The high wages that once coaxed people to Alaska have continued to shrink compared to the rest of the U.S., due partly to a statewide recession before the pandemic and a slow recovery after it, according to a new report from the Alaska Department of Labor and Workforce Development.
Alaska’s average wages still outperform the rest of the country, said economist Neal Fried, writing in the agency’s latest publication of Alaska Economic Trends. They placed eighth nationally last year at $30.52 an hour, about $2.50 above the national average.
But Alaska wages no longer hold the top spot they’ve held at times in the past, he wrote. The leaders are Massachusetts, New York, Washington and California, ranging from $35.07 to $32.94 an hour. Mississippi, West Virginia, Arkansas and South Dakota are at the bottom, at $20.53 to $22.50.
“Since the economic bust of the mid-to-late 1980s, Alaska’s wage advantage has narrowed,” he wrote. “While Alaska wages still rank high among states, they aren’t the lure they once were, something that’s evident by the past decade’s downturn in migration.”
Since 2010, average wage growth in Alaska rose by $1.09 an hour, adjusted for inflation. But during that time, U.S. inflation-adjusted wage growth outpaced Alaska by almost 40 cents. Alaska’s average wage in 2015 was 15% higher than the national average. Last year, it was 9% higher.
“The narrowing isn’t surprising given the economic contrasts over that period,” Fried wrote. “Between 2016 and 2019, the nation’s economy prospered as Alaska weathered a statewide recession and a brief, weak recovery before COVID-19. The pandemic-led recession that followed hit everyone, but Alaska’s recovery has lagged behind the nation’s.”
Alaska’s wages have stayed perched in the top 10 for decades, thanks to factors like the state’s higher cost of living, tough working conditions and periods of strong economic growth, Fried wrote.
But the state today has a smaller percentage of high-paying jobs in areas such as oil than it once did. And there is a greater percentage of lower-paying jobs, such as in the service sector that includes restaurants, he said in an interview on Dec. 5.
He said Alaska’s shrinking wage gap and relative economic underperformance are factors in the state’s net outmigration. More people have left Alaska than moved here since 2012.
A different report released last month by the University of Alaska Center for Economic Development focused on Alaska’s overall economic performance compared to its national peers.
That report said Alaska’s economy has performed “at or near the bottom” nationally for seven straight years in four key measures of economic health: employment growth, unemployment, gross domestic product and net migration.
The report said low oil prices are the primary culprit — they crashed in 2014, hurting the industry that drives the state’s economy — though oil prices have improved in recent months.
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