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TECHNICAL REPORT
NUMBER 62
Alaska CS
Socioeconomic
Studies Program
Sponsor:
Bureau of Land
Management
Alaska Outer
Continental
~helf Office
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BEAUFORT SEA STATEWIDE AND
REGIONAL DEMOGRAPHIC AND
ECONOMIC S·YSTEMS I.MPACTS
The United States Department of the Interior was-designated by the Outer
Continental Shelf (OCS) Lands Act of 1953 to carry out the majority of
the Act's provisions for administering the mineral leasing and develop-
ment of offshore areas of the United States under federal jurisdiction.
Within the Department, the Bureau of Land Management (BLM) has the
responsibility to meet requirements of the National Environmental Policy
Act of 1969 (NEPA) as well as other legislation and regulations dealing
with the effects of offshore development. In Alaska, unique cultural
differences and climatic conditions create a need for developing addi-
tional socioeconomic and .environmental information to improve OCS deci-
sion making at all governmental levels. In fulfillment of its federal
responsibilities and with an awareness of these additional information
needs, the BLM has initiated several investigative programs, one of
which is the Alaska OCS Socioeconomic Studies Program (SESP).
The Alaska OCS Socioeconomic Studies Program is a multi-year research
effort which attempts to predict and evaluate the effects of Alaska OCS
Petroleum Development upon the physical, social, and economic environ-
ments within the state. The overall methodology is divided into three
broad research components. The first component identifies an alterna-
tive set of assumptions regarding the location, the nature, and the
timing of future petroleum events and related activities. In this
component, the program takes into account the particular needs of the
petroleum industry and projects the human, technological, economic, and
environmental offshore and onshore development requirements of the
regional petroleum industry.
The second component focuses on data gathering that identifies those
quantifiable and qualifiable facts by which OCS-induced changes can be
assessed. The critical community and regional components are identified
and evaluated. Current endogenous and exogenous sources of change and
functional organization among different sectors of community and region-
al life are analyzed. Susceptible community relationships, values,
activities, and processes also are included.
The third research component f.ocuses on an evaluation of the changes
that could occur due to the potential oil and gas development. Impact
evaluation concentrates on an analysis of the impacts at the statewide,
regional, and local level.
In general, program products are sequentially arranged in accordance
with BLM' s proposed OCS lease sale schedule, so that information is
timely to decisionmaking. Reports are available through the National
Technical Information Service, and the BLM has a limited number of
copies available through the Alaska OCS Office. Inquiries for informa-
tion should be directed to: Program Coordinator (COAR), Socioeconomic
Studies Program, Alaska OCS Office, P. 0. Box 1159, Anchorage, Alaska
99510.
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TECHNICAL MEMORANDUM NO. 62 CONTRACT NO.AA550-CT6-61
' =-~ ------~-----------
STATEWIDE AND REGIONAL ECONOMIC AND DEMOGRAPHIC SYSTEMS,
BEAUFORT SEA (71) IMPACT ANALYSIS
PREPARED FOR
BUREAU OF LAND MANAGEMENT
ALASKA OUTER CONTINENTAL SHELF OFFICE
DOCUMENT IS AVAILABLE TO THE PUBLIC THROUGH THE
NATIONAL TECHNICAL INFORMATION SERVICE
5285 PORT ROYAL ROAD
~~-=SP'-"Rm£EIELD_.__'llRGINIA~l6.~.---~--~--~ ----·
• DEC 3 1981
~ - -•
STATEWIDE AND REGIONAL
ECONOMIC AND DEMOGRAPHIC SYSTEMS
BEAUFORT SEA (71) IMPACT ANALYSIS
NOTICE
This document is disseminated under the sponsorship of the
U.S. Department of the Interior, Bureau of Land Management,
Alaska Outer Continental Shelf Office, in the interest of
information exchange. The United States Government assumes
no liability for its contents or use thereof.
ALASKA OCS SOCIOECONOMIC STUDIES PROGRAM
STATE AND REGIONAL ECONOMIC AND DEMOGRAPHIC
SYSTEMS, BEAUFORT SEA (71) IMPACT ANALYSIS
Prepared by
Will Nebesky
Lee Huskey
Institute of Social and Economic Research
University of Alaska
August 1981
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TABLE OF CONTENTS
LIST OF TABLES .
LIST OF FIGURES.
INTRODUCTION . .
STATEWIDE AND REGIONAL GROWTH: THE
BASELINE HISTORICAL ANALYSIS
Statewide Economy: Statehood -1978 .....
Regional Economies: Anchorage, Southcentral,
Fairbanks, and the North Slope ...... .
BASE CASE
Methodology ...... .
Base Case Development Scenario
Excluding OCS Activit~ ....
OCS Activity in the Base Case ..
North Slope Resident Adjustment .
Base Case Forecasts . . . . . . .
PROJECTED IMPACTS OF THE PROPOSED BEAUFORT SALE.
Introduction ........... .
Mean-Find Scenario ........ .
Low-Find Scenario: Statewide and
Regional Impacts ........ .
High-Find Scenario: Statewide and
Regional Impacts ........ .
Simpson-Deletion Scenario: Statewide
and Regional Impacts.
REFERENCES . . . . . . . . . . . : . . . .
APPENDIX A: OCS Lease Sale Employment in the Base Case
APPENDIX B: A Procedure to Determine the Share of OCS
Employment that Reside in Alaska (SEAR)
APPENDIX C: Direct and SEAR Adjusted Employment for the
- - - -- - -- ----Beaufort Sea Sale 71
APPENDIX D: Assumptions for the North Slope Resident Adjustment
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159
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202
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214
217
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35.
LIST OF TABLES
Value of Production for Selected Industries
Various Years, 1960-1979 ............... .
Civilian Employment, Unemployment and Labor Force
1960, 1965, 1970-1978, by Broad Industry· Classification
Index of Seasonal Variation in Nonagricultural
Employment: Selected Years 1960-1978 ....... .
Personal Income by Major Component: Alaska,
Selected Years 1960-1978 ............. .
Alaska Resident Adjusted Personal Income in Current
and Constant 1979 Dollars 1g6o, 1965, & 1970-78 ...
Distribution of Relative Wage Rates, by Industry,
for Alaska, Selected Years, 1965-1978 ........ .
Change in Real Average Monthly Wage 1973-1976, Alaska .
Rates of Change for Anchorage and the U.S.
Consumer Price Index, Selected Years, 1960-1977 ....
Alaska Population and Components of Change: 1965-1978
Anchorage Nonagricultural Wage and Salary
Employment, Selected Years ...... .
Anchorage Labor Force, Employment,
and Unemployment, 1970-1978 ......... .
Anchorage Personal Income 1965-1978 . . ..
Anchorage Population 1965-1978 ......... .
Nonagricultural Wage and Salary Employment in the
Fairbanks Region, Selected Years ........ .
Labor Force, Employment, and Unemployment in the
Fairbanks Region, 1970-1978 .......... .
Personal Income in the Fairbanks Region 1965-1978
Population in the Fairbanks Region 1965-1979 ..
North Slope Region Population Growth ....
North Slope Region Demographic Structure
of North Slope Eskimos. . . . . . . . . . .
North Slope Region Employment Growth ....
North Slope Region Structure of Employment.
North Slope Region Seasonality Index ... .
North Slope Region Borough Revenues ... .
North Slope Region Borough Expenditures ... .
Capital Improvement Program FY 1975 to FY 1985.
North Slope Region Government Employment Growth
North Slope Region Personal Income ..
Scenario Economic Assumptions ... .
Resident Employment in Fisheries .. .
State Production Tax Revenues . • . .
State Royalty Revenues. . . . . . . .
State Petroleum Property Tax Revenues
Corporate Income Tax Revenues . . . .
OCS Lease Sales in Base Case Scenario
Projected Population and Components of
J~!:Hlng~;~j~laska,~l9B~0~::20~00~~··~.·~·---~ ........ d····
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36. Projected Age Structure of Alaska
Population 1980-2000. . . . . . . . . . . . . . . . . .
37. Projected Employment: Alaska, 1980-2000 ....... .
38. Projected Composition of Alaskan Employment, 1980-2000.
39. Projected Personal Income: Alaska, 1980-2000 ...... .
40. Projected Wages and Salaries by Sector: Alaska, 1980-2000
41. Projected Real Wage Rates: Alaska, 1980-2000. . . . . .
42. Projected Alaska and U.S. Inflation 1980-2000 ..... .
43. Projected State Government Revenues: Alaska, 1980-2000. .
44.· Projected Total and Per Capita State
Government Expenditures: Alaska, 1980-2000.
45. Projected Total and Per Capita Fund
46.
47.
48.
Balances: Alaska, 1980-2000 ........ .
Projected Population North Slope, 1980-2000 .
Projected Employment: North Slope, 1980-2000.
Projected Total and Per Capita Real Personal
Income: North Slope, 1980-2000 ...... .
49. Projected Population: Anchorage, 1980-2000.
50. Projected Employment and Employment
Components: Anchorage, 1980-2000. . . . . .
51. Projected Total and Per Capita Real
Personal Income: Anchorage, 1980-2000 . . .
52. Projected Population: Fairbanks, 1980-2000.
53. Projected Employment and Employment
Components: Fairbanks, 1980-2000 ..... .
54. Projected Real and Real Per Capita Personal
Income: Fairbanks, 1980-2000 ........ .
55. Projected Population: Southcentral, 1980-2000
56. Projected Employment and Employment
Components: Southcentral, 1980-2000
57. Projected Real and Real Per Capita
Personal Income: Southcentral, 1980-2000.
58. Economically Recoverab 1 e Reserves
in the Beaufort Sea Lease Sale 71 .
59. Projected Direct OCS Employees that
Will Reside in Alaska .....
60. Projected State Property Tax
Revenues for All Scenarios .....
61. Projected Statewide Population
Impacts, Absolute Values: Mean Case .
62. Projected Statewide Population Impacts
Percentage Differences: Mean Cases. . .
63. Projected Statewide Employment Impacts
Absolute Values: Mean Case ...... .
64. Projected Statewide Employment Impacts
Percentage Differences: Mean Case .....
65. Projected Statewide Real and Real Per Capita
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Personal Income Impacts, Absolute Values: Mean Case .
66. Projected Statewide Real and Real Per Capita Personal
Income Impacts, Percentage Differences: Mean Case ..
2--~~ ----~ ---~~~-67-.-lt~Gj-eG-teG~S-tatew-i-de---Rea-l~Wage~anEI--£a-cl-a-ry----Impaet-s-, ---
~ Absolute Differences: Mean Case .......... .
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68. Projected Statewide Real Wage and Salary
Impacts, Percentage Differences: Mean Case ..
69. Projected Statewide Real Wage Rate Impacts
Absolute Values: Mean Case .......... .
70. Projected Statewide Real Wage Rate Impacts,
Percentage Differences: Mean Case ....... .
71. Projected Statewide Relative Price Index Impacts,
Absolute and Percentage Differences: Mean Case.
72. Projected Statewide Revenue Impacts,
Absolute Values: Mean Case ........... .
73. Projected Statewide Revenue Impacts,
Percentage Difference: Mean Case ... ; ... ~ ....
74. Projected Statewide Real and Real Per Capita Government
Expenditure Impacts, Absolute Values: Mean Case ....
75. Projected Statewide Real and Real Per Capita Government
Expenditure Impacts, Percentage Differences: Mean Case.
76. Projected Statewide General and Permanent Fund Balance
Impacts, Absolute Difference: Mean Case .....
77. Projected Percentage Differences in Current and
1980 Dollar Fund Balances: Mean Case ..
78. Projected Regional Population Impacts,
Absolute Values: Mean Case ......... .
79. Projected Regional Population Impacts,
Percentage Differences: Mean Case ..... .
80. Projected Regional Total Employment Impacts,
Absolute Values: Mean Case ......... .
81. Projected Regional Total Employment Impacts,
Percentage Difference: Mean Case ..... .
82. Projected Regional Basic Sector Employment
Impacts, Absolute Values: Mean Case .....
83. Projected Regional Basic Sector Employment
Impacts Percentage Differences: Mean Case ..
84. Projected Regional Support Sector Employment
Impacts, Absolute Values: Mean Case .....
85. Projected Regional Support Sector Employment
Impacts, Percentage Differences: Mean Case ...
86. Projected Regional Government Sector Employment
Impacts, Absolute Values: Mean Case ..... .
87. Projected Regional Government Sector Employment
Impacts, Percentage Differences: Mean Case ...
88. Projected Regional Real Personal Income Impacts,
Absolute Differences: Mean Case ........ .
89. Projected Regional Real Personal Income Impacts,
Percentage Differences: Mean Case .....
90. Projected Regional Real Per Capita Personal Income
Impacts, Absolute Values: Mean Csae ....... .
91. Projected Regional Real Per Capita Personal Income
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Impacts Percentage Differences: Mean Case . . . . . 204
92. Summary of Low Scenario Impacts . . . . . . . . . . . . . 205
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93. Regional Distribution of Low-Find ,
-----~----~~--.Impacts~i .. rLthe___Y-eal'-.2000~-·~-~·-·-~·-~·--·-·--··-.-.-.-.-.-.--607~--~----r
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Summary of High Scenario Impacts ..
Regional Distribution of High-Find
Impacts in the Year 2000. . . . . ..
Summary of Simpson-Deletion Impacts ...
Regional Distribution of Simpson-Deletion
Impacts in the Year 2000 ........ .
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LIST OF FIGURES
1. Distribution of Wage and Salary
Income Alaska, 1965 and 1978. . . . ...
2. MAP Model Regions ........•
3. MAP Submodels .......... .
4. MAP Statewide Model ........ .
5. Comparison of OCS Employment to Total
Exogenous Employment in the Base Case
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I. INTRODUCTION
This study is concerned primarily with measuring the economic effects
of the proposed Outer Continental Shelf (OCS) petroleum development in
the Beaufort Sea (sale 71). This study includes a statewide and re-
gional historic baseline analysis and base case projections against
which the direct and indirect economic effects of Beaufort Sea OCS pe-
troleum development are measured. The analysis and projections are
carried out on a statewide level for selected regions within the state
economy. The regions include Anchorage, Southcentral, Fairbanks, and
North Slope regions of the Man-in-the-Arctic Program (MAP) models.
Part II of the study contains the historical baseline analysis for
each of the economic areas in question and generally focuses on speci-
fic economic and demographic concerns re 1 evant to an understanding of
the historic growth of the economies. The baseline analysis also as-
sists in laying the foundation for assumptions regarding future growth
of the areas.
Part III contains three important elements. First, the underlying
projection methodology is explained and reviewed in terms of the accu-
racy and limitations of the projection methodology and the projections
·-themselves. Second, the assumptions necessary to "drive11 the models
are presented. Finally, the base case projections for the respective
areas are presented.
Part IV of the study presents a description and analysis of the pro-
jected impacts associated with the proposed Beaufort Sea lease sale.
Results for the mean and low case scenarios are discussed, both at the
statewide and regional levels.
the appendices.
Supporting materials are contained in
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II. STATEWIDE AND REGIONAL GROWTH:
THE BASELINE HISTORICAL ANALYSIS .
The Statewide Economy: Statehood -1978
In carrying out the historic baseline studies, either for Alaska or
the regions, it is important to keep in mind the purpose of the analy-
sis. There are three primary objectives involved. First, the analy-
sis should provide the uninitiated reader with a general sense of the
struc:ture of the economy and how and why it has changed over time.
Second, the study should provide some indication of how individuals
within the system have benefited from the functioning of the system;
i.e., an assessment of economic well-being. Third, the baseline his-
tory should provide guidance in developing assumptions regarding fu-
ture development of the economy.
Hence, the historical baseline study is not simply a description of
the economy, but rather pro vi des an an·a lysis of the growth and changes
in the system, the dimensions of economic well-being, and its future
prospects. With these comments in mind, we can now turn to the base-
line study of the state as a whole.
At the risk of oversimplification, the economic history of Alaska can
be summarized as one of resources, defense, disaster, more resources,
_ _ _ ----and-go:~~e~ment.~~l!-~i-0-1'!----to-Wo~ld-War~I-I-,~in-t~-f!es-t-i-n-the-state~f-Ocused----~-~--
3
largely on natural resource exploitation, primarily based on furs,
fish, and hard rock minerals. World War II and the cold war aftermath
lead· to a sizable military-government involvement in the state, both
in terms of population and economic activity.
The advent of statehood found an economy reflecting a narrowly based
private sector, largely dependent upon limited natural resource activ-
ity, and a large federal civilian and military presence. In 1960, for
examp 1 e, federa 1 ci vi 1 ian wages and sa 1 aries accounted for 25 percent
of the total civilian wage bill, while state government (5.9 percent)
and local government (5. 1 percent) made up an additional 11 percent of
total wage and salary payments. When military payrolls are included,
42. 5 percent of wage and sa 1 ary income was accounted for by govern-
ment.
Discovery of the Swanson River oil field in 1957 had done much to
raise expectations about future economic prospects, but it was not
until major discoveries in Cook Inlet during 1965 that the oil and gas
industry became firmly established and significant levels of produc-
tion were assured. The emergence of petroleum resources as a signifi-
cant factor in the Alaska economy considerably improved the potential
for private sector development and, more importantly, helped to shore
up the extremely shaky fiscal base of state government.
for the mid-and latter part of the decade of the 1960s, it was to be
.natu~a.l~·d·i·saster··tha't··prov4ded~muGh~a·f~~the·~i·mpetus· ·for~·eeonomi·e··
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growth. The Good Friday earthquake of 1964 resulted in a major recon-
struction effort which supported levels of economic activity that
probably would not have been achieved otherwise. A second disaster,
of lesser statewide magnitude but of great consequence for the Fair-
banks region, was the flood of 1967. Disaster relief and reconstruc-
tion funds, followed later by flood control projects, provided a need-
ed boost-for the region's economy.
Discovery of oi 1 at Prudhoe Bay in 1968 marks the beginning of the
latest phase of Alaska economic history. Development of the super-
giant field, construction of the oil pipeline, and the related flows
of revenue to state government are providing the impetus for sustained
economic growth and diversification that should carry the state well
into the 21st century.
Against this backdrop, we can now look more specifically at several
important dimensions of growth and change in the Alaska economy. As
suggested earlier, there are certain key measures of economic activity
that are central to the analysis. Personal income and employment data
provide insight into the overall growth of the economy and changes in
the composition of economic activity. In addition, these data can be
used as genera 1 indicators of changes in economic well-being over
:;; ____ --------time. An important corollary variable is population growth. It is
also instructive to review aggregate measures of production for the
economy.
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In addition to these general measures of economic activity, there are
several specific attributes of·the economy that need to be considered.
These include such topics as secular and seasonal unemployment, the
structure of costs and prices; and the ro 1 e of state government with
respect to determining overall economic activity. Finally, we must
consider issues related to potential future economic activity. We now
turn to specific measures of the economy.
PRODUCTION
Data measuring the gross value of production by industrial classifica-
tion are not available for recent years. However, vari'ous measures of
the value of output for selected industries have been compiled and are
presented in Table 1. Except for agriculture, the industries reflect
the primary 11 export base 11 components of the private sector economy.
Data on federal and total government expenditures have also been in-
cluded for comparative purposes. Furthermore, a large portion of fed-
eral government outlays indirectly reflects an export of goods and
services by the private sector economy of Alaska.
Fisheries and petroleum have clearly dominated growth in the value of
production in the priva_:te sector. Value of catch to fishermen has
grown at an average annua 1 rate of 15 percent over the period, and
wholesale value has grown almost as rapidly (14.4 percent), reflecting
both the substantial growth of shellfishing and rising product prices.
When deflated by the consumer price index (which is appropriate if we
---~----ar~-tn1~r-~~t_~_ct j n _ j mpJ i~it __ g_y_r_~JJSJ.~Jng __ RQ~erJ, __ the .'Lalue _o_t_ catch __ grew ___ _ .
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Table 1. Value of Production for Selected Industries
Various Years, 1960-1979
(millions of current dollars)
Federal Total
IndustrY Agriculture Forestry Fisheries Oil & Gas Government Government
Value Io F1sfiermen Wholesale Crude Dry Outlays in Spending in
Year Salmon Shellfish Total Value Oil ~ Alaska (FY} Alaska (FY~
1960 5.6 47.3 33.6 3.1 40.9 96.7 1.2 .03 155.8 N.A.
1961 5.7 48.0 35.7 5.1 46.5 128.7 17.7 .129 N.A. N.A.
1962 5.7 52.3 42.1 7.1 58.4 131.9 31.2 .467 N.A. N.A.
1963 5.3 54.1 31.3 9.6 46.9 109.0 32.7 1.1 N.A. N.A.
1964 5.6 61.0 41.4 10.0 56.8 140.9 33.6 1.7 N.A. N.A.
1965 5.3 57.5 48.3 14.5 70.1 166.6 34,1 1.8 533.7 N.A.
1966 5.3 71.2 54.2 17.6 81.9 197.3 44.1 6.3 N.A. N.A.
1967 5.2 80.6 24.6 18.3 48.8 126.7 88.2 7.3 N.A. N.A.
1968 4.9 89.2 49.5 27.9 79.9 191.7 186.7 4.4 N.A. N.A.
1969 4.3 101.0 40.6 20.8 68.1 144.2 214.5 12.7 N.A. N.A.
1970 5.2 93.7 68.0 20.5 97.5 213.9 232.8 18.2 728.7 N.A.
1971 5.0 103.5 51.4 26.0 85.5 198.7 234.3 18.0 852.9 N.A.
1972 6.0 82.3 45.3 33.6 92.4 185.7 221.7 18.0 989.4 N.A.
1973 7.0 131.4 60.1 61.4 142.4 283.0 239.6 19.5 1018.6 1592
1974 8.1 154.7 65.7 62.8 144.8 254 347.4, 22.5 1135.9 1730
1975 9.2 133.5 55.3 55.4 129.4 293 364.6 42.8 1326.8 2000
1976 8.8 149.5 118.0 96.5 239.6 452 318.8 60.5 1368.1 2226
1977 9.9 179.3 171 157 349 723P 988.9 66.6 1544.9 2524
1978 9.2 N.A. 238P 272P 543P 1118g 2701.5 89.6 1753.0 2845
1979 9.1P N.A. 317P 231P 6Q6P 1243 5493.6P 91.5 1932.2 3147e
p = preliminary
e = estimate
N.A. = not available
SOURCE: See Table 1 Notes
Table 1 Notes
The data are primarily obtained from selected tables in The Alaksa
Economy: Year-End Performance Report 1978 (Alaska Department of Commerce
and Economic Development, Division of Economic Enterprise; Juneau, Alaska)
and Alaska Statistical Review (Alaska Department of Commerce and Economic
Development, Division of Economic Enterprise; Juneau, Alaksa, 1980). The
latter source is a preliminary report. Specific sources for each column
of the table follow.
Agriculture: page B-13 Alaska Statistical Review (ASR). Value of sales
is approximately 74 percent of value of production, with the balance
being used on farm.
Forestry: Data from 1960-1971 are from Alaska Statistical Review (1972),
p. 90, and reflect total end product value. For 1972-1977, the data are
from the 1978 Year End Performance Report and reflect only forest prod-
uct exports. Here the series are not comparable, but individually
reflect growth in the periods in question. Comparable series are not
available over the full period.
Fisheries: Data for 1972-1975 are from the 1978 Year End Performance
~' p. 58. .1976 data are from Alaska Catch and Production: 1976
(Alaska Department of Fish and Game). 1977-1979 data are from ASR
(1980). 1960-1971 data are from ASR (1972) p. 74. Data for 1960-71,
1976-79 are comparable. Data for 1972-75 represent approximately 92 per-
cent of total wholesale value.
Oil and Gas: ASR (1980) p. B-3. It should be noted that these data do
not include value added in transportation and here reflect approximate
wellhead value.
Federal Government Outlays in Alaska: 1960-1977 data are from 1978 Year
End Report, p. 105. 1978-1979 data are from ASR (1980), p. E-2. Data
are for fiscal year ending in given calendar year.
Total Government Spending in Alaska: Data from ASR (1980) p. E-1. The
total is net of intergovernmental transfers.
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at a 1 most 10. 3 percent and the who 1 esal e va 1 ue by 9. 5 percent. Crude
oil and natural gas percentage growth rates are relatively meaningless
since the base in 1960 is negligible, but their significance is obvi-
ous. It is also worth noting that in 1978 (the last year for which
data are available) production of minerals other than oil and gas and
sand and gravel amounted to 18.4 million dollars, or about 0.6 percent
of the total value of mineral production. Neither has there been any
significant change in the ~alue of this dimension of mining over the
past two decades. In deflated do 11 ars, federal government expendi-
tures have grown at about 9.3 percent.
Government expenditures are not directly comparable to the value of
production in other industries since they reflect not only government
production (wages and salaries) but purchases of goods and services
and transfer payments to individuals. However, in another sense these
expenditures do reflect a measure of demand for production of goods
and services throughout the economy as a whole and underscore the con-
tinuing importance of government spending in·the economy.
Of particular significance in overall government spending is the role
of state government spending. The state fiscal history can roughly be
divided into three periods: early post-statehood, Prudhoe Bay sale to
pipeline completion, and Prudhoe Bay production.
During the first period, federa 1 government grants, both statehood
:------------tf!ans-i-t-ion-g~antS---and--otl'le~S--,~Wel"e-an-impo-~tant--GompGnent--{)-f-s-ta-te-----------
9
government revenues. The relative decline in federal grants were more
than offset by revenues linked to general economic growth and the de-
velopment of Cook Inlet petroleum resources, but expenditures were
constrained by available revenues.
The $900 million Prudhoe Bay lease sale in the fall of 1969 ushered in
the second period and led to an immediate doubling of state government
expenditures. Growth in expenditures continued rapidly, although
still constrained by available revenues and the rapidly diminishing
ba 1 ance of the 1 ease sa 1 e. The third period is marked by the com-
mencement of production from Prudhoe Bay; and, for the first time, the
state has significant potential surplus revenues.
The rapid expansion of revenues since 1969 has resulted in a closely
correlated growth of state government expenditures. This is reflected
not only in expanding state government employment and wages but also
by total government expenditures for purchases of goods and services
and transfers to local government. The net result has been that state
government spending (both directly and through local government) has
assumed a significant role in the overall determination of economic
activity in Alaska. This is a pattern which will prevail for some
time into the future.
In summary, the role of natural resources in the growth of the Alaska
economy has been dominated by fisheries and petro 1 eum. Forest pro-
r L
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Alaska, but have not demo·nstrated significant growth. Agriculture has
remained stagnant, and, in real terms, the value of production has de-
clined. Government has remained a major force in the economy, with
state and local government increasing in relative proportion to total
government.
EMPLOYMENT, UNEMPLOYMENT, AND WORK FORCE
Analysis of employment, unemployment, and work force data is important
for several reasons. First, since labor is one of the key factors of
production, employment data provide a general indicator of the growth
and composition of production over time. The main deficiency with
these data for such purposes is that they ignore changes in factor
proportions over time and differences in factor proportions between
industries. This omission is particularly important in industries
that are highly capital-intensive, such as the petroleum industry.
A 1 so, s i nee these data are based on job counts, they do not reflect
actual man hours of production and, hence, provide only an approximate
measure of labor input.
Second, work force data, in conjunction with total employment data,
determine unemployment. It is instructive to observe the patterns of
unemployment over time and in response to changes in total economic
activity. Third, the data are useful in measuring seasonal patterns
of economic activity and how this may have changed over time.
=--------------------------------------------------------------------
11
-----
Tables 2 and 3 provide summary data on employment, labor force, and
unemployment for selected years over the 1960-1978 period. Total em-
ployment over this period grew at an annual average rate of 4. 9 per-
cent. However, substantial variation in the growth rate is evident.
From 1960-1973, the rate was 3 percent; while for 1974-1978 (reflect-
; ng the pipe 1 i ne boom) the rate was 8. 6 percent. The growth of the
civilian labor force shows a similar pattern, although increasing at a
slightly higher rate. The result of this is that total unemployment
has grown at about 7 percent per year over the period and the unem-
ployment rate has also increased.
It is also worth noting that during the pre-pipeline period the unem-
ployment rate was relatively stable and that the somewhat higher rates
of 1977 and 1978 reflect in large part a readjustment to a more normal
post-pipeline period. These data clearly illustrate the openness of
the Alaska labor market. Large variations in the demand for labor are
primarily met by significant in-and out-migration and by changes in
labor force participation rates. As a consequence, the long-run rate
of unemployment is quite stable and the simple expansion of economic
activity has little effect in terms of reducing unemployment. The
second block of data in Table 2 provides annual average employment
data by broad industry classification. In addition to illustrating
the sustained growth of employment and production in all industry cat-
egori~s, these data also indicate relative changes in the significance
,of specific industries.
12
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Total Civ ll ian Labor Force
Total Une~loyment
% of ITotal Labor Force
Total Employment
I
I
Nonagri cul:tura 1 Wage and
Salary ~~ployment
Mini~
! Cont~act Construction
I
Manu~acturing
I
!food Processing
..
1960
73.6
5.9
8.0%
67.7
U--·-~
TABLE 2. CIVILIAN EMPLOYMENT, UNEMPLOYMENT AND LABOR FORCE
1960, 1965, 1970-1978, BY BROAD INDUSTRY CLASSIFICATION
(IN THOUSANDS)
1965
89.8
7.7
8.6%
82.1
1970
91.6
6.5
7' 1%
85.1
1971
97.7
8.0
8.2%
89.6
1972
103.6
8.6
8.3%
95.0
1973
109.1
9.3
8.5%
99.9
1974
125.6
9.9
7.9%
115.7
1975
156.0
10.8
6.9%
145.3
1976
168.0
14.0
8.3%
154.0
1977
174.0
16.0
9.2%
158.0
1978
181.0
20.0
11.0%
161.0
Emp. _%_ ~-%-Emp. _%_ ~-%-Emp. _%_ Emp. _%_ ~-%-~-%-Emp. _%_ ~._%_ ~-%-
56.9 100.0 70.5 100.0 92.5 100.0 97.6 100.0 105.4 100.0 111.2 100.0 129.7 100.0 163.7 100.0 173.5 100.0 166.0 100.0 163.2 100.0
1.1 1.9 1.1 1.6 3.0 3.2 2.4 2.5 2.1 2.0 2.0 1.8 3.0 2.3 3.8 2.3 4.0 2.3 5.0 3.0 5.6 3.4
5.9 10.4 7.0 14.1 10.9 25.9 15.8 30.2 17.4 19.5 11.7 12.2 7.5
5.8 10.1 5.9 10.3 5.9 10.9 6.6 11.5' 7.0
2.8
!Logging, Lumber, Pulp 2.2
,I
4.9
3.9
6.5
6.2
3.0
2.3
9.2
8.8
4.3
3.3
6.9
7.8
3.7
2.8
7.5
8.4
4.0
3.0
7.4
7.8
3.6
2.8
7.6
8.0
3.7
2.9
7.9
8.1
3.7
2.8
7.5
7.7
3.5
2.7
7.8
9.4
4.6
3.2
8.5
4.1
2.9
9.6
4.3
3.6
7.4
3.3
2.8
9.6
4.3
3.4
2.6
2.1
5.1
3.2
2.9
1.8
5.5
3.5
3.3
2.1
6.3
1.8
3.9
1.1
Tran~portation, Communications
Pii~1ic Utilities 6.8
TradJ
Finalce, Insurance,
Redl Estate
i Services
I Gove~nment
i
I Federal
'state
Local
12.0 7.3 10.4 9.1 9.8 9.8 10.0 10.0 9.5 10.4 9.4 12.4 9.6 16.5 10.1 15.8 9.1 15.6 9.4 16.4 10.0
7.7 13.5 10.0 14.2 15.4 16.6 16.1 16.5 17.1 16.2 18.3 16.5 21.1 16.3 26.2 16.0 27.6 15.9 28.5 17.2 28.8 17.6
1.4
5.6
2.5
9.8
2.2 3.1 3.1 3.4 3.2 3.3 3.7 3.5 4.2 3.8 4.9 3.8 6.0 3.7 7.1 4.1 7.8 4.7 8.2 5.0
7.5 10.6 11.4 12.3 12.5 12.8 14.0 13.3 15.2 13.7 18.3 14.1 25.1 15.3 27.7 16.0 27.4 16.5 27.6 16.9
22.7 39.9 29.7 42.1 35.6 38.5 38.0 38.9 41.7 39.6-42.8 38.5 45.3 34.9 49.5 30.2 49.7 28.6 50.7 30.5 52.2 32.0
15.6 27.4 17.4 24.7 17.1 18.5 17.3 17.7 17.2 16.3 17.2 15.5 18.0 13.9 18.3 11.2 17.9 10.3 17.7 10.7 18.1 11.1
3.9 6.9 7.0 9.9 10.4 11.2 11.7 12.0 13.3 12.6 13.8 12.4 14.2 10.9 15.5 9.5 14.1 8.1 13.9 8.4 14.3 8.8
3.2 5.6 5.3 7.5 8.1 8.8 9.0 9.2 11.2 10.6 11.9 10.7 13.1 10.1 15.8 9.7 17.6 10.1 19.1 11.5 19.8 12.1
Table 2 Notes
Sources of data: 1960, 1965 ASR (1972) p. 16. It should be noted
that the 11 labor force 11 data are actually work force data for these two
years and are not directly comparable with the data for 1970-1978. The
basic difference between the two series is that work force estimates are
based on job counts and, hence, a worker may be counted more than once
if holding two or more jobs. Labor force estimates are supposed to
eliminate this double counting. Thus, the work force data for 1960
and 1965 somewhat overstate the actual number of employed.
In 1970-1978, labor force and total employment estimates are obtained
from Alaska Labor Force Estimates by Area (Alaska Department of Labor),
various years.
Non-agricultural wage and salary data are obtained from the Statistical
Quarterly (Alaska Department of Labor) for the various years.
14
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TABLE 3. INDEX OF SEASONAL VARIATION IN NONAGRICULTURAL
EMPLOYMENT: SELECTED YEARS 1960-1978
1960 1965 1970 1972 1974
Total Nonagricultural
Employment 39.4 .30.6 22.7 24.6 32.0
Contract Construction 156.2 91.7 69.5 77.6 108.2
Manufacturing 136.3 . 116.3 107.9 105.2 70.8
1976
23.1
64.7
78.2
Food Processing 211.5 195.2 196.3 175.3 100.6 112.0
Trade 20.8 20.0 15.6 14.8 25.1 13.5
Services 28.4 17.2 10.7 16.2 26.8 13.3
Unemployment Rate,
A 11 Industries 117.5 74.4 59.2 65.1 82.3 45.8
Labor Force 28.2 26.5 21.8 21.0 27 01 21.2
1978
14.0
47.2
86.5
125.0
12.0
17.8
30.0
12.0
SOURCE: Compiled from Statistical Quarterly (Alaska Department of Labor),
selected years. Seasonal variation is measured as the high month
minus the low month divided by average annual figure, stated as
~-----------------------a-f'lePeent-.---cl:lnemp1eymen-t-data-are-from~t:-abor-Forte~Estimates----------------
(Alaska Department of Labor), various years.
15
Employment in mining is the one basic sector industry that has in-
creased its share of total employment. The federal government share
has declined substantially over the period, while both state and local
government have grown, with much of the growth in state gov~rnment em-
ployment occurring during the 1960s and the early 1970s. Local gov-
ernment growth lagged state government in the early years, but by 1975
local government employment exceeded state government employment. Of
particular interest is the growth of support sector activity, incl ud-
ing trade, finance, insurance and real estate, and services. This
growth reflects a steady diversification of support sector activity
and the process of import substitution in response to 'increasing mar-
ket size, growth of.incomes, and opportunities for specialization.
short, the data reflect a general maturation of the economy.
In
It is also of interest to consider changes in seasonal patterns of
economic activity. Table 3 summarizes seasonal activity in selected
industries, as well as for total nonagricultural wage and salary em-
p 1 oyment, 1 abor · force, and unemp 1 oyment. Seasona 1 variation is mea-
sured as the high month minus the low month divided by the average an-
nual figure for the respective variable. Because of secular growth in
the variables, the index tends to overstate seasonality for any given
year, but for comparative purposes, over time, the index is satisfac-
tory.
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The data reflect two important dimensions of the Alaska economy.
~~~~~~.~·E j r:s't_,~s~e,as~OJlaJJ~tj{ .~ar~ie.s~d-cas±~tc.aJJ_y f"Com ..... ].ndus_tcy_ to .. _indust.~y--,~wj_th~-... ·.-.. -. ~ .. ~ .. -.... -E-
16
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construction and manufacturing (especially food processing) showing
the greatest seasonal swings. Second, while significant seasonality
remains in all industry, there has been a major reduction over time.
In summary, the data on labor force, employment, and unemployment il-
lustrate several important features of the Alaska economy. First,
whi 1 e growth has been uneven, aggregate economic activity has in-
creased substantially since statehood. Contract construction, mining,
and support sector industries grew rapidly during pipeline construc-
tion. With the exception of contract construction, levels of employ-
ment achieved at the peak of pipeline construction have' generally been
sustained or have increased.
Second, structural change that reflects a general maturing of the eco-
nomy has occurred, as evidenced by the increased share of total em-
ployment accounted for by support sector activity, including trade,
finance, insurance and real estate, and services. Coupled with the
greatly reduced dependence of the state on federal government activity
and the growth of petroleum and fisheries, the data indicate a general
broadening and diversification of economic activity.
Third, in addition to sustained secular growth, there has been a mark-
ed decrease in seasonal swings in economic activity. In part, this
reflects the relative growth of industries with smaller seasonal vari-
ations. In addition, construction and fish processing seasonality
~-----_ ------.ha¥e-also~~educed-substant~ia~-ly~.
17
Finally, the relative stability of unemployment rates over time clear-
ly indicates the openness of the Alaska labor market. The generally
higher than national average unemployment rates have not responded to
aggregate economic expansion historically and probably will not in the
future.
PERSONAL INCOME
Persona 1 income measures that part of the tota 1 va 1 ue of production
that accrues to individuals and includes: wage and salary income;
other labor income; proprietor's income; income from dividends, inter-
est, and rent; and personal transfer payments. While deficient in
many respects as a measure of economic well-being, it is nevertheless
a useful indicator of the degree to which individuals share in the to-
tal benefits of production. Table 4 presents estimates of personal
income for Alaska, by major source, for selected years covering the
period from 1960 through 1978.
Personal income h~s grown steadily over the entire period, at an aver-
age annual rate of 11.3 percent, while for the pipeline period the
growth was about 17 percent per year. Wage and salary income account-
ed for the majority of personal income throughout the period, aver-
aging 80 percent. In contrast, about 68 percent of U.S. personal in-
come is accounted for by wages and salaries. Proprietor income as a
share of total personal income has declined somewhat; while that of
dividends, interest, and rent has increased modestly. The share ac-
~ ~ ~ ~-_ _ ______ co.unted_for. by transfer_ payments_ has. j Dcr.eased substantia lly_hut. _still -
18
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TABLE 4. PERSONAL INCOME BY MAJOR COMPONENT:
ALASKA, SELECTED YEARS 1960-1978
(millions of current dollars)
1960 1965 1970 1975 1978
COMPONENT $ % Total $ % Total $ % Total $ % Total $ % Total
W~ges & Salary 567.9 84.1 778.2 88.8 1293.9 84.7 3620 85.0 3954.9 80.6
1
!Private, Total 281.5 41.7 463.2 52.8 773.1 50.6 2771 65.1 2907.2 59.2
Mining 10.3 1.5 14.3 1.6 54.2 3.5 116 2.7 248.4 5.1
Contract Construction 77.3 11.5 98.0 11.2 140.2 9.2 1095 25.7 537.8 11.0
Manufacturing 47.1 7.0 59.7 6.8 90.9 5.9 161 3.8 260.9 5.3
Fisheries 17.7 2.6 22.9 2.6 31.4 2.1 46.2 1.1 100.5 2.0
_. Forest Products 8.4 1.2 22.8 2.6 38.6 2.5 64.8 1.5 50.0 1.0
1.0 Support Sector 142.1 21.1 265.3 30.3 457.4 29.9 1364 32.0 1817.0 37.0
i
:Government 286.6 42.5 376.0 42.9 593.6 38.8 993 23.3 1301 .8 26.5
! Federal Civilian 104.7 15.5 137.6 15.7 195.1 12.8 308 7.2 383.2 7.8
I Military 136.0 20.1 143.9 16.4 225.7 14.8 258 6.1 287.5 5.9 '
I State & Local 45.9 6.8 94.4 10.8 172.9 11.3 427 10.0 631.0 12.9
P~oprietors 1 Income 50.1 7.4 62.1 7. 1 73.9 4.8 143 3.4 260.5 5.3
'
D~vidend, Interest & Rent 33.0 4.9 52.1 5.9 81.4 5.3 220 5.2 333.4 6.8
I
T~ansfer Payments 24.0 3.6 34.2 3.9 79.3 5.2 274 6.4 358.3 7.3
:
I
TOTAL 675.0 100.0 876.6 100.0 1528.5 100.0 4257 100.0 3907.1 100.0
:Less
I Cont. for Soc. Ins. 11.0 22.3 49.2 172.0 223.5 1
Residence Adj. 31.5 ~5.9 67.1 637.0 314.6
R~sident Personal Income 632.5 900.2 1412.2 3447.0 4369.0
Table 4 Notes
SOURCE: Major components of the table are obtained from U.S. Department
of Commerce, Bureau of Economic Analysis reports of personal income by
state. Wages and salary figures (row 1) include wage and salary plus
other labor income components of personal income. Except for 1960, the
private, total row and subcomponents thereunder, contain wage and salary
income, other labor income, and proprietors' income. Total income is
the sum of the wages and salary row plus proprietors' income; dividends,
interest and rents; and transfer payments. Resident personal income is
equal to total income less contribution for social insurance and the
residence adjustment.
