Alaskanomics

2021 Population Data Highlights

By Mark Edwards, EVP - Chief Credit Officer & Bank Economist

Population is a critical variable in economic analysis and the latest data from the Alaska Department of Labor and Workforce Development provides valuable insight into how Alaska is faring. Here are several components from that report worth highlighting.

As a reminder, the 2021 data represents the state fiscal year (July 1, 2020 to June 30, 2021). The 2021 number is an estimate at July 1, 2021, not the end of December.

• Our population actually grew by 745 people last year. That is a 0.1% growth rate for 734,323 people. It ends four years of consecutive declines of -0.2%, -0.4%, -0.3% and -0.3% between July of 2016 and July of 2020.
• Net migration is still negative for the Ninth consecutive year. The 2021 decrease was 3,327 people. This was the smallest migration decrease since 2012-13 when we experienced a decrease of 1,423 people. 2017-18 was the peak at a loss of 9,163 people due to migration.
• The rate of natural increase (births – deaths) continues to get smaller since 2009. This is due to both an increasing death rate and a decreasing birth rate. 
• In 2009, the natural increase was 8,001 with 11,504 births and 3,503 deaths. In 2021, there were 9,445 births and 5,373 deaths for a natural increase of 4,072. About half the level in 2009 because there were roughly 2,000 fewer births and 2,000 more deaths.
• Looking at the regional data shows positive population growth last year in the Fairbanks North Star Borough at 1.54%, the Mat-Su Borough at 1.28% and a small improvement in the Kenai Peninsula Borough at 0.21%.
• Population declines last year include Kodiak at -1.24%, Sitka at -0.67%, Anchorage at -0.43%, Ketchikan at -0.3% and Juneau at -0.25%.
• There are 20,729 more men than women in the state, 377,526 men vs. 356,797 women.
• Of the working age population between 18 and 65, the largest group is those 30 years old at 12,273 people and the smallest group is those 47 years old at 7,779.  
• The average age of Alaskans is 36 years old.

Resource Development Council Conference Part 1

The Resource Development Council hosted the 35^th Annual Alaska Resource Conference this week. Over the next week, Alaskanomics will highlight the presentations from the conference.

The two-day event allows the resource industry to gather and look back at the past year, while planning for the coming year. There were many things to celebrate at this year’s conference, but participants and speakers were decidedly cautious about the State’s fiscal future.

As is the tradition, the conference started out with an outlook for the coming year by Alaska Department of Labor Economist, Neal Fried. With the exception of 2009, the Alaska economy has been growing for the past 25 years. The growth has not always been by leaps and bounds, but it has been moving in the right direction. In 2014, it is predicted that there will only be about 900 new jobs in Alaska, which is only 0.6 percent. This is not as strong as many would hope and there will be a breakdown of the employment categories in January when the annual wrap up is published. Fried continued with brief updates of the various resource industries.

• Timber has had very little change and is down with record lows
• Mining is largely unchanged as well and has slowed and growth has flattened out
• Fishing grew in both processing and harvesting this past year
• Oil keeps hitting new highs, North Slope employment has doubled in the past decade
• The Visitor Industry is up for the third year in a row

Alaska earnings have grown since a dip in the late 1990s and we currently have the second highest household income behind Maryland. The population grew in the past year, but the growth is starting to slow down.

Kara Moriarty of the Alaska Oil and Gas Association gave the update for the oil and gas industry. She shared the usual numbers that more than one third of all Alaska jobs are tied to the oil and gas industry and for every one industry job, 20 other jobs are generated through industry spending. The oil industry paid $6.9 billion in taxes and royalties and luckily the current tax policy generates more revenue at low prices than the old regime. This is very good since the price of oil has dipped below $80 a barrel. There has been a lot of new development on the North Slope and in Cook Inlet. Moriarty finished with the reminder that while we cannot control the price of oil or Alaska’s high cost environment, we could all be “Resource Proud”.

