Workforce shortages could sabotage Anchorage and Alaska economic opportunities, report says

Having more people leave Alaska than enter it and the aging of the adult population that remains has put Alaska’s largest city and the state as a whole at risk of squandering some historic economic opportunities, according to a new three-year outlook report released Wednesday by the nonprofit Anchorage Economic Development Corp.

“Anchorage and Alaska are witnessing a weird combination of big economic opportunities that are mostly a sure thing, combined with economic threats that could lead to decades of stagnation and decline,” Bill Popp, the organization’s president, said Wednesday at an annual luncheon where the report’s results were presented.

The report and Popp’s presentation painted a picture of plenty of jobs available but fewer people available to fill those jobs.

Anchorage, home to four out of every 10 Alaskans, has lost 18,600 working-age residents since 2013, Popp said, with that age group defined as being between 16 and 64 years old. Over the next three years, the report predicts, Anchorage will lose another 2,900 working-age adults, Popp said. The total loss of 21,500 represents a 10% decline, he said.

“We’ve lost one out of 10 workers that we used to have. Let that sink in for a moment,” he told the audience.

Statewide trends have been similar. The Alaska labor force peaked in 2013 at 479,000 but by 2022 had declined by 5.4%, the sharpest drop of all U.S. states during that period except for West Virginia and Wyoming, according to the state Department of Labor and Workforce Development.

The opportunities before Anchorage and Alaska are plentiful, as Popp described them.

The oil industry is planning billions of dollars in investments, largely driven by Santos’ Pikka project and ConocoPhillips’ newly approved Willow project, which together will produce thousands of construction jobs and hundreds of operating jobs, Popp said.

More billions of dollars are being steered to Alaska from the federal government for infrastructure projects. Shipping is another bright spot, he said. Anchorage has become the third-busiest cargo airport in the world, with the volume forecast to keep growing, and the Port of Alaska, the city port into which consumer goods used by 90% of the state population flow, is expected to handle even more freight in the future. The tourism industry is also thriving in Anchorage, the AEDC report showed.

But demographic realities undercut those opportunities, Popp said.

“What kind of economic benefit will come to our communities if most of those oil and infrastructure projects are designed by workers living outside of Alaska and built by shift workers flying in and out of Alaska every two weeks?” he said. “If you think this is an unbelievable scenario, I have news for you: It’s already happening.”

In Anchorage, one out of every four jobs are held by people who do not live in the city, he said. That includes 12% of Anchorage jobholders who are commuters from elsewhere in Alaska, mostly the outlying Matanuska-Susitna Borough, and the 13% of jobholders who are non-Alaskans traveling here for shift work or seasonal work or who never come to Alaska at all because they are working remotely from elsewhere, he said.

The forecast holds a glimmer of good demographic news for Anchorage. A tiny population increase – 0.3% — is expected this year, bringing the city’s total to 290,800 from 289,810 in 2022. Tiny increases are expected in the subsequent years, bringing Anchorage’s expected population to 291,700 in 2026, according to the report. The increases are the result of births outstripping deaths. That change does nothing to alleviate worker shortages in the near term, Popp noted.

Statewide population estimates are largely similar, according to the most recent forecast from the Department of Labor and Workforce Development. The department’s population projections have mid-range scenarios with increases of between 0.21% and 0.36% for each of the seven years up to 2030.

The keynote speaker at Wednesday’s forecast luncheon, former Oklahoma City Mayor Mick Cornett, described how that city’s focus on quality-of-life improvement fueled a long-term economic renaissance.

Cornett recounted the painful experience of three decades ago when Oklahoma City, reeling from a slump in the oil and gas industry, tried desperately to convince United Airlines to build a huge aircraft maintenance facility there. The campaign, which the local press reported cost the city at least $500,000, was focused on massive economic incentives. United in 1991 chose Indianapolis for the facility, concluding that its workers would be unwilling to live in Oklahoma City, Cornett said.

That rejection helped touch off long-term investments in downtown revitalization, parks and sports facilities, sidewalks and other amenities that made Oklahoma City a more livable city — and helped fuel its current prosperity, Cornett said. He added that the lesson is what then-Mayor Ron Norick “figured out the hard way”: “The secret about economic development is creating a city where people want to live.”

Anchorage Mayor Dave Bronson, in brief remarks at the event, did not mention any quality-of-life initiatives, other than his recently announced decision to reopen the city’s Sullivan Arena for sports and civic events after three years of its use as a homeless shelter.

Bronson told the AEDC audience that he and his administration are working on a budget with the intention of reducing property taxes. He said he has asked his staff to prepare different scenarios ranging from a flat budget to one with an overall 4% cut.

Originally published by the Alaska Beacon, an independent, nonpartisan news organization that covers Alaska state government.