Pretty cool, Anchorage’s Hilltop Ski Area on Saturday/Craig Medred photo

An economic opportunity for Alaska

If Americans fearful of climate change are now truly fleeing the warm states for places like Duluth, Minn., as national and international media are reporting, Anchorage is missing a bet by failing to promote itself as a global-warming refuge.

Not to bad mouth one of the nicer cities in the one-time Land of Ten Thousand Lakes trying to rebrand itself as “The North,” but Duluth is a notably frigid winter city with a small-town airport and limited air service.

There are three flights per day to Minneapolis and Chicago or one per day to Phoenix and Fort Myers, Fla. Suffice to say, Duluth isn’t the “Air Crossroads of the World” that Anchorage is.

And those Duluth winters with average monthly temperatures that never top 20 degrees and the winds howling off a solidly frozen Lake Superior?

The only good thing you can say is that the weather is, on average, no colder (not counting those windchills) in December in Duluth than in December in Anchorage. But November, January and February are all a different story with average monthly temperatures in Duluth three to 10 degrees colder than Alaska’s urban heartland.

But that hasn’t stopped the mainstream media from spinning the idea Duluth is the place to which to retreat.

Speculator in chief

The New York Times started this in March with a headline claiming that “Out-of-Towners Head to ‘Climate-Proof Duluth.” The evidence to support this conclusion appeared to be claims in the story below that realtors “in Duluth say that nearly every out-of-town client now mentions concerns about rising temperatures and natural disasters as a motivation for their move.”

Certainly it is possible a trickle of the global-warming fearful could be flowing toward Duluth, but the building statistics for the city of fewer than 82,000 indicate only 72 permits were issued for the construction of new, single-family homes last year while 30 structures were torn down.

There was a significant uptick in construction of multi-family buildings with 187 units added in buildings housing five or more families. That was more than twice as many units as in 2021, but way short of the 454 in 2019.

Suffice to say, Duluth does not make SmartAsset’s list of America’s top 25 “boomtowns” – 23 of which are south of the 40th parallel, which basically splits the country into north and south, and the northernmost of the boomtowns is Pasco, Wa., with a five-year population growth rate of more than 17 percent.

Duluth’s population has shrunk by 0.1 percent since the 2020 Census, according to the U.S. Census Bureau, and the trend line for the last five years is, according to World Population Review, slowly downward. 

Nonetheless, the idea of Duluth as a climate hideaway filling up with refugees from elsewhere in America is picking up steam.

Late last month, Agence France-Presse – a Paris-based global news service known as AFP – picked up the story idea and spread it widely around the globe.

“Icy northern U.S. city becomes haven for climate migrants” headlined The Japan Times while the Daily Times of Pakistan; Phys.org, a website for science; Singapore-based Today Online; and many others used what appeared to be the AFP-recommended headline:

“Frigid US city becomes haven in climate change era.”

Yahoo and MSN were only a little more reserved and shared a headline that said “Duluth becomes climate refuge for many.”

What number constitutes “many” is hard to say, but according to the Minnesota Department of Employment and Economic Development, Duluth grew by only 0.1 percent between 2010 and 2021 and “is projected to see population decline in the next 20 years as well.”

The report projects a 2023 population of 85,758 dropping to 83,545 by 2033. Most of this is blamed on baby boomers dying off as they age, but the projections call for drops in all ages of the population except those aged 45 to 54.

The latter age group is expected to increase from 8,966 to 9,912. And the report notes that the deaths of older residents in 2021 was “mitigated by net positive migration, with 281 more people moving into Duluth than out in 2021.”

These 281 people would appear to be part of the “many.”

Fake news

And it’s not like there’s any great rush to outlying areas around Duluth as is the case around Boise, Idaho. The warmish Boise Metro Area includes the communities of Nampa and Meridian, which ranked one and two in the list of boomtowns.

In Boise this winter, they were complaining about the longest streak of days – 157 – when the daytime high temperature never topped 60 degrees. 

Boise’s coldest month is January when the day’s average high temperature is 39 degrees. Duluth’s average high for that month is 20 degrees colder with the average low at a chilly 2 degrees.

Anchorage is balmy by comparison with a high of 24 degrees and a low that, on average, remains in the double digits at 11 degrees. 

Chilly winters and a soft economy are the most likely explanations for why Duluth and the surrounding area have been largely bleeding population since the 1960s.

The state of Minnesota reports that the population in Local Workforce Development Area 3, which takes in a swath of northeast Minnesota about a quarter the size of the entire state and includes the Duluth metropolitan area, declined in population between 2010 and 2021 and is projected to continue declining.

