Business group projects 1,600 job loss in Anchorage in 2016

  • By Dan Joling
  • Saturday, January 30, 2016 8:58pm
  • News

ANCHORAGE — A 2016 economic forecast prepared for the Anchorage Economic Development Corp. projects a loss of 1,600 jobs in Alaska’s largest city, including 600 in the oil and gas sector.

The city of just under 300,000 could see a net 1 percent jobs decline, according to the report’s forecast. Cost-cutting by petroleum companies and a projected decline in state government spending are among factors in the projected job loss.

“It is definitely going to be a year that is a bit of a pinch in the local economy, but luckily it’s not a punch,” said Bill Popp, president and chief executive officer of the nonprofit group formed to encourage growth and diversity in the Anchorage economy.

The report forecasts a loss of 500 government jobs and 500 construction jobs. It forecasts a loss of 400 “business services jobs” such as engineers, marketers, lawyers, architects and management professionals due to reduced spending on large-scale construction projects.

On the plus side, it forecasts 300 more health care jobs with Medicaid expansion and the aging of Alaska’s baby boomers. The report forecasts 200 more jobs in “leisure and hospitality.”

The report was prepared by McDowell Group, an Alaska-based economic consulting company, using data produced by the Alaska Department of Labor and Workforce Development. The report was one of six economic reports released by the corporation. BP sponsored the Anchorage jobs forecast.

People hear 1,600 lost jobs and it seems like a big number, Popp said. A 1 percent reduction, however takes the city back to 2012 levels.

“It’s a setback but it by no means the economy going into freefall,” Popp said.

Alaska petroleum jobs are expected to follow a national decline because of persistent low prices and global oversupply. For much of 2015, Anchorage had 3,700 people employed by oil companies. By December, that already had fallen by 300, Popp said.

A decision by Royal Dutch Shell PLC in September to cease Arctic offshore drilling “for the foreseeable future” meant the loss of about 400 Alaska jobs, according to the report. BP in January announced it would reduce 4,000 jobs, including some in Alaska. But ConocoPhillips, the report notes, released a 2016 Alaska capital budget of $1.3 billion and plans two more drill rigs.

Upward of 90 percent of the state government budget is dependent on the oil industry. The price of Alaska North Slope crude oil Jan. 21 was just under $27 per barrel. Adjusted for inflation, that’s the lowest price since 2002, when production averaged more than 1 million barrels per day. This month, production is about 566,000 barrels per day.

The top issue for the Alaska Legislature, which convened last week in Juneau, is how to deal with a projected $3.5 billion gap between projected income and spending. Anchorage lost 400 state government jobs in the second half of 2015, Popp said, part of a statewide loss of 1,600 positions.

“When you cut over $800 million of the state budget, there are consequences,” he said. The report tries to forecast additional job losses based on Gov. Bill Walker’s proposed budget and the deficit.

The downturn in Anchorage could be countered in part by growth in other sectors, Popp said. The visitor industry is constructing hotels in Anchorage. A strengthening national and lower energy costs should make Alaska an attractive destination and the corporation is projecting a record tourism year.

State Department of Labor economist Neal Fried said Friday the report projects more job loss than the department’s own forecast a month ago but does not vary greatly.

Alaska has seen moderate growth since 1988 was largely untouched by three Lower 48 recessions, Fried said. Two great uncertainties not present before — legislative action on the state budget and petroleum companies’ reaction to low oil prices — make it a tough time to figure out what is going to happen in 2016. The sectors of job loss are easier to predict than the degree, he said.

“There isn’t really a playbook for this,” Fried said.

More in News

Shawn Dick of Talkneetna carries a fresh catch out of the water while dipnetting on the Kenai Beach on July 10, 2020. (Peninsula Clarion file)
Kenai River dipnetting opens this month

The Kenai River personal use dipnet fishery opens July 10

The sun is seen shining above the Kenai River in Soldotna, Alaska, on July 14, 2020. (Photo by Erin Thompson/Peninsula Clario file)
When the temperature hits 70, Alaskans feel the heat — and start suffering health ills

Acclimatization, the angle of the sun at high latitudes and other factors make summer heat more intense in Alaska

A map shows active fires around the state of Alaska on Friday, July 1, 2022. (Screenshot from Alaska Wildland Fire Information Map)
Fire danger prompts restrictions on burning, fireworks

There were 160 fires in Alaska as of Thursday, and of those 17 were staffed with fire personnel

Jessica Cook, left, and Les Gara are photographed in The Peninsula Clarion’s offices Thursday in Kenai. (Ashlyn O’Hara/Peninsula Clarion)
Gara, Cook campaign on the Kenai Peninsula

The pair cited education funding, reproductive rights and election security as priorities

A map shows the Seward Highway MP 17-22.5 Rehabilitation Project area. The Seward Highway between Mileposts 17 and 22.5 — from about Primrose Campground to near Teddy’s Inn The Woods — will be closed from 8 p.m. and 5 a.m. on Mondays and Wednesday starting July 18, 2022. (Screenshot)
Roadwork in Moose Pass to shut parts of Seward Highway

The Seward Highway between Mileposts 17 and 22.5 will be closed from 8 p.m. and 5 a.m. on Mondays and Wednesday starting July 18

Former Homer High School athletic director poses on Friday, July 1, 2022, at the high school athletic field in Homer, Alaska. (Photo by Michael Armstrong/Homer News)
Work ethic, grit and teamwork

After two decades, Homer athletic director says goodbye to program he helped build

Assembly members participate during a meeting of the Kenai Peninsula Borough Assembly on Tuesday, June 21, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Another renewable energy company seeks to set up peninsula solar farm

Utopian Power wants to build a two-megawatt solar farm on a 40-acre chunk of land owned by the borough

COVID-19. (Image courtesy CDC)
COVID hospitalizations up from last week

Hospitalization data is the most effective indicator of the prevalence of the virus

Most Read