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ECONOMIC PROFILE

Russian explorers mapped the Bering Sea coast and some of the Arctic. From the 1840s until 1863, Russian Missionary Jacob Netsvetov recorded the regional fur and fishing trading activities of the peoples of the Region. These commodities provided an opportunity for indigenous people to trade for goods and new items such as knives, guns, tools and other implements useful for increasing efficiency of subsistence hunting and fishing. Trading posts and forts were established in key locations around the Region and provided permanent settlements for many of the indigenous people. In the 1870s and 1890s, Moravian and Catholic missionaries recorded increasing numbers of parishioners settling in permanent communities. The gold rushes elsewhere in Alaska and the Yukon also brought small numbers of prospectors to the Region in search of gold.

The first real economic development in the Calista Region began with the onset of mining operations in the early 1900s. Prospectors returning from the 1898 Nome gold rush discovered gold in several locations in the Kuskokwim area in 1907-1909, and hundreds of prospectors poured into the Region, forming several major settlements.

After initial gold rushes to several strikes in the Region, some of the larger placer districts consolidated their small claim holdings with larger operations that could support more efficient and advanced methods and equipment. These gold mining operations continued until World War II, when the federal government shut them down, and diverted men and equipment to the war effort. After the war was over, many miners could not afford to recapitalize their operations. With the reduction of mining operations in the Calista Region, the area's economy entered a general decline.

Along with the growth of mining in the Region, the introduction of reindeer herding in 1901 provided a new economic stimulus that involved far more Native people. Moravian Church missionaries introduced the animal, and Native men were taught to herd by Norwegian Saamis through an apprentice program that paid them in deer. From a few hundred head, the herds grew exponentially until there were tens of thousands in the Region in 1930. The industry collapsed in the late 1930s due to oversupply, devaluation and lack of management. Today, one herd remains on Nunivak Island.

After World War II, federal expenditures for airports, communications facilities and social services became increasingly important to the Region, but did not replace the economic activity generated by mining. The federal government's role in the Region's economy was supplemented by the State. As Alaska's economy grew, state expenditures became increasingly important to the Region's economy, particularly in the 1970s. Most new jobs created by state and federal expenditures were filled by people from outside the Region because few local people had the requisite skills needed to fill the jobs.

In the private sector, commercial fishing, construction, trapping and crafts production provided village residents with employment and earnings during the 1960s and 1970s. Unemployment remained high, and subsistence activities continued to be a primary element of the Regional economy, particularly in the smaller villages. The Calista Region, unlike other areas of the state, has been unable to capitalize on economic booms. For example, residents were left out of the Trans-Alaska pipeline construction because the Region was too far away to provide services, and village residents had neither the skills nor the trade union membership necessary to get the jobs available during construction of the pipeline. As local economies in other areas of the state grew throughout the 1970s and 1980s, the Calista Region's economy - with the exception of construction - actually declined, and local residents became even more dependent on state and federal monies for survival.

Over the last 100 years, the economy of the Calista Region has evolved from a total subsistence economy to a mixed subsistence/cash economy. Subsistence remains very important to the overall economy of the area. Although wage employment has become more prevalent, it has not developed enough to support village residents. The Calista Region shares a common characteristic with most rural Alaska regions: they have mixed economies based on the subsistence use of renewable resources and cash provided by the government in the form of wages, transfer payments, revenue sharing and investments in infrastructure and the role of the private sector is limited (House Research Agency, 1982).

For the immediate future, a mixed economy combining the activities of wage employment and the harvest of subsistence resources for both commercial and subsistence use is expected to continue, simply because neither subsistence nor wage employment alone can support village residents (Fienup-Riordan, 1983).

Government spending is the single most important component of the regional economy, as is the case in much of rural Alaska. The stability of the Calista Region's economy is largely dependent upon outside public funding; consequently, the economy is very vulnerable to state or federal budgetary and program adjustments.

The overall contribution of government spending to the economy is much greater when government expenditures for construction, shared revenues, grants and other items are included. In 1990, it is estimated that state and federal expenditures accounted for approximately 65 percent of the total wages earned by residents of the Calista Region. The role of government is very visible in activities and services provided by the AVCP Regional Housing Authority, the Yukon-Kuskokwim Health Corporation, the Public Health Service Hospital in Bethel, Kuskokwim Community College, the Regional Educational Attendance Areas (REAA) and the Alaska Department of Health and Social Services.