“Local Area 3 is projected to see population declines in the next 20 years,” the report says. “According to population projections from the State Demographic Center, the area is expected to lose just over 19,000 residents from 2023 to 2043, an 8.1 percent decline.”

There are only two age groups expected to grow in that time, according to the report: “Local Area 3 is expected to add
around 6,561 people aged 75 years and over, a 27 percent jump. The region is also projected to see a small but notable gain of 1,288 in the 45- to-54-year-old age group.”

Those 45- to 54-year-olds (but not the old folk aging out in Duluth)  could possibly be added to the “many” rushing to Duluth from elsewhere in the country to put the number of climate refugees Minnesota planners expect to arrive by 2043 near 2,300.

Twenty-five hundred people over the course of 40 years aren’t exactly a gold rush boom. Gold in the area around the now ghost town of Iditarod, Alaska, attracted 10,000 in the two years between 1910 and 1912, according to the Bureau of Land Management, and there were no paved roads to Iditarod, let alone an airport.

True myths

Still, this idea of climate refugees rushing to northern cities is a very real belief as is the fear of global warming among some.

A poll conducted by the American Psychiatric Association in May found “59 percent were anxious about the impact of climate change on the planet.”

Jesse Keenan, an associate professor of real estate in the architecture school at Tulane University in New Orleans, last year told Yale Environment 360 that he expects 50 million Americans could eventually move to New England or the Upper Midwest to escape the climate changes they fear are coming.

Fears shape behaviors, and although the actual responses to date appear to differ from the picture being painted by the mainstream media, the propaganda plays on people and will at some point come to affect them.

It’s just not happening yet.

When researchers at the University of Vermont took a deep dive into climate-related migrations to date, they found that “Americans are leaving many of the U.S. counties hit hardest by hurricanes and heatwaves, and moving towards dangerous wildfires and warmer temperatures.

Their study of 10 years of movement patterns was published in the peer-reviewed journal Frontiers in Human Dynamics in December. 

Part of the motive for movement “to western states,” it did note, (was) dramatic mountain scenery and plentiful opportunities for outdoor recreation,” and it underlined that the people most likely to move were those most successful socially and economically.

In the U.S., these people can largely be identified as the young and well-educated, an increasing number of whom are involved in tech industries.

Many of them now also work remotely or would like to do so. A Dice report issued in November found “the majority of tech professionals – 60 percent – ranked fully remote as their most-desired workplace setting.”

Anchorage could prove attractive to at least some of them, and Alaska could use a tech-industry boost to its economy given the fading fortunes of its old economic powerhouses.

Nobody and this would include what appears to be a majority of Alaskans, really wants the mining industry in the state. The oil and gas industry is not going away anytime soon, but in a world quickly transitioning from hydrocarbon to electric economies, according to the International Energy Authority, that industry is never going to be the 49th state cash cow that it once was.

And the fishing industry is steadily bleeding away value to farmed salmon that are free of the supply chain problem facing wild fish. A goodly portion of the massive catch of Bristol Bay sockeye from 2022 is still warehoused in cold storage because processors can only move so much frozen salmon in one year, and the backlog is but one reason there is talk of Bay salmon prices of a dollar a pound this year or maybe even less.

Prices haven’t been that low since 2016, and the state is now a world away from the late 1980s when Bay sockeye were bringing in $1.50 to more than $2 per pound, the equivalent of $4.10 to $5.25 per pound in today’s dollars, according to the inflation calculator at the U.S. Bureau of Labor Statistics.

It was in those halcyon days of old that fishermen convinced the Alaska Legislature to ban salmon farming in Alaska in the belief that would help the 49th state maintain its corner on the market. 

Market economics

Markets are, unfortunately, not that easy to control. The high prices at the time just encouraged the Norwegians to increase their salmon farming efforts, and as they did the farmers became ever more efficient and salmon farming went global.

In 2021, the last year for which the data website Statista has full global data available, just shy of 75 percent of the world’s salmon supply came from farms. That was a slight decrease from the near 83 percent the year before. 

The production of farmed salmon has nearly doubled since 2009 while the wild catch has trended slowly downward despite record harvests in Alaska across that time span. Both trends are expected to continue, and the dominance of farmed salmon in the market now benchmarks value.

As with Alaska gas and oil, so too with Alaska salmon. These commodities will always have value. The lingering question is how much farther that value will fall.

What’s that leave for the Alaska economy? Tourism, which is solid and growing but highly seasonal, and Alaska Native Corporations, which are doing well and have become a mainstay of Alaska’s private sector economy in large part due to subsidiaries taking advantage of special federal contracting provisions.

