The tourism industry in Alaska provides around 40,000 jobs and was worth $1.7 billion to the state economy in 2008. As 2009 advances, the tourism industry is experiencing considerable downturn and it seems that this will continue through the next year, according to some projections.

Tourism is one of the state’s top industries in terms of revenue and employment. The revenue from tourism is substantial and can be explained by the number of visitors to Alaska each year. During the 2000-2001 visitor season, over 1.4 million visitors came to Alaska. This number has been increasing over the years. Just over 1.7 million out-of-state visitors came to Alaska between May and September in 2008. However, the major concern is how badly the tourism industry will be affected by the recent economic recession, since tourism is important for state’s revenue and employment.

According to an online article, “Tourism Industry Likely Poised For A Dismal 2009,” state revenue from tourism might decrease substantially in 2009 and some businesses that are closely related to tourism and visitors are already reporting a 30 percent decline in performance compared to last year at this time. Dave Worrell with the Alaska Travel Industry Association is projecting a decline in tourism for 2009 of 10 to 15 percent, which represents more than $200 million of spending.

Another article in the Wall Street Journal, “Alaska Fights a Tourism Cold Front,” also talks about the decline in tourism and missing the “Palin Effect” on tourism. Travel companies were expecting a strong season for Alaska after Gov. Sarah Palin’s turn in the presidential-campaign spotlight.  But in early May, which is the start of peak tourism season, some hotels, cruise lines, and tour operators in the state complained that reservations were down as much as 50 percent from last year when all resorts and cruises were fully booked by this time. As a result, tourism agencies and all cruise lines are offering substantial discounts, reaching 25 to 50 percent. The $1.45 billion cruise industry is critically important to tourism. Operating in Alaska for cruise companies has become less profitable, as prices have come down substantially.

Since January 2009, the numbers of both the employed and unemployed in Alaska are increasing according to figures released by the Alaska Department of Labor and Workforce Development (ADOLWD)  on Thursday, March 5. While the unemployment rate, which was 7.9 percent in January, has increased by 1.5 percent, the number of payroll jobs increased by 5,200 during the same period, which is hand-in-hand with ADOLWD’s long-term employment projections.

According to the ADOLWD’s 10 year employment projection (2006-2016), Alaska’s employment is projected to increase about 14 percent from 314,051 to 357,819 between 2006 and 2016. This is an increase of nearly 44,000 new jobs.

The report is not projecting business cycles, but merely identifies the general directions of movements and some measures of the magnitudes of changes in the labor market. According to the article, if the current recession becomes a depression, then these 2016 projections may prove overly optimistic. Likewise, if the economy quickly reverses and experiences rapid growth, these projections may be understated.

The study presents projected job openings created by both increasing demand for an occupation and replacement of workers leaving an occupation, plus calculated growth rates over this 10 year period and statewide mean wages, and includes the following topics:

Alaska’s Job Growth by Industry

-          The average growth for the economy is expected to be 14 percent.

-          The health care and social assistance industry is projected to outperform the average growth with nearly 25 percent growth.

-          The utilities industry and professional, scientific and technical services are projected to grow at nearly 28 and 25 percent respectively

-          Other industries posting well-above-average gains include mining, and arts, entertainment and recreation.

-          Industries that will underperform are: government, manufacturing and information services. The agriculture-related industries also will continue to decline further.

Changes in Alaska Industry Employment

-          Some occupations in high demand today didn’t exist a generation ago and some occupations today are experiencing significant employment declines.

Job Openings by Occupational Category

-          The greatest number of newly created jobs will come from construction and extraction, which includes many mining related occupations.

-          Office and administrative support, food preparation and serving, sales occupations and occupations related to health care industries follow close behind.

-          Transportation and material moving openings are expected to remain high.

Growing and Declining Occupations

-          Occupations concentrated mostly in industries with both large employment and rapid growth will provide many of the employment opportunities in the future.

-          Network systems analysts and environmental engineering technicians hold two of the top three spots as Alaska’s fastest-growing occupations.

-          Declining occupations can be found across both large and small industries. Their declines often reflect changes in technology and the way the jobs are performed. 

