A shrinking workforce is holding back Anchorage’s economic recovery after COVID-19, report finds

Anchorage employers are hiring more workers from outside the city and state to adjust to a severe labor shortage that’s holding back the city’s economic recovery, according to a report released Wednesday by the Anchorage Economic Development Corp.

People — especially young people — leaving Alaska to work elsewhere is a major contributor to the issue, the report said.

It’s one unsettling sign for an economy that’s otherwise showing reasons for optimism as tourists flock to Alaska and the huge federal infrastructure bill starts to pump money into the state, according to AEDC President Bill Popp, who unveiled the three-year economic forecast.

The job-worker imbalance needs immediate attention, Popp told the members of the business community during a Wednesday presentation.

Though employment is growing rapidly, it remains below pre-pandemic levels, he said. The lack of workers is creating “serious headwinds” for employers of all stripes. Some can’t operate fully because of the lack of employees, he said.

There are thousands more jobs openings than there are people to fill them, about two or three positions for every available worker, he said.

“Practically every employer in Anchorage has jobs open that are going unfilled for lack of qualified candidates,” he said.

[Alaska’s June job numbers are up from 2021 but lag behind pre-pandemic figures]

In many cases, there are no candidates, he said.

The openings range from skilled jobs like doctors, architects, accountants, teachers and legal aides to lower-paying jobs like food-service worker and janitors, Popp said.

1 in 3 young workers leaving Alaska

The cause of the worker shortfall has been years in the making, Popp said. The data doesn’t support the myth of potential workers lazily sitting at home, watching TV and living off government subsidies.

The labor force participation rate is a strong 79%, one factor countering that view, he said.

A major contributor to the job-worker imbalance has been the city’s shrinking workforce, as people retire and the city’s population has dwindled over several years, he said.

The labor force in the city has fallen by 9,000 people, or 4.4%, over five years ending in 2019, he said.

Especially problematic is the loss of working-age residents younger than 26. About one in three appear to be leaving permanently for the Lower 48, worse than many other cities, he said.

Those long-term forces are compounded by trends that arose during the pandemic in 2020, such as people becoming unable to work because they can’t find child care help, or they face health risks related to COVID, he said.

Anchorage employers have adapted in part by hiring workers from outside the city and state in what amounts to a national competition for some workers, Popp said.

[More grants coming to stabilize Alaska’s fragile child care system]

Three-quarters of the city’s workforce is locally based, he said. Eleven percent come from the Matanuska-Susitna Borough, and 12% come from the Lower 48, he said.

Anyone who wants to find a job in Alaska can do so, he said.

Job postings are at levels not seen since the group began studying the issue in 2018, the report says. About 4,600 employers posted nearly 31,000 job openings in Anchorage and the Mat-Su Borough for three months this spring, well above the number of workers available to fill them, he said.

Even with the labor shortage, employers in the city have added about 5,000 jobs, a 3.6% increase, in the first six months of the year compared to last year.

In a strong economic sign, the corporation expects the city to add about 1,000 more jobs this year than it had originally anticipated, Popp said.

Tourism roars back

Job numbers in restaurants, bars and hotels, part of the hospitality industry, have jumped by 2,000 since last year.

Buoying that sector is the return of cruise ships to Southcentral Alaska for the first time since 2019, he said. Also, passenger numbers at the Ted Stevens Anchorage International Airport, at 1.8 million visitors through May, is well above last year.

The airport passenger numbers indicate that independent travel, unrelated to pre-arranged cruise ship tours, is going strong, he said. Other signs of a strong rebound in tourism include surging vehicle rental tax and room tax as hotels fill up. The extra tax revenue is in part due to higher room and car-rental rates as prices have jumped, the study said.

[Some Alaska workers are facing a crisis in housing. Employers hope that if they build it, employees will come.]

Other big winners in job growth include the transportation sector, driven in part by record levels of cargo at the Anchorage airport in 2021, Popp said.

Employment numbers are also growing strongly in the professional services sector, where engineers and architects are starting to work on projects associated with the federal infrastructure bill that’s expected to pump $5 billion into Alaska over the next five years, he said.

The huge number of jobs available should generate optimism, but a consumer sentiment survey of future expectations was not optimistic, he said.

Contributing to the view are issues like soaring inflation and fuel prices, supply chain disruptions and the labor shortage, the report found.

Despite the consumer views, personal income is expected to grow, a positive sign for individuals, Popp said. Within the next few years, permitted projects in the city should increase, alongside construction activity, and passenger and cargo levels at the airport could hit record levels, the forecast found.

New cargo projects at the airport, big oil field prospects on the North Slope, and the redevelopment of the Port of Alaska are among the projects that could also boost growth, the report said.

The big challenge will be retaining workers and building a workforce with the right skills to meet demand, he said.

The corporation, with the support from other Anchorage business groups and the Anchorage Assembly, hired a consultant to look for solutions, he said. It is also studying other cities for ideas, such as Oklahoma City, which suffered problems like Anchorage’s but now retains many of its workers, enjoys a growing tech sector and has become a major destination for conferences and tourism, Popp said.

“We want to learn from our competitors so that we can win the talent war we face,” Popp said.