Dying watchdogs

jobsNews analysis

The new Alaska jobs forecast from the state Department of Labor is out, and it clearly points to steady growth in government spending despite a forecast for fewer state jobs.

The reality is written in both the top line of the report, which forecasts job gains, and the bottom line, which reflects job losses. The latter would indicate the government watchdogs are dying, and dead dogs don’t bark. 

But first that top line.

It predicts the big job growth in Alaska through 2026 will come in health care and social assistance. The costs of the latter is shouldered by government, and it is sure to cost a lot.

The cost of the former is also largely shouldered by government: Think Affordable Care Act subsidies, Medicare and Medicaid. Medicaid alone now accounts for more than 10 percent of the state budget, according to Ballotpedia, an independent public policy organization; and incumbent Gov. Bill Walker is running on the idea that this is a good thing.

With the Labor Department projecting that more than 20 percent of the 17,000 new jobs expected between now and 2026 will come in the health and social service category, and with only slight increases expected in the oil revenue that is still the lifeblood of state government, it’s hard to avoid wondering who is going to pay for the continuing expansion of what some have called the nanny state.

“Health care has been on a decades-long growth streak, even throughout the current recession, a trend we expect to continue through the project on period,” economist Paul Martz observed. “We project 21.4 percent growth in health care and social assistance
employment, or about 10,100 jobs, in the long term.”

Alaska, he said in a telephone interview on Tuesday, has a demographic problem. More healthy and productivity young people are leaving; more retiring, old people are staying; and the average age between the two is steadily skewing older.

Various health-care studies have found costs bottom out at about age five, increase slowly through the teen years, begin to accelerate toward age 40 and greatly accelerate thereafter.

“The changing demographics of age and gender have contributed from 7 percent to 10 percent of the real growth in per capita health care costs,” a study conducted for the Society of Actuaries concluded in 2013. Actuaries are in the business of setting the insurance costs that enable insurers to maintain profits.

The upward trend for insurance costs in the U.S. has continued since 2013, but the insurance system was changed in 2010. The federal  Affordable Care Act (ACA) came into being to provide a government subsidy to help people struggling to afford ever-increasing insurance costs, and Medicaid was expanded to help the poor.

They added to the government costs of existing Medicaid and Medicare, a 1960s-era program of government health insurance for Americas over age 65.

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On the one hand, these federal programs are generally good for Alaska. They flow dollars north. The Alaska Legislature did have to provide a $55 million subsidy to the last insurance company left in the state – Premera – to convince it to stay in Alaska in 2017, but more than 80 percent of that cost has since been picked up by the federal government.

And there is no doubt the federal money provides an economic boost that ripples through the entire Alaska economy. The health care industry here provides good wages for a lot of people.

“Alaska medical costs are more than double the national average,” Premera concluded in a study last year. 

“It should come as no surprise that Alaska is expensive. The state’s remote, rugged geography, small market and high cost of living naturally make medical costs more expensive than other states. Drugs and equipment get to Alaska by boat and plane, and people sometimes need to be transported by expensive air ambulance service to get care.  Alaskans visit emergency rooms rather than use less expensive options more often than people in other states, due to the lack of medical facilities. Alaska also has lower use of preventive medicine, leading to higher cost procedures.

“What is surprising is that even accounting for these facts, Alaska’s medical cost gap is growing even when compared to states of similar size and geography or even to cities with a high cost of living.”

This is good in that people with health-care jobs end up with cash to spend to help other businesses. It is bad in that the high costs of employee healthcare impose downward pressure on business development in the state and cause Medicaid costs to weigh ever more heavily on the state budget.

What role Medicaid plays in encouraging people to stay in the state with by far the highest medical costs in the nation – instead of moving to where rates are lower and jobs are easier to find – is an unknown, although Walker’s TV aide for Medicaid suggests that the program encourages at least some to stay when it would appear they have the education to enable them to find better-paying work Outside.

And everyone who stays increases the demand for government services from an already cash-strapped state budget. This is, sadly, a simple economic reality with which the state is already wrestling.

Alaska per capita state spending is nearly three times the national average, according to the Henry J. Kaiser Foundation, and 25 percent above the $10,800 per person spent by Delaware, the second highest spending state. 