Education and Training Levels

-          60 percent of projected openings will require less than a year of on-the-job training.

-          18.4 percent will require a Bachelor’s degree or above.

-          17 percent moderate-term on-the-job training.

-          9.7 percent Associate degree or vocational training.

-          7.3 percent long-term on-the-job training.

-          4.4 percent experience in a related occupation.

The article is accessible on Alaska’s 10 Year Occupational Forecast.  Additional information about all occupations can be found on Research and Analysis’ Web site at laborstats.alaska.gov. In the blue bar on the left, click on “Occupational Information,” then “Occupational Forecast” for 2006 and 2016 employment estimates, the number of growth and replacement openings, growth rates, links to other occupational data, help with understanding the methods used and what the data means, plus links to other data produced by Research and Analysis.

Important Note: Alaska’s employment patterns parallel those of the U.S. in many industries, and are affected by similar forces. Therefore, many U.S. economic indicators and forecasts were considered in the creation of these Alaska projections

My name is Said Yusupov. I am from Chechnya. I lived in Grozny and graduated from high school there. After graduation, I made the transition to Bogazici University at Istanbul, Turkey where I have spent 6 years studying Economics and English. After I graduated from the Economics department I moved to Alaska.

I am currently an MBA student at UAA and I am planning to start the MSPM program next spring semester.

I have an easy going personality and respect for others. Some of my friends say that I am too serious but it helps me to concentrate on my work and I am hard working.

I am very glad to have an opportunity to do an internship at Northern Economics. Friendly people and a warm working environment are very important at a work place and I saw that here from my first day.

Northern Economics prepared a report titled, “The Seafood Industry in Alaska’s Economy” in January. The purpose of the report is to describe the economic importance of Alaska’s seafood industry, primarily the industry’s significance to the state economy. The report was funded by a broad spectrum of industry groups with the intent of providing an objective assessment of the industry.

Alaska’s seafood industry is the largest private sector employer and job provider and generates revenues for the state and its communities. The report emphasizes Alaska’s role as one of the nation’s leading seafood producers and includes the following topics:

• Historical overview of the growth of Alaska’s seafood industry


• Economic impacts of Alaska’s seafood industry by:

• Region of industry activity


• Residency of participants


• Fisheries jurisdictional area


• Major target species or species group

Some highlights from the report include:

Importance of Alaska to the Global Seafood Market

• Alaska landings of traditional global groundfish species groups and flatfish accounted for about one-fifth of the world harvest of these species groups in 2006


• Alaska is the top producer of wild salmon, producing nearly 80 percent of the world supply of wild king, sockeye, and coho

Importance of Alaska Seafood to the U.S.

• In 2007, Alaska accounted for over 62 percent of the volume of the commercial seafood harvested in the United States


• Alaska as a single state led all other multi-state regions in the US in terms of ex-vessel value with over 37 percent of the US total


• Alaska landings accounted for over 90 percent of the U.S. Pacific Ocean herring harvest and over 75 percent of the US commercial catch of Pacific Halibut in 2007


• In 2007, Alaska had two of the country’s three top fishing ports ranked by total harvest value

Importance of Alaska Seafood to Alaska

• The total estimated ex-vessel value of Alaska’s commercial harvest was $1.55 billion in 2007


• The estimated wholesale value of Alaska’s commercial seafood industry was $3.6 billion in 2007


• With an estimated workforce of 56,606, the seafood industry employs more workers than any other industry sector in Alaska. The retail and wholesale trade sector follows with a workforce of 56,445


• The value of Community Development Quota group assets in the aggregate increased from about $13.3 million in 1992 to over $415 million in 2005

The report is accessible from the Marine Conservation Alliance’s website (PDF).

The report has received extensive press coverage, including in the Alaska Journal of Commerce and Anchorage Daily News:

• Alaska Journal of Commerce: Commercial fisheries pack a $6 billion impact in Alaska (Bauman)


• Anchorage Daily News: U.S. Seafood Output Poised to Increase (Welch)

Northern Economics, Inc. presented its annual statewide economic forecast for 2009 at World Trade Center Alaska Economic Forecast luncheons on January 20, 21, and 22. Marcus Hartley presented the forecast on January 20 in Fairbanks, followed by presentations by Pat Burden in Anchorage on January 21 and Juneau on January 22.