20
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remains well below the national figure of 12.6 percent. The data also
generally confirm the re 1 at i ve changes in the composition of industry
activity that were observed in the employment data.
The growth of aggregate personal income in Table 4 reflects not only
aggregate growth of production but a 1 so the i nfl uence of i nfl at ion.
Tab 1 e 5 presents aggregate persona 1 income in both current and con-
stant do 11 ars. Growth of constant dollar persona 1 income has been
significant and has averaged 7.8 percent per year. During the 1974-
1977 period, the growth was even more dramatic at 11. 8 percent in rea 1
terms. The combined effects of inflation and the plateauing of eco-
nomic activity following completion of pipeline construction have re-
sulted in a slight decline in real personal income in 1978.
There are two other dimensions of personal income that are particular-
-
ly important in assessing individual economic well-being: per capita
income and the distribution of income. Table 5 includes data on the
growth of per capita persona 1 income in rea 1 and current dollars.
Real per capita income from 1960-1973 grew at an average annual rate
of 4 percent. The 1973-1978 period, encompassing pipeline construc-
tion and the post-boom readjustment, shows rapid expansion until 1976
and then a substantial drop during 1977 and 1978. The net growth over
the period is only 2 percent per year. Two points are worth noting in
this respect. First, the rapid expansion of activity occurred during
"~-~ ~ ~ ~ ~ ~ ~-~ ~~~a~-peP...i-od~of h~-Qh~na-M~na-l~i-nf~lat-fon~and~was~o-f -su-f-f4e-i-ent magn-i-tucle~to~~~-~~~
.. 21
1960
1965
1970
1971
1972
1973
1974
1975
1976
1977
1978
TABLE 5. ALASKA RESIDENT ADJUSTED PERSONAL INCOME
IN CURRENT AND CONSTANT 1979 DOLLARS
1960, 1965, and 1970-1978
Millions of Dollars of
Persona 1 Income, Tota 1 · Per CaEita Personal Income
Current $ Constant 1979 $ Current $ Constant 1979 $
632.5 1,470.6 2,797 6,503
858.4 1,982.8 3,168 7,318
1,411.9 2,700.3 4,644 8,882
1,557.2 2,954.8 4,939 9,372
1,698.5 3,036.4 5,234 9,631
2,001.5 3,570.0 6,046 10,784
2,436.7 3,822.9 7' 138 11 '199
3,527.7 4,493.5 9,673 12' 321
4,194.8 5,421.4 10,274 13,278
4,313.4 5,346.5 10,455 12,959
4,369.0 4,875.2 10,849 12,106
Average Annual Percent Growth
11.3 7.8 6.9 3.5
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SOURCE:· Current do 11 ar persona 1 and per capita income from U.S. Department [~ · ·· ···~····~~· ··aT cmnmerrctr;··sure·au·~arEconcjfif'fc ·AnaT ysfs: ... ~·oerTa:tea~·E>:Y~7rnchorage···· · · ·· ·· ··· :
Consumer Price Index, U.S. Department of Labor.
[
22
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1 ead to addition a 1 region a 1 i nfl at ion in the A 1 as ka economy. Thus ,
the real value of per capita income growth was greatly diminished.
Second, the rapid expansion of total economic activity had only a min-
imal effect in raising per capita income, again reflecting the ease of
entry into the Alaska labor market.
Data on the distribution of personal income are not available for re-
cent years, but it is instructive to look at the pattern of wages over
time. Table 6 presents data on relative wages, by industry, for se-
lected years over the 1965-1978 period.
The numbers reflect the ratio of the average monthly wage for the re-
spective industry divided by the average monthly wage for all nonagri-
cultural wage and salary employment. The data must be interpreted
with caution since several factors are at work that may account for
year-to-year variability. First, the average monthly wage data re-
flect both straight time and overtime earnings and are thus sensitive
to variation in the ratio of straight time to overtime work.
Second, the average monthly wage is computed by dividing total wages
by average monthly employment; and average monthly ·employment, in
turn, reflects both full-and part-time work. Thus, the employment
data are only an approximation of man hours worked. We are also
looking at fairly aggregate data. Some of the variation within indus-
tries may be accounted for by changes in composition of activity with-
23
TABLE 6. DISTRIBUTION OF RELATIVE WAGE RATES,
BY INDUSTRY, FOR ALASKA,
SELECTED YEARS, 1965-1978
Industrl 1965 1970 1976
Total Nonagriculture Wage and Salary 100 100 100
Mining 147 164 140
Contract Construction 165 169 210
Manufacturing 106 99 73
Food Processing 97 78 55
Logging, Lumber, and Pulp 115 124 96
Other Manufacturing 112 110 83
Transportation, Communication,
and Public Utilities 115 114 105
Wholesale Trade 127 117 94
Retail Trade 78 70 50
Finance, Insurance, Real Estate 88 81 62
Services 74 72 78
Government 91 97 74
Federal 91 100 70
State 91 96 79
Local 91 93 72
1978
100
193
157
93
71
119
109
128
111
62
81
75
97
94
111
89
SOURCE: Computed from average monthly wage data from the Statistical
Quarterly (Alaska Department of Labor), selected years.
Relative wages are the respective industry wage divided by
the average wage for all industries x 100.
24
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The data first indicate the growing disparity of average wage rates,
which would suggest a trend toward a less equal distribution of in-
come. More significant are the changes that occurred at the peak of
pipeline construction in 1976. Major distortions in the structure of
wages are present, and this suggests that the distribution of benefits
during a .boom is not uniform, but rather that a small segment of the
economy appears to reap a large proportion of the gains. This feature
of boom economics is further demonstrated by an analysis of changes in
real wages over the 1973-1976 period.
Table 7 shows average monthly wages, by broad industry classification,
deflated by the Anchorage consumer price index (CPI). Use of the
Anchorage CPI is dictated because there is no statewide index. Hence,
the deflation is subject to so~e error since price changes are not
uniform throughout Alaska. As an approximation, however, the data are
adequate.
It is clear that drastic differences exist among industries and that
the economic benefits of rapid economic expansion tend to be concen-
trated in a select few industries. A major portion of income implied
in the growth of construction wages was also earned by nonresidents or
temporary resident employees. With the exception of business ser-
vices, all components of the support sector and government badly lag-
ged the average growth of wages and, implicitly, relative income.
Federal government and finance, insurance, and real estate real wages
25
TABLE 7. CHANGE IN REAL AVERAGE MONTHLY WAGE
1973-1976, ALASKA (1973 DOLLARS)
Average Wage Average Wage
Industry 1973 1976
Total Nonagriculture
Wage and Salary $1,006 $1,424
Oil and Gas Mining 1 ,661 2,068
Contract Construction 1,635 2,985
Manufacturing 961 1 ,041
Transportation,
Communication, and
Public Utilities 1 '141 1,494
Wholesale Trade 1 '177 1 ,341
Retail Trade 687 709
Finance, Insurance,
Real Estate 897 884
Services 751 1,107
Hotels, Motels, Lodging 527 537
Business Services 732 1,706
Government 1,024 1,047
Federal 1,062 1,002
State 992 1,132
Local 1,003 1,024
Average Wage
Percent Change
12.3%
7.6
22.2
2.7
9.4
4.4
1.1
-0.5
13.8
0.6
32.6
0.7
-1.9
4.5
0.7
SDURCE:-. Computed_from.~ay_e~age~monthJy_wage_data,_StatJsticaJ_Qua~tecl,y
(A1a~ka Department of Labor), selected years.
26
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While much of the inflation that occurred during the period is attri-
butable to national inflation, significant regional inflation result-
ing from pipeline construction activity also occurred. Prior to pipe-
line construction, the Anchorage CPI had been growing at a less rapid
rate than the U.S. CPI. However, during pipeline construction, this
relationship was reversed, and the Anchorage CPI grew more rapidly.
-Table 8 presents relative rates of growth in the Anchorage and U.S.
CPis for selected years and clearly illustrates the regional inflation
associated with pipeline construction.
As one final indication of income distribution patterns, a distribu-
tion relating percentage of total wage and salary income to percentage
of employment has been constructed for 1965 and 1978 (see Figure 1).
The distributiqn was constructed by ranking industries according to
average monthly wage. The percentage of total employment and total
wage income accounted for by the respective industry was then comput-
ed. The cumulative employment and income percentages were then plot-
ted, yielding the typical Lorenz-type distribution figure.
A comparison of the two distributions reveals a clear shift toward a
less uniform distribution of income. This shift is probably accounted
for by two factors. First, as indicated earlier, there has been a
sizable increase in the share of total activity accounted for by sup-
port sector industries, and these industries generally have lower than
average wage rates. Second, there has been a substantia 1 growth in
the~ Y'ange ~of ~elati-ve~ wages-between indust~ies-~ove~--t-imer--------- - -
27
Anchorage
United States
TABLE 8. RATES OF CHANGE FOR THE ANCHORAGE
AND U.S. CONSUMER PRICE INDEX,
SELECTED YEARS, 1960-1977
1960-1970 1970-73 1973-74 1974-75 1975-76 1976-77
1.8 4.1 13.3 12.3 6.5 5.8
2.8 5.6 12.0 7.6 5.3 6.5
. ···~-~SQ!JRCE_:~D~riv~cifr.olll_~~b~Bureau.of.Labor Statistics. reports on Anchorage and United States· -cJ:rrs~--~ -~-~~-. ----------~ -~
28
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Percent of
FIGURE 1 • DISTRIBUTION OF WAGE AND SALARY INCOME
ALASKA~ 1965 and 1978
100_, .
90----------------------------------
70-: ... ··········-··
6o----~ c·-------··-··-·--· -,~-~--------.. ·•·•· ................. _: •....
-. --~
-1
~
.. 9
I
I
! ·-· -----·1
1978 I,
~
----··---... ----------.... i
I .,
i
I Wage & Salary so------,--------· -----------------1 I Income
. __ -----------------·----· ·.
40~--'--__ :·.,--,--'--. -. ------------
; --. ------------------·· --------------...
----·. ---..,..--. 30--' ··--------~--:~----"~· ,---........ .
···•· ---. ·------------··-----
0
I
i
i --,
I
I -~--.. --. --------------------t
I
Percent of Employment
SOURGE:-·-See text;·
29
In summary, real personal income has shown sustained growth over the
entire 1960-1978 period, both in aggregate and per capita terms. The
growth has not been uniformly distributed, however, and the wage com-
ponent has become less uniform over time. This was particularly evi-
dent during pipeline construction and supports the hypothesis that the
benefits of pipeline construction were largely concentrated in a few
sectors.
POPULATION
The reQtaining dimension of growth to be considered is population.
Changes in population are divided into two components, natural in-
crease (or decrease) and in/out-migration. Natural population growth
results from an excess of births over deaths and is, hence, determined
by birth and death rates.
Alaska exhibits both the highest birth rate and the lowest death rate
in the United States; and as a result, the rate of natural population
increase is the highest in the United States. This phenomenon is
largely accounted for by the relative youthfulness of the population,
with over 34 percent of the population between the ages of 14 and 30.
This age group has· both the highest fertility rate and the lowest
death rate.
Net migration (in-migration minus out-migration) is the second factor
contributing to population change. Many factors influence the migra-
-tJ c:n1 __ ci~~i ~ i_o_n; _ bu_t _f()r tb~ A_lct_s_~~-_ca_s~, it gJlJ:>~~rs tha._t~<wLtll_the_ ex-~ __ _
caption of military-related migration) migration occurs largely in
30
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response to economic opportunity. In the aggregate, relative rates of
unemployment and relative wage differentials in Alaska and elsewhere
should be important in determining the migration decision. At the in-
dividual level, the economic component of the decision is related to
the expected gain resulting from the move. Basically, this is the ex-
pected wage differential times the probability of getting a job, less
the cost of making the change. Thus, either a change in relative wage
rates or relative employment opportunities can influence the decision.
That migration is sensitive to economic opportunity is clearly demon-
strated by patterns of migration that occur during and after pipeline
construction. Data summarizing population and changes in population
for Alaska for the years 1965 through 1978 are presented in Table 9.
Both the relative stability of natural increase and the volatility of
net migration are clear. Natural increase has averaged about 1.5 per-
cent per year; while large variations, even in pre-pipeline years, are
evident in the net migration component.
In summary, Alaska 1 s natural population growth is substantially above
that of the nation as a whole. Furthermore~ the response of migration
to economic opportunity is clearly evident. Once again, this empha-
sizes the openness of the Alaska labor market.
Regional Economies: Anchorage, Southcentral,
Fairbanks, and the North Slope
Potential impacts of OCS development will not be uniformly felt
throughout the state. Rather, specific regions within Alaska can be
31
Year
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
TABLE 9. ALASKA POPULATION AND COMPONENTS
OF CHANGE: 1965-1978
(thousands)
Total Natural Increase Total Change
265.2 5.7 10.2
271.5 5.3 6.3
277.9 5.0 6.4
284.9 5.1 7.0
294.6 5.6 9.7
302.4 6.1 7.8
312.9 5.9 10.6
324.3 5.5 11.4
330.4 5.1 6.1
351.2 5.6 20.8
404.6 5.9 53.4
413.3 6.3 8.7
411.2 6.8 -2.1
407.0 6.7 -4.3
SOURCE: Alaska Department of Labor
32
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Net Migration
4.5
1.0
1.4
1.9
4.1
1.7
4.7
5.9
0.9
15.2
47.5
2.4
-8.9
-11.0
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expected both to experience the brunt of the impacts and to capture
disproportionate shares of the benefits. In the case of the present
proposed 1 ease sa 1 e, the Anchorage, Southcentra 1 , and Fairbanks re-
gions shown in figure 2 can expect impacts as well as where the sale
would occur. Hence, the baseline analysis must address these regions
as well as the state as a whole.
ANCHORAGE AND SOUTHCENTRAL
Anchorage has occupied a central role in Alaska 1 s growth since state-
hood. It has emerged as a key transportation and distribution center,
as well as assuming a dominant role in the growth of other support
sector activity. The area has also become the state center for petro-
leum industry administrative facilities. Its importance as a seat of
Federal government activity in Alaska has been supplemented by rapid
growth of state and 1 oca 1 government. Because of the size of the
Anchorage economy, it tends to reflect total state activity as well as
to impact upon tot a 1 economic activity in A 1 as ka. It is because of
its central place in the Alaskan economy that economic activity remote
from Anchorage is often significantly tied to Anchorage.
Employment, Labor Force, and Unemployment
Direct measures of production for the Anchorage economy are not avail-
able. Neither is Anchorage a commodity producer in which resource-
based activity is directly important to total economic activity. This
makes it particularly important to consider the structure and growth
33
of employment for Anchorage. While such data are only partially re-
flective of total production, they do provide meaningful insights into
changes that have occurred.
Summary data on Anchorage employment, by broad industry classifica-
tion, for 1965 through 1978, are presented in Table 10. Overall em-
p 1 oyment has grown at about 7. 3 percent per year·, and the rate of
growth exceeded the statewide rate of 6. 7 percent. While growth has
generally been consistently upward, it accelerated substantially dur-
ing pipeline construction. Since then, growth of employment has mod-
erated; but the level of employment still exceeds that 'achieved during
the period of pipeline construction. It is also worth noting that, in
contrast to other parts of the state where pipeline construction play-
ed a significant role in the expansion of activity, Anchorage growth
during this peri ad occurred more uniformly throughout most sectors,
reflecting the region•s role as a support center.
Several industries expanded more rapidly than the growth of total em-
ployment, including: mining (13.3 percent); transportation, communica-
tions, and public utilities (8.9 percent); wholesale-retail trade (9.4
percent); finance, insurance, and real estate (11.0) percent; services
(11.5 percent); and state and local government (10.5 percent). Con-
struction, manufacturing, and federal government growth rates were all
below the regional average for the period.
34
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6
·r:·--·-·-·-···-------------\
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9
4 5 6
8 9 10
A
FIGURE 2: MAP MODEL REGIONS·
LEGEND
0 Places of 25,000 to 50,000 inhabol1nts outsodt SMSA's
SCALE sex.,..J !f ..... ...l-9" •re __ f80111LEs
• ~ .. ~
7 8 ·9 10
TABLE 10. ANCHORAGE NONAGRICULTURAL WAGE AND SALARY
EMPLOYMENT, SELECTED YEARS
(thousands)
1965 1968 1970 1972 1974 1976 1978
£!!!e. ! fme. ! fme. ! fme. ! ~ % ~ ! ~ !
Total Norp\gric
Wage &;Salary
Employment 30.678 100.0 34.019 100.0 42.019 100.0 48.252 100.0 58.713 100.0 73.733 100.0 76.893 100.0
Mining 0.371 1.2 0.781 2.3 0.958 2.3 0.806 1.7 1.036 1.8 1.409 1.9 1.874 2.4
Contract .•
ConstrUction 3.126 10.2 2.438 7.2 3.514 8.4 4.272 8.9 5.1,!82 10.0 ,7.587 10.3 6.431 8.4
w Manufacturing 0.791 2.6 0.834 2.5 1.018 2.4 1.215 2.5 1.379 2 ? 1.629 2.2 1.683 2.2 0"1 •"
Transportation,
CoiiVllunkations,
and Ut'il ities 2.618 8.5 -3.046 9.0 3.907 9.3 4.522 9.4 5.583 9.5 7.409 10.0 7.950 10.3
Wholesale-Retail 5.279 17.2 6 •. 552 19.3 8.617 20.5 9.948 20.6 12.298 20.9 15.958 21.6. 16.865 21.9
Finance,. Insur-
ance and Rea 1
Estate' 1.295 4.2 1.452 4.3 1.980 4.7 2.415 5.0 3.151 5.4 4.257 5.8 5.019 6.5
Services 3.767 12.3 4.652 13.7 6.403 15.2 7.725 16.0 10.119 17.2 15.450 21.0 15.538 20.?
Federal
Government 9.394 30.6 9.216 27.1 9.534 22.7 9.435 19.6 9.925 16.9 9.813 13.3. 9.896 12.9
State & [{)cal
Government 4.001 13.0 5.022 14.8 6.036 14.4 7.839 16.2 9.242 15.7 9.465 12.8 11.266 14.7
SOURCE:
1
Statistical guarterlt (Alaska Department of Labor), various years.
j
The growth of the support sector i 11 ustrates the maturing of the
Anchorage economy as was also observed at the statewide level. A com-
parison of statewide and Anchorage support sector employment as a per-
cent of tota 1 emp 1 oyment a 1 so indicates the ro 1 e of Anchorage as a
trade, distribution, service, and financial center for the state as a
whole. Employment as a percentage of total Anchorage employment con-
siderably exceeds comparable figures at a statewide level in trade,
finance, and services. For Anchorage, these industries accounted for
48.6 percent of total employment in 1978; whereas for the state as a
whole the figure is only 39.5 percent. The share of total employment
accounted for by the federa 1 government in Anchorage is' a] so above the
state proportion, and over 50 percent of total federal government em-
ployment in Alaska is based in Anchorage.
The data on labor force and unemployment also illustrates the openness
of the Anchorage economy (see Table 11 ). Over the period from 1970
through 1979, unemp 1 oyment averaged 7. 4 percent. While temporarily
dropping during pipeline construction, the unemployment rate.has risen
again to historic levels in the years since completion of the pipe-
line, averaging 7.7 percent for 1978 and 1979. Hence, while rapid ex-
pansion of employment opportunities may temporarily reduce unemploy-
ment, the effects are clearly short-run.
Personal Income
Total and per capita personal income for Anchorage are shown in Table
12, both in current _an~~~nstant ~-( 1 ~28) _do 11 ars :____!~_ cu!'!~n~c:t_~l_l~~~--~--_______ _
T-------------~-----~---
37
TABLE 11. ANCHORAGE LABOR FORCE, EMPLOYMENT,
AND UNEMPLOYMENT, 1970-1978
[
[
[
Year Employment Labor Force Unemployment Unemployment Rate c
[
1970 45,757 49,024 3,267 6.7%
1971 49,484 53,902 4,418 8.2
1972 52,395 57,535 5,140 8.9
1973 54,299 60,117 5,818 9.7
1974 54,691 58,661 3,970 6.8
1975 64,721 68,481 3,760 5.5
1976 68,420 73,436 5,016 6.8
1977 79,023 84,513 5,490 6.5
1978 74,819 81 ,551 6,732 8.3
1979 75,424 81 '120 5,696 7.0
SOURCE: Alaska Department of Labor, Labor Force Estimates by Area,
selected years.
38
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both total and per capita personal income have grown every year (at
average annual rate of 14.4 percent and 10.0 percent, respectively)
with considerable increases in the rate occurring during pipeline con-
struction. Much of the growth has been negated by inflation, however.
In real terms, total incomes grew at 8.2 percent over the period;
while per capita income grew at 4.1 percent. However, both real total
and per capita personal income have declined slightly since peaks
reached during pipeline construction. It is also worth noting that
the growth rates of Anchorage persona 1 income exceeded those of the
state for comparable periods.
Population
Population for Anchorage has grown from 102.3 thousand in 1965 to
185.5 thousand in 1978, at an average annual growth rate of 4.7 per-
cent (see Table 13). This was substantially in excess of the state-
wide growth rate of 3.4 percent. As a result, the Anchorage share of
total state population rose from 38.6 percent in 1965 to 45.6 percent
in 1978. From 1965 to 1969, ·the Anchorage and statewide populations
grew at about the same rate; while for 1969 through the start of pipe-
1 i ne construction, the popu 1 at ion of Anchorage grew at about 6 per-
cent. During this period, the state as a whole grew at about 3.6 per-
cent. Both the state and Anchorage populations grew rapidly during
the 1974 through 1976 period (17. 7 percent and 20. 1 percent, respec-
tively), but the Anchorage population did not peak until 1977; whereas
the statewide population reached a peak in 1976. However, the decline
in Anc~or~~e_ popu] a~ion h_a~s~ ~e_e_n J)rOp()J'ti ()nate_ly _g!'e'!tel" _t_h~':l t_h~t for
39
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
TABLE 12. ANCHORAGE PERSONAL INCOME
1965-1978
Current Dollars Constant (1978) Dollars
Total Total
(millions) Per Capita (millions) Per Capita
371 3,412 767 7,056
398 3,595 722 7,153
462 4,061 900 7,911
502 4,228 953 8,027
570 4,622 1,035 8,391
635 4,997 1,109 8,730
733 5,469 1,248 9,313
800 5,631 1 ,333 ' 9,383
880 6,031 1,385 9,490
1 '114 7,402 1,550 10,299
1 ,625 10,070 2,011 12,463
1,903 10,579 2,212 12,296
2,109 11 ,592 2,317 12,736
2 '128 11 ,839 2,128 11 ,839
Average Annual Percent Growth
14.4% 10.0% 8.2% 4.1%
SOURCE: Bureau of Economic Analysis, U.S. Department of Commerce.
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TABLE 13. ANCHORAGE POPULATION
1965-1978
(thousands)
1965 102.3
1966 105.9
1967 107.8
1968 111.6
1969 114.2
1970 126.3
1971 135.8
1972 144.2
1973 149.4
1974 153.1
1975 177.8
1976 185.2
1977 195.8
1978 185.5
-----SOURCE:-A1aska-Departmentof-tabor;----------------
41
the state as a whole. In 1978, statewide population was 6.3 thousand
below the pipeline peak; while the Anchorage population was 10.3 thou-
sand below its peak.
In summary, the Anchorage economy has shown substantial growth over
the entire period reviewed. Steady diversification of the economy is
evident, and the role of Anchorage as an economic center for the state
is clear. Furthermore, economic activity remote from Anchorage is
nevertheless often significant for the Anchorage economy because of
Anchorage•s central role.
The Southcentral economy includes primarily the Kenai-Cook Inlet,
Seward, Matanuska-Susitna, Valdez, Chitina, Whittier, Kodiak, and
Cordova-McCarthy Census Division. Economic ties exist between the
Kenai-Cook Inlet, Seward, and Matanuska-Susitna Census Divisions and
Anchorage. Anchorage is the primary distribution point for commodity
flows to those areas. Second, the Anchorage population utilitizes the
surrounding areas for recreational purposes. Finally, the surrounding
areas (and in particular the Matanuska-Susitna Valley area) constitute
an important component of the Anchorage labor pool. More broadly, the
Southcentral region as a whole constitutes a labor pool for economic
activity throughout the state. This last tie is the most significant
in terms of 1 i nkages between the proposed OCS 1 ease sa 1 e and the
Southcentral regional economy.
42
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FAIRBANKS
The Fairbanks region in the MAP model includes the Upper Yukon, Yukon-
Koyukuk, Southeast Fairbanks, and Fairbanks Census Divisions, and com-
prises Alaska 1 s geographic interior (see Figure 2). The distribution
of economic activity among these regions remains fairly stable during
the 1970s. The Fairbanks Census Division which includes the city of
Fairbanks captured about 85 percent of regional personal income 1n
both 1970 and 1978. The remaining 15 percent was distributed in di-
minishing amounts among the Yukon-Koyukuk, Southeast Fairbanks, and
Upper Yukon Census Divisions.
Until the mid-1970s, the government sector, consisting primarily of
defense, communications, and the University of Alaska, was the largest
producer of income and emp 1 oyment in the region. Between the 1 ate-
1960s and mid-1970s the construction employment, as a proportion of
regional employment, grew from less than 10 percent to more than
25 percent and temporarily became the 1 argest determinant of avera 11
economic activity. Headquartered in the Fairbanks Census Division,
the northern half of the Trans-Alaska Pipeline System was the princi-
pal source of direct and multiplier construction employment in the
mid-1970s. The role played by Fairbanks during the oil pipeline con-
struction reflects the importance of Fairbanks as a center of trans-
portation, distribution, and other economic support for the interior
region.
"'; ---------------·-------------
43
Employment
Nonagricultural wage and salary employment by industry in the Fair-
banks region is shown for selected years between 1965 and 1979 in
Table 14. Over the 11-year period from 1965 to 1976, total wage and
salary employment more than doubled from 13 to 32 thousand jobs, aver-
aging yearly growth of 8.5 percent. Over this period, contract con-
struction employment as a proportion of the total increased from
11 percent to 27 percent at the height of TAPS construction in 1976.
Over the same period, federal , state, and 1 oca l government dec 1 i ned
sharply from nearly half to only a quarter of total wage and salary
employment. The data in Table 14 indicate that employme·nt in the
other industries (e.g., mining, manufacturing, transportation, commu-
nications, public utilities, finance, insurance, and real estate) re-
mained fairly stable between 1965 and 1976. Service sector employment
increased modestly over this period. During the post-pipeline decline
of the late 1970s, total wage and salary employment declined 23 per-
cent to 24,700 persons. Total government employment increased slight-
ly in the midst of this decline implying that the recession was con-
centrated in other nongovernment sectors of the economy.
Although the data on total employment in Table 14 and 15 differ, the
trends indicated from each data source are similar. Employment in-
creases gradually through the early 1970s prior to a cycle of abrupt
growth followed by gradual decline to roughly pre-pipeline levels of
employment. The unemployment rate declines during the period of rapid
growth in the mi d-1970s, but increases to higher 1 eve 1 s in the 1 ate
44
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"J:ABLE 14. NONAGRICULTURAL WAGE AND SALARY EMPLOYMENT IN THE FAIRBANKS
REGION, SELECTED YEARS
(Persons)
1965 1968 1970 1972 1974 1976 1979 ''····
~ ! ~ % ~ ! ~ ! fu % ~ % ~ %
Total NqnAgric
Wage & Salary
Emp1o~ent 13107 100 13828 100 15770 100 17258 100 24443 100 32195 100 24704 100
Mining i 270 2 180 181 211 * * 283 * * I
Contract
Const11uction 1393 11 997 7 * * 1208 7 5360 22 8647 27 * * ..j::>
01 I Manufac~uring 250 2 * * 248 2 245 307 * * * *
' Transpor:tation,
Communications,
and Utilities 1722 13 1736 13 2119 13 1969 11 2476 10 3725 12 * *
Wholesa~e-Retai1 * * 2152 16 * * * * * * 4588 14 * *
' Finance' Insur-
ance ilnd Rea·l
Estate
i
386 3 458 3 * * 562 3 656 3 * * 859 3
.,
Services * '* 1575 11 1794 11 2515 15 3546 15 5420 17 * *
Federal
Gover~ment 3181 24 2931 21 2905 18 3262 19 3131 13 2974 9 2946 12
State & ,Local
Gover~ment 2745 21 3524 25 4034 26 4652 27 4646 19 5162 16 6136 25
* W~thheld under nondisclosure regulations.
SOURCE: • Alaska Department of Labor tabulations.
TABLE 15. LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT IN THE
FAIRBANKS REGION, 1970-1978
Year Employment Labor Force Unemployment Unemployment Rate
1970 15,772 17,317 1,545 8.9%
1971 15,706 17,609 1,903 10.8%
1972 16,453 18,600 2,147 11.5%
1973 16,225 18,423 2,198 11.9%
1974 18,238 19,660 1,422 7.2%
1975 25,691 27' 189 1,498 5.5%
1976 25,864 28,251 2,387 8.4%
1977 24,342 27,884 3,542 12.7%
197·8 22,043 26,722 4,679 17.5%
1979 21,857 24,958 3 '1 01 12.4%
SOURCE: Alaska Department of Labor, Labor Force Estimates by Area,
selected years (1970-1977). Alaska Department of Labor,
special tabulations, 1978-1979.
46
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1970s than levels experienced prior to pipeline construction. Hence,
1 abor force increases during and immediately after the pipe 1 i ne boom
were not matched by comparable, sustained increases in total employ-
ment during the period of post-pipeline decline.
Personal Income and Population
As shown in Table 16, personal income expressed in current dollars
grew at varying rates from the mid-1960s to the late 1970s. The
eight percent average annual rate of growth between 1965 and 1970
nearly tripled to 23 percent per year from 1970 to 1976. Personal in-
come in 1976, $916 million, expanded over five times the 1965 level.
A 1 though regi ona 1 income dropped 19 percent to $768 mi 11 ion between
1976 and 1977, the data suggest that this decline was short lived as
' .
income increased slightly thereafter. Over the entire 13 year period,
personal income grew at an average annual rate of 11.9 percent.
Expressed in constant, 1978 dollars, personal income grew at about
half its nominal rate, suggesting a 6.1 percent average annual rate of
inflation over the same period. After adjusting for population expan-
sion (Table 17) per capita personal income grew at a real rate of
3.5 percent per year.
Population growth is similar to the varied pattern of income and em-
p 1 oyment growth in the Fairbanks region except that region a] popu 1 a-
tion peaks one year earlier than personal income at nearly 79,000 per-
- _ ---------~ons in 1975. Over the 10-year period Ereceding~l975,_QQRUlation grew ___ . _____ _
47
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
TABLE 16. PERSONAL INCOME IN THE FAIRBANKS REGION
1965-1978
Current Dollars Constant (1978) Dollars
Total Total
(millions) Per Capita (millions) Per Capita
180 3,545 372 7,326
190 3,715 345 6,746
191 3,718 372 7,242
206 4,016 391 7,622
233 4,410 423 8,007
265 4,726 463 8,257
282 5 '129 480 8,731
305 5,370 508 8,944
343 6,061 540 9,542
446 7,062 621 9,834
779 9,909 964 12,262
916 13,358 1065 15,531
768 13,194 844 14,500
773 11,452 773 11,452
Average Annual Percent Growth
11.9% 9.4% 5.8% 3.5%
SOURCE: Bureau of Economic Analysis, U.S. Department of Commerce.
48
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TABLE 17. POPULATION IN THE FAIRBANKS REGION
1965-1979
(Persons)
1965 50,779
1966 51,139
1967 51,369
1968 51,300
1969 52,830
1970 56,077
1971 54,977
1972 56,797
1973 56,593
1974 63 '151
1975 78,614
1976 68,572
1977 58,208
1978 67,500
1979 66,314
Average Annual Percent Growth
1965-1975 1965-1979
4o5% L9%
SOURCE: Alaska Department of Labor, Alaska Population Overview,
December 1979 (estimate for 1979 is provisional).
49
at 4.5 percent per year. Between 1975 and 1977, population declined
35 percent, but stabi 1 i zed at about 67,000 in the 1 ate 1970s. Over
the entire period, 1965 to 1979, population grew at an average rate of
1.9 percent per year.
NORTH SLOPE REGION
By most traditional measures, the North Slope region of Alaska has ex-
perienced rapid growth in the past decade. Special characteristics of
this economy make the interpretation of this growth in economic wel-
fare or development terms less than straightforward. Two characteris-
tics of the regional economy influence the interpretation of this
growth, the importance of the subsistence sector and the frontier na-
ture of the economy. This section will describe the recent growth in
the region in terms of its unique character.
The North Slope has a transitional economy. The transition from a
pure isolated subsistence economy to full linkage with the monetized
market exchange system is a continuing process. Fisk (1975) describes
four stages of the transition,
1. Pure subsistence in isolation;
2. Subsistence with supplementary cash activity;
3. Cash orientation with supplementary subsistence; and
4. Complete market specialization.
50
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The majority of the North Slope economy is in stage two or three.
Subsistence continues to play a important role in the economy. A re-
cent survey in the region showed that over 70 percent of the Native
residents participated in subsistence activities during the year.
Over 45 percent of the residents got at least half of their food
through subsistence activities (Kruse, 1981). Although the same sur-
vey found little negative association between working and participa-
tion in subsistence activities, the importance of subsistence as an
economic activity doe~ affect the local market economy. The subsis-
tence economy wi 11 affect the response to market sector opportunities
by i nfl uenci ng such things as, the demand for market goods, the labor
force participation, and the seasonality of participation.
The second important factor to consider when analyzing the North Slope
economy is its frontier or remote nature. The North Slope is a re-
mote, low density region. In relation to its population, the region
possesses a large amount of resources (see example, Kreitner, 1978).
In regions such as the North Slope with a high resource to population
ratio, economic growth is primarily determined by the development of
the resources.
The pattern of growth in such regions is described by the Stap 1 e
Theory of growth (Watkins, 1972). Staple or natural resource exports
in economies 1 ike the North Slope are the 1 eadi ng sector of growth.
Most capi_tal _and labor used in the _pro(juction of the natural resource
51
must be imported. Economic development is the process of diversifica-
tion around the staple or natural resource base. The staple theory
provides a basis for analyzing the unique pattern of growth found in
this region.
The spread of development associated with the natural resource produc-
tion is determined primarily by the characteristic of the exported
natural resource. The nature of production--the technology, degree of
factor substitution, and the nature of returns to scale--determine the
extent of economic development. The way the resource is produced de-
termines the demand for 1 abor, the types of inputs used, and the dis-
tribution of income. These determine the linkage between further eco-
nomic activity and natural resource production.
One final remark must preface this discussion; the nature of the re-
gion 1 s economy a 1 so affects the qua 1 i ty of the data used to analyze
·it. The reliability of data provided for remote regions with limited
market economies is questionable. Because of this, the analysis pre-
sented below is intended to present trends and major patterns. It
should not be interpreted as providing an exact description of the
magnitude of growth.
Historic Interaction
The interaction of the North S 1 ope subsistence and market economies
dates from the 1870s. Historical contact was the result of the pro-
duction of t~~ l'e~i on 1 s natura 1 resources. Interac_:t ion pegan with ~he
52
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opening of whaling grounds in the 1870s. North Slope natives partici-
pated in the whaling industry both as crews for wages and as entrepre-
neurs who organized their own crews. With the decline in whaling,
trapping for furs rose as the predominant industry in the cash econo-
my. Furs replaced whaling in the early 1900s (historical information
from Sonnenfeld, 1957).
The effect of the way the natural resource is produced on the economic
growth of the region can be examined by looking at the effect of whal-
ing and trapping on population concentration. Because of the need for
crews and the physical advantage of Point Barrow, whaling led to a
concentration of the population at Barrow. Trapping of furs requires
a large territory per trapper, so this production reversed the trend
toward concentration and led to population dispersal.
Wha 1 i ng and fur production 1 inked the North Slope economy to the
broader market economy. These activities represented the beginnings
of dependency of the region, as locally produced goods were replaced
by imported goods. In many cases these goods increased the efficiency
of subsistence activity (Sonnenfeld sights the introduction of the
shou 1 der gun for wha 1 i ng), but increased the dependence on outside
markets to obtain subsistence. These activities also introduced the
vagaries of natural resource markets. Both whaling and fur production
experienced rapidly fluctuating prices which affected regional produc-
tion but were determined by outside factors.
53
More recent interaction has been the result of large construction pro-
jects. Two major projects were the exploration of petroleum in the
Naval Petroleum Reserve and the construction of DEW line. In both
cases, these activities resulted from the exploitation of the region's
natural resources: petroleum and polar location. NPR4 was created in
1923, but the first major exploration occurred between 1944 and 1953.
This exploration was conducted by the Navy and employed Eskimos in the
crews (Department of Defense, 1977). The DEW line was constructed in
the mid-1950s being completed between 1954 and 1957. This project
also employed many local Eskimos. These two projects introduced true
wage employment into the region (Chance, 1966).
Recent Economic Growth
The remainder of this section will describe recent economic growth in
the region. In this section we will concentrate on the growth which
occurred between 1970 and 1979. We will examine the major determi-
nants of growth and the 1 i nkages between sectors of the· economy.
Recent growth has not been qualitatively different from the historical
growth described above. Growth during the 1970s has been generated by
the production of natural resources in the region. These resources
are the petroleum reserves at Prudhoe Bay. The major linkage between
this deve 1 opment and the growth of the 1 oca 1 economies has been the
result of the formation of the North Slope Borough. The Borough is a
local government with the power to tax Prudhoe Bay petroleum facili-
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[
Prudhoe Bay is the largest known petro 1 eum reserve in North America;
it contains reserves estimated at 9.6 billion barrels of oil and
25 trillion cubic feet of gas. Development of the field began in
1969. The development of Prudhoe Bay resulted in the construction of
considerable infrastructure including major projects such as the
Trans-Alaska Pipeline and the Prudhoe Bay haul road, as well as air-
ports, port facilities, and employee living quarter·s (Alaska Consul-
tants, 1978).
The prevailing conditions in arctic regions--remoteness, lack of inf-
rastructure, and separation--dictate the production att'ributes of suc-
cessful arctic commercial activity. Such enterprises must be large,
have access to large amounts of capital, import technologies, and ex-
port the product in the most easily transportable form (Rea, 1976).
The high costs of production in the arctic also dictate that only bo-
nanza resource depos i t_s wi 11 be deve 1 oped. The petro 1 eum deve 1 opment
at Prudhoe Bay fits this description.
Prudhoe Bay development has three potential linkages with the local
regional economy. The first linkage is its effect on the production
of other petroleum resources in the region. The large cost of infra-
structure development which is absorbed by the Prudhoe Bay develop-
ment, allows smaller arctic fields near this existing infrastructure
to be developed. Prudhoe Bay has changed the cost of petroleum devel-
opment in the region making more resources economic (Kreitner, 1978).
This wi 11 affect future deve 1 O()=m~en=--ct,___. _________ _
55
The remaining linkages reflect the past effect of Prudhoe Bay develop-
ment on the growth of the regional economy. The second linkage con-
cerns the employment of other regional resources, primarily labor and
capital. This has been limited in the past. The final linkage is the
government linkage which allows residents of the region to tax the pe-
tro 1 eum operation and 1 imit the flow of economic resources from the
region. The next sections will describe recent changes in the North
Slope regional economy in terms of these linkages.
Population Growth
Table 18 illustrates the growth of the population in the North Slope
region. Total population between 1970 and 1979 has grown at a very
rapid pace; population grew by 150 percent between 1970 and 1979 com-
pared to 54 percent between 1950 and 1960 and 33 percent between 1960
and 1970. The rapid growth of the population in this recent period
can be explained by the development of Prudhoe Bay.
