Juneau, Alaska

(907) 699-6788 ed.king@kingecon.com

Why is Alaska’s Population Declining?

The Department of Labor published Alaska’s annual population numbers in January. It shows a reduction of 3,048 people in FY19. That is the third annual loss in population in a row.

On a quarterly basis, the available U.S. Census data suggests we’ve been losing population for 12 consecutive quarters (beginning in October 2016). And the three years before that were not impressive.

While we can’t pick apart exactly what’s going on, we can look at the trends that have been causing our population to change for a few years now. From that, we can understand a little more about where to point the finger.

Birth Rates are Falling

Ever since Word War II veterans came home and created the Baby Boom, birth rates have been on the decline. With the exception of the baby echo in 1980s, it’s been a steady trend.

And, it has gotten worse. The generation currently in the prime fecundity window (those born between 1980 and 2000 – basically the Millennials) is not starting families the way their parents and grandparents did.

Most of the decline is a trend of teenage pregnancies going way down. But, a combination of factors has led the Millennial generation to wait longer to start a family. Consequently, they will end up having fewer kids or none at all.

As those biological clocks tick, we are seeing an increase in 30-something year old women having kids. That might signal that birth rates will stabilize soon. But, the overall trend is clear. One reason the population isn’t growing the way it used to because there aren’t as many babies being born.

Death Rates are Rising

There was a time when mortality rates were falling. That mostly had to do with the end of the war. But, a younger population also tends to be more resilient. The influx of babies pushed down the mortality rate of the population.

As advances in medicine improved life expectancy, less and less of the population faced the inevitable end – and the mortality rate stayed low. But, the unfortunate reality is that death can only be delayed, not avoided.

As our population is blessed with more time with our parents and grandparents, the number of those people arriving at the pearly gates has been steadily increasing over the last 30 years.

Out Migration

Alaska has a lot of people leaving the state each year. They are mostly military families being reassigned and resource development personnel rotating to new locations. Naturally, some portion of the population leaves for college, to take advantage of better job opportunities, or to retire in warmer climates.

In addition to these emigrants, thousands of seasonal workers make Alaska a temporary home in the summertime. However, these laborers don’t usually get counted as out-migration (as they never establish Alaska as their home and are not counted in the population).

For the last 30 years, the number of people leaving Alaska has hovered right around 40,000 people per year. However, beginning in 2012, that average has increased by about 7,000 people per year (a pattern that began a full four years before Alaska entered a recession).

Correlation to Alaska’s Economy and State Budget

While it is tempting to listen to the reasons that people give as they pack up their belongings, the data does not support the anecdotal evidence. There has been no statistically significant increase in out-migration while Alaska worked through its recent recession.

Nor is there any statistical evidence that changes to the budget have altered out-migration patterns. In fact, there was an increase in outmigration in 2012-2013 – a time when Alaska’s economy was doing exceptionally well and the state budget was at a record high. That level of out-migration has been slowing down as the budget was cut in the years that followed.

In Migration

The number of people moving into the state is a little more stable than the number moving away. For the most part, the people coming to Alaska are replacing the ones that left. The average number of people coming north is right around 40,000 people per year – mostly replacing those military families and resource workers that receive new assignments.

In-migration spiked in 2012 and 2013 (which masked the increase in out-migration for a couple years). Since then, it has returned to more normal levels. There does not appear to be any correlation to things like state spending, PFD amounts, or even the unemployment rate (although there is a weak correlation to oil prices).

Who’s Leaving?

While the individual data are not public, we can use aggregated data to paint a fairly clear picture of what’s going on. It works like this:

The number of people 31 years old in 2019 should equal the number of people 30 years old in 2018. Any reduction from that number indicates that more of those people died or moved away than moved up to the Last Frontier.

From the figure, we can tease out what appears to be the groupings of importance. School age kids tend to come a little more than they go. But, when kids graduate, they leave Alaska.

We seem to attract people in their 20s. That makes sense, as people tend to be more mobile before they have kids. From around 30 until about 50, people seem to be less likely to move (again, probably having to do with kids in school).

Then, from age 50 and up (empty nesters and retirees), we lose more people than we gain. Most of that has to do with older people dying. But, we also lose the retirement battle as more people seek the warm sun than the peaceful wilderness.

How do these group change over time?

Finally, we can add up the people in these groups and see what’s been going on over time. I’ve pulled out an approximation for deaths by normalizing an actuarial mortality table to the number of reported deaths each year. It’s not perfect, but it get’s us something close enough to gain some insights.

The following graphs each show the timeseries of implied net migration for each grouping. Positive numbers mean we attracted more people than we lost. Negative values mean the opposite is true.

If you want to undertake this exercise on your own, the data can be found here, and the life table is here.

School Age Children

Children tend not to move as much as young adults. That is, unless their parents take a job outside, or if they relocate closer to family in the Lower 48.

For the most part, Alaska has attracted more children that it has lost during the last 40 years. That is, with the exception of the years Alaska’s job market can’t compete with the rest of the country. During the 1980s recession, there was a significant loss of students.

Likewise, the strong L48 economy in the 90s attracted parents with children to relocate. Since 2012, the contiguous states have been enjoying the longest bull run in our history. And it has resulted in reduced student counts during 5 of the last 6 years.

