The state of Alaska is poised to lose 7,500 jobs, or two percent of its workforce, in 2017 while it continues to battle plummeting oil prices.
In its annual employment forecast, the Alaska Department of Labor attributed the surge in unemployment to the price of oil. The state’s annual jobs report revealed potential widespread reductions in the service industry, a sector that depends on consumer spending.
The state expects 2,800 of the jobs eliminated to fall on Anchorage, saying that the unemployment rate is 6.8 percent in November, which is up from the 6.4 percent unemployment rate a year ago.
If an oil company reduces its workforce, the change impacts those who rely on the company workforce to spend money. “Alaskans will hold on to more of their dollars this year because of lower wages and less confidence in the state economy,” Caroline Shultz, an economist, told the Daily Progress.
More than 90 percent of the state government, and a full one-third of all state jobs, come from oil, according to CNBC. The state is subject to drastic local price swings, which can effect everything from the price of fuel to the price of milk.
Alaskans are considering a personal income tax for the first time in 35 years, to address some of the funding gap issues resulting from volatile swings in oil prices and the resulting impact on state revenue.
Many of the jobs the state expects to lose will also be in state government and construction, but the losses could be partially absorbed by new jobs in the healthcare sector and tourism, the employment forecast says.
Other hopeful indicators include the expansion of a crucial medical center in Alaska’s southeast region, which is expected to provide much needed work, but these gains may be outpaced by widespread job losses.
Oil prices suddenly dropped in the second half of 2014, which resulted in lower production and protracted layoffs. The state budget has been in so much trouble in recent years, that state legislators have been looking to move state business into a smaller, less expensive venue, reports The New York Times.
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