Alaska’s population has shrunk slightly as the result of the recession but is projected to start growing again. If current spending trends continue, each new resident will cost the state another $13,500 or $1.35 million per hundred or $13.5 million per 1,000 and et cetera.

Where the money will come from to cover any cost increases in a state still overwhelmingly dependent on oil royalties and taxes is a good question,  Martz admitted.

“I don’t think I have a good answer for that,” he added. “There’s a lot of uncertainty.

“That’s a much bigger question; that’s for sure.”

Silent watchdogs

Who is going to explore that question shifts this analysis to the bottom of that job-growth report where Martz projects job losses in state government, which should help reduce spending a little, and in “information.”

Among the information industries is journalism. It’s been trending steadily downward for years now.

Alaska’s largest newspaper went bankrupt a year ago, was resurrected and now struggles on as a shadow of what it was in its heyday. It was forced to lay off its capital correspondent just before chaos erupted over the nomination of Brett Kavanaugh to the U.S. Supreme Court, and Sen. Lisa Murkowski, R-Alaska and a potential swing vote, became a key figure in the national debate.

KTVA News downsized, killed its sport department, laid off its nightly news anchorwoman and replaced her with a former sports reporter. Local talk radio is fading in part because of the shrinkage of the daily newspaper around which talk has historically been built. Online news has fractured into dozens of pieces, none of which – including this one – look to be financially sustainable over the long term.

The people involved in information in this state appear to be a dying breed.

Martz’s forecast is for a further 9 percent reduction and the loss of another 567 jobs. It appears even some of the public relations people might fade away for lack of reporters to whom they can hand press releases to be rewritten, or not.

(If you pay careful attention, you might have noticed the some Alaska publications no longer bother rewriting those tomes. It is easier to just strip off identifying information and reprint the PR as if it were independently provided news.)

Many seem not to care.

After decades of exposure to mainstream media with a tendency to lean left, some on the right of the political spectrum foolishly see the death of the media as a good thing. It’s not.

Even a bad press is better…

The evidence would indicate the media decline is especially bad for those opposed to the steady growth of government.

A lengthy study of newspaper closures and local government finances led Pengjie Gao from the University of Notre Dame, and colleagues Chang Lee and Dermot Murphy from the University of Illinois at Chicago to conclude that when journalism dies in a community, government spending goes up.

“The loss of government monitoring resulting from a closure is associated with higher government wages and deficits, and increased likelihoods of costly advance refundings and negotiated sales,” they wrote in a paper published on the Social Science Research Network (SSRN) in August. “Overall, our results indicate that local newspapers hold their governments accountable, keeping municipal borrowing costs low and ultimately saving local taxpayers money.”

This shouldn’t have come as big news.

The Federal Communications Commission, which oversees TV and radio communications in the U.S., reached a similar conclusion way back in 2011.

“….In part because of the digital revolution, serious problems have arisen…,” researcher Steven Waldman and the Working Group on Information Needs of Communities concluded. “Most significant among them: in many communities, we now face a shortage of local, professional, accountability reporting. This is likely to lead to the kinds of problems that are, not surprisingly, associated with a lack of accountability—more government waste, more local corruption, less effective schools, and
other serious community problems. The independent watchdog function that the Founding Fathers envisioned for journalism—going so far as to call it crucial to a healthy democracy—is in some cases at risk at the local level.”

The situation has only worsened in the past decade. Mainstream reporting in Alaska, like that in many places, has largely defaulted to the easy and readily saleable: breaking news and politics as sport.

Public policy, along with government misfeasance and malfeasance, go largely ignored. Simple market economics are to blame for some, maybe most of this. Journalism today inhabits a world of “internet metrics.” It’s all about eyeballs.

The worst story any reporter can write is one that goes unread. It doesn’t attract any viewers for the advertising department to sell, and it wastes time that could have been devoted to a story that will grab people:

Maybe one about a canine hero saving a lost hiker or a moose-born in a parking lot or the loss of a service dog killed by a reckless driver. Those stories grab attention, and they don’t require much skill to write.

