ISER breaks down the effect of workplace closures in Alaska

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ANCHORAGE, Alaska (KTUU) - Economists at the University of Alaska's Institute of Social and Economic Research are starting to piece together the bigger picture of what mandatory workplace closures across the state will mean, for both long and short term scenarios.

Before COVID-19 brought the state's economy to a halt, Alaska was slowly climbing its way out of a multi- year recession. Mouhcine Guettabi is one of the research who was studying that process. ISER typically focuses on the state economy, and the role that our permanent fund dividends play as a form of universal basic income.

"We were doing research on a few different things." Guettabi told KTUU on Tuesday. "Obviously our attention has shifted almost completely over the last month and a half, to trying to understand the potential economic implications of COVID-19."

Now, the coronavirus is the clear focus for many of ISER's economists. Mandates from state and municipal leaders have closed the doors of all businesses considered "non-essential," just in time to disrupt a tourist season that contributes significantly to the Alaskan economy.

Guettabi is using the number of unemployment insurance claims that are being filed in response to workplace closures as a way to measure the growing scope of these impacts. In the first week that Alaska's unemployment benefit requirements were loosened to meet the growing demands, he says that around 7,000 people filed claims. The following week he recorded another 13,000 - and he won't be surprised if the current week brings statewide totals close to the 30,000 mark.

Guettabi looks at April as the first full month for Alaskans in this new virus-time economy. He estimates that over the course of the month, workers will miss out on $80 to $90 million dollars in wages, statewide, strictly as a result of work place closures. His numbers leave out considerations for falling oil prices, the potential cancellation of cruise ship operations and the uncertainty that surrounds the upcoming commercial fishing seasons. Even with those exclusions, we're looking at losses of $2 billion to the state's GDP - possibly more if this is prolonged, by Guettabi's estimation.

"One of the challenges right now with the federal bill, as generous as it is, is that most of the help is basically designed to get businesses through the next two or three months," he said. "In Alaska, the potential loss of revenue hasn't even started for some business. Those seasons will be coming up in two or three weeks."

However, Guettabi says the federal aid will bring some much needed relief to families and business, which is important for weathering the storm. The regional economist warns that cries to reopen businesses and jump start the economy before threats related to the virus could result in an even more dire outcome. If businesses open their doors now, the potential damage done by a widespread COVID-19 outbreak would have a much longer lasting impact on the economy and on the overall health of our population.

"These are decisions that are necessary in order to quell or contain the virus. That is what is best for the public health and the longterm economic health of our state and the country as a whole," he said.

"I've hesitated over whether or not to even discuss these negative economic consequences, I don't want the impression that people are left with the be: 'The closures have these significant economic costs, therefore we should reopen economic activity."

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