For the past two years, business in Anchorage has been good. Our employment numbers have been consistently solid; we've added about 1,800 private-sector jobs in 2013, according to preliminary and revised year-to-date data from the Alaska Department of Labor. But there's another side to those numbers that not everyone may have noticed.
As Anchorage enjoys new business announcements and generally good business news, what's the cost of prosperity?
In Anchorage, the average unemployment rate in 2013 is on trend to be the lowest year in the past decade, averaging 4.9 percent (not seasonally adjusted) through October.
The regional average unemployment rate (unadjusted) for 2013 is 5.6 percent. Our region includes the Matanuska-Susitna and Kenai Peninsula boroughs. In real numbers, that rate represents just fewer than 13,000 people unable to find work in October. That's out of a total regional work force of 226,500.
Overall, it's a good picture. Private-sector job growth has helped offset losses in government employment. Unemployment rates here are the envy of most of the rest of the U.S., and it looks like private-sector job growth will continue into 2014.
We've seen several recent announcements of new businesses coming to Anchorage in 2014, including Bass Pro Shop, Cabela's, Texas Roadhouse and Krispy Kreme. Significant new investments in oil and gas exploration and development on the North Slope and in Cook Inlet will boost employment in that important sector of our economy.
But when we dig deeper into the numbers, there are a few headwinds for Anchorage businesses in the coming year. For example, just the short list of new retail and restaurant businesses above will likely require 600 or more employees. Finding those employees will be tough, given the small pool of active job seekers in the region. While I'm confident these and other businesses opening or expanding in the coming year will ultimately succeed with staffing, it will be much more expensive than it has been in recent years.
At AEDC, we're hearing more and more concerns from local businesses about the difficulty of finding workers and the increasing cost of that workforce.
According to the Federal Bureau of Labor Statistics, which compiles wage data, the hourly wage for Anchorage has jumped by 5 percent in the last year. The 2012 average was $25.87 an hour. So far in 2013, the average is $27.17 an hour. This is the law of supply and demand in full effect. Spiking wages will increase the already high cost of living here.
So even though the news is mostly good for the Anchorage economy in coming years, it will be tempered by challenges. Where will we find the qualified workers needed by new or expanding businesses? In addition to offering the best possible vocational training options to Alaskans, should we think about targeted recruitment to bring skilled technicians and professionals to Anchorage?
And how do we keep them here in the face of many options for employment in the rest of the U.S., where the cost of living is much lower?
We cannot ignore these questions or expect the problems to solve themselves. Hope is not a strategy. As Anchorage businesses thrive, we need to anticipate and prepare for all the effects of prosperity on our economy.
In future columns, I'll dig more deeply into these issues, with the intention of spurring discussion of the challenges ahead for Anchorage and Alaska.
Bill Popp is the president and chief executive officer of the Anchorage Economic Development Corp.