Anchorage construction booming while overall job numbers return to pre-pandemic levels, data indicates

Construction in Anchorage is booming and other sectors are growing steadily as overall job numbers in Anchorage appear to finally be exceeding their pre-pandemic levels, according to economic data released Wednesday by the Anchorage Economic Development Corp.

Still, challenges continue to worry business leaders in Alaska’s largest city. The concerns include a broad labor crunch, unaffordable housing, and the condition of the state economy, said Jenna Wright, president of Anchorage Economic Development Corp.

“But what we can say with confidence is that so far this year, we’re reporting job levels that are above our pre-pandemic numbers and we’re in solid year-over-year job growth territory,” she told thousands of business leaders gathered at the Dena’ina Civic and Convention Center in Anchorage.

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

The economic development group released the report at its annual luncheon, along with a review of its Project Anchorage effort that seeks to create a 3% sales tax in Anchorage. The tax would help offset some property taxes and provide funding for new public amenities to help improve the quality of life in the city.

Anchorage job levels in June reached 156,500, according to state estimates.

“In January, we were optimistic that we would gain about 1,400 jobs this year,” she said. “And so far, that number is turning out to be possibly even conservative, although it’s too soon to make a final conclusion.”

Job levels this year are exceeding 2019 numbers set before the pandemic began, she said. But the city remains solidly below record job numbers set in 2015, a year that followed a long period of high oil prices that helped grow the state economy.

The Anchorage economy still has a way to go, but it’s heading in the right direction, she said.

‘Whopping’ job growth in construction

Nearly all sectors of the economy are experiencing job growth, she said.

A few areas have lost a small number of jobs, but those are typically lower-paying sectors such as retail. They could be losing workers to better-paying sectors such as construction, she said.

Construction is growing rapidly, she said.

She said an array of multi-million-dollar projects are boosting the sector.

They include a $200 million project to overhaul the downtown city block that once the housed the 4th Avenue Theatre. There’s also a $70 million project that includes the renovation of the Aviator Hotel downtown, at Fourth Avenue and C Street. The medical industry is also pursuing major projects, including a $257 million expansion of emergency care services at the Native hospital.

“So far, it’s been a phenomenal summer for the construction industry that’s currently estimated to be experiencing a whopping 15% job growth year-over-year,” she said.

Preliminary state estimates also show sharp growth in construction, up about 2,000 workers from June last year.

The industry is still working on projects that were backlogged during the pandemic, Wright said.

It’s also working on new projects related to the $1 trillion bipartisan infrastructure bill, she said.

The growth in construction is benefiting other areas of the economy, she said.

It contributed to an estimated 4% increase in job levels in the professional and business services sector, she said. Engineers, architects and other professional services are supporting many of the infrastructure construction projects, she said.

“It’s extremely busy. There’s a lot of projects out there,” said Justin McVaney, director of preconstruction at Cornerstone General Contractors, as the luncheon ended.

The firm is the general contractor for the $200 million cargo facility being built by NorthLink Aviation at the Ted Stevens Anchorage International Airport.

The busy construction environment has made it difficult for small projects, less than $5 million, to find builders, he said.

“Project owners with smaller projects are actually having a hard time finding good contractors,” he said. “We’re getting a lot of calls and we’re trying to help where we can. But like everybody here we’re trying to cover all the need with a limited resource.”

Tourism grows, with help from foreign workers

Jobs in the health care sector have grown by about 1,300, an estimated 6% increase for the year so far, compared to last year, she said.

“And reports from this industry are that the number of temporary, traveling workers is down from years past and the number of local, permanent hire is up, which is allowing providers to better control their costs and bring more stability to their operations,” she said.

“The health care industry is also starting to see the fruits of years of investment in workforce development and training programs where new talent is beginning to enter the workforce,” she said.

That’s helping to “counteract the wave of retirements that occurred during the pandemic as well as the growing demand for health care from our aging population,” she said.

Positive signs also include continued growth in the tourism industry, Wright said. The sector was hammered when the pandemic canceled cruises to Alaska.

The sector is potentially being aided by an increase in temporary workers under the U.S. State Department’s J-1 Summer Work Travel cultural exchange program that brings foreign workers to the U.S., Wright said. The program essentially stopped during the pandemic, but is bouncing back, she said.

Most “tourism metrics are up year over year with a 4% increase in hotel revenue, a huge 39% increase in convention sales, and just over an increase of 5% in TSA passenger counts,” Wright said, referring to the Transportation and Security Administration.

Kara Edwards, general manager at the Alyeska Resort in Girdwood, said that the growth in tourism is bringing more Outside visitors to the resort. They want to try features such as the Nordic spa or mountaintop sky bridges and the tram, she said after the luncheon.

“Every time we see a new flight pattern come in from the airport, that’s a great thing for us,” she said.

The resort also has ambitious plans to continue expanding and growing its workforce.

But the labor shortage is still making it challenging to find enough workers, she said.

Business optimistic, but concerned about local economy

An online survey of 150 business leaders found general optimism that their gross sales, net profits and workforce will grow, despite some of the obstacles businesses face, Wright said.

But Anchorage businesses were slightly pessimistic about the local economy. A survey of Anchorage consumers found a similar result, she said.

Contributing to that view could be issues like the decade-long outmigration Anchorage has experienced, Wright said.

“And it’s impossible to ignore our city’s struggles with things like unaffordable housing, homelessness and a lack of child care,” she said.

The economic development group, working with a coalition of business leaders, has proposed the 3% sales tax as a way to help address some of the big issues affecting the city’s economy, she said.

[Anchorage economic development group proposes 3% sales tax to help reduce property taxes and build public projects]

The tax is designed to produce revenue of $180 million annually, with visitors to Alaska footing a chunk of that. It would sunset in five years and include exemptions for many basic expenses such as most groceries.

One-third of the revenue would be committed to building public amenities to improve the quality of life in Anchorage. It’s inspired in part by the Project 80s effort that in the 1980s led to the creation of public amenities in Anchorage such as the Coastal Trail, the Alaska Center for the Performing Arts and the Loussac Library.

People can submit ideas for the public facilities on the projectanchorage.com website, through Sept. 15, Wright said at the meeting.

So far, respondents have been interested in projects involving city beautification, parks, recreational facilities and trails, she said.

She said the development group’s goal goal is to get the proposal before Anchorage voters in April, with five specific projects.