Daily Sitka Sentinel

Consultant Gives 'A' To the Economy in S.E.

By GARLAND KENNEDY

Sentinel Staff Writer

Wages rose and job opportunities increased across much of Southeast through 2022, but problems such as the lack of affordable housing and child care remain persistent throughout the region, an economic consultant told the crowd assembled at the annual gathering of the Southeast Conference Tuesday in Centennial Hall.

The speaker, Meilani Schijvens, gave Southeast’s economy an overall grade of A,  the highest rating she has ever assigned for the region in her annual report.

“Why did our economy earn an A?” she asked, and then answered: “Number one – our jobs were up by 5 percent… that’s an increase of 2,200 jobs here in Southeast Alaska. Jobs were up all across the region.”

Petersburg was the exception, with job numbers falling 12 percent, the sharpest decline in the region, but there was strong job growth in Haines, Hoonah, Skagway and Gustavus. Skagway witnessed a 41 percent expansion of its employment pool between 2021 and 2022. Sitka saw a more modest 3 percent rise, but, when averaged between communities, the region saw a 5 percent gain in employment in ‘22.

Schijvens, who runs the Juneau economic analysis business Rain Coast Data, based her presentation on information compiled from the Alaska Department of Labor. Her presentation, “Southeast by the Numbers,” kicked off this year’s Southeast Conference, an association of Southeast Alaska chambers of commerce and business people.

An audience of about 100 attended the opening session of this year’s event at Centennial Hall.

Across Southeast, Schijvens said, 44,450 people were employed in 2022, earning a combined $2.6 billion. Wages rose by an average of 11 percent over the prior year.

Schijvens also highlighted federal spending in the region, especially from the 2021 Bipartisan Infrastructure Deal and the subsequent Inflation Reduction Act passed by Congress.

“When we just look at some sort of key federal investments, the Infrastructure Bill has invested $220 million in Southeast Alaska so far and counting, Build Back Better, our RAISE grants, the Southeast Alaska Sustainability Strategy, our very intensive COVID relief dollars, the Inflation Reduction Act, Housing and Urban Development, just that roundup alone adds up to a billion dollars,” she said. “And this is money that is really making a huge impact.”

The regional economy was “in real dire straits about two years ago,” but for now it’s looking brighter, she added.

While she mostly focused on data from 2022 as compared to 2021, she took a longer view in terms of Southeast’s aging population. The state needs to attract younger people, but to do this it must address two key concerns – housing and child care.

“If you look at the total population in Southeast Alaska in 2000, and look at the total population in 2022, we have almost identical population numbers. However, we have 6,500 fewer residents at a prime working age, the 19 to 59 year olds,” she summarized. “... We want to be able to attract and retain those younger workers; we’re going to need them in the Southeast Alaska economy. And that needs two things, it needs housing and it needs child care.”

Those who stay are often either from here or moved here for the expansive recreational opportunities, she said.

“On the flip side, why do people not stay at their jobs in Southeast Alaska? Or why are people maybe not able to take the job in the first place? Number one reason, according to our business leaders, housing – lack of housing, cost of housing. The number two reason, child care, lack of child care, cost of child care; and our number three reason, transportation.”

Over the past decade, she said, an average home in Juneau and Ketchikan has risen in value by 45 percent, a boon for those who already owned property, but a meteoric rise that shut prospective buyers out of the market.

Of business people surveyed in Sitka, a full 88 percent said housing availability and costs are a barrier to them and their workers.

As housing prices rise year by year, she noted, construction is not keeping up.

“I don’t know when we’ve had a lower year than 2022, in terms of getting new housing units built in Southeast Alaska; this is our lowest year that I can find. I’m sure there’s a lower year, but I just don’t know,” she said.

