AEDC Anticipates 2020 Will Bring the End of Anchorage’s Recession

What Are Jobs Without a Workforce?

Popp explained that Anchorage’s population has been on the decline since its peak in 2013 and showed a net loss of approximately 2,600 residents (0.9 percent) in 2019, which brings the total loss since 2013 to 9,200 people (3.1 percent). “The number one issue for the coming decade is where are we going to get people to fill jobs,” Popp said. 

One factor is a changing attitude toward jobs; while Baby Boomers generally moved to any place in pursuit of a quality job, younger generations won’t chase jobs to cities or states that don’t meet their lifestyle standards. “Communities across the United States are competing with communities across the United States to attract and retain a workforce,” he said. Those communities that don’t have a strategy and policies in place to attract a workforce will struggle to build their economies, he explained, “because having to transport a workforce into an area to do business is the most expensive option you can possible expect to have when making an investment.” 

The national unemployment rate is low, as is Alaska’s. However, according to the 2020 Economic Forecast Anchorage report sponsored by Northrim Bank and published by AEDC, “While the national unemployment rate is low, primarily because of sustained job growth, the Anchorage (and Alaska) rate is low because the labor force is shrinking.”

And businesses in Alaska have noticed. In the 2020 Annual Business Confidence Index Report (sponsored by Premera, prepared by the McDowell Group, and published by AEDC) of the top ten barriers to business growth identified by local businesses, four are labor related. The number two barrier identified is the availability of professional/technical workforce; number four is the availability of a semi-skilled workforce; number five is the cost of labor; and number six is the job readiness of entry-level workforce. 

And so one challenge for Anchorage and the state as a whole is how to find and keep qualified, trained workers to make sure the Last Frontier remains a viable place for businesses to thrive.

AEDC has identified a three-prong approach in Anchorage to make it the kind of city in which people want to live, work, and play: revitalizing Anchorage’s downtown, U-Med district, and Chester Creek Greenbelt. “We want to focus our attention to generate revitalization, new investments, and expanded high quality of life elements… to attract a workforce and retain the workforce that we grow locally organically… This strategy is really critical to our next ten years of efforts at AEDC,” Popp stated.

Confidence Mixed with Uncertainty

In the 2020 Annual Business Confidence Index Report, the overall Business Confidence Index dropped 2.8 points to 55.4, which indicates a sense of optimism, if not a great one. As a group, businesses reported the “condition of the state economy” as the largest barrier to business growth in Alaska.

The state’s significant budget gap is large factor, as how the state chooses to spend money—or not—deeply impacts how businesses make their own investment decisions. AEDC asked businesses to vote on their preferred method to close the state’s budget gap. The most highly favored solution amongst businesses is to reduce the PFD (71 percent support, 27 percent oppose it), while the less favored is eliminating the PFD altogether (39 percent support, 61 percent oppose). A statewide sales tax is the next solution with business community support, followed by reductions in state spending, another broad-based statewide tax, and a statewide income tax. 

Other indicators of a health economy are also mixed.

Anchorage’s housing markets remain stable, but Popp explained that’s due in part to slowed residential construction, not because of growing demand for housing. 

Regarding retail, while Alaska was in some ways insulated from national trends in the decline of traditional retail, in the last few years it’s caught up to us. In 2019 Nordstrom, Pier 1, and Bed, Bath, and Beyond all pulled out of Alaska, and Popp said he is aware of other retailers under national pressure that may need to cease Alaska operations in the near future. (As a side note, current rumors that Simon and Seaforts will close soon are entirely unfounded, Popp emphasized; in fact, under new ownership, the Anchorage landmark is likely to see new investment and a long future.)

Part of the reason government jobs are expected to continue to decrease in Anchorage is because of job losses in the University of Alaska system (due to budget cuts) and in the Anchorage School District, which has seen a decrease in student enrollment, which can be reasonably expected to continue as the city’s population continues on a downward trend.

Popp concluded his presentation by stating he does believe Anchorage is nearing the end of the recession, but it’s a tricky call. “This was a difficult forecast for us this year. Our friends at the McDowell Group and my team had numerous discussions about all the influences on what could make things better, and frankly it’s a hot mess,” he stated. But he left the audience with this advice for Anchorage’s future: “We have to start getting involved. We need to get off the sidelines… being positive contributors in policy making, in supporting our schools, and getting out there and doing what needs to be done to make our neighborhoods better and safer… Many of you are doing a lot, but we need everybody to shoulder the wheel… We hope you’ll join us in our efforts to make Anchorage the best city in America to live, work, and play.”