Here we are- my final APCM blog. Thank you to my collaborators at APCM and APCM Wealth Management for Individuals. It’s been a great ride and fantastic opportunity. They gave me a chance at a moment when I was in transition and starting a new business. They are client #001 in my client database, and I will always appreciate them as people and a business.
Alaska is losing the competition for talent and people, and it’s holding our economy back. In 20 years of living here, my experience has been that we’ve always been short talent particularly in medium-skill and high-skill occupations. This shortage helped create what I’ll call the “Alaska Compact”- If you were a skilled worker who was willing to work hard (and could pass a drug test) then you could come to Alaska and you make a real go of it. The cost of living would be higher than most places in the US, but you would get paid more. In addition, the thin labor market provided many opportunities to move up the ladder quickly and make real differences. At the same time, your local taxes would be low by Lower 48 standards, your state taxes would be non-existent, and local services and the education system, while not (in aggregate) measuring up to the best (or even the better-than-average) that the Lower 48 had to offer, would be good enough that it wasn’t a dealbreaker. Throw in tight communities where you could really know people, and Alaska’s amazing recreation opportunities, and the compact’s package was attractive. For 40 years this unique combination and it’s concurrence with the baby boom generation made for a win-win-win-win for workers, families, communities, and the state. Our population grew more than 75 percent between 1980 and 2020 from 400,000 to 735,000. As the population grew so did the quality and quantity of services that you could access easily without leaving the state.
We are in a moment of disjunction as a state, a nation, and a world. The old orders and familiarities are evolving or falling away and being replaced with something new (and sometimes the unknown). The Alaska Department of Labor and Workforce Development projects that instead of a 75 percent increase in population over 40 years that we’ll get a three percent increase over 30 years. Part of that incredible slowdown is a natural slowing in the growth of the U.S. nationwide. We’re having fewer children and letting in fewer immigrants both legal and illegal. However, I hypothesize that a significant part of that shift to nearly non-existent growth is a disjunction in the Alaska Compact that existed for at least the last 40 years. As a package, the compact no longer exists as it once did. A BLS report from 1998 indicated a 24 percent premium in average weekly wages for workers in Alaska compared to the national average. Current BLS data indicate average weekly wages in Alaska are now at or below the national average and that our standing worsened during the pandemic. Over the same period, the cost of living compared to the national average hasn’t shifted much in the 20 years I’ve lived here (still 20-30 percent above the national average). So, on average, we’re no longer creating the same income premium as we did 20+ years ago and the cost of living has stayed high. At the same time, wait for it, we’re 49th in educating our kids. In no way am I arguing that our state public education system fails all kids or is a failure. That’s simply not true and we’ve made MASSIVE progress in lowering the percentage of high school students that don’t graduate. However, we are, collectively, simply not getting enough children the education and preparation, they need before kindergarten and that’s helping lower our fourth grade reading and eighth grade math proficiency scores (both hallmarks of future success). We just aren’t keeping up with other states; if you stay still and everybody else hits the gas then you’re not going to keep up.
So, put yourself in the shoes of a young skilled worker or family deciding where to live. Compared to 2003, when my wife and I faced the same decision, in Alaska you see the same high-cost living environment but potentially without the income premium, a more uncertain fiscal situation (and the fiscal situation in 2003 was not good), and metrics around investment in education and educational achievement that challenging to say the least. The recreational opportunities are still here, and Alaska’s unique qualities are still intact. What decision do you make? As I noted in my “mini-rant” last month, the market has been voting with its feet for over a half-decade and saying, “there are better options elsewhere.” Young people and families aren’t moving here and, to a lesser degree, those who are here aren’t choosing to stay.
Elements of the old Alaska Compact are gone or fading and as Alaska moves to the future it should consider what will take its place. How hard does it want to compete to attract families and skilled labor? When we talk economic development we often talk about attracting companies, particularly resource companies, to Alaska. Those efforts are still part of our equation, but in a world with fewer workers and more competition for those workers, are we willing to compete for the labor force that companies look for? Similarly, in a world where workers are more mobile than ever, and can work many jobs from anywhere, how hard are we willing to compete to make Alaska the place they want to call home? Every company I know is pining for high quality labor and struggling to find it here. We want the people who want to be here, but are we willing to make to make that case, not just in word, but in deed?
Alaska has the resources and the “uniques” necessary to have an amazing future where we no longer ride the “boom and bust” cycles of that defined our first 63 years of statehood. It’s a question of whether we’re willing to do the work? Are we? I don’t know. I’ve been thinking about that for a long time, especially across my 5-year run writing this blog for APCM, and I still haven’t been convinced in either direction. So, here’s my closing ask- If you want Alaska to reach its potential, consider your role in helping Alaska make the case that this complex, beautiful, frustrating, and amazing place we call home really is a great place to plant your roots.
Jonathan’s Takeaway: Jonathan and his wife recently sent their first child to college. They don’t know if he’ll pick Alaska when he graduates, but they want Alaska to make its best case that this place is one where he and his peers can set their roots and build a great future.
Jonathan King is a consulting economist and Certified Professional Coach. His firm, Halcyon Consulting, is dedicated to helping clients reach their goals through accountability, integrity, and personal growth. Jonathan has 25 years of social science consulting experience, including 19 years in Alaska. The comments in this blog do not necessarily represent the view of employers and clients past or present and are Jonathan’s alone. He’d love to hear from you at Jonathan@halcyoncg.com.