Economic Facets

Breaking Southeast’s economy into various sectors, Schijvens showed that the visitor industry is the largest single employer in the region, with 15 percent of the workforce but only 9 percent of paid wages. Local government entities are right behind with 14 percent of the workforce and 14 percent of wages. Seafood workers constituted 8 percent of Southeast workers in 2022 and accounted for 11 percent of regional income, while private health care workers made up 7 percent of the workforce but earned 9 percent of all income.

“We’re not super dependent on any one key aspect of our economy. When people talk about having a diverse economy, this is what they’re talking about,” she concluded.

Since 2019, she said, wages have grown by 12 percent, with particular growth in retail, construction, seafood, healthcare and mining, but this has not kept up with inflation, which peaked at 12 percent in Alaska in June of 2022.

“We’re dealing with inflation, but inflation is actually starting to come down in the first half of 2023,” she said. “The prices probably won’t go down, but they’re stabilizing. And so that’s another great indicator. GDP is up as well. It’s a lagging indicator, but still it’s up in Southeast Alaska.”

A survey of 370 business people across the region, she continued, indicates that about three quarters of them have a rosy view of the future, with the highest degree of optimism registered in Skagway, Juneau, Gustavus and Sitka - towns that cater to large cruise ships.

“There’s also the communities on the other end that are struggling a bit more, led by Wrangell and Prince of Wales,” she said. “And what you see with the (optimistic) communities, those are all communities with large cruise ship ports. And the communities with less optimism include communities that don’t currently have large cruise ports and are much more reliant on the seafood sector.”

While 68 percent of those questioned in Skagway saw a positive future for their town, 29 percent of those surveyed in Wrangell had a negative outlook on its future. This pessimism was shared by residents who were polled in Petersburg and on Prince of Wales Island.

Alaska Native organizations were the most upbeat in 2022, followed by the tourism industry, but a third of those involved in the seafood industry reported a pessimistic outlook. Social service and healthcare providers also shared a negative view of the future.

Schijvens said Southeast had 1.2 million more visitors in 2022 than in 2021 – a year in which the industry was still hard hit by the pandemic. In 2019, the previous high water mark for tourism in the region, there were 1.3 million cruise visitors. For this year Schijvens projects 1.69 million tourists, and 1.7 million in 2024.

“As we move into 2023, we see that job growth is continuing and we expect it to continue moving forward,” she said. “... And this is the essence of the sentiment I’ve heard from our tourism, business leaders across Southeast Alaska, it was just a very strong year for the tourism economy.”

At the moment, however, she said at Southeast cruise ports “capacity seems to be at near 100 percent.”

“Looking forward, we’re actually expecting stability... The reason that we’re expecting stability is there was (Juneau) mayor Weldon’s tourism task force that recommended a five-ship cap in Juneau. And the City and Borough of Juneau team worked with the cruise ship industry to instate that five-ship cap moving forward. And so what that’s going to do is it’s going to have a calming effect on growth… Because Juneau is such an important cruise ship port that’ll sort of cap growth in Southeast Alaska as a whole.”

Juneau signed that memorandum of agreement with a cruise lines organization in April this year.

Shifting gears to Southeast’s fishing economy, Schijvens said fish landings totaled 245 million pounds, with a combined value of $335 million.

She also cited an online Wallet Hub piece that named Juneau the second best youth job market in the United States last year.

“What does a good economy mean to you? And the number one answer that we always get is, ‘I just want an economy that my kids can come home and have jobs and that my kids can stay here and find a job and find a place to work,’” Schijvens stated.

Looking into the future, Schijvens expressed concern about the future of Alaska’s Permanent Fund.

“The bad news is that we are more reliant on the Permanent Fund and we are seeing Permanent Fund declines,” she said, citing an Alaska Beacon story. “The fund is posting negative returns for the first time in decades. And according to analysis, without sufficient earnings, the fund will be unable to pay for state government services or dividends by 2026. So we continue to worry about the state’s fiscal health.”

The Southeast Conference meeting will continue through the week with presentations on a variety of economic topics.