Brain drain

Writing substantive stories that people will read is a lot harder, and those damn metrics now detail what readers are actually reading. It’s not like the good, old-days when reporters could write long, boring stories about “Anchorage at the Crossroads” to be read by almost no one.

But that was OK then because the stories were important, at least in the eyes of journalists who convinced themselves people were forcing themselves to read. Some were, too, and those few readers drove broader public discussions among the masses.

Now the computers count eyeballs, and news organizations in a daily battle for financial survival have no time for stories that won’t get read immediately by everywoman and everyman.

Couple this to internet demand for constantly new material  (an hour ago story is “old”) plus the economic decline of journalism that has encouraged many of the best and brightest to go looking for more lucrative work, and those stories the FCC mentioned about government waste, local corruption, and failing schools, or the stories about the risings costs of health care, or the problematic economy of a state with fewer residents than many major American cities, start to look out of reach of a lot of local news organizations.

Education used to be an established newspaper beat, but like most newspaper beats it has gone away. Readers are the losers. That’s a shame in Alaska.

Only the state of New York spends more per student on education than Alaska, according to CNBC, and only the state’s of Mississippi, Arizona, New Mexico and Nevada crank out worse students, according to U.S. News and World Report.

Alaska spends a lot of money to produce poorly educated children, and yet there is almost no reporting on the need for education reform in the 49th state. But then there are so many stories that go uncovered.

Oil and gas now stands as the state’s biggest tech industry, but you wouldn’t know it from what you read. Still, it isn’t by accident that Prudhoe Bay has lasted a lot longer than anyone expected or that a surprising amount of new oil has been found on the North Slope in the past few years.

How much new oil can be produced and for how long remains vital to the state’s short-term future. But it’s hard to gauge how far the industry might go in the future when you have little idea of how it got this far ahead of the past.

When built in 1975, the TransAlaska Oil Pipeline System had a design life of 30 years. That’s how long it was expected to take to drain Prudhoe. The-30 year marked passed more than a decade ago.

BP in a court hearing in 2011 said it believed it could now keep oil flowing until 2030. The state argued for 2065. Indications now are that both of those projections might be low, which would be good for Alaska’s economy.

It would be nice to know a whole lot more about how this little miracle so important to the state’s economic survival was made to happen. It doesn’t get much attention, though, nor does the business side of the state’s second largest industry – tourism.

One of the few state industries with the potential for real, income-generating growth, it goes largely unnoticed in a business sense. And coverage of commercial fishing – the state’s third largest business? Well that is largely left to a news bureau funded by commercial fishing interests based in Seattle.

Government waste? Local corruption?

The few reporters left with jobs in the state are too busy chasing the latest crime story or the fallout from homeless squatters to dig into those time-consuming topics. Stories about waste and corruption are complicated.

Cranking out a story a day on a website like this doesn’t leave time for complicated stories, and it’s not much different elsewhere. The old, shrinking, mainstream media is cash strapped, and the economics of internet news seem mainly to encourage forays into the political jungle to cover the sport of elections.

See MustReadAlaska, The Midnight Sun and Alaska Landmine.

It is possible those online startups or others might evolve toward filling the niches the FCC identified in 2011, but there is no way of knowing. And the realities of the internet seem to be pushing news away from those stories instead of toward them.

Conflict, as President Donald Trump is well aware, attracts more attention in the tubes than reasoned discussion.










11 replies »

  1. Great article Craig. As I remember the spread sheets, from the Legislature, Before Walker put Alaska into the Medicaid minefield, spending would total +$400 million by the mid-2020’s. Federal $ drop off after 2020. Since the medical costs are higher than expected and the Savings are less (nonexistent?) Alaskans will kiss the PF Dividend goodbye sooner than later thanks to Walker.
    It doesn’t help to have a non-competitive medical industry here either. Just listen to the radio ads for getting X-rays. If the onerous costs of supporting state subsidized industries like commercial fishing, multi-school boards for 6 children, and pie in the sky pipeline (s) we won’t be the only retirees to take our residence and nest egg elsewhere.

    • Don’t let that door hit you in the ass as you leave, Scott. Many retirees have always moved South and we’ll see how this is different. Obviously, the perks that retirees do get to keep them here will face some criticism by others but we don’t need to furnish them jobs.
      And what does “the radio ads for getting X-rays” have to do with any of this?

