Peninsula's economic future up in air after Sept. 11

Posted: Saturday, March 02, 2002

Its resilience and diversity may be the Kenai Peninsula economy's saving grace in this period of national recession.

Despite a serious downturn in the Cook Inlet salmon fishery, declining timber sales and concern over the impact the Sept. 11 terrorist attack may have on the coming summer tourist season, the peninsula's economy continues to show slow but steady growth overall, a reflection of the statewide picture, according to analysts with the Alaska Department of Labor and Workforce Development.

In fact, Alaska is one of the few places in the country where business continues to flourish as the economy in much of the rest of the nation languishes in the doldrums. Take employment for an example. Statewide, it's growing. Modestly, to be sure, but growing nevertheless.

"The basic gist is now, with the rest of the country in recession, we're in better shape in that respect," said Neal Fried, an economist with the Labor Department. "For the first time in a while, we are outperforming the rest of the country."

Still, the current recession is "a weird one," Fried said. Typically, when unemployment rises Outside, Alaska sees an influx of people. That hasn't happened, yet. It may be the population Outside is older on average, "less footloose," Fried said.

Alaska salmon and timber industries are hurting, but other parts of the state's economy are doing better, including the oil industry, which Fried described as being "hot over the last year." Construction, normally subject to boom-and-bust cycles, of late has been very stable, he said.

The service industry is another strong element of the statewide economy, especially in the health care field. Also affecting Alaska's economy is the growth in federal dollars pouring into the state for water lines and sewers, roads, forest fire mitigation logging, health care, nonprofits and more.

"Federal money is touching all kinds of industries," Fried said. "That will be felt this year."

Statewide, wages showed a healthy increase primarily because of a rebound in the oil patch and in construction, he said.

One industry generating a lot of concern is tourism. Predictions for the next year are all over the map.

The Alaska Travel Industry Association called the picture "bleak," following Sept. 11. A December survey of 300 visitor-industry businesses the association conducted showed a 23 percent decline in inquiries and bookings for the upcoming season. If the downturn is sufficiently steep come summer, many Alaska businesses may be forced to close, the association said.

A bill before the Alaska Legislature, HB 359, would appropriate $6 million for emergency marketing efforts. The travel industry had asked for more than twice that to cover television, radio and print advertising in Outside markets with nonstop or one-stop airline service to Alaska. As of mid-February, the bill languished in the Senate Finance Committee.

Gauging the long-term impact of the Sept. 11 attack isn't easy. How do you measure the level of unease felt by would-be tourists?

"Long-term, tourism is a question mark," said Neal Gilbertsen, another economist with the state Labor Department. "Maybe Alaska will be more attractive than Europe."

The department doesn't keep a tourism-specific category of statistics, so measuring the impact of Sept. 11 on tourism isn't simply a matter of crunching numbers. What state analysts have heard is largely anecdotal -- that bookings are down. But any decline could be due to the national recession, not Sept. 11, Gilbertsen said.

Others say they're fairly certain Sept. 11 has affected tourism.

"There was a pretty significant immediate impact of nine-one-one," said Derotha Ferraro, director of the Homer Chamber of Commerce. "The rest of September really hurt, especially for things like hunting guides and bear-viewing."

Bed-and-breakfast owners tell her their phones aren't ringing with calls from people seeking summer accommodations, but charter boat operators are booking at a normal rate, she said. At the chamber office itself, telephone inquiries are up over this time last year, which may signal a good summer to come. But that may be an effect of last year's increased advertising budget, Ferraro said.

Ricky Gease, executive director of the Kenai Visitors and Convention Bureau, said reports he's seen do indicate Alaska can expect fewer visitors this year. House Bill 359 would provide a much-needed shot in the marketing arm, especially on the peninsula, he said.

About 5 percent of the tourists expected to visit the peninsula this year are Alaskans or Outsiders who've been here before. They don't need much encouragement to return, Gease said. Instead, ad dollars will target those contemplating their first trip.

The employment picture shows the Kenai Peninsula to be relatively healthy. Based on the latest data available from borough and state sources, federal, state and local governments combined to employ the greatest number of peninsula workers, at 4,275 in 2000. Wholesale and retail trade jobs were next at just over 3,900, while services scored third at almost 3,600, followed by manufacturing and mining, which includes the oil and gas industry.

State analysts have predicted changes in the state job market that will affect life on the peninsula.

By 2008, more retail salespersons, cashiers and registered nurses will be added to the state's workforce than any other professions. Bank tellers, computer operators and roustabouts will lose the most positions, according to a Labor Department forecast.

Technical medical occupations are expected to show the fastest overall rate of growth, with respiratory therapists topping that list, followed by medical assistants and surgical technologists.

On the flip side, oilfield jobs -- pumpers, engineers, technologists, choker setters and roustabouts -- are likely to be among the fastest decliners in terms of numbers of jobs. In the timber industry, fallers and buckers also will see sharp declines by 2008.

What does that mean for the peninsula? It turns out that because the peninsula's economy is so diverse, in terms of occupations, it is a kind of microcosm of the entire state, Fried said. In fact, the state numbers do pretty well at predicting the occupational future of the peninsula's economy in general.

"Is it a leading indicator? I've never thought of it that way before," Fried said. "People are always looking for a magic bullet that will shed some light on the economy. It would be interesting to see how the Kenai Peninsula Borough and state economies track. You'd have to look at growth over time. The scale is different. One or 2 percent growth in a smaller economy is different from 1 or 2 in a bigger economy."

The most recent labor statistics show the numbers didn't change much between 2000 and 2001. The labor force available for work, for instance, averaged 21,694 in 2000 and 21,679 in 2001. Employment peaked in July of each year, in 2000 at 22,589 and in 2001 at 22,577. The slowest month in each year was December at 17,846 and 17,971, respectively. However, the average unemployment rate actually dropped from 10.4 percent in 2000 to 10 percent in 2001.

The drop-off in jobs from September to October last year would not appear to show any dramatic impact of the Sept. 11 attack when that decline is compared with previous years.

Subtracting October employment numbers (those actually working) from September numbers show 1,071 fewer employed workers in October 2000 than were on the job in September of that year. In 2001, that difference was actually smaller, just 1,042. And, the September-October differences in 2001 and 2000 were significantly smaller than in the four prior years, 1996 to1999.

It should be noted that the number of people actually available for work, the total workforce, also drops annually between September and October -- averaging a decline of around 1,000 over the past six years.

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