A shrinking workforce is hobbling Anchorage’s recovery, economic forecast says

Anchorage’s labor shortage will cost thousands of jobs in high-wage industries such as health care this year, according to economic forecasts released Wednesday by the Anchorage Economic Development Corporation. Infrastructure package, according to the forecast.

The city plans to add 1,550 jobs in 2023, group president Bill Popp said in an annual report presented to the city’s business community on Wednesday. No sector will lose jobs and the overall workforce is expected to remain at about 145,000, he said.

He said the job expansion is a positive step as the economy continues to recover from the pandemic.

But with the city’s labor force declining for a long time, big hopes of job growth in key sectors have faded, he said.

The Economic Development Corporation saw a “wave of job growth” in architecture and engineering jobs last year as billions arrived as part of the $1.2 trillion infrastructure package passed by Congress more than a year ago. , Popp said.

But local employers in these and other industries will not be able to take full advantage of this opportunity this year due to a shortage of skilled workers, Popp said.

“Local employers don’t believe they can hire the skilled workers they need, either locally or out of state, to fill the hundreds of design jobs they think will be needed to finance the new infrastructure,” he said. “Instead, it seems likely that most new federally funded projects will be designed by companies outside of Alaska.”

Employment will increase slightly in the construction industry due to a labor shortage, adding 100 jobs. As such, some federally subsidized construction work will be led by out-of-state companies, he said.

The labor shortage is also the reason why growth in the healthcare industry is projected to flatten out this year. Popp said strong employment in the health care sector has driven the state’s economic engine for years, with only a handful of jobs lost since 2020.

“But this superficial view overlooks the thousands of jobs currently unfilled in Anchorage’s health care system,” Popp said.

Hospitals, clinics, laboratories and related businesses are suffering from severe labor shortages, he said.

[Senior clinic at Alaska Regional to close in February, leaving vulnerable patients with limited options for care]

“And it’s not just the shortage of nurses, doctors and other positions that are key to serving patients,” he said. “Thousands, including cleaning, food service, office work, landscaping, facility maintenance, and dozens of other positions that are key to the overall success of our healthcare system built over decades. Support positions could be filled today.”

Decrease in milling population is a factor

Produced for more than 20 years by McKinley Research Group and its predecessor McDowell Group, this annual forecast is the group’s latest study of employment and business confidence in Anchorage, the state’s economic heartland. .

[Chicken jerky, nacho cheese and raisins: Worker shortage means 8 Anchorage elementary schools are going without hot lunch]

The city’s working-age population has fallen by about 15,000, or about 7%, according to the report. This was largely due to her overall population decline starting in 2015, just before Alaska entered the pandemic, facing a three-year statewide recession that caused further economic turmoil. .

A declining population — which lost another 600 residents last year — is in the throes of a problem that will continue to put pressure on the size of Anchorage’s workforce, the report said.

“The city suffers from several factors that contribute to labor availability and overall quality of life: high housing costs, low availability of child care services, and K-12 “Uncertainty surrounding education funding is the three most prominent factors in 2022.”

“Hundreds, if not thousands, of workers are leaving the workforce to stay home and care for their children due to the lack of available and affordable childcare. Child care jobs are down 9% across the state in the first half of 2022, leaving us incapacitated,” Popp said in a presentation.

[Alaska’s overall economic performance among the worst in US for several years, research finds]

The decline in the working-age population is affecting the economy in other ways. Popp said the job market is very tight, pushing the unemployment rate to a record low.

“Anchorage averaged 3.7% unemployment in 2022,” he said. “This is a historic low for this metric in Anchorage’s modern history.”

tourism growth

Some industries will see solid growth in 2023, but labor shortages will weigh on employment, the report said.

Hotels, restaurants and tourism operators will lead the way in hiring thanks to strong growth in tourism, the report predicts. The leisure and hospitality industry is expected to account for more than half of the city’s new jobs, adding 800 additional jobs.

“Cruise ship passenger capacity has increased by 10% for the 2023 season,” Popp said. “Advance bookings are booming in the hotel industry. Hotel Captain Cook, for example, is currently completely sold out for the summer season. 2023 could be a record year for visitors to Anchorage. , restaurants and retailers, along with hotels and tourism operators, should enjoy a great summer.”

The transportation, warehousing and utilities sector will add 200 jobs, led by Ted Stevens Anchorage International Airport, one of the world’s busiest freight hubs. The sector is a “rock star” and the only Anchorage industry to fully recover from the job losses of both the pandemic and the recession, the report said.

The airport has “blown away” expectations in recent years due to increased cargo and passenger traffic, putting hundreds of millions of dollars into salaries and purchases in Anchorage, the report said.

One of Anchorage’s seven jobs is directly or indirectly tied to the airport.

[Why Anchorage’s international airport is such a big cargo destination — and how it could get even bigger]

The high-paying oil and gas industry will add 100 new jobs in Anchorage after losing about 100 jobs last year, the report says.

“We hope this will be the beginning of a recovery of the 2,200 jobs lost since 2015,” Popp said.

Bill Pop's AEDC Economic Forecast

Massive new oil prospects on the horizon will help by bringing billions of dollars of new investment to Alaska, like the Pikka field pursued by Australia-based Santos and Spain-based Repsol. will be

National factors will affect businesses in Anchorage this year, but inflation is expected to ease as supply chain problems ease.

Popp said there was no sign of Anchorage or the state going into recession this year, despite concerns from some in the business community.

Overall, Anchorage business leaders are “very optimistic” about their business prospects this year, but Popp said they were less optimistic about the economy overall, based on a survey commissioned by AEDC. I’m here.

[The pandemic years changed shopping in Anchorage. Maybe forever.]

On the other hand, consumers are “extremely pessimistic” about the economy this year, possibly in part because of problems such as housing, homelessness and the state’s financial crisis that seem to have no solution year after year, he said.

Popp said AEDC is working with many other Anchorage groups and companies on a multifaceted initiative called Choose Anchorage. The initiative aims to increase participation in workforce training and recruit skilled under-48 workers to help fill Anchorage’s labor shortage and put down roots in the city. increase.

AEDC has signed a contract with TIP Strategies in Austin, Texas. TIP Strategies is a consulting firm that helps communities across the country deal with workforce and other issues. We conduct research and help develop action plans.

TIP Principal Jeff Marcell was the keynote speaker at the Economic Forecasts Luncheon. He said Anchorage business leaders must take a leading role in putting the brakes on the city’s labor loss, which will become a bigger problem if it continues. will need new resources, which could mean funding and “sweat equity,” he said.

“This is a crisis,” he said. “You can’t bury your head in the sand because of a crisis.”

AEDC presented the data at a luncheon of over 1,000 people at the Denaina Civic and Convention Center.

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