Southeast Alaska’s shrinking State sector is down by more than 800 jobs over 7 years. Long the top provider of wages in the region, state government is on track to be a distant third in coming years – after municipal government and tourism – and a bountiful fishing season would make the state the fourth largest provider of wages. The regional health care industry had been optimistic about the trajectory of the economic environment, adding nearly 500 jobs and $50 million in wages over the last four years to support the growing health care needs of an aging population. However, steep state cuts to Medicaid funding, compounded by the potential loss of matching federal dollars, have reversed the growing business confidence of that sector. The region’s mining sector has been growing, while the ship building and construction sectors have contracted. Fishing remains mercurial. Southeast Alaska lost nearly 700 seafood jobs in the past four years, with wages down by $22 million. By volume, the catch for 2018 was the lowest in decades, but strong seafood prices have offset losses. The so-called trade war with China is having deleterious impacts on several Southeast industries, including seafood, timber, and mining. Through all of this, the visitor industry has provided a critical counter-balance to a capricious economy. In just seven years, the tourism sector added more than 2,000 annualized jobs to Southeast communities, increasing wages by $85 million. During the summer of 2020, 1.44 million visitors are projected to spend nearly $800 million during their Southeast Alaska holidays. The collective result was a flat economy in 2018. Southeast Alaska decreased in population by 80 people, added two jobs, and overall wages grew incrementally. The region persevered through several rough years,but Southeast Alaskans are resilient and remain optimistic about the future. More than a quarter of regional businesses plan to add jobs in the coming year, and 68% of business leaders expect the coming year to be positive and/or better than last year.
In 2019, the University of Alaska Southeast, University of Alaska Anchorage, Bartlett Regional Hospital, the Southeast Alaska Regional Health Consortium (SEARHC), and Alaska State Hospital and Nursing Home Association (ASHNHA) partnered with Southeast Conference to conduct a Southeast Alaska health care workforce survey. The purpose of the survey was to measure the future workforce needs of regional health care providers along with the obstacles to meeting those needs; and to understand the trends and economic value of health care in the region. Combining this information with with existing data will allow health care partners to develop better regional health care recruitment, retention and training strategies, and forecast future health care workforce needs so they can more effectively plan to fill those gaps.
In April of 2019, 320 Southeast Alaska business owners and top managers from 25 communities responded to Southeast Conference’s annual Business Climate and Private Investment Survey. More than half (59%) of respondents were positive about the economy, calling the business climate “good” or “very good,” an increase of 4% from last year. Looking forward, Southeast Alaska business leaders overall have a similar outlook from a year ago. More than half (56%) of survey respondents expect their prospects to remain status quo, 30% expect their prospects to improve in the coming year, and 14% expect decline. This represents a one percent increase in overall positive outlook over last year. Businesses in Hollis, Gustatvus, Hoonah and Skagway reported the outlooks that are most likely to improve. The timber, food and beverage, and tourism industries reported the most improving outlooks by industry. A new question added to the survey this year was regarding hiring expectations over the next year. More than a quarter of business leaders surveyed expect to add jobs to their businesses over the next 12 months, while 51% expect to maintain total jobs, and 11% expect to reduce total employees. The largest gains are expected in the visitor industry, where a staggering 42% of respondents expect to increase their total staff in up coming year. Skagway employers expect the most significant job gains. Juneau and Petersburg are the least likely to add jobs next year. This year businesses were also asked to rate their preferences regarding how they would like to see to the state achieve a balanced budget, and 320 Southeast business leaders from 25 communities provided their insights. Of the 15 categories of budget components businesses were asked to rank, the top four elements Southeast business leaders would most like to see used to address the fiscal gap include: 1) Reducing oil tax credits (77%); 2) Reducing individual PFD payments (72%); 3) Increasing the percent of market value earnings from the Permanent Fund used to pay for state services (66%); and 4) Instituting a state-wide income tax (63%). The categories businesses would least like to see used to balance the state budget include cuts to the Alaska Marine Highway System, cuts to K-12 education, and implementation of a state property tax. Southeast businesses said they invested approximately $221 million in their businesses last year. The report includes open-ended responses.
