Alaska’s economic recovery lags behind most states

a sign posted outside a restaurant reads "we are hiring"
A sign outside 49th State Brewing in downtown Anchorage apologizes for long wait times and states, “We are hiring”. The wait to be seated on a Wednesday evening in July was roughly 1.5- to 2-hours, according to staff and patrons. (Jeff Chen/Alaska Public Media)

While the country continues to build back jobs after a sharp drop-off at the start of the pandemic, Alaska’s economic recovery is lagging behind most states, according to Dan Robinson, chief of research and analysis with the state labor department. 

As of July, Alaska had made up less than half of COVID-related job losses. The makeup of the state’s economy is an important factor, said Robinson. Many of the states struggling to recover jobs have large fossil fuel sectors.

“COVID hit the oil industry really hard and it’s been slow to bounce back,” he said. “It’s just barely in the last three or four months starting to bounce back. And it’s been a weak bounce.”

Tourism is another sector that has struggled to bounce back since 2020. Alaska and Hawaii share similarities there. 

“It’s the specifics of Alaska and Hawaii’s tourism sectors,” Robinson said. “You have to fly, you have to spend a lot of money. For Alaska, cruise ship tourism is the obvious casualty, especially summer of 2020.”

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The nationwide labor shortage has also impacted job growth in Alaska. 

Job openings are at historic highs right now and Robinson said data is still being collected as to why that is. Some economists speculate that people may not be rushing to return to jobs in retail and hospitality with the extra constraints of working in a pandemic.

“And then, it’s a little frou-frou, but there’s a lot of talk about workers, partly because of COVID, wanting more meaning from their work,” Robinson said.

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He said a lack of affordable child care may also be at play for working parents weighing whether to return to work. 

Robinson said he doesn’t think the labor shortage is going to be a long-term drag on the state’s economy, but it does mean that employers may have to respond with higher wages and better benefits, at least in the short term.

The rise of the highly-contagious delta variant of the coronavirus has also thrown even more uncertainty into Alaska’s economic future. But Robinson said it’s too soon to tell how the largest surge of the pandemic could impact the state’s lagging recovery. 

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