Stephanie Madsen of the At-Sea Processors Association shared that the fishing industry continues to grow and is currently the number one private sector employer in the state. The value of Alaska’s fisheries fluctuates because of the global market. The industry continues to be challenged by environmental non-governmental organizations (NGOs) calling for protected areas. Madsen continued by noting that Alaskan fisheries historically have been managed conservatively and are continually adapting to the varying definitions of sustainable.

Keith Coulter with Koncor Forest Projects gave the update for the timber industry, which by far has seen the largest decline of other resource industries. He noted that both fishing and forestry are sustainable and renewable and are not mutually exclusive. Rural communities that have lost timber are having a hard time replacing the jobs and income that were seen with the timber industry. Coulter shared that he felt that Federal Forests should be managed in the same way that private forests are and Alaska should resist efforts to adopt federal forest practices. He warned that changes to the Alaska forest practice should be informed by contemporary science. Coulter also urged the need for reform of federal overreach in the Tongass and elsewhere through fewer environmental regulations and restrictions.

Karen Matthias with the Council of Alaska Producers gave the update for the mining industry. She was proud to share that both Red Dog and Greens Creek Mines were celebrating their 25^th anniversary of operation. She said the industry needed to do a better job at sharing success stories from around the state. An example is that Usibelli Mine has been in operation for more than 70 years and is mining responsibly. There are more than 5000 direct mining jobs in Alaska with an average annual wage of $100,000. Donlin Gold is in the permitting process and other mines could bring many new jobs to the state. Alaska is number one in the world for pure mineral potential and holds incredible potential in the mining industry. It was no surprise to conference attendees that permitting is consistently the biggest challenge in mining and is a very slow process. The outlook is bleak right now, but the industry can redouble efforts to fight against those trying to block responsible development and educate the public on the positive impact of mining so that things might improve.

Gideon Garcia with CIRI Alaska Tourism wrapped up the year in review with the tourism industry update. This past year, Alaska saw 1.96 million visitors, who spent $3.9 billion. The tourism industry adds 46,000 jobs for Alaskans. The projections for the 2015 season look good. Cruise traffic is predicted to have a 2.8 percent increase and overall visitor traffic is expected to jump 2-3 percent in 2015.

The year in review and 2015 outlook is a staple to the RDC conference and while presenters were proud to share accomplishments within their individual industries, it was obvious that the challenges of federal overreach, commodity prices, and regulations weighed heavy in the room.

Alaskanomics will continue to highlight the conference with Investment in Action by Trond-Erik Johansen of ConocoPhillips Alaska and Investing in Alaska’s Future with Janet Weiss of BP Exploration (Alaska).

Alaska Economic Trends: 10-Year Forecast

The Alaska Department of Labor and Workforce Development publishes a monthly magazine, Alaska Economic Trends. In October, the focus was a 10-year forecast of industries and occupations. In her opening, Department Commissioner Dianne Blumer highlights that Alaska is expected to gain more than 36,000 jobs by 2022. This will increase the state’s total job count to more than 370,000. In the projections, health care and mining jobs will have the largest increase with 25 percent and 24.8 percent, respectively.

The projected gain of just over 36,000 jobs by 2022 is a 10.8 percent growth rate for Alaska. This follows the projected population growth of 10 percent during the same period. The health care industry will see the largest increase of jobs due to the increasing age of Alaska residents. Between 2012 and 2022, the number of Alaskans who are 65 or older will increase 79 percent.

The mining industry, minus oil and gas, will be right behind health care in job growth. The expected increase of 24.8 percent will be due to higher-than-average mineral commodity prices and the expansion of existing mines. Many existing mines are expected to grow and there are multiple projects in various stages of permitting and planning. Because of the volatile nature of the mining industry, experts are not able to predict which projects will move forward and there could be significant changes to the forecast depending on mineral prices.

Not only are jobs expected to grow by 36,000 before 2022, there will also be 95,000 jobs that will need to be filled due to employees retiring or changing jobs. As noted earlier, the number of people over 65 will increase significantly in the next 8 years. In comparison, the number of people under 65 will only see a 3.6 percent increase. This will put high demand on healthcare jobs and related services as the population ages.

