Alaska job market still growing despite decline from 2001

First quarter numbers lagging behind previous two years, but still moving in positive direction

Posted: Thursday, June 06, 2002

On the whole, job growth in Alaska was slower during the first quarter of 2002 than during the same period last year, a state labor economist said this week, but here in the Cook Inlet region, the rate of growth kept pace with 2001 figures, a sign that the economy of the Kenai Peninsula Borough is relatively healthy.

Cutbacks in the petroleum and manufacturing industries statewide, especially on the North Slope, led to a 11.7-percent decline in employment within those industries compared to the first quarter of 2001, said Neal Fried, with the Alaska Department of Labor and Workforce Development. This year, British Petroleum and Phillips have smaller capital and exploration budgets than in 2001. Also, British Petroleum has largely completed work on its Northstar project, Fried said.

On the Kenai Peninsula, however, exploration and production activities by the oil industry actually contributed to an overall stability in the local economy. Here, there was no comparable decline in first-quarter employment. Industry jobs remained steady, Fried said.

While the decline in oil industry employment statewide was sizable, Fried said it should be noted that the prior two years were very strong years for the industry.

"2000 and 2001 were good for a lot of things," he said in an interview Tuesday. "It was a period of strong oil activity. They were some of the best years in the oil patch in a long time. There was a multiplier effect in the economy of Southcentral Alaska. It really revved up the growth of the economy."

Unknown at this time will be the overall impact of the loss of 150 jobs at Alyeska Pipeline Service Co., which announced the work-force cutback earlier this year. An equal number of jobs could be lost among the company's contractors, according to Fried.

Despite the negative growth in the oil industry and the influence it had on the slowing of the employment growth rate statewide, overall the current year appears on its way to becoming the 14th in a row in which the state's work force has grown.

Will it remain that way?

"I would be really surprised if it wasn't the 14th year in a row" by the end of 2002, Fried said.

Writing in the latest issue of Alaska Economic Trends published monthly by the labor department, Fried noted that when employment figures from all industries were combined, the labor force grew by 1.7 percent in the first quarter slower than the 2.1 percent growth posted in the first quarter of 2001, but still positive.

Overall, the Gulf Coast Region, which includes, Valdez and Cordova in Prince William Sound, the Kenai Peninsula Borough and Kodiak Island Borough, saw a modest first-quarter employment growth of about 1.6 percent. The Anchorage-Matanuska Susitna Valley Region saw the largest first-quarter growth at 2.4 percent, while the Northern Region fell by 2.6 percent due to the fall-off in North Slope activity, Fried said.

In other areas of the economy, the employment picture looks fairly healthy.

Construction industry employment continues to climb and is in its sixth year of rising numbers, Fried said. Employment in construction is up 3.2 percent over the first quarter of 2001.

"The industry has enjoyed almost steady increases since 1989," he said, adding that while the construction industry has a history of contributing to past boom and bust cycles, lately it has "become a stabilizing influence on the economy."

The retail and service sectors were responsible most of the first-quarter job growth, Fried said. Restaurants and bars were retail's most dynamic sector driven by "what appears to be an insatiable desire to eat out," he said. Also boosting the employment figures is growth in state and local government, Fried said.

Whether 2002 stays in the positive range will depend largely on the influence of fishing and tourism, as well as construction this year, Fried said.

"The big months are June, July and August," he said. "Even for the visitor industry, those are the tell-tale months that tell us how things will end up for this year."

While predictions are optimistic, the reality is the visitor industry, because of its diversity, won't have firm numbers to contribute to an analysis until late this year or even early next, he said.

"We usually don't know how good it was, compared to the previous year, until the end of the year," he said.

There are no uniform statistics for the visitor industry comparable to, say, building starts in construction, he said. The department will look at things like sales taxes, bed taxes where they exist, the number of cruise ships, and hotel employment among other things to derive as clear a picture as possible. But each part of the state is different. Some have bed taxes, for instance. One area may depend heavily on Outside visitors, others on in-state visitors, still others, like the Kenai Peninsula, on both. And not all statistics are reliable as indicators of the health of an industry. For instance, Fried said, hotel employment can be up but hotel guest numbers down, as may be the case when new hotels first open.

The latest unemployment numbers for the Kenai Peninsula Borough show no difference between the first quarter of last year and the first quarter of this year. Both showed a 12.4 percent unemployment rate, about typical for the winter months. Unemployment usually falls to around 10 percent on the peninsula in the summer season.

Fried also noted federal data that sheds light on Alaska's economy. Per capita, federal spending in Alaska reached $10,214 in 2001, making it the highest in the nation. The national average was $6,268. Meanwhile, per capita income in 2000 and 2001 came in slightly higher than the national average. The average Alaska income in those years was $29,642 and $30,997 respectively, Fried said. Alaska now ranks 14th in the nation in per capita income.

Strong wage gains were responsible, Fried said.

"This improved trend, however, does not come anywhere close to closing the relative losses Alaska experienced over the past decade and a half," he said.

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