Skip to main Content

Unemployment insurance claims rise across Alaska

  • Author: Alex DeMarban
  • Updated: September 27, 2016
  • Published September 26, 2016

The number of people who collected jobless benefits in Alaska this summer grew year over year in several industries, suggesting that a long stretch of layoffs in the high-paying oil patch and the loss of income to the state is rippling through the economy, recent data from the Alaska Department of Labor and Workforce Development shows.

"We are seeing higher claims pretty much across the board for most industries over the year, although nothing to the magnitude seen with oil and gas," said Lennon Weller, a state Labor Department economist, last week.

The increase from the year before includes a caveat: 2015 saw historically low numbers of people receiving unemployment benefits, in part because the state's oil-dependent economy was still benefiting from years of unusually high oil prices, Weller said.

Big projects around the state were wrapping up in 2015, such as Exxon Mobil's $4 billion Point Thomson oil field that began production in May. That activity helped buoy other sectors such as construction.

Now, months of slowdown in the oil industry, including Shell's decision to stop exploring in the U.S. Arctic Ocean 12 months ago, and layoffs announced by employers such as BP and ConocoPhillips, may be dragging down the broader economy. But to know for sure will take more time, Weller said.

"Any time you lose that many high-paying jobs, you'll get an indirect effect, but to what extent is from that and what is from other factors, it's a little bit tough to tell at this point," Weller said.

Major projects in the oil and gas industry can support contractors in a variety of industries, and six-figure paychecks often paid in the sector can contribute to greater spending across the economy.

At least 2,400 jobs have been lost in the oil and gas industry in 18 months, from 14,800 jobs in March 2015, according to state data.

Weller said the increases in unemployment claims were limited to a few sectors, including oil and gas, until late spring, when increases began appearing in other areas.

Scott Hansen, Alaska regional manager for the Pacific Northwest Regional Council of Carpenters, representing about 1,500 people in Alaska, said on Monday that the construction industry is feeling the effects of the slowdown in the oil fields.

The expected 15 percent drop in union hours worked this year puts the industry about on par with 2014, following growth last year, he said.

Some projects will help, such as Alaska Airlines building a $40 million maintenance hangar and beverage distributor Odom Corp. building a $40 million warehouse and office facility, both in Anchorage.

"We're not quite at the 'sky is falling' like in the late 1980s, but we have got to pay attention," Hansen said.

During a three-month period starting in June, the total number of people collecting unemployment payments from the state rose by 12 percent from the year before.

During those recent summer months, 9,814 people collected the weekly checks on average. That compares to 8,724 a month, on average, in the same period a year ago.

The summer increase involves numerous sectors, including mining, utilities, construction, manufacturing, trade, transportation, finance, professional and technical services and food and lodging.

Many of the claims are up about 10 to 20 percent in sectors with increased claims, Weller said.

In food and lodging, claims are up 16 percent for the period, to 645 a month on average this year, from 555 the year before.

In manufacturing, claims are up 21 percent for the period, to 1,005 a month on average, from 832 the year before. The figure includes food processing, so the sector could have been affected by poor salmon runs this summer, reducing work for processors.

In transportation, claims are up 7 percent, to 596 a month in summer 2016 from 557 the year before.

Unemployment payments, typically lasting six months, are one gauge of economic health.

The state's unemployment rate was 6.8 percent in August, up from 6.5 percent the year before. Alaska's unemployment rate has risen gradually since early 2015, when it held for several months at 6.4 percent.

The national unemployment rate was 4.9 percent in August.

Payroll employment fell by 4,600 jobs in August from the year before, a 1.3 percent drop.

In addition to the oil and gas industry, most of the job losses came in construction and professional and business services, the state Labor Department said. A decline in the public sector was entirely from state jobs, while federal government employment rose for the year.

The only industry experiencing substantial growth was health care, adding about 900 jobs in August from the year before.

Health was one of the areas where the number of people collecting unemployment benefits fell in summer 2016 from the year before. The drop also included the information sector, such as telecommunications companies, and in public administration — local, state and federal government officials and public schools.

The growth in federal jobs, as well as people at the state level taking retirement, helped reduce the need for people in government to collect unemployment in the summer, Weller said.

Comments
Sponsored