“The Minority Small Business and Capital Ownership Development Program – commonly known as the “8(a) Program” – provides participating small businesses with training, technical assistance, and contracting opportunities in the form of set-aside and sole-source awards. A setaside award is a contract in which only certain contractors may compete, whereas a sole-source award is a contract awarded, or proposed for award, without competition. In FY2019, 8(a) firms were awarded $30.3 billion in federal contracts, including $9.5 billion in 8(a) set-aside awards and $9.3 billion in 8(a) sole-source awards,” according to the Congressional Research Service.

“While Native participation in some industries, such as gaming, has been in the spotlight, proceeds from another source have grown more quickly. Over the last 40 years, Alaska Native Corporations, Native Hawaiian Organizations, and federally recognized tribes (hereafter referred to simply as tribes) have increasingly done business with the world’s largest procurer of goods and services: the U.S. government,” the Federal Reserve Bank of Minneapolis reported in December.

Alaska Native entities controlling almost 1,400 businesses linked to the 13 Native Regional Corporations and 66 village corporations collectively earned more than $11 billion in revenue (in 2021 dollars) from federal governments from 1981 through 2021, the bank reported.

Most of this business is done Outside, and it has grown dramatically over the years.

The contracting businesses provide a steady stream of profits back to Alaska, which has helped Native-owned businesses claim the top 11 spots and 17 of the top 20 spots in Alaska Business magazine’s ranking in the “elite class of Alaska businesses” based on gross revenues.

These businesses do not, unfortunately, put many people to work in Alaska, and employment is the foundation of a state’s overall economy.

Only three Alaska Native companies – NANA Regional Corporation, which operates the Red Dog Mine near Kotzebue in cooperation with Teck Resources; the Arctic Slope Regional Corporation, which is heavily involved in the North Slope oil business; and Southcentral Foundation, a health-care entity – make the magazine’s top-10 list of employers, and only one more, the Bristol Bay Native Corporation, which is involved in Bay salmon fisheries, joins them in the top 20.

Two out of three of those businesses are involved in industries in disfavor with most Americans. According to NBC, oil and gas is the most-hated industry in the country with health care not far behind at number three. 

Mining didn’t make the list, but it appears unpopular in Alaska as well. The Alaska Conservation Foundation says its polling found that “63 percent of Alaskans believe that while mining has been part of Alaska’s past, it doesn’t have to be a big part of its future and that economic opportunities from fishing, tourism, and marine farming could provide good-paying jobs for Alaskans that don’t create pollution.”

The actual data tends to disagree with the latter assumption.  Seafood processors, for example, are heavily dependent on low-paid migrant workers.

More than 80 percent of the 22,000 employed in the state’s seafood processing industry are seasonal, non-resident employees according to the Alaska Department of Labor, and they earn an average of less than $10,000 per year. 

Tourism is less dependent on non-residents. Seventy-two percent of the more than 57,000 employed are Alaskans, according to the state, but wages are similarly low at less than $35,000 per year on average.

The average Alaskan employed in the oil and gas industry earns more than that in a quarter of the year, and those in the mining business make about three times as much per year.

State data doesn’t break out salaries for tech workers who are somewhere among the approximately 15,500 people in professional, scientific, and technical services who make up less than 4 percent of the state workforce.

The only tech company that makes the list of top employers is GCI, the 49th state telecommunications giant providing phone, cable TV and internet services statewide.

But none of this means that techies couldn’t be encouraged to move to Alaska. According to ZDNet, 18 percent of them are already self-employed contractors and more would like to be as noted above.

Alaska has a lot to offer self-employed contractors who like the combination of mountains, big open spaces, recreation and urban amenities.

Anchorage trumps Duluth in all those categories. The Minnesota city is actually one of the few places in the Midwest with a hill big enough to ski on, but it has no mountains, and it is often brutally cold in winter – more like Fairbanks than Anchorage.

And tech looks to be a huge part of the American economy going forward. MarketResearch is forecasting that 5G Security, Virtual Reality Gaming, Virtualization Software, Digital Education, and Healthcare Predictive Analytics will be the top five industries to boom in the ten years ahead. 

All involve techies.

Number six is cannabis edibles, a category in which Alaska seems to already be doing quite well. Possibly it could be combined with tourism to do even better with tourists chowing down on marijuana brownies while on aerial sightseeing tours of the country’s wildest state.

Think of it as getting high while getting high.

Or maybe combine cannabis use with the viewing of the northern lights now promoted in the state’s Interior. Now there would be a trip.

Correction: This story was updated on June 8, 2023, to correct the number of Alaska Native corporations profiting from 8(a) contracts and the amount of money involved.