Overall, Alaska attracted 11,000 more students that it lost over the last 40 years (mostly in the 80s). That’s only 0.2% of this age group – making it one of the least migratory of all the classifications.

New Adults

After high school graduation, young Alaskans leaving the state consistently outnumber the number moving up. On average, about 1,500 more new adults migrate out than move in. And that number did not change over the last few years.

Over the last 40 years, it adds up to 30,000 more young adults leaving than coming. That’s roughly 4.5% of the total number of people in this age group each year – making this age group the most likely of any group to move away. It’s likely that college lures most of these new adults outside (many of which don’t return).

There is also something interesting in the data in the early 2000s. I’m not sure if there is a story there, or if that’s just an artifact of the data.

Young Professionals

Alaska consistently attracts 20-something year-olds. It’s probably a combination of young military veterans staying here when they ETS, kids returning from college, and people lured up for their first real job.

While some young adults certainly move south each year, we always seem to attract more than we lose. That continued to be the case over the last few years of population loss. Although we attracted less than normal, the number was still positive. Therefore, it was certainly not this age group fleeing the state that caused the population to fall.

In total, we have attracted 96,000 more people of this age group than we have lost over the last 40 years (half of which came up during the oil boom in the early 1980s). Overall, we see an average of +2.5% of this age group expand each year.

Prime Earning Years

The period in life from age 30 to 50 is the window of putting down roots, raising children, getting promoted, and buying a home. Therefore, you would expect this grouping to be more stable and rooted than the younger years. In fact, that is the case.

Over the course of the last 40 years, Alaska has gained and lost about the same number of people in this age group. But, there does appear to be some correlation to the relative strength of the economy. We lose this battle whenever the L48 economy is doing well. And, when we lose people of this age group, we lose their children as well.

In our history, this age group has a net migration rate of almost 0%. It is the group least likely to migrate. Over the last 7 years, we have lost over 10,000 people of this age group more than we have gained (-1%).

Empty Nesters

Once those kids are out of school and off to college, we seem to lose more people than we gain. In almost every single year in our history, we see empty nesters fly south. Beginning in 2014, that tendency has increased. We’ve seen the average loss from this age group go from -400 to -2.100 in the last 5 years.

Part of this is due to an increase in the number of people entering this age group. But, we’ve also seen an increase in the rate of net out-migration go from -0.4% to -1.4%. People in this age group are the second most likely to leave the state.

Retirement Age

Alaska also loses the retirement battle. We do not attract as many people to retire in Alaska than we see attracted to the warmer climates. Although the number of retirees lost is small, that is because there were historically fewer Alaskans in this age group than the others. As the population ages, this number is increasing. And, it is likely to continue.

Over the last 40 years, we have seen over 10,000 more Alaskans retire outside than move up for their golden years. Almost 8,000 of which has occurred in the last 6 years.

Overall, we lose about 0.7% of the all retirees to migration each year – making retirees the third most likely age group to migrate. That number has ticked up to 1.6% since 2014. As the population continues to age, expect this pattern to have a larger impact.

Why did Alaska’s population fall in 2019?

As we’ve seen, there are a number of reasons that Alaska’s population has been falling over the last few years. Although the total population loss in 2019 was 3,048 people, the normal trend is for the population to grow. So, measuring from zero doesn’t tell the whole story.

In reality, 2019 was an estimated 10,821 lower than a “normal” trend would have suggested. Here is an approximation of the relative impact during 2019 of each group we identified.

The increase in deaths and decrease in births explains about 21% of the lower than normal population change last year. Although we still gained young Alaskans entering our workforce, another 14% is explained by the fact that we’ve attracted less young people than we normally do.

In 2019, we also saw a loss of people that were very likely in the labor force and are normally less mobile than other age groups. This accounted for 20% of the population reduction. And, those prime earners very likely took their children with them. Those children moving away accounts for another 24% of the decline.

Finally, the other 21% of the drop in population can be attributed to more people ages 50 and up leaving the state. These are a combination of people taking jobs down south and retirees finding greener pastures.

Conclusions

In total, it appears that about half of the population problem has to do with job related reasons. And, most of that has more to do with the strength of the economy in the Lower 48 states than anything else. The other half of the issue is related to demographics. The data does not appear to support any argument that cutting state spending is to blame.

The pattern appears to be one in which young people come to Alaska to start their lives. They have kids, settle down, and make Alaska their home. But, once those kids are out of the house, a lot of people seem to pick up and head back south.

As the people that moved up to Alaska in their 20s during the oil boom enter their 60s today, that pattern is causing problems in maintaining our population and our workforce. Without young people replacing those retirees, our population and our labor force is declining.

Eventually, we will need to compete with our peer states to attract talent. That will mean increasing wages for those that live here and those willing to relocate. That implies that the people who stick around will become better off.

Whether you measure the success of an economy by changes in the number of people it serves, or by the wealth of the average resident it houses, is open for debate. Regardless, the patterns that we observe today are painting the picture for what comes next. And, Alaska is at the front lines of the new labor market dynamics. I’m confident that things will turn out well for us.

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