Report: Anchorage economy is healing, but jobs will be slow to return
The city’s population will continue to decline, economic outlook finds
ANCHORAGE, Alaska (KTUU) - Anchorage’s economy is on the mend, but the jobs lost during the COVID-19 pandemic won’t come back up to the levels from before the crash until 2024 and the city’s population will continue to decline, according to projections from the Anchorage Economic Development Corp.
The corporation hosted a virtual meeting on Wednesday during which its three-year outlook report was released and presented.
“Coming off of the disastrous year of (the) COVID-19 pandemic in 2020, we are now entering into a prolonged period of economic recovery,” said Bill Popp, president and CEO of the corporation, during the virtual presentation.
Anchorage lost 12,300 jobs in 2020 during the pandemic. At its worst point, the report says jobs dropped by 23,000, or 15%, in April of 2020.
“We did see job losses begin to ease in the second half of the year, but 2020 was an incredibly hard year for the Anchorage economy,” Popp said.
Even before the pandemic, jobs in Alaska’s largest city were on the decline, with Anchorage losing 6,000 jobs from 2015 to 2019. There were a peak 156,000 jobs in Anchorage in 2015.
“Now we face the long and hard task of recovering 18,300 jobs to get us back to the job numbers last seen in 2015,” he said.
The corporation’s three-year projections show Anchorage adding back 12,000 jobs from now through 2024, reaching close to the level they were before the pandemic. That will leave just over 6,000 jobs still to be added for Anchorage to get back to those peak job numbers of 2015.
“We will not bounce back to where we were in 2019 overnight,” Popp said. “We face many unexpected consequences of the pandemic, such as ... sharp labor force shortages in a broad range of jobs and skills, the changing model of where people work and how that will affect businesses and landlords, to issues like spiking building material costs and global supply shortages.”
Anchorage began this year down 11,300 jobs in the first quarter, according to the report, and then added 8,400 jobs back in the second quarter.
“So far 2021 is headed in the right direction,” Popp said.
“Year to date, Anchorage is down an average of 1,600 jobs in the first 6 months and will likely cross over into positive growth in the third quarter,” he said.
The sectors leading the way in job growth so far in 2021, according to the report, are the leisure and hospitality industry, and transpiration. Leisure and hospitality as a sector saw 3,700 more jobs in June, while the transportation sector added 1,500 jobs. Popp said that’s thanks to local consumers, a larger than expected influx of independent tourists, and a resurgence of passenger operations.
The Ted Stevens Anchorage International Airport is now fourth-busiest in the world for cargo operations. In fact, Popp said 2020 was a record year for cargo at the airport. That continued boom coupled with a resurgence in commercial passenger service should help the city’s transportation sector continue to grow.
Cargo volume was recorded at 3.5 million tons in 2020, up 16% from the year before. The three-year outlook projects that will continue to grow to 4.1 million tons by 2024.
Passenger operations at the airport had been at a record high in 2019 of 5.8 million passengers before the pandemic hit, the report shows. It dropped down to 4.1 million passengers, but the outlook projects that number to grow back up to 5.2 million by 2024.
The retail sector also added 900 jobs in June, and the health care industry added 800, but Popp said oil and gas jobs in Anchorage were down by 200 “as the industry statewide remains at low levels of activity to date.”
Anchorage’s economy will not fully recover until long-term issues with population and labor are sorted out, data from the corporation shows.
The city’s population was already in decline before the pandemic. The report shows Anchorage’s population peaked in 2013 at just over 301,000 people. It’s been in decline ever since, and dropped by nearly 3,500 in 2020 during the pandemic.
Outmigration from Alaska to the Lower 48 accounts for a significant portion of the loss over the years. The report states that over the last five years, Anchorage lost a net average of about 18,000 residents moving to the Lower 48.
“Relocation between Anchorage and the Mat-Su Valley has played a significant role in intra-state migration, though movement has softened somewhat in recent years,” the report states. “Outmigration to Mat-Su between 2019 and 2020 was at its lowest level in more than a decade.”
As the economy recovers and businesses open back up, employers are posting jobs again and looking for workers, but they’re faces with a tight labor market, Popp said. Online job postings in the second quarter of 2021 were up 16% compared to the same time last year.
“Everyone is trying to hire at the same time,” Popp said.
Between now and 2024, the outlook predicts Anchorage will lose another 3,100 people, for a population of 285,000. The current labor shortage will only become worse while these population trends persists, Popp said during the presentation.
“We must better understand the reasons why our working age population is declining, and act to correct the problems that we can correct as quickly as we can,” he said.
On a positive note, the report shows that personal income grew by about 3% in 2020, largely thanks to a strong stock market and an influx of federal funding for pandemic relief. The corporation forecasts that personal income will rise by $1.2 billion between now and 2024.
Additionally, Popp shared the corporation’s consumer optimism report, which shows that residents are more optimistic about the economy, their own personal finance and future expectations.
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