Pandemic toll on Alaska economy drags on with continued high unemployment and oil industry layoffs

Notices that companies must file with the state in the event of mass layoffs provide an indication of the severe toll the COVID-19 pandemic has had on many Alaska businesses, including the high-paying oil and gas sector.

A dozen companies reported laying off 1,269 people starting in mid-March, according to the reports filed with the state under the federal Worker Adjustment and Retraining Notification Act.

Also, an additional 10,313 new unemployment claims were filed for the week that ended April 18. That’s down from prior weeks but still up 1,000% from a year ago, said Lennon Weller, an economist with the Alaska Department of Labor and Workforce Development, on Wednesday.

More than 70,000 people have filed new jobless claims over six weeks, said Weller. The figure represents about 22% of the state workforce.

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The layoff notices are triggered under federal law, when sizable companies lay off large amounts of their workforce.

Four oil field service companies reported laying off at least 274 workers. They totaled 81 at Schlumberger Technology Corp., 80 at Halliburton Energy Services, 63 at Baker Hughes and more than 50 at Peak Oilfield Services.

Facing a severe price plunge amid lowered demand for oil, producers and oil explorers in Alaska has already announced cutbacks to projects and decreased spending.

“There is no work to be performed,” Baker Hughes said of its operations in Deadhorse near the North Slope oil fields in its explanation to the state.

Peak Oilfield said its decision was based the unexpected slowdown in work and “increasingly onerous” travel restrictions made it logistically and economically unfeasible to get much of their workforce to remote job sites.

The layoffs are expected to be permanent, the four oil field service companies said.

Eight companies in the dining and lodging sectors gave notice of a total of 995 layoffs, including 616 at Alyeska Resort, 82 at South Restaurant and Coffeehouse, 77 at Spenard Roadhouse and 68 at Benihana. The restaurant group that owns South Restaurant and Spenard Roadhouse had previously said it was laying off employees in early April.

Alyeska said in its notice that it expects the layoffs will be temporary, though it added that it was uncertain when normal operations will resume. South, Spenard and Benihana said they hope to rehire employees when that’s possible.

The state and city of Anchorage have taken tentative steps to reopen the economy following widespread closure mandates that shut down many businesses starting in mid-March.

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The reports are an indicator of the economic disruption caused by COVID, but not the full picture, economists said.

Layoffs in the oil and gas sector sparked by the last oil-price plunge in 2014 contributed to the Alaska recession that ended last year.

Neal Fried, an economist with the Alaska Department of Labor and Workforce Development, said this time, the initial losses are spread across the full economy.

The state will have a better idea of the statewide layoffs in mid-May, he said. They will include more information about the oil and gas sector.

“We know that the numbers are going to get hit and probably pretty hard,” he said.

Dave Cruz, owner of oilfield support company Cruz Construction, said he’ll be able to keep his core group of about 70 employees working this summer. They’re doing civil construction projects for the state and local governments.

Next winter in the North Slope oil fields, however, could be difficult, he said.

“I’m anticipating we’ll have a pretty substantial downturn,” he said.

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