Peninsula economy still better than state, economist says

The economy of the Kenai Peninsula is a little better off than the state as it heads into a year with steeper predicted job losses than 2016.

As in past years, the peninsula’s economy is similar to the state’s, except that it has a few more oil jobs than the state in general, said Alaska Department of Labor and Workforce Development economist Alyssa Rodrigues in a presentation during the annual Industry Outlook Forum Wednesday. Despite that, the peninsula is still overall doing better than the state in some measures, she said.

“The Kenai Peninsula is still doing better than the state,” she said. “Despite the fact that the peninsula lost jobs in both 2015 and 2016, it’s still doing better than the state. … The borough is so diverse. And so there is a whole lot of trying to make something work when one industry starts to falter, other industries kind of pick up and help out to some degree.”

Employment on the peninsula fell about 2.4 percent between the first two quarters of 2015 and 2016, a sharper drop than the state’s average decline of about 1.6 percent in the same period, as previously reported by the Clarion. Most of those jobs were in oil and gas and professional services. The numbers only represent the first two quarters of 2016, so they do not include the summer job boom in fishing, tourism and construction.

Rodrigues said the peninsula’s job growth has consistently outpaced the state’s over the years, and last year, average wages increased by more than 3 percent, or $1,556, on the peninsula. By contrast, the average North Slope Borough wages fell last year, she said.

“This last year was kind of astronomical,” she said. “… Inflation during 2014 and ‘15 was only half a percent, but wages increased by 3.3 percent, so that’s huge. Not only was there more money in the pockets of those who are still employed, it was more than enough to cover the increased cost of goods and services.

One tendency people have had since Alaska’s economy began to show negative signs in early 2014 has been to draw comparisons to the last major recession in the late 1980s. A drop in oil prices led to broad layoffs in the industry and led to a downturn in state revenue for a few years, similar to the current situation.

However, there several important differences, she said. Unlike the 1980s, when several years of major job growth preceded the decline, Alaska’s job growth was relatively slow for three years before 2016. Although in both situations oil and gas jobs in the state were at an all-time high, the economy today is more diverse than it was in the 1980s as well, she said.

She also contrasted the overall job growth with the percent decline to give perspective on the declines.

“I don’t want to make the job loss seem small and insignificant — it is significant,” she said. “2015, an almost 2 percent job loss, that is significant. But it is not a ‘sky is falling’ situation.”

Some industries are remaining relatively stable, despite the declines in oil and gas and professional services. Leisure and hospitality have stayed relatively flat, real estate has declined slightly and finance has increased slightly, possibly because of more people refinancing to take advantage of low interest rates, she said.

Locally, sales tax revenues in the borough have taken a nosedive, though. Because the state does not have a broad-based sales tax, Rodrigues pulled the numbers from the borough, which show a sharp drop in revenue in the first three quarters of 2016. For next year, she guessed it might be down another $500 million borough-wide.

“This is a place where we can really see … that ripple effect,” she said. “The contraction in terms of retail spending from people losing jobs in other sectors or just being nervous about it. When your neighbor loses their job, your coworker loses their job, it makes you a lot more nervous about yours.”

There is uncertainty for the future. The Legislature, which begins its session Monday, will again tackle the question of how to set a budget for a state with an approximately $3 billion deficit. The Department of Labor has predicted another 7,500 jobs to be lost in 2017, or about 2.3 percent, and may worsen if Congress repeals Medicaid expansion because of the potential losses in the health care sector. Commissioner Heidi Drygas wrote in a foreword to the 2017 economic forecast that the state’s economic health depends on the Legislature passing a sustainable budget.

“In the absence of a fiscal plan, job losses will continue, population loss is inevitable, and the weak job market will have negative ripple effects on real estate,” she wrote.

Kenai Peninsula Borough Mayor Mike Navarre echoed Drygas’ call in his borough-wide update at the Industry Outlook Forum. The borough is just entering its budget process and looks to stay fairly conservative, possible combining departments to save money, the same way it did last year with the purchasing and capital projects departments, he said. He acknowledged that these will be tough years in Alaska but said the administration would try to position the borough to weather the weakened economy as best it can.

He said the Legislature would have a difficult job this year deciding how best to reduce the budget and come up with a fiscal plan and said he planned to spend some time in Juneau. The Kenai Peninsula Borough “is so intertwined” with the state for funding that it could not be made up locally, he said.

“It’s vitally important that the Legislature this year come in with a fiscal plan for Alaska,” he said. “We have to start fixing our economic base so that we can move on towards the recovery phase and make sure that we don’t turn a fiscal crisis into a full-blown economic crisis for Alaska.”

Reach Elizabeth Earl at

More in News

COVID-19 (Image courtesy CDC)
State reports 3 more COVID deaths, more than 900 cases

The newly reported deaths push Alaska’s total to 594 COVID fatalities since the beginning of the pandemic.

In this July 1908 photograph provided by the U.S. Coast Guard Historian’s Office, the U.S. Revenue Cutter Bear sits at anchor while on Bering Sea Patrol off Alaska. The wreckage of the storied vessel, that served in two World Wars and patrolled frigid Arctic waters for decades, has been found, the Coast Guard said Tuesday, Oct. 12, 2021. (U.S. Coast Guard Historian’s Office via AP)
Coast Guard: Wreck found in Atlantic is storied cutter Bear

The ship performed patrols in waters off Alaska for decades.

The Federal Aviation Administration released an initiative to improve flight safety in Alaska for all aviation on Oct. 14, 2021. (Peter Segall / Juneau Empire File)
FAA releases Alaska aviation safety initiatives

The recommendations, covering five areas, range from improvements in hardware to data-gathering.

Kyle Kornelis speaks at a public meeting about the Runway 7-25 Rehabilitation Project on Tuesday, May 4, 2021 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Soldotna airport unveils revamped runway

Runway 7-25 was temporarily closed earlier this year while it underwent renovations.

Alaska Redistricting Board Director Peter Torkelson speaks at a redistricting open house on Thursday, Oct. 14, 2021 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Alaska Redistricting Board Director Peter Torkelson speaks at a redistricting open house on Thursday, Oct. 14, 2021 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Redistricting proposals draw concerns from local residents

The state is seeking feedback on the best way to redraw the state’s legislative district boundaries in the wake of the 2020 census.

Signs advertising COVID-19 safety protocoals stand outside the Soldotna Regional Sports Complex on Oct. 6, 2020, in Soldotna, Alaska. (Photo by Erin Thompson/Peninsula Clarion)
Ordinance seeks more funding for sports complex renovations

Approved for introduction by the Soldotna City Council during their Oct. 13 meeting, the legislation would put an extra $583,000 toward the project

Most Read