A Snapshot of the Alaska Economy AFN Leadership Forum Steve Colt UAA Institute of Social and Economic Research 6 July 2006 Acknowledgments Funding: Alaska Council on Economic Education University of Alaska Foundation Previous work: Scott Goldsmith, ISER Helpful comments: Cynthia Casas, Steve Jackstadt These slides available at: www.iser.uaa.alaska.edu Overview Size: – How big is the Alaska economy? Structure: – What drives the Alaska economy? – How is that changing? Regional variation: – How is remote Alaska different? Looking ahead: – Strengths and areas of concern How big is the Alaska economy? (year 2004) population: 658,000 total employment: 400,000 – includes military, proprietors personal income: $22 billion gross state product: $36 billion – value of production occurring within the state – includes wages and profits going to nonresidents ISER, AK DOLWD, U.S. BEA Alaska gross state product: $36 billion in 2004 All other GSP 64% U.S. Bureau of Economic Analysis Petroleum related 36% Alaska gross state product compared to other states 1600 1,519 1200 907 1000 800 600 229 400 U.S. Bureau of Economic Analysis California New York U.S. average 23 Alaska 0 22 N. Dakota 200 36 Vermont billions of dollars 1400 Alaska gross state product: a closer look 60 50.2 36.0 40 30 22.0 22.9 AK nonpetroleum 27.6 Vermont billions of dollars 50 41.8 29.7 20 U.S. Bureau of Economic Analysis Hawaii Rhode Island Alaska S. Dakota 0 Montana 10 Alaska gross state product compared to other countries 171.9 180 140 120 90.5 100 40 38.5 U.N. Human Development Report 2005 Norway New Zealand 9.0 Costa Rica 0 36.0 22.9 AK nonpetroleum 20 35.0 Alaska 60 Nepal 80 Iceland billions of dollars 160 Structure of the Alaska economy subsistence the five driving sectors how we got here looking ahead Subsistence is a vital part of the Alaska economy Total subsistence harvests exceed 53 million pounds ISER, ADF&G Sources of jobs in the cash economy: personal assets 10% tourism, cargo 10% oil and gas 32% fishing, mining, timber 10% federal govt 35% about 400,000 total jobs in 2004 Oil and gas: 126,800 jobs (32%) Oil production, 56,300 Other Sectors, 273,200 ISER Recycled taxes, 29,600 Permanent fund, 40,900 Federal spending: 141,600 jobs (35%) Military, 53,800 Civilian, 87,800 Other Sectors, 258,400 ISER Seafood, mining, and timber: 50,400 jobs (13%) Seafood, 34,900 Other Sectors, 349,600 ISER Mining, 8,700 Timber, 6,200 Agriculture, 500 Tourism and air cargo: 39,800 jobs (10%) Tourism, 34,200 Other Sectors, 360,200 ISER Air cargo, 5,600 Personal assets (mailbox economy) 41,400 jobs (10%) Personal assets, 41,400 Other Sectors, 358,600 ISER Growth of Alaska employment 1965-2000 ALASKA EMPLOYMENT THOUSANDS 350 300 350 [photos] 300 250 250 200 200 150 150 100 100 50 50 0 0 1965 1970 SUPPORT ISER 1975 1980 STATE / LOCAL GOVT 1985 1990 INFRASTRUCTURE 1995 BASIC Alaska economy looks more like the U.S. over time Employment Mix by Census Class of Worker 100% 80% 60% 40% Self 20% Govt Private Wage 0% AK 1990 U.S. Census AK 2000 ANCMatSu US 2000 Regional variation: how is remote Alaska different? jobs income demographics infrastructure Unemployment Alaska DOLWD Average annual wage & salary earnings in private industry (2000) Wade Hampton Yukon-Koyukuk Bethel $16,081 $23,691 $24,911 Lake & Peninsula $26,342 Nome $26,457 Dillingham $28,829 NW Arctic $45,015 NSB Anchorage Alaska DOLWD $70,905 $34,404 Rural Alaska runs on expensive diesel Barrels of Oil per Year barrels oil per person per year Primary Energy Inputs per Alaskan 70 60 50 Wood and all other Other petroleum 40 Gasoline 30 Diesel 20 10 Hydro - Coal Alaska Gas PCE Network places Other Natural Gas Who will need jobs? Age distributions, year 2000 100-104 95 90 85 80 100-104 95 90 85 80 75 70 65 60 75 70 65 60 55 55 50 45 40 35 50 45 40 35 30 30 25 20 15 10 25 20 15 10 5 5 0 3,000 0 2,000 1,000 female U.S. census 0 1,000 2,000 male Anchorage 3,000 1,000 500 0 female 500 1,000 male remote rural AK Internet availability to communities (not the same as actual connections) 120% 100% 80% 60% 85.6% 97.0% remote rural rest of state 40% 20% 0% Regulatory Commission of AK 2005 uncertain broadband dial-up none Looking ahead: strengths and areas of concern Oil production is declining… Concern: Oil Production 1969 - 2022 2,500,000 NPRA Other NS Northstar Barrels per Day 2,000,000 Colville R Badami Duck Island 1,500,000 GPMcIntyre Milne Pt KRU.IPA+Sat 1,000,000 PBU.IPA+Sat Prudhoe Bay Cook Inlet Kuparuk 500,000 0 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 Year Alaska Department of Natural Resources We have been rescued – for now by high oil prices millions of year 2005 real dollars State Oil Revenues 4,500 4,000 3,500 3,000 Corporate Income 2,500 Severance Tax 2,000 Royalties 1,500 1,000 500 1985 1990 Alaska Department of Revenue, author calculation 2000 2005 Permanent fund earnings roughly equal oil revenues Strength: Small firms are a vital part of today’s economy…. Strength: More than 40% of private sector jobs are with firms of less than 50 people – average size = 6 people More than 50% of private sector jobs are with firms of less than 100 people These data do not include proprietors: – most fishers, many professionals – Therefore, true size of the small-business sector is significantly larger Alaska DOLWD, author calculation Private sector employment by size of firm (year 2005) 52,522 more than 500 Less than 50 employees 100-500 52,857 50-100 24,097 Alaska DOLWD 98,892 Alaska leads the nation in household internet usage Strength: % of households with internet access (2003) – Alaska 68.5 – New Hampshire 65.5 – Colorado 63.4 – Connecticut 62.9 – Utah 62.6 U.S. Census Strength: Alaska has low inequality Gini coefficients for countries and regions (0 = complete equality 100 = complete inequality) Alaska 38.0 (based on household income) Alaska estimated by author from US Census American Community Survey 2004 – household income UN Human Development Report 2005 Chap 2 – per capita income concern: formal ownership of Alaska lands 44 6 Total 375 million acres 104 State Fed conservation 73 Other Fed ANCSA Other Private 152 Strength and concern: Alaska age distribution includes many young people entering labor force 100-104 95 90 85 80 75 70 65 60 55 50 45 40 100-104 95 90 85 80 75 70 65 60 55 50 45 40 35 35 30 25 20 15 10 5 0 30 25 20 15 10 5 3,000,0 2,000,0 1,000,0 00 00 00 female U.S. Census 0 1,000,0 2,000,0 3,000,0 00 00 00 male U.S. (year 2000) 0 10,000 5,000 0 female 5,000 10,000 male Alaska (year 2000) We’re all in this together. www.iser.uaa.alaska.edu