OPINION: Alaska’s labor shortage is a people shortage

Your favorite restaurant has an hour wait, even though you see empty tables. Operating hours for small businesses are reduced despite long lines. “Help wanted” signs seem to adorn every doorway.

You don’t have to spend a lot of time looking at data to know that there’s a labor shortage. Workers of every stripe are just hard to find. Some employers, understandably grouchy about being short-staffed, blame widespread laziness. “Nobody wants to work for a living anymore,” is a common refrain. Others offer a more charitable version of the same take, attributing the shortage to a “reevaluation of life priorities” that leads many to stay home instead of working.

We’ve all heard about a neighbor’s cousin’s spouse who quit working to enjoy life during the pandemic and never went back. But this doesn’t represent the bigger picture. Alaska’s workforce has shrunk, because there are fewer working-age people in the state. Between 2010 and 2021, the number of residents aged 20 to 60 decreased by about 22,000 as a result of aging, as well as outmigration. Meanwhile, the labor force participation rate — the share of the population that is employed or actively seeking employment — is actually higher than in 2018 or 2019. This contradicts the popular refrain that working-age people are idly standing on the sidelines en masse.

A greater share of Alaskans are in the labor force right now than before the pandemic, despite a litany of pressures on the workforce. Nationally, COVID-19 brought a wave of retirements, some early and some planned, accelerating a longer-term trend inherent to a graying population. Add in a few other factors like increased visa restrictions for guest workers, ongoing concerns about COVID infection, and a shortage of child care capacity, and a clearer picture of a squeezed labor market comes into focus. Surging growth in consumer spending in 2021 and 2022 means the rising demand for workers collided with the reality of a thinned-out workforce.

In broad strokes, most of these factors are common to Alaska and the U.S. as a whole. Outmigration, however, is where Alaska sadly stands out. Last year capped off nine consecutive years where more people left the state than moved here. This is a trend independent of the pandemic, but a harsh reality to confront when thinking about workforce availability — and economic opportunity more generally. Business expansion can’t happen without workers, and right now a shortage of human capital might be Alaska’s most pressing economic constraint.

For example, large firms considering moving or expanding to a new location named labor costs and the availability of skilled workers as the two most important factors in 2022, according to an extensive survey by Area Development magazine, an economic development publication. Critically important factors like energy costs, tax rates and highway access ranked lower.

Alaska may not be chasing corporate headquarters or automotive plants, but the state’s largest industries, such as natural resources, tourism and defense, may be forced to respond to a shrinking workforce by investing elsewhere or hiring more nonresidents. New homegrown businesses can’t get off the ground if they can’t hire. The result could be a smaller economy with less opportunity for future Alaskans wishing to make a life here.

What can we do to improve this situation? A big part of the solution is to invest in livability. That means strong foundational elements that underpin communities like housing, public safety and good schools. Housing, in particular, has been a weak spot for the state for decades. Too little gets built every year, leaving many communities with aging stock and not enough of it. More than one would-be Alaska resident has had second thoughts on moving to the 49th state when they saw how little was on the market, and how expensive it was. Policymakers should be thinking seriously about removing barriers and incentivizing more housing construction.

People also like to live in places that are fun. Alaska is a fantastic place for hiking, biking, fishing and hunting, but the lively urban spaces that young people seek are lacking in comparison to other places. Investment in downtowns, community art, walkability, and aesthetic improvements are not silver bullets, but they contribute to making a place desirable. Cities like Bend, Oregon, and Boise, Idaho, attract new residents by offering outdoor recreation with fun urban environments, and Alaska can too.

Quick fixes are rare in economic development, and these strategies would take years to pay off. But an investment mindset by residents, community leaders, and policymakers is essential to building a more prosperous and resilient state.

Nolan Klouda is the executive director of the University of Alaska Center for Economic Development, and is a multi-generation Alaskan. He lives in Anchorage with his partner Michelle and two children.

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