Data presented in the 2009 forecast reflected the following trends in Alaska’s current economy:

• Jobs declining by about 3,400 or 0.6% of total jobs in 2008 (Jobs include military and self-employed residing in Alaska)


• Earnings declining by about $400 million or 1.5% (Includes wages and salaries, proprietor’s income, and contributions to pensions and social security)


• GSP dropping $14.1 billion or 26.4%, primarily due to lower crude oil prices and coming off of a peaking GSP due to high oil prices (GSP includes the value of goods and services less the cost of goods used in their production)

See below for links to coverage we’ve received in the press:

• Anchorage Daily News: Recession expected to catch up to Alaska this year


• Fairbanks Daily News Miner: Recession forecast to hit Alaska in 2009


• Juneau Empire: Economists stands by prediction of government growth in 2009


• KTUU: Job Losses Expected for Alaska


• ABC Alaska News: Alaska Economic Outlook


• Alaska Progress Report: Alaska Economic Outlook 2009


• Kansas City InfoZone: Tracking the Recession: Gloom in Alaska

One of the challenges of working as a consultant in Alaska is that Alaska’s unique natural environment and geographic location often mean that proposed projects that are economically feasible where construction, labor, and/or energy costs are lower are economically infeasible here. As the professionals who often conduct the feasibility analysis, our all-too-frequent role as the bearers of disappointing news brings a new meaning to the term “the dismal science.” While our motto may be “Helping Society Make Better Decisions,” it’s still not easy to tell a client that their dream project is unlikely to result in a positive economic outcome. Sometimes, though, we are blessed with the joy of watching an obviously beneficial and feasible project move from proposal to analysis to action. A recent example moved one step closer to reality when Governor Sarah Palin approved the new FY 2009 Capital Budget, which included $150,000 to help the Alaska Department of Fish and Game (ADF&G) with its planned overhaul of the current system for collecting labor data on Alaska’s seafood harvesters.

The Problem

Accurate data on participation is important for both the communities crew members call home and for the crew members themselves. Without accurate data fishing communities find it difficult to prove to policy makers, granting agencies, or lawmakers that their communities are integrally tied to fisheries. This is especially true for inland communities where a connection between the community and the sea may not be obvious to a policy maker located outside Alaska. Crew license holders suffer because their licenses do not provide adequate proof that they participated in a specific fishery. This makes it more difficult for crew and communities to find a seat at the table during fisheries restructuring discussions or when they try to access federal programs such as those run under the Trade Adjustment Act. Hence, an improved system has the potential to make a large difference in the lives of crew members and in their communities. (We also note that improved data collection systems always make the lives of your friendly neighborhood economic consultants easier.)

The Process

The recent state appropriation is part of a process that began with the Southwest Alaska Municipal Conference’s (SWAMC) Seafood Harvesting Labor Data (SHLD) project-when SWAMC expanded an existing effort to improve the quality of seafood harvesting labor data. SWAMC member communities are located from Kodiak to Bristol Bay and out along the Aleutian Chain. Commercial fishing is a cornerstone of the local economy in many of these communities. While several sources track permit holder effort and processing labor by community, crewmember data has received a decidedly lower level of attention than other key components of the seafood labor force. For example, permit holder effort and processing labor are each tracked-by community-by one or more of the following agencies: the U.S. Census, the U.S. Bureau of Labor Statistics, the Alaska Department of Labor and Workforce Development, and the Commercial Fisheries Entry Commission. Normally, worker counts are available through unemployment insurance premiums paid to the State of Alaska, but crew members are contract workers who are not required to pay unemployment insurance premiums so the Alaska Department of Workforce and Labor Development does not collect wage reports. The only consistent data over time comes from the Alaska Department of Fish and Game’s licensing program. The current licensing program is both vendor and license-holder friendly in that applying for a crew license is the same as applying for a recreational fishing license: simply tell a vendor you would like to purchase a crew license, fill out a carbon-paper backed form, hand over your money, and walk away with your new license. A paper copy of the license is then sent back to ADF&G by the vendor, where it is hand-entered in a database. That point represents the end of consistent official tracking of crew effort across the entire population of crew members. While the data collected by ADF&G allow us to know how many people purchased licenses and where they purchased them, we do not know how many crew license holders participate in a given fishery in aggregate or by community of residence. The current system tracks licenses purchases as opposed to actual participation.

