Peninsula falls behind state

Peninsula average annual incomes lag behind other parts of Alaska

Posted: Wednesday, November 16, 2005

An analysis of available data from 2003 and 2004 shows the per capita annual income in the Kenai Peninsula Borough was well below the statewide average.

According to the Alaska Department of Labor and Workforce Development, per capita income on the peninsula was 88 percent of the state average. Anchorage, on the other hand, showed a per capita income of 114 percent of the statewide average.

The analysis was printed in the November issue of Alaska Economic Trends, a monthly publication of the labor department.

Statewide, Alaska’s 2004 per capita income reached $34,454, an increase of $1,241, or 3.7 percent, over 2003, according to economists Neal Fried and Brigitta Windisch-Cole with the department’s Research and Analysis Section. That figure is 5 percent above the national average, which ranks Alaska 13th among all states, where it has roughly been for the past four years.

Per capita income includes not only wages and salaries, but also investment incomes from dividends, interest and rents, as well as “transfer payments,” which is state of federal government money in the form of Alaska Permanent Fund dividends, retirement and disability insurance payments, family assistance, food stamps and other supplements. It is a figure spread out across all Alaska residents, including children and other people who don’t work.

Thirty years ago in 1975, during the heyday of oil pipeline construction, Alaska was ranked number one nationally in terms of per capita income and held that position until 1986 when the state was slammed by severe economic recession. In just three years, Alaska’s per capita income fell from 38 percent above the national average to 15 percent, according to the labor department analysis.

Alaska declined again in 1990s relative to the rest of the nation primarily because its economy grew more slowly than the booming Lower 48. Fried and Windisch-Cole noted that while the state was experiencing strong growth in low-wage jobs within the retail and service industries, high-paying jobs in the oil, timber and fishing industries were declining. By 2000, Alaska’s per capita income had fallen to near that of the national average.

Contrary to its experience in the mid-1980s, Alaska managed to avoid the more dramatic impacts of the 2001 national recession, and per capita income actually rose again to roughly 5 percent above the national average, the authors said.

Alaska ranks somewhat higher when only the annual wages and salaries of working Alaskans are considered, as opposed to the per capita figure that divides all earnings by the total number of residents, working or not.

In 2004, Alaska workers earned an average of $39,054 a year. However, that represented a decline from as recently as 1995, when Alaska earners averaged 17 percent above the national average and Alaska was ranked fifth among all states.

By 2004, that ranking had fallen to 15th and Alaskans were earning nearly one percentage point below the national average, according to the Trends article.

“Slower overall wage growth and strong growth in lower-wage employment has put a damper on Alaska’s broad wage picture,” Fried and Windisch-Cole wrote.

Oil and gas jobs continue to command the highest wages in Alaska, and the Kenai Peninsula is home to roughly one out of every six in the state. But the numbers are declining.

In 1980, the annual average monthly employment in the oil and gas industry on the peninsula was 1,233 people, a figure that represented 15.6 percent of all employment within the borough. In 2000, it had reached 2,046, but by that time represented only 12 percent of all borough employment. By 2003, monthly oil and gas employment had fallen to 1,436, just 8.1 percent of the employed work force, according to borough figures.

Still, the industry’s economic influence in terms of wages remains. Statewide, the average annual wage in 2004 in the oil and gas industry was $96,539. That compares to the retail trade and leisure and hospitality sectors where average yearly wages run $25,764 and $17,220, respectively.

Also noted in the study is the fact that among all states, income in Alaska is the most equally distributed. Income disparities do exist, however, largely along urban-rural lines, Fried and Windisch-Cole said.

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