Labor report forecasts significant job loss in 2017

A report released by the Alaska Department of Labor and Workforce Development late last week is forecasting a 1.7-percent drop in employment this year from expected 2016 numbers.

The forecast predicts a loss of around 600 jobs in the region over the coming year, with half that to be expected from state government. Southeast lost over 500 state jobs between 2014 and 2016, after a sharp drop in oil revenues pushed the state budget into a sustained, multi-billion-dollar deficit. The drop may be the second-largest the region has experienced in a decade, after a 2.2-percent post-recessionary fall in 2009.

In the fiscal year set to start July 1, the ADLWD report anticipates cuts to slow as "low-hanging fruit" – vacant or outgoing positions which are not refilled – diminishes. Wrangell lost one such position last year with the retirement of its Public Health Nurse. A further administrative assistant position was cut as a result, with the Public Health Center office largely closed, with staff from other locations still maintaining programming periodically.

"After two years of cutting costs in government, opportunities for savings will be harder to find," writes Conor Bell, who prepared the report's Southeast forecast. "While layoffs seem certain, most state government losses will continue to come from attrition in 2017." The report ascribes this to the number of "baby boomers" – those born since the end of World War II, but before 1964 – now reaching retirement age.

At the federal level, ADLWD forecasts government employment will decline slightly in the coming year, after several years of little change. That period of stability followed a decade of near-continuous decline in federal employment within the region.

At the local level, the report anticipates reductions in state revenue sharing and education funding will impact public sector jobs. It identifies 50 such positions cut across Southeast's communities in 2016.

"Tribal government, which is counted as part of local government, will likely fare better, as it's largely federally funded," the report notes.

For its third year, the construction sector is expected to continue declining as capital budgets are further trimmed. In all, ADLWD anticipates a drop of about 100 positions in the region from last year, but that represents a fraction of wider statewide losses of 1,200 expected this year, or 7.4 percent overall.

"While the Southeast construction industry hasn't yet sustained the full impact of the change because past funding from larger budgets has carried over, that pool is diminishing," the report notes.

One of these holdover projects expected in Wrangell is the repaving of Evergreen Road, to be undertaken by the state Department of Transportation and Public Facilities. After being delayed several times since 2013, progress on the road rehabilitation is hoped to resume this year.

The renovation of the float facilities at Shoemaker Bay Harbor may also be a boon to local industry. The $5,000,000 Wrangell requested for a state match has been included by Gov. Bill Walker in his draft budget harbor facilities item. If that amount survives the legislative process (see Port Commission story) and finds its way into a final budget, work could begin by the year's end.

Drawing from the Department of Fish and Game's positive pink salmon forecast released last month, ADLWD anticipates the commercial fishing industry should have a "markedly better year." While this may not translate into more jobs, it may mean more money in workers' pockets, which would help boost the overall economy.

The report did not take any employment numbers into account for its overall forecast, as most fishermen are self-employed. Also, while salmon prices have recovered from the dip of the past two years, potential import tariffs suggested by the incoming administration of President-elect Donald Trump could hurt prices. Much of the fish caught in Southeast is exported to China for processing – Alaska Seafood Marketing Institute estimated 35 percent of the state's tonnage was sent there in 2015 – before being imported back to the United States.

Summer tourism is also expected to remain strong, with more than a million cruise ship visitors anticipated coming to Southeastern ports this coming season. The visitor industry is more significant in the region as opposed to elsewhere in the state, and should help sustain other businesses like restaurants and stores that are expected to suffer elsewhere. However, these businesses are also expected to feel the pinch during the offseason, due to less local spending.

Education and health services are expected to hold steady through the year, with a slight increase expected for the latter. The forecast anticipates healthcare is likely to continue seeing growth over the long term, due to Southeast's aging population.

Southeast has an older-than average population, with its largest group in their 50s. A graying populace will continue having an effect on overall employment, with the decrease in working-age Alaskans not expected to be offset by natural increases. Outmigration may exacerbate that problem. Between the summer of 2014 and 2015, the region lost 494 residents to net migration, a longstanding trend expected to continue into the future.

In both the public and private sectors, a number of positions vacated by retirement will be ripe for reduction in the current economic climate. Though some of those may be refilled by younger, newer workers, these can be expected to be paid less well due to lack of seniority.

A full report on the state's workforce expectations can be found on ADLWD's website, at http://labor.alaska.gov/trends/jan17.pdf.