Employment uptick expected

Posted: Thursday, January 20, 2011

The state Department of Labor and Workforce Development expects overall employment to increase slightly this year, with some industries growing, some dipping slightly and some, like construction, remaining flat.

The latest issue of the department's monthly publication, Alaska Economic Trends, forecasts an employment increase of 0.6 percent statewide, the same as the preliminary increase estimate for 2010.

Last year actually fared better than expected; when the department did the same forecast a year ago, economists had predicted an employment decrease of 0.4 percent in 2010.

Construction employment is estimated to remain flat, according to Trends publication. Neal Fried, a department economist and author of the article that covered the statewide outlook, said in a telephone interview that while bond packages, stimulus projects and a hefty capital budget will help keep work on an even keel, private construction likely will remain a low point.

John MacKinnon, executive director of the Associated General Contractors of Alaska, said the most reliable forecast for construction employment will come when the Institute of Social and Economic Research puts out its annual construction employment forecast later in the year.

Last year, that forecast estimated relatively flat construction spending for 2010. The DOL publication listed a 0.6 percent decrease in employment from 2009 to 2010.

A surplus of commercial vacancies within Anchorage means there is little vertical construction work - buildings - available, MacKinnon said, where roads and bridges ("horizontal" construction) are being built and repaired every summer.

"Transportation needs are there regardless of the economy. Facility needs ebb and flow with the economy," he said.

Contractors have felt the pressure of this economy, MacKinnon said, as bidding on projects has become fiercely competitive. Contractors often bid at or below engineers' cost estimates, meaning they're willing to drop the price just to get the work.

The "800-pound gorilla in the room," he said, is oil and gas spending, which at this point is difficult to anticipate given the uncertain regulatory environment in Alaska.

But ultimately, despite the possibility of two consecutive flat years, MacKinnon is upbeat about the future of construction employment.

"We're still in good shape. There might even be an uptick," he said.

The article warns that a dropoff in federal spending could cause some pain, assuming the movement to reduce federal spending and eliminate earmarks in Congress becomes reality.

"How much and how quickly it will happen remains unknown, but it isn't far off," Fried wrote.

Health care, a subcategory of "Educational and Health Services," is the industry that seems to be individually leading the charge, with 1,100 more wage and salary hires expected in 2011.

Health care is the fastest-growing industry in the state, with demand increasing with the number of baby boomers entering retirement age.

Growth in that sector was even greater from 2009 to 2010, with 1,400 jobs added, according to the article.

Industries catering to tourists and visitors did better last year than expected, Fried said, as an increase in independent travelers helped offset the number of cruise ship passengers lost.

Bed tax numbers in many Alaska cities and towns were up despite the cruise ship decline of 140,000 passengers, though travel officials have noted that this can be reflective of increased room rates in addition to improved business.

Fried characterized the increase in independent travelers as indicative of one of the "biggest errors" of the department's 2010 forecast, which predicted that leisure and hospitality "could be facing its worst outlook in recent times."

Leisure and hospitality, a category reserved for hotels and restaurants, among other businesses, is expected to see an increase of 100 employees this year, according to the article.

More national conventions and better conditions nationwide should make for an improved year for the tourism industry, Fried wrote.

"Returning cruise ship traffic and more confident American consumers will mean more visitors and more generous spending than Alaska's visitor industry has seen in the last two years," he wrote.

From 2009 to 2010, the government sector saw an increase of 900 employees, according to the article. Fried attributes this partly to the Census, as the U.S. Census Bureau hires large numbers of locals in every state to complete the count.

But with the Census count over and fewer new employees being hired at school districts, 2011 will see a possible net loss of about 100 employees, according to the article.

Sean Manget can be reached at sean.manget@alaskajournal.com.

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