Alaska Economic Trends gives specifics in a variety of industries and occupations and expands on the forecast through 2022. The full issue can be viewed at http://labor.alaska.gov/trends/oct14.pdf

Economic Update- Alaska Population

Below is the 2nd section from the recent Alaska Economic Update. To read the full report, visit the Alaskanomics What's New Section to the left of the post.

Population increases only 0.6% - The most recent Department of Labor estimate for Alaska's population is 736,399.  That is a 0.6% increase in 2013 resulting from an additional 4,572 people.  This is the smallest increase in the last 17 years.  The period between 1994 and 1996 saw similarly low levels.  In historical perspective, this is the 7^th lowest rate of population change in the 68 years since the end of World War Two in 1945. 

A majority of the growth is due to natural increase.  There were 11,263 births reported and 3,843 deaths recorded for a natural increase of 7,420 people. This is very consistent with the last ten years.  Where the variability comes from is the net of in and out migration of people internationally and from other parts of the U.S.  Migration resulted in a net loss of -2,848 people.  This again was the largest decrease since the 1994-1996 period.  The driving factor is likely to be the relative improvement of the U.S. and world economy compared to Alaska.    

The median age is 34, but that is one of the least common ages in the state.  The distribution is heavily weighted on the young and older end.  Of ages under 65, the fewest people are age 35 to 44.  The male and female gap has also been narrowing over time with women now accounting for 48.3% of the population.

Alaska’s Construction Spending to be up 18 percent in 2014

The Associated General Contractors (AGC) of Alaska together with supporter, Northrim Bank released the 2014 Alaska Construction Spending Forecast. The report highlights the upcoming year for both private and publicly funded projects in construction throughout Alaska. Construction spending is expected to be $9.2 billion, up 18 percent from 2013.

The oil and gas sector is expected to account for nearly half of the total with $4.3 billion. This is over $1 billion higher than the total for oil and gas last year. Private spending, excluding oil and gas will be about $2 billion, which is slightly higher than the 2013, which was $1.9 billion. Public spending will also increase from 2013. It is expected to be $2.9 billion, up from $2.7 billion last year.

There are four major factors for the robust projection for 2014. The largest reason is due expanded investment plans by the oil and gas industry. Other factors include a larger Department of Defense budget, a reallocation of unspent funds federal highway funds, and strong spending by the state government.

The oil and gas industry is expected to see a 33 percent increase over 2013. It is suspected that this is due to the climate of optimism with the passage of the new oil tax structure for 2014. Not only will new construction be a factor in the coming year, aging infrastructure will be will addressed on both the North Slope and in Cook Inlet.

Mining is expected to see a drop in 2014 due to the fact that the price of gold is dropping. More than half of the expected spending in the mining industry will be on maintenance, continued exploration, and new facilities at the operating mines in Alaska. The six large mines currently in operation are Red Dog, Fort Knox, Pogo, Kensington, and Greens Creek all mineral mines and Usibelli, is the state’s only coal mine. There are also smaller projects that will have construction activity throughout the state.

Utilities are expected to see a jump in 2014 with two new large plants being built for MEA (Matanuska Electric Association) and ML&P (Anchorage’s Municipal Light and Power). There will also be hydroelectric projects and renewable resource projects, like wind and biomass. There will also be an increase in telecommunications in 2014. Spending will be a mix of new firms (Verizon) coming into the market and GCI and Alaska Communications expanding and upgrading current facilities. Utility spending is a combination of private and public spending.

On the public side of the forecast, much of the increase for public spending will be seen by defense spending. There will be a huge increase in military spending for facilities on bases and formerly used defense sites. Fort Wainwright has seven new projects including a new warm-storage hangar, which will cost $36 million. Fort Greeley will also see a large increase in projects, including a $1 billion expansion to the missile defense system, which will last over the next seven years.