We asked the people who experience the marine highway’s benefits first hand to describe its value: the mayors, tribal leaders, business owners, tourism directors, fishermen, economic development experts, and other community leaders. These Alaskans’ stories weave together to form a single tale: Transportation is the lifeblood of coastal communities, and a strong ferry system is essential to local economic development, quality of life, and community well-being. There are 35 ports spanning 3,500 miles that are connected by Alaska’s state ferries. Here are 25 stories from coastal communities that rely on the Alaska Marine Highway System.
Summary of 2018 work by Southeast Conference and progress on the economic priority objectives of the region.
Southeast Conference is responsible for developing a Comprehensive Economic Development Strategy (CEDS) for Southeast Alaska designed to identify regional priorities for economic and community development. The CEDS 2020 Southeast Alaska Economic Plan is a strategy-driven plan developed by a diverse workgroup of local representatives from private, public, and nonprofit sectors. Over the course of 12 months, 27 workshops and strategic planning meetings Southeast Conference members developed an overall vision statement, a list of six goals, 47 objectives, 8 priority objectives, and regional and industry specific SWOTs analyses. More than 400 people representing small businesses, tribes, native organizations, municipalities, and nonprofits were involved in various elements of the planning process.
Southeast Alaska has been experiencing rough economic times, but there are bright points in the region. While the state sector has struggled, we have seen sustained growth in the tourism industry, and there are indications the economy is beginning to stabilize.Dramatic cuts reduced state sector employment in the region by 15% since 2012, a loss of 850 jobs, and an estimated $50 million in lost annual wages. By comparison, the rest of the state experienced a 7.5% decline in state jobs during the same period. State spending cuts have curtailed growth in other industries, especially construction.The regional population declined for the third year in a row, by a combined 1,600 people. About half the population loss consisted of children and 20-somethings leaving Juneau, the community most impacted by cuts in state employment. The seafood industry has been struggling. A poor 2016 harvest led to the loss of 500 jobs; and while the 2017 harvest was on par with 10-year averages, neither the jobs nor the Chinook returned. Chinook harvest levels are the lowest on record. Additionally, the fishing industry is facing the potential impacts of the president’s seafood tariffs. The ferry system continues to face significant cuts, reducing ridership by 20% in the last three years, and bringing 35% fewer visitors to the region. Layoffs were announced at the Ketchikan shipyard, and Ocean Beauty is permanently closing its Petersburg cannery. Just under half of regional business leaders called the Southeast business climate “poor" or “very poor” in 2018, up from 29% in 2015. But not all indicators are bad. There were 380 more jobs in 2017 than in 2016, and we are less than 400 jobs below peak employment levels of 2013. This is almost entirely thanks to massive growth in tourism – specifically cruise ship tourism. Between 2010 and 2019, cruise passenger numbers are projected to increase by 50%, with 1.31 million cruise visitors expected to sightsee here in 2019. Jobs in the visitor industry increased by nearly 2,000 year-round equivalent workers since 2010, and visitors to Southeast spent $65 million here last year. Jobs are poised to expand in health-related fields. Mining and tribal government employment grew last year. Oil prices are improving, and there is hope that this, combined with a permanent fund restructure, will stabilize the government sector. Looking forward, Southeast Alaskans remain optimistic about the future, with two-thirds of Southeast Alaska business leaders expecting their prospects to be positive or to improve in 2019.
In the Spring of 2018, 232 Southeast Alaska business owners and top managers from 27 regional communities responded to Southeast Conference’s Business Climate and Private Investment Survey, answering questions about the economic climate and regional investment. Confidence in the regional business climate has been decreasing. However, looking forward business leaders are optimistic. Businesses in Skagway and Haines reported the brightest outlook in the region. The mining sector reported the most positive industry outlook, followed by the health care, tourism, and real estate industries. This year we added a new question to to our business climate survey: How has the economy impacted your business? We received 140 thoughtful responses from business owners and operators, and we printed these in full by industry. It is the stories "behind the numbers."
Summary of 2017 work by Southeast Conference and progress on the 7 economic priority objectives of the region.
Last year was a tough year for the Southeast Alaska economy. Jobs and workforce earnings were down for the first time since 2007. Population dropped for the second year in a row, the first losses in a decade as well. The reason for our economic distress is clear. Dropping oil prices combined with falling oil production have drastically reduced the state’s share of oil earnings, which previously provided up to 90 percent of the state’s unrestricted revenues. Last year was also the worst year for our seafood sector in over a decade. However, there is also good news. Tourism is booming, and 2017 will be a record year for cruise and air passengers, along with jobs and spending.