Daily Sitka Sentinel

Tour Industry Shines In ‘Flat’ SE Economy

By SHANNON HAUGLAND
Sentinel Staff Writer
    Southeast has lost hundreds of state government and fishing jobs in recent years, but there are bright spots in the region’s economy in other sectors, such as tourism and health care, a Southeast Conference audience was told today.
     Consultant Meilani Schijvens, in her report “Southeast By the Numbers 2019,” listed the highs and lows in the various economic sectors at this morning’s session of the annual meeting of Southeast Alaska government and business leaders. She spoke in the main auditorium of Harrigan Centennial Hall. More than 250 are attending the conference.
    Schijvens’ Rain Coast Data survey of the main industries between 2017 and 2018 shows mixed results overall, but that the economy in general is diverse and therefore may be more “resilient.”
    She also announced that the number of cruise ship visitors to Southeast in 2020 is expected to be 1.44 million to the region, spending just under $800 million in the communities.
    That included 1.42 million cruise ship visitors to Juneau, 1.27 million to Ketchikan, 404,033 to Icy Strait Point, and 210,399 to Sitka, for a 33 percent increase. The news prompted an enthusiastic response from the audience.
    In her presentation, Schijvens noted the lack of job growth in general from 2017 to 2018 – with a two-job gain in the region, although employment earnings were up by $86 million.
    “This is pretty much as flat that you can possibly get when you’re looking at an economy,” she said.

Meilani Schijvens speaks today at Harrigan Centennial Hall (Sentinel Photo by James Poulson)

    Among the trends in Southeast Alaska from 2017 to 2018:
    – the population decreased by 80, to about 73,000, following a four-year trend of losses. Petersburg grew the most (up 63), and Sitka lost the most (down 96) from 2017 to 2018. “I’m sorry to say Sitka was the loss leader in terms of population,” Meilani said today.
    – two new jobs were added and wages grew “incrementally.”
    – 121 health care jobs were added, for a 3 percent increase.
    – the number of cruise passengers was up by 7 percent.
    – the number of government jobs decreased by 108.
    – the amount of seafood landed was down by 39 percent.
    “The region persevered through several rough years, but Southeast Alaskans are resilient and remain optimistic about the future,” said the summary at the top of the report. “More than a quarter of regional businesses plan to add jobs in the coming year, and 68 percent of business leaders expect the coming year to be positive and/or better than last year.”
    Schijvens pointed to “economic uncertainty” in the region, caused in part by decision makers at the state level. At the same time, she also noted the resilience of the Southeast economy with the region not dependent on any single industry.
    “We are developing a really resilient economy in Southeast Alaska; we’re not overly dependent on one sector,” she told the audience today, in her PowerPoint presentation. “So if any sector does get hit, there are five top economic sectors to help balance it out.”
    Some of the information was presented as trends.
    Among the bright spots Schijvens noted: the visitor industry has been growing, and by next year may be the largest among all sectors; in health care, 500 jobs and $50 million in wages were added in the health care sector over the past four years to support the growing aging population. (She added in her report that steep Medicaid cuts at the state level – compounded by the loss of matching federal dollars – “have reversed the growing business confidence of that sector.”)
    Fishing lost 700 seafood jobs in the last four years, with wages down by $22 million over four years. The catch last year was the lowest in decades but strong prices helped offset losses, Schijvens said.
    “Through all this, the visitor industry provided a critical counter-balance to a capricious economy,” the report said, noting 2,000 “annualized” jobs and $85 million in wages have been added over seven years.

