Alaska’s unemployment rate reached its lowest level ever for April, two years after it hit a record high during the early days of the COVID-19 pandemic.
The state’s seasonally adjusted unemployment rate dipped to 4.9% in April — the latest data available from the Alaska Department of Labor and Workforce Development.
In April 2020, the unemployment rate shot to an unprecedented 11.9% a month after the pandemic was declared, levels that exceeded even the mid-1980s downturn in the state, according to Labor Department data dating back to 1976.
Today’s low unemployment highlights an extremely tight labor market, creating headaches for Alaska employers who need workers as summer and a promising tourism season get underway, but also advantages for potential workers who can shop for the highest wages, state economists said.
The trends in the broader state labor market are largely being seen locally as well. The unemployment rate in Wrangell fell to 5.6% in April, down from 6% in March and significantly lower than the 8.2% unemployment reported a year prior.
Southeast’s unemployment rate for April was less than the state’s record-low rate, at 4.3%.
Southeast added nearly 3,600 jobs, or about 12% to its workforce, in the first four months of 2022, according to state data. Many of the new jobs were in the fishing and rapidly rebounding leisure and hospitality sector.
The numbers are another sign that the economy has bounced back to its pre-pandemic footing, said Lennon Weller, an economist with the Alaska Department of Labor and Workforce Development.
Before the pandemic, the state was just recovering from a long recession.
“The majority of data we look at would indicate we are essentially as healthy if not healthier than we were pre-pandemic,” Weller said June 7.
The trends seen in Alaska echo a nationwide recovery from massive job losses during the pandemic. In April, Alaska was one of 17 states recording their lowest unemployment ever.
Persistent inflation has become a problem, particularly for many people with long commutes or who already faced high prices at stores, such as in rural Alaska, Weller said.
Demand at Alaska food pantries has spiked in recent months.
On the other hand, Weller said there are several bright spots in the economy: Preliminary data for wage growth in 2021, the most recent available, is fairly strong; spending and tourism are returning to pre-COVID levels; and unemployment claims are at record low rates.
“We’re close to a baseline level where as many people that want a job, have one,” Weller said.
The number of unemployed people was just under 18,000 in March and April, low levels not seen for more than three decades, state data shows.
Helping create the tight job market is a relatively small labor pool in Alaska. The total number of employed and unemployed people in Alaska reached nearly 362,000 in April, higher than in recent years, but less than in 2016.
The state’s population peaked at just under 743,000 people in 2016, before trending downward thanks in part to outmigration associated with a strong Lower 48 economy. That shrinking population has contributed to a shrinking labor pool.
On top of that demographic shift, the pandemic created new circumstances that have prevented some people from returning to work.
More than 40,000 Alaskans were unemployed in the early days of the pandemic. But many haven’t returned to their former jobs for various reasons, economists said. Some took early retirement, some remain concerned about exposure to COVID-19, and some continue to face challenges finding child care, among other reasons, Weller said.
“A number of people have chosen to remain on the sidelines for whatever reason,” said Neal Fried, an economist with the Alaska Department of Labor.
The current conditions have created an “incredible” demand for job seekers, who are in relatively short supply, he said. That’s an unusual outcome for a recovery, which is typically an employer’s market rather than a job seeker’s, Fried said.
The tight labor market is also a factor in the Lower 48, so there’s been less incentive for workers to head to Alaska for job opportunities, Fried said.
“The fact the job market is so tight all over the country means fewer people are coming to Alaska, which makes the job market in Alaska get even tighter because we typically get a chunk of the labor pool from somewhere else in the country,” Fried said.
Paula Bradison, CEO of Anchorage-based PeopleAK, formerly Alaska Executive Search, said employers are offering large signing bonuses at a pace she’s never seen before. For employers, however, “the pandemic amplified the problems we were going to experience no matter what,” she said.
Alaska’s workforce had long been undergoing attrition and aging, too. More workers were increasingly close to retirement as the pandemic arrived, and they had increased incentive to opt out of the workforce because COVID-19 put older populations at high risk, she said.
The tight labor market could continue, she said, as giant sums of federal infrastructure money is expected to pour into Alaska, creating new demand for workers.
Elwood Brehmer contributed to this report for the Sentinel.
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