Our Role

Northern Economics’ role in the SHLD project was to document the challenges communities and crew license holders faced with the current system, to outline past and current efforts to address the problem, to convene a 2-day workshop of stakeholders, and to outline roadmaps to a variety of solutions for SWAMC. The high point of the project came in November 2006 when more than two dozen stakeholders representing crew, communities, state and federal agencies, and researchers came together to exchange ideas and explore solutions to the issues at hand. The meeting ended with a commitment by ADF&G to review the current situation. After the completion of the project in early 2007, the SWAMC Board voted to continue pushing for a revamped data collection system. SWAMC’s staff has continued working with ADF&G on to make sure that a new data collection system meets the needs of crew members, communities and policymakers while also meeting ADF&G’s goals of ensuring the system stays accessible to vendors and purchasers alike. As quoted by the Anchorage Daily News on May 4th, 2008, John Hilsinger of ADF&G noted “We need a system that works in the Bering Sea Crab Fisheries as well as the skiff fisheries on remote rivers.”

While Northern Economics no longer has an active role in SHLD project, we are heartened every time we hear that the project continues to move forward and that SWAMC and the myriad of state and federal agencies involved in the project continue to build on the understandings forged during the SHLD workshops. If SWAMC’s and ADF&G’s efforts result in an improved crew labor data collection system, we’ll be excited to be able to use the new data and to know that we played a small role in making positive change for Alaska.

Governor Palin’s proposed $500 per person energy rebate morphed into a $1,200 per person resource rebate in July, with the hope of allowing Alaskans to decide how to spend their share of excess revenues from development of the state’s resources.

A recent ISER publication compares the proposed rebate with the increase in household energy costs for residents throughout the state. As with the earlier study mentioned in this blog, the energy costs include electricity and heating, but not vehicle fuel costs and other energy needs. What it finds is that virtually all of the households in Anchorage (97 to 99 percent) would collect more from the rebate than their energy costs had increased from 2006 to 2008. The numbers are similar for the increase in energy costs from 2000 to 2008: 87 to 94 percent of households would be overcompensated.

Residents in other road communities and more developed areas of the state would fare similarly. Households in the Mat-Su and Kenai Peninsula Boroughs would be overcompensated by 77 to 91 percent (or 62 to 81 percent for 2000 to 2008 increases). Households in Fairbanks, Juneau, and elsewhere would be overcompensated by 70 to 73 percent (2006-2008) and 47 to 59 percent (2000-2008).

In rural Alaska, however, the rebate would cover energy cost increases from 2006 to 2008 in about half of households, and would only cover the energy cost increases from 2000 to 2008 in about one-third of households.

Based on ISER’s findings, for the majority of households in the state, the rebate by far exceeds the increases in energy costs. Only communities in rural parts of the state have experienced increases in energy costs compared with the amount of the rebate.

Alaskans would be wise to spend their rebates carefully, however, as the less-mentioned effect of increasing fuel costs is the impact it has on the price of transporting food to and within our great state. The U.S. Postal Service increased shipping costs in May due to increased fuel prices. Along with the penny per stamp increase faced by consumers around the nation, bypass mail rates went up 9.5 percent, a cost passed on to rural customers of the AC Store, according to the Seward Phoenix LOG. As noted in the article, this increase follows increases in bypass mail rates of 12 percent and 7 percent in the prior two years.

The impact of higher transportation costs on food prices was covered in the July 2008 issue of Alaska Economic Trends. While Anchorage’s inflation rate was only 2.2 percent in 2007, during the first three months of 2008 data collected on food costs suggests that food prices increased 10 percent. Areas with air and seasonal barge access face the most expensive food.