Jobs and Population Summary
    Schijvens broke down the trends in the various sectors, and singled out a few trends, in her presentation.
    The biggest job sector in Southeast is government, which includes the U.S. Coast Guard. Such jobs comprise 29 percent of the workforce, and 34 percent of earnings. Second highest is the visitor industry, which provides 18 percent of the jobs, and 11 percent of earnings. Seafood (8 percent of jobs), non-government health care (6 percent), trade (10 percent) and professional services (6 percent) are the next three on the list of industries.
    The population decline from 2017 to 2018 in Southeast marked the fourth straight year of declines for a total decline over four years of 1,600.
    There were population increases in Petersburg, Ketchikan, Hoonah, Wrangell, Haines and Hydaburg, while Sitka, Juneau, Klawock, Coffman Cove, Metlakatla and Yakutat saw declines. Sitka’s decline from 2017 to 2018 was 96, the study said.
    Year-round equivalent jobs were up by 380 and workforce earnings were up by $86 million over 2017, the study said.
    A final section pointed to changes in demographics.
    “Population losses appear to have leveled out, but uncertainty regarding the state funding cuts makes it hard to project future changes,” Schijvens said in her report. “As long as the state continues to make fiscal reductions, these will continue to be paired with population declines.
    Sitka’s four-year decline, 2014 to 2018, was 433 to 8,652, Juneau’s was 773 (32,247) and Ketchikan’s was 29 (13,843).
    The four year regional decline was 1,642, to 72,876.

Tourism/Cruise Ships
    The tourism industry is growing in the region, she said, particularly the cruise sector, with numbers rising 17 percent this year and expected to be 6 percent higher next year. Tourism accounted for 8,004 jobs in the region in 2018, up by 3 percent over the previous year, with wages up by 8 percent.
    One out of five jobs is in tourism (the largest private employer), and Schijvens predicts the sector will rise to the top as the biggest wage generator in the region in 2020, at $275 million. She said it will just top local government, health care and state government in wage generation. The similarity in wages among the sectors demonstrates the economic resiliency of the region, Schijvens told the audience.
    The biggest growth in the region in cruise ship tourism is expected at Icy Strait Point near Hoonah, which anticipates a 114 percent rise from 2018 to 2020, for a total of 404,033 visitors in 2020.
    The number of visitors on cruise ships coming to Southeast is expected to be 1.44 million in 2020, up from 1.17 million in 2018, for a 23 percent increase.
    Cruise ship visitation in Sitka for the same period is expected to increase by 33 percent, for a total of 210,399 visitors in 2020; Juneau’s numbers are expected to increase 24 percent between 2018 and 2020, for 1.42 million cruise visitors in 2020.
    Projections are that cruise ship visitor spending for 2020 will reach $793 million throughout Southeast.
    “The visitor industry has the strongest outlook of all Southeast Alaska industries,” the study said. “Alaska’s popularity as a visitor destination has continued to grow. ... More Americans are traveling due to a strong national economy and international travel destinations are increasingly perceived to have security risks. Cruise passengers are expected to continue to rise as larger, higher-capacity vessels visit the region.”
    One-third of all visitor spending in Alaska occurs in Southeast, the study said.
    In other sectors of the tourism economy, visitors arriving by air (representing 8 percent of visitor traffic) grew from 2017 to 2018 by 17 percent, while cruise passengers increased by 13 percent. Visitors arriving by ferry was down the same year by 32 percent, “due to decreases in funding and service,” the study said.

Construction/Tourism
    The study said that, as a result of the increase in the tourism economy, the construction industry is also expected to grow, Schijvens said.
    “Construction employment is at its lowest point since the early 1990s,” she told the audience. But that’s poised to change.
    Jobs in that sector declined by 1 percent from 2017 to 2018, but projects on the horizon that should give the region a boost include Hoonah’s Icy Strait Point dock, a private dock at Ward Cove, a three-acre subport by Norwegian Cruise Lines in Juneau, reconfiguration of a cruise dock and uplands work in Ketchikan, the Archipelago project on the Juneau waterfront, and Tlingit-Haida Central Council’s Heritage Park in Thane.
    “There’s a lot of other projects people tell me about that they tell me I can’t talk about,” she told the group today. “ ... They’re not ready for prime time.”