Other areas of public spending will see slight decreases that are offset by the increase in defense spending. Overall, there will be a modest 6 percent increase in public spending, in comparison to the 24 percent increase in private spending.

The construction trade is Alaska’s third largest industry, paying the second highest wages. Accounting for 20 percent of Alaska’s total economy, the construction industry reflects the pulse of the economy. These numbers do not include construction workers that are in other industries, such as oil and gas, mining, and utilities. It also doesn’t account for self-employed construction workers. In 2011, it was estimated that there were 9,000 self-employed construction workers in Alaska.

The economy has continued to grow in Alaska. This means more jobs and a growth in the population. This growth has been a catalyst for the residential and commercial construction sector. The oil and gas sector is an obvious driver for this growth, but the other areas discussed above are also helping add to the positive forecast for 2014.

The 2014 Construction Spending Forecast was compiled and written by Scott Goldsmith, Mary Killorin and Linda Leask of the University of Alaska’s Institute of Social and Economic Research (ISER). Visit Alaskanomics’ Resource Section for the full report.

3-Year Economic Outlook Luncheon Recap

Over 1,000 people gathered for lunch today to hear the Anchorage Economic Development Corporation’s (AEDC) annual 3-year Economic Outlook. The program started with Anchorage Mayor Dan Sullivan sharing a few things about Anchorage’s current economic climate. He was proud to announce that Anchorage had just been named the 9^th best city to live in for 2013 by Kiplinger.com. He also noted that Anchorage has had a budget surplus for four consecutive years and seen its bond rating increased to AA+. Both of these accomplishments speak to the strength of Anchorage’s economy and labor force. Sullivan also highlighted that Alaska was ranked 5^th for entrepreneurial opportunity. Mayor Sullivan wrapped up his presentation with information about upcoming projects for Anchorage and left with encouraging remarks about the state of Anchorage’s economy.

Bill Popp, President & CEO of AEDC, continued the presentation by sharing the 2013 jobs update. In 2012, Anchorage saw an increase of 3,400 jobs, which represents 2.2% growth. The largest growth was seen in professional and business services. Through June 2013, we saw a 1.0% growth with 1,600 new jobs. He continued with the complete results of the 3-year outlook which looks at everything from population statistics, employment numbers and important pieces of the Anchorage economy, including air passengers, freight and building permit values.

A few highlights from the presentation show that Anchorage’s population numbers have been steadily increasing after a small dip in 2007 & 2008 and look to top 300,000 in 2013. Employment numbers are also on a steady increase and are predicted to grow at a rate of 1-1.5% over the next three years. Both air passengers and air freight saw a dip in 2009, but have been steadily increasing in the past four years. Building permit values have also seen an increase in the past few years and the increase looks to continue for the next three years. The forecast was mainly positive and it looks like Anchorage will continue to have a strong economy, but Popp warned that the low level of unemployment and high cost of housing will make it difficult to find and keep strong employees.  

Popp concluded his portion of the presentation with notes on the Anchorage Consumer Optimism Index which measures the level of confidence that residents have in the local economy. Through quarter two of 2013, Anchorage residents show relative confidence at 61.4%. This is higher than the past few years and is continuing to increase. Consumer confidence is a good indicator of economic strength. Anchorage’s short-term forecast is strong and it is a good time to be in Anchorage. The municipality has its challenges, but many see those challenges as opportunities for growth.  

To conclude the luncheon, guests heard from Gallup Chairman & CEO, Jim Clifton, who shared his thoughts on the current business climate. He also shared stories from his career and encouraged attendees to focus on the promise of entrepreneurs as the way to grow the US and global economy.

For the full presentation from today’s luncheon, please visit www.aedcweb.com.

Alaska’s personal income rises 2.5% over one year

Total personal income for Alaska was $34 billion in the third quarter of 2012, according to data released by the U.S. Department of Commerce Bureau of Economic Analysis. This is an increase of $846 million compared to one year ago, or a growth rate of 2.5%.  This marks the fourteenth consecutive quarter of income growth in Alaska since the first quarter of 2009.

