ABOUT WASILLA, ALASKA

Economic Overview

The following information has been excerpted from the January 2003 Alaska Economic TRENDS publication of the Alaska Department of Labor. You can access Alaska Economic TRENDS online

ALASKA ECONOMIC TRENDS

January 2003 Volume 23 Number 1
ISSN 0160-3345
Frank Murkowski, Governor of Alaska
Greg O’Claray, Commissioner of Labor and Workforce Development
Joanne Erskine, Editor

The Matanuska-Susitna Borough by Neal Fried, Labor Economist

It’s a big place

Both in population and in physical size, the Mat-Su Borough ranks third in the state. With 62,426 residents, it trails only Fairbanks and Anchorage.  And at 22,683 square miles, it is nearly as large as West Virginia. Although it is a big place, 90 percent of its residents live in a relatively narrow corridor between the communities of Willow and Sutton. (See map page 14.) Only three communities are incorporated or have political boundaries—Wasilla, Palmer and Houston. The residents of these three communities represent only 19 percent of the borough’s population, and the balance lives in unorganized places. While most residents live in a relatively concentrated area, some communities such as Skwentna and Chase are reachable only by plane, train, boat, snowmachine and other off-road vehicles. Places such as Y, Talkeetna, Glacier View, and Lake Louise are on the road system, but are distant from any major population center.

What makes the borough’s economy tick?

Historically, most of the communities in the borough were established to support farming, gold and coal mining. The Matanuska-Susitna Valley was literally the breadbasket of Alaska.  Mining largely disappeared when the Valdez Creek gold mine closed down in 1995, but potential for other mining activity remains. The Valley is still the largest agricultural producer in the state, but farming has been largely overshadowed in importance by other economic players.

Today the Mat-Su economy derives its vitality from a number of different quarters. Probably its most prominent source of economic stimulus is its role as residence of choice for many people who work somewhere else. The Valley’s visitor industry also continues to broaden and expand. A growing number of businesses in the Mat-Su provide services to the rest of the state, such as Job Corps, the GCI call center and others. As the Mat-Su Borough’s population rises to higher levels, more of the services needed by the local populace are generated locally. Combined, these several forces have elevated the Mat-Su Borough to the most dynamic economy in the state.

Commuters remain the backbone

In a sense, the Mat-Su Borough fits the classic national metro-suburban commuter model. That is, many people who live in the Mat-Su Borough commute to work outside the borough each day.  In fact, recently released U.S. Census 2000 commuter data show that 35 percent of the Valley’s labor force works outside the borough.  The details of where they commute to are not yet available, but obviously the vast majority of them commute to Anchorage. Data produced by the Alaska Department of Labor and Workforce Development does shed some light on where Mat-Su residents work. According to this data (it excludes federal and self-employed workers) 35.4 percent of Valley residents worked in Anchorage.  Another 5 percent were working on the North Slope, with the remaining 6.5 percent working in places around the state. Commuting workers earned more in total wages than all those who worked in the Valley.   

According to the 2000 census, the average commute time to work for Valley residents was 41 minutes, up from 32 minutes in 1990. It is unclear whether the time increased because of growing congestion, increased distance, or both. The average Alaskan spends 20 minutes commuting to work, and only 6 percent commute outside of their area to work—making this commuting pattern unique to the Valley. So why do so many commute? 

There are likely a host of reasons, but some are better explainers than others. Two compelling reasons lie behind the willingness to commute. The Mat-Su Borough offers a very competitive housing market to the state’s housing consumers, and Anchorage, the state’s largest labor market, is within easy daily travel distance for most Mat-Su residents.

The lure of affordable housing

There is little doubt that part of the Valley’s appeal is its affordable housing market. The numbers paint a clear picture. That is not to say that other factors such as lifestyle, scenery, etc. don’t play an important role, but they are more difficult, if not impossible, to quantify. In 2002, the average sales price of a single family home in the Valley came in at $169,404, a full 22 percent below the average single family home price in Anchorage.  (See Exhibit 3.) The Valley’s housing prices also come in significantly below the statewide average of $185,735. This price differential is a strong enticement to workers in Anchorage, retirees, and those who work outside the region (such as the North Slope) but want to live near a larger community.

The Valley is doing more of its own wash

The tremendous expansion that has taken place in Valley retail and service industries largely explains why the number of jobs in the Valley has grown nearly four times the rate of the rest of the state. Local residents are spending more of their income locally and less in Anchorage.  Economists sometimes label this phenomenon as “import substitution” — which takes place when it becomes economical for a region to go from buying their goods and services from outside their area, to buying them locally. Whether it is because the Valley has reached a critical size, or due to a longterm trend, does not matter. In the process, additional employment is generated. A full 67 percent of new jobs in the area came from the retail and service industries during the past decade.   (See Exhibit 11.)