Growth in the traditional communities over this period has been closer
to the historic pattern. Barrow grew 26 percent between 1970 and
1979; 64 percent between 1960 and 1970; and 38 percent between 1950
and 1960. The other traditional communities grew 70 percent between
1970 and 1979; fell by 25 percent between 1960 and 1970; and grew by
74 percent between 1950 and 1960. The 1970-1979 population growth re-
versed a trend found in the 1960s of concentration in the population
in Barrow. This is partly a result of the resettlement of some
56
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TABLE 18. NORTH SLOPE REGION POPULATION GROWTH
Prudhoe Bay
Other and Other
Traditional Industrial
Year Total Barrow Communities Areas
1950 1678 951 727 -0-
1960 2577 1314 1263 -o-
1970 3423 2152 945 326
1979 8695 2715 1606 4374
1980 1 4199 2207 1992 -o-
11980 census resident population. Excludes population working in
the region with residence outside the region.
SOURCE: Table 3-1. Kruse, et al. 1981.
57
smaller villages in response to the Native Claims Settlement Act (1980
Census estimates show similar trends).
The population at Prudhoe Bay was a few hundred in 1970 and over 4000
in 1979. This population has fluctuated during the period as the pe-
troleum facilities and pipelines were developed; population was esti-
mated to be apporximately 8800 in July of 1976. This pattern is typi-
cal of resource projects with much higher employment in the develop-
ment phase.
Prudhoe Bay population can be considered resident in only a very re-
stricted sense. Prudhoe Bay is an industrial enclave with only min-
imal interaction with the local economy and the local population. The
enclave nature of the development is a result of the lack of local in-
frastructure, the separation of communities, and the fixed location of
the resource. The major links of the enclave are with the markets
outside the region. With arrangement in worker schedules, workers can
live in outside communities and only reside in the North Slope while
they work. It has been estimated that less than one percent of em-
ployees at Prudhoe Bay are from the North Slope. Because of this pat-
tern the Prudhoe Bay population contains virtually no dependents.
Table 19 shows how the demographic structure of the Eskimo population
has changed. This describes the major component of the resiqent popu-
lation. The major change is the aging of the population. The popula-
. tjon over seventeen increaseq from 47 percent in 1970 to 56 percent in
1977. The aging of the high birth cohorts will continue this process
58
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Age
< 10
11-17
18-24
25-34
35-44
45-54
55+
TABLE 19. NORTH SLOPE REGION DEMOGRAPHIC STRUCTURE
OF NORTH SLOPE ESKIMOS
(Percent of total)
1960 1970 1977
Male Female Male Female Male Female
22 20 17 16 11 11
7 6 10 10 11 11
5 5 6 5 8 7
9 6 5 5 10 6
5 3 5 4 5 4
3 3 3 4 4 3
4 2 6 4 5 4
SOURCE: Figure 3-1. Kruse, et al. 1981.
59
One result will be that a large proportion of the future population
will be of working age.
Employment Growth
Table 20 shows that employment growth mirrors the pattern of growth in
population. (A complete analysis of employment growth is hindered by
·a change in reporting districts in 1974.) Total employment grew from
977 in 1970 to 5549 in 1979 (this assumes a very small annual average
employment in 1970 at Prudhoe Bay). A large proportion of this em-
ployment occurs in Prudhoe. Until 1977 at least one-half of the em-
ployment in the region was at Prudhoe Bay; s i nee then a·t least 40 per-
cent of employment was in Prudhoe Bay.
Prudhoe Bay is only one of many similar enclaves in the North Slope
region. The non-Prudhoe employment shown in Table 19 contains this
other enclave employment. The extent of this employment can be was
estimated to be about one-third of the level of Prudhoe Bay in 1980.
North Slope Borough estimates ~opulation in these encalves as of July
1980 as Prudhoe Bay (3054), Alyeska Pipeline (537), NPRA (125), DEW
line (144), and other petroleum exploration (114).
The extent of employment growth could be expected to generate major
changes in the structure of the economy. The structure of the economy
describes the relation between sectors .. and the local provision of
goods. Tables 21 and 22 illustrate two measures of structural change.
60
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Year
1970
1975 2
1976
1977
1978
1979
TABLE 20. NORTH SLOPE REGION EMPLOYMENT GROWTH
(Annual average employment)
Total Emelo~ment Prudhoe Ba~
6172 3820
6932 4444
5674 2723
6059 2493
5549 2282
Net
977 1
2352
2488
2951
3566
3267
1Prior to North Slope Borough formation, employment district did
not include Prudhoe Bay.
___ . _ 2 J.975-J~79_ eJ1lploym~nt_ ~$.tjmate_s from_Ala~k.a Department of Labo.r_
communications.
61
Table 21 compares the distribution of employment across industries in
1970 and 1979. If growth did not change the structure of the economy,
we would expect the distribution of employment to be similar. The ma-
jor change in the distribution of employment is the increased impor-
tance of the basic sectors of government and mining. These sectors
increased from 46 percent in 1970 to 67 percent (excluding Prudhoe Bay
employment). The employment shares seem to suggest that the support
sector has expanded less rapidly than the baisc sector. In fact, the
share of trade-finances-services has been reduced from 27.9 percent in
1970 to 14.9 percent of total employment in 1979.
The pattern of response in the support sector is affected by the en-
clave nature of much of the employment. In addition employment may
not be the appropriate measure of structura 1 change. Tab 1 e 21 a 1 so
shows the per capita level of support sector employment (trade-
finances-services). Examining the non-Prudhoe component of the eco-
nomy shows this per capita level has increased. Support sector em-
ployment grew more rapidly than the resident population over the peri-
od.
One important reason for the growth of the 1 oca 1 support sector was
the formation of the Arctic Slope Regional Corporation (ASRC) as a re-
sult of the Native Claims Settlement Act in 1971. This corporation
not only provides employment directly but also influences the level of
employment in the support sector through establishment of subsidiary.
ASRC has provided caQital for· develo ment of the local sector
(McBeath, 1981).
62
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TABLE 21. NORTH SLOPE REGION STRUCTURE OF EMPLOYMENT
(Percent of total)
1979
Industry 1970 Total Net of Prudhoe
Mining 28.6 46.3 21.6
Construction 17.7 7.5 9.7
Transportation 8.8 6.4 8.5
Trade & Finance 13.4 7.0 11.5
Service 14.5 5.8 3.4
Government 16.9 27.0 45.7
Per capita support
sector employment .088 .082 .113
SOURCE: Base of Alaska Department of Labor communications.
63
* TABLE 22. NORTH SLOPE REGION SEASONALITY INDEX
(Percent of annual average employment)
1979
Quarter 1970 1973 Total Prudhoe Ba~
1 1.22 1.06 1.08 . 95
2 1.04 .99 1.02 . 95
3 .99 1.02 . 92 1.19
4 . 75 .93 .98 .91
* Seasonality index for each quarter equals the average quarterly
employment divided by the annual average.
SOURCE: Derived from Alaska Department of labor employment estimates .
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Table 22 shows the seasonality of employment. Seasonality is compared
in three years; 1970 and 1973 exclude Prudhoe Bay activity. The pat-
tern of seasonality is much less in 1979 than in 1970. The pattern of
seasonality does not vary significantly between 1973 and 1979. There
seems to be little seasonality evident in the employment figures.
This may be partly a result of complementary seasonal patterns in dif-
ferent mining phases: exploration, development, and production. The
small size of the economy means that this pattern can be easily
changed by some major activity, such as a large construction project.
Economic-Demographics Linkage
Traditionally regional population growth has been assumed to be relat-
ed to the change in emp 1 oyment opportunities. An increase of jobs
over residential labor force results in an increase in population, and
population is reduced if labor force is greater than the available
jobs. This pattern does not describe the growth of rural regions in
Alaska. In the North Slope while the resident population (non-Prudhoe
Bay) increased by forty percent between 1970 and 1979, non-Prudhoe em-
ployment increased by over two hundred percent .
Four factors make the relation between employment and population
growth less direct than traditionally assumed. First, the enclave
nature of employment in the region means many workers come to the re-
gion simply to work, and jobs are filled by nonresidents. The short-
term nature of much of the employment in construction and resource de-
-\1~1 opment __ make_s_ this nonresident _pattern_ of _ employment. pass i b l e .
65
The second factor is the ability to adjust labor force participation.
Labor force is not a static concept; many factors influence the deci-
sion to participate. The availability of the subsistence sector pro-
vides opportunity to withdraw from the labor force and remain in the
region. Another determinant of labor force participation is availa-
bility of employment. In regions with low employment opportunities
many residents do not seek emp 1 oyment beca~se they know no jobs are
available. As'jobs become available, these discouraged workers enter
the labor force and eliminate the necessity to import population to
fi 11 the increased emp 1 oyment. Kruse, et a 1. (1981) describe this
pattern in the North Slope region. Those in the labor force in March
(census month) increased from 61 percent in 1970 to 73 percent in 1977
for men. A more dramatic increase in labor force participation was
found for women; the share who were in the 1 abor force rose from
33 percent in 1970 to 54 percent in 1977. Although many factors in-
fluence the participation in the labor force, increased job opportuni-
ties were partially responsible for the increase. This increased
labor force participation explains the unequal population and employ-
ment growth in the region.
The final factor which influences the economic-demographic linkage is
a function of the small size of the population and the technical
skills required for mining and construction jobs. The technical na-
ture of many of the jobs in resource development industries means that
emp 1 oyees wi 11 be imported even though unemp 1 oyed workers are in the
region.. By comparing the occupational distribution of non-urban
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employment in the oil and gas industry in Alaska (Alaska Department of
Labor, 1978) with job descriptions supplied by the U.S. Department of
Labor (U.S. Labor Department, 1974), we found no more than 25 percent
of the jobs could be considered unskilled or semiskilled. If clerical
positions are removed, this figure would be approximately 17 percent.
This illustrates the natural resource jobs available to North Slope
residents may be limited.
Government Growth
The major linkage between the resource development at Prudhoe Bay and
the local North Slope economy was the government linkage. The forma-
tion of the North Slope Borough in 1972 provided residents with the
ability to maintain some of the income arising from petroleum produc-
tion in the region through taxation of petroleum facilities. One of
the main features of the Borough is that it has used the tax resources
not only to provide services and public facilities but also to provide
jobs. Growth of local government employment is the major determinant
of economic growth in the local economy.
The North Slope Borough collects a property tax on Prudhoe Bay facili-
ties. This tax is limited in two ways. First, the state places a 20-
mill ceiling on all taxation of oil and gas property which both the
state and local governments can collect. Second, the local government
share of this property tax is determined by a formula determined by
either population ($1500 per capita) or a formulate accounting for the
~----------------. aY_e_r_~ge_statew_i_de_p_er_capLta_p_r_op_ey-_ty_assessment._f!.s_a_way_a~ound------
67
these limits G.O. bonding has been used to provide funds for capital
projects, since there is no legal limit to taxation to pay debt ser-
vice (McBeath, 1981).
Table 23 shows the Borough's revenues which rose from $529,000 in 1973
to $74.3 million in 1980. As the table shows, the major source of
these revenues has been the property tax. The major source of these
property tax revenues is from taxes on real property at Prudhoe Bay.
Table 24 shows the Borough's expenditures throughout this period. Es-
timated 1980 expenditures are almost one hundred times 'the 1973 expen:-
ditures. Using census figures, the 1980 expenditures equal $17,700
per capita. For the period between 1975 and 1979 capital expenditures
accounted for the majority of the Borough's expenditures. The 1980
budget shows the beginning of what may be a new trend, the increased
importance of debt service. In 1980, thirty-nine percent of the
Borough's expenditures was for debt service.
Table 25 illustrates the magnitude of the Borough's Capital Improve-
ment Program (CIP). The CIP between 1975 and 1985 will authorize the
sale of $511 million in G.O. bonds. The three major components of the
CIP are schools, housing, and water and sewer facilities; each of
which accounts for over $100 million in projects.
68
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FY
1973
1974
1975
1976
1977
1978
1979
1980
TABLE 23. NORTH SLOPE REGION BOROUGH REVENUES
(Thousands of dollars)
Source
Property Sales
Total Tax Tax Transfers
528 79.0% 7 9.0
6,143 57.8% 16.9 22.6
11,719 46.9% 10.1 34.7
16,634 44.5% 39.6
29,999 63.9% 1.3 30.5
45,259 60.4% 3.2 25.0
59,392 71.1% 3.1 23.8
74,280 65.6 2.0 18.7
SOURCE: Table 3. McBea~h. 1981.
69
Miscellaneous
5.0
2.7
8.3
15.9
4.3
11.4
13.1
8.2
[
-
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TABLE 24. NORTH SLOPE REGION BOROUGH EXPENDITURES
(Thousands of dollars) ~
Areas
General Capital Debt c
FY Total Government Education Projects Service
1973 788 96.0 4.0 [
1974 5,845 42.7 37.3 20.0
1975 16,404 20.2 35.8 44.0 [ 1976 40,904 13.5 16.8 65.0 4.7
1977 35,861 22.5 27.9 39.2 10.4
1978 64,771 20.0 19.1 53.4 7.5
1979 117,208 14.3 11.4 61.4 12.9 B 1980 74,280 33.0 22.4 5.4 39.2
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SOURCE: Table 3. McBeath. 1981.
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TABLE 25. CAPITAL IMPROVEMENT PROGRAM
FY 1975 to FY 1985
(Mill ions)
Function
Schools
Roads
Housing
Water & Sewer Facilities
Airports
Urban Development
Light and Power
Public Safety
Communications
Prudhoe Bay Sanitary Facilities
Health Facilities
Library/Cultural Facilities
Total
SOURCE: Table 4. McBeath. 1981.
71
G.O. Bonds Authorized
and to Be Authorized
$131.6
43.7
111.7
106.6
15.9
3.1
34.2
13.1
1.1
38.9
9.4
1.7
$511.0
The creation of employment opportunities through the North Slope
Borough government is one major effect of the expansion of government.
Table 26 shows the growth of government in the North Slope. Total
government employment in the region increased from 165-to-1498. Our-
; ng this period the 1 oca 1 government increased from 19 emp 1 oyees in
1973 to 1183 in 1979. Federal government employment increased by
94 percent over the period, while state employment declined. The de-
cline in state government resulted from the transfer of functions to
the Borough. Borough employment consists of three major sectors, gen-
eral government, school district, and CIP employees. A survey of
Borough emp 1 oyment in 1980 found emp 1 oyees distributed as fo 11 ows:
general government -37 percent, school district -34 percent, and
CIP -29 percent (McBeath, 1981).
Both the operation of the Borough government and the capital improve-
ment program create jobs, increase incomes, and strengthen the local
demand for goods and services. The importance of these programs for
local residents can be seen by contrasting the 14 percent of Borough
residents who had worked for oil or pipeline companies in 1977 with
the 57 percent who had worked for the Borough (Kruse, et al., 1981).
Income Growth
Table 27 illustrates the change in the structure of income in the re-
gion over the period. Regional personal income increased at an annual
average rate of 23 percent over the period from $7.5 million in 1970
72
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TABLE 26. NORTH SLOPE REGION GOVERNMENT EMPLOYMENT GROWTH
Government
Year Federal State Local Total --
1970 128 ._ __ 37--165
1971 168 --114--282
1972 173 142 19 334
1973 171 118 106 395
1974 283 86 272 641
1975 265 93 432 790
1976 239 79 573 892
1977 240 71 766 1078
1978 256 77 1140 1473
1979 248 67 1183 1498
j-- -
j
SOURCE: Alaska Department of Labor Employment estimates.
73
' TABLE 27. NORTH SLOPE REGION PERSONAL INCOME
(Thousands of dollars)
Net Labor & ProEri etors Income
Place of Place of Transfer Personal
Year Work Residence Pa~ments Income
* 1970 36,089 6,252 1033 7,466
1975 231,839 22,843 4986 28,415
1976 317,397 32,524 3846 37,220
1977 225,176 37,783 3862 42,600
1978 248,610 42,998 3802 47,661
1979 119,867 42,842 3971 47,794
* Old definition of North Slope region which excludes Prudhoe Bay.
SOURCE: Bureau of Economic Analysis, Personal Income Statistics.
74
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to $47.8 million in 1979. If the cost of living in the region in-
creased at the same rate as the Anchorage CIP (7.2 percent per year),
rea 1 persona 1 income increased at a rate of 16 percent per year.
Two major structural changes can be observed over the period. The
share of labor and proprietor income created in the region which stays
in the region changes significantly over the period. In 1970 eigh-
teen percent of the income earned in the region stayed in the region;
in 1979 the figure was twenty-one percent. The share of resident in-
come was less than ten percent in 1975 at the height of Prudhoe Bay
development and pipeline construction. The other structural change is
the reduction in the share of transfer payments in personal income
from 14 percent in 1970 to 8 percent in 1979. As employment opportu-
nities increase in the region this trend would be expected.
Summary
The economic growth of the North Slope region has been and will con~
tinue to be determined by natural resource production. The primary
determinant of growth in the recent past has been the development of
petroleum resources at Prudhoe Bay. The enclave nature of development
meant that the linkages between Prudhoe Bay and the local economy were
less than direct. The major link was the government link; the North
Slope Borough translated tax revenues from property tax at Prudhoe Bay
into employment opportunities in the local economy. Future economic
activity in the region wll follow a similar pattern. One major new
75
factor will be the involvement of the local Native corporations in the
resource industries, which wi 11 increase the 1 i nkage between natura 1
resource production and the local economy.
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III. THE BASE CASE
Methodology
In this part of the report we deal with three critical elements of the
base case. The first of these is the underlying methodology used to
develop the base case. The second element concerns the assumption re-
garding the future economic activity used to develop the projections.
The third is the set of projections themselves.
Impact analysis, as carried out in the present study, is based upon a
comparison of sets of economic and demographic projections, where one
set is the standard or base case set. The base case serves as a frame
of reference against which the economic and demographic changes re-
' sul ti ng from the proposed OCS 1 ease sa 1 e can be measured and eva l u-
a ted.
There are two components of this process that are of particular con-
cern. First the question of the accuracy and consistency of the pro-
jections. Generally speaking, this is dependent upon the validity of
the assumptions utilized regarding future economic growth of the exo-
genous variables and the projection methodology employed. More will
be said on both of these points below.
The second concern relates to the degree of information contained in
the projections. Specifically, do the projections contain the infor-
_mati QIJ ~t_bat ~is_necessary~to _adequately_ interpret .and __ evaluate~theim--
pacts?
77
While aggregate data on economic and demographic variables generated
using the projections methodology employed in this study will answer
many questions, it must be recognized that.there will be omissions as
well.
At the root of impact analysis is the issue of how economic well-
being, both individually and collectively, will be affected by the
proposed action. Two major problems are associated with this process.
First it is not possible to measure all impacts that will result from
the lease sale. In part this is due to the volume of information that
would be required and the inadequacy of the existing methodo 1 ogy to
capture all effects at an acceptable level of cost.
The more serious prob 1 em is that many of the effects are not measur-
able. While reallocation of resources within the context of the· func-
tioning of the market·, in response to economic change, is des i rab 1 e
from the perspective of efficiency, change on the order of magnitude
implied by OCS activity may also lead to situations of market failure
and the presence of externalities. These are often difficult to iden-
tify and are certainly difficult to measure.
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Even if these effects could be isolated they are usually inseparable
from a further problem, that of income redistribution. Changes in in-~
come distribution· and the relative economic position of individuals [
resulting from OCS activity necessarily imply that there will be los-
---------=-se=r--=s~a=nd~g.a i ners and associ a ted changes in e_c_o_o~mj_c_weJ_fa~e._Ihese-----t-
78
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are problems that involve normative economic judgments and cannot be
dealt with by impact analysis alone. ' In short, comparative impact
analysis provides only part of the information necessary for decision
making.
We can now turn to a discussion of the specific methodology employed
in deve 1 oping the present base case projections (and associ a ted OCS
impacts projections). At the statewide and regional level two models
have been uti 1 i zed, the MAP statewide econometric mode 1 and the MAP
regional econometric model. For documentation see Goldsmith, Man-in-
the-Arctic Program: Alaska Economic Model Documentatio'n. The MAP
statewide model is actually a system of models composed of economic,
fiscal, and population models. The three are interdependent, as shown
schematically in Figure 3.
FIGURE 3: MAP SUBMODELS
r Economic
Model ~
Population
Model
79
) Fiscal
Model
In essence, this states that the economic model receives input from
the fiscal and population models, the fiscal model receives input from
the economic and population models, and the population model utilizes
input from the economic models, but not directly from the fiscal mod-
el. Thus, when we talk about the economic model we are really de-
scribing the interaction of three models. To simplify things somewhat
we can describe the important linkages between submodels and then con-
sider the economic model in more detail.
The population-economic model link is the source of population esti-
mates that are of direct interest, and reflect both natural population
change and migration induced by changes in economic conditions. The
population estimates are also used by the economic model for purposes
of computing various per capita values for economic variables.
The significant link with the fiscal model relates to the role of
state government expenditures as a source of major economic stimulus
to the aggregate level of economic activity. In turn, state govern-
ment (and local government) expenditures are dependent upon two key
factors, the overall level of economic activity and the level of ac-
tivity in the petroleum industry. The system allows for a variety of
policy choices regarding state government spending and is one of the
key points to consider in assessing economic forecasts.
80
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We can now turn to a consideration of the economic model component of
the system .
The MAP statewide and regional models belong to a class of econometric
mode 1 s that are known as di saggregate economic base mode 1 s. In es-
sence, economic activity is classified as either endogenous or exoge-
nous (or basic). Exogenous activity determines the level of endoge-
nous activity, and the specific relationships between the two compo-
nents of economic activity are what make up the system of equations
that are the econometric model. These models can be quite simple or
rather complex, and the MAP models fall in this latter category. It
is possible to get a feel for the models by considering the MAP state-
wide model.
As can be seen in Figure 4, determination of industrial production in-
volves the impact of exogenous sector activity, which includes forest-
ry, fisheries, agriculture and other manufacturing, as well as federal
government wages and salaries. Other exogenous sector activity in-
cludes the petroleum industry and components of contract construction,
such as major pipelines. State and local government expenditures may
a 1 so be considered as exogenous for discussion purposes, a 1 though
there is some interdependence between these expenditures and tota 1
economic activity. It should be noted that in constructing scenarios
for forecasting or projection purposes it is primarily these exogenous
variables that must be provided.
81
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FIGURE 4. MAP STATEWIDE MODEL [
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State and
Local ~ Petroleum
Government
_l "' EXOGENOUS SECTORS SUPPORT SECTOR
Forestry ' : l Construction J Trade Fisheries Finance Federal government Services
Agriculture T ranspotlation Other manufacturing Communications
Public utilities
I " J Industrial Production l I
J
~
Employment
.~ [
I Wage l .~ Woges and
Rates I r Salaries
~ [
I Nonwage I ~ Personal
Income I Income
~
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l Personal I Disposable
To•es I Personal
lnco'!'e L
~
l Consumer I Real Disposable
Prices J Personal
IIIC(!me
[
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-t
SOURCE: ~tan-In-The-Arctic Program Alaskan Economic Model Documentation L (ISER, 1979).
82
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These exogenous variables combine with demand from the support sector
and endogenous construction to generate total industrial production.
Industrial production, through a series of steps, determines employ-
ment and income, and finally real disposable personal income, which in
turn is a determinant of support sector and endogenous construction
economic activity. This means that aggregate production depends on
both exogenously determined and endogenously determined economic ac-
tivity, where endogenous activity depends on total activity. As such,
the system is a simultaneous equation structure.
It should also be noted that certain other variables enter the model
as well. In particular, wage rates are used in determining total wage
and salary payments, where the wage rates are in part dependent upon
U.S. wage rates, which are determined exogenously. It should also be
observed that the model is particularly sensitive to the wage rates
used.
The MAP regional model is structurally similar to the statewide model
except that the model is disaggregated to seven regions. (See Figure
4) This means that scenarios (or future va 1 ues for exogenous vari-
ables) must be specified on a regional basis and that forecasts of en-
dogenous variables (such as income, employment, and population) will
be generated on a regional basis. Otherwise the models are similar.
83
The Base Case Development Scenario Excluding OCS Activity
The impact of OCS development on the economy will be measured as the
change from the level of activity from the base case. The base case
is defined as the level of activity which is projected to occur with-
out the OCS lease sale of interest. This section describes the base
case which will be used in this study.
A set of assumptions about the future level of various exogenous eco-
nomic activity defines a development scenario. A development scenario
is required to forecast the future level of activity in the economy
with each model used in the analysis. There are three major types of
assumptions required for a development scenario. First, the models
require assumptions about the future level of national variables which
directly or indirectly affect Alaska economic activity. Secondly, as-
sumptions about the future development of the exogenous sectors of the
Alaska economy are required. These assumptions can be separated into
OCS and non-OCS assumptions; the major difference between the base
case and the impact case is the addition to the OCS assumptions of the
OCS lease sale of interest. Finally, the models require assumptions
about the state government finances. These include both assumptions
about state expenditure decisions and assumptions about the level of
exogenous state revenues.
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NATIONAL VARIABLES ASSUMPTIONS
Inasmuch as Alaska is an open economy, it is affected by changes in
the national economy. Consequently, several assumptions about the fu-
ture growth of the U.S. economy are required. The assumptions needed
are threefold. First, a forecast of average weekly earnings in the
United States is required as an input into the estimation of Alaskan
wage rates. Second, the Alaskan price level is tied in part to the
national price level so that a forecast of the U.S. consumer price in-
dex is needed. Finally, inasmuch as a major determinant of migration
to Alaska is the income differential between Alaska and the lower 48,
a forecast is required of real per capital disposable income in the
United States.
The 1 ong-run assumptions for these ·nation a 1 vari ab 1 es are based on
long-term forecasts prepared by Data Resources, Inc., in their Septem-
ber 1979 forecast of U.S. economic activity (TRENDLONG0979). This
forecast predicts a long-run average rate of increase in the U.S. con-
sumer price index of 8.85 percent through 1990. A rate of 8.3 percent
(the 1990 value) is used for the 1991-2000 period. Real disposable
per capita income is forecast to increase at a 3.38 percent average
annual rate. Hourly earnings are forecast to increase at 10.2 per-
cent, while average hours worked are forecast to decline slowly at
-0.23 percent.
Consequently, average weekly earnings may be expected to grow at an
. a~n11ua_l_ r~te_ Qf 9"' 97_ perc_ent_( i.e., _l 0. 2 p_ercent minus 0.23 percent).
85
These long-term average growth rates were adopted as the three nation-
al variable assumptions utilized in the analysis.
THE ECONOMIC SCENARIOS
The economic scenarios consist of time series on employment and output
in certain export base or exogenous industries. This does not mean
that we are predicting that all or any of these events will occur
since there is a highly variable degree of uncertainty with respect to
the levels and timing of the events in these scenarios. What it does
mean is that with a certain degree of probability, we expect the gen-
eral level of economic activity to follow this scenario. We assume
that there is a medium probability that the level of activity will be
at least as great as that described by this scenario.
The major exception to this important assumption is related to the ex-
ogenous series in fisheries-related activity. These series were de-
veloped by Sea Grant and Earl Combs, Inc., under contract with the
BLM/Alaska OCS Office. The components related to bottomfishing, in
the opinion of the ISER staff, are greatly in excess of what can rea-
sonably be expected to actually occur. To the extent that these
series do in fact turn out to be too high, then the aggregate projec-
tions will also be high and the probability that they will be achieved
must necessarily be reduced. Since we have been specifically in-
structed to use the series by the Alaska OCS Office we have done so,
but we are not in agreement with the assumptions.
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Primarily as a result of the uncertainty attached to the occurrence,
magnitude, and timing of any particular event, agreement about partic-
ular scenarios is hard to achieve even among those most knowledgeable
about the Alaska economy. Emphasizing our concern mainly with general
1 eve 1 s of activity, the probabi 1 ist i c nature of the specific scenario
should reduce the disagreement. In an attempt to reduce even further
the disagreement, the scenario was developed based upon existing sce-
narios which have attained some measure of consensus. The most impor-
tant source for these scenarios were the scenarios deve 1 oped in the
Level 8 Southcentral Water Study (Scott, 1979) and the Susitna Dam
feasibility study (Goldsmith and Huskey, 1980). The major exception
is the series related to bottomfishing activity, as commented upon
above.
The economic scenario is described in Table 28. The assumptions are
described below; these discussions are organized by industry.
Mining
Currently, the mining sector in Alaska is dominated both in employment
and output by the petroleum industry. This is assumed to continue in
the future.
The scenario includes production at Prudhoe Bay and in the Upper Cook
Inlet. Production from the Sadlerochet formation at Prudhoe is as-
sumed to include both primary recovery and secondary recovery using
~
__________ ----~-___ .\'{~er _f_lQQ.di ng. Deve 1 opment____Qf___the~water _ fl oo_din__g __ fad_lLties_b_egins ___ --~--
in 1982.
87
The Kuparak formation is also assumed to be developed with production
rising to 120,000 barrels per day by 1984. Employment associated with
these developments peaks in the early 1980s with the development of
Kuparak and the water flooding project. Upper Cook Inlet employment
is assumed to remain at its existing lev'el throughout the projection ,
period. This assumes a rising level of exploration, development, and
production of gas in the Kenai fields which would replace employment
lost because of declining oil production.. Also included is explora-
tion, development, and production in NPRA, beginning in 1985.
88
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Special Jrojects
I Trans-Alaska
Pipeline
Northwest Gasline
I
I Prudhoe ~ay
Petroleum
Producti
1
on
I
Upper Cojk Inlet
PetroleJm Pro-
duction
TABLE 28. SCENARIO ECONOMIC ASSUMPTIONS
Description
The construction of
the TAPS was com-
pleted in 1977.
Additional construc-
tion of four pump
stations is assumed
as well as pipeline
operations.
Construction of natural
gas pipeline from
Prudhoe Bay which in-
cludes construction of
an associated gas
conditioning facility
on the North Slope.
Primary recovery from
Sadlerochit formation,
secondary recovery
using water flooding
of that formation and
development of the
Kuparuk formation.
Employment associated
with declining oil
production is assumed
to be replaced by
employment associated
with rising gas pro-
duction maintaining
current levels of
employment.
Dates & Employment
1979-1982 -Pump
station construction
of 90/year
1977-2000 -Operations
employment of 1500/yr.
1982-1986 -Construc-
tion peak employment
of 10,589 (1985)
1986-2000 -Operations
begin employing 200
petroleum and 119
transport workers
Location
Operations employ-
ment a 11 ocated:
1/3 to Southcentral
l/3 to Fairbanks
l/3 to N. Slope
2/3 of pipeline
construction and
transportation
employment in Fair-
banks.
Source
E. Porter, Bering-Norton
Statewide-Regional
Economic and Demographic
Systems, Impact Analysis,
Alaska OCS Socioeconomic
Studies Program, Bureau
of Land Management, 1980.
Mogford and
Goldsmith, 1981
(Forthcoming)
1/3 in North Slope.
All gas conditioning
employemnt in North
Slope.
1982-1984 -Construction All in North Slope E. Porter, 1980.
of water flooding pro-
ject peak employment of
2,917 (1983)
1980-2000 -Mining employ~
ment long-run average of
1 ,802/year
1980-2000 -Mining em-
ployment of 705/year
All in Southcental E. Porter, 1980
region
Special Projects
' Beluga Coal Pro-
duction
Pacific ilNG
Project·
Petrochemical
Development
Susitna Project
National Petroleum
Reserveiin Alaska
I
Bradley Lake
TABLE 28. SCENARIO ECONOMIC ASSUMPTIONS (cont.)
Description
Moderate development
of Beluga coal re-
source for export.
Construction of cur-
rent proposal by
Pacific LNG
Development includes
refinery and petro-
chemical facility
using states royalty
has as feed stock.
Construction of two
dams on the Susitna
River for a major
hydroelectric project.
Petroleum production
in NPRA. Production
in five fields with a
total reserve of 2.5
billion bbls equiva-
lents of oil and gas.
Construction of 525
miles of pipeline.
Dates & Employment ,;;;;.L.;;..oc;;;..;a;:...:t:...:.i..;;;..on:...;__ __ _
1985-1990 -construe-Located in
tion -peak employment Southcental
of 400 (1987) region
1988-2000 -operations
employment of 210/year
long-run average
1982-1985 -Construe-Located in
tion peak employment Southcentral
of 1,323/year (1984} region
1986-2000 -Operations
employment of 100/yr.
1984-1986 -construc-
tion employment of
2400/year
1987-2000 -operations
employment 1118/year
1984-1998-construc-
tion peak employment
1414 ( 1992).
1991-2000 -operations
employment 19 per dam.
Leases held between
1983-1990. Develop-
ment and exploration
begins in 1985.
Average mining employ-
ment of 460/year.
Southcentral
Southcentral
Construction of hydro-1981-1985 -construe-Southcentral
electric facility tion -peak employment
of 300 (1983)
1986-2000 -operations
employm~nt (10)
{"-:-JrJr-Jr:-Jr-Jrlr:J~['I]Jr-:J
Source
Pacific Northwest Labora-
tory, Beluga Coal Field
Development: Social Effects
and Management Alternatives,
1979.
E. Porter, 1980.
Based on modifed Alpetco
proposal (E. Porter, 1980)
and J. Kruse, Fairbanks
Petrochemical Study, 1978.
E. Porter, 1980.
Based on mean scenario
under Management Plan 2
in Office of Minerals
Policy and Research
Analysis, U.S. Department
of Interior, Final Report
of the 105(b) Economic
and Policy Analysis, 1979.
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Industry ~I
Assumptions
Fi sheriesi/Food
Processi'ng
Forestry ;IPul p
and Paper
Manufac,uring
~ Other Mal-
facturing
Federal
ment
overn-
Other Mi]1ng
Agricult re
TABLE 28. SCENARIO ECONOMIC ASSUMPTIONS (cont.)
Description
Small increase in em-
ployment in tradi-
tional fishery. Major
expansion of domestic
groundfish industry.
Expansion to replace
foreign fishery in the
200 mile limit by 2000.
Employment expands to
accommodate 960 mil-
lion board feet of
lumber.
Expansion of existing
manufacturing of
locally consumed goods.
Civilian employment
assumed to grow at
recent historical rate.
Military declines
at 0.05%
No expansion of exist-
ing nonspecial pro-
jects.
Assumes that a rela-
tively low priority is
given to agriculture
development because
of priorities for
recreation and wilder-
ness or the lack of
markets.
Dates & Employment
Fishery employment ex-
pands to 9638 by
2000 (resident).
Processing employment
expands to 10,420 by
2000 (resident).
Growth of output at
4% per year.
Civilian employment
grows at 1.0%/year
Employment constant at
1979 level, 2,350/yr.
Employment grows to
1,037 by 2000.
Railbelt Location Source ~~~----------------
Resident regional Sea Grant, 1980; Earl Coombs,
employment in year Inc., memo to OCS; OCS.
2000: F P
Southcentral 2658/2405
Southeast 1376/538
Northwest 57/17
Southwest 5547/7306
Anchorage · 0/154
Approximately 11% M. Scott, 1979.
of activity in
Fairbanks region.
Remainder in South-
east.
Regional distribu-
tion based on ex-
isting distribution
of employment.
Existing regional
distribution.
Regional allocation
constant
M. Scott, 1979.
71% of growth M. Scott, 1979.
located in
Fairbanks region
and 29% in South-
central region.
Other regions re-
main the same.
In addition to the petroleum development, some other mining is assumed
to take place. Development of the Beluga coal resources is assumed.
In this scenario, coal is assumed to be produced for export.
The special projects described above do not exhaust the mining employ-
ment in the state. Additional employment occurs in the exploration,
development, and production of nonpetroleum minerals, as well as a ma-
jor component of headquarters employment in Anchorage. Market forces
and governmental policies are assumed to be such that this component
of mining remains constant.
Agriculture-Forestry-Fisheries
This industry is, in reality, three distinct subindustries which re-
present Alaska• s renewable resource industries. Of the three, the
fishing industry is currently the largest in terms of both employment
and value of product. Agriculture is currently only a marginal indus-
try employing few people statewide (Scott, 1979). Current state ef-
forts to develop agriculture may lead to its increased importance in
the future. Forestry consists of only a small component; the future
of forestry is most appropriately discussed with the future of lumber
and wood products manufacturing.
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The future of agricultural development in the state depends important-[
ly on governmental policies and actions. State and federal land poli-L
cies, infrastructure development and loan programs, and marketing pro-
______ '_g,rams wi 11 determine the future o_Ltb_i_s_tn!fus_tr)". __ Agric~uJ_tur:e_i_s_as,_-______ E-
sumed to rise only s 1 i ght ly from its current 1 eve 1 s of emp 1 oyment.
This assumes that agriculture receives low priorities from government. [~
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Fisheries also hold promise for the future. The major determinant of
future increases in fisheries employment will be the expansion of the
Alaska bottomfish industry. The creation of the 200-mile limit may
support increased Alaska bottomfish activity.
The fishing industry is assumed to undergo a rapid expansion in this
scenario. Total resident employment in fisheries grows at 8.0 percent
per year over the projection period, while employment in processing
expands at 13.3 percent. This growth results primarily from the de-
velopment of the bottomfish industry. The domestic fishery is assumed
t.o completely replace the foreign fishery operating within the 200-
mile limit by 2000 and expand to catch the allowable biological catch
(Sea Grant, 1980; Earl Combs, Inc. memo to BLM/AK OCS Office, and BLM/
AK OCS Office). We would state again that we feel that the bottomfish
projections are substantially over optimistJc and we are using them at
the instruction of the BLM/AK OCS Office.
Not all fishery-related employment is assumed to have full economic
impact on the state and regional economy. Boats and crews may be from
outside and only fish Alaska waters; these crews have limited impact
on the economy. Processing employees are also often brought in from
outside the state and live in enclaves having little effect. · For this
reason, the resident share rather than total employment has been used.
Table 29 provides estimates for 1980, 1990, and 2000.
93
Year
1980
~990
2000
1.0
:Vear
.j::>.
1980
1990
2000
SOURCE:
r-l
TABLE 29 RESIDENT EMPLOYMENT IN FISHERIES
Harvesting
Rest of the
Aleutians Southwest Northwest Southeast" Southcentral Anchorage
388 642 57 1259 1164 0
1141 642 57 1301 1303 0
4905 642 57 1376 2658 0
Processing
Rest of the
Aleutians Southwest Northwest Southeast Southcentral Anchorage
175 32 21 225 359 39
1394 65 21 420 503 53
7208 98 17 538 2405 154
See text.
aThe 851 resident employees represent between 12 and 14 percent of total statewide processing employment
in 1980. Although this resident share seems small, the data that is available SU9'gest that in some areas the
share of resident processing employment is considerably smaller. For example, in the Aleutian Islands Census
Division, Tuck (1981) estimates that only 10 percent of the processing jobs were helds by residents. (See
Technical Report No. 57, St. George Basin Petroleum Development Scenarios Economic and Demographic Analysis,
Alaska Outer Continental Shelf Office, 1981, pp. 48-50.)
In their discussion of processng activity, Terry, Scoles, and Larson (1980) indicate that " .•• imported
iabor from qther areas of Alaska and Seattle is essential for the operation of many (processing) facilities. . "
in western Alaska. (See Technical Report No. 51, Western Alaska and Bering-Norton Petroleum Development Scenarios
Commercial Fishing Industry Analysis, Alaska Outer Continental Shelf Office, 1980, p. 322.)
In southcentral Alaska we assume that the resident share increases from 40-to-60 percent over the projection
period. This estimate is based on the existing distribution of resident employment in southcentral; Kodiak:
50 percent, Seward: 25 percent, and Cordova: 40 percent (Technical Report 51).
Total
3510
4444
9638
Total
85la
2456
10420
For the Aleutians and part of Southcentral (Kodiak) the figures were
supplied by OCS, for bottomfishing. The remainder of traditional and
bottomfishing total employment projections, by region, were obtained
from Sea Grant (1980). Residency adjustments were developed utilizing
residency factors in Rogers (1980) and are based upon residence of
fishermen, by type of gear, and fishing in each of the regions. PrQ-
jections for processing were similarly developed.
Federal Government
Federal government employment has always been an important component
of Alaska•s economy. In recent years, federal government employment
has been growing very 1 itt 1 e; increases in civilian emp 1 oyment have
been offset by decreases in military employment. Low rates of growth
in federal government employment are assumed to occur. Civilian em-
ployment grows at about 1 percent per year, while military employment
declines at 0.05 percent per year.
Manufacturing
The manufacturing industry in Alaska has four important components:
seafood processing, lumber-wood products-pulp, petrochemicals, and
manufacturing for the local economy. Production of seafood processing
is expected to continue to dominate the food processing industry in
Alaska; growth of this industry was based on projections provided by
Sea Grant to SESP (Sea Grant, 1980 and OCS, as explained above).
