Preliminary numbers show effect of COVID-19 on the economy
A recent report from the Alaska Department of Labor and Workforce Development shows preliminary figures on the economic impact of COVID-19, documenting a fairly static cost of living and only slightly increased unemployment in the Nome Census area. Sales tax figures from the City of Nome, however, show significantly less commerce in recent months compared to the same months in previous years, a pattern that has been expected as lockdowns curtailed the activities of many businesses.
Neal Fried, a state economist and author of the cost of living portion of the report, told the Nugget that while the cost of living statewide has always been high, it has not changed very noticeably in recent months, mostly because the economic shifts that cause changes in the cost of living take time to have noticeable effects. He said that the last comprehensive statewide cost of living analysis was conducted in 2009 and scored Nome at 139, or 39 percent more expensive than Anchorage, the reference point used in the study. Although he did not collect data from Nome in his most recent study, he said that the relative difference between Nome and Anchorage is probably still about the same.
A 2020 cost of living measurement was produced for Nome by the U.S. Department of Defense, which produces an index for all communities where it has or may have staff outside the Lower 48. On this index, Nome scored a 144, or 44 percent more expensive than the U.S. average, on par with Utqiagvik, Petersburg and Wainwright, and outscored only by Bethel with 150, which was also comparable to previous years. Fried pointed out, however, that the DOD index can be skewed because it excludes the cost of housing, since DOD employees in Alaska typically do not pay for their own housing.
The other major focus of the report was unemployment, which did show the effects of COVID-19. Unemployment in the Nome Census area in May 2019 was 11.2 percent, 6.2 percent statewide and 3.6 percent nationally. In May 2020 those numbers were up across the board, but the magnitude of the change in Nome was less than elsewhere, with 14.7 percent unemployment in the Nome Census area, 12.6 percent unemployment in Alaska and 13.3 percent unemployment across the U.S. In comparing May 2020 to May 2019, the report found that Nome and the surrounding region had one of the least affected unemployment rates in the state.
Municipal sales tax reports, however, clearly show that the pandemic has hurt Nome’s economy. In March 2020 the City of Nome collected $42,907.75 less in sales tax than it did in March 2019, an abrupt loss of commerce because of the pandemic. Some of the greatest losses were in hotels, accommodation, and liquor, probably due to the abrupt cancellations of Iditarod visitors. In April, the City collected $59,773.91 less in taxes compared to last year. Both months saw major losses in revenue from pull tabs and bingo sales and some increases in revenue from nonrestaurant food sales, as people spent more at grocery stores and less from restaurants.
Neal Fried said that Nome’s sales tax patterns were not surprising given what is going on elsewhere in the state, but the full extent of the pandemic’s economic damage will not be fully known for some time.
The City is slated to receive a total of $5.67 million in AK CARES Act funds, in three installments. The Nome Common Council has decided to direct some of the CARES Act funds to businesses and individuals experiencing economic hardship due to COVID-19. Of the first tranche of funds coming to Nome, $300,000 were allocated in utility credits for small businesses in Nome (with less than 50 employees) negatively impacted by COVID-19, as well as $275,000 for individual households and $25,000 in $300 checks for artisans and sculptors. Businesses get credited for $3,000 and individual households receive a $300 credit with NJUS.
Applications for the funding will go through NJUS.
Businesses and individuals need to sign a declaration of hardship before receiving the credit. Applications started being taken at City Council Chambers on July 6 until Friday July 10, between 11 a.m. and 5 p.m. Starting Monday, July 13 to Friday, July 17, between 12 p.m. and 4:30 p.m., applications can be filed at the NJUS office in the Old Federal Building.