The fact that employment grew considerably faster than population may be another indicator of the “import substitution” trend. Very strong sales tax receipt growth for the cities of Palmer and Wasilla is further evidence that the Valley is capturing more of its residents’ consumption dollars.  Since 1995, sales taxes collected in these communities increased by 77 percent—much faster than the 28 percent growth for the borough’s population.

Nothing short of a population boom

Since 1990, the borough’s population has grown by 57 percent, versus 17 percent for Anchorage and 15 percent statewide. The borough’s annual rate of population growth since 1990 has been 4.2 percent, compared to 1.3 percent statewide and 1.4 percent for Anchorage. In 2001, the Valley’s population stood at 62,426. That is nearly 22,800 more people than it had in 1990.   Only Anchorage, Fairbanks, the Kenai Peninsula and Juneau are home to more people than just this increase.  This robust growth in the Valley puts it in a separate league. The borough’s population in 2001 represented 19 percent of the Mat-Su/ Anchorage region, compared to 9 percent in 1980 and 14 percent in 1990.

Over the past decade, while the Valley has attracted thousands of new residents, the state has experienced net out-migration (more people moving out than moving in). It is no wonder the Valley has been attracting so much attention over the past five years. 

What is surprising is that this strong population growth was not limited to communities within commuting distance of Anchorage. Places like Talkeetna and others beyond commuting range have also experienced very strong growth. 

Interesting demographics in the Valley

Once every ten years, Alaska and every state and community in the nation are presented with a thorough statistical portrait in the form of the decennial census. The Census Bureau has been releasing results from the 2000 Census for the past year and will continue to do so for the next couple of years. Because this same information is produced for every community and state in the nation, comparisons are easily made. Most of the information can also be compared to previous decades. Exhibits 16 and 17 list some of the more interesting demographic data for the entire borough and the 28 identified places within its boundaries. Exhibit 18 is a map. More detail can be found on the websites of the Department of Labor and Workforce Development and the U.S. Census Bureau.

The median age for the Valley population was 34.1 in 2000, which is almost two full years older than the state’s median and 3.3 years older than the Valley’s in 1990. Like the rest of the state, the Valley is aging. The age breakdown of its population is not very different from that of the state, and neither is the ratio of men to women.  Its population is considerably less diverse than the state’s—88 percent white versus 69 percent statewide. There are more family households in the Valley (two or more people related by blood or marriage) than there are statewide, and those households are considerably bigger. Average family size in the Valley was 3.3, identical with the statewide average. There are also more married couple families. Educational levels at the college level are lower in the Valley and have not changed significantly from 1990. Household income was $51,221, not very different from the statewide average, but eight percent below Anchorage’s median household income.  

When the demographics for the 28 identified places in the Valley are compared, the differences can often be quite dramatic. Due to small sample sizes, some caution should be used in interpreting this data. For instance, the detailed data for Petersville, with a population of 27, should be treated carefully. With the exception of the three incorporated communities, the boundaries of the other 25 places are fluid from one decennial census to another, which makes comparisons with previous decades difficult. Even with these shortcomings, the data do shed light on the different places in the borough in a microscopic way. For example, the City of Palmer has the youngest median age at 28.8 compared to 47 for Lake Louise. Despite the relative youth of Palmer’s population, 9 percent is over 65, compared with 6 percent for the borough and the state. A more established population and a Pioneer Home may help explain the size of Palmer’s over 65 population. The Farm Loop area has one of the highest concentrations of college graduates and the Gateway area has the highest median household income. At 65 minutes, workers from Glacier View spend the most time commuting to work, and at 5 minutes, Skwentna’s residents the least! The place identified as Y, which is south of Talkeetna and north of Willow, is the only place in the United States that is recognized by one letter.

The future

If we assume that Southcentral’s economy will continue to grow, there is little doubt the Mat-Su Valley will keep on capturing a disproportionate share of this action, whether it be population, employment, payroll, or whatever the economic measure might be. With its cost advantages, land availability, and investments in basic infrastructure, there is little doubt this trend will accelerate. If a Knik Arm Crossing were to become a reality it would happen that much sooner. Growth could so fill in the intervening space, that sometime in the not so distant future, it may not be apparent to the casual visitor that the Mat-Su Valley and Anchorage are two separate entities.