The new report highlights the rising economy and loss of government jobs in Southeast Alaska

Southeast by the Numbers 2022. (Photo by Eric Stone/KRBD)

Southeast Alaska’s economy experienced a massive rebound in 2021 and has continued to recover from the pandemic this year, but there are concerns that dwindling state jobs and a shortage of housing could weigh on further recovery.

Let’s start with the good news: 2020 has been so bad that almost everything looks good by comparison. Not only has the pandemic shut down the economy and devastated the tourism sector — it’s also been one of the worst years for Southeast Alaska’s fishing industry on record.

Rain Coast Data owner and director Meilani Schijvens says it’s impossible to imagine a better year-on-year recovery in jobs, wages and visits.

“It’s so nice to see the economy recovering and the employment numbers coming back and wages coming back. And you look forward so positively,” Schijvens said in an interview on Monday.

Rain Coast Data’s latest annual report for the Southeast Conference economic development group, known as Southeast by the Numbers, was released on Tuesday, the first day of the organization’s annual meeting in Ketchikan.

Schijvens says that by the end of the tourism season, she expects the total number of cruise ship passengers in Southeast Alaska to be 1.05 million. That’s the fourth-highest number of all time – and she says next year could break a record.

“The cruise industry itself is saying to look for a season similar to the 2019 season – that was 1.33 million passengers,” she said. “But we’re going to have more ships and more departures, so I expect it’s going to be probably our greatest season ever.”

Another highlight is the construction sector — and with federal infrastructure money flowing into Alaska following the passage of a bipartisan bill last year, Schijvens expects another big year for construction companies.

The mining sector grew slowly but steadily, creating nearly 37 jobs for a total of 898 last year.

But another important part of the region’s extractive industry was struggling. Employment in the timber industry fell to its lowest level on record – with just 312 people still employed in logging and wood processing. That’s more than 90% down from the industry peak in 1991.

Schijvens points to uncertainty over the status of the federal Roadless Rule — the Clinton-era deforestation limit was lifted by the Trump administration in 2020, but the Biden administration last year announced plans to restore it. The report also points to Sealaska Corp.’s decision. to move away from the felling of old stands at the beginning of last year.

But the shining star of the economy in 2021 was the fish sector. It wasn’t exactly a peak year for the industry – in terms of total weight harvested and value of catch, last year’s catch was just above the 10-year average. But both metrics have more than doubled since 2020.

“It really came back and supported the economy,” she said. “In fact, our seafood sector was our number one contract provider in Southeast Alaska in 2021. And that was the first time since 2015.”

That is among the private sector industries. The main source of wages for the people of Southeast Alaska was, as usual, the government – the public sector provided about a third of total workers’ income in 2021.

But Schijvens says she’s worried about a growing trend: government jobs are leaving the region or disappearing altogether.

“The biggest concern I have is watching government jobs in Southeast Alaska decline. If you look at the last 10 years, state jobs in Southeast Alaska have declined 24%. That’s a lot of jobs,” she said. “And those jobs are well-paying jobs with benefits that come with them.”

And she says the Southeast is bearing a disproportionate share of state job cuts under Governor Mike Dunleavy.

“If we look at the Parnell and Walker administrations, those jobs really just went away. These were part of the job cuts,” said Schijvens. “And in recent years, we’ve seen those jobs move to other parts of Alaska.”

According to the report, state agencies have eliminated 65% of jobs in Southeast Alaska’s Department of Public Safety and 62% in the Alaska Court System. Jobs in the state education and transportation departments have fallen by about half, as have jobs at the University of Alaska in the region.

“We have this really strong economic recovery coming up in Southeast Alaska and that’s the only thing that can kind of derail this economic recovery if these cuts continue or something I’m worried about,” Schijvens said.

Overall employment in all sectors has fallen 12% across the region since June from pre-pandemic levels – partly because employers in the tourism sector are unable to fill vacancies. Nationwide, employment is down 6% and across the country, jobs are up 1% from before the pandemic.

Schijvens says that the lack of available housing in the region plays an important role in the labor shortage.

“We have these types of labor shortages that we’re seeing throughout Southeast Alaska, and I’m lumping them together because that’s how our business leaders describe them.”

More than 60% of business leaders say rent and housing prices are too high for their employees, and a similar proportion say there just aren’t enough housing on the market. According to the survey, the bottlenecks are most pronounced in Hoonah, Sitka, Ketchikan and Skagway.

And the construction isn’t keeping up with demand – Schijvens data shows that the number of approved and completed housing units actually fell by 19% last year.

“We know that construction costs have increased. Maybe that put people off, but we’re seeing very low building rates for homes across Southeast Alaska right now,” she said.

Despite the warning signs, business leaders are optimistic – 79% say they have a positive outlook for the year ahead.