It remains to be seen how quickly, or if, the resource rebate checks will start to arrive in mailboxes, but one thing is clear: whether it be food or fuel, Alaskans are paying more for many of the items they purchase on a regular basis.

The Institute of Social and Economic Research (ISER) at the University of Alaska Anchorage published a WebNote titled “Estimated Household Costs for Home Energy Use, May 2008” earlier this month.

ISER estimates that households in the state spend an average of 3.9 percent of their income on home energy. In Anchorage, the percentage ranges from 2 percent to 3.9 percent, depending on income. In other large communities and communities on the road system, 3.1 percent to 12.9 percent is spent on home energy. For remote rural communities, the impact is the greatest, ranging from 5.3 percent to 41 percent. With soaring diesel prices, it is understandable that more remote communities pay more for home energy, since the majority of communities outside Anchorage rely on diesel fuel for electricity generation and heating.

The authors are careful to point out that the numbers are only estimates, since there is a lag between when information used in the study is available. The study likely overstates the actual expenditures. However, the basic premise of the study holds: Alaskans, especially those in remote areas of the state, spend a lot of money on home energy needs.

The study’s focus is on home energy use, which includes heating, electricity, and other uses. It does not include the cost of fuel used for transportation, however, meaning that the burden placed on Alaskan households due to high energy prices is even greater when one considers the operation of a vehicle and the purchase of goods produced outside the state or region. (I’ve heard reference to the fact that food travels an average of something like 1,500 miles to arrive on one’s dinner plate at home. Anchorage is 1,450 air miles from SeaTac alone, so food traveling to Alaska has to go much farther than food sent to other parts of the country.)

You can find the ISER WebNote at http://www.iser.uaa.alaska.edu/Publications/webnote/Fuelcostupdatefinal.pdf.

The Natural Resources Defense Council (NRDC) recently launched a new website to help businesses understand how to “go green” in a very no-nonsense manner. They explain that “going green” is the colloquial term for working towards reducing the negative impacts on the planet’s ecological systems from your company’s supply chain and operations. The site is designed to be useful to all manner of enterprise because it collects all of the parts of the greening process into one site: how to make the business case, how to design a greening program, and the various opportunities for greening.

From an economics perspective, the site is very interesting because it is written by an environmental organization for a business audience. People tend to think of environmental activists as taking a confrontational approach to changing the way a business, viewed as environmentally negative, operates by trying to stop the business’s operation. The NRDC has attempted to take a different approach to changing the way businesses operate by appealing to businesses by framing their interests (reducing ecological impacts) into the terms of business.  The result is discussing environmental protection in terms of reduced costs and increased revenue – music to any business owner’s ears.

This approach is not new and has grown in interest in the environmental community for several years. The basic idea is that most resources that a business consumes cost the business money.  If they reduce the consumption, they reduce their internal cost in addition to reducing the external costs that include the ecological impacts of the resource consumption. There is also the added bonus that discerning environmental minded shoppers may feel better about purchasing products made with less impact on the planet. It also has the potential to boost employee morale because people tend to want to make the world a better place and the opportunity to make that difference through your job is inspiring.

Again, there is nothing profoundly new on the website. It is notable for its guilt-free appeal to businesses to add some environmental thinking to their operations and the comprehensive but not overwhelming coverage of issues. So take a look and see if there are any money saving tips that could help your business or organization. The link is below:

NRDC’s Greening Advisor

My name is Cristina Gaina. I am exploring the Alaskan Economy(and everything related) this summer as an intern for NEI.I am an international student at UAA,majoring in Economics  and working on a minor/major in Math. As for my graduate studies, an MBA is probably my best choice for now.

So far,I love my experience with NEI. I have been able to put at work my organizational skills and learn a lot about Alaska’s geo-economic and socio-cultural specific characteristics, especially demographics-past,present and future.

It is a wonderful experience that combines applying knowledge gained in class, learning the real world economics and enriching cultural knowledge in a friendly,supportive as well as challenging  environment.