95
The growth of the lumber-wood-paper-pulp sector of manufacturing in
the state is determined primarily by two factors. These are the For-
est Service allowable annual cut and the Japanese market conditions.
Growth in lumber-wood-paper-pulp reflect an increase in annual-allowed
cut by half the 1970 level over the period.
The petrochemical industry in Alaska currently consists of the devel-
opments in Kenai. The petrochemical industry expands with the con-
struction of the Pacific LNG facility as currently planned and the de-
ve 1 opment of a petrochemi ca 1 faci 1 i ty which uses the state • s royalty
oil and gas. The petrochemical complex is assumed to use the state•s
roy a 1 ty gas, to produce ethylene or fue 1-grade methano 1 , as we 11 as
include a fuels refinery as defined by ALPETCO. Although no major
proposal like this is currently proposed, interest in such a project
has currently been expressed by major international firms.
The final component of the manufacturing industry tonsi sts of those
industries producing for local consumption and other diverse special-
ized production. It was assumed that this sector would grow because
of increased market size, a 11 owing sea 1 e economies which make 1 oca 1
production viable. This sector was assumed to grow at 4 percent per
year.
Transportation
The exogenous portion of the transportation industry is that which
-~erves_ ~Q~c_i~_l_ projec:ts. __ Ibis Jndustry_ includes the operations _em-
ployment for TAPS and the Northwest gasline.
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Construction
The final exogenous industry for which scenarios' are required is that
portion of the construction industry where the 1 eve 1 is determined
outside the economy. This sector includes construction employment as-
sociated with the special projects described above. This sector does
not include capital improvement projects of any level of government or
construction activity which supports the local economy; the remainder
of construction activity is determined endogenously in the MAP model.
The major development of special projects occurs in the early part of
the projection period. The most important project during this period
is the construction of the Northwest gasline which is ass~med to begin
in 1982. The construction of the petrochemical facility is assumed to
begin in 1984. An additional major construction project is the con-
struction of the Susitna Hydro Project which begins in 1984. Con-
struction of the bottomfish processing facilities projected also in-
crease employment. It is assumed that it will require 40-man years to
build a processing plant (conversation with industry sources).
PETROLEUM REVENUE ASSUMPTIONS
Petroleum revenues to the state consist of royalties, production
taxes, property taxes, the corporate income tax, and mi see 11 aneous
revenues.
Royalties and Production Taxes
Royalties and production taxes arise from three sources--those associ-
·-.. at_ed w.ith_p_roduction of oil and gas from Upper.Cook Jnlet, those asso--
ciated with existing and planned production at Prudhoe Bay and
97
vicinity, and the revenues expected from state-owned properties in the
Beaufort Sea. Royalties ar~ calculated as 12.5 percent of wellhead
value (net of field costs for oil), while production taxes are levied
as a fraction of nonroyalty value, with the rate dependent upon the
P!oductivity of the average well in the field.
Upper Cook Inlet. Because assumptions as to future development around
Upper Cook Inlet do not vary in any of the cases to be examined and
because such revenues are small relative to other sources, revenue es-
timates for Upper Cook Inlet are taken directly from Alaska Department
of Revenue forecasts, as shown in Tables 30 and 31.
Prudhoe Bay Revenues. Because of its size and its relevance to other
assumptions made in both the base case and possibly the OCS scenarios,
Prudhoe Bay revenues are estimated directly rather than taken from
Alaska Department of Revenue computations. To arrive at such esti-
mates, estimates of production and wellhead value are needed. Produc-
tion estimates are those derived by simulations of reservoir behavior
by the Alaska Division of Oil and Gas Conservation for the Department
of Revenue. Wellhead value of oil is derived explicitly from the fol-
lowing assumptions:
•
•
West coast market prJ ce is $25. l 0 per barrel in FY
1980. Real market pr1ce is assumed to remain constant
throughout the forecast period.
Tanker costs from Valdez to the West Coast are $1/bbl
in FY 1980. These costs remain constant in real terms
tb't'Ql.Jgb 20_00 ....
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• Field processi-ng and gathering costs are 75¢/bbl in FY
1980, a 1 so remaining constant in real terms through
2000.
• TAPS pipeline tariff is assumed to be $5.25 in FY 1980.
The nominal tariff is assumed to remain constant
through 1990 when increased operating costs are assumed
to dominate decreasing capital costs. After 1990, the
tariff remains constant in real terms.
Wellhead value .of gas is derived by the following assumptions:
•
•
Under the interim rules of the Natural Gas Policy Act
of 1978, the ceiling price of Prudhoe gas as of Decem-
ber. 1, 1978, is $1.63 per MMBTU, or $1.78 per MCF.
Since recent sales by Exxon (OGJ, 4/2/79) reflect this
cei 1 i ng, the cei 1 i ng price, kept constant in rea 1
terms, is assumed throughout the period .
Prudhoe Bay gas must be treated in a co,ndi t i ani ng
plant, at a cost of 80$/MCF which, according to recent
rulings by FERC, wi 11 be deducted from the cei 1 i ng
price received by producers for the gas. This cost re-
mains constant in real terms.
Production taxes are computed as follows. The production tax is a
fraction of nonroyalty value, with the fraction dependent on the pro-
ductivity of the average well in the field. The tax rate on oil is
assumed to equal 12 percent through 1989, after which the rate falls
to 11 percent. For gas, the 12 percent rate is assumed throughout the
period. Production tax estimates are shown in Table 30.
Royalties for oil are computed as 12.5 percent of the value of produc-
tion net of field costs; while fo~ gas, royalties are 12.5 percent of
wellhead value received by the producer. Royalty estimates are shown
in Table 31.
99
TABLE 30. STATE PRODUCTION TAX REVENUES
(Millions of Current Dollars)
Year UEEer Cook Inlet1 Prudhoe Ba.l Beaufort Sea 2 Total
Oi 1 Gas Oil Gas Oi 1 Gas
1900 12.1 10.3 1087.23 0.0 0.0 0.0 1109.63
1981 16.1 11.4 1261.06 0.0 0.0 0.0 1288.56
1982 25.4 11.9 1430.76 0.0 0.0 0,0 1468.06
1983 28.8 12.2 1575.85 0.0 0.0 0.0 1616.85
" 1984 32.2 13.0 1739.00 0.0 0.0 0.0 1784.20
1985 24.8 18.3 1915.69 113.68 0.0 0.0 1978.79
1986 19.9 19.6 2108.43 123.502 0.0 0.0 2271.43
1987 15.0 19.6 2318.86 134.172 0.0 0.0 2487.63
_. 1988 10.4 19.7 2547.13 145.765 0.0 0.0 2723.00 0 1989 6.0 20.1 2768.96 158.359 37.847 1 .193 2992.46 0
1990 2.3 21.1 2644.98 172.04 110.775 3.535 2954.73
1991 0.0 21.5 2663.14 186.905 162.657 5.249 3039.45
1992 0.0 22.3 2526.4 200.053 180.191 5.702 2939.65
1993 . 0.0 21.5 2413.44 220.597 195.984 6.195 2857.72
1994 0.0 22.4 2243.77 239.656 213.158 6.73 2725.71
1995 0.0 22.8 2084.84 260.362 227.619 7.312 2602.93
1996 0.0 22.8 1942.14 282.857 242.975 7.749 2498.52
1997 0.0 22.8 1802.06 307.295 259.271 8.209 2399.64
1998 0.0 22.8 1669.55 333.845 260.287 8.232 2294.71
1999 0.0 22.8 1539.30 362.689 253.591 7.949 2186.43
2000 0.0 22.8 1416.57 394.025 243.724 7.827 2084.95
1From Alaska Department of Revenue, Petroleum Production Revenue Forecast, September 1979.
' 21979-81 from Alaska Department of Revenue, OE· cit.; thereafter, calculated as explained in text.
\), • '} "'-· -.J \,,.._ '' I,L, I
TABLE 31. STATE ROYALTY REVENUES
(Millions of Current Dollars)
Year U~~er Cook ln1et1 Prudhoe Ba~ 2 Beaufort Sea 2 Total
Oil Gas Oi 1 Gas Oil Gas
1980 29.9 6.4 1240.34 0.0 0.0 0.0 1276.64
1981 36.4 7.4 1440.2 0.0 0.0 0.0 1484.00
1982 81.3 8.0 1635.54 0.0 0.0 0.0 1724.84
1983 96.1 9.5 1802.89 0.0 0.0 0.0 1908.49
1984 116.9 10.8 1991.01 0.0 0.0 0.0 2118.71
1985 114.8 16.3 2194.73 135.334 0.0 0.0 2461.164
1986 113.2 17.1 2416.95 147.026 0.0 0.0 2694.276
1987 111.7 17.6 2659.55 159.729 0.0 0.0 2948.579
19~8 107.8 18.5 2922.72 173.529 0.0 0.0 3222.549 _, 1989 104.4 19.2 3178.59 188.522 43.446 1.42 3535.578 0 __, 1990 99.7 20.1 3313.53 204.81 127.209 4.208 3769.557
1991 96.0 20.7 3336.43 222.506 186.797 6.248 3868.681
1992 91.4 21.5 3167.77 241.73 206.942 6.788 3736.130
19Q3 87.3 22.1 . 3023.86 262.615 225.089 7.375 3628.339
1994 83.5 23.0 2811.4 285.305 244.824 8.012 3456.041
1995 87.8 23.6 2612.36 309.955 261.444 8.704 3303.863
1996 92.8 23.6 2433.65 336.734 279.092 9.226 3175.102
1997 92.8 23.6 2258.21 365.828 297.823 9. 772 3048.033
1998 92.8 23.6 2092.24 397.435 299.001 9.8 2914.876
1999 92.8 23.6 1929.09 431.773 291 . 321 9.464 2778.048
2000 92.8 23.6 1775.36 469.078 ·279.997 9.317 2650.152
1From Alaska Department of Revenue, Petroleum Production Revenue Forecast, September 1979.
21979-81 from Alaska Department of Revenue, o~. cit.; thereafter, calculated as explained in text.
Beaufort Sea Revenues. Beaufort Sea revenues are calculated as in the
Prudhoe case, with one exception--namely that an additional GO¢ per
barrel for oil and 15¢ per MCF for gas are subtracted from well head
value, representing additional transport costs from offshore areas.
Furthermore, it is assumed that only 50 percent of such production
falls under state ownership. Royalty and production tax estimates are
shown in Tables 30 and 31.
Property Tax Revenues. The state levies a 20 mill property tax on
certain categories of oil and gas property within the state such as
seismic equipment, drilling rigs, wells, platforms, pipelines, pump
stations, and ~ermi nal facilities. Estimates of theses revenues are
shown by development in Table 32.
Corporate Income Tax Revenues. In 1978, the state passed new legisla-
tion levying a 9.4 percent tax on net income from oil and gas produc-
tion and transportation in the state. Whi 1 e no detai 1 ed mode 1 i ng of
this tax has yet been done by the Department of Revenue, currently
available estimates through FY 1981 project sucrr revenues to be about
10 percent of the level of estimated production taxes and royalties.
It is assumed that this rel~tionship continues to hold throughout the
forecast period (see Table 33).
STATE FISCAL POLICY ASSUMPTIONS
Past studies of the Alaskan economy conducted within the Man-in-the-
... _Arctic Program, _the QCS Studies Program,. and othermiscellaneous. pro-
grams have indicated repeatedly the key role of state government
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Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TAPS
187.929
193.714
199.299
204.622
209.611
214.184
218.251
221.709
224.442
226.322
227.203
226.923
225.303
222.141
217.214
210.271
201.038
189.207
174.438
156.354
134.539
Lower Cook
ALCAN Inlet OCS I
0.0 0.0
0.0 0.0 o.o 0.0
0.0 0.0
0.0 19.7
0.0 19.7'
133.168 19.6
137.506 19.4
141.739 19.2
145.826 18.9
149.721 18.6
153.371 18.1
166.717 17.5
159.693 16.8
162.223 15.9
164.223 14.9
165.598 14.0
166.243 13.0
166.039 12.0
164.853 11.0
162.54 10.0
I'·
TABLE 32. STATE PETROLEUM PROPERTY TAX REVENUES
(Millions of Current Dollars)
Northern Lower Cook
Beaufort Sea ·Gulf OCS Bering-Norton Inlet OCS II St. George Total
0.0 0.0 0.0 0.0 0.0 187.929
0.3 0.0 0.0 0.0 0.0 194.014
0.4 . 0.0 0.0 0.558 0.0 200.257
0.7 0.0 0.128 0.576 0.0 206.026
0.7 0.0 0.135 0.594 0.0 230.740
0.8 0.0 0.141 2.381 0,0 237.206
3.0 0.1 0.148 25.199 0.0 399.466
6.2 2.0 14.73 26.737 8.309 436.591
11.0 2.4 36.581 27.562 26.68 489.604
16.2 7.8 49.781 28.358 76.327 569.514
18.5 7.8 58.392 29.116 101.089 610.421
20.7 7.8 61.177 29.825 106.009 623.905
22.1 7.8 64.009 30.474 111.025 634.928
24.2 7.8 66.873 31.049 116.116 644.672
26.4 7.7 69.753 31.536 121.258 651.984
27.6 7.7 72.633 31 . 917 126.422 655.666
28.0 7.5 75.489 32.175 131.573 655.370
28.0 7.4 78.297 32.287 136.67 651.104
27.8 7.2 81.026 32.23 141.666 642.399
27.5 7.0 83.642 31.978 146.505 628.832
27.1 6.7 86.106 31.501 151.122 609.608
Table 32 Notes
The TAPS and ALCAN property tax base for each period was calculated
by deducting depreciation in the current period from last period•s de-
preciated cost. Petroleum property tax revenues for the remaining OCS
projects were calculated in a similar fashion from data provided by the
Alaska OCS Office.
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TABLE 33. CORPORATE INCOME TAX REVENUES
(Millions of Current Dollars)
Year Upper Cook Inlet OCS I Prudhoe Bay Beaufort Sea I Total
1980 5.87 232.757 0.0 238.627
1981 7.3 270.126 0.0 277.256
1982 12.66 306.63 0.0 319.290
1983 14.66 337.875 0.0 352.535
1984 17.29 373.001 0.0 390.291
1985 17.42 438.094 0.0 455.514
1986 16.98 481.927 0.0 498.907
1987 16.39 529.771 0.0 546.161
j 1988 15.64 581.673 0.0 591.313
1989 14.97 632.439 8.413 655.822
1990 14.32 636.792 24.64 675.752
1991 13.82 644.434 36.194 694.448
1992 13.52 617.999 40.07 671.589
1993 13.09 596.226 43.581 652.897
3 1994 12.89 562.548 47.4 622.838
1995 13.42 531.679 50.646 595.745
i 1996 13.92 504.891 54.051 572.862
~ 1997 13.92 479.155 57.663 550.738
1998 13.92 455.625 57.888 527.433
~ 1999 13.92 433.149 56.383 503.452
2000 13.92 412.96 54.235 481.115
SOURCE: See text.
----------------------------
105
fiscal policy as a major determinant of both historical and future
state economic growth.
Over the period of study state government will receive revenues from
oil d~velopment which far exceed current levels of expenditure. The
rate at which the government chooses to spend these revenues (or to
offset existing revenue sources with them) will serve to determine not
only direct emp 1 oyment in the government sector but, through the mu 1-
tiplier effects of such expenditures or tax reductions, will have im-
pacts on all endogenous sectors, affecting the growth of employment,
income, prices, and migration into the state.
Two factors affect the current framework in which state fiscal policy
will be determined. First, revenues have already overtaken expendi-
tures as a consequence of the onset of production from Prudhoe Bay and
will continue to increase as a consequence of both increased produc-
tion and price increases. Second, the establishment of the Permanent
Fund, as a constitutional amendment in 1976, places constraints on the
use of certain petroleum revenues. It requires that a minimum of 25
percent, of a 11 mi nera 1 1 ease renta 1 s, roy a 1 ties, roy a 1 ty sa 1 e pro-
ceeds, federal mineral revenue sharing payments, and bonuses received
by the state be put in the fund.
These changes in the structure of state spending limit the usefulness
of past fiscal policies in determining the fiscal policy rules to be
'
used. The rate of state_ expenditures, because it is a matter of poJ icy
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choice within this new framework, cannot be modeled simply from past
experience. Past experience can, however, provide qualitative guidance
in formulating hypothetical fiscal policy options for use in simula-
tion. First, we can expect that, as in the past, increasing levels of
economic activity generate new demands for government services. As
prices and population rise, increased expenditure is required to sim-
ply maintain services at a constant level. In fact, however, this
level will be expected to rise over time if historical trends contin-
ue.
Secondly, historical data gives at least some indicati~n of state fis-
ca 1 po 1 icy response to surp 1 us petro 1 eum revenues. The revenues gen-
erated by the Prudhoe Bay lease sale in FY 1970 led to a rapid jump in
both the level and growth of nominal and per capita expenditures, with
nominal expenditures jumping from an average growth of 8.9 percent an-
nually prior to the sale to an average 19.7 percent after the sale;
and real pe~ capita expenditures jumped from 2.3 percent prior to the
sale to 7.7 percent after the sale.
If these qualitative features carry over into future fiscal responses
to surplus petroleum revenues, future real per capita expenditures can
be expected to rise within the bounds set by revenue quantities and
statutory constraints. At a minimum, the state might choose simply to
maintain real per capita expenditures at their current levels. At a
maximum, it could choose to spend all but 25 percent of restricted pe-
tro 1 eum revenues as they are incurred. Unfortunate]y_,_t_b_e_r_ange_o_f ____ _
107
possibilities within these brackets is very large. While it is fool-
ish to try to anticipate the actual fiscal policy choices of the
state, it is possible to simulate each of the extremes. As a compro-
mise, for purposes of simulation, a middle-range policy can then be
selected. This is the strategy followed here.
The mid-range forecast used in the base case was developed as follows.
First, exogenous petroleum revenues were estimated. The petroleum
revenues used in this forecast were based on the most recent Petroleum
Production Revenues Forecast which is prepared quarterly by the Alaska
Department of Revenue. Next, two forecasts were made, one in which
real per capita state government expenditures are maintained at exist-
ing levels and a second in which only the legislated minimum is saved.
These cases provide the extremes. A path of growth in state expendi-
tures which is midway between these extremes was chosen to use in the
base case. The result was a growth rate of 14 percent in nominal
state government expenditures.
OCS Activity in the Base Case
Base case employment in construction, transportation, and mining in-
creases through the cumulative effect of several OCS lease sales that
have taken place and are scheduled to occur prior to sale 71. These
include:
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Existing
1 Lower Cook
• Beaufort Sea (Joint state/federal)
Scheduled
• Northern Gulf (Sale 55)
• Lower Cook Inlet (Sale 60)
• Bering-Norton (Sale 57)
• St .. George (Sale 70)
The timing, amount, and residency location of employment for each of
the above lease sales are shown in Table 34. In general, the bulk of
OCS emp 1 oyment in the base case occurs in the mi d-to-1 ate 1980s and
early 1990s. Over half of OCS employment is assumed to reside in
Anchorage. The remainder is distributed in diminishing amounts be-
tween southcentral Alaska and Fairbanks, with a small proportion re-
siding in the immediate vicinity of the leased tracks for each case.
As shown in Figure 5 OCS base case emp 1 oyment represents about one-
third of total exogenous employment in the mining, transportation, and
construction industries combined.
The figures in Table 34 and Appendix A have been adjusted to net out
nonresident OCS employees that 1 ive in enclaves for the duration of
their work task. Nonresident (enclave) OCS employment refers general-
ly to offshore, temporary, and speci a 1 i zed work such as offshore
.. _ dr_i Jl i_ng _crews for exp lorg:f: i_on and construct jon_ crews during field de-
velopment. Further, we assume that offshore and specialized labor is
109
OcS Lease Sale
Coqk Inlet
Beaufort Sea
(Joint Federal/State)
TABLE 34. OCS LEASE SALES IN BASE CASE SCENARIO
Year of Sale
1977
1980
Employment Schedule
Operations: 1978-2000+
Median: 958
Peak: 1392 in 1987
construction: 1982-1986
Peak: 351 in 1985
Residency Location
(Approximate)
14 percent Anchorage
86 percent Southcentral
100 percent Southcentral
Transportation: 1978-2000+ 100 percent Southcentral
Median: 165
Operations: 1981-2000+
Median: 213
Peak: 281 in 1990
Construction: 1981-1996
Peak: 124 in 1982~83
66 percent Anchorage
16 percent Southcentral
18 percent fairbanks
60 percent Anchorage
18 percent Southcentral
22 percent Fairbanks
\r....-·1
_, .....
N
OCS Lease Sale
Berd ng-Norton
(Sale 57)
St;. George
(Sale 70)
Year of Sale
1982
1982
TABLE 34
Employment Schedule
Operations: 1983-2000+
Median: 684
Peak: 776 in 1989
Construction: 1983-1990
Peak: 654 in 1988
Transportation: 1983-2000+
Peak: 290 in 1990-91
Operations: 1983-2000+
Median: 871
Peak: 951 in 1993
Construction: 1983-1990
Peak: 1165 in 1987
Transportation: 1983-2000+
Peak: 880 in 1989
Residency Location
(Approximate)
78 percent Anchorage
18 percent Southcentra1
4 percent Nome-Kobuk
48 percent Anchorage
14 percent Southcentral
38 percent Nome-Kobuk
59 percent Anchorage
16 percent Southcentral
25 percent Nome-Kobuk
80 percent Anchorage
17 percent Southcentral
3 percent Southwestern
76 percent Anchorage
21 percent Southcentral
3 percent Southwestern
28 percent Anchorage
8 percent Southcentral
64 percent Southwestern
NOTE: See Appendix A for detailed employment series by industry (mining, construction, and trans-
SOURCE:
rn
portation) for each lease sale. ·
Alaska OCS Studies Office.
r-:1 f7"1 r-J ["'""'""] r--1
30000
25000
22500
20000
17500
1
l
15000
12500
J
l 10000
7500
5000
J
2500
2000
1980
25722
3424
1985
113
FIGURE 5. COMPARISON OF OCS
EMPLOYMENT TO TOTAL EXOGENOUS
EMPLOYMENT IN THE BASE CASE
(Thousands of Persons)
(Total exogenous employment in
mining, transportation, and
construction)
13634
5013 4950
(OCS base case employment in
mining, transportation, and
construction)
1990 1995 2000
less likely to permanently reside in Alaska during the earlier phases
of offshore field development. The importance of distinguishing be-
tween enclave and resident employment is related to the different ex-
pansionary effect that each group would be likely to have on the local
and statewide economy. We assume that 11 enc 1 ave 11 emp 1 oyees do not
spend their earnings in Alaska and, therefore, have no direct or in-
direct effect on the economy. On the other hand, we assume that cer-
tain onshore construction jobs and most ongoing production employment,
both on-and offshore, is more prone to reside and spend income in
Alaska during rotation leave.
In summary, the OCS employment outlined in Table 34 and shown explic-
itly in Appendix A includes only the share of OCS employees that re-
side in Alaska (SEAR). The employment figures, therefore, do not re-
flect total direct OCS employment because they exclude the nonresident
(enclave) component. A more detailed discussion of the methods and
. assumptions used to determine the share of OCS employees that are
Alaska residents is found in Appendix B.
The ommission of encalve workers from resident-project employment
possibly understates the true impact on Alaska's economy of OCS petro-
leum activity. This understated impact is most evident in the support
and government sectors. The support sector includes several parts:
trade, service, finance, construction, transportation, communications,
and public utilities. The expansionary effect of resident OCS project
emp 1 oyment on these sectors is transmitted through changes in two var-
iables: income (spending) and population. The income effect directly
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increases the earnings of the commercial sector while the population
effect increases the 11 load 11 on public services, thereby indirectly
stimulating government action. These same avenues of effect are also
present for nonresident OCS employees, although to a reduced and pos-
sibly negligible degree.
To the extent that enclave OCS workers do impact the economy, their
effect will probably not be felt in the region of lease sale activity.
These enclave workers are more likely to leave a more noticeable trail
in the Anchorage region which links them directly to the outside
world. Furthermore, the support sectors affected by en'cl ave ocs· work-
ers are most 1 ike ly confined to transportation, communications, and
government. The enc 1 ave OCS worker 1 s expansionary effec~ in these
specific sectors of the economy will depend on the economy•s present
capacity (and that induced by the resident OCS population--many of
whom also travel regularly to the Anchorage region where they reside
permanently) to absorb their direct and indirect demands.
The overall effect of enclave OCS workers may, therefore, be negligi-
ble since it is confined primarily to the Anchorage region which may
have the capacity to absorb their relatively marginal effects (includ-
ing transportation) without any appreciable change to the level of
support sector and government services.
ISER economists are presently not able to test this or other hypothe-
______ ---~~§_ reg~rdi fl9 the secondary economic effec~s_o_f_eocJ_all_e_empJ_oy-ment. ______ _
115
with the MAP model. We, therefore, assume that enclave OCS employees
have no effect whatsoever, acknowledging that this assumption under-
states the true impact. Until the MAP econometric model can be fur-
ther deve 1 oped to handle these important and camp 1 ex re 1 at i onshi ps,
the only other option would be to weight enclave OCS workers by a fac-
tor that approximates their induced effect on Alaska 1 s support and
government sectors, and include this weighted component in resident-
project employment that is fed into the base case scenario to estimate
OCS impacts. This option, however, runs the risk of overstating the
true impacts of enclave employment, a possibly less desirable alterna-
tive than our assumption that enclave workers do not impact the econo-
my. In either case more research is needed to improve our understand-
ing of these important relationships on economic growth.
North Slope Resident Adjustment
An important phenomenon that confronts an economic-impact analysis of
petroleum development in remote regions of Alaska is that many employ-
ees of a given development project do not reside in the workplace lo-
cation. Exploration and development crews are often isolated from the
immediate physical and cultural environment in offshore and shore-
based facilities where they are housed and fed during their work
shift. As a result, these 11 enclave 11 employees do not directly affect
the regional economy in which the development project is situated.
Enclave employees that are residents of Alaska typically spend income
116
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in the location of permanent residence during rotation leave. Histor-
ically, the pattern of residency of TAPS and Prudhoe employment sug-
gests that enc 1 ave emp 1 oyees reside in the Anchorage, Southcentra 1 ,
and Fairbanks regions, depending on the location and type of work
task.
In past MAP work related to the North Slope region, we have dealt with
the distinction between residency and workplace by incorporating MAP
model specifications designed to redistribute some of the secondary
impacts of basic sector activity in the North Slope to other MAP model
regions. Briefly, total wage and salaries earnings us:ed to determine
output in several secondary industries (e.g., transportation, public
utilities, trade, etc.) were divided into enclave and resident catego-
ries in the North Slope region. This dichotomy tends to reduce the
contribution of basic sector earnings to support sector output, and
therefore, employment in the North Slope region. It does not detract
from total statewide basic sector earnings, but shifts some of the
secondary effects of North Slope petroleum development to other re-
gions of the state. Thus, exogenous North Slope employment assoicated
with several projects was entered into the North Slope region in the
MAP model, even though it was evident that most of these employees of-
ficially resided in other areas of the state.
117
Despite the conventions built into the MAP model to redistribute the
secondary impacts of North Slope basic sect.or activity to other MAP
model regions, it became increasingly evident from forecast results
that the MAP regional model was permitting an unreasonably large share
of secondary activity to occur in the North Slope region; suggesting
structural change in the North Slope economy that MAP economists con-
sidered unlikely in the foreseeable future.
To correct the disproportionate secondary effects of employment in the
North Slope, local residency assumptions similar to those applied to
direct ocs employment have now been applied to direct employment asso-
ciated with several North Slope development projects. These projects
include:
• Beaufort Sea Joint State/Federal ocs Lease Sale
(Beaufort I)
• Northwest Gasline (ALCAN) • Trans-Alaska Pipeline System (TAPS) • National Petroleum Reserve of Alaska (NPRA)
• Prudhoe Bay Mining • Other (nonpetroleum) Mining
In general, we assumed that even though work is performed in the North
Slope, most direct employment would not reside in the North Slope re-
gion. Mining, construction, and transportation employment was real-
located to North Slope, Fairbanks, Anchorage, and Southcentral regions
according primarily to population proportions in those regions. This
change in resident status does not affect the level of overall state-
wide employment, but does dramatically reduce residence in the North
Slope. In 1984 . over. 7000 North Slope residents were shifted from_
118
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their North Slope workplace location to other more probable areas 'of
instate residence. The number of North Slope residents transferred to
other regions stabilizes at about 4000 persons during the latter 1980s
and 1990s.
In previous MAP/OCS work, neither the local residency adjustment nor
the SEAR adjustment (Appendix B) were used on direct OCS employment in
the Beaufort Sea Joint State/Federal OCS lease sale. Thus, in addi-
tion to the adjustment in North Slope resident status described above,
the SEAR adjustment to direct OCS emp 1 oyment was a 1 so app 1 i ed to
Beaufort I employment. The use of both employment adjustments reduces
both the level of statewide employment (SEAR adjustment) and the level
of employment in the North Slope (residency-status adjustment).
Again, the adjustment in North Slope resident status is not intended
to undermine the importance of North Slope employment, but to more
accurately reflect the resident distribution of North Slope employ-
ment.
Base Case Forecasts
The base case employment, revenue, and expenditure assumptions out-
lined above were used in conjunction with the MAP statewide and re-
gional econometric models to forecast economic activity in Alaska
through the year 2000. The section presents these base case forecasts
w_hjch ~!1_1 pe us~d as a benchmark from which to measure the impacts of
proposed federal OCS development in the Beaufort Sea.
119
STATEWIDE
Population
Table 35 presents the forecasts of statewide population growth, natu-
ral increase and net migration. The post-Prudhoe Bay decline that
ends in 1981 is rapidly overtaken by a mid-1980s 11 boom 11 period, fed
principally by construction of the ALCAN gasline, as well as other
large scale, special projects (see Table 28). Between 1981 and 1986,
population is forecasted to grow at an average annual rate of 5.3 per-
cent, roughly twice the overall rate of growth for the entire projec-
tion period. By the end of the boom period in 1986, population
reaches 510,800 over 28 percent higher than its 1980 level. Sharply
rising net inmigration into Alaska, which peaks at over 33,000 in
1985, is further evidence of a mi d-1980s boom period. The post-
construction decline after 1986, like the decline following the TAPS
construction effort, causes slower growth in statewide population but
does not result in a population decline. Between 1986 and 2000 popu-
lation growth stabilizes at an average annual rate of 2.2 percent.
Net outmigration occurs from 1987 to 1989 but reverses and gradually
increases through the 1 ate 1990s. By 1996 net i nmi grat ion overtakes
population growth from natural increase. By the year 2000 statewide
population reaches 690,000, a level over two-thirds higher than 1980
population. As shown in Table 36, continued turnover of population
keeps the age structure virtually unchanged throughout the forecast
period.
120
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TABLE 35. PROJECTED POPULATION AND COMPONENTS
OF CHANGE: ALASKA, 1980-2000
(Thousands of persons)
POPTST N!NCTOT MIGNET
1320 :::97.976 6.556 -14.93
, 98; 395.49 5.255 -8. 371
1982 ~02 .. 451 5 .. 4::6 1 .43/i
1953 ~17.0~ ... 5.466 9.172
~ 984 .;:~8.7~3 s. 7i3 25.8~8
1 s:s 483 .. 759 5.759 22.32
198€ 51C.S 7.99 14.033
1987 5i 6.1 1<1 a --.~::: -3.062
1988 519.502 8.1 13 -4.738
1989 523.-482 7.807 •1 .844
1990. 53·! .1 7.637 0.969
193l 544.443 7 .538 2 .. 746
1992 )56.238 7 .618 . 4.172
1993 ~70 .. 2: 'l. 71 6.:<38
1994 '583.372 7 .892 ~.27
1995 3S6_82S 8.032 5 .. 422
1996 612 .. 97:? 8.183 8 .. 957
~997 6-33.2:JE 3.48 10.8:)9
1598 '"552 .. 7~_; 8 .24:2> 10.633
i 999 670 .. 029 9.167 8.117
2000 6·30 .057 9.~22 10.605
POPTST = Population (10 3 persons)
NINCTOT = Civilian non-Native plus Native natural increase (10 3 persons)
MIGNET = Net migration (103 persons)
SOURCE: MAP Model Projections.
121
TABLE 36. PROJECTED AGE STRUCTURE OF ALASKA
POPULATION 1980-2000
(Proportion of Total Population)
KIO.POP AO.PtJP GER.POP
1980 0 ._291 J.E68 0 .. 041
1931 0.292 0.664 0.044
1962 0.291 ).663 0.045
1983 0.29 0 .. 664 0.046
1984 0.287 0.667 0.045
1985 0.285 0.671 0.044
1986 0.285 0.671 0.044
1987 0.296 0.659 0.045
1988 0.287 0.666 0.047
1989 0.287 0.664 0.048
1990 ·.o.287 0.663 ·o.04!:1
1991 0 .. 28-7 0.563 0.05
1992 0.226 0.663 0.051
1993 0.:285 0.663 0.052
1994 0.284 0.663 0.053
1'105 0.2~3 0.6F4 ().053
1996 0.282 0.664 0.054
1997 0.281 ).665 0.054
1998 0.28 0.566 0.'355
1999 0.279 0.666 0.055
2000 0.276 0.656 0.056
KID.POP = Children {age: 1-14) as percentage of population (percent)
AD.POP = Adults (age: over 14 and under 65) as percentage of population
(percent)
GER.POP = Aged (over 65) as percentage of population (percent)
SOURCE: MAP Model Projections.
122
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Employment
As shown in Table 37, Alaska employment would begin to recover from
the TAPS construction decline by 1982. By 1985, basic sector employ-
ment (i.e., construction, mining, manufacturing, and agriculture)
would peak at over 53,000 workers. This rise, due largely to the con-
struction of the gas pipeline, triggers a boom-bust cycle in total em-
ployment similar qualitatively to that accompanying the TAPS construc-
tion cycle, although of lessor severity. Total employment at the peak
of construction in 1985 is 35 percent above its 1980 level. The down-
side of the gasline cycle witnesses a 1 percent drop in total employ-
ment from its peak level by 1986, despite a much more significant de-
cline (over 17 percent) in basic sector employment. Basic sector em-
ployment does not regain its 1985 levels until 1993, after which
growth tends to stabilize. As in the case of the post-TAPS decline,
the resiliency of the economy can be traced to resiliency in the sup-
port sector (i.e., transportation, communication, public utility,
trade, finance, and service employment) which by 1988 declines less
than 3 percent from the 1986 peak. After the gasline cycle, support
sector employment growth resumes at more or less stabile rates resem-
bling historical growth. In the early 1980s a significant long-run
change takes place in the structure of the state economy, as the sup-
port sector rapidly overtakes government as the primary source of
Alaskan employment. By 2000, total employment reaches nearly 381,000,
' 100 percent higher than its 1980 level, for an average annual growth
of 3.5 percent. The support-sector share of employment rises from
34 gercent in 1980 to O'Le_o_6_l_p_e_r_c;:_eJll:_i_o_2Q_Q_Q_._Ihis_,_combJned_w_ttb, ____ ~--
123
EM99ST =
EM98ST =
EMBlST =
EMSlST =
EMG9ST =
SOURCE:
TABLE 37. PROJECTED EMPLOYMENT: ALASKA, 1980-2000
(Thousands of Persons)
EM99ST EM98ST EMB1ST EMS 1ST EMG9ST
1980 190.415 175~572 ~7.574 63.907 8 4. 191
1 081 190.115 175.383 28.277 62.636 84.47
1982 197..133 , 8 2. 127 32.564 64.788 84. '175
1983 208.902 193.449 37.624 71.042 84.783
1984 23:;<.079 215.779 48.026 85.055 82.698
1985 2.37.254 240.083 53. 22'3 104.35 . 82.51
1986 266.12 243.654 49.232 113.136 86.286
1987 2134.536 24 7. 122 . 45.507 111.803· 89.812
1988 264.706 247.286 46.263 109.735 9 t. 238
1969 :267.842 250.318 46.948 110.645 9:?;725
1990 273.578 255.866 48.54 112.965 94.362
1 S9t 280.785 262.839 50.487 116.386 95.967
, 992 239. 1 2 270.907 52.797 120.494 97.617
1993 298.959 280.437 55.257 125.612 99.568
1994 :308.109 289.303 56.766 130.528 102.01
1£93 ,.,,. ~ ·~ ... r:' ......... ".:' ~ol ,...,.... "~~ -o-.r: ""'"'n ~:~ .. :s1 •;,) t I o UV oJ ':;....: . ....~. ..J::/,...,V_, I "'-~'""' o :""' oJ f
1996 329.766 310.305 62.918 t41.65o 1 c 5. 732
1997 343.159 323.305 66.467 149.103 107.735
1998 35C-.36E 333.132 69.388 156.5d9 11 0. 195
1999 367.823 347.265 71.335 162.935 11 2. 996
2000 381.407 360.471 75.694 169.536 115.242
Total employment
Wage and salary employment
Employment in the basic sector (construction, m1n1ng, manufac-
turing and agriculture)
Employment in the support sector (transportation, communications,
publtc utilities, trade, finance, and services) ·
~mPJ9.YJ1!e~n:t in :tll~. gqvernmer:~t. ~ec;tor (federaJ, stat~ 9 and J gc;al).
MAP Model Projections.
124
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the growth in basic industries, causes the government's share of total
employment to fall substantially, from nearly 44 percent in 1980 to
30 percent in 2000, as shown in Table 38.
Persona 1 I nco me, Wages , and Pri ce·s
The mid-1980s boom-bust cycle associated with gas pipeline and other
special projects is more evident in patterns of projected personal. in-
come growth than in popu 1 at ion and emp 1 oyment growth. As shown in
Table 39, the gas pipeline boom sends real per capita incomes
(PIRPCST) rapidly to a new peak in 1985, averaging 10.7 percent real
growth since 1980. Total statewide real personal income (PIRST) grows
at a more astounding rate of 15.3 percent over the same period. By
the peak in 1985, real income would be twice its 1980 level, and real
per capita income is two-thirds higher than its 1980 level. Real in-
come drops nearly 10 percent; and real per capita income, 17 percent
by 1988, following the decline of gas pipeline construction activity.
After 1988, a period of steady income growth brings real personal in-
come to 13.4 billion dollars in 2000, over 200 percent higher than its
1980 1 eve 1 , for an average annua 1 growth of 5. 9 percent. Rea 1 per
capita income, on the other hand, grows by about 80 percent by the end
of the period, reflecting an average annual rate of growth of 3.0 per-
cent. The decline in total and per capita real personal income after
1985 and the generally lower rate of income growth in the second dec-
ade of the forecast period reflects both the sudden Jeduction of high
paying construction jobs with the completion of several major con-
. ____ .. _______ stru.c-tj Qn_ p_rojects and a .long-term shUt toward . 1 ower-wage. jobs in .
support sector and fisheries industries.
125
TABLE 38. PROJECTED COMPOSITION OF ALASKAN
EMPLOYMENT, 1980-2000
(Proportion of Total Employment)
EMNS.EM EMS?. EM EMG9. EM
1980 0.222 0.336 0.442
1981 0.226 0.329 0 .. /!.ti4
1982 0.24 1 0.329 o • .:.3
1983 0.25 .. 0.34. 0.406
~ 984 Q.277 0.366 0. 35.6
1985 0.274 :1.406 0. 321
~ 986 0.251 0.425 0.324
1987 0.238. 0.423 0. 3·l
1988 0.241 J.415 0.34!3
1 S89 0.241 0.413 Oo346
~-390 0.242 0.413 0.345
1 991 0.244 0.415 0.342
1S92 0.246 0.417 0.338
1993 0.247 0.42 0. 333
1994 0.245 0.424 0. 331
1995 0.246 0.426 0.328
1·396 0.25 0.43 0 .. 321
1937 0 .. 252 0.435 0.314
19SO 0.251 0.439 0.309
1999 0.25 0.443 0.307
200(1 0.253 0.445 0. 3C\2
EMNS.EM = Basic sector employment as percentage of total employ.ment (percent)
EiMSP.EM = Support sector employment as percentage of total employment
(percent)
EMG9.EM = Government employment as percentage of total employment (percent)
SOURCE: MAP Model Projections.
126
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TABLE 39. PROJECTED PERSONAL INCOME:
ALASKA, 1980-2000
(Millions of 1980 Dollars
and 1980 Dollars, Respectively)
PI RST PIRPCST
1980 4274. 10739.3
, 98'1 43<31 .3 11027.6
1·982 _472C.2 11723.6
1983 5 377.93 12893.8
1984 7·J20.61 15646. 1
1985 8723.83 17848.9
1986 6573.73 16930.7
1987 8 .J'J7 .. 1551 4.