The most recent annual numbers report per capita income of $45,529 in Alaska.  That ranks Alaska 7^th out of the 50 states and about 9% higher than the national average.

The largest contribution to income is wage earnings.  They increased 2.1% on average over the last 12 months, while employer contributions to pension and insurance benefits increased 2.5%.  Investment dividends, interest and rents grew by 4.2%.  Contributions from government social insurance programs climbed by 2.1%.  Proprietors’ income showed the largest percentage increase of 7% in the last year.

Of the largest business sectors, gross aggregate wages for utility works rose by 16%, followed by construction at 8%, and art, entertainment and recreation also at 8%.  Other notable income increases came in the accommodation and food service industry up 6%, military 4%, and retail trade plus 4%.

Overall government worker wage income grew by 1.6%, which was brought down mainly by a 4% decrease in federal wage earnings.  This was nearly equal to the 4.1% loss of federal government jobs in 2012.

Alaska’s population grew by 1.3% in 2012; largest growth was in Fairbanks and Mat-Su

The most recent Department of Labor estimate for Alaska's population is 732,298.  That is a 1.3% increase in 2012 resulting from an additional 9,162 people.  A majority of the growth is due to natural increase.  There were 11,034 births reported and 3,746 deaths for a natural increase of 7,288 people. The net of in and out migration was a change of 1,874 people.

The median age is 34, but that is one of the least common ages in the state.  The distribution is heavily weighted on the young and older end.  Of ages under 60, the fewest people are age 33 to 47.  Age 38 has the fewest people at 8,801.

The Municipality of Anchorage population is estimated to be 298,842.  This is an addition of 2,758 people over last year, or a 0.9% increase.  This is all due to natural growth, as there was a net out-migration of 376 people reported.  This is the second year in a row of a net decline in migration, and Anchorage is growing at a slower rate than the state as a whole.

The Interior region grew last year at nearly twice the statewide rate at 2.4% due to large gains in the Denali and Fairbanks North Star Borough.  The region is home to an estimated 115,114 people.  The gains were led by a net in-migration of 1,379, almost entirely into the North Star Borough.  Natural increase added another 1,310 people last year.

The Mat-Su Borough is also on an above average growth rate of 2.2%.  However, this is lower than the 4% growth rate seen in the Mat-Su over the last decade. Positive net migration of 1,196 drove the population increase, while natural increase added another 808 people last year.  The Mat-Su population is an estimated 93,801 people.

The slowest growth was in the Gulf Coast Region at 0.5%.  This includes the Kenai Peninsula, Kodiak, Valdez and Cordova.  The Southwest Region of the Aleutians, Bethel, Bristol Bay, and Dillingham grew at 0.7%.  The Southeastern panhandle grew at 1% while the Northern Region added 1.3% to its population.

Alaska unemployment remains lower than the national average

Alaska's seasonally adjusted unemployment rate finished the year at 6.6%.  The comparable national rate in December was 7.8%.  This was an improvement of 0.8% and 0.7% respectively for Alaska and the U.S. versus the December of 2011 rates.

As seen in the graph below by the Alaska Department of Labor, for over four years Alaska has been doing better than the U.S. in terms of unemployment.  The unemployment rate is even better in our largest communities.  The preliminary, not seasonally adjusted, rate for Anchorage was 5.2%, Juneau 5%, and Fairbanks at 6.2%.  The Mat-Su rate improved from 8.9% in 2011 to 8% in December of 2012, but is still higher than the national unemployment levels. 

High levels of unemployment still persist in several rural areas of Alaska.  The worst situations are the Aleutians East Borough at 28.6%, the Municipality of Skagway at 23.5% and the Hoonah-Angoon Census Area at 22.7%.  However, the North Slope Borough has the lowest unemployment levels in the state at 4.6%.

Tourism visitors increase 2% in the summer of 2012.

A recent report by the McDowell Group prepared for the State Department of Commerce showed overall visitor volume increased by 2% in Alaska between May and September of 2012.  Cruise ship visitors increased by 6%, while air travelers decreased by 4% and highway/ferry traffic was essentially flat.

