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

Kenai Fire Marshal Jeremy Hamilton is seen by one of Kenai Fire Department’s Tower trucks on Friday, Sept. 30, 2022 at Kenai Fire Department in Kenai, Alaska. (Jake Dye/Peninsula Clarion)
‘Get up, get out and get safe’

Kids taught about fire safety as part of prevention effort

Bob Bird, left, chairman of the Alaskan Independence Party, and former Lt. Gov. Loren Leman make the case in favor of a state constitutional convention during a debate in Anchorage broadcast Thursday by Alaska Public Media. (Screenshot from Alaska Public Media’s YouTube channel)
Constitutional convention debate gets heated

Abortion, PFD factor into forum.

Carol Freas (right) helps a voter fill out absentee election materials in Kenai City Hall ahead of the Oct. 4 municipal election on Thursday, Sept. 29, 2022 in Kenai, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Absentee voting already underway

Absentee in-person voting has been made available across the borough

Graphic by Ashlyn O’Hara
Graphic by Ashlyn O’Hara
What’s on the ballot: Reapportionment, new field house, school bond

Voters will decide on ballot measures that address schools, public safety and legislative bodies

Cars line up ahead of dismissal at Mountain View Elementary School on Thursday, September 29, 2022, in Kenai, Alaska. A bond package up for consideration by Kenai Peninsula Borough voters on Oct. 4 would fund improvements to the school’s traffic flow. (Ashlyn O’Hara/Peninsula Clarion)
‘Critical needs’: Parking lot problems

Lack of space for pickup and drop-offs creates traffic jam at elementary school

Soldotna Elementary School Principal Dr. Austin Stevenson points out elements of the school building on Friday, Sept. 30, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
‘Critical needs’: Aging school on the brink

Renovations are cost prohibitive at Soldotna Elementary

Rep. Mary Peltola, an Alaska Democrat, delivers a speech on the U.S. House floor before Thursday’s vote approving her first bill, establishing an Office of Food Security in the Department of Veterans Affairs. It passed the House by a 376-49 vote, although its fate in the Senate is undetermined. (Screenshot from official U.S. House video)
Poll: Peltola’s a popular pol

Food for vets bill passes House, pollster says she is “the most popular figure in Alaska right now.”

A parking sign awaits the new executive director of the Alaska Permanent Fund at its Juneau headquarters, Three finalists will be interviewed for the job during a public meeting Monday by the fund’s board of trustees, who are expected to deliberate and announce the new director immediately afterward. (Mark Sabbatini / Juneau Empire)
Interviews, selection of new Permanent Fund CEO set for Monday

Three finalists seeking to manage $73.7B fund to appear before trustees at public meeting in Juneau

Principal Sarge Truesdell looks at cracked siding outside of Soldotna High School on Tuesday, Sept. 27, 2022, in Soldotna, Alaska. The siding is one of several projects in a bond package Kenai Peninsula voters will consider during the Oct. 4 municipal election. (Ashlyn O’Hara/Peninsula Clarion)
‘Critical needs’: Split siding at SoHi

The damage has been given patchwork treatment over the years

Most Read