~ 988 7?43.06 15289.8
1989 a oss .. ~a 15343.3
1990 932a.97 15586.9
1991 8G31. 71 · ~59Q9o3
1992 908D.83 1632'5.5
1993 9528.02 1671 1 • 4
1994 9872 .. 18 16922.6
1'-19'5 1 0 3-'27 .·7 , 7304 .. 4
199G 10 9-39.'7 1785:0.8
1997 11552 .. ~6 18401 ..
1 928 i 2251 . ~5734.2
1999 12724.,9 18991.5
2000 1 3 339.:1 19417.4
PIRST = Personal income (millions of 1980 dollars)
PIRPCST = Real per capita personal income (1980 dollars)
SOURCE: MAP Model Projections.
127
Projection of real wages and salaries by major sector are shown in
Table 40. In general, growth in total wages and salaries would paral-
1 e 1 the pattern of growth in rea 1 persona 1 income; characterized by
rapid growth during the period of concentrated, high-wage pipeline
construction from 1980 to 1985, followed by retraction and eventual
stabilization toward historic trends during the second decade of the
forecast period. Wages in the support sector (WSSlRST) peak in 1985,
following a 5-year period of average growth exceeding 16 percent per
year. From 1985 to 2000, real wages grow moderately at an average an-
nual rate of 2.5 percent, reflecting the effects of a post-boom de-
cline in the late 1980s. Basic sector wages (WSBlRST) are projected
to experience dramatic growth of nearly 30 percent per year from 1980
to 1985, and would peak at over two and one-half times their 1980
level, only to drop 50 percent by 1989. The sharp reduction in high-
wage, basic-sector construction activity after 1985 tends to dampen
long-run growth at 2.1 percent per year between 1985 and 2000.
Over a 11 growth in government wages (WSG9RST) between 1980 and 2000
would be slower than either the support or basic_ sectors but would be
far more stabile during the post-boom decline in the late 1980s. Un-
like government wages which experience a only modest reduction in av-
erage annual growth after 1985, real basic and support sector wages
would not regain their 1985 levels before 1998.
Projection of annual wage rates in 1980 dollars in the basic
(WRBl RST), service (WRSl RST), and government (WRG9RST) sectors are
128
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WS99RST =
WSBlRST =
WSSlRST =
WSG9RST =
SOURCE:
TABLE 40. PROJECTED WAGES AND SALARIES
BY SECTOR: ALASKA, 1980-2000
(Millions of 1980 Dollars}
WS99RST WSB1RST WSS1RST WSG9RST
1590
1981
1982
1983
1984
1965
1986
1967
1988
i 989
i 990
i 991
1992.
18S3
1994
13·95
1996
1997
~ 998
1:199
2000
3490.77
355-l.51
3864.35
44~4.59
5865.07
7 347.24
7:218.37
5591 .0'3
65.25.13
6o18.12
6>334.23.
7119 .. 23
7465.73
7823.33
8103.86
9 cJ20. i 5
9584.07
10078.8
10 ·i53. 3
11012.7
774.791
811.618
984.509·
1275.96
2120.86
2819 •. 12
2404.4
187/' .54
183o.38
~83-'!.77
1898.24
~S86.63
2103.25
221 ~-55
2257.17
2591.7
2794.72
2938.69
3000.14
321 5.16
i~58.03
1146.52
1210.87
1397.74
1878.14
25~C.73
2638.18
2432.67
2334.91
2337.27
2265.4i
2468.
2571.56
2690.55
2786.98
3C77.53
3273.91
3450.41
~583.42
3749.53
1557.95
i 606.37
.1668 .. 97
1750.89
1866.07
2017.4
2175.8
2280.87
2353.65
2446.08
2.550.52
2664.6
2785.93
2918.23
305.9.72
:::201.
3350.93
3515.44
3689.72
3859.77
4048.05
Total wages and salaries, statewide (millions of 1980 dollars}
Basic sector wages and salaries (millions of 1980 dollars}
Support sector wages and salaries (millions of 1980 dollars}
Government sector wages and salaries (millions of 1980 dollars)
MAP Model Projections.
129
presented in Table 41. Real wage rates in the basic and support sec-
tors would achieve positive growth up to their peak year in 1985,
afterwhich wage rates decline sharply and would be unable to recover
their 1985 levels by the end of the forecast period. In contrast to
this, wage rates in federal, state, and local government would contin-
ue to grow steadily after 1985. Over the entire projection period
rea 1 government wage rates grow 50 percent faster than basic sector
wage rates and over 200 percent faster than support sector wage rates.
Employees in all sectors would still receive a higher inflation ad-
justed annual wage rate in 2000 compared with real wage rates in 1980.
In recognition of the high rates of projected Alaska and U.S. infla-
tion in Tab 1 e 42, it is evident that nomina 1 wages and incomes must
increase dramatically in order to achieve the gains shown in
Tables 39 -41.
With the exception of the interval between 1980 and 1984, when
Alaska 1 s economy would undergo considerable expansion, U.S. inflation
remains higher than inflation in Alaska. As a result, a gradual ten-
dency toward equalization of Alaskan and U.S. price levels continues
throughout the post-1984 forecast period.
Government Revenues and Expenditures
State government revenue projections by source are shown in Table 43.
The variables include: total state government revenues (REVGFR), pe-
troleum revenues (RP9SR), revenues from the fecteral government
130
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TABLE 41. PROJECTED REAL WAGE RATES: ALASKA, 1980-2000
( 1 980 Do 11 a rs )
WRB1RST WRS1RST WRG9RST
~ 930 28.098.7 18120.5 185•:'5.
1 921 28702.5 ~8304.5 19017.1
1982 3C 232.7 18689.8 19657.
1983 33913.3 ~9674.9 20769.5
1£24 44130.6 22081 .4 22564.9
1885 52 9C>8. 1 24060.6 24450.2
1986 .<:8838.3 23318.6 25216,2
1937 41 258.5 217:58.5 25396.1
i 988 39694.3 21277.6 25784.6
: S89 39:)81 . 1 21124.1 2€379.6
1 9'?0 391·Js.s 21116.9 27029.2
1 9S1 39 349.7 21205.3 2776::.9
1992 39 ·J3i .6 2~341 .9 28539.3
i 993 40157.9 2:41 :?.5 2']309.
1994 29762.9 21251 .6 29994.3
1995 4024'3.2 21451 .3 30763.7
1596 !· 4 19-~ .5 21725.3 31692 . 7 ... '
1997 42 ;J.·;l~. 4 21957.4 3263('.4
1 9Sd3 42351 " 22040.4 33483.6 ....
1999 42057.2 21993. 34247.
2CCC 42475 .. 9 22116 • .3 35126.5
WRBlRST = Wage rates in the basic sector (millions of 1980 dollars).
WRSlRST = Wage rates in the support sector (millions of 1980 dollars)
WRG9RST = Wage rates in the government sector (millions of 1980 dollars)
SOURCE: MAP Model Projections.
131
TABLE 42. PROJECTED ALASKA AND U.S.
INFLATION 1980~2000
(Percent Change from Previous Year)
ANINF USIN F
1980 0.132 0. ~ 29
1 981 0.102 0.099
1982 0.031 0.094
1983 0.081 0.085
1984 0.086 :J o079
1985 0.079 0.079
1986 0.068 0.084
1987 0.08 1).085
1988 0.083 0.083
1989 0.08 0.082
1990 0.079 0.083
1 991 0.077 0.083
1992 0.077 0.083
1993 0.077 0.083
1994 0.07€ 0.083
1995 0.077 0.083
1996 0.077 0.083
1997 0.077 0.083
1998 0.077 0.083
1999 0.077 0.083
2000 0.078 0.083
ANINF = Increase in Alaska relative price index over previous year (percent)
USINF = Increase in U.S. consumer price index over previous year {percent)
SOURCE: MAP Model Projections.
132
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TABEL 43. PROJECTED STATE GOVERNMENT REVENUES:
1980
~ 931
1-982
1983
1984
1985
1936
~ 987
1988
1989
1990
1991
1992
1993
1994
1935
i 896
1997
1998
1999
2000
ALASKA, 1980-2000
(Millions of 1980 Dollars)
REVGFR RP9SR RFDSR
2288.14 1830.68 226.J92
3053.97 2665.31 205.067
3 335.38 2828.54 190.048
37~3.37 300 5.42 180.043
4052.59 3066.6 174.109
4497 .4B 3284.03 171.103
4323.62 3450.46 165.228
5181.14 3496.88 154.092
5409.5·:; 3539.08 g3. 005
5677.2/ 3614.43 133.545
5 730.64 3462.05 125.247
5767.65 3299.92 117.847
5'32S. 79 2973.19 111 • 123
5"507. 18 2692.43 1C5.062
5352.52 2·396. 41 99.245
5.200. 77 ~·r..J5.20 ;3o7~9
5 050 . .:.;g 191 1 . 75 88.806
4 937.84 1710.07 84.366
4813.84 1523.4 80.132
43ao.o4 135 1 . 75 '!5.881
4 554.99 119 7. 97 71.954
RNDSR
230.5"7
182.59
366.8
557.904
811.877
1 042.32
1307.94
1530.18
1727.46
1929.3
2143.35
2349.89
2545.48
2709.68
2856.86
2;7V.70
3059.94
3143.4
3210.32
3252.41
3285.05
REVGFR =Total general fund revenue (millions of 1980 dollars)
RP9SR =Total petroleum revenues (millions of 1980 dollars)
RFDSR = Revenues from the federal government (millions of 1980 dollars)
RNDSR =Other (nonfederal, nonpetroleum) revenues (millions of 1980 dollars)
SOURCE: MAP Model Projections.
133
(RFDSR), and other revenues (RNDSR). Total revenue grows steadily
from 1980 (2.3 billion dollars) to a peak of 5.8 billion dollars in
1991 and declines steadily thereafter to 4~6 billion dollars in 2000.
The bulk of these revenues are accounted for by petro 1 eum revenues.
Petroleum revenues peak in 1989 at 3.6 billion dollars and decline
through the year 2000 to a level of 1.2 billion dollars.
Receipts from the federal government decline throughout the period,
from 0.2 billion in 1980 to 0.07 billion dollars in 2000. Other rev-
enues increase steadily and substantially from a level of 0.2 billion
dollars in 1980 to over 3. 3 bi 11 ion do 11 ars in 2000. These revenues
include such items as: corporate income taxes, personal income taxes,
earnings on fund balances, and miscellaneous tax receipts.
Expenditure data are presented in Table 44 and include total state
government real expenditures (E99SR) and real per capita expenditures
(E99SRPC).
Total expenditures grow at 5. 6 percent over the entire period. In
contrast to this,growth in per capita state expenditures average
2.7 percent per year. The difference between total and real per capi-
ta state expenditure growth reflects the effect of increasing popula-
tion which lowers the per capita share of state expenditures.
The differences between total revenues and expenditures are accumu-
lated in_ the state•s fund balances (expressed in 1980 dollars) which
134
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TABLE 44. PROJECTED TOTAL AND PER CAPITA STATE
GOVERNMENT EXPENDITURES: ALASKA, 1980-2000
(Millions of 1980 Dollars)
E99SR E99SRPC
1980 149'5.46' 1112.41
1981 154 7 .. 09 1153.04
1982 1616.14 1188.8
1983 1705.11 1210.22
1984 1790.47 1181 .26
1985 1892.08 1146.02
1986 2019.52 11 70.6
1987 2131.85 1222.8
1988 2245.06 1279.34
1989 237C.82 1335.63
1990. 2505.7 1368.84
1991 2651.:<:3 1441.59
2806.48 1493.64
1993 297! .19 1542.56
, 994 3~40~98 1596.96
1995 ~331 .. 43 1652.45
1996 3524.89 1699.59
1997 373.).88 17-l4.12
1998 3949.3~ 1791.16
1999 4180.21 1846.93
2000 441 3.E7. 1896.05
E99SR = Total state expenditures (millions of 1980 dollars)
E99SRPC = Real per capita state expenditures
SOURCE: MAP Model Projections.
135
peak in the mid-1990s and decline slowly thereafter, as shown in
Table 45.
REGIONAL
In this section we review the base case projections for the North
Slope (Rl), Anchorage (R5), Fairbanks (R7), and Southcentral (R4).
The geographic distribution of these and other MAP regions are shown
in Figure 2.
North Slope
Population. The growth of North Slope population during the forecast
period is shown in Figure 16. Population growth of 6.6 percent per
year would be strongest in the early 1980s, until it would peak in
1986. After a modest decline from 1987 to 1989 in response to a de-
cline in regional employment over the same period, positive growth re-
sumes at about half the average annual rate of the early 1980s. By
the year 2000, total regional population reaches 8,182, nearly twice
its 1980 level, representing an average growth of about 3.5 percent
annually.
Employment. Table 47 presents the base case forecast of North Slope
employment. A considerable portion of total employment growth is con-
centrated in the early 1980s, followed by several years of employment
decline before emp 1 oyment regains upward momentum from 1990 there-
after. Total employment growth between 1980 and 1986 would be two to
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136
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TABLE 45. PROJECTED TOTAL AND PER CAPITA FUND
BALANCES: ALASKA, 1980-2000
(Millions of 1980 Dollars)
FUN DR FUN DR PC
1 sao 1931 . 51 1430.7i
i S61 3534.99 2646.04
1982 52S5.65 3895.4
1983 7244.46 51 41 . 84
1984 9257.03 6107.29
1985 11527.8 6932.23
1986 14063.4 8i 50.53
1987 16457. 9439.53
, 968 16775 .. 6 10699.8
198S 21133.9 119'J6.1
1990 23279. 129)2.9
1 991 25211 . ' 13708.4
1992 26751 .8 14237 .. 6
1993 27932. 14501 .5
19S4 287·~4 0 14586 .. 4
1 £>9 '5 291F.3.6 14475.5
1S96 29280.6 14118.1
1997 2S09C, .. 9 13599.5
1998 28616.1 12378.5
1999 2785.:1.2 12306.7
2.000 26800.5 11497.5
FUNDR = Total fund balance (millions of 1980 dollars)
FUNDRPC = Real per capita fund balance (millions of 1980 dollars)
SOURCE: MAP Model Projections.
137
TABLE 46. PROJECTED POPULATION:
NORTH SLOPE, 1980-2000
(Thousands of Persons)·
POPTR1
1980 4.134
1981 4.225
1982 4.473
1-983 4.773
1984 5.083
1985 5.664
1986 6.051
1987 5.995
1988 5.936
1989 5.857
1990 5.965
1991 6.19
1992 6.391
1993 6.584
1994 6. 785
1995 7 nns
1996. 7.22f
1997 7 .48.1
1998 7.723
1999 7.962
2000 8.182
POPTRl = Total population in the North Slope (10 3 persons)
SOURCE: MAP Model Projections.
138
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EM99Rl =
EM98R1 =
EMBl Rl =
EMSl Rl =
EMG9R1 =
SOURCE:
TABLE 47. PROJECTED EMPLOYMENT: NORTH SLOPE, 1980-2000
(Thousands of Persons)
EM99R1 EM98R1 EMB1R1 EMS 1 R1 EMG9R1
1930 2.318 2.127 0.509 0.457 1 • 161
1981 2.363 2.179 0.526 0.443 1 .208
1982 2.579 2.408 0.598 0.459 1.352
~ 983 .:.2. 76~ 2.605 0.691 0.488 1.426
1984 3.023 2 .. 874 0.902 0.571 1. 401
1985 3.412 3.267 1.184 0.718 1 .356
1.956 3.435 3.33S 1 . 138 0.753 1 .447
1 Sd7 3.3ii 3.1o9 0.965 0.691 1 .513
1388 3.251 3.105 0.912 0.649 1.544
1989 3.141 2.997 0.814 0.613 1 .57
1&90 3.165 2.992 0.777 0.6 1 .615
1981 3.29€: 3 .. 126 0.845 0.615. 1 .667
'! ~;St2 3.402 3.233 0.892 0.628 1. 713
1993 3.5 3 • .332 0. 9.32 0.643 1. 758
1994 3.59 -1'1.,~ .,:).~, ..... 0.958 0.655 1 . 811
1 :..: ;:, 3 .. ';"~7 3o::-!: ~ .. ~:=: .... C""'TI""' ~ .~sc "'""""''-
1996 3.842 3.67S 1. 07 0.695 1. 914
1997 3~o9S5 3.825 1. 137 0 .. 723 1 .9:34
1998 4.1~8 3.959 1.192 0.746 '2.021
i 999 4.236 4.079 1.::32 0.763 '2.083
200C 4.372 4.218 1. 296 o. 783 '2.139
Total employment in the North Slope (10 3 persons) 3 Wages and salary employment in the North Slope (10 persons)
Basic sector employment in the North Slope (103 persons)
Support sector employment in the North Slope (103 persons)
Total government sector employment (103 persons)
MAP Model Projections.
139
entire forecast period. Virtually a 11 growth wou 1 d be due to in-
creased basic-and-government-sector employment. By the year 2000
basic sector employment, fueled mainly by construction activity in-
crease by one and one-half times its 1980 level. Government employ-
ment nearly doubles over the forecast period, while support sector em-
ployment in 2000 overtakes its 1980 level by only 70 percent.
Personal Income. Projected regional personal income expressed in mil-
lions of 1980 dollars and real per capita personal income expressed in
1980 dollars are shown in Table 48. Between 1980 and 1985 personal
income in the North Slope is projected to grow at a remarkable average
rate of 23 percent per year before experiencing a 30 percent overall
decline between 1985 and 1990. High wage endogenous construction em-
ployment combined with strong growth in government employment account
for the bulk of personal income growth during the early 1980s. The
North Slope Borough property tax receipts from Prudhoe Bay and TAPS
facilities represent a major source of regional personal income, as
nearly 75 percent of property taxes are channeled directly into wages
and salaries earnings, primarily for local construction projects.
During the second decade of the forecast period, real personal income
growth would stabilize at 5.3 percent per year. By the year 2000,
rea 1 persona 1 income reaches 213 mi 11 ion do 11 ars, more than three
times its 1980 level. Expressed in real per capita terms, personal
income would only regain 80 percent of its peak, 1985 level of $32,000
by the end of the forecast period.
140
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TABLE 48. PROJECTED TOTAL AND PER CAPITA REAL
PERSONAL INCOME: NORTH SLOPE, 1980-2000
(Millions of 1980 Dollars and in
1980 Dollars, Respectively)
PI RR1 PIRPCR1
1980 64.458 15592.4
1981 66,865 15325.2
1982 76.50-17103.6
1S83 91 .46b 19~62 .. 9
1984 128.947 25365.9
, 985 183. 32311.3
1986 178.921 29570.3
1987 148.235 24"7:25.
, 988 138. ~51 23274.2
1989 1:<.8. 708 2~~7~.1
1990 127.651 21393.4
i 991 136.638 22072~2
1992 144.061 ~2540.
1993 150 .. 827 22906.8
1994 155.057 22851 .3
19·?5 1~'2.94 :;z:"1So5
i 996 1/4.362 24122.2
1997 186.51 24932.2
1998 195.901 25365.3
1999 202.647 25453.
2000 213 .. 234 26051.
PIRRl = Real personal income in the North Slope (millions of 1980 dollars)
PIRPCRl = Real per capita personal income in the North Slope (millions of
1980 dollars)
SOURCE: MAP Model Projections.
141
Anchorage
Population. As shown in Table 49, Anchorage population is forecasted
to grow steadily betwen 1980 and 2000. Although population growth
levels off i~ 1987 after increasing at an annual average rate of
4.8 percent over the previous 6 years, it resumes a steady pace at
about ha 1 f of the ear 1 i er rate from 1987 to the end of the forecast
period. As a proportion of statewide population, Anchorage maintains
a steady 46 percent throughout the forecast period. By the year 2000,
Anchorage population at 318,000 is 75 percent higher than its 1980
level, representing an overall average annual rate of growth of
2.8 percent.
Employment. The pattern of Anchorage employment growth, as shown in
Table 50, follows closely the pattern of statewide growth. Anchorage
employment grows from 87,500 to 178,000, reflecting a 3. 6 percent an-
nual average rate of growth from 1980 to 2000. As with statewide em-
ployment, Anchorage employment grows more rapidly in the early 1980s,
averaging 6. 5 percent per year until it peaks at 127,479 in 1986.
After a subsequent period of moderate decline, employment growth re-
sumes at an average rate of 2. 3 percent per year from 1988 to 2000.
The share of Anchorage emp 1 oyment be 1 ongi ng to the support sector
(transportation, communication, public utility, trade, finance, and
services) increases somewhat dramatically from 42.8 in 1980 to 57.6 in
2000. Similarly, basic sector employment increases--although
modestly--from 13.5 to 14.7 percent over the same forecast period.
The concentration" of s.upport. sector activity reflects the role played
142
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TABLE 49. PROJECTED POPULATION: ANCHORAGE, 1980-2000
(Thousands of Persons)
PO ::>TR5
1 f:?80 i 91 .965
1.981 179.823
1982 183.452
1983 192.c;;2
1984 208. 9'/5
1985 '231 .. ~87
1986 241 4• ~ . . . ~
1 951 241 .536
, 988 2-1:;: .. 209
1989 2~~ .. 445
1 cor, 247.662
i 991 25! • 725
1 9'?2 257.356
1993 253.364
1994 258.715
.. ,...""'e ·~;.;~ 275.42~
1S96 233.485
i 997 292.793
1998 301 .854
1993 308.548
2000 3;8.366
POPTR5 = Total population in Anchorage (10 3 persons)
SOURCE: MAP Model Projections.
143
TABLE 50. PROJECTED EMPLOYMENT AND EMPLOYMENT
COMPONENTS: ANCHORAGE, 1980-2000
(Thousands of Persons)
EM99R5 EM9SR5 EMB1 R5 EM 51 RS EMG9R5
1980 a7 :5os 31 .025 10.96 34 .. 712 35.352
1981 87.329 80.802 11.175 34.184 35.442
1982 90.e7r 64.201 12. 97, 35.71 35.52
1983 97.:<5. 90.122 14.736 39.856 35.531
1 !J8.!] 107.93~ 100.205 17.013 48.267 34.925
1985 122.073 113.639 19.003 59.731 34.905
"t 986 127.479 118.918 12.209 64.518 36., 91
1987 126.81 11 3. 329 17.898 63.024 3 7. 406
1928 126 .. 162 11 7. 671 18.099 61.651 37.921
1989 127.2~4 11 8. 669 18.197 62.06 38.412
1990 129.444 120.754 18.388 63.398 38.968
1991 132.344 12 3.49 18.525 65.451 39.515
1992 136.228 127.166 19.~75 67.91 40.08
1993 140.5<:4 131 . 258 19.644 70.867 40.747
1994 ~44o512 135.02. 19.839 73.605 41.576
1995 149.004 13 9. 296 :20.565 76.457 42.273
1996 154.541 144.551 21.579 80.118 42.853
1997 160.799 150.517 22.51 8~1.469 43.533
1 S98 16€.83·~ 156.274 23. 1 69 88.73 44.375
1999 171.944 15 1 . 156 23.533 92.3 45.323 :woo. 177.664 166.513 24.482 96.038 46.093
EM99R5 = Total employment in Anchorage (103 persons)
EM98BR5 = Wages and salary employment in Anchorag~ (103 persons)
EMB1R5 = Basic sector employment in Anchorage (10 persons)
EMS1R5 = Support sector employment in Anchorage (103 persons)
EMG9R5 = Total government sector employment in Anchorage (103 persons)
SOURCE: MAP Model Projections.
144
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by Anchorage as a regional distribution center for the state. Fur-
ther, the Anchorage region absorbs a large portion of special-project
emp 1 oyment (except for the gas pipe 1 i ne) that permanently reside in
Alaska, and act as an additional stimulant to endogenous construction,
a major portion of basic sector growth in Anchorage. The concentra-
tion of support and basic sector employment occurs at the expense of
government employment which, as a proportion of statewide government
emp 1 oyment, dec 1 i nes from 43. 6 percent in 1980 and 27. 7 percent in
2000.
Personal Income
Table 51 presents projected real and real per capita personal income
in the Anchorage region. Over the entire projection period real per-
sonal income grows at an average annual rate of 5.7 percent, slightly
1 ess than statewide rea 1 persona 1 income growth of 5. 9 percent per
year. Anchorage income growth accelerates in the early 1980s, al-
though less rapidly than North Slope income growth. By the year 2000,
Anchorage personal income is over three times larger than it was in
1980. In real per capita terms, personal inocme expands over 70 per-
cent, averaging 2.8 percent annual growth.
Fairbanks
Population. In general, Fairbanks' population growth is similar to
other regions of Alaska. A period of accelerated growth occurs from
1980 to 1985, followed by absolute population decline with a gradual
:__ ________ r_es ump~t_i_o_o~o_f_gr_o_wtb~the~eaf_te~.-What_distinguishes-Ea-i-~banks-' popu=---------
lation growth from other regions is its magnitude in the early years.
145
TABLE 51. PROJECTED TOTAL AND PER CAPITA REAL PERSONAL
INCOME: ANCHORAGE, 1980-2000
(Millions of 1980 Dollars
& 1980 Dollars Respectively)
PIRRS PI R PCRS
1980 20~1.17 11052.5
1981 2051.98 114~1.1
1982 2215.79 12078.3
1983 2500.15 13017.4
1984 3 094.79 ~4809.3
1985 3 328.15 16 5::!7 .2
1986 3920.69 16240.6
1987 3 743.26 i 5 497.7
1988 3717.05 15346.S
1989 3777.61 15453.8
1990 3878.76 i5·351.5
1991 4013.26 15942.3
1992 4196.59 16308.5
1993 4390.34 15570.2
1984 4538.23 16<368.6
1 gqc; 4745.4? ., 7 2~'} .. 5
1996. 5•.J19.69 17706.9
1997 5320.07 15170.1
1998 5:579.31 18433.4
1999 5 790.23 18705.4
2000 6 067.71 19058.9
PI RR5 = Rea 1 persona 1 income in Anchorage (mi 11 ions of 1980 do 11 ars)
PIRPCR5 = Real per capita personal income in Anchorage (1980 dollars)
SOURCE: MAP Model Projections.
146
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From 1980 to 1985 population grows at a remarkable average rate of
9.3 percent annually. as shown in Table 52. This compares to an aver-
age annua 1 rate of 4. 2 percent statewide and 4. 9 percent in the
Anchorage bowl. Further, the period of accelerated population growth
in Fairbanks is more concentrated into fewer years than elsewhere in
Alaska. Again, increases in gas pipeline construction employment,
which are expected to concentrate in the Fairbanks area, represent the
major contribution to the dramatic population expansion in the early
1980s. In contrast to statewide and to Anchorage population growth
which continue to increase after a period of accelerated growth,
Fairbanks• population falls by 6 percent to 82,144 in 1987, following
its 1985 peak of 87,415. From 1987 (when population growth resumes)
to 2000, Fairbanks• population grows at a moderate 2.1 percent per
year. By the year 2000, Fairbanks• population was projected to in-
crease to nearly 108,000 persons, about 92 percent higher than its
1980 level. As a proportion of statewide population, Fairbanks popu-
lation increases from 14.1 in 1980 to 15.6 in 2000.
Employment. As with population growth, the pattern and composition of
projected employment in Fairbanks is similar to, but more pronounced
than, that of Anchorage and of statewide employment. As shown in
Table 53 the gas pipeline boom would create a 300 percent increase in
1980 basic sector employment (i.e., construction, mining, manufactur-
ing, and agriculture) from 3,500 to 13,000 in 1985. The 30 percent
annual average rate of growth over the first five projection years is
mat_~bect by a decline equaJly as abrupt to levels well below half the_
147
TABLE 52. PROJECTED POPULATION: FAIRBANKS, 1980-2000
(Thousands of Persons)
J:'OPTR7
1980 56.137
, 981 57.137
1982 60.00'
1963 E5.061
1 92.4 77.389
1985 87.4i5
1986 35.91 1
19S7 82.144
1988 32.285
~ 989 83.032
1990 84.6:35
.1991 86.384
1992 88.397
1993 90 .. ~73
, 994 92.33
, Cl9ti 94.1';,,
19£,6 g .. ,. 049
~997 99.9
1998 102.6!8
HJ99 105.089
2000 ~07 .. 553
POPTR7 = Total population in Fairbanks (10 3 persons)
SOURCE: MAP Model Projections.
148
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EM99R7 =
EM98R7 =
EMB1R7 =
EMS1R7 =
EMG9R7 =
SOURCE:
TABLE 53. PROJECTED EMPLOYMENT AND EMPLOYMENT
COMPONENTS: FAIRBANKS, 1980-2000.
(Thousands of Persons)
EM99R7 EM98R7 EMB1R7 EMS1R7 EMG9R7
1980 32.029 3 0. 088 3.52 9.3 17.267
i 98~ 32.26 30.312 3.786 9.272 1 7.255
1982 33.975 31.972 4.71 10.026 17.236
1983 37.404 35.291 6.447 11 • 663 1 7.181
1984 46.265 43.876 11.316 15.76 16.8
1985 52·."588 50.05 12.967 20.347 16.736
1986 50~ 152 47.7t7 9.495 20.872 1 7. 351
1987 45.801 43.514 5 •. 868 19.707 17.939
1988 45.255 42.988 5.612 19.199 ~ 8. 177
1989 45.504 43.233 5.616 19.214 18.404
1990 46.416 44.126 5.804 19.661 18.662
1 981 47.563 45.246 6.07 20.259· 18.916
~ 992 48.856 46.511 6.279 21.05 1 9. 181
1983 50.259 47.883 6. 411 21.974 1 9. 498
1994 51.56 49.153 6.473 22.783 19.897
1'?9::i '33.09 50. F;f3~ F; 731 ?3.F.Q2 70.,3
1995 54.807 52.:.37 7.071 24.76 20.506
1997 56.769 s-+,~63 7.346 26.083 20.835
1998 58.627 56.088 7.52 27.327 21 .24
1999 60.293 57.722 7.631 28.389 21 .703
2000 61 .~92 59.397 7.927 29.394 22.076
Total employment in Fairbanks (10 3 persons)
Wages and salary employment in Fairbanks (103 persons)
Basic sector employment in Fairbanks (103 oersons)
Support sector employment in Fairbanks (103 persons)
Total government sector employment (103 persons)
MAP Model Projections.
149
peak by 1988. Basic sector employment resumes in 1989 and increases
gradually thereafter. By the end of the forecast period basic sector
employment would achieve less than two-thirds of its 1985 peak. Al-
though less erratic than basic sector employment, support sector em-
ployment (i.e., transportation, communication, public utility, trade,
finance, and services) more than doubles between 1980 and 1985 and
peaks at 21,000 in 1986. By 1985 support sector employment overtakes
and permanently exceeds government employment, signaling a more gener-
al structural change that occurs both statewide and in Anchorage (al-
though not in the North Slope region) in the early 1980s. Support-
sector resilience to economic cycles is reflected in the moderate
8 percent employment decline that signaled the termination of gasline
construction by 1988. Despite the mild downturn in the mid-to late-
1980s, support sector employment maintains a strong, 5.9 percent aver-
age annual rate of growth over the 20-year projection period; exceed-
ing employment growth in both the basic sector (4. 1 percent) and gov-
ernment sector (1.2 percent). By 2000 support sector employment would
reach 29,294, over three times its 1980 level of 9300 persons. In con-
trast to basic and support sector employment, government employment in
Fairbanks (federal, state, and local) declines steadily between 1980
and 1985 before resuming modest growth for the duration of the fore-
cast. Overall the entire projection period, government employment as
a proportion of total wage and salary employment decreases from 57.4
to 37.2 percent. The statewide share of support sector employment in-
creases from 11.7 to 13.3 percent while the support sector increases
from 30.9 to 49.5 percent of statewide employment.
150
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Personal Income. Projection of growth in real and real per capita
personal income is presented in Table 54. Expressed in millions of
1980 dollars, real personal income grows from $807 in 1980 to a maxi-
mum of $2245 millions in 1985, representing a 22.7 average annual rate
of growth over the first five forecast years. Preceded by a 3-year
period of post-boom decline, positive growth resumes by 1989, averag-
ing 4.4 percent per year. The effects of a shift away from high wage
construction jobs after 1985 is largely responsible for the sharp
30 percent reduction in real personal income between 1985 .and ] 988.
By the end of the forecast period income would recover and grow to
over 300 percent of its 1980 level. However, because Fairbanks• popu-
lation also was projected to almost double over the same period, real
personal income expressed in per capita terms would increase only
59 percent from $14,400 in 1980 to $22,800 -in 2000. Although this
overall increase reflects an improvement in individual real per capita
purchas i.ng power, real per capita personal income in 2000 is st i 11
only 89 percent of the peak level achieved largely from high wage con-
struction employment in 1985.
Southcentral
Population. At an average annual rate of 2.4 percent from 1980 to
2000, projected population growth in Southcentral Alaska would be less
rapid than statewide population growth (2.8 percent) and regional pop-
ulation in the North Slope (3.5 percent), Anchorage (2.8 percent), and
Fairbanks_(3.3 percent). In general, the Anchorage and Fairbanks re-
gions absorb a greater share of exogenous construction, mining,
151
TABLE 54. PROJECTED REAL AND REAL PER CAPITA PERSONAL INCOME:
FAIRBANKS, 1980-2000
(Millions of 1980 Dollars and 1980
Dollars Respectively)
PirtR7 Pl~;:lCR7
1980 806.503 14356.6
1 981 832 .. 243 14 :5C·5 .. 7
1982 316.331 i 5 272.
1963 1 105.46 169·~j .2
1984 1 7!4 .11 2214S .. 2
~385 2244.69 25678 .. 5
1986 1966.88 22S94 .. 4
1987 1 '557 .83 1 a 3~:;..:+ .. 7
1 £·88 1 517.55 18 ~...:.2 .. ·5
1989 1 531 .77 184~7. 8
1990 1 379.35 18660 .. 7
1 991 16 .. 4.09 19032.4
1992 1 718.77 19~43.8
1993 1 7:?4.05 19825.5
1994 1250.26 2003';., 7
~ SS5 1 3:;0.f:7 204"7 .6
1J96 2C48.72 "· 1 i•J.3 . '
1997 2168.51 2~ nc.a
1998 2266.69 22 ;~S2. 7
, 999 2348 .. 22 2234!:.1
2000 2456.12 2233:= .4
PIRR7 = Real personal income in Fairbanks (millions of 1980 dollars)
PIRPCR7 = Real per capita personal income in Fairbanks (1980 dollars)
SOURCE: MAP Model Projections.
152
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transportation, and manufacturing employment than the share we assume
would reside in Southcentral. As shown in Table 55, however, popula-
tion growth in Southcentral would be smoother than other regions dur-
ing the eye 1 es of economic expansion and dec 1 i ne in the 1980s. The
downswing that fo 11 ows the comp 1 et ion of gas 1 i ne construction is not
evident in Southcentral population projections which displays strong
growth from 1985 to 1987. From 1987 to 1988, Southcentral population
would decline by less than 1 percent compared to a 6 percent decline
in Fairbanks. By 2000 Southcentral population is about 60 higher than
its 1980 level. As a proportion of statewide population the Southcen-
tral region would diminish from 12.5 percent in 1980 to 11.6 percent
in 2000.
Emp 1 oyment. As shown in Tab 1 e 56, tota 1 emp 1 oyment in Southcentra 1
grows steadily throughout the post-boom decline of the mid-to late-
l980s. In contrast to the other regions, which generally experience
an employment peak by the mid-1980s, Southcentral employment reaches a
peak in 1993 primarily in response to construction of the Susitna Hy-
droelectric project. By the year 2000, total employment has more than
doubled at 43,475, representing an average growth rate of 3.7 percent
annually. This 1 ong-run growth rate exceeds that of other regions.
Further, the employment participation rate (i.e., the ratio of employ-
ment to population) rises from 42.4 in 1980 to 54.4 in 2000. The bulk
of employment growth occurred in the basic sector which by the end of
the forecast period exhibited a 200 percent increase from 1980 levels.
Over the~ 20::-ye"aT~ ,forecast "period basic sector employment would g,row
153
TABLE 55. PROJECTED POPULATION: SOUTHCENTRAL, 1980-2000
(Thousands of Persons)
POPTR4
1980 49.681
1981 49.077
1982 50.524
1983 52.239
1984 56.554
1.985 6C.144
1986 64.338
1:J87 67 .09f;
1988 66.936
1989 67.191
1990 67.432
1991 63.025
1992 68.529
1993 69.398
1894 69.089
1 e9= ?O.IJ~?
, 996. 71.6"4
1997 73.60::
1 !:198 75.257
1999 76.212
2000 79.893
POPTR4 = Total population in Southcentral (10 3 persons)
SOURCE: MAP Model Projections.
154
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TABLE 56. PROJECTED EMPLOYMENT AND EMPLOYMENT COMPONENTS:
EM99R4 =
EM98R4 =
EMB1R4 =
EMS1R4 =
EMG9R4 =
SOURCE:
1980
1. 9<31
1982
1983
1984
1985
1986
1987
1 ::>88
1 S89
1990
1 991
1992
lS93
1994
1535
1·996
1997
1998
1999
2000
SOUTHCENTRAL, 1980-2000
(Thousands of Persons)
EM99R4 EM98R4 EMB1R4
21.079 1 9. 1 07 4.574
21.049 18.097 4.716
22.443 19.44 5.942
24.09 21.04 7.038
27.635 24.488 9.767
29.777 26.606 10.405
31.629 28.351 10.206
32 .• .:196 29. !47 9.937
3" ··---:>:J 29.211 10.118
32.857 29.523 10.15
33.387 30.055 10.376
34.068 30.728 10.68
34.733 31.392 10.978
35.586 32.233 11.218
35.562 32.228 10.649
36.~1~ -~ ~-.... ~..,. n.-..~ ..)..:JoVI,.;) 1 v.v;..-1:,..,
37. 7o6 34.404 11.533
3-9.277 35.889 12.148
40.48 37 o075 12.432
41.042 3 7. 638 12. 091
43.475 40.016 13.439
EM 51 R4 EMG9R4
6.495 7.038
6.308 7.073
6.406 7.093
6.925 7.076
7.957 6. 763.
9.466 6.735
10.931 7.215
11 • 554 7.656
11.254 7.839
j 1 .35 8.024
11 • 448 8.231
11.618 8.43
1"!.779 8.635
12.134 8.881
12.386 9.192
12.7:~ 3.~47
13.218 9.653
13.838 9.903
14.429 10.214
14.977 10.57
15.728 1 0.849
Total employment in Southcentral (10 3 persons)
Wages and salary employment in Southcentral (103 persons)
Basic sector employment in Southcentral (103 gersons)
Support sector employment in Southcentral (103 persons)
Total government sector employment (103 persons)
MAP Model Projections.
155
from one-quarter to one-third of total wage and salary e~pployment.
The share of support sector employment also increased moderately from
36 percent to 39 percent of tota 1 wage and sa 1 ary emp 1 oyment. At an
average rate of 2.2 percent per year, government employment would ex-
perience the lowest overall rate of growth compared to basic sector
(5.5 percent) and support sector (4.5 percent) growth, and as with
other regions, would decline as a percent of total employment; in this
case from 39 percent in 1980 to 27 percent in 2000.
Personal Income. The pattern of real and real per capita personal in-
come growth shown in Table 57 is similar to other· regi'ons. As in the
case of employment, personal income in real and real per capita terms
exhibits stronger long-run growth at 6.3 and 3.8 percent respectively,
than the other regions under consideration in this analysis. At
1,488 millions of 1980 dollars in the year 2000 real personal income
is nearly two and one-half times its 1980 level. Because population
increases by 60 percent over this peri ad, real per capita income in
the year 2000 would be roughly double its 1980 level, which exhibits a
greater overall increase per capita purchasing power to Southcentral
residents than to residents in Fairbanks, Anchorage, and the North
Slope.
Summary
In summary, the following general features characterize economic
growth in the base case. First, a period of dramatic economic expan-
sion would occur during the early 1980s which culminates to a maximum
156
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TABLE 57. PROJECTED REAL AND REAL PER CAPITA PERSONAL
INCOME: SOUTHCENTRAL, 1980-2000
(Millions of 1980 Dollars and
1980 Dollars Respectively)
PI RR4 PIRPCR4
1980 40::.1 .658 E!:389.87
1 981 45! .362 9 i ;7 .1
1982 518.02~ 10253.1
1933 519.50S 1 1 859.1
1984 913.,.;94 16152.7
1985 1 128.02 18 753.5
'\ 986 1 136.84 17·370.
i 987 1 1)~4.74 ~537C .. 8
1988 1 026.17 1 5 :3~0. 6.
i 989 1 •)28. 76 i5310.9
1990 1 053.:36 1 5 ;321
1 991 1 :)37 .. C6 15 .?30 •. 1
1 9:?·2 1 125.01 1 e -.:1 :: ~ . 1
1993 1 166.72 16612.1
1994 1 !0:.7 .-;5 16615.4
t "95 1 188.58 ~s-J:s.?
