COVID-19 cases are surging in Alaska, with no sign of the pandemic loosening its grip in the state. Until the virus is under control, experts say the state’s economy will continue to suffer.
“The economy is not going to come back in the way we’d like until the virus is under control and until people feel safe,” said economist Jonathan King, with Halcyon Consulting. King notes that the virus is growing exponentially.
In September, data from the Alaska Department of Labor shows Alaska had 37,600 fewer jobs than the same month in 2019.
Small businesses are hurting. King said that’s where the state is seeing a lot of structural damage to the economy, as people’s spending habits change. But human behavior can also help the economy right now, said King.
“We can certainly do a lot if we had a universal mask mandate and people really adhered to it,” King said. “The data indicate that we would cut transmission in the state substantially and that would really help.”
Beyond mask wearing, he said, residents should limit gatherings.
“We also need to really limit who we’re interacting with,” said King. “If we’re going to get the virus spread under control. Particularly as we move indoors with the winter months.”
Wearing a mask, handwashing, social distancing: these are all things that public health experts have repeatedly said will help reduce transmission of the virus, a key step toward helping the economy.
King said when speaking about the economy, and the damage it’s sustained during the pandemic, it’s important to recognize that damage has not been distributed evenly — it’s concentrated in particular areas, and among certain people.
“Transportation and travel, hospitality, tourism…and it’s really concentrated among low wage workers,” said King. “It’s more concentrated among women, among people of color, in terms of the economic damage.”
With that in mind, King said the discussion has to go beyond talking about the economy in general terms.
“I think we need to be having that discussion about where it’s concentrated and why and what we need to be doing to support those areas of the economy, and really supporting the people that are in those areas of the economy,” said King.
That idea is echoed by Kevin Berry, an assistant professor of economics at the University of Alaska’s Institute of Social and Economic Research. Berry’s research focuses on how people respond to environmental risk.
Berry notes the pandemic has been less severe for higher-income residents who tend to hold jobs that are easier to do from home.
“I do think there’s an obligation for us as a country, as a state, to sort of make these people whole,” he said, referring to lower-income residents harder hit by the financial impacts of the pandemic. “And that involves another round of stimulus.”
Berry points to new research that shows a portion of the economic slowdown during the pandemic is tied to government lockdowns.
“But the vast majority of the slowdown, the real cause of the COVID-19 recessions, the economic malaise…is the virus. It still seems that people are predominantly trying to avoid getting sick, taking the medical advice of their doctors, staying at home, and that’s depressing demand,” said Berry.
Returning to normal, Berry said, hinges on beating the virus.
“I think it’s worth everybody remembering that the economy, while we often measure it in dollars and quantity of goods, it doesn’t exist — money doesn’t exist just to be in a big pile somewhere. The point is not to have a vault filled with gold coins,” said Berry. “It’s so that people can live healthy, productive, prosperous lives…if we talk about the future health of the Alaska economy, we’re really talking about the health of Alaskans.”
Berry said a lot of what happens over the next several months will be influenced by the behavior of Alaskans and whether they choose to follow public health advice to slow the spread of the virus. And it doesn’t stop there.
“The underlying drivers of pandemics are growing into the future,” said Berry. “The sooner our society, as a country as a state, we start to figure out how to beat these things, how to invest in infrastructure, try to conserve our environment, take proactive actions and also learn how to work together during these outbreaks, the better the future looks.”
Clarification: This story was updated to clarify that Berry was referring to lower-income residents when he said “I do think there’s an obligation for us as a country, as a state, to sort of make these people whole.”
