing by about 50 jobs a year, or 1 percent reported Abrahamson. This sector provides 16 percent of the region’s jobs. Tribal jobs — counted under local government — fell in 2011, bounced back in 2012, and fell again in 2013 while schools districts and municipal government have shed jobs since 2011. According to Abrahamson, state government employment has been flat for a decade in the Southeast region, and neither the governor’s budget nor the most recent revenue forecasts suggest job growth is likely in 2014. Effect on the private sector Flat or declining government job counts impact private sector employment as well said Abrahamson. Aside from job losses, retirements can also affect local economies given that workers with more experience tend to make more money. As they retire, many of those workers will be replaced by less experienced, less costly workers, which could temporarily lower both total and average wages. If retirees remain and spend their retirement incomes and savings in the region, however, they could also stimulate local economies said Abrahamson. Several sectors will grow Leisure and hospitality will add 100 jobs in Southeast Alaska in 2014, continuing its upswing and recovery from the U.S recession. Transportation and trade saw an uptick in jobs in 2013 after dropping sharply in 2009 and staying low for a few years. Transportation and trade jobs are forecasted to grow by 100 again this year, on the way to regaining their 2008 peak of 7,800 jobs reported Abrahamson. Health care growth slows Private education, health care, and social services employment in Southeast has had a long growth streak of about 4 percent per year over the past decade said Abrahamson in her economic report. Though the health care demands of an aging population suggest more growth is possible, the industry is forecasted to decline by 1 percent this year. This may seem like a surprising drop for such a high-growth industry, but it isn’t unprecedented — job counts also dipped briefly in 2007 and 2008. The industry provides 17 percent of jobs in the region but just 10 percent statewide, and this figure doesn’t include health care facilities run by local governments. Health care run by local governments - the medical centers in Juneau, Wrangell, Petersburg, and Sitka - have added about 25 jobs a year, reaching 850 in 2013. Mining growth levels off Much of the recent growth in mining and logging, mostly from the Kensington mine near Juneau, has leveled off said Abrahamson. Despite a busy exploration schedule — exploration and development expenditures in Southeast totaled $121 million in 2012 according to the most recent estimates by the Department of Natural Resources — no notable new mining projects are slated for 2014, so the industry isn’t forecasted to add jobs. Fishing’s contribution is major Although commercial fishermen are considered self-employed and not counted in the Alaska Department of Labor and Workforce Development’s standard job numbers, the industry’s economic impact on Southeast is significant reported Abrahamson. Fishing remains strong overall, and Southeast’s record $219 million in harvest value was the state’s highest in 2013. According to Abrahamson, seafood processing employment — which is counted in the department’s job numbers — continued to inch toward an all-time high in 2013 with a July peak of 4,000 jobs. Processing employment is forecasted to remain flat in 2014, though, due to the alternating harvest cycle of pink salmon. About forecasts Economists base forecasts on the assumption that what drives job demand in specific industries won’t change dramatically, and don’t include the possibility of catastrophic economic events. While it’s unlikely these employment forecasts will be exact, they represent the mostly likely middle outcomes given these assumptions. Forecasts are modeled using previous years’ trends and subjectively modified by analyst interpretation.
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