KODIAK — A statewide recession led to Kodiak Island Borough losing almost 600 jobs from 2015-2018, according to a economic publication released by the Alaska Department of Labor and Workforce Development.
The February issue of the ADLWD’s Economic Trends report details the job losses and gains that occurred as a result of statewide recession caused by a steep drop in oil prices from above $100 per barrel to below $30 in 2015. As a result, the report states, Alaska has been losing jobs for 39 consecutive months.
Statewide, job losses total around 12,700 –– with some areas losing significantly more jobs than others. The report states that the biggest losses are in areas with “relatively high concentrations of oil and gas activity, professional and business services firms, state government and construction companies.” The North Slope Borough was hit the hardest with a losses of over 4,200. Anchorage lost roughly 6,000 jobs (a lower percentage, given the size of its population), Fairbanks lost a little over 750 and Juneau lost around 460. The Kenai Peninsula lost 850 jobs and Kodiak lost a little under 600.
The report states that the economic downturn affected “all areas of the state,” even those that didn’t lose local jobs.
“North Slope workers who lost their jobs live scattered throughout the state, which means the loss of income from those high-wage jobs also rippled into their home communities,” the report states. “Further, all Alaskans are affected to some degree by state government’s struggles. Permanent Fund Dividend amounts have changed, state-funded services and operations have an uncertain future, and big changes appear necessary in either the size of state government, the types and amounts of revenues collected, or both.”
For Kodiak, job losses were concentrated in one area.
“The basic story is just manufacturing, which for you guys is seafood processing,” said Dan Robinson, ADLWD’s chief of research and analysis and the author of the report.
According to Robinson, in Sept. 2015, Kodiak had 2,384 jobs in the manufacturing industry. By Sept. 2018, this number had dropped to 1,536. Of the 584 jobs that Kodiak lost between 2015-2018, roughly 500 of them were in manufacturing. While he couldn’t place the exact cause of the loss of these jobs, Robinson said that it’s likely linked to poor fishing harvests and increasing levels of automation in seafood processing facilities.
However, some parts of the state that suffered temporary jobs loses have recovered and seen growth. For example, the Matanuska-Susitna Borough’s job count rose by 750 (3.4 percent) from 2015-18. A majority of these jobs, some 450, are in health care and social assistance. Beyond Mat-Su Borough, Bristol Bay Borough added 345 jobs, the Yukon-Koyukuk Census gained 199 and the Valdez-Cordova Census Area gained 81.
The report notes that Mat-Su benefited from strong and continued population growth –– an increase of about 10,000 people between 2013-2018 –– bucking the statewide trend. In general, more people have left Alaska than arrived for six straight years. Kodiak has matched this trend, with its population dropping from 13,972 in 2012 to 13,136 in 2018.
The negative net migration is mostly due to fewer people coming to the state. The number of people moving to Alaska has fallen by about 12,000 since peaking above 50,000 in 2013. According to the report, the past six years is the first time since at least 1945 that the state has lost more people than its gained for so many consecutive years.
Typically, Alaska experiences strong in-migration when its economy is stronger than that of the Lower 48. From 2008 to 2012, Alaska’s economy was “noticeably stronger than the U.S. economy.” However, Alaska’s economy ranked last in the U.S. from 2015 to 2018 –– which could provide a partial explanation for the decrease in in-migration.
The report also notes that one “concerning possibility” is that those looking for jobs are put off Alaska “due to negative perceptions about the vitality of our job market, the quality of our schools, the level of crime and the overall quality of life here.”
“That possibility raises the stakes on some of the decisions we’re in the process of making as a state when it comes to the size of state government and the way we pay for it as well as the future of the Alaska Permanent Fund and Permanent Fund Dividend,” the report states.
According to a study of extended periods of state job losses from 1961-2016, 93 percent of the time, states didn’t lose jobs for more than three years. ADLWD’s analysis of 259 state-level recessions found that, when a recession lasted longer than three years, it was usually linked to structural shifts in the state’s economy. Alaska, the report states, is in the middle of a “messy transition” away from relying almost entirely on oil-related revenue to pay for state government.
In 2018, the state legislature passed a law that created a new revenue stream from the Permanent Fund’s investment earnings. The Alaska Department of Revenue forecasts this will provide $2.7 billion in FY 2019 and $2.9 billion in FY 2020. According to the report, this saw the state go from depending on petroleum revenue for 80 percent of its unrestricted general fund revenue to 40 percent. While the report states that this revenue will be “far more consistent and dependable than Alaska’s petroleum revenue has been over the years,” it also states that “harder choices lie ahead.”
“Major work remains, as evidenced by an expected deficit of $1.6 billion in the coming fiscal year, even with the additional funds from the Permanent Fund investment earnings,” the report states. “Alaska has begun adding oil jobs again and more growth is likely in the near and mid-term future. But until we figure out our state government situation, we’ll struggle to grow or we’ll grow at restrained rates.”