Sitka’s economy isn’t exactly booming, but it’s not doing too badly, either. While much of the rest of the state has been in a recession over the last five years, Sitka has experienced modest growth in many areas of the economy, with the notable exception of population — which has remained stable for 25 years.
Jim Calvin, an economist with the McDowell Group in Juneau, delivered the news to a full house at Harrigan Centennial Hall last week (4-24-19).
The most glaring omission in the numbers was data from the 2018 fishing season. Power trolling for salmon remains Sitka’s top fishery, and a poor season in that sector, combined with a record-low pink salmon harvest, would have taken some of the shine off of what was otherwise an unexpectedly bright report.
Economics — like climate — is the study of long-term trends, and not short-term highs and lows.
On a bar graph and pie chart, Jim Calvin says Sitka is doing pretty well.
Sitka’s exhibited a remarkable degree of stability and resiliency over the last 25 years as it’s gone through various ups and downs. But pretty stable, pretty diversified economy. Some year-to-year noise in unemployment, but all-in-all pretty stable. Income has been trending in the right direction. Per capita total personal income for residents has been trending in the right direction. The latest data we have is 2017, but the last four or five years it’s all pointed in the right direction.
There are some interesting contrasts in the numbers: At 4-percent, Sitka has the lowest unemployment rate in the state, but 60-percent of the community’s workforce is non-resident. School enrollment is down sharply, but not the overall population. By 2030, almost a quarter of the population could be hitting retirement age.
Any one of these statistics don’t necessarily represent a threat to Sitka. Calvin says the darkest clouds are coming from Juneau.
Sitka has a remarkably diversified economy and has ridden out Alaska’s recession largely unscathed. It’s been tough sledding in Anchorage for example, and oil industry employment across the state is down by a third. And those are all high wage jobs. So Anchorage has taken a hit for sure. The state, since the recession has started, has lost somewhere in the neighborhood of 12,000 jobs. In the meantime, Sitka has been steady-as-she goes. Clearly, there are challenges each year depending on the strength of the fish run, or the number of visitors that are coming into the community. But you have a nicely diversified economy from which to look to the future. There are some challenging things in front of the community: The state budget is one of those key challenges. A lot of that is beyond your control. Frankly the legislature and the governor have it within their power to push the state back into recession, or to at least hold the gains that we’ve made as we’ve been trying to come out of recession, depending on how we address our budget situation. In the meantime, Sitka has kind of been an observer in that and suffered the kind of economic pain that other communities which are much more dependent on the oil industry, and the professional business services that feed the oil industry. So you’re in a good place in that regard. But still as Alaskans we’re all in this together, and if we can’t figure out a way to provide necessary state services and balance our budget, we risk shooting ourselves in the foot. That’s what we’re most concerned about — it doesn’t have to be a bloodbath for us to get our financial house in order. But we risk that.
Sitka businesses shared insights into the economy that weren’t necessarily fleshed out in the data. 109 local businesses responded to McDowell’s survey, compared to the 200 which responded in Juneau — an economy roughly four times as large.
In short, Sitka businesses are concerned about upward trends in the economy that aren’t so desirable, like the cost of living, and the unavailability of housing.
This is what the business community expects from the local economy over the next five years. This surprised us a little bit. More than half — 57-percent of the respondents — expect the economy to decline over the next five years. And that compares to 14 percent who expect it to improve. You know a lot is going on here: I think the state’s budget challenge is a big part of that. Sitka is particularly exposed with the high school, the university, the Pioneers Home — all are part of that state budgeting picture. In addition to DOT, and Fish & Game, and other sources of state employment. State government’s an important part of the picture. You add into that Medicaid payments that flow into the economy, capital project money that flows into the economy — state money that flows to and through Sitka is an important part of the economic picture. So I think we’re seeing concern about that here. Probably also some concern about the hospital/SEARHC issue, what that might mean in terms of the housing market and employment picture going forward. So that’s kind of a downer on what the business community is seeing about the economy going forward, and that’s not a good thing, because these are the people who invest in the community, and you would like your potential investors to be more optimistic about what’s coming.
Calvin took questions on the contrast between Sitka’s generally positive economic data and the negative business confidence. He said “Part of the challenge we have as researchers is that all of the data makes us look backwards, we can’t look forward. But we do know that people are very concerned about the state budget situation, and for good reason.”