Alaska at or near bottom in measures of economic health nationally

For the past seven years, the Alaska economy has performed “at or near the bottom” nationally in four key measures of economic health, according to a report released Nov. 17 by the University of Alaska Center for Economic Development.

Taken together, the state’s poor performance between 2015 and 2021 — in employment growth, unemployment, net migration and gross domestic product — place Alaska’s economic health at the bottom of all 50 states and the District of Columbia, said Nolan Klouda, the center’s executive director and lead author of the 10-page report.

“You could make a case that Alaska is the bottom-performing state going back to 2015,” Klouda said in an interview. “I think it is.”

The report concludes, “by all measures presented here ... Alaska’s economy appears stuck in a rut relative to the rest of the U.S.”

“This underperformance places Alaska at or near the bottom of all states and D.C. for the period from 2015 to 2021, as well as the pandemic-affected period from 2020 to the present,” the report said. “This marks seven years of weak or negative growth as measured by (gross domestic product, the total value of all goods and services produced) and employment, and the highest rate of net out-migration of any state or D.C.”

The report is a short but troubling look at those economic indicators in Alaska and nationally. It does not explore policy solutions. It casts years of low oil prices as the primary culprit, though those prices have improved in recent months. Oil prices are key to Alaska state revenue and higher prices drive funding for projects.

Klouda, in the interview, provided some ideas to help turn the situation around, including continued diversification of the state’s economy and allocation of revenues into areas that can attract people to Alaska, such as investments to improve the educational system.

He also pointed out that the “stark” picture of the state’s economy in the report is based on the performance of the rest of the U.S. during a time of relatively strong economic health nationally.

Bill Popp, head of the Anchorage Economic Development Corp., said the report paints a clear and accurate picture of the state and Anchorage’s economic challenges. Net out-migration — more people leaving Alaska than coming — is a particularly troublesome issue that hinders economic recovery through a lack of available workers, he said.

“I think it’s a call for action to the community, that we can no longer say this is a cycle and the economy will get better next year,” Popp said. “We have a lot to be optimistic about, but we don’t have the labor force to take advantage of those opportunities that we need to.”

More people have left Alaska than moved here each year from 2012 to 2021, another sign of a contracting economy. “Alaska’s average annual net migration rate between 2015 and 2021 is the lowest of any state,” the report said.

During that period, Alaska lost about nine residents for every 1,000, while the U.S. gained about 2.2 residents for every 1,000.

Popp said the net outmigration of Alaskans has continued for an unusually long number of years. The key factor has been the lack of people moving to Alaska, a situation that can be addressed with proper investments to improve services, he said.

“One issue is that our wages are not as strong as they used to be,” he said. “And a lot of (other) cities and states have reinvested in themselves, providing great schools, vibrant downtowns and community settings and walkable neighborhoods, things that younger generations are looking for. There’s a lot of competition for the labor force nationally and it’s come full circle that we haven’t invested in ourselves.”

 

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