  2. Craig,

    Look no further than the article you wrote before this one, it currently has 200+ comments. The essence of that article is he said she said, teen party, and drinking. A thought provoking article such as this, even on a site for readers and thinkers…the response from the readers and thinkers, not so much. Click bait draws views, more views more cash. The movie Idiocracy portends our future.

    • Actually Steve-O,
      It is a story of “Integrity” as Lisa Murkowski clearly points out…
      Both of the Judicial Process in America and the “polarized partisan” politics that the GOP has now become.
      Many feel the FBI report was a farce…9 of the 10 pages dedicated to Judge (just one witness and Brett’s best friend for years)…
      There is no bi-partisans left in America, any R’s that try to work with D’s or I’s, get thrown to the wolves and the super PCAs will toss millions at opponents to see they are never re-elected.
      Lucky for Jeff Flake, he is calling it quits soon.
      America is worried our representive democracy is falling the majority of the people.
      Remember if Brett gets moved ahead, it is still almost a 50 – 50 split in believing his story…not very reassuring for most Americas.
      Trust is being lost…
      That is the true story.

      • Umm what? Did you read the article above? I don’t want to talk about how your representative democracy is falling apart, in The United States of America we have a Constitutional Republic and it is working for the vast majority of citizens. The citizen watchdogs, known as reporters have failed us a lot for a number of years (they have always failed us to an extent), but they are an important part of what has shaped our country. Tweets, facebook, and even blogs like this where any idiot like myself can shape the dialog in the story that lives after the story is told are not necessarily a good thing.

        For godssake, we have people who think The United States of America is a representative democracy! At one time in our history we had an informed citizenry, now we have groups of people who don’t even know our system of government telling other people that the shy is falling.

        Perspective is a powerful tool.

  3. In a very few years AM radio will be gone. Already AM stations are going silent all over America, even in Alaska. We’re seeing some of the remaining AM stations adding FM “translators”. Not just in rural areas, in Anchorage as well. Why? Because people are listening to FM, abandoning AM because of the cleaner signal from the FMs. Where you can hear them. And that’s NOT in rural areas. Smaller communities can be served by local, even low-power FMs but the signals don’t reach the fish camps or even slightly remote areas except in a very cases. TV doesn’t go there. Internet doesn’t go there. Though it can if the folks can afford their own satellite dishes and can afford to pay the exorbitant costs. That, along with the death of print media, means a rural population cut off from information.

    So what’s the answer? Maybe a government satellite-dish/receiver giveaway? Along with generators and free fuel to power them. Maybe free solar panels, windmills, inverters and battery banks? The one thing you can feel sure of it – stationary bicycle type generators will never catch on. Besides, these days who would know how to ride one?

  4. Alaska has become a dot gov (.gov) state. There is no impetus to cut government when everyone is a dot gov employee. Dot gov is self-perpetuating. There is no reason to make Alaska friendly to private sector businesses. Because Alaska can survive as a dog gov state, dot gov minions take great glee in blocking private sector businesses that might compete with dot gov. And they love tormenting resource companies. Alaska is now like a Soviet outpost city, where the make believe economy is propped up by government. The L48 economy is flourishing, and will continue to flourish. But Alaska will forever remain a backwater dot gov outpost. And no, tourism which employs underpaid, enslaved visa workers from Turkistan, will never be a significant part of our economy.

    • James,
      Ain’t it Ironic that all these goverment enployees and GOP political operatives cite “Socialism” as their biggest enemy, yet they are all getting weathy of off government sponsored and government “subsidized” jobs?
      Some days AK feels very “Orwellian” to me.

  5. Craig, I suspect some sort of typo but your calling Health jobs 20% of total jobs growth is clearly misleading. 10k health jobs is almost 60% of 17k total jobs.

  6. Craig, this was a great piece, full of a lot of information and insight. Sadly, it’s length and content is way over the average readers heads nowadays in the era of clickbait and immediate gratification. I fully agree with a number of points raised and the sentiment in general.

    I almost feel bad reading it and NOT donating to your fund…

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