1936 1 2·32. ~4 17 621 • 1
1997 1 343 .. 57 18 253.7
19;:l8 1 393.43 13515.7
, 999 1 395.23 18307.~
2000 1 487.56 i8619.5
PIRR4 = Real personal income in Southcentral (millions of 1980 dollars)
PIRPCR4 = Real per capita personal income in Southcentral (1980 dollars)
SOURCE: MAP Model Projections.
157
in 1985-86, as exhibited by several aggregate statewide and regional
economic indicators. The boom is strongly exacerbated by Northwest
gasline construction employment, which alone exceeds 10,500 workers in
1985 and contributes to almost half of statewide exogenous employment
in the construction, mining, and transportation industries combined.
Most gasline employment is concentrated in the Fairbanks region which
would experience the benefits and hardships of short-lived, acceler-
ated growth more acutely than the North Slope, Anchorage, and South-
central regions.
Structural change would occur in the form of a diminishing share of
government employment from a once dominant proportion of total state-
wide employment in all four regions under consideration. Despite this
shift, government employment in the North Slope still exceeds 50 per-
cent of total wage and salary employment by the year 2000. The rela-
tive decline in government employment is confined to state and local
levels and reflects our assumption that ongoing state expenditures
neither exhaust fund balances nor diminish to radically conservative
levels but grow in real terms at a mid-range rate of about 3 percent
annually.
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~~·~~~~~~~~~~~~~~~~~~
158
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IV. PROJECTED IMPACTS OF THE PROPOSED BEAUFORT SALE
Introduction
Four scenarios of OCS development in Harrison Bay of the Beaufort Sea.
are included in the following discussion of projected impacts. Esti-
mates of economically recoverable reserves for each development scena-
rio are shown in Table 58. In general, the exploration, construction,
and deve 1 opment phases would occur over the same i nterva 1 s for each
scenario. Shore-based facilities are constructed in 1984 and explora-
tion would extend from 1985 to 1988, followed by a 2-year lapse until
'
platform and pipeline construction would begin in-1990. Oil and gas
production would begin in 1993 for all scenarios and continue beyond
the forecast i nterva 1 which terminates in 2000. Estimates of direct
SEAR adjusted, OCS resident emp 1 oyment for the 1 ow, mean, high, and
Simpson deletion scenarios are shown in Table 59. Direct OCS employ-
ment adjusted for Alaska residency constitutes the primary source of
impact of OCS development on the Alaska economy. The remaining OCS
impact would occur from state property taxes revenues that accrue from
three miles of additional pipeline (valued at $30 million for each
scenario) within state boundaries. These extra property tax revenues
(including the portion going to the North Slope Borough) are shown in
Table 60.
Projections of sale impacts are developed by adjusting the non-OCS
base case to include direct impacts (primarily employment) of the low,
mean, high, and Simpson deletion development scenarios and re-running
159
TABLE 58. ECONOMICALLY RECOVERABLE RESERVES IN THE
BEAUFORT SEA LEASE SALE 71
Scenario Oil 1
Low .5
Mean 2.38
High 4.73
Simpson Deletion 1.63
1Billions of barrels.
2Trillions of cubic feet.
SOURCE: Alaska OCS Office.
Gas 2
.37
1.78
3.55
1.23
160
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Year
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE 59. PROJECTED DIRECT OCS EMPLOYEES THAT WILL RESIDE
IN ALASKA
Scenarios
Low Mean High SimQSOn Deletion
0 0 0 0
37 37 37 37
39 39 39 39
46 69 85 66
46 71 88 66
23 69 85 66
0 0 0 0
64 76 76 72
461 1282 2319 152
470 1479 2524 1075
492 1641 2732 1336
457 1757 2978 1426
393 1771 3069 1297
401 1541 3180 1062
401 1333 2940 1067
398 1333 2772 1069
396 1348 2628 1069
401 1359 2499 1062
SOURCE: Alaska OCS Office; SEAR adjustment performed at ISER (see
Appendix C).
161
Year
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE 60. PROJECTED STATE PROPERTY TAX REVENUES FOR ALL
SCENARIOS
(Millions of Current Dollars)
State Property
Tax Revenues
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.687
1.468
1. 541
1. 615
1 .691
1. 768
1.845
1.923
2.000
2.076
2.151
SOURCE: ALASKA OCS OFFICE.
162
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the statewide and regional MAP model. A comparison of each modified
OCS development case run is then made with the non-OCS base case pro-
jections of the previous section. The difference in the values of the
respective vari ab 1 es of each development case and the non-OCS base
case pro vi des a measure of the impact of the OCS deve 1 opment scena-
rios. Projections are developed for the 1980-2000 period.
STATEWIDE IMPACTS
Population
The Mean-find Sc~nario
Over the projection period there is a net increase of about 11,000
people above what would have occurred in the absence of the mean case
(700. 9 thousand versus 690. 1 thousand). This is equivalent to 1. 6
percent of the base case projected populatio~. The bulk of this in-
crease would not occur until. after production begins in 1990, as shown
in Tables 6l.and 62.
Net in-migration contributes most to year-by-year population increase
through the early part of the production phase. After 1995, natural
increase contributes a greater share to annual population increments.
Net out-migration would occur from 1996 to 1998 in response to an ab-
solute decline in direct OCS employment from a peak of 1771 employees
in 1995. (See Table 61.) Over the entire projection period net mi-
gration adds about 8400 persons to the total state population. By
comparison, natural increase expands total population by 2400 persons
163
TABLE 61. PROJECTED STATEWIDE POPULATION IMPACTS,
ABSOLUTE VALUES: MEAN CASE
(Thousands of Persons)
. POPTST MIGNET NATINC
1980 o. o. 0.
1981 o. o. o.
1982 o. o. o.
1983 0. 0. o.
1984 0.121 0.121 o.
1985 0.263 0.137 0.005
1986 0.362 0.09 0. 01
1987 0.403 0.027 0.013
1988 0.428 0.012 0.014
1989 0.281 -0.16 0.014
1990 0.425 0.137 0.007
1991 3.718 3.281 0.012
1992 6.475 2.617 . 0.145
1993 8.208 1.496 0.241
1994 9.429 0.934 0.269
1995 10.308 0.566 0.314
1996 10.443 -o .188 0.324
1997 10.118 -0.629 0.303
1998 10. 132 -0.254 0.266
1999 10.441 0.063 0~247
2000 10.847 0.164 0.241
POPTST = State population (10 3 persons)
MIGNET = Net migration (103 persons)
NATINC = Civilian non-native natural increase (103 persons)
SOURCE: MAP Model Projections.
164
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TABLE 62. PROJECTED STATEWIDE POPULATION IMPACTS
PERCENTAGE DIFFERENCES: MEAN CASES
(Percent)
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
POPTST = State population
MIGNET = Net migration
POPTST
0.
0. o.
o.
0.027
0.054
0.071
0.078
0.082
0.054
o.oa
0.683
1.164
1.439
1 .616
1.727
1.. 701
1.598
1.552
1.558
1.572
MIGNET
o.
o. o.
0.
0.468
0.41
0.637
-0.893
-0.247
8.686
i4o113
119.488
62.734
23.908
1 7. 717
10.447
-2.093
-5.819
-2.388
0.77
1.541
NATINC = Civilian non-native natural increase
SOURCE: MAP Model Projections.
165
NATINC
0.
0.
0.
o.
0.
0.096
0.16
0.197
0 .213'
0.224
0. 111
0.207
2.486
4.085
4.772
5.088
5.14
4.609
3.85
3.411
3.235
or about 23 percent of the cumulative population increase of 10,800
persons generated from mean OCS deve 1 opment in the Beaufort Sea.
Employment
The pattern of net employment differences in total state employment
between the base and mean case generally follows that of direct OCS
employment in Table 61. As shown in Tables 63 and 64, net employment
impacts remain modest at about 200 persons through the exploration and
construction phases but increase rapidly after 1990, reflecting the
heavy employment requirements of the development phase. The peak em-
ployment impact would be reached in 1995 at 2. o· percent above the
base case or 6400 statewide emp 1 oyees. Differences in base and mean
case employment would decline to about 1.5 percent above the base case
(5500 employees) after 1995.
The same genera 1 pattern ho 1 ds for components of tota 1 emp 1 oyment.
Between 80 and 90 percent of basic sector employment (EMBlST) expan-
sion would consist primarily of OCS direct employment; the remaining
10 to 20 percent is generated through multiplier effects in the con-
struction sector. Support sector employment (EMSlST) expansion would
be similar but would peak three years later than basic sector employ-
ment, reflecting lagged multiplier effects (i.e., the delayed employ-
ment impacts of discretionary spending distributed over several peri-
ods after income was earned). The same pattern is also present in
government employment (EMG9ST) although the amplitude is considerably
less.
166
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5
EM99ST =
EM98ST =
EMBlST =
EMSlST =
EMG9ST = -,
SOURCE:
TABLE 63. PROJECTED STATEWIDE EMPLOYMENT IMPACTS
ABSOLUTE VALUES: MEAN CASE
· (Thousands of Persons)
EM99ST EM98ST EMB1ST EMS 1ST EMG9ST
1980 o. o. o. o. o.
1981 o. o. 0. o. o.
1982 o. 0. 0. 0. o.
1983 0. o. 0. o. o.
1984 0.089 0.085 0.048 0.042 -0.004
1985 0.159 0.154 0.046 0.09 0.018
1986 0.209 0.202 0.068 0.099 0.035
1987 0.22 0.212 0.07 0.105 0.038
1988 0.226 0.218 0.07 -0.109 0.04
1989 0.116 0.112 0.009 0.072 0.032
1990 0.216 0.209 0.099 0.102 0.008
1991 2.63 2.546 1 .535 0.784 0.227
1992 4.44 4.299 1. 771 1.891 0.638
1993 5.424 5.255 1 .849 2.545 0.86i
1994 6.016 5.832 1.9 2.939 0.993
1995 6.354 6.163 1.951 3.133 1.078
1996 6.155 5.973 1. 707 3.162 1.104
1997 5.676 5.511 1 .464 2.993 1.055
; 998 5.492 5.336 1.462 2.856 1.019
1999 5.541 5.386 1.491 2.86 1.035
2000 5.68 5.524 1.525 2.931 1.068
Total employment (10 3 persons)
Wage and salary employment (103 persons)
Proportion of employment in the basic sector (10 3 persons)
Proportion of employment in the support sector
Proportion of employment in the government sector
MAP Model Projections.
167
EM99ST =
EM98ST =
EMBlST =
EMSlST =
EMG9ST =
SOURCE:
TABLE 64. PROJECTED STATEWIDE EMPLOYMENT IMPACTS
PERCENTAGE DIFFERENCES: MEAN CASE
(Percent)
EM99ST EM98ST EMB1ST EMS 1ST EMG9ST
1980 o. o. o. o. o.
1981 o. o. o. o. o.
1982 0. 0. o. o. 0.
1983 o. o. o. o. o.
1984 0.038 0.04 0.099 0.049 -0.005
1985 0.062 0.064 0.086 0.086 0.022
1966 0.078 0.081 0.137 0.087 0.041
1987 0.083 0.086 0.154 0.094 0.042
1988 0.085 0.088 0. 151 0.099 0.043
1989 . 0.043 0.045 0.019 0.065 0.034
1990 0.079 0.082. 0.204 0.09 o.oo8
1991 0.937 0.969 3.04 0.673 0.237
1992 1.536 1 .587 3.354 1.569 0.653
1993. 1 .814 1 .874 3.347 2.026 0.864
1994 . 1.953 2.016 3.347 2.252. 0.973
1995 2.001 2.065 3.303 2.314 1.036
i 996 1.866 1 .925 2.713 2.232 1.044
1997 1.654 1. 705 2.202 2.007 0.979
1998 1.541 1.588. 2.106 1..824 0.925
1999 1.507 1.551 2.09 1.755 0.916
2000 1.489 1.532 2.015 1.729 0.927
Total employment
Wage and salary employment
Proportion of employment in the basic sector
Proportion of employment in the support sector
Proportion of employment in the government sector
MAP Model Projections.
168
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Income, Wages, and Prices
Total personal income in 1980 dollars (PIRST) rises about $8 million
above base case levels during mean case exploration and construction.
This income impact is not significant when expressed as a percent of
total base case personal income or in absolute real per capita terms
(Table 65). Not until the development phase commences in 1990 does
the impact of OCS development on real personal income increase nota-
bly, rising to a peak impact of $236 million (or 2.3 percent) in 1995.
As a percent of base case real per capita personal income, the impact
of mean case OCS development does not exceeds 1 percent over the pro-
jection period (see Table 66).
The real wage and salary payments shown in Tables 67 and 68 follow the
same general pattern as personal income. The smallest differences are
seen in the government wage bill (WSG9RST), where the difference grows
from about 9.2 million dollars in 1984 to 31.5 million dollars in 1996
(a 0.9 percent increase above the base case). After this peak, the
differences drop slightly before increasing gradually to about
$33.8 mi 11 ion by the year 2000. The average percentage difference
over the period remains less than 1 percent.
The difference in total support sector real wages (WSSlRST) grows from
$1.6 mi 11 ion in 1984 to $68 mi 11 ion in 1996 (a 2. 2 percent increase
above the base case). Thereafter, the percentage difference averages
less than 2.0 percent. Basic sector wage bills (WSBlRST) closely ap-
proximate those of the support sector, although the average wage and
169
TABLE 65. PROJECTED STATEWIDE REAL AND REAL PER CAPITA
PERSONAL INCOME IMPACTS, ABSOLUTE
VALUES: MEAN CASE
(Millions of 1980 Dollars and 1980
Dollars, Respectively)
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993.
1994
1995
1996
1997
1998
1999
2000
PIRST PIRPCST
o.
o. o.
o.
7.023
7.527.
7.297
7.641
7.516
2.844
14.258
120.926
174.035
201.57
220.934
235.758
227.047
209.742
209.117
215.605
224.484
o.
o. o.
o.
11 .43
5.805
2.242
2.695
. 1 .871
-2.805
14.281 .
112.707
121.418·
, 11.344
. 103.543
94.52
64.801
. 36.613
28.367.
25.441
1 9'. 793
PIRST = Personal income (millions of 1980 dollars)
PIRPCST = Real per capita personal income (1980 dollars)
SOURCE: MAP Model Projections.
170
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TABLE 66. PROJECTED STATEWIDE REAL AND REAL PER CAPITA PERSONAL
INCOME IMPACTS, PERCENTAGE DIFFERENCES: MEAN CASE
(Percent)
·PI RST PIRPCST
1980 o. 0.
1981 o. o.
1982 o. o.
1983 o. o.
1984 . 0.1 0.073
1985 0.086 0.033
1986 0.084 0.013
1987 0.095 0.017
1988 0.095 0.012
1989 0.035 -0.018
1990 0.171 0.092
1991 1 .396 0.706
1992 1. 91 7 0.744
1993 2.115 0.666
1994 2.238 0.612
1995 2.283 0.546
1996 2.07 0.363
1997 1 .a 0.199
1998 1.706 0.151
1999 1 .694 0.134
2000 1.675 0.102
PIRST = Personal income
PIRPCST = Real per capita personal income
SOURCE: MAP Model Projections.
171
TABLE 67. PROJECTED STATEWIDE REAL WAGE AND SALARY IMPACTS, ABSOLUTE
DIFFERENCES, MEAN CASE
(Millions of 1980 Dollars)
WSB1RST WSS1RST WSG9RST
1980 o. o.
1981 o. 0.
1982 o. o.
1983 o. o~
1984 4.121 1.607
1985 2.802. 2.431
1986 2.865 1 .964·
1987 3.015 2.083
1988 3.033 2.199
1989 . 0.328 1.423
1990 6.924 3. 753 .
1991 75.504 1 7.368
1992 86.571 39.663 .
1993 90.208 53.117
1994 93.598 61 .968
1995 98."124 66.555
1996 88.051 68.053
1997 77.401 65.273
1998 79.248 62.861--
1999 82.438 63.401
2000 86.127 65.505
WRBlRST = Basic sector wages and salaries
WRS1RST = Support sector wages and salaries
WRG9RST = government sector wages and salaries
SOURCE: MAP Model Projections.
172
0.
o.
o. o.
0.185
0 •. 737
0. 874 .
0.929
1.009
0.852
0.889
. 7.183
17.521
23.109
26.957
30.01
31.456
30.799
30.583
31.927
33.808
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TABLE 68. PROJECTED STATEWIDE REAL WAGE AND SALARY IMPACTS,
PERCENTAGE DIFFERENCES: MEAN CASE
(Percent)
WSB1RST WSS1RST WSG9RST
1980 o. o. 0.
1981 o. o. 0.
1982 o. 0. o.
1983 o. o. o.
1984 0.194 0.086 0.01
1985 0.099 0.097 0.037
1986 0.119 0.074 0.04
1987 0.161 0.086 0.041
1988 0.165 0.094 0 .0,43
1989 0.018 0.061 0.035
1990 0.365 0.157 0.035
1991 3.801 0.704 0.27
1992 4.106 1 .542 0.629
1993 4.064 1 .974 0.792
1994 4.147 2.223 0.881
1995 4.128 2.292 0.938
1996 3.397 2.211 0.939
1997 2.77 1.994 0.876
1998 2.697 1.822 0.829
1999 2.748 1 0 769 0.825
2000 2.679 1. 747 0.835
WSBlRST = Basic sector wages and salaries
WSSlRST = Support sector wages and salaries
WSG9RST --Government sector wages and salaries
SOURCE: MAP Model Projections.
173
TABLE 69. PROJECTED STATEWIDE REAL WAGE RATE IMPACTS,
ABSOLUTE VALUES: MEAN CASE
( 1980 Do 11 ars)
WRB1RST WRS1RST
1980 o. o.
1981 o. o.
1982 o. 0.
1983 o. 0.
1984 . 41.879 8.066
1985 7.047 2.594
1986 -8.844 -2.992
1987 2.937 -1 • 711
1988 5.59 -1 .059
1989 -0,305 -0.824
1990 62.773 14.133
1991 290.578 6.398
1992 290 il312 =5.668
1993 278~4 -10.922
1994 307 52 -5.934
1995 321 ;l285 -4.773
1996 274.!57 -4.484
1997 233.402 -2.871
1998 244.891 -0.477
1999 270.891 2.988
2000 276.539 3.986
WRBlRST = Wage rates in the basic sector
WRSlRST = Wage rates in the support sector
WRG9RST = Wage rates in the government sector
SOURCE: MAP Model projections.
174
WRG9RST
0.
0.
o.
o.
3.348
3.488
-0.246
-0.387
'-0. 168
0.168
7.18
9.016
=6.977
-21.086
-27.395
-30.027
-33.031
-33.383
-31.852
-30.902
-31.965
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salaries are higher and the peak occurs one year earlier. Basic sec-
tor total wages in the OCS case are about 4.1 percent above the base
case in the peak year ( 1995), but the percentage difference drops
steadily until the end of the projection period, at which time the
difference is 2.7 percent.
Real annual wage rate impacts shown in Tables 69 and 70 are greatest
in the basic sector (WRBlRST). From a difference of 42 dollars in
1984, the wage rate impact grows to 321 dollars in 1995, a 0.8 percent
difference over the base case. After a 2-year period of decline, wage
rates impacts gradually increase to about 277 dollars by the end of
the projection period. Differences in the wage rates for the support
sector (WRSlRST) and government sector (WRG9RST) are generally nega-
tive over most of the projection period.
Direct OCS and indirect high-wage emp 1 oyment increases in the basic
sector create additional low wage jobs in the support and government
sectors.
Changes in the Alaska Relative Price Index (RPI) are minimal. A neg-
ligible increase over the base case of approximately 0.01 percent oc-
curs in the early part of the project, but before the project peaks
the differential becomes negative. Statistically, the differences are
probably not significant and for all intents and purposes there is no
real effect on the index. Data on the index are included in Table 71.
175
TABLE 70. PROJECTED STATEWIDE REAL WAGE RATE IMPACTS,
PERCENTAGE DIFFERENCES: MEAN CASE
WRB1RST WRS1RST WRG9RST
1980 o. o.
1981 Oo o.
1982 o. 0.
1983 o. 0.
1984 0.095 0.037
1985 0.013 0.011
1986 =Oo01-8 -0 0 013
1987 0.007 -o 0 oo8
1988 0.014 -o.oo5
1989 '=0.001 =0.004
1990 0.161 0.067 .
1991 0.738 0.03
. 1992 Oo728 =0.027·
1993. 0.694 -0.051
1994 ·0.774 -0.028
1995 0.798 =0. 022
1996 0.667 -0.021
1997 0.555 -0.013
1998 0.578 -o. oo2-
1999 0.644 0.014
2000 0.651 0.018
WRBlRST = Wage rates in the basic sector
WRSlRST = Wage rates in the support sector
WRG9RST = Wage rates in the government sector
SOURCE: MAP Model projections.
176
o.
0 •.
o.
Oo
0.015
Oo014
-Oo001
'-0.002
-0.001
0.001
0.027
-. 0. 0'32
-0.024
-0.072
-0.091
-0.098
-o .1 04
-0.102
. -0.095
-0.09
-0.091
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TABLE 71. PROJECTED STATEWIDE RELATIVE PRICE INDEX IMPACTS,
ABSOLUTE AND PERCENTAGE DIFFERENCES: MEAN CASE
RPI RPI
1980 o. o.
1981 o. o.
1982 o. o.
1983 o. o.
1984 0.082 0.016
1985 0.119 0.022
1986 0.116 0.02
1987 0.111 0.018
1988 0.115 0.017
1989 0.144 0.02
1990 0.189 0.024
1991 0.34 0.04.
1992 -0.313 :...o.o35
1993 -0.791 -0.081
1994 -1.031 -0.098
1995 -1 .15 -0.102
1996 -1 .. 267 -o .1 o4
1997 -1.236 -0.094
1998 -0.983 -0.069
1999 -0.755 -o.os
2000 -0.604 -0.037
RPI = Alaska Relative Price Index
SOURCE: MAP Model projections.
177
TABLE 72. PROJECTED STATEWIDE REVENUE IMPACTS,
ABSOLUTE VALUE: MEAN CASE
(Millions of 1980 Dollars)
REVGFR RP9SR
1 sao o.
1 S81 o.
1982 0.
1983 0.
1984 -o. 597
1985 -0.719
1986 -0.609
1987 -0.598
1988 -0.672
1989 -1.
1990 -o. 973
1991 -o. 699
1992 6.832
1993 12.445
1994 14.352
1995 14.613
1996 14.352
1997 12.637
1998 9.195
1999 6.246
2000 4.707
REVGFR = Total general fund revenue
RP9ST = Total petroleum revenues
o. o.
o.
0.
-o. 505
-o. 729
-o. 1
-0.628
-o .609
-0.718
-0.54
-0.741
1. 601
2.742
2.896
2.7
2.5
2.106
1.537
1.132
0.883
RFDSR
o.
o.
o.
o.
0.003
0.026
0.049
0.057
o.058
0.024
0.041
0.528
0.969
1.182
1.268
1.283
1.21
1.084
0.99
0.931
0.887
RFDSR = Revenues from the federal government
RNDSR = Other (nonfederal, nonpetroleum) revenues
SOURCE: MAP Mode-l projections.
178
RNOSR
o.
0.
o.
o.
-0.094
-0.018
0.039
-0.025
-0.123
-o .305
-0~472
-0.484
4.263
8.522
10. 186
10.628
10.643
9.448
6.666
4.182
2.938
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Government Revenue and Expenditure
The difference in total state government revenue '(REVGFR) between the
base case and the mean OCS development shown in Table 72 is negative
unt i 1 1992, after oi 1 and gas production begins. The dec 1 i ne is
caused by the marginally higher price level brought about by OCS de-
velopment. (See Table 71.) The nominal direct and indirect revenue
effects of economic expansion in both the petro 1 eum and endogenous
sectors are neutral until state and borough petroleum property tax re-
ceipts accrue with the onset of production. Expressed in 1980 dol-
lars, total state government revenue (REVGFR), petroleum taxes
(RP9SR), and other (nonpetroleum) state government revenues (RNDSR)
including state corporate i~come taxes and earnings on the general and
permanent fund balances decline modestly in real terms through 1991 at
less than 0.02 percent below base case revenues (Table 73). Further,
although real property tax receipts grow steadily after 1990
(Table 60) the present value of their real impact in future years ex-
pressed in 1980 dollars, diminishes as the forecast period progresses.
By the second half of the projection period all state government rev-
enue impacts shown in Table 72 remain positive. The absolute value of
other state government revenues (RNDSR) are more strongly impacted by
OCS activity than are federal government revenues (RFDSR) or petroleum
revenues. Note, however, that as a percent of base case revenue, fed-
era 1 government revenue (RFDSR) would be the only revenue category
having a greater-than-1 percent increase over base case 1 eve 1 s. By
1996 the difference in total state government revenue approaches
$11 million or 0.3 percent of base case state government revenue.
179
TABLE 73. PROJECTED STATEWIDE REVENUE IMPACTS,
PERCENTAGE DIFFERENCE: MEAN CASE
REVGFR RP9SR RFDSR RNOSR
1980 o. o. 0. o.
1981 0. o. o. o.
1982 0. 0. 0. o.
1983 o. o~ o. 0.
1984 -0.015 -0.016 0.002 -0.012
1985 -o .016 · -0.022 0.015 -0.002
1986 -O.Ol2 -0.02 0.029 0.003
1987 -0.012 -o. o1a . 0. 037 -0.002
1988 -:-0.012 ":"0.017 0.041 -0.007
1989 '-0.018 -0.02 0.018 -0.016
1990 -0.017 -0.016. 0.032 -0.022
1991 -0.012 -0.022 . 0.448 -0.021
. 1992 0.121 0.054. 0.872 0.167 1993 0.226 0.102 1.125 0.315
1994 ·0.268 Q .121 1.277 0.357
1995 0."281 0.126 1.37 0.358
1996 0.284 0.131 1. 362 0.348
1997 0.256 0.123 1.285 0.301
1998 0.191 0.101-1.235 0.208
1999 0.133 0.084 1.227 . 0.129
2000 0.103
REVGFR = Total general fund revenue
RP9ST = Total petroleum revenues
0.074 1.233
RFDSR = Revenues from the federal government
RNDSR =Other (nonfederal, nonpetro1eum) revenues
SOURCE: MAP Model projections.
180
0.089
I
1 ..
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1-:
l :
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TABLE 74. PROJECTED STATEWIDE REAL AND REAL PER CAPITA GOVERNMENT
EXPENDITURE IMPACTS, ABSOLUTE VALUES:
MEAN CASE
(Millions of 1980 Dollars and 1980 Dollars, Respectively)
E99SR E99SRPC
1980 0. 0.
1981 0. 0.
1982 0. o.
1983 o. 0.
1984 0.504 0.013
1985 0. 993. -0.015
1986 1.403 -0.016
1987 1.623 -o. 022
1988 1 • 811 ~0. 022
1989 . 1 • 303 0.02
1990 1. 951 -0.022•
1991 18.119 0. 01
. 1992 32.706 0.019
1993 42.734 -0.019
1994 50.897 0.017
1995 57 .. 475 -0.031
1996 59.994 0.018
1997 59.646 0.015
1998 61.338 0. 016.
1999 65.07 -o. o3
2000 69.516 0.019
E99SR = Total state expenditures
E99SRPC = Real per capita state expenditures
SOURCE: MAP Model projections.
181
Total state government expenditures (E99SR) expressed in 1980 dollars
increased modestly during exploration and construction (see Tables 74
and 75). The difference between base and mean case state expenditures
increases abruptly after 1990 as a result of expanded population re-
sulting directly and indirectly from mean OCS development. From 1991
to the end of the forecast period the rate of state expenditures
growth averaged 16 percent per year. As a percent of base case levels
state expenditure under mean OCS development peaked at 1.7 percent in
1995, declining gradually thereaf~er. By assumption, real per capita
state expenditures remain constant at base case levels.
The difference between base case and mean case general fund balances
is shown in current do 11 ars (FUND) and in 1980 do 11 ars ( FUNDR) in
Table 76 (percentage differences shown in Table 77). The impact of
mean OCS development on general fund balances would steadily decline
in both current and 1980 dollars. By the year 2000 general fund bal-
ances fall by $252 million (of 1980 dollars), reflecting a 35 percent
average annual rate of decline between 1984 and 2000. Although large
in absolute terms, this negative impact approaches but does not exceed
1 percent of base case general fund 1 eve 1 s over the duration of the
forecast.
The drain in the general fund balance is caused mainly by accelerated
state government expenditures to meet OCS~induced population and price
182
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TABLE 75. PROJECTED STATEWIDE REAL AND REAL PER CAPITA GOVERNMENT
EXPENDITURE IMPACTS, PERCENTAGE DIFFERENCES:
MEAN CASE
· E99SR E99SRPC
1980 o. o.
1981 o. o.
1982 o. 0.
1983 o. 0.
1984 . 0.028 0.001
1985 0.052 -o. 001
1986 0.069 -0.001
1987 0.076 -0.002
1988 0.081 -0.002
1989 0.055 0.001
1990 0.078 -0.002
1991 0.683 0.001
1992 1.165 0.001
1993 1.438 -o .oo1
1994 1.617 0 •. 001
1995 1.725 -0.002
1996 1. 702 0.001
1997 1 .599 0.001
1998 1.553 0.001
1999 1.557 -0.002
2000 1.573 0.001
E99SR = Total state expenditures
E99SRPC = Real per capita state expenditures
SOURCE: MAP Model projections.
183
TABLE 76. PROJECTED STATEWIDE GENERAL AND PERMANENT FUND
BALANCE IMPACTS, ABSOLUTE DIFFERENCE:
MEAN CASE
(Millions of Current and 1980 Dollars, Respectively)
FUND FUNDR
1980 o. o.
1981 o. o.
1982 0. 0.
1983 0. o.
1984 . -0.797 -2.062
1985 -2.086 -3.871
1986 -3.832 -5.105
1987 -6.105 -6.281
1988 -9.031 -7.773 .
1989 -11.805 -9.703
1990 -15.547 -12.34
1991 -48.293 -29.535
1992 -100.937 -28.367
1993 -168.687 -35.75
1994 -256.875 -54.43
1995 -368.312 -so .352
1996 -496.687 -107.265
1997 -640. -137.34
1998 -812.312 -174.219
1999 -1022.87 -213.082
2000 -1273.81 -252.18
FUND = Total fund balance (millions of current dollars)
FUNDR = Total fund balance (millions of 1980 dollars)
SOURCE: MAP Model projections.
184
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TABLE 77. PROJECTED PERCENTAGE DIFFERENCES IN CURRENT-
AND 1980-DOLLAR FUND BALANCES: MEAN CASE
FUND FUN OR
1980 o. o.
1981 o. o.
1982 o. o.
1983 o. o.
1984 -0.006 -o. 022
1985 -0.011 -0.034
1986 -0.016 -0.036
1987 -0.02 -0.038
1988 -0.024 -0.041
1989 -0.026 -0.046
1990 -0.029 -0.053-
1991 -0.077 -0.117
1992 -o .141 -0.106
1993 -0.209 -0.128
1994 -0.287 -0.169
1995 =0.377 =0.275
1996 -0.47 -0.366
1997 -0.566 -0.472
1996 -0.678 -0.609
1999 -0.814 -o. 765
2000 -0.977 -0.941
FUND= Total fund balance (millions of current dollars)
FUNDR =Total fund balance (millions of 1930 dollars)
SOURCE: MAP Model projections.
185
POPTRl =
POPTR4 =
POPTRS =
POPTR7 =
SOURCE:
TABLE 78. PROJECTED REGIONAL POPULATION IMPACTS,
ABSOLUTE VALUES: MEAN CASE
(Thousands of Persons)
POPTR1 POPTR4 POPTR5 POPTR7
1980 o. 0. 0. o. 1981 o. o. 0. 0. 1982 o. Oo o. o. 1983 Oo Oo 0. o. 1984 0.001 Oo014 0.082 0.033 1985 0.001 . Oo03 0 o.151 Oo062 1986 0.001 Oo045 Oo208 0.082 1987 0.002 0.05 . 0 o232 Oo088 1988 Oo002 0.053 0.244 Oo09 1989 . Oo004 Oo032 0.135 0.043 1990 0.003 Oo052. Oo261 0.071 1991 -0.01 0.033 . 3. 744 0.176 1992 0.026 0.36 5o103 Oo684 1993 Oo043 0.566 6o013 1 0 011 1994 -0.052 0.703 6.676 1.235 1995 0.06 0.788 7 o14 1.371 1996 0.069 0.797 7.078 1 .303 1997 0.069 0.758 6.815 1.172 1998 Oo063 0.754· 6o843 1.172 19.99 0.063 0.784 7 0 003 . 1.229 2000 0.066 0.835 7.197 . 1.29!i
Total population in the North Slope region
Total population in the Southcentral region
Total population in the Anchorage region
Total population in the Fairbanks region
MAP Model projections.
186
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level expansion in the absence of a compensating rise in state govern-
ment revenues. For example, in 1995 when the difference in general
fund revenues peaked at $14.5 million (1980), the difference in (i.e.,
impact) on) state expenditures was $57.5 million (1980), nearly four
times the size of general fund revenue impacts. In general, direct
and indirect state government revenue increases from OCS development
do not match the rise in state government expenditures needed to ac-
commodate OCS-induced economic expansion.
REGIONAL IMPACTS
Introduction
We have assumed that OCS development in the Beaufort 71 lease sale
will not have any direct employment impact on the North Slope region.
All Beaufort employment will permanently reside in the Fairbanks,
Anchorage, and Southcentral regions during rotation leave. Conse-
quently, the population, employment, and personal income impacts that
are projected in the North Slope would result from the dispursement of
North Slope Borough property tax receipts through local government
wages and salaries and local capital improvement projects.
Regional Population Impacts
Abso 1 ute and percentage differences between the base and mean case
population projections for the North Slope (Rl), Southcentral (R4),
Anchorage (R5), and Fairbanks (R7) regions are shown in Tables 78 and
79. Anchorage undergoes the greatest population expansion with the
difference between the mean and base cases growing from 82 persons i~
187
TABLE 79. PROJECTED REGIONAL POPULATION IMPACTS,
PERCENTAGE DIFFERENCES: MEAN CASE
. POPTR1 POPTR4 POPTR5
1980 o. o. o. 1981 0. 0. 0. 1982 o. o. o. 1983 0. 0. 0. 1984 . 0.011 0.024 0.039 1985 0.024 0.049 0.065 ~ 986 0.018 0.069 0.086 1987 0.031 0.075 0.096 1988 0.04 0.078 0.101 1989 0.063 0.047 0.055 1990 0.047 0.077 0.105 1991 -0.155 0.049 1 .487 1992 0.41 0.526 1. 983 1993 0.646 0.815 2.283 1994 0.765 1.017 2.485 1995 0.853 1 .125 2.592 1996 0.949 1.113 2.497 1997 . 0.916 1.03 2.328 1998 0.818 1.002 2.267 1999 0.797 1.028 2.262 2000 0.807 1.046 2.26
POPTRl = Total population in the North Slope region
POPTR4 = Total population in the Southcentral region
POPTR5 = Total population in the Anchorage region
POPTR7 = Total population in the Fairbanks region
. SOURCE: MAP Model projections.
188
POPTR7
o. o.
o.
o.
0.042
0.071
0.096
0.107
0.109
0. 051 .
0.084
0.204
0.774
1.11 7
1 .338
1 .449
1.343
1.173
1 .142
1.17
1.205
[
[
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L
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EM99Rl
EM99R4
EM99R5
EM99R7
--'
SOURCE:
TABLE 80. PROJECTED REGIONAL TOTAL EMPLOYMENT IMPACTS,
ABSOLUTE VALUES: MEAN CASE
(Thousands of Persons)
EM99R1 EM99R4 EM99R5 EM99R7
1980 0. o. 0. 0.
1981 o. 0. 0. 0.
1982 o. 0. 0. o.
1983 o. o. o. o.
1984 0.001 0.01 0.055 0.023
1985 0.001 0.016 0.093 0.037
1986 0.001 0.023 0.121 0.048
1987 0.001 0.026 0.127 0.049
1988 0.001 0.026 0.129 0.049
1989 0.002 0 .• 013 0.056 0.02
1990 0.002 0.028 0.134 -0.039
1991 0.007 0.089 2.297 0.196
i 992 0.025 0.291 3.239 0.535
1993 0.034 0.404 3.76 0.728
1994 0.04 0.469 4.079 0.845
1995 0.044 0.501 4.259 0.903
1996 0 .• 047 0.478 4.098 0.827
1997 0.046 0.425 3.808 0.708
1998 0.044 0.402 3.725 0.673
1999 0.045 0.403 3.762 0.681
2000 0.047 0.419 3.838 0.701
= Total employment in the North Slope region
= Total employment in the Southcentral region
= Total employment in the Anchorage region
= Total employment in the Fairbanks region
MAP Model projections.
189
1984 to 7200 persons in 2000. Expressed in terms of percent differ-
ence, the Anchorage population impact would be greatest in 1995 at
26 percent higher than base case 1 eve 1 s. The population impacts on
Southcentral and Fairbanks are similar to those on Anchorage in that
the percentage difference would also be greatest in 1995. The Fair-
banks region generally absorbs about 50 percent more additional popu-
lation that Southcentral. The North Slope population impact is less
in absolute and percentage in absolute and percentage differences than
the other regions. Not until after 1990 does the difference in mean
and base case population in the North Slope exceed more than a few
persons. The North S 1 ope popu 1 at ion impact is g·reatest in 1996 and
1997 with 69 additional persons. Again, we emphasize that this impact
is not a result of direct employment, but is attributed to local gov-
ernment wage and salary and capital improvements expenditures from
higher petroleum property tax receipts. As a proportion of the total
statewide population impact in the year 2000 (9394 persons), Anchorage
absorbs 76 percent, Fairbanks receives 14 percent, Southcentral re-
ceives 9 percent, leaving 1 percent to the North Slope region.
Regional Employment Impacts
The impact of the mean case expressed in absolute and percentage dif-
ferences is projected for each of the four regions and for several
categories of employment including total employment (EM99), support
sector employment (EMSl), basic sector employment (EMBl), and govern-
ment sector employment (EMG9). (See Tables 80 through 87.) As shown
in Table 80, the difference between total employment in the mean and
190
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-,
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EM99Rl
EM99R4
_j EM99R5
EM99R7
c3 SOURCE:
TABLE 81. PROJECTED REGIONAL TOTAL EMPLOYMENT IMPACTS,
PERCENTAGE DIFFERENCE: MEAN CASE
EM99R1 EM99R4 EM99R5 EM99R7
1980 0. o. o. o.
1981 o. o. o. o.
1982 0. o. o. o.
1983 o. o. 0. 0.
1984 0.032 0.038 0.051 0.049
1985 0.037. 0.053 0 •. 076 0.071
1986 0.021 0.074 0.095 0.096
1987 0.033 0.079 0. 1 0.108
1988 0.042 0.081 0.102 0.109
1989 . 0.05 0.04 0.044 0.043
1990 0.073 0.084. 0.103 .0.085
1991 0.22 0.26 1. 735. 0.412
1992 0.741 0.837 2.378 1.094
1993 0.977 1 .134 2.676 1.448
1994 1.114 1.32 2.823 1.64
1995 1.198 1.377 2.859 1.701
1996 i.23 1.266 2.652 1.509
1997 1.157 1.082 2.368 1.246
1998 1.073 0.993 2.233 1..147
1999 1.065 0.982 2.188 .. 1.13
2000 1.076 0.965 2.16 1.131
= Total employment in the North Slope region
= Total employment in the Southcentral region
= Total employment in the Anchorage region
= Total employment in the Fairbanks region
MAP Model projections.
191
TABLE 82. PROJECTED REGIONAL BASIC SECTOR EMPLOYMENT IMPACTS,
ABSOLUTE VALUES: MEAN CASE
(Thousands of Persons)
EMB1R1 EMB1 R4 EMB1R5 EMB1R7
1980 o. o. o. o. 1981 o. 0. 0. o. 1982 o. o. 0. 0. 1983 o. o. 0. o. 1984 0.001 0.009 0.027 0.01 1985 0.001 0.007 0.028 0.01 1986 -o. 0.01 0.042 0.015 1987 o. 0.011 0.043 0.014 1988 o. 0.011 0.043 0.014 1989 o. 0.001 0.004 0.001 1990 0.001 0.018 0.058 0.019 1991 0.003 0.071 1 .367 0.094 1992 0.006 0.105 1 .499 0.136 1993 o.oo8 0.114 1. 541 0.149 1994 0.009 0.117 1 .569 0.158 1995 0.01 0.123 1 .599 0.165 1996 0.011 0.084 1 .438 0.11 1997 . 0. 011 0.047 1.284 0.057 1998 0.011 0.045 1 .287 0.056 1999 0.012 0.047 1.308 0.061 2000 0.013 0.051 1.327 0.066
EMBl Rl = Basic sector employment in the North Slope region
EMB1R4 = Basic sector employment in the Southcentral region
EMB1R5 = Basic sector employment in the Anchorage region
EMB1R7 = Basic sector employment in the Fairbanks region
SOURCE: MAP Model projections.
