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Business/Economy

The average wage in Alaska fell last year for first time since the mid-1990s

The elimination of thousands of jobs in oil and gas, work that tends to pay well, drove down the average wage in Alaska last year for the first time in two decades, recently released state data shows.

The wage drop could mean there is less money from consumers circulating in the Alaska economy. That's assuming people aren't drawing on savings, investments or other means aside from paychecks to maintain spending levels.

"It's certainly a metric that matters because the economy depends on people spending to a great extent and wages comprise a very significant portion of total income," said Mouhcine Guettabi, an economist at the Institute of Social and Economic Research at the University of Alaska Anchorage. "People have money coming in from a lot of different sources, but for the vast majority of us, if we put aside subsistence and high net-worth individuals, wages tend to be most significant source of income."

The statewide average wage in 2016 was $4,434 a month, nearly 2 percent lower than the previous year. Adding up the wages of all Alaskans, workers here were paid $17.7 billion last year, down about 3.7 percent from 2015.

Changes to worker pay varied according to industry. Average wages in construction and legal services suffered, but remained steady in real estate support staff and restaurants. The data does not include people who are self-employed, like business owners, real estate agents and contractors, or the uniformed military.

Health care continued to flourish. Wages in hospitals and doctor's and dentist's offices and other outpatient facilities showed noticeable growth. But the wage data doesn't capture many of the high-paying jobs held by doctors who are in profit-sharing business partnerships or work for themselves.

The oil and gas sector, which had 2,800 fewer jobs in 2016 than the previous year, posted a 3.6 percent wage drop of $5,000 a year.

In addition, the share of oil and gas wages in the economy shrank. Oil and gas represented 11 percent of all wages in 2015, according to a report by state labor economist Neal Fried. The next year they made up 8.6 percent of the total earned by all Alaskans.

The last time nominal wages fell was the mid-1990s when oil industry jobs were falling and big-box stores like K-Mart were proliferating. The increase in retail positions helped boost jobs and economic growth, but not wages.

"It was a period of wowzer-zowzer retail growth, but a lousy period for average monthly wages," said Fried. "I'd say, 'The economy is growing,' and people would say, 'Well that may be true, but they're all low-paying jobs.' "

State labor economist Dan Robinson published a report in April that found growth to be the default mode for any modern state economy in the United States.

Robinson said the same can be said for wages.

"Wages don't usually go down. You don't need me to say that," Robinson said. "The numbers say that."

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