Economic Challenges

Alaska has many unique advantages (abundant natural resources, large tracts of wilderness, and a globally strategic location) that drive the economy. But it also faces a unique set of challenges.

Probably the largest challenge Alaska faces is its relative isolation from the rest of the world. Alaska is far away from the centers of the national and world economy. Most goods and materials that Alaskan businesses need must be shipped a great distance, which is expensive. This makes it both costly to live and to do business in Alaska. This is also the reason Alaska has very little manufacturing. The cost of shipping in materials and then shipping out finished products makes Alaska-made products uncompetitive in most cases. For example, it is hard to imagine a large business would open up a major car or industrial product factory in Alaska. It simply costs too much to ship in materials and ship out the final product. And the high cost of living means they must pay higher wages and operational costs. These challenges create significant limits on economic development in the state. 

Another significant challenge for economic development in Alaska is a limited workforce. In 2024, Alaska had two job openings for every unemployed person seeking work. This makes finding and keeping employees difficult for businesses. One reason for the labor shortage is people leaving the state. More than 50% of high school graduates leave Alaska - and many do not return. In 2024, more people had left Alaska than came to Alaska for 11 consecutive years.  Compounding this problem is that most people leaving are younger working-age adults, and most people coming to the state are nearing or in retirement. 

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