Ask an Economist: What does the partial government shutdown mean for Alaska’s economy?

Photo by Liz Ruskin

In Alaska, the percentage of federal employees in the workforce is one of the highest in the country. But right now, many of those employees aren’t getting paid.

That’s because the federal government is in its third week of a partial shutdown. Around 5,700 people in Alaska work for unfunded federal agencies. So right now, they’re furloughed or working without pay.

Alaska Public Media’s Abbey Collins checked in with state economist Neal Fried about how the shutdown fits in to the overall picture of Alaska’s economy.

Interview Highlights:

Federal employees in Alaska’s workforce: “It’s about 5 percent of 4.5 percent is federal civilian employees. When we look at the actual numbers it’s about 15,000 actual jobs on an annual basis. They tend to be stable jobs. There’s some seasonality to it but not a whole lot. And they’re well paid jobs. Oil is first, mining is second and they (federal jobs) run in third place.”

Part of the state economy’s basic sector: “The federal government is responsible for almost a third of all economic activity in Alaska. It might be even more than that now, because the oil sector has shrunk in relation to the rest of the economy. If this goes on for longer, other things will be effected besides just federal employees.”

Economic impact: “There is not a measurable effect yet. That doesn’t mean there wont be…if this continues for a little while longer, a couple more days, we could start picking this up in our actual numbers…our January employment numbers.”

“I can’t measure how federal employees are changing their habits. There’s just no way of me measuring that right now. Obviously it creates some anxiety. It creates some anxiety in the overall economy…because they spend money in our economy.”

Effect of past shutdowns: “I don’t think there have been really lasting effects here. In other words, if it ended tomorrow, if we look back at all kinds of data, we would never be able to even pinpoint this. So it’s really going to be a matter of how long this lasts.”

Neal Fried is an economist with the Alaska Department of Labor.