Shrinking workforce hampers Anchorage recovery, economic forecast says

Labor shortages in Anchorage this year will cost thousands of jobs in high-wage industries such as health care, according to an economic forecast released Wednesday by the Anchorage Economic Development Corporation. It will also hurt companies’ ability to receive federal grants from sprawling infrastructure programs, forecasts say.

The city expects to add 1,550 jobs in 2023, the group’s president, Bill Popp, said Wednesday in his annual report to the city’s business community. No sectoral losses are expected, keeping the total workforce at around 145,000, he said.

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

But he said high hopes for more jobs in key sectors have been dashed as the city’s workforce shrinks for a long time.

With billions of dollars arriving as part of the $1.2 trillion infrastructure package passed by Congress a year ago, the economic development corporation last year expected a “wave of job growth” in construction and engineering jobs, Popp said.

But local employers in those industries and others will not be able to take full advantage of those opportunities this year due to a lack of skilled workers, Popp said.

“Local employers believe they will not be able to hire the skilled labor necessary, locally or out of state, to fill the hundreds of design jobs we believe new infrastructure funding will require,” he said. “Instead, it now appears that most new of federally funded projects were likely designed by companies outside of Alaska.”

Employment in construction will grow only modestly, adding 100 jobs, due to labor shortages. For that reason, some federally funded construction efforts will be led by out-of-state companies, Popp said.

Labor shortages are also behind forecasts for flat growth in the healthcare sector this year. Strong hiring in health care has fueled the state’s economic engine for years, and the state has lost only a handful of jobs since 2020, Popp said.

“But this superficial view ignores the thousands of job openings that are currently open in the Anchorage health care system,” Pope said.

Hospitals, clinics, laboratories and related businesses are facing severe staff shortages, he said.

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

“It’s not just a shortage of nurses, doctors and other positions that are critical to delivering services to patients,” he said. “Thousands of support positions can be filled today, including cleaners, food service, clerical, landscaping , facility maintenance, and dozens of other positions that are critical to the overall success of the health care system we’ve spent decades building.”

A Factor in Grinding Population Loss

The annual forecast, created more than 20 years ago by McKinley Research Group and its predecessor McDowell Group, is the latest survey of employment and business confidence in Anchorage, the state’s economic hub.

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

The city’s working-age population fell by nearly 15,000 people, or about 7%, the report said. That’s largely due to an overall population decline that began in 2015, when Alaska faced a three-year statewide recession just before the pandemic entered, which led to more economic turmoil.

The report said the population decline — which shed another 600 residents last year — is part of a set of problems that will continue to put pressure on the size of Anchorage’s workforce.

“The city has been grappling with several factors affecting workforce availability and overall quality of life: High housing costs, low availability of child care services, and uncertainty surrounding funding for K-12 education are three that will stand out in 2022. factors,” the forecast said.

“The shortage of available and affordable child care is taking hundreds, if not thousands, of workers out of the workforce in order to stay home and care for their children. By the first half of 2022, child care-related jobs across the state A reduction of 9%, with a corresponding decrease in production capacity,” Pope said in his speech.

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

The decline in the working-age population is rippling through the economy in other ways. That has led to an extremely tight job market, helping push the unemployment rate to historic lows, Pope said.

“The average unemployment rate in Anchorage in 2022 is 3.7 percent,” he said. “It’s the all-time low for that metric in Anchorage’s modern history.”

growth in tourism

Some industries will see solid growth in 2023, although worker shortages will also weigh on employment there, the report said.

The report predicts that hotels, restaurants and tour operators will take the lead in hiring due to the strong growth in tourism. The leisure and hospitality industry is expected to account for more than half of the city’s new job creation, adding 800 positions.

“Cruise capacity will increase by 10 percent in 2023,” Popp said. “Advance bookings in the hospitality industry are very strong. For example, the Hotel Captain Cook is now fully sold out for the summer. Anchorage could see record levels of tourists in 2023, restaurants and retail outlets as well as hotels Should have a great summer with tour providers.”

Transportation, warehouse and utilities will add 200 jobs, led by Ted Stevens Anchorage International Airport, one of the world’s busiest cargo hubs. The industry is a “rock star,” the only one in Anchorage that has fully recovered from job losses from the pandemic and recession, the report said.

In recent years, the airport has been “breaking the roof” of expectations as cargo and passenger volumes expand, pumping hundreds of millions of dollars into Anchorage’s payroll and procurement, the report said.

One of seven jobs in Anchorage is directly or indirectly related to the airport.

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

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

“This is hopefully the start of the recovery of the 2,200 jobs lost since 2015,” Popp said.

Big new oil prospects on the horizon, such as the Pikka field sought by Australia’s Santos and Spain’s Repsol, would help bring billions of dollars in new investment to Alaska.

National factors will weigh on businesses in Anchorage this year, but inflation is expected to moderate as supply chain issues ease, the report said.

Popp said he sees no sign that Anchorage or the state will enter a recession this year, despite concerns from some in the business community.

Overall, Anchorage business leaders are “very optimistic” about the prospects for their own businesses this year, according to a survey commissioned by AEDC, Popp said, but less optimistic about the outlook for the broader economy.

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

Consumers, on the other hand, are “clearly pessimistic” about the economy this year, likely in part because of problems that seem to lack solutions year after year, such as housing, homelessness and the state’s fiscal crisis, he said.

Popp said the AEDC is working with a number of other Anchorage groups and businesses on a multifaceted initiative called “Choose Anchorage,” aimed at promoting participation in workforce training and recruiting skilled workers under the age of 48 who Can help address Anchorage’s labor shortage and put down roots in the city.

AEDC contracted Austin, Texas-based TIP Strategies, a consulting firm that helps communities across the country with workforce and other issues, to conduct the study and help develop an action plan.

TIP Director Jeff Marcell was the keynote speaker at the Economic Forecasting Luncheon. He said Anchorage’s business leaders must take the lead in stemming the city’s labor loss, which will become a bigger problem if it continues. Fighting it will require new resources, which could mean money and “sweat equity,” he said.

“This is a crisis,” he said. “You can’t put your head down and work on a crisis.”

AEDC released the data at a luncheon of more than 1,000 people at the Dena’ina Civic and Convention Center.

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