February 4, 2023

Aerial, Aerial View, Aerial Views, Aerial Views, Aerials, Anchorage, Downtown Anchorage

Anchorage’s labor shortages will cost the economy thousands of jobs in high-wage industries like healthcare this year, according to an economic forecast released Wednesday by the Anchorage Economic Development Corp. It will also affect companies’ ability to receive federal grants from the giant infrastructure package, the forecast said.

The city is expected to add 1,550 jobs in 2023, said Bill Popp, the group’s president, who presented the annual report to the city’s business community on Wednesday. No sector is expected to lose jobs, keeping the total workforce at about 145,000 people, he said.

The job expansion is a positive step forward as the economy continues to recover from the pandemic, he said.

But high hopes for more jobs in key sectors have fallen because of the city’s long-dwindling workforce, he said.

The economic development agency had expected a “wave of job growth” in architecture and engineering last year as billions of dollars arrive as part of the $1.2 trillion infrastructure package Congress passed over a year ago, Popp said .

But local employers in these and other sectors will not be able to fully exploit the opportunities this year due to the shortage of skilled workers, said Popp.

“Local employers believe they will not be able to recruit the required skilled workforce, either locally or from abroad, to fill the hundreds of design jobs we believe will be needed for the new infrastructure funding “, he said. “Instead, it now looks like most of the new federally funded projects will likely be designed by companies outside of Alaska.”

The construction industry will see only modest job growth of 100 jobs due to labor shortages. Construction for some federal grants is being directed by non-government firms for this reason, Popp said.

The labor shortage is also why the forecast for this year calls for flat growth in the medical industry. Strong healthcare recruitment has fueled the country’s economic engine for many years, and few jobs have been lost since 2020, Popp said.

“But this superficial view overlooks the thousands of positions that currently remain unfilled in Anchorage’s healthcare system,” Popp said.

Hospitals, clinics, laboratories and related businesses are facing significant staff shortages, he said.

[Senior clinic at Alaska Regional to close in February, leaving vulnerable patients with limited options for care]

“And it’s not just a shortage of nurses, doctors and other positions that are critical to delivering services to patients,” he said. “Thousands of support positions could be filled today, including janitorial, hospitality, clerical, landscaping, facility maintenance and dozens of other positions critical to the overall success of our healthcare system that has taken decades to build.”

Grind population loss a factor

The annual forecast, produced for more than two decades by McKinley Research Group and its predecessor, the McDowell Group, is the group’s latest insight into employment and business confidence in Anchorage, the state’s economic hub.

[Chicken jerky, nacho cheese and raisins: Worker shortage means 8 Anchorage elementary schools are going without hot lunch]

The city’s working-age population has shrunk by nearly 15,000 workers, down about 7%, the report said. This is in large part due to a declining overall population that began in 2015 when Alaska faced a three-year statewide recession just before entering the pandemic that caused further economic upheaval.

The shrinking population — by an additional 600 residents over the past year — is part of a whirlwind of problems that will further pressure the size of Anchorage’s workforce, the report said.

“The city is grappling with several factors that contribute to labor availability and overall quality of life: high housing costs, low availability of childcare services, and uncertainty that funding for K-12 education will be three of the most important in 2022” , so the forecast says.

“The lack of available and affordable childcare is preventing hundreds, if not thousands, of workers from staying at home and looking after their children. Childcare-related jobs fell 9% nationwide in the first half of 2022, with a corresponding loss of capacity,” Popp said in his presentation.

[Alaska’s overall economic performance among the worst in US for several years, research finds]

The shrinking working-age population is affecting the economy in other ways. It has contributed to an extremely tight job market and helped push unemployment rates to record lows, Popp said.

“The average 2022 unemployment rate in Anchorage was 3.7% for the year,” he said. “This is an all-time low for this metric in Anchorage’s modern history.”

growth in tourism

Some industries will see solid growth in 2023, although labor shortages will hurt employment there too, the report says.

Hotels, restaurants and tourism businesses will help lead the way in hiring thanks to strong growth in tourism, the report predicts. The leisure and hospitality industry is expected to account for more than half of the new jobs in the city, with 800 additional jobs.

“Cruise ship passenger capacity has been increased by 10% for the 2023 season,” Popp said. “There are strong advance reservations in the hotel industry. For example, the Hotel Captain Cook is completely sold out for the summer season. There is the potential for a record year for visitors to Anchorage in 2023, and restaurants and retail should enjoy a great summer alongside hotels and tourism providers.”

The transportation, warehousing and supply sectors will grow by 200 jobs, led by Ted Stevens Anchorage International Airport, one of the world’s busiest cargo hubs. The sector is a “rock star” and the only industry in Anchorage to fully recover from job losses from both the pandemic and the recession, the report said.

The airport has “blown away” expectations in recent years with the expansion of cargo and passenger traffic, pouring hundreds of millions of dollars into Anchorage payrolls and shopping, the report said.

One in seven jobs in Anchorage is directly or indirectly linked to the airport.

[Why Anchorage’s international airport is such a big cargo destination — and how it could get even bigger]

The high-paying oil and gas industry will add 100 new jobs in Anchorage after losing about 100 jobs last year, the report said.

“Hopefully this is the beginning of a recovery for the 2,200 jobs lost since 2015,” said Popp.

Bill Popp AEDC Economic Forecast

Big new oil prospects on the horizon will help by bringing billions of dollars in new investments to Alaska, like the Pikka oil field being pursued by Australia-based Santos and Spain-based Repsol.

National factors will impact Anchorage businesses this year, but inflation is expected to ease as supply chain issues ease, the report said.

Popp said he sees no emerging signs that Anchorage or the state will enter a recession this year, despite concerns from some in the business community, he said.

Overall, Anchorage business leaders are “very optimistic” about the prospects for their own companies this year, but less so for the broader economy, based on a survey commissioned by AEDC, Popp said.

[The pandemic years changed shopping in Anchorage. Maybe forever.]

Consumers, on the other hand, are “strongly pessimistic” about the economy this year, perhaps in part because of problems that seem to have no solutions year after year, such as housing, homelessness and the state’s budget crisis, he said.

According to Popp, AEDC is working with many other Anchorage groups and companies on a multi-faceted initiative called “Choose Anchorage,” which aims to encourage participation in workforce training and recruit skilled workers under 48 who can help fill the labor shortage to close in Anchorage and put down roots in the city.

AEDC hired Austin, Texas-based TIP Strategies, a consulting firm that helps communities across the country resolve workforce and other issues, to conduct research and create an action plan.

Jeff Marcell, Director of TIP, was the keynote speaker at the economic forecasts luncheon. He said Anchorage’s business leaders must play a leading role in curbing the city’s workforce loss, which would become a bigger problem if it continued at this rate. Fighting it will require new resources, which could mean funding and “welding capital,” he said.

“This is a crisis,” he said. “You can’t stick your head in the sand in a crisis.”

AEDC released the data during a luncheon attended by more than 1,000 people at the Dena’ina Civic and Convention Center.

• • •

Leave a Reply

Your email address will not be published. Required fields are marked *