Anchorage will see employment grow slightly this year, with construction projects statewide growing, report says

A batch of positive economic indicators will help Anchorage job numbers grow slightly this year, though employment won’t rebound to pre-pandemic levels, according to the 2024 economic forecast released Wednesday by the Anchorage Economic Development Corp.

The bright spots include an array of new construction projects statewide, booming business at the Port of Alaska, and continued strength in tourism and air cargo, said Jenna Wright, president of the development corporation.

Employment in the city should grow by 1,400 to about 147,000, she said at the group’s annual luncheon at Anchorage’s Dena’ina Civic and Convention Center.

Still, the continued decline in the city’s working-age population will continue to hold back job growth, echoing a recent report from state of Alaska economists raising statewide alarms about the problem.

[Alaska’s working-age population continues its long decline, a headwind for the economy]

Turning around the nine-year decline in the city’s working-age residents is the city’s “primary” economic challenge, she said.

“Our population is aging and becoming more dependent on fewer workers,” she said. “More than half of our Alaskan-born citizens are eventually leaving the state. It is more important now than it’s maybe ever been to focus on talent retention and attraction.”

One factor contributing to the worker shortage is the “crisis” in residential housing construction, Wright said. Experts have said it’s a factor in limited housing vacancies across the city, and soaring rent and housing prices.

Just 211 housing units were built last year, including only 60 multi-unit houses, Wright said. That’s the lowest activity in at least a decade, and only half the number of houses built annually in recent years, the report shows.

The lack of new housing will make it “very difficult” to attract and retain working-age adults, she said.

Average home prices in Anchorage rose to a record high of about $480,000 last year, up about 5% from the previous year, the report shows.

Record port shipments

On a positive note, the Port of Alaska saw record cargo volumes last year, as major construction projects advance statewide, Wright said.

Projects on the horizon include the Port of Nome expansion in Western Alaska at more than $600 million, plus two major oil field development projects on the North Slope, the report shows.

That and other development has helped boost demand for cement by nearly 50% higher last year compared to the year before, she said.

Shipping through the port in 2024 will “continue at historically high volumes” thanks to strong demand for cement needed for the projects, she said.

Air cargo keeps soaring

Air cargo at the Ted Stevens Anchorage International Airport continues to be strong, and the airport is the world’s third-busiest for cargo, she said. The activity has helped boost high-paying transportation sector jobs by more than 20% in the last decade, including by over 400 jobs from just last year.

“Additionally, we expect transportation employment will continue to expand in 2024,” she said, with Amazon opening its first ground-delivery station in Alaska, and FedEx investing nearly $200 million in a new sorting facility in Anchorage.

Northlink Aviation is also building a $200 million cargo facility at the airport, adding infrastructure that will boost the cargo sector, Wright said.

Oil and gas jobs begin to grow, slowly

The oil field projects underway, such as ConocoPhillips’ Willow field and Santos’ Pikka project, have helped oil and gas employment in Anchorage grow for the first time in eight years, she said.

The growth was slight, but the high-paying jobs are a valuable contributor to the economy, she said.

Employment in the sector in Anchorage grew about 50 jobs, and should grow a similar amount this year, for a total sector employment of 1,600, the report shows.

The numbers are still well below oilfield employment numbers seen about a decade ago, the report shows. The sector is expected to continue growing as the oilfield projects advance, Wright said.

Building permit activity rises, slightly

The projects are supporting growth in the construction sector, which people say “is absolutely booming,” she said.

General contractors, architects and engineers have backlogs of work, with billions of dollars of federal infrastructure funding yet to arrive, Wright said.

Building permits in the city should grow slightly in the coming year, after rising a bit last year to reach valuations of more than $515 million, she said.

[Alaska’s minimum wage rises to $11.73 as a ballot measure seeks further increases]

That should help construction jobs grow in Anchorage by 300 for the second straight year, to 7,700, the report shows.

“However, the speed of completing these projects will be stifled by severe worker shortages that will inevitably increase project timelines,” she said. “Additionally, the construction industry is still facing long lead times on many types of materials that can be up to a year out.”

Tourism to remain strong

The expanding tourism industry brought in more than $60 million in estimated tax revenue last year and drove hundreds of millions of dollars in spending at local businesses, Wright said.

Passenger volume in the cruise ship industry should increase by 12% in 2024, an expansion beyond the 415,000 passengers who crossed the Gulf of Alaska to reach ports in Southcentral Alaska, she said

Anchorage saw very strong convention and meeting attendance growth last year, she said. Air passenger travel is expected to grow in 2024 to 5.7 million passengers, atop 5% growth over the last year.

The growing numbers of visitors has supported jobs in leisure and hospitality employment. Those will increase by 500 jobs in 2024 to 17,300 total, slightly below pre-pandemic levels, Wright said.

Employment in the sector will be held down by a lack of workers from the U.S. State Department’s J-1 Summer Work Travel cultural exchange, she said. The program provides foreign college employees temporarily, but has not rebounded to pre-pandemic levels.

A sales tax idea for public amenities

Despite improvements in the economy, Anchorage consumers are “feeling markedly bleak” about their expectations for the future, she said, based on a survey.

The “conflict between positive economic indicators and negative consumer optimism” is happening nationally, she said. One explanation: Consumers are still experiencing high prices after more than a year of soaring inflation, though it has fallen back to more “normal” rates, she said.

The luncheon included a presentation by Patience Fairbrother, a national expert who works for cities on talent attraction.

Fairbrother, with New York-based Development Counsellors International, said the cost of living plus housing prices and housing availability are critical factors to attract and retain workers. Job security, job pay and quality of life are also vital, she said.

She said Anchorage has unrivaled outdoor opportunities and a diversifying economy to highlight. Investments in community development projects would also make the city more attractive, she said.

The Anchorage Economic Development Corp., with a coalition of business leaders and partner organizations, will pursue implementation of a sales tax to boost public investment, Wright said. The goal in part is boosting investments in community projects to increase the city’s quality of life, she said.

“Think about what our city could look like in 10 or 20 years if we reinvested in ourselves the same way we did during Project ‘80s,” Wright said, referring to a 1980s program that expanded the city’s trail system and built facilities such as Sullivan Arena, the Alaska Center for the Performing Arts and the Egan Center.

“We have billions of dollars coming our way from oilfield projects, private investment and public infrastructure funding at levels that we haven’t seen since the ’80s,” she said. “These dollars could either serve as a quick flash in the pan that keeps us afloat, or they can be the foundation on which we launch ourselves into economic growth and prosperity through intentional talent retention and attraction effort.”