192
[
[
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[
[
[
E
[
L
b
L
L
L
J
base cases for Southcentral (R4), Anchorage (R5), and Fairbanks (R7)
strongly resemb 1 es the pattern of direct OCS emp 1 oyment shown in
Table 59, as well as the regional population impacts just ·discussed;
employment impacts gradually increase to peak levels in 1995, followed
by modest cyclical changes thereafter. Again, the Anchorage region
accepts the bulk of the statewide employment impact (77 percent in
2000) followed by Fairbanks (1 + percent), Southcentral (8 percent),
and the North Slope (1 percent). As with regional population, the
largest regional employment impacts occur outside the North Slope re-
gion where OCS development takes place. This reflects two important
.assumptions discussed above. First, nonresident enclave employment is
not included in the development scenarios. Second, the employment
data reflect place of residence rather than place of work. In the
case of Anchorage ( R5), part of emp 1 oyment expansion represents the
direct (and indirect) impact of headquarters employment.
Differences in basic sector employment (EMBl) for the peak year 1995
are: 10, 123, 1599, and 165 for regions Rl! R4! R5! and R7! respec-
tively. The comparable percentage differentials are 2 percent or less
for all regions except Anchorage (R5) which experiences a peak basic
sector emp 1 oyment impact of nearly 8 percent over base case 1 eve 1 s
(see Tables 82 and 83).
Support sector peak employment differences occur in 1996, reflecting a
slight lag in support sector response to direct economic expansion.
In absolute terms these impacts are: 9, 248, 2131, and 529 for Rl, R4,
193
TABLE 83. PROJECTED REGIONAL BASIC SECTOR EMPLOYMENT IMPACTS,
PERCENTAGE DIFFERENCES: MEAN CASE
EMB1R1 EMB1R4 EMB1R5 EMB1R7
1980 0. o. o. 0. 1981 o. o. o. 0. 1982 o. 0. o. o. 1983 o. o. o. o. 1984 0.096 0.087 0. 16 0.091 1985 0.043. 0.064 0.145 0.078 1986 -0.006 0. 102 0.23 0.154 1987 0.014 0.113 . 0. 241 0.245 1988 0.027 . 0.112 0.236 0.253 1989 0.039 0.014 0.02 0.02 1990 0.188 0.172 . 0.313 0.326 1991 0.34 0.663 7.379 1 .545 1992 0.689 0.956 7.816 2.169 1993 0.814 1 .016 7.845 2.329 1994 . 0.946 1 .1 02 7.908 2.433 1995 1 .033 1 .125 7. 775 2.458 1996 1.053 0. 731 6.665 1 ."556 1997 0.993 0.383 5.705 0.778 1998 0.94 0.36 . 5.554 0.75 1999 0.966 0.385 5.557 . 0.802 2000 0.987 0.383 5.421 0.83
EMBl Rl = Basic sector employment in-the North Slope region
EMB1R4 = Basic sector employment in the Southcentral region
Et4Bl R5 = Basic sector employment in the Anchorage region
EMB1R7 = Basic sector employment in the Fairbanks region
SOURCE: MAP Model projections.
194
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c
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[
[
L
[
[
-'
""]
j
~ EMSl Rl =
EMS1R4 =
EMS1R5 =
EMS1R7 =
-,
SOURCE:
TABLE 84. PROJECTED REGIONAL SUPPORT SECTOR EMPLOYMENT
IMPACTS, ABSOLUTE VALUES: MEAN CASE
(Thousands of Persons)
EMS1 R1 EMS1R4 EMS1R5 EMS1R7
1980 o. o. o. o.
0. o. 1981 o. o.
o. o. o. o. 1982 o. o. 1983 o. o.
1984 . o. 0.002 0.026 0 .01.3
1985 0. 0.007 0.055 0.023
1986 -o. 0.008 0.062 0.027
1987 o. 0.009 0.066 0.028
1988 a. 0.009 0~067 0.028
0.04 0.013 1989 0. 0.007
1990 0.001 0.009 0.067 0.019
1991 -o. 0. 0.74 0.069
1992 0.004 0.107 1.384 0.291
1993 0.006 0.179 1. 772 0.431
1994. 0.007 0.222 2.009 0.516
1995 0.007 0.237 2.127 0.551
1996 0.009 0.248 2.131 0.529
0.24 2.025 0.473 1997 0.009
1.956 0.445 1998 0.008 0.224
1999 0.008 0.222 1. 967 0.446
2000 o.oo8 0.229 2.012 0.456
Support sector employment in the North Slope region
Support sector employment in the Southcentral region
Support sector employment in the Anchorage region
Support sector employment in the Fairbanks region
MAP Model projections.
195
' RS, and R7, respectively. Support sector impacts do not exceed 3 per-
cent of base case levels for all regions (see Tables 84 and 85).
In comparison to basic and support sector expansion, government em-
ployment differences are considerably less in Anchorage than in other
regions.
Whereas, Anchorage would typically absorb 75 percent of basic and sup-
port sector employment expansion, it only accounts for 50 percent of
statewide government employment expansion in the peak year impact year
of 1996. Fairbanks accounts for 25 percent, Soutncentral has 20 per-
cent, and the North Slope captures nearly 5 percent of statewide gov-
ernment employment (see Tables 86 and 87). This higher North Slope
impact reflects the disbursement of about 50 percent of borough petro-
leum property taxes for local government wages and salaries.
Regional Personal Income Impacts
The regional distribution of real personal income expansion {expressed
in 1980 dollars) follows the same patterns as employment and popula-
tion. As shown in Table 88, Anchorage experiences the largest impact,
$150 mi 11 ion or 75 percent of statewide persona 1 income expansion in
the .year 2000; followed by Fairbanks, $30.4 million or 16 percent of
statewide expansion; Southcentral, $16.2 million or 8 percent of
statewide expansion; and the North Slope, $2.63 million at 1 percent
of statewide personal income expansion. Personal income regional im-
pacts peak in 1995 for Anchorage, Fairbanks, and Southcentral, and in
196
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[
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[
r-,
L
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[
l
[
[
b
[
[
L
L
[
-,
'
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'
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--,
'
J
-,
J
_;
TABLE 85. PROJECTED REGIONAL SUPPORT SECTOR EMPLOYMENT IMPACTS,
PERCENTAGE DIFFERENCES: MEAN CASE
EMSl Rl =
EMS1R4 =
EMS1R5 =
EMS1R7 =
SOURCE:
EMS 1 R1 EMS1 R4 EMS1R5 EMS1R7
1980 o. o. o. o.
1981 o. 0. o. 0.
1982 0. 0. 0. 0.
1983 o. o. 0. o.
1984 0.054 0.031 0.054 0.08
1985 0.041 0.069 0.092 0.11 5
1986 -0.009 0.072 0.096 0.128
1987 0.003 0.077 0.104 0.141
1988 0.02 0.083 0.109 0.143
1989 0.065 0.061 0.065 0.067
1990 0.115 0.079 0.105 '0.094
1991 -0.035 0.001 1 . 13-1 0.339
1992 0.649 0.908 2.038 1.382
1993 0.884 1.474 2.501 1.96
1994 1.007 1.794 2.73 2.267
1995 1.114 1. 861 2.782 2.327
1996 1.232 1.876 2.659 2.135
1997 1.18 1. 732 2.397 1 .812
1998 1.032 1 .556 2.204 1 .629
1999 0.996 1.482 2.131 1 .573
2000 1.005 1.457 2.095 1.553
Support sector employment in the North Slope region
Support sector employment in the Southcentral region
Support sector employment in the Anchorage region
Support sector employment in the Fairbanks region
MAP Model projections.
197
TABLE 86. PROJECTED REGIONAL GOVERNMENT SECTOR EMPLOYMENT
IMPACTS, ABSOLUTE VALUES: MEAN CASE
(Thousands of Persons)
EMG9R1 EMG9R4 EMG9R5 EMG9R7
1980 o. o. 0. 0.
1981 o. o. 0 •. 0.
1982 o. o. 0. o.
1983 o. o~ . . 0. o .
1984 -o. -0.001 =0.001 -0.001
1985 o. 0.002 0.006 0.003
1986 0.001 0.005 0.012 0.006
1987 0.001 0.005 ·o.o12 0.006
1988 0.001 . 0.005 0.013 0.006
1989 . 0. 001 0.004 0. 01 0.005
1990 o. 0. 001 . 0.003 0.001
1991 0.006 0.03 . 0. 076 0.037
. 1992 0.016 0.085· 0.208 0.104
1993. 0.022 0.114 0.281 0.14
1994 ·0.025 0.131 0.324 0.162
1995 0.028 0.143 0.352 0.176
1996 0.028 0.146 0.36 0 •. 18
t997 0.027 0.14 0.345 0.172
1998 0.026 0 .135· 0.333 0.166
1999 0.026 0.137 0.338-. 0.169
2000 0.027 0.141 0.349 0.174
EMG9Rl = Total government sector employment in the North Slope region
EMG9R4 = Total government sector employment in the Southcentral region
EMG9R5 = Total government sector employment in the Anchorage region
EMG9R7 = Total government sector employment in the Fairbanks region
SOURCE: MAP Model projections.
198
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..,
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-,
~
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-
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-
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EMG9R1
EMG9R4
EMG9R5
EMG9R7
TABLE 87. PROJECTED REGIONAL GOVERNMENT SECTOR EMPLOYMENT
IMPACTS, PERCENTAGE DIFFERENCES: MEAN CASE
. EMG9R1 EMG9R4 EMG9R5 EMG9R7
1980 0. 0. o. o.
1981 o. o. o. o.
1982 0. o. 0. o.
1983 o. 0. 0. 0.
1984 . -0.012 -0.01 -0.003 -0.004
1985 0.034 0.036 0.017 0.017
1986. 0.063 0.065 0.032 0.033
1987 0.064 0.066 0.033 0.034
1988 0.066 0.067 0.034 0.035
1989 0.053 0.053 0.027 0.028
1990 0.013 0.011 0.007 . 0.007
1991 0.335 0.35 0. 191 0.197
1992 0.933 0.983 0.518 0.54
1993 1 .249 1.284 0.69 0.719
1994 1.402 1.43 0.78 0.813
1995 1.479 1 • 511 0.833 0.868
1996 1.478 1 .515 0.84 0.876
1997 1.376 1.41 0.792 0.825
1998 1.287 1 .319 0.751 0. 782
1999 1.265 1 .296 0.746 0.777
2000 1.27 1 .304 0.757 0.788
= Total government sector employment in the North Slope region
= Total government sector employment in the Southcentral region
= Total government sector employment in the Anchorage region
= Total government sector employment in the Fairbanks region
SOURCE: MAP Model projections.
199
PIRRl
PIRR4
PIRRS
PIRR7
TABLE 88. PROJECTED REGIONAL REAL PERSONAL INCOME IMPACTS,
ABSOLUTE DIFFERENCES: MEAN CASE
(Millions of 1980 Dollars)
. PI RR1 PIRR4 PIRRS PIRR7
1980 0. o. 0. o.
1981 o. 0. 0. o.
1982 o. o. 0. o.
1983 o. o. 0. o.
1984 . 0.162 1. 155 3.217 2.104
1985 0.116 0.9 3.928 1 .992
1986 -o.oos 0.844 4.186 1.825
1987 0.033 0.954 4.269 1.87
1988 0.049 0.943 4.157 1 .803
1989 0.061 0.311 1. 287 0.551
1990 0.287 2.354 7.062 3.121
1991 0.692 7.42 95.48_4 12.319
1992 1.431 1 3.26 122.465 23.291
1993 1. 722 16.038· 137.012 29.455
1994 1.995 1 7. 986 146.926 33.924
1995 2.261 19.408 154.941 36.608
1996 2.431 17.81 149.176 33.347
1997 2.404 15.256 139.836 28.488
1998 2.359 1 4. 881 140.773 27.985
1999 2.475 15.317 144.793 29.084
2000 2.63 16.237 150.012 30.415
= Real personal income in the North Slope region
= Real personal income in the Southcentral region
= Real personal income in the Anchorage region
= Real personal income in the Fairbanks region
SOURCE: MAP Model projections.
200
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[
...,
-
"'
·~
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PIRRl
PIRR4
PIRR5
PIRR7
TABLE 89. PROJECTED REGIONAL REAL PERSONAL INCOME IMPACTS,
PERCENTAGE DIFFERENCES: MEAN CASE
PI RR1 PIRR4 PIRRS PIRR7
1980 o. o. o. 0.
1981 o. 0. 0. o.
1982 o. o. o. o.
·1983 0. 0. 0. o.
1984 0.125 0.126 0.104 0.123
1985 0.064 0.08 0.103 0.089
1986 -0.003 0.074 0.107 0.093
1987 0.022 0.091 0.114 0.12
1988 0.035 0.092 0. 112 0.119
1989 0.047 0.03 0.034 0.036
1990 0.225 0.223 0.182 0.198
1991 0.507 0.683 2.379 0.749
1992 0.993 1 .178 2.918 1 .355
1993 1.142 1.375 3.121 1 .642
1994 1.287 1.567 3.238 1 .833
1995 1 .387 1.633 3.265 1.89
1996 1.394 1 • 411 2.972 1 .628
1997 1.289 1 .135 2.628 1.314
1998 1.204 1.068 2.523 1 .235
1999 1.221 1.098 2.501 1.239
2000 1.233 1.092 2;472 1.238
= Real personal income in the North Slope region
= Real personal income in the Southcentral region
= Real personal income in the Anchorage region
= Real personal income in the Fairbanks region
SOURCE: MAP Model projections.
201
1996 for the North Slope. In general the percentage differences from
the base case shown by region in Table 89 indicate that personal in-
come impacts would be relatively small, not exceeding 3.3 percent for
any region in any given year.
Real per capita income impacts (see Tables 90 and 91) generally re-
flect those observed at the statewide level. Increases -that occur at
the start of the project are followed by brief periods of negative im-
pacts before turning positive again. Real per capita personal income
impacts peak in the early 1990s for all regions and except for the
North Slope, and decline steadily thereafter. North Slope impacts ex-
perience cyclical changes throughout the 1990s. The Anchorage region
experiences the largest absolute impact at $150 per capita in 1992.
The North Slope is a close second at $146 in 1991. In general the
real per capita impacts are well below 1 percent of base case real
personal income in all regions.
The Low-Find Scenario: Statewide
and Regional Impacts
The impacts associ a ted with 1 ow-find OCS deve 1 opment, as measured
against base case aggregate indicators are similar to the pattern of
moderate-find OCS impacts. Between 1984 and 1989 when exploration and
construction would take place, low case impacts on population, employ-
ment, prices, wage rates, income, and the state fiscal position are
minor. Most aggregate indicators typically do not expand by more than
202
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L
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L
[
'
;
:l
.,;
~
TABLE 90. PROJECTED REGIONAL REAL PER CAPITA PERSONAL INCOME
IMPACTS, ABSOLUTE VALUES: MEAN CASE
( 1 980 Do 11 a rs )
PIRPCR1 PIRPCR4 PIRPCRS PIRPCR7
1980 0. o. 0. o.
1981 o. o. 0. o.
1982 o. 0. o. o.
1983 o. 0; o. o.
1984 29.086 16.562 9.555 17.809
1985 12.762. 5.703 6 •. 141 4.672
1986 -6.246 0.855 3.355 -0.699
1987 -2.035 2.523 . 2. 77. 2.559
1988 -1.152 . 2.059 1 .699 1.797
1989 ;..3.461 ... 2.617 -3.242 . -2.832
1990 38.047 22 •. 855. 12.004 21.113
1991 146.289 101.242 1.40 .1 09 103.637
1992 131.012 1 0 6. 531 . 149.562 112.062
1993 112.824 93.242 136.531 102.898
1994 118.168 90.395 124.109 98.008
1995 123.301 85.215 112.965 89.047
1996 106.309 51 • 859 82.09 59A02
1997 92.172 19.039 53.418 30.184
1998 97.207 1 2. 027 46.312 20.18
1999 107.266 12.602 43.562 . 15.191
2000 110.176 8.477 39.484 7.4S
PIRPCRl = Real per capita personal income in the North Slope region
PIRPCR4 = Real per capita personal income in the Southcentral region
PIRPCR5 = Real per capita personal income in the Anchorage region
PIRPCR7 = Real per capita personal income in the Fairbanks region
SOURCE: MAP Model projections.
203
TABLE 91. PROJECTED REGIONAL REAL PER CAPITA PERSONAL INCOME
IMPACTS PERCENTAGE DIFFERENCES MEAN CASE
PIRPCR1 PIRPC:R4 PIRPCRS PIRPCR7
1980 0. o. o. o. 1981 o. o. 0. o. 1982 0. 0. 0. o. 1983 0. o. o. o. 1984 . 0.115 0 0 103 0.065 o.o8 1985 0.039 Oo03 0.037 0.018 1986 -0.021 0.005 Oo021 -0.003 1987 -o.oo8 Oo016 0.018 0.013 1988 -o.oo5 Oo013 Oo011 Oo01 1989 -Oo016 -Oo017 -Oo021 -0.015· 1990 Oo 178 0 0146 Oo077 0 0113 1991 Oo663 Oo634 Oo87-9 ' 0.545 1992 Oo581 Oo648 Oo917 Oo576 1993 0.493 Oo555 0.819 Oo5i 9 1994 Oo517 Oo544 Oo735 0.489 1995 0.53 Oo502 Oo656 0.435 1996 0.441 Oo294 0.464 0.281 1997 0.37 0.104 0.294 0.139 1998 0.383 0.065 0.251 0.091 1999 0.421 Oo069 0.233 0.068 2000 0.423 0.046 0.207 0.033
PIRPCRl = Real per capita personal income in the North Slope region
PIRPCR4 = Real per capita personal income in the Southcentral region
PIRPCR5 = Real per capita personal income in the Anchorage region
PIRPCR7 = Real per capita personal income in the Fairbanks region
SOURCE: MAP Model projections.
204
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L
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[
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-r
[
r:
L
[
c
[
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L
L
h
[
t,, " I l,Jl,~ I _! L. ,, ,,, ,,j l,, •. J IJl,, ,_ ,,,,J !,"'"'"· ,j l. .. J
TABLE 92. SUMMARY OF lOW SCENARIO IMPACTS
N
0
U'1
Peak C~clical Imeact
Variable Absolute Value
(Persons)
POPTST 2730
MIGNET 1203
EM99ST 1681
EMBlST 511
EMSlST 881
EMG9ST 286
(Millions of
1 980 Do 11 a rs )
PIRST $58.9
REVGFR $ 3.95
E99SR $19.82
FUN DR -$83.2
POPTST = Population
MIGNET = Net migration
EM99ST = Total employment
Percentage Difference
(Percent)
0.47
43.8
0.56
1.01
0.68
0.28
0.62
0.45
0.45
-0.31
EMBlST = Proportion of employment in the basic sector
EMSlST = Proportion of employment in the support sector
EMG9ST = Proportion of employment in the government sector
PIRST = Personal income
REVGFR = Total general fund revenue
E99SR = Total state expenditures
FUNDR = Total fund balance
SOURCE: MAP Model projections.
Imeact
Year , Absolute Value
(Persons)
1994 3088
1991 47
1993 1597
1991 305
1994 867
1994' 301
(Millions of
1980 Dollars)
1993 $61.9
1993 i 0.37 2000 19.82
2000 -$83.2
-· . ,
in the Year 2000
Percentage Difference
(Percent)
0.45
0.44
0.43
0. 51
0.51
0.26 .
0.46
0.01
0.45
-0.31
one-tenth of a percent over base case 1 eve 1 s during this
predevelopment-phase. Aggregate state expenditures and fund balances,
expressed in 1980 dollars experience the greatest expansion relative
to respective base case levels, yet the impact of low-find OCS devel-
opment on these variables would still be less than one-half of one
percent of base case levels.
Once the development phase begins, the impact of low-find OCS de-
velopment becomes noticeably larger as with the mean case impacts.
The absolute value and percent difference of cyclical peak impacts are
shown in Table 92 for several aggregate indicators. With few excep-
tions these cylcical peaks do not exceed 1 percent of base case levels
and are usually on the order of less than 0.5 percent. Also shown in
Table 92 are the absolute values and percentage differences of impacts
that occur in the year 2000 for the same variables. By the year 2000
the largest employment expansion occurs in the support sector (867 em-
ployees) followed by roughly equal amounts of increased employment in
the basic and government sectors (305 and 301 employees, respective-
ly). As in the mean-find scenario the impact of low-find development
on the overa 11 fi sea 1 position of the state is reflected in an in-
creasingly negative fund balance. Expressed in 1980 dollars, these
negative low-find fund balance impacts for 2000 are one-third the size
of those in the mean-find scenario. For reference purposes, support-
ing data for statewide and regional low-find impacts are included in a
technical appendix of MAP model projections entitled, 11 Beaufort Base
Case and Impact Results from the MAP Model, ISER, dated January 5,
1981; pages 119-47.
206
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--,
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--.
TABLE 93. REGIONAL DISTRIBUTION OF LOW-FIND IMPACTS
IN THE YEAR 2000
Population Employment Personal
Persons Percent Persons Percent Dollarsa
North Slope
(Rl) 18 0.6 13 0.8 0.7
Southcentral
(R4) 27 0.9 135 8.5 5.2
Anchorage
(R5) 1,963 63.6 1033 64.7 39.3
Fairbanks
(R7) 439 14.2 234 14.7-20.1
Statewide 3,088 100.0 1597 100.0 61.9
aMillion of 1980 dollars.
Income
Percent
1.1
8.4
63.5
16.3
100.0
Table Note: Regional percentages do not sum to 100 since other regions not
included in this table are also affected by OCS development.
SOURCE: MAP Model.
207
The regional distribution of the absolute difference between low-find
and base case statewide population, employment, and real personal in-
come is shown in Table 93. Also shown are the regional shares ex-
pressed as a percent statewide impacts represented by each variable.
As expected, the regional distribution of impacts on the aggregate in-
dicators in Table 93 reflect the pattern of direct OCS employment ad-
justed for Alaska residency. The relatively modest population, em-
p 1 oyment, and rea 1 personal income impacts in the North S 1 ope occur
indirectly through the expanded petroleum property tax base in the
North Slope Borough. For all variables, the Anchorage region absorbs
nearly two-thirds of the total statewide impact.
The High-Find Scenario: Statewide
and Regional Impacts
Table 94 summarizes the impact of high scenario development relative
to the base case. The impacts in Table 94 are expressed as absolute
and percentage differences from the base case for· severa 1 aggregate
economic indicators. Many aggregate indicators experience peak im-
pacts prior to 2000 when the projection period ends. These peak cy-
clical impacts and the year they occur are presented in the first
three columns.of Table 94. Columns four and five display the· impacts
as they occur in the year 2000. The following discussion summarizes
the high scenario impacts; supporting data are shown in Beaufort Base
Case and Impact Results from the MAP Model, 1981, pages 61-117.
208
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U)
TABLE 94. SUMMARY OF HIGH SCENARIO IMPACTS
Peak Cyclical Impact
Variable Absolute Difference Percentage Difference
(Persons) (Percent)
POPTST 20,642
MIGNET 5,895
Et~99ST 11,722
EMBlST 3,440
EMSlST 5,940
EMG9ST 2,091
(Millions of
1 980 Do 11 a rs )
PIRST 445.1
REVGFR 24.1
E99SR 132.3
FUN DR -468.2
POPTST = Population
MIGNET = Net migration
EM99ST = Total employment
2.99
t~l4. 65
3.56
6.06
3.98
1.90
3.82
0.46
2.99
l. 75
EMBlST = Proportion of employment in the basic sector
EMSlST = Proportion of employment in the support sector
EMG9ST = Proportion of employment in the government sector
PIRST = Personal income
REVGFR = Total general fund revenue
E99SR = Total state expenditures
FUNDR = Total fund balance
SOURCE: MAP Model.
Impact in the Year 2000
Year Absolute Difference Percentage Difference
(Persons) (Percent)
2000 20,642 2.99
1991 375 -3.54
1996 10,944 2.86
1994 2,893 3.82
1997 5,683 3.35
1998 2.069 1.80
(Millions of
1980 Dollars}
1997 430.3 3.2
1995 12.6 0.28
2000 132.3 2.99
2000 -468.2 1.75
TABLE 95. REGIONAL DISTRIBUTION OF HIGH-FIND IMPACTS
IN THE YEAR 2000
Po~ulation Employment Personal
Persons Percent Persons Percent Dollarsa
North Slope
(Rl) 132 0.6 92 0.8 5.2
southcentral
(R4) 1 ,551 7.5 791 7.2 30.2
Anchorage
(RS) 13 '761 66.7 7,413 67.7 288.8
Fairbanks
(R7) 2,358 11.4 1,303 11-.9 56.0
Statewide 20,642 l 00.0 10,944 100.0 430.3
aMillion of 1980 dollars.
Income
Percent
1.2
7.0
6.7. l
13.0
100.0
Table Note: Regional percentages do not sum to 100 since other regions not
included in this table are also affected by OCS development.
SOURCE: MAP Model.
210
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As with the mean-and low-find scenarios, the high-find scenario im-
pacts are relatively modest until after the development phase com-
mences in 1990. By 1991 net inmigration expands to 5895 persons which
accounts for 93 percent of population increase in that year. Popula-
tion impacts continue to grow steadily without experiencing an inter-
mediate cyclical peak prior to termination of the projection period in
2000. The 20,642 extra persons in 2000 represents a ,3 percent in-
crease in base case population of 690,057. The pattern of total and
sectoral employment impacts suggest that, in contrast to the more con-
centrated 1 ow and mean scenario impacts, the high-find impacts are
more dispursed throughout the projection period. -Although the total
employment impact occurs in 1996 (the same year of peak direct OCS em-
ployment) basic sector employment peaks two years earlier in 1994
while support and government sector employment are lagged one and two
years behind, respectively. As a percent of-base case employment in
each industry sector, the basic sector peak impact increases by more
than 6 percent, and government sector at 1.9 percent above respective
base case levels.
Further evidence of a more widely distributed impact than that of pre-
vious development scenarios is reflected in the distribution of maxi-
mum impact for real personal income (PIRST) and total state government
revenue (REVGFR). A comparison between the low-and high-find peak-
cyclical impacts on various aggregate indicators (excluding state ex-
penditures and general fund balance) in Tables 92 and 93 indicate
that, whereas low-find impacts occur between 1991 and 1994, high-find
211
impacts occur between 1991 and 2000. Note a 1 so that the base case
fund balances are drawn further down as a result of high-find OCS de-
velopment than either the low or mean scenarios. High scenario fund
balance impacts become increasingly negative; by 2000 fund balances
fall $468 million (1980 dollars) from the base case level of $268 bil-
lion; a decline of nearly 2 percent.
The regional distribution of high-find statewide population, employ-
ment, and real personal income is summarized for the year 2000 in
Table 95. The regional shares of economic expansion, represented by
the variables in Table 95 follow the general patterns of low-find im-
pacts and of direct OCS employment. Again, the North Slope impacts
occur indirectly since we assume that direct OCS employment in sale 71
does not reside in the North Slope. The North Slope impacts shown in
Table 95 are considerably larger than those shown in Table 93 for the
1 ow-find regi ona 1 impacts. The difference reflects the method that
North Slope Borough property taxes are calculated. The borough prop-
erty tax base is a function nf' +ho VI ...... ~
n11mhoV'6 n-F t..lnvt.+h C.1-.--'lft_,...;....I--~-IIUIUU~I VI 11UII..oii..JIUfJCIC:;,IUCJil..;:).
At the present time, there is still some controversy over whether the
North Slope Borough can legitimately include persons that work but do
not necessary reside on the North Slope. In this analysis we have
followed the borough• s traditional formula and included North Slope
construction, mining, and transportation emp 1 oyees in the borough • s
property tax base calculation even though these employees reside else-
where in Alaska.
212
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TABILE 96. SUMMARY OF SIMPSON-DELETION IMPACTS
Peak C~clical Im~act
variable Absolute Difference Percentage Difference
(Persons) (Percent)
POPTST 7710
MIGNET 2367
EM99ST 4754
EMBlST 1434
EMSlST 2485
EMG9ST 819
(Millions of
1 980 Do 11 a rs )
PIRST 172.6
REVGFR 11.6
E99SR 52.1
FUN DR -190.3
POPTST = Population .
MIGNET = Net migration
EM99ST = Total employment
1.3
:B6.2
1.5
2.5
1.8
0.8
1.7
0.2
1.2
0.7
EMBlST = Proportion of employment in the basic sector
EMSlST = Proportion of employment in the support sector
EMG9ST = Proportion of employment in the government sector
PIRST = Personal income
REVGFR = Total general fund revenue
E99SR = Total state expenditures
FUNDR = Total fund balance
SOURCE: MAP Model.
lm~act in the Year 2000
Year Absolute Difference Percentage Difference
(Persons) (Percent)
1995 8123 1.2
1991 86 0.8
1995 4296 1.1
1994 1069 1.4
1995 2308 1.4
1995 801 0.7
(Mi 11 ions of
1980 Dollars)
1994 167.1 1.2
1995 3.5 0.07
2000 52.1 1.2
2000 -190.3 0.7
The Simpson-Deletion Scenario: Statewide and Regional Impacts
The Simpson-deletion scenario impacts are summarized in Tables 96 and
97. As a tract-deletion variant of the mean-find scenario, the dif-
ference between the Simpson-deletion and base case scenarios parallel
the mean-find impacts. In general, the peak impact on aggregate indi-
cators of mean-find development without the Simpson tracts occurs
about one year earlier with about 75 percent of the overall economic
expansion that would occur under the mean-find scenario discussed
above. The regional distribution of Simpson-deletion impacts is simi-
lar to that of all other cases examined. More -detailed supporting
data is presented on pages 177-205 of Beaufort Base Case and Impact
Results from the MAP Model.
214
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TABLE 97. REGIONAL DISTRIBUTION OF SIMPSON DELETION IMPACTS
IN THE YEAR 2000
Population Employment Personal
Persons Percent Persons Percent Dollarsa
North Slope
(Rl) 48 0.6 35 0.8 1.9
Southcentral
(R4) 659 8.1 338 7.9 12.8
Anchorage
(R5) 5,238 64.5 2,856 66.5 109.6
Fairbanks
(R7) l ,041 12.8 570 13.3 24.5
Statewide 8,123 100.0 4,296 100.0 167.1
aMillion of 1980 dollars.
Income
Percent
1.2
7.6
65.6
14.7
100.0
Table Note: Regional percentages do not sum to 100 since other regions not
included in this table are also affected by OCS development.
SOURCE: MAP Model.
215
216
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REFERENCES
Alaska Consultants. North Slope Borough Coastal Management Program:
Prudhoe Bay Area. North Slope Borough. 1978.
Alaska Department of Fish and Game. Alaska Catch and Production:
Commercial Fisheries Statistics. Var1ous years.
Alaska Department of Labor. Alaska Economic Trends. Various years.
Alaska Department of Labor. Alaska Labor Force Estimates. Various
years.
Alaska Department of Labor. Population Estimates by Census Division.
Various years.
Alaska Department of Labor. Occupational Employment Statistics.
1979.
Alaska Department of Labor. Statistical Quarterly: Various quarters,
1964-1978.
Alaska Sea Grant Program. Draft Final Western Alaska and Bering-
Norton Petroleum Development Scenarios: Gommercial Fishing Indus-
try Analysis (BLM/Alaska OCS Office; Anchorage) April 25, 1980.
Arthur D. Little, Inc. The Development of a Bottomfish Industry:
Strategies for the State of Alaska. (Technical Appendix,
Vol. II). A Report to the Office of the Governor.
Chance, N. The Eskimo of North Alaska. Holt, Rinehart, and Winston.
New York. 1966.
Department of Defense. Final Environmental Impact Statement: Continu-
ing Exploration and Evaluation of NPRA4. 1977.
Fisk, E. The Response of Nonmonetary Production Units to Contact with
the Exchange Economy. Agriculture in Development Theory. ed.
L. Reynolds. Yale. 1975.
Huskey, Lee and Jim Kerr. Small Communit A 1 i cation to the Ber.,_;1 ;;.;;n ;;;..-:...,;N,....o..;;.r~to.;.;;.n~O;.,;,C~L,....;.e....;;a;.J;;s....;;;e...;..S.,._a~l;..;:e~A;;;.;re.;.;,l;a~.=..;;.-r-,;.;;..,;;;..;;:~=,.;-;;.;
of Soc1al and Econom1c Research; Anchorage March 1980.
Kreitner, J. Northern Alaska Hydrocarbon Resources. Federal-State
Land Use Planning Commission for Alaska. 1978.
217
Kruse, J.; J. Kleinfeld, and R. Travis. Energy Development and the
North Slope Inupiat. Man-in-the-Arctic Program. Institute of
Social and Economic Research. 1981.
McBeath, G. North Slope Borough Government and Policy Making. Man-
in-the-Arctic Program. Institute of Social and Economic
Research. 1981.
Mathematical Sciences Northwest, Inc., and Human Resources Planning
Institute, Inc. A Social and Economic Impact Study of Offshore
Petroleum and Natural Gas Develo ment in Alaska: Phase I Final
Report. Department of the Interior, Bureau of Land Management;
Anchorage) October 15, 1976. ~
North Pacific Fishery Management Council. Western Alaska King Crab
Draft Fishery Management Plan (Anchorage) May 20, 1980.
Rea, K. The Political Economy of Northern Development. Science
Council of Canada. Ottawa. 1976.
Rogers, George W. "Critique of the Arthur D. Little, Inc., Analysis
and Recommendations for State Policy and Directions for Develop-
ing a Bottomfish Industry for Alaska." (Alaska Legislative Af-
fairs Agency; Juneau) April 24, 1979.
Scott, Michael J. "Prospects for a Bottomfish Industry in Alaska" in
Alaska Review of Social and Economic Conditions (Vol. XVII, No.
I, April 1980) pp. 2-31.
Sonnenfeld, J. Changes in Subsistence among the Barrow Eskimo. John
Hopkins. Baltimore. 1957.
Watkins, M. A Staple Theory of Economic Growth. in Readings in
Economic Develoement. ed. W. Johnson and D. Kamerschen. South-
western Publish1ng. 1972.
U.S. Department of Labor. Occupational Outlook Handbook. Wasliington.
1974.
218
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APPENDIX A
OCS LEASE SALE EMPLOYMENT IN THE BASE CASE
-
:..::-
TABLE Al. LOWER COOK INLET MINING EMPLOYMENT
EP9CI4 = Mining employment in Southcentral region
EP9CI5 = Mining employment in Anchorage region
EMP9CI = Total mining employment
SOURCE: Alaska OCS Office
TABLE A2. LOWER COOK INLET TRANSPORTATION (ETX) AND
CONSTRUCTION (ECX) EMPLOYMENT
· ETXCI4 ECXCI4
1977 o. o.
1978 0.062 0.
~ 979 0.103 o.
1980 0.103 o.
1981 0.108 o.
1982 0.087 0 0 136
1983 0.128 0.072
1984 0.182 0.309
1985 0.251 0.351
1986 0.196 0.057
·1987 0.144 o.
1988 0.165 0 •·
1989 0.165 o.
1990 0.165 o.
1991 0.165 o.
1 !::1!:12 u .1 o::» "
1993 0.165 o.
1994 0.151 o.
1995 0.137 o.
1996 0.135 o.
1997 0.135 o.
1998 0.135 o.
1999 0.135 o.
2000 0.135 o.
ETXCI4 = Transportation employment in Southcentral region
ECXCI4 = Construction employment in Southcentral region
Note: All Lower Cook transportation and construction employment
resides in Southcentral region
SOURCE: Alaska OCS Office
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~ EP9BF4 =
EP9BF5 =
EP9BF7 =
EMP9BF =
....; SOURCE:
-
--
TABLE A3. BEAUFORT SEA MINING EMPLOYMENT, STATE AND
FEDERAL JOINT LEASE SALE
EP96F4 EP96F5 EP9BF7 EMP9BF
1977 o. 0. 0. o.
1978 0. o. o. o.
1979 o. 0. 0. o.
1980 o. o. 0. o.
1981 0.003 0.017 0.003 0.023
1992 0.008 0.05 0.01 0.068
1983 0.008 0.05 0.01 0.068
1984 0.009 o.os8 . 0.012 0.079
1985 0.003 0.018 0.003 0.024
1986 . 0.007 0.031 0.008 0.046
1987 0.02 0.074. 0. 024~ 0.118
1988 0.034 0.131 0.04 0.205
'i989 0.045 0.179 0.052 0.276
1990 0.044 0.185 0.052 0.281
1991 0.041 0.168 0.047 0.256
411"\n'"t t'\ 1'\":10 0 1<;1' " /)lll:; n .,L~C!
1993 0.036 0.147 0.041 0.224
1994 0.036 0.148 0.042 0.226
1995 0.036 0.149 0.042 0.227
1996 0.036 0.149 0.043 0.228
1997 0.035 0.144 0.041 0.22
1998 0.034 0.14 0.039 0.213
1999 0.034 0.14 0.039 0.213
2000 0.034 0.14 0.039 0.213
Mining employment in Southcentral region
Mining employment in Anchorage region
Mining employment in Fairbanks region
Total mining employment
Alaska OCS Office
TABLE A4. BEAUFORT SEA CONSTRUCTION EMPLOYMENT, STATE AND
FEDERAL JOINT LEASE SALE
· ECXBF4 ECXBF5 . ECXBF7 ECONXBF
~ 977 o. o. o. o.
1978 o. o. o. o.
1979 o. o. 0. o.
1980 0. 0. 0. o.
1981 0.005 0.015 0.005 0.025 1982 0.018 0.059 0.022 0.099
1983 0.023 0.074 0.027 0.124
1984 0.023 0.074 0.027 0.124
1985 0.009 0.03 0.011 0.05 1986 0.018 0.058 0.022 0.098
1987 0.009 0.03 0.011 0.05 1988 0.013 0.042 0. 015 -0'.07
1989 0.013 0.042 0.015 0.07
1990 0.004 0.014 0.005 0.023 1991 0.004 0.014 0.005 0.023
1992 0.002 0.007 0.003 0.014!
1993 0.004 0.014 0.005 0 .. 023 1994 0.004 0.014 0.005 0.023
1995 0.002 0.007 0.003 0.012
1996 o. 0.002 0.001 0.003 1997 o. o. o. o.
1998 o. o. o. o.
1999 o. o. o. o.
:2000 o. o. o. o.
ECXBF4 = Construction employment in Southcentral region
ECXBFS = Construction employment in Anchorage region
ECXBF7 = Construction employment in Fairbanks region
ECONXBF = Total construction employment
SOURCE: Alaska OCS Office
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TABLE AS. NORTHERN GULF (SALE 55) MINING EMPLOYMENT
EP9554 EP9555 EMP955
1977 o. 0.
1978 o. 0.
1979 o. o.
1980 0. 0.
1981 0.041 0.004
1982 0.081 0.009
1983 0.081 0.009
1984 0.075 0.008
1985 0.034 0.004
1986 o. 0.
1987 0.081 0.009
1988 0.161 0.018
1989 0.306 0.034
1990 0.3 0.033
1991 0.309 0.034
1 ~?:! I\ ,., t::., 1'1 1'\.,Q
1993 0.274 0.031
1994 0.276 0.031
1995 0.279 0.031
1996 0.279 0.031
1997 0.279 0.031
1998 0.279 0.031
1999 0.279 0.031
2000 0.279 0.031
EP9554 = Mining employment in Southcentral region
EP9555 = Mini-ng employment in Anchorage region
H1P955 = Total mining employment
SOURCE: Alaska OCS Office
0.
o.
0. o.
0.045
0.09
0.09
0.083
0.038
0.-
0.09
0. 179
0.34
0.333
0.343
n ':)Q?
0.305
0.307
0.31
0.31
0.31
0.31
0.31
0.31
TABLE A6. NORTHERN GULF (SALE 55) TRANSPORTATION AND
CONSTRUCTION EMPLOYMENT
ETX554 ECX554
1977 o. o.
1978 o. o.
1979 o. o.
1980 o. o.
1981 0.017 o.
1982 Oo035 o.
1983 0.035 0.
1984 Oo026 Oo038
1985 Oo009 Oo012
1986 . 0 0 0.093
1987 Oo086 0.098 '
1988 Oo086 Oo037
. 1989 0.1 Oo
19SO 0 0107 o.