Cruise ships continue to be the preferred method of travel for Alaska visitors, accounting for 59% of summer visitors last year.  Air travel represented 37%, while 4% entered the state via the highway or ferry.  Together, this accounted for 1.59 million out-of-state visitors to Alaska in the five peak summer months.  The additional seven months of the slower season bring the total to roughly two million.

Cruise ship volume has increased for two consecutive years, but is still 9% lower than the peak of over one million passengers in 2008.  Last year was helped by an additional Princess ship and more volume on Holland America.  Alaska was hurt when the smaller company Cruise West went out of business in 2010.

Air travel has also been impacted by the national recession.  Though it decreased 4% last year, overall air travel is 15% higher than the low seen in 2009, at 580,500 visitors.

Highway and ferry travel is a much smaller portion of the visitor level, accounting for only 69,100 people last summer.  This is 19% lower than the recent high in 2006.  Higher fuel prices over this period have made the long drive much more expensive and likely reduced this method in favor of others.

The report states that bed taxes were up in every community survey.  Collections increased 6% in Anchorage, 17% in the Fairbanks North Star Borough, 10% in the Mat-Su and 9% in Juneau.  This statistic will also include taxes generated by resident travelers and can be impacted by changes in room rates.

Despite increase in bed tax collections, vehicle rental tax revenues were down in Anchorage by 6%.  The report hypothesizes that cruise travelers transiting through Anchorage are not as likely to rent a car as independent air travelers.  RV rental taxes also declined by 5% last year.

Click here to download the complete report, along with comparable winter statistics.

Alaska Produces Less Than 1 Barrel Per Person

You have probably seen both of these charts in your life, but probably never together.  The blue line shows oil production in Alaska since 1978, after oil began flowing down the Trans-Alaska Pipeline.  It peaked at 2 million barrels per day of production in 1988, but has since declined to 577,819 barrels a day at the end of the State’s fiscal year ending June 30, 2012.  The red line highlights the population of Alaska over the same period.  It was 411,600 in 1978 and has grown to approximately 730,000 people today.

That means at peak production in 1988 Alaska was producing 3.8 barrels a day per person.  However, in 2012 that rate has declined to only 0.79 barrels a day per person.  That is nearly five times less on a per capita basis.  This has serious economic implications because of the extreme dependency the State of Alaska government has on oil taxes to pay for government services.  According to the Alaska Department of Revenue, in fiscal year 2011 oil revenue accounted for 92% of the State’s unrestricted revenue. 

This is money without “strings attached”, unlike Federal program receipts and investment returns from accounts like the Permanent Fund.  In total, the State collected over $8 billion last year in energy taxes of various types. These revenues fund a lion’s share of the State operating and capital budgets, providing money for countless programs throughout Alaska.

Oil averaged over $112 per barrel in fiscal year 2012.  Oil production tax rates escalate 0.4% for every dollar the net value rises above $30.  The rate increases 0.1% when the value rises above $92.5.  As a result, Alaska continues to be flush with oil revenues at today’s very high prices, regardless of the continual decline in the amount of oil we are producing.  However, our population continues to grow and shows no sign of stopping. 

Therefore, we are more sensitive than ever to a decline in oil prices.  Alaska has never seen prices this high, nor have we had our tax revenues so reliant on a progressivity price factor.  It has been a windfall for government at these high prices, but we have not yet felt the pain of what the reverse feels like if prices decline.

Many politicians in Juneau seem to be gambling that prices will stay high for ever and continue to mask our declining production problem.  Others are taking the more realistic long-term view that prices have always been volatile.  In response, we need to control the level of spending to more sustainable levels, attempt to diversify our revenue streams, and most importantly, make every effort to incentivize more oil production.

Texas and North Dakota have demonstrated that multi-decade stagnate or declining oil production levels can be turned around.  They have each added over 500,000 barrels per day of new oil production in the last few years.  Alaska must endeavor to do the same.