Alaska Economics 101

It's 12 degrees at my place, up from 9 degrees 30 minutes ago. We've had fog overnight, leaving a layer of frost on everything, but still no significant snowfall since mid-December. Rats!

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We're digesting information received from a former co-worker in St. Louis, whose job was lost when the company she worked for recently shut its doors. She told us that the unemployment situation there is grim, taking mid-level managers an average of two years to find another job. Apparently the beginning of the problems there was when Anheuser Busch was sold to Amstel (or whomever it was), and then the Chrysler plant closing. That began a serious ripple effect that has now spread throughout the region. Frankly, I believe it goes back farther than that, to when Boeing bought out McDonnell-Douglas and moved the operation to the Seattle area. And that was about the same time that General Dynamics closed its doors in St. Louis.

The dominoes have been falling there for some time now.

We compare that to Alaska, going into 2010 with a budget surplus. The Anchorage job market is off about 3 percent, but that compares pretty favorably to the rest of the states. People here are cautious about spending money, but at least we have money to spend. The Anchorage housing market has been slightly negative as well, but new building permits are on the increase again.

The economic development folks seem to think that the tourism market will begin to rebound this year, as well. That's a VERY good thing, as much of the local economies in coastal cities (like Anchorage, Juneau, Ketchikan, Sitka, Cordova, etc) depends on tourism - everything from sightseeing to fishing charters, souvenirs, and the like.

This is not to say that people should flock here looking for work. Some months ago, Yahoo published a report on where jobs could be found; I'm sure there's a link, but I'm too lazy to look it up. They mentioned Alaska in general, and Anchorage specifically as a place to find work.

They lied. As I said, jobs are down, and the market is fairly small. It wouldn't take too many new people entering the area to throw things into a real tailspin.

I suspect that most folks don't really grasp the situation from a geographic standpoint: Anchorage and the surrounding small towns are likewise surrounded by hundreds of thousands of square miles of wilderness. There's nothing else here, and Seattle is a three-day drive through Canada from here, 1,300 miles away. The local market is finite, and cannot absorb a rapid influx of new workers. That is to say, new jobs are not available. Any openings right now are primarily created by attrition, rather than expansion.

Still, we're in better shape than many areas, and much more stable than most. We're fortunate, and we know it.