Alaska employment drops in July after 2 months of improvement

Alaska unemployment headed in the wrong direction in July after two months of improvement, with the state recording about 2,000 more job losses in July than in June.

Overall, jobs were down almost 40,000 compared to July 2019.

The state’s Department of Labor on Friday released July unemployment figures showing overall employment down 11.2% from a year ago, with nearly all sectors seeing a decline during the pandemic.

The leisure and hospitality industry was hit hardest, down 14,200 jobs compared to a year ago, a decline of 32.3%. Transportation jobs were down 12.4%, construction down 11.6%, manufacturing down 16.3%. The oil and gas industry was down 1,800 jobs, or 18%.

The Anchorage/Mat-Su region was down 17,400 jobs compared to a year ago.

“It is a flattening of the wrong curve,” said University of Alaska Anchorage economics professor Mouhcine Guettabi.

Guettabi said you cannot turn the economy on and off like a faucet, as some theorized early in the pandemic. It will likely take two or three years to recover, and that is with the assumption of more federal aid and a vaccine.

Allowing businesses to close permanently and people to be evicted from their homes creates long-term barriers to economic recovery, he said.

“We are in the midst of an unprecedented shock, and mitigating or minimizing the number of businesses that go bankrupt is incredibly important,” Guettabi said.

After some job growth in June, Alaska unemployment in July was back to March and April levels. That was due in part to restrictions on indoor dining, Guettabi said, but industries across the board are hurting.

On July 24, new capacity restrictions were imposed on several indoor businesses.

“I think it’s wrong to summarize if we hadn’t closed the economy, things would be better, because that’s really not borne out by this data,” Guettabi said.

Guettabi said some states were slow to close industry and still saw significant economic impacts.

Bill Popp, president and CEO of the Anchorage Economic Development Corp., said August’s unemployment numbers will likely reflect an additional drop due to the business restrictions. A full closure of bars and ban on indoor dining in Anchorage went into effect Aug. 3.

During a Friday public briefing, Anchorage Mayor Ethan Berkowitz said the closure will likely be allowed to expire at the end of the month. There will still be restrictions, he said, though the specifics are still being worked out.

Popp and Guettabi said further federal assistance is desperately needed. Nearly all of the first round of federal assistance is gone. The Anchorage Assembly recently approved the city’s use of its CARES Act funds. The state still has some money in its business grant program, AK Cares, but that money will likely be gone soon.

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“I think this is a pretty big set of problems that we don’t have adequate funding for yet, in the form of assistance, mainly from the federal government,” Popp said.

Additionally, all CARES Act money must be spent by Dec. 30.

“We have no assistance in the pipeline as of Jan. 1,” Popp said. “The first quarter is the worst quarter for the economy. It is the toughest.”

Berkowitz on Friday said the city will get the remainder of its CARES Act funds out to workers and businesses as quickly as possible, but then it will be on the state and federal government to step up.

“I am also optimistic that Congress will find a way to reach an accord that will get money to the general public,” he said

Winter is especially difficult in Alaska, which has the most seasonal economy in the country, Guettabi said. July employment in Alaska is about 15% higher than January’s.

The tourism-dependent economy needs some help at least until next summer, when businesses could see a lift, Popp said.

“This gets really challenging in terms of how we are going to get through that period without seeing even bigger impacts than what we’ve already seen, in terms of businesses closing permanently and more jobs being lost at a higher rate,” Popp said.