Sitka took an economic hit in 2020 — more so than many places in the state, according to researcher Jim Calvin — but did not dry up and blow away, thanks to government relief payments. Still, “the impacts have not been uniform,” Calvin reported, as the visitor sector, dining, bars, transportation, and seafood all saw serious losses. (KCAW photo/Berett Wilber)

Economic data from 2020 for Sitka are in, and the numbers show a community hit hard by job losses and revenue declines, especially in tourism and seafood.

However, federal relief looks like it may have offset the worst of the damage. Economist Jim Calvin, with McKinley Research, presented his analysis of Sitka’s economy last week (4-22-21).

See the entire McKinley Research Group presentation on Sitka.

The analysis from McKinley Research may not have been quite what the audience expected. Jim Calvin has studied Sitka’s economy for years, in the organization’s previous incarnation as the McDowell Group.

At its worst in May of 2020, Sitka’s employment was down by about 25-percent.

“Sitka was hit harder than most of the rest of the state,” said Calvin. “Down 676 jobs (25-percent). In the meantime the statewide decline was about nine percent, and Juneau was down 13-percent.”

Virtually all seasonal tourism jobs vanished, along with most visitors — and not just cruise passengers. In April of 2019 somewhere around 5,000 people arrived at Sitka’s airport; that same month a year later saw only 300 “enplanements.”

Every other sector of Sitka’s economy also took hits: hotels, restaurants, construction, retail, seafood, and government all were down.

Government relief played a huge role in Sitka’s economy in 2020: In all, wages were down $19.4 million in Sitka, and business sales dropped off by $60 million. However, Sitka’s total combined relief (direct payments, PPP, Unemployment Insurance, Economic Injury Disaster Loans, State of Alaska Cares Act Funds, and Tribal Funding totaled $80 million. (Source: McKinley Research)

And Calvin found an economic indicator in the fishing industry that someone less familiar with the region might overlook.

“The number of crew licenses sold in 2020 was 31-percent lower than in 2019,” Calvin said. “That’s the lowest number of crew licenses sold since 2009.”

Lockdowns across the country effectively closed the white-tablecloth market for Alaska’s premium harvests of salmon, halibut, and black cod. That, plus the challenges of safely taking on crew during the pandemic meant that many boats were going with fewer crew, or in some cases, going it alone.

Gross business sales in Sitka were down in 2020 — but by a total of only around $15 million. From $497 million in 2019, to $392 million in 2020. Calvin said it’s important to turn that number around.

“We care about business sales because it’s business sales that generate wages,” he said. “And it’s business sales that generate tax revenues to support city services. So, the moral of the story: Big whack in business sales in the community as a result of the pandemic.” 

A big whack, but not devastation. Sitka does not look or feel depressed. The reason, according to the data, appears to be the three major federal relief packages so far. In Alaska — incredibly — personal income went up in 2020, by $1.4 billion, a little over three percent. In Alaska, as in Sitka, there was an overall drop in workplace earnings that was more than offset by so-called “transfer payments” — or direct payments from government. Sitka didn’t benefit to quite that degree, but it’s something: Add up the supplemental unemployment insurance, the Paycheck Protection Program, and the Economic Impact payments and Sitka’s net personal income loss is only $20 million — out of the $632-million in personal income in 2019.

The problem, says Calvin, is the uneven distribution of the pain.

“The impacts have not been uniform,” he said. “Certainly businesses in scenic and sightseeing, and other transportation, accommodations, food service businesses, drinking places — those businesses have been hardest hit. And lower wage earners have been hit by a substantial margin.”

Calvin says that three-quarters of Sitka residents collecting unemployment insurance had earnings of less than $40,000 annually prior to the pandemic.

In a typical year, in a typical economic presentation, Calvin would devote more attention to broader economic trends — like Sitka’s demographics. He did mention that the community’s slow population slide continues, and that Sitka could be down around 8,100 people by 2030. But this time he concluded with the big question of the pandemic: What are the long-term economic impacts of COVID? Will the positive vaccination trend end the pandemic, and stimulate a spending boom? Or will the trillions in debt incurred by the country trigger a round of inflation? Calvin deferred the answer to Yogi Berra, who said “It’s dangerous to make forecasts, especially about the future.”