Shrinking workforce is hampering Anchorage’s recovery, according to economic forecast

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A labor shortage in Anchorage will cost the economy thousands of jobs in high-wage industries like health care this year, according to an economic forecast released Wednesday by the Anchorage Economic Development Corp. It will also affect the ability of businesses to get federal grants from the giant infrastructure package, says the forecast.

The city is expected to add 1,550 jobs by 2023, Bill Popp, the group’s president, said as he presented the annual report to the city’s business community on Wednesday. No sector is expected to lose jobs, keeping the overall labor force at about 145,000 people, he said.

The job expansion is a positive step forward as the economy continues to recover from the pandemic, he said.

But high hopes for more jobs in key sectors have been dashed by the city’s long-standing decline in the workforce, he said.

Last year, the economic development corporation anticipated a “wave of job growth” in architecture and engineering jobs, as billions of dollars pour in as part of the $1.2 trillion infrastructure package Congress approved a year ago. Pop said.

But local employers in those industries and others this year will not be able to take full advantage of the opportunities due to a lack of qualified employees, Popp said.

“Local employers believe that they will not be able to hire the necessary skilled labor, either locally or out of state, to fill the hundreds of design jobs that we believe will be needed to fund the new infrastructure,” he said. “Instead, it now appears that most new federally funded projects are likely to be designed by companies outside of Alaska.”

The construction industry will see only modest growth in employment, adding 100 jobs, due to labor shortages. Construction work for some federal grants will be handled by out-of-state companies for that reason, Popp said.

The worker shortage is also why the forecast calls for flat growth in the medical industry this year. Strong hiring in health care has powered the state’s economic engine for many years and it has lost only a small number of jobs since 2020, Popp said.

“But this cursory view overlooks the thousands of jobs currently unfilled in Anchorage’s health care system,” Popp said.

Hospitals, clinics, laboratories and related businesses are struggling with significant staff shortages, he said.

[Senior clinic at Alaska Regional to close in February, leaving vulnerable patients with limited options for care]

“And it’s not just a shortage of nurses, doctors and other key positions for delivering services to patients,” he said. “Thousands of support positions could be filled today, including jobs such as janitorial, food service, clerical, landscaping, facility maintenance and dozens of other positions key to the overall success of our healthcare system that has taken decades to develop.”

Loss of mill population is a factor

The annual forecast, created over more than two decades by McKinley Research Group and its predecessor, McDowell Group, is the group’s latest look at employment and business confidence in Anchorage, the economic center of the state.

[Chicken jerky, nacho cheese and raisins: Worker shortage means 8 Anchorage elementary schools are going without hot lunch]

The city’s working-age population has shrunk by nearly 15,000 workers, a drop of around 7%, the report says. It’s largely due to a declining overall population that began in 2015 when Alaska faced a three-year statewide recession, just before entering the pandemic, causing further economic upheaval.

The population decline — another 600 residents down last year — is among a whirlwind of issues that will continue to put pressure on the size of Anchorage’s workforce, the report says.

“The city has struggled with several factors that contribute to the availability of labor and overall quality of life: high housing costs, low availability of child care services, and uncertainty surrounding education funding. K-12 are three of the most prominent in 2022”, predicts the forecast. she says.

“The shortage of available and affordable child care is keeping hundreds, if not thousands of workers out of the workforce to stay home and care for their children. Child care-related jobs were down 9% statewide in the first half of 2022, with a corresponding loss in capacity,” Popp said in his presentation.

[Alaska’s overall economic performance among the worst in US for several years, research finds]

The shrinking working-age population is affecting the economy in other ways. It has contributed to an extremely tight labor market, helping to push unemployment rates to record lows, Popp said.

“Average unemployment for 2022 in Anchorage was 3.7% per year,” he said. “This is an all-time low for this metric in modern Anchorage history.”

growth in tourism

Some industries will see solid growth in 2023, though worker shortages will also drag down employment there, the report says.

Hotel, restaurant and tour operators will help lead hiring thanks to strong growth in tourism, the report predicts. The leisure and hospitality industry is expected to account for more than half of the new jobs in the city, with an additional 800 positions.

“Cruise passenger capacity has increased by 10% for the 2023 season,” Popp said. “You are seeing strong advance bookings in the hotel sector. As an example, the Captain Cook Hotel is already fully sold for the summer season. There is the possibility of a record year for visitors to Anchorage in 2023, and restaurants and retailers should enjoy a great summer, along with hotels and tour providers.”

The transportation, warehousing and utilities sector will grow by 200 jobs, led by Ted Stevens Anchorage International Airport, one of the world’s busiest cargo hubs. The sector is a “rock star” and is the only Anchorage industry to have fully recovered from job losses from both the pandemic and the recession, the report says.

The airport has been “blowing away” expectations in recent years with expanding cargo and passenger traffic, pumping hundreds of millions of dollars in payroll and purchasing into Anchorage, the report says.

One of the seven Anchorage jobs is directly or indirectly related to the airport.

[Why Anchorage’s international airport is such a big cargo destination — and how it could get even bigger]

The high-wage oil and gas industry will add 100 new jobs in Anchorage, after losing about 100 jobs last year, the report says.

“Hopefully, this is the start of a recovery from the 2,200 jobs lost since 2015,” Popp said.

Bill Popp AEDC Economic Forecast

Big new oil prospects on the horizon will help by bringing billions of dollars in new investment to Alaska, such as the Pikka oil field being pursued by Australia-based Santos and Spain-based Repsol.

Domestic factors will affect Anchorage businesses this year, but inflation is expected to moderate as supply chain issues abate, according to the report.

Popp said he sees no imminent sign that Anchorage or the state will enter a recession this year, despite concerns from some in the business community, he said.

In general, Anchorage business leaders are “very optimistic” about the prospects for their own businesses this year, but less so for the broader economy, according to a survey commissioned by the AEDC, Popp said.

[The pandemic years changed shopping in Anchorage. Maybe forever.]

Consumers, for their part, are “markedly pessimistic” about the economy this year, perhaps in part because of issues that seem intractable year after year, such as housing, homelessness and the state’s fiscal crisis, he said.

Popp said AEDC is working with many other Anchorage groups and businesses on a multi-faceted initiative called Choose Anchorage that seeks to increase participation in job training and recruit skilled workers from the Lower 48 who can help close Anchorage’s labor shortage. and put down roots in the city.

AEDC retained Austin, Texas-based TIP Strategies, a consulting firm that helps communities across the country address workforce and other issues, to conduct research and help create an action plan.

Jeff Marcell, TIP Director, was the keynote speaker at the Economic Forecasting Luncheon. He said Anchorage’s business leaders must play a leadership role in stemming the city’s loss of labor, which will become a bigger problem if it continues. Fighting it will require new resources, which could mean funding and “sweat equity,” he said.

“This is a crisis,” he said. “You can’t bury your head in the sand over a crisis.”

AEDC released the data during a luncheon of more than 1,000 people at the Dena’ina Civic and Convention Center.

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