Health Care/Nurses
    The health care industry in 2018 provided 3,990 jobs in the region, with a gain of 500 and $50 million in wages over the last five years. Wages last year were $243 million in the industry.
    “Health care has been moving in an amazing direction, and has become an economic leader,” Schijvens said today.
    The report said SEARHC is the top health care employer, with 1,200 employees.
    Another section of the report Workforce 5-year Development Needs noted that in the next five years some additional 543 registered nurses will be needed in Southeast, “assuming nothing is done to stem the high rate of turnover.”
    The study said there is “significant worker churn” in those positions.
    “Moreover, it’s hard to fill registered nurse jobs, 82 percent of health care organizations in the region say it’s a difficult position to fill, including 64 percent who say it’s very difficult,” Schijvens said.
    The report notes that the actual growth of the profession is not as fast as some other jobs (5 percent), but combined growth and turnover will result in the need for 543 additional RNs.
    Also needed will be 312 new nursing assistant positions.
    “Whether or not this trend continues is up in the air as political uncertainty surrounding health care is back,” Schijvens said. While the health care sector was the most optimistic among all regional sectors in the spring of 2018, the report said, after Gov. Dunleavy proposed steep cuts to health care and Medicaid spending across the state the health care sector became the “least optimistic” among all sectors, according to the Southeast Alaska Business Confidence Survey.
   
Government Jobs
    While state government jobs have been declining, job losses are expected to plateau. While local government jobs dropped by 84 (total sector employment 5,266), state jobs by 49 (4,771), federal employment is up by one (2,111) and tribal government jobs are up by 24 in the region (999).
    Government jobs account for more than 13,000 jobs in the region.
    “What we’ve seen is massive job losses our state sector,” Schijvens told the audience. She estimated 800 state jobs were lost over the last seven years. “We know more cuts are coming down the line ... but maybe after that we can find the bottom of the downward trend.”

Seafood Industry
    The study cited uncertainty in the seafood industry related to harvest fluctuations, climate factors, tariffs, budget cuts, and salmon farming.
    “Seafood has been having a series of bad years,” Schijvens said today. Two-thirds of regional seafood business leaders reported an unfavorable outlook for the industry, her report said.
    The study cites declines in catches and forecasts. The seafood industry in 2018 provided some 3,711 jobs in the region, which was down by 118 jobs from 2017. The total pounds caught went down from 207 million pounds, to 185 million pounds in 2018, and the value of the catch went from $310 million to $247 million.
    “We’re way below our 10-year average,” Schijvens said today.
    Some 700 jobs were lost on the past four years, including 118 in the last year, Schijvens said.
    A pie chart broke down the total pounds caught in Southeast, and the value of each of the fish for 2018:
    – chum represented 52 percent of the total pounds caught, and 33 percent of the total value.
    – pink salmon was 17 percent in poundage, and 5 percent of the value.
    – other salmon were 9 percent in poundage, and 17 percent of the value.
    – halibut was 4 percent in pounds, and 17 percent of the value.
    – blackcod was 5 percent of the pounds, and 16 percent of the value.
    – herring was 4 percent of the pounds, and 2 percent of the value.
    “The regional 2018 fishing season was significantly below the 10-year average, and total pounds landed was the lowest since the 1980s. Poor pink salmon and herring returns are primarily to blame,” the study says.
    In a related section, the report said the maritime industry provides some 6,273 jobs, including 3,508 in fishing and seafood processing ($237.4M in wages), 793 in the Coast Guard (66.4M in wages), 326 in ship building and repair ($19.1M in wages), 1,258 marine tourism ($47.2M in wages), 367 marine transportation ($24.8M in wages), and marine construction 21 jobs ($1.8M).
   
Other Sectors
    Other statistics from other sectors, from 2017 to 2018 indicate:
    – timber jobs down by 17, or 5 percent, to 337.
    – mining jobs are up by 3, for 889 jobs.
    – construction is down by 23, or 1 percent, to 1,909 jobs.
    – education jobs are up by 14 jobs, to 3,096.