Unemployment in Anchorage has dropped to one of the lowest levels in years, thanks in large part to a "mini-boom" in Cook Inlet and steady growth in other key areas, according to an official with the Anchorage Economic Development Corp.
Unemployment in Anchorage fell in May to the "crazy low" figure of 4.7 percent -- the lowest in five years, according to Bill Popp, the group's president.
"We're hearing consistently across the board of significantly increased difficulties in finding a qualified workforce, from tourism to business and professional services to construction," he said.
The numbers in the AEDC report, based on preliminary state and federal Labor Department figures, are subject to change as revisions are made in the coming months, meaning the rate could rise or fall slightly.
Statewide, the seasonally adjusted unemployment rate dropped to 5.9 percent in May, the state Labor Department reported recently. That compares to a national rate of 7.6 percent.
"We are the envy of much of the nation," Popp said of Anchorage.
Through May, jobs in Anchorage had increased 1,500 jobs compared to the first five months of 2012, with the growth in the private sector offsetting a reduction in jobs in the federal government and in schools.
The most noticeable growth came in the oil and gas industry, which added 460 jobs through May to grow 15 percent.
Popp in January predicted Anchorage would see no growth in oil and gas employment, according to news reports. But that assessment began to change in March, after the release of a revised report that showed unexpected growth in the sector in 2012.
"It's a combination of several factors aligning at same time," Popp said. "Cook Inlet is taking off in ways we haven't seen in decades. The rest of the growth in Anchorage employment (in the oil and gas sector) stems from North Slope development," including Exxon Mobil Corp.'s Point Thomson gas-cycling project east of the Prudhoe Bay oil field.
Popp said it's too early to gauge the effects of Senate Bill 21 -- providing a potentially massive tax cut to North Slope producers -- on the employment rate in Anchorage. The cut passed the Legislature on April 15 and goes into effect in January, though many supporters have been quick to credit the measure with any uptick in the economy.
"Any time you get a tax cut it contributes (to more employment), but it's way too early to say," Popp said.
Instead, Popp cited a revamped oil-tax structure -- the one for Cook Inlet in Southcentral Alaska -- for sparking renewed interest in that region's aging oil and gas fields. Companies working the once-productive region pay no production tax and reap generous state subsidies, though Alaska pockets 12.5 percent of the oil produced through its royalty.
At its height in 1970, oil production in Cook Inlet peaked at 230,000 barrels a day, but had fallen to as low as 8,000 barrels a day in recent years. Increased investment has helped boost production to 12,000 barrels, and new companies, including Apache, a leading independent energy firm, are prospecting for new discoveries. The increased infrastructure, including two jack-up rigs when before there were none, could lead to even more spending, Popp said.
He believes companies have sunk about $500 million into the region in recent years, and expects that figure to rise this year as well, by as much as $100 million.
The renewed interest in Cook Inlet has also led to blistering growth on the Kenai Peninsula, the jumping off point for much of the new work.
"If you look at unemployment on the Kenai Peninsula, it is in freefall," he said. "It is fricking amazing. They are at 6.7 percent unemployment, and the year-to-date average is down almost 2 percentage points from the same five months last year. Everything I'm hearing is it's the oil and gas renaissance going on down there."
Jobs were also added in:
- The services producing sector, with 440 more jobs through May compared to last year, primarily in health care and in private educational services, such as Charter College.
- Leisure and hospitality, up 340 jobs through May, with most of that coming in restaurant growth. Helping is that the cruise industry added 40,000 passenger berths to the Alaska fleet.
- The construction sector is up 320 jobs, with permitting numbers indicating a strong construction season.
- The professional and business services sector, such as engineering and architectural firms, also showed a high rate of increase at 2.3 percent.
About 460 federal government jobs were lost, along with about 440 jobs in public education.
Losing a job is never easy, but the silver lining is that job growth in the private sector has risen, including among Native corporations winning public and private contracts outside Alaska yet keeping some of the jobs here. State capital expenditures -- state capital budgets had grown to $3 billion last year -- have also boosted job growth.
"It's a good time in the sense that there's a lot of activity happening," Popp said. "That gives people new opportunities they wouldn't have elsewhere."
Contact Alex DeMarban at alex(at)alaskadispatch.com