1991 0 0 107 o.
i 00.., f'l "'"? o.
1993 0.042 o.
1994 0.042 Oo
1995 0.042 o.
1996 0.042 o.
~ 997 Oo042 o.
1998 0.042 o.
1999 Oo042 o.
2000 0.042 o.
ETX554 = Transportation employment in Southcentral region
ECX554 = Construction employment in Southcentral region
Note: All transportation and construction employment resides in
Southcentral region
SOURCE: Alaska OCS Office
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TABLE A7. LOWER COOK INLET (SALE 60} MINING EMPLOYMENT
EP9604 EP9605 EMP960
1977 o. o.
1978 o. o.
1979 o. o.
1980 o. o.
1981 o. o.
1982 0.083 0.
1983 0.09 0.
1984 0.09 o.
1985 0.084 o.
1986 0.206 0.002
1987 0.354 0.004
1988 0.354 0.015
1989 0.354 0.031
, 990 0.365 0.046
1991 0.379 0.053
inn<"\ ~ ~"7! n n~-:t
1993 0.377 0.053
1994 0.377 0.053
1995 0.377 0.053
1996 0.377 0.053
1997 0.377 0.053
1998 0.377 0.053
1999 0.377 0.053
2000 0.377 0.053
EP9604 = Mining employment in Southcentral region
EP9605 = Mining employment in Anchorage region
EMP960 = Total mining employment
SOURCE: Alaska OCS Office
o.
0.
o.
0.
0.
0.083
0.09
0.09
0.084
0.208
0.358
0.369
0~385
0.411
0.432
n 4':1
0.43
0.43
0.43
0.43
0.43
0.43
0.43
0.43
TABLE A8. LOWER COOK INLET (SALE 60) TRANSPORTATION AND
CONSTRUCTION EMPLOYMENT
ETX604 ECX604
1977 o. o.
1978 o. o.
1979 o. o.
1980 o. o.
1 981 o. 0.
1982 0.025 0.131
1983 0.036 o.
"1984 0.036 o.
1985 . 0.027 0.048
1986 0.28 0.299
1987 0.425 0.133_
1988 0.425 o.
1989 0.425 o.
1990 0.443 o.
1991 . 0 ~366 o.
4 no") n '"JC:C:: v.
1993 0.366 o.
1994 0.366 o.
1995 0.366 o.
1996 0.366 0.
1997 0.366 o.
1998 0.366 o •.
1999 0.366 ·o.
2000 0.366 o.
ETX604 = Transportation employment in Southcentral region
ECX604 = Construction employment in Southcentral region
Note: All transportation and construction employment resides in
Southcentral region
SOURCE: Alaska OCS Office
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TABLE A9. BERING-NORTON (SALE 57) MINING EMPLOYMENT
EP9574 EP9575 EP9576 EMP957M
1977 o. o. o. o.
1978 o. o. 0. o.
1979 0. o. 0. o.
1980 o. 0. 0. o.
1981 o. o. o. o.
1982 o. 0. 0. o.
1983 0.026 0d097 0.018 0.141
1984 0.083 0.316 0.059 0.458
1985 0.14 0.537 0.097 0.774
1986 0.098 0.36 0.066 0.524
1987 0.112 0.395 0.012 0.519
1988 0.146 0.561 0. 022-(). 729
1989 o. ~56 0.597 0.022
1990 0.138 0.538 0.022
1991 0.135 0.534 0.022
4 ""'-" I'\ .0 ~'"" . _..,. " e.., "' """ 1993 o. ~ 32 0.534 0.022
1994 0.13 0.541 0.022
1995 0.127 0.534 0.022
1996 0.126 0.535 0.022
1997 0.125 0.536 0.022
1998 0.126 0.54 0.022
1999 0.125 0.546 _o .022
2000 o. 126 0.536 0.022
EP9574 = Mining employment in Southcentral region
EP9575 = Mining employment in Anchorage region
EP9576 = Mining employment in Bering-Norton region
EMP957 = Total mining employment
SOURCE: Alaska ocs Office
0.776
0.698
0.691
n ~a~
0.689
0.694
0.684
0.683
0.684
o.6a8
0.694
0.684
TABLE AlO. BERING-NORTON (SALE 57) TRANSPORTATION EMPLOYMENT
ETX574 ETX575 ETX576 EMT9X57M
1977 o. o. o. o. 1978 o. o. 0. o. 1979 0. o. o. o. 1980 o. o. o. o. 1981 o. 0. 0. o. 1982 o. o. 0 •. o. 1983 0.009 0.034 o. 0.043 1984 0.029 0.111 o. 0.141 1985 0.055 . 0. 21 0.007 0.272 1986 0.048 0.175 0.022 0.246 1987 0.027 0.097 0.037 0.162 1988 0.044 0.158 0.074 0.276 1989 0.044 0.158 0.074 0.276 1990 0.047 0.169 0.074 0.29 1991 o.046 0.17 0.074 0.29 ,.. "''"""'P ~ ~ ~ =~ " nc:n n ,.,.,1
1993 0.036 0.137 0.059 0."231 1994 0.036 0.137 0.059 0.231 1995 0.035 0.138-0.059 0.231 1996 0.035 0.138 0. 059· 0.231 1997 0.035 0.138 0.059 0.231 1998 0.035 0.138 0.059 0.231 1999 0.034 0.138 0.-059 0.231 2000 0.035 0.138 0.059 0.231
ETX574 = Transportation employment in Southcentral region
ETX575 = Transportation employment in Anchorage region
ETX576 = Transportation employment in Bering-Norton region
EMT9X57M = Total transportation employment
SOURCE: Alaska OCS Office
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TABLE All. BERING-NORTON (SALE 57) CONSTRUCTION EMPLOYMENT
· ECX574 ECX575 ECX576 ECONX57M
1977 o. o. 0. o. 1978 o. o. 0. o. 1979 o. o. o. o. 1980 o. 0 ·~ o. o. 1981 0. 0. o. o. 1982 o. o. 0. 0. 1983 0.016 0.061 0.077 0.155 1984 o. o. o. o. 1985 o.oo8 0.0:31 0. 0.038 1986 0.016 0.061 o. 0.077 1987 0.074 0.261 0.188 0.523 1988 0.089 0.316 0.25 0.654 1989 o·.o3 0.107 0.125 0.262 1990 o.ot s 0.064 0.063 0.144 1991 o. o. 0. o. , 992 o. o. Q. u. 1993 " " A o • .... \lo u.
1994 o. 0. 0. o.
1995 o. 0. o. o. 1996 o. o. 0. o. 1997 0. o. o. o. 1998 o. o. o. o. 1999 o. o. o. o. 2000 o. o. o. o.
ECX574 = Construction employment in Southcentral region
ECX575 = Construction employment in Anchorage region
ECX576 = Construction employment in Bering-Norton region
ECONX57M = Total construction employment
SOURCE: Alaska OCS Office
EP9702 =
EP9704 =
EP9705 =
EMP970M =
SOURCE:
TABLE Al2. ST. GEORGE (SALE 70) MINING EMPLOYMENT
EP9702 EP9704 EP9705 EMP970M
1977 o. 0. o. o. 1978 o. 0. o. o. 1979 o. o. 0. o. 1980 o. o. o. o. 1981 0. o. 0. o. 1982 o. o. 0. o. 1983 0. 0 •. 017 0.067 0.084 1984 o. 0.024 0.094 0.118 1985 o. 0.027 0.109 0.136 1986 o. 0.026 0.096 0.122 1987 0.03 0.046 0.167 o;244 1988 0.03 0.047 0.185 0.263 1989 0.03 0.166 0.63 0.826 1990 0.03 0.157 0.672 0.859 1991 0.03 0.145 0.668 0.843
1 ~~:t U.\i;j y, !:»"+ u o I Vi v.o:::; i 1993 0.03 0.166 0.756 0.951 1994 0.03 0.154 0.727 0. 911 1995 0.03 0.145 0.696 0.871 1996 0.03 0.136 0.667 0.833 1997 0.03 0.147 0.714 0.891 1998 0.03 0.158 0.763 0.951 1999 0.03 0.149 0.732 0.911 2000 0.03 0.143 0.698 0.871
Mining employment in St. George region
Mining employment in Southcentral region
Mining employment in Anchorage region
Total mining employment
Alaska OCS Office
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TABLE Al3. ST. GEORGE (SALE 70) TRANSPORTATION EMPLOYMENT
ETX702 ETX704 ETX70!5 EIIT9X70M
,
1977 o. o. o. o.
1978 o. o. o. o.
1979 o. o. o. o.
1980 o. o. o. o.
1981 o. o. o. o.
1982 o. o. o. o.
1983 o. 0.012 0.046 0.057
1984 o. 0.018 0.072 0.091
1985 0.015 0.03 0.117 0.162
1986 0.045 0.044 0.165 0.254
1987 0.09 0.059 0.214 0.363
1988 0.332 0.062 0.222 0.616
1989 0.565 0.068 0.247 o.88
1990 0.51 0.043 0.158 0.711
1991 0.51 0.043 0.158 0.711
4n...,~ "" =~ 4J.~t;~ ~.1~9 n "7<0 1 ;o;.;;;, ... . ..... ;.
1993 0.51 0.042 0.159 0.711
1994 0.51 0.041 0.16 0.711
1995 0.51 0.041 0.16 o. 711
1996 0.51 0.041 0.16 0.711
1997 o.5t 0.041 0.16 0. 711
1998 o.5t 0.04 0 ._161 0.711
1999 o.5t 0.04 0.161 0.711
2000 0.51 . 0.041. 0.16 0.711
-~ •• --•.< • --' •
ETX702 = Transportation employment in St. George region
ETX704 = Transportation employment in Southcentral region
ETX705 = Transportation employment in Anchorage region
EMT9X70M = Total transportation employment
SOURCE: Alaska OCS Office
_;
...
,,
TABLE Al4. ST. GEORGE (SALE 70) CONSTRUCTION EMPLOYMENT
ECX702 ECX704 ECX705 ECONX70M
1977 o. o. o.
1978 o. o. 0.
1979 o. o. o.
1980 o. o. 0.
1981 o. o. o.
1982 o. 0. 0 •.
1983 0.001 0.004 0.014
1984 0.002 0.011 . 0. 043
1985 0.004 0.034 0.134
1986 . 0. 0.04 0. 15
1987 0.029 0. 247 . 0.888
1988 0.029 0.227 0.819
1989 0.029 0.183 0.66
1990. 0.021 0.129 0.47
1991 o. 0. o.
~ ?~::! ~~ n n
1993 o. o. o.
1994 o. o. o.
1995 o. o. o.
1996 o. o. o.
1997 o. 0. o.
1998 o. o. o.
1999 o. o. o.
:0000 o. o. o.
ECX702 = Construction employment in St. George region
ECX704 = Construction employment in Southcentral region
ECX705 = Construction employment in Anchorage region
ECONX70M = Total construction employment
SOURCE: Alaska OCS Office
o.
o.
o.
o. o.
o.
0.018
o.oss
0.172
0.19
1.165
1.075
0.873
0.619
o.
n.
o.
o.
o.
o.
o.· o.
o.
o.
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APPENDIX B
A PROCEDURE TO DETERMINE THE SHARE OF OCS EMPLOYMENT
THAT RESIDE IN ALASKA (SEAR)
The direct total employment estimates made by Dames and Moore and the
Alaska OCS Office Studies Program for several OCS petroleum scenarios
have been refined to reflect resident/nonresident composition of this
/ .
employment. Resident, in the context of these refinements, refers to
an individual that resides in Alaska for the duration of employment
(including offsite). Resident employees do not need to live in Alaska
before the project begins. Resident employment is assumed -to have full
impact on the Alaska economy, while the impact of nonresident employees
is assumed to be negligible. To assist in the determination of the
share of employment to Alaska residents (SEAR), a cross s~ction of in-
formation regarding the classification, structure, duration, and impact
of OCS petroleum development-related employment is presented in Table Bl,
Characteristics of OCS Employment by Task,11 which accompanies this appen-
dix.
A brief outline of the table•s format and information content will pre-
cede a discussion of the assumptions used to provide consistency and
accuracy in the interpretation of this information.
TABLE Bl. CHARACTERISTICS OF OCS EMPLOYMENT BY TASK
1
Employment Sectors
For Petroleum Operations 1
ONSHORE
l. Service Base
2. Helicopter Service
3. Service Base Const. l 4. Pipe Coating
5. Onshore Pipeline Const.
6. Oil Terminal Const.
7. LNG Plant Const. 10 8. Concrete Platform Const. J
2
Phase of 2 Deve 1 opment
Exploration
Development
Production
Exploration
Development
Production
Development
9. Oil Terminal Operations 1
f
l. Production
10. LNG Plant Operations
OFFSHORE
11. Surveys
12. Rigs
13. Platforms {
} Exploration
Development
Production
14. Platform Installation }
Development
15. Offshore Pipeline Const.
16. Supply-Anchor-Tugboats
Exploration
Development
Production
3
Rotation 4 Fa,ctor~ Duration 4
2
1.5a
1
l.ll
1.11
1.11
l.ll
1.11
2
2
2
NA
2
1.5
1.5
1.5
p
p
T
T
T
T
T
NA
p
p
T
T
p
T
T
T
5
Potential
AK Resident
Share from
Industry5
.15a
.2
1.0
6
Employment 6 Multiplier
1.5
.2 (.3)b 1.5
.5
.2
.2
.5
NA
NA
1.0
1.0
1.5
1.1
1.1
1.1
1.1
NA
1.5
1.5
1
.2
.2
.2
.2
NA
7
Payments
Allocation
Coefficients
Share to
AK Residents 8
In Years:
1 5 10
NA
NA
!.25 .25 .25
} .75 .75 .75 9
.2 1.1
.1 1.1
.2 } .15
.2
.55 .55
.1 (.3)b 1.2c
1. 0 1.4d
• 1
• 1
.15
. 15
.5
1.1
1.1
.4 }
.8
.2
.2
.4
.8
.8
.75 .75
.25 .25 .25
.25 .25 .25
NA
aApproximation bNumbers in parentheses indicate second 5-year period
cFirst three years dThereafter NA = not appl iicable
8
Estimate
Share of Employment
To Alaskan Residents
(SEAR)
lg79-84 1985-89 1990 +
1.0
1.0
1.0
.5
.. 5
1.0
.5
.2
.2
.5
.5
NA
1.0
1.0
.2
.2
. 1
1.0
. 1
• 1
.4
.8
.8
1.0
1.0
1.0'
.525
.525
1.0
1.0
1.0
1.0
.578
.578
1.0
.525 .578
.21 .231
.21 .231
.525 .578
.525 .578
NA NA
1.0 1.0
1.0 1.0
.21
.21
.3
1.0
.105
.105
.42
.88
.88
.231
.231
.33
1.0
.116
.116
.462
.968
.968
.,
-~
-,
TABLE NOTES
Characteristics of OCS Employment by Task
1. These are the employment sectors (or tasks) requested by Tom Smythe
of Alaska Consultants in his November 21 correspondence with Richard
Schmidt of Peat, Marwick, Mitchell and Co.
2.
3.
4.
5.
6.
7.
Dames and Moore, 11 Alaska OCS Socioeconomic Studies Program, Northern
Gulf of Alaska, Petroleum Development Scenarios, .. Draft Report,
Task 9BA, October 24, 1978, Table 5-4, pages 119-122.-
Ibid.
Based on discussions found in Planning for Offshore Oil Develogment,
Gulf of Alaska OCS Handbook, D1vis1on of Community Plann1ng, A CRA,
1978, pages 40-41 and 223-224. Note: P = permanent;. T = temporary.
Interview: Max Beazley, Staff Engineer at Mobil Oil Corporation,
Exploration and Producing. Mr. Beazley is currently working in the
Prudhoe Unit, a planning team for future development in Prudhoe Bay.
11 Planning for Offshore Oil Development, .. Division of Community
Planning, ADCRA, October 1977, Table 12, pages 17-18. ·
The factors to the right of the multipliers are the ratios of
respective task-specific multiplier increments (multiplier 1)
to the statewide basic sector employment multiplier (1.5-1 = .5).
(See note 6, above.)
8. 11 A Social and Economic Impact Study of Offshore Petroleum and Natural
Gas Development in Alaska: Phase II,11 Mathematics Science Northwest,
Inc., and Alaska Consultants, Inc., for BLM, October 1976, page 19.
9. Amendments suggested by Ed Phillips, Alaska DNR.
10. Concrete Platform Construction is not considered feasible in the
Gulf of Alaska.
TABLE FORMAT
Columns one and two categorize employment by sector (or task) and by phase
of development, respectively. Column three lists the rotation factor
associated with each task. The rotation factors are taken from Dames and
Moore (see table note 2) and are calculated as follows:1
1 + Number of days off duty
Number of days on duty
They are used to determine the on-and offsite employment for a given
task. Employment duration (permanent or temporary) by task is listed in
column four. The information in columns one through four characterize
employment by task. They are intended to provide qual ita'tive limits for
the SEAR estimates.
Columns five through seven provide alternative implicit and explicit
estimates of the SEAR. Column five includes an.industry perspective on
the resident potential of Alaska OCS employment. Column six provides
estimates of the impact multipliers of employment in each task. The
multipliers are implicit indicators of in-state residence. The factors
to the right of the employment multipliers are the implicit SEARs as-
sumed in these multipliers, given an employment multiplier of 1.5 for
Alaska. The payment allocation coefficients found in column seven
were developed for use in a regional input-output analysis designed
1The assignment of a unitary rotation factor for offshore plat-
forms production (task 13) suggests that an operations crew is never
granted off-duty leave from the platform. Although this assumption
appears to be questionable, Gordon Harrison of Dames and Moore at-
tributes categorical data problems to its existence and notes that
potential inconsistencies implied by its use are insignificant and
are balanced elsewhere in employment assumptions for that task.
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to capture the socioeconomic impacts of OCS petroleum development in
the Yakutat area. (See table note 8.) The values associated with
table note 9 are adjustments suggested to compensate for a bias toward
higher payment allocation to Alaska residents that was introduced to
facilitate interregional effects. An even distribution of skills across
resident and nonresident groups is required in order to reinterpret
the payment allocation coefficients in the context of employment and
residency. This assumption is, perhaps, unrealistic during exploration
and petroleum field development. Under this interpretation, the pay-
ment allocation coefficients will overstate the SEAR for tasks relevant
to those phases of development.
METHODOLOGY AND ASSUMPTIONS
The task-specific information just outlined has been mapped into a final
SEAR estimate (in column eight) for each task using the following
methodology:
1. The SEAR estimates contained in columns five, six, and
seven are used to bracket a reasonable SEAR range for
each task. For example, the SEAR range for offshore
platform installation (task 14) extends from .1 to .25.
2. In the interest of consistency, an additional set of
general, phase-specific SEAR guidelines are developed.
Here, a given employment task is examined in the con-
text of its phase of development.
Tasks subsumed under exploration (Onshore: service base, helicopter
service; Offshore: surveys, rigs, supply-anchor-tugboats) are tern-
porary, require 11 extreme specialization, 11 and usually em~race a
reparatory work crew having 11 international character.112 These conditions
imply a low SEAR (of approximately .1 to .2) for exploration employment.
Of course, exceptions to these guidelines occur. For example, helicopter
service during exploration may be contracted through Anchorage-based
f . 3 1rms.
The offshore development phase, including platform installation (14)
and operation (13) offshore pipeline construction (15), and supply-anchor-
tugboats (16), is assumed to retain the descriptive and structural
characteristics mentioned above for the case of expl~ration.
Onshore development includes various types of construction employment.
Although the work force is generally seasonal (not unusual in the Alaska
construction industry), the potential for civil construction work by
Alaska-based contractors is more likely than that of offshore development
or of exploration, particularly as the overall sphere of OCS development
broadens. It is assumed that a SEAR of about .4 to .5 is consistent
with these conditions.
2Dames and Moore, 11 Alaska OCS Socioeconomic Studies Program,
Northern Gulf of Alaska, Petroleum Development Scenarios, .. Draft
Report Task 9BA, October 24, 1978, pp. 106-107.
3Dames and Moore, 11 Alaska OCS Socioeconomic Studies Program,
Monitoring Petroleum Activities in the Gulf of Alaska and the ~ower
Cook Inlet Between April 1975 and June 1978,11 Technical Report #17,
August 1978, p. 38.
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During production, employment is generally permanent and oriented toward
less specialized, more routine entry-level positions. These employment
characteristics appear to be compatible with Alaska residency. Overall,
we attach a SEAR of 1.0 to tasks subsumed under the production phase.
Table 82 summarizes the general SEAR guidelines outlined above.
TABLE 82. PHASE-SPECIFIC SEAR GUIDELINE
Exploration
Development
Production
Onshore
. 1 - . 2
• 4 -o5
1.0
Offshore
.1 -.2 .
• 1 - . 2
1.0
Additionally, there are two principal relationships which influence the
trend in the share of OCS employment to Alaska residents (SEAR). First,
the internal supply of labor that is qualified to perform the variety of
tasks delineated in column one of Table Bl is assumed to increase in
response to earlier "layers" of OCS petroleum development, as a function
of other mining activity, and to more general growth in the Alaska economy.
Second, for those OCS employees that initially accept nonresident status,
it is likely that a certain percentage shift to Alaska residency over
time. We consolidate the combined effects of these employment dynamics
into an assumption calling for a one percent annual average rate of
growth in the SEAR for all tasks having ~n initial SEAR of less than
one. For simplicity, the continuous compounding of growth per period
is replaced by a five percent increase between 1985 and 1989 and a
ten percent increase thereafter. This assumption corresponds to the
figures in the three subcolumns under column eight.
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APPENDIX C
DIRECT AND SEAR ADJUSTED EMPLOYMENT FOR
THE BEAUFORT SEA SALE 71
Ul"ll ,j 1...1'11 j w.; ,; J 11 I '.J w. I I J l.t I,.,,J k. I ,ciJ ~-'' ·-~ ~ "·""' ~ .... : . .J L
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE C.l. OCS TOTAL DIRECT AND SEAR ADJUSTED EMPLOYMENT
MEAN CASE, BEAUFORT SEA SALE 71
Mining Construction Transportation
Total SEAR Total SEAR Total SEAR
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 75 37 0 0
135 32 0 0 17 7
206 52 0 0 39 17
207 53 0 0 43 18
206 52 0 0 39 17
0 0 0 0 0 0
0 0 443 76 0 0
1808 297 522 77 0 0
2258 445 300 35 92 90
2298 485 0 0 252 247
2298 485 372 363
2343 500
1646 270
1016 62
1016 62
1061 77
1092 88 0 0 372 363
SOURCE: Alaska OCS Office.
;,_' '
HQTS Total
Total SEAR
0 0
0 0
0 0
0 0
75 37
152 40
246 69
251 72
246 69
0 0
0 443 76
908 2330 1282
2651 1478
2550 1640
2670 1756
2715 1771
2017 1541
1387 1333
1387 1333
1432 1348
908 1464 1358
.!!',....-:
'oi, ,L .. j
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE C.2. OCS TOTAL DIRECT AND SEAR ADJUSTED EMPLOYMENT
LOW CASE, 6EAUFORT S~A SALE 71
Mining Construction Transportation
Total SEAR Total SEAR Total SEAR
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 75 37 0 0
135 32 0 0 17 7
137 35 0 0 26 11
137 35 0 0 26 11
69 17 0 0 13 6
0 0 0 0 0 0
0 0 350 64 0 0
671 158 350 64 60 58
686 163 0 0 120 116
531 139 0 0 166 1 2
426 104
231 40
255 48
255 48
246 45
240 43
255 48 0 0 166 162
SOURCE: Alaska OCS Office.
HQTS
Total
0 0
0
0
0
75
152
164
164
82
0
0 350
191 1081
806
697
592
397
421
422
412
407
191 421
~--,
l.-J
Total
SEAR
0
0
0
0
37
40
46
46
23
0
64
471
470
492
458
393
401,
401
398
396
401
,_.,.,
; .J
I, " I'' 1-~ J l I' 1 U ,.,..l , ,J
TABLE C.3. OCS TOTAL DIRECT AND SEAR ADJUSTED EMPLOYMENT
HIGH CASE, BEAUFORT SEA SALE 71
Mining Construction Transportation
Year Total SEAR Total SEAR Total SEAR
1980 0 0 0 0 0 0
1981 0 0 0 0 0 0
1982 0 0 0 0 0 0
1983 0 0 0 0 0 0
1984 0 0 7~i 37 0 0
1985 135 32 0 0 17 7
1986 272 67 0 0 44 18
1987 274 68 0 0 48 20
i988 272 67 0 0 44 18
1989 0 0 0 0 0 0
1990 0 0 443 76 0 0
1991 3155 445 441' 69 0 0
1992 3605 594 300 35 92 90
1993 3605 594 300 35 305 298
1994 3945 733 22~i 26 425 414
1995 3945 733 0 0 545 531
1996 4012 755 0 0 637 620
1997 3285 515 0 0 637 620
1998 2775 347 0 0 637 620
1999 2340 203 0 0 637 620
2000 1905 75 0 0 637 620
SOURCE: Alaska OCS Office.
HQTS Total
Total SEAR
0 0 0
0 0
0 0
0 0
75 37
152 40
316 85
322 89
316 85
0 0
0 443 76
1805 3601 2319
3997 2523
4210 2.732
4595 2978
4490 3068
4650 3018
3922 2940
3412 2772
2977 2628
1805 2587 2500
TABLE C.4. OCS TOTAL DIRECT AND SEAR ADJUSTED EMPLOYMENT:
SIMPSON DELETION CASE, BEAUFORT SEA SALE 71
Mining Construction Transportation HQTS Total
Year Total SEAR Total SEAR Total SEAR Total SEAR
1980 0 0 0 0 0 0 0 0 0
1981 0 0 0 0 0 0 0 0
1982 0 0 10 0 0 0 0 0
1983 0 0 rO 0 0 0 0 0
1984 0 ·o 75 37 0 0 75 37
1985 135 32 0 0 17 7 152 40
1986 205 51 0 0 35 15 240 66
1987 205 51 10 0 35 15 240 66
1988 205 51 10 0 35 1~ 240 66
1989 0 0 10 0 0 0 0 0
1990 0 0 42!5 72 0 0 0 425 72
1991 1342 238 433 66 0 0 622 1775 925
1992 1642 337 22!5 26 92 90 1959 1074
1993 1802 416 0 0 305 298 2107 1336
1994 1802 416 397 388 2199 1426
1995 1412 287 1809 1297
1996 698 52 1095 1062
1997 713 57 1110 1066
1998 719 59 1116 1068
1999 719 59 1116 1068
2000 699 52 0 0 397 388 622 1097 1062
SOURCE: Alask~ OCS Office.
~ rr f-1 ~ r-:J en r:-:l r-:1 r-r-i r.-m r·-,.""'1 ,..--.--, r~ r----"1 r-1 ·~ ~--::l ""'j rJ I I ' " ' I ~ )
APPENDIX D
ASSUMPTIONS FOR THE NORTH SLOPE RESIDENT ADJUSTMENT
j
1
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l
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Appendix 0 shows the allocation of employment before and after
the North Slope resident adjustment for the six projects discussed in
the text. The overall effect of the North Slope resident adjustment
is summarized in Tables 0.1 and 0.2. Table 0.1 shows the amount of
North Slop~ employment that was transferred to regions 4, 5, and 7 to
more accurately reflect the geographic residence distribution of North
Slope employment. In Table 0.2, the amount of project North Slope
project employment that I assume will reside in the North Slope work-
place location is shown by industry classification. Tables 0.3
through 0.18 provide detailed assumptions on the North Slope resident
adjustment. Note region 1 is the North Slope.
TABLE 0.1. NORTH SLOPE EMPLOYMENT TRANSFER
Year Employment
1980 2524
1981 2727
1982 5076
1983 6414
1984 7119
1985 5934
1986 4990
1987 4049
1988 3925
1989 3463
1990 3651
1991 4133
1992 4248
1993 3952
1994 3415
1995 3652
1996 4175
1997 4301
1998 4008
1999 3469
2000 3716
2
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[
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L
-, Year
1980
1981
i982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
-, 1999
_J
2000
-,
~
d
~
:J
TABLE D.2. NORTH SLOPE EMPLOYMENT THAT RESIDES IN THE
NORTH SLOPE BY INDUSTRY CLASSIFICATION
Mining Transportation Construction
27 ] 0
29 0
52 0
61 11
58 34
33 73
30 78
32 57
31 38
31 16
31 27
31 55
31 59
33 59
32 I
32
32
32
34
33
33 1 59
3
Total
28
30
53
73
93
107
109
90
70
48
59
87
91
93
92
92
92
92
94
93
93
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE D.3. BEAUFORT JOINT FEDERAL/STATE MINING AND
CONSTRUCTION EMPLOYMENT ORIGINAL
REGIONAL ALLOCATIONa
Mining Construction
Region 1 Region 5b Total (Total)
0 0 0 0
58 8 66 49
173 24 197 1~8
173 24 197 247
202 28 230 247
56 10 66 99
102 10 112 304
266 10 276 333
458 21 479 .466
580 36 616 466
553 42 595 155
486 38 524 155
466 37 503 77
399 33 432 155
402 33 435 155
405 33 438 77
407 33 440 22
385 32 417 0
361 32 393 0
362 32 394 0
362 32 394 0
aThe SEAR adjustment was not applied to these figures.
bHeadquarters employment.
SOURCE: Alaska OCS Office (November 1978).
4
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j
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE D.4. BEAUFORT JOINT FEDERAL/STATE MINING EMPLOYMENT
AFTER NORTH SLOPE RESIDENT ADJUSTMENT
Total a Region 4 Region 5b Region 7
0 0 0 0
23 3 17 3
68 8 50 10
68 8 50 10
79 9 58 12
24 3 18 3
46 7 31 8
118 20 74 24
206 34 131 40
276 45 179 52
281 44 185 .52
256 41 168 47
249 39 164 46
224 36 147 41
226 36 148 42
227 36 149 42
228 36 149 43
220 35 144 41
213 34 140 39
213 34 140 39
213 34 140 39
aThese projections are based on the SEAR adjustment which determines
statewide residency, and the North Slope re~ident adjustment which deter-
mines the regional resident allocation of OCS employment. The applica-
tion of SEAR reduced original mining employment (Table 0.1) by the
following proportion by phase of development:
Resident Proportion of
Phase Total Direct EmElo~ment
(Percent)
Exploration 1981-86 25
Development 1986-96 33
Operations 50
blncludes headquarters.
5
TABLE D.5. BEAUFORT JOINT FEDERAL/STATE CONSTRUCTION EMCLOYMENT
AFTER.NORTH SLOPE RESIDENT ADJUSTMENT
Year Totalb Region 4 Region 5 Region 7
1980 0 0 0 0
1981 25 5 15 5
1982 99 18 59 22
1983 124 23 74 27
1984 124 23 74 27
1985 50 9 30 11
1986 98 18 58 22
1987 50 9 30 11
1988 70 13 42 15
"1989 70 13 42 15
1990 23 4 14 .5
1991 23 4 14 5
1992 12 2 7 3
1993 23 4 14 5
1994 23 4 14 5
1995 12 2 7 3
1996 3 0 2 1
1997 0 0 0 0
1998 0 0 0 0
1999 0 0 0 0
2000 0 0 0 0
aRegional employment allocated as a proportion of 1978 population.
bApplication of SEAR adjustment reduces original direct construction
employment by the following proportions for each development phase:
Resident Proportion of
Phase Total Direct Employment
(Percent)
Exploration 1981-86 50
Development 1986-96 15
6
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TABLE D.6. PRUDHOE BAY MINING EMPLOYMENT ORIGINAL
REGIONAL ALLOCATION
Year Region 1
1980 2044
1981 2155
1982 4337
1983 5134
1984 4684
1985 2217
1986 1802
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000 1802
SOURCE: Porter, Edward, Alaska OCS Socioeconomic Studies Pro~ram
Bering-Norton Petroleum Development Scenarios Econom1c and
Demographic Analysis, Institute of Social and Economic Re-
search, 1980, pp. 78-81.
7
Year
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Note:
TABLE D.7. PRUDHOE BAY MINING EMPLOYMENT REGIONAL
ALLOCATION AFTER NORTH SLOPE
RESIDENT ADJUSTMENT
Total
1000
1113
1772
2044
2155
4337
5134
4684
2217 lr
I
1802
Region 1
11
12
19
22
24
47
56
52
24
20
' 20
Region 4
184
205
326
376
397
798
945
862
408
332
j
332
Region 5
590
657
1045
1206
1271
2559
3029
2763
1308
1063
1
J
1063
Region 7
215
239
382
440
463
933
1104
1007
477
387
1
I
387
Allocation based on population proportions in each region.
8
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TABLE D.8. NPRA CONSTRUCTION AND MINING EMPLOYMENT
ORIGINAL REGIONAL ALLOCATION
Region 1
Year Construction Mining
1982 0 0
1983 75 0
1984 75 0
1985 363 88
1986 987 176
1987 1099 230
1988 765 443
1989 314 354
1990 541 374
1991 1092 354
1992 1174 408
1993 765 533
1994 314 444
1995 541 464
1996 1092 444
1997 1174 498
1998 765 623
1999 314 534
2000 541 554
SOURCE: Office of Minerals Policy and Research Analysis, U.S. Depart-
ment of the Interior, Final Report of the 105(b) Economic
and Policy Analysis, 1979. Based on the mean scenario
order management plan 4.
9
Year
1982
1983
TABLE D.9. NPRA CONSTRUCTION EMPLOYMENT RESIDENT ALLOCATION
AFTER NORTH SLOPE RESIDENT ADJUSTMENT
Total Region 1 Region 4 Region 5
0 0 0 0
75 4 11 44
Region 7
0
16
1984 " 75 4 11 44 16
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Note:
363 18 53 214 78
987 49 144 582 212
1099 55 159 648 237
765 38 111 451 165
314 16 45 185 68
541 2.7 79 319 116
1092 55 159 644 235
1174 59 170 693 252
765 59 90 451 165
314 59 2 185 68
541 59 47 319 116
1092 59 154 644 235
1174 59 170 693 252
765 59 90 451 165
314 59 2 185 68
541 59 47 319 116
Employment in region 1 equals five percent of total until
peak in 1992; maintains peak thereafter. Employment in
other regions based on regional population proportion.
10
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Year
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE D.10. NPRA MINING EMPLOYMENT REGIONAL ALLOCATION
AFTER NORTH SLOPE RESIDENT ADJUSTMENT
Total Region 1 Region 4 Region 5
0 0 0 0
88 1 16 52
176 2 32 104
230 3 42 136
443 5 82 261
354 4 65 209
374 4 69 221
354 4 65 209
408 4 75 241
533 6 98 314
444 5 82 262
464 5 85 274
444 5 82 262
498 5 92 294
623 .... 115 368 I
534 6 98 315
554 6 102 327
Region 7
0
19
38
49
95
76
80
76
88
115
95
100
95
107
134
115
119
Note: Allocation based on proportion of population in each region.
11
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE 0.11. TAPS CONSTRUCTION EMPLOYMENT ORIGINAL
REGIONAL ALLOCATION
Total
90
90
90
0
0
Region 1
7
7
7
0
0
Region 4
32
32
32
0
0
Region 5
0
0
Region 7
51
51
51
0
0
SOURCE: Dames and Moore, Beaufort OCS Dev~lopment Scenarios, 1980.
Based on addition for four pump stations adding capacity
of .15 million barrels per day each.
12
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r·
1-:
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t:
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c
[
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L
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L
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Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE 0.12. TAPS TRANSPORTATION EMPLOYMENT ORIGINAL
REGIONAL ALLOCATION
Total Region 1 Region 4 Region s·
1500 50 569 529
1500 50 569 529
Region 7
352
352
SOURCE: Alaska Department of Labor, Alaska Economic Trends, October
1978.
13
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Note:
TABLE D.13. TAPS CONSTRUCTION EMPLOYMENT RESIDENT ALLOCATION
AFTER NORTH SLOPE RESIDENT ADJUSTMENT
Total
90
90
90
0
0
Region 1
0
0
Region 4
32
32
32
0
0
Region 5
0
0
Region 7
58
58
58
0
I
0
The seven original employees in region 1 (Table D.11) all
transferred to region 7. Employment in regions 4 and 5
remain constant.
14
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[
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r l __ ~
[
[
c
[
6
[
r3
L
r~
L
[
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE 0.14. TAPS TRANSPORTATION EMPLOYMENT RESIDENT ALLOCATION
AFTER NORTH SLOPE RESIDENT ADJUSTMENT
Total Region 1 Region 4 Region 5 Region 7
1500 1 577 559 363
1500 1 577 559 363
Note: Of the fifty original region 1 employees (see Table 0.12),
one was allocated to the North Slope according to the North
Slope population proportion. The forty-nine additional employees
going to regions 4, 5, and 7 were distributed according to
population proportions in those regions; they incremented
the original levels in those regions.
15
.......
0'1
1980
1981
1982
1983
1984
1985
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
TABLE D.15. ALCAN MINING, TRANSPORTATION, AND CONSTRUCTION EMPLOYMENT
ORIGINAL REGIONAL ALLOCATION
Constructionc Min1nga
Reg1on 1
Transportatienb
Total · ~ion 1 Region 7 Total
0
0
Reg1on 1 Region 7
0
0
0
0
0
0
0
400
400
0
0
0
0
0
0
0
200
200
0
0
0
0
0
0
0
50
50
0
0
0
0
0
0
0
150
150
500
2795
7823
703B
1563
0
0
0
0
125
699
1956
1759
391
0
0
aPrudhoe Bay Project: Draft EIS, Federal Energy Regulatory Commission, July 1979.
bEstimate by Northwest Alaska Pipreline Company, August 1979.
0
0
375
2096
5867
527B
1172
0
0
cAlaska Economic Outlook to 1985, Alaska Department of Labor, July 1978 and Prudhoe Bay Project: Draft EIS, (see note a).
\LJLI,.il I l . ~-" ; "
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
. 1997
1998
1999
2000
,J ~~~-· L. .. .,J .J
TABLE D.16. ALCAN MINING TRANSPORTATION AND CONSTRUCTION EMPLOYMENT REGIONAL ALLOCATION
AFTER NORTH SLOPE RESIDENT ADJUSTMENT
Minin a Constructionc
Total Region 1 Region 1 Region 4 Region 7
Transportal i onb
Total Total
0
217
563
2435
7103
Region 1 Region 4 Region 5 Region 7
0
0
0
0
0
160
200
2 0
0
0
0
0
0
2
2
2
0
0
0
0
0
29
37
37
0
0
0
0
0
94
118
118
0
0
0
0
0
35
43
43
0
0
0
0
0
0
119
119
10589
5074
468
0
0
0
0
0
7
30
55
29
2
0
0
0
2
7
122
497
924
483
33
0
0
0
5
23
392
1592
2962
1549
108
0
0
0
210
533
1914
4984
6648
-3013
325
0
0
TABLE NOTES FOR TABLE 0.16:
aMining employment allocated according to the proportion of pop-
ulation in each region.
bAll transportation employment is assumed to reside in the Fairbanks
region (7) where the Northwest Gasline Headquarters are based.
cApproximately forty percent of pipeline construction employment
will be staff personnel which receive special leave rotQtion privileges
that would encourage them to reside near project headquarters in Fairbanks.
I assume the twenty-nine percent of pipeline craft construction employ-
ment will reside in Fairbanks reflecting the distribution of TAPS opera-
tion personnel in the Fairbanks district. Regional population proportions
were applied to the remaining pipeline and conditioning plant construc-
tion personnel.
SOURCE: Mogford and Goldsmith, 1980 (Table 1).
18
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b
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Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Total
2945
2945
TABLE 0.17. OTHER MINING EMPLOYMENT ORIGINAL REGIONAL ALLOCATIONa
Region 1 Region 3
451 53
451 34 53
Region 4
350
350
Region 5
16 8
1618
a"Other" mining refers to nonpet.roleum mining employment primarily hard rock minerals.
,)
Region 6
136
136
Region 7
303
303
SOURCE: Alaska Annual Planning Information, FY 1980. Assume 1980 value remains constant throughout the forecast period.
_j I ,J _J
N
0
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Note:
TABLE D.18. OTHER MINING EMPLOYMENT REGIONAL ALLOCATION AFTER NORTH SLOPE RESIDENT ADJUSTMENT
Total
2945
2945
Region 1
5
5
Region 3
34 53
34 53
Region 4 Region 5 Region 6
433 1884 136
433 1884 136
Region 7
400
400
Full-time resident employment in other mining reduced from 451 to 5 employees in region 1. The remaining 446 employees
were distributed to regiorns 4., 5, and 7 according to population proportions in those regions. Regions 2, 3, and 6 were
not affected by this resident adjustment. -
,------,
1., ~-_1
I
:-:--:! :---1