It's now official. The National Bureau of Economic Research issued a news release this week proclaiming the U.S. recession ended in late 2001. According to the report, the national economy is on a slow rebound with unemployment still running high but Gross Domestic Production (GDP) expanding at a steady pace.
Alaska, like nearly every other state, is experiencing a retraction in state spending and government employment. As the center of government for the state, Juneau is destined to absorb a good portion of the budget-driven cuts to come in a very direct way.
A thorough analysis of Juneau's economic health was issued last week in a report entitled "Juneau Indicators." The report, researched by the McDowell Group, was a collaborative effort of the Juneau Economic Development Council (JEDC), the Juneau Chamber of Commerce and the CBJ.
In a nutshell, the statistics point to a sluggish local economy in 2002, dampened primarily by slow growth in wages, population and retail sales.
Last year, Juneau's population grew by 1 percent, lagging behind the 1.6 percent rate for the rest of the state. Retail sales increased by 5 percent in 2002, helped by the now defunct Kmart, but retail employment is on the decline.
As the main population center and retail and health care hub for Southeast Alaska, Juneau can credit a small portion of its population growth to migration from other declining communities in Southeast. Ketchikan lost about 200 residents in 2002 and the populations of Wrangell and Petersburg have shrunk by more than 15 percent since the mid 1990s. Many people have also left their native villages seeking opportunity in Juneau.
As a retail hub, Juneau is dependent upon shoppers from villages and towns throughout the region. Taxes from local retail sales along with property taxes are the primary source of revenue to fund the operation of city government. Each year, millions of dollars in retail sales drift out of Juneau to Seattle, Canada and to remote storefronts in cyberspace.
Juneau has a very diverse retail base but by no means can it fulfill all consumer needs. Goods not available in Juneau must be purchased Outside.
However, it is important to note that purchases made Outside do not contribute to our local tax base, which supplies tax revenues needed to support our schools, public works, public safety, jobs and host of other quality of life components. Nor do purchases made Outside contribute to local employment and entrepreneurial opportunity.
In most instances, Juneau retailers deal with a great disadvantage in competing with merchants from Outside. Juneau retailers find their bottom lines saddled by the same high cost of living encumbrances that every Juneau resident faces.
They must pay more for their property, labor, shipping, inventories and services they consume. Their property taxes are much higher than that of competitors elsewhere, and the sales tax they must add to their goods and services will only be increasing as the burden of supporting the cost of government becomes more "local" and moves closer to the pocketbook.
In some, but not all, cases the high cost of living and doing business in Juneau adds to the price of goods and services. While consumers sometimes grumble about high prices, retailers really have little choice in setting prices on merchandise if they hope to stay in business. Many don't survive.
Local bookstores, for instance, must compete with stores without walls, unlimited inventories, 24/7/365 hours, and computers doing nearly all of the work on the Internet. Juneau is fortunate to have a number of bookstores and consumers who still enjoy prowling the bookshelves.
However, local businesses provide something that no business from Outside can provide. Local businesses provide a vital social safety net for the community, contributing millions of dollars each year to charities, the arts, school projects and a host of community events. Without the support of the business community, many charities would cease to exist, and Juneau's many cultural amenities would go wanting.
Certainly, we live in a free market and consumers can easily make choices about where they spend their money. And, most retailers understand that consumers on fixed and limited incomes must do what they can to get by.
Juneauites should fully consider the local economic impact of their choices each time they consider making a purchase Outside.
If commerce continues to shift away from local businesses, the trend will bear devastating consequences for Juneau and its high quality of life. As Alaska considers a statewide sales tax, communities, retailers, consumers and voters will be forced to make hard choices.
There is strength in numbers, however, and support for our local businesses is one important way to fortify Juneau's social capital.
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