Commercial fishing provides the largest influx of non-government money and wages into the Region's economy. Commercial fishing activities have helped diversify an economy that otherwise would be totally dependent on government spending. Most of the manufacturing employment in the Region is in fish processing, which provides an important source of seasonal earnings to village residents, particularly for unskilled workers. Although the total earnings from commercial fishing are still relatively low compared to total income in the Region, they provide an important source of income in many of the smaller villages where employment opportunities are limited. High costs for fuel and gear limit the economic return to commercial fishermen. The average earnings per fisherman are usually insufficient to meet annual income requirements for a family in the Region, and must therefore be supplemented by other income sources or subsistence foods.

Additional sources of earnings in the Region are hunting, trapping and crafts production. Like fishing, these occupations are not major income producers at the regional level, but provide some cash earnings to individuals. These occupations are important since they provide earnings during the winter months when construction, fishing and other seasonal work are unavailable. The production of crafts such as baskets, ivory carvings and other art forms is practiced in villages throughout the Region, but the lack of a well-established market limits consistent earnings from these activities.

The growth of government, trade and services sectors has created white collar/professional jobs in the Region. However, most men living in the villages are trained as blue-collar workers and laborers, and the Region has a disproportionately high amount of blue-collar labor available for the few labor-related jobs available. People entering the Region with the necessary education and skills often fill the new white-collar positions.

The major center of regional economic growth continues to be the city of Bethel. While small and relatively undeveloped by urban standards, Bethel has a much more active and prosperous local economy than the outlying villages of the Calista Region.

Average wages are substantially higher in Bethel than in the surrounding villages, reflecting the greater proportion of professional and technical jobs that are available. As a result, per capita incomes are much higher in Bethel than in the outlying villages. The average per capita income for the Calista Region is distorted when Bethel is included. Consequently, the true economic situation for the 80 percent of the Region's village residents is really much lower than shown in statistical reports.

Annual Economic data from the state

A PDF Presentation

Overview

The Bethel Census Area is typical of many Alaska rural economies in that it has a small seasonal economic base that is concentrated on natural resources - particularly salmon - and a cultural tradition of subsisting off the land. The economic base has declined 33% since 1995 due to a collapse in annual salmon runs. Offsetting this decline was a small increase in the tourism industry. Other sources of base income come from mining and the federal government. Federal and state capital improvement projects for schools, sewer and water, airports, utilities and other structures periodically infuse cash into the economy but provide limited opportunities for local employment. Opportunities for year-round employment are in public education, local government and various village organizations.

The City of Bethel serves as the Census Area's regional hub for transportation, retail trade and medical services. One indicator of Bethel's transition to a cash economy is its lower dependence on wild-food harvests. While subsistence use is still important in Bethel, annual per capita wild-food harvest is only about 260 pounds, which is much lower than the 400 pounds to 800 pounds harvested in the surrounding villages. These other communities are not based on cash economies and are primarily located to take advantage of subsistence resources. Year-round employment in the villages is limited to local government, including the schools and village organizations. Seasonal work in commercial fishing, construction and firefighting for the U.S. Bureau of Land Management also provide cash income.

Population

The Bethel Census Area is rural and composed primarily of Alaska Native villages. It is the third largest Census Area in the state at 41,087 square miles and is the home to 2.6% of the state's population. The chart above shows that the Census Area's population in 2003 was 16,774 and has increased an average of 1.6% per year. Population density is 0.4 people per square mile, which is high compared with other rural census areas. At the same time, the population density is well below the Alaska average of 1.1 person per square mile.

On average between the years of 1991-2003, more people moved out of the Bethel Census Area than opted to live here. This out-migration resulted in an annual average net loss due to out-migration of 4.9 people per 1,000 population from 1991-2003. (Chart) However, high birth rates in the Census Area offset this out-migration and resulted in the rapidly expanding population.

Birth rates in the Bethel Census Area are substantially higher than the Alaska average, while death rates are only slightly higher than average.(Chart) High birth rates are common in rural Alaska, but the have been declining since 1991.(Chart)

The Alaska Native population in the Census Area, primarily Yupik Eskimos, account for 82.3% of the total population. The percentage of Alaska Natives in the Bethel Census Area is high compared with other areas in the state. In 2002, Alaska Natives represented 15.9% of Alaska's total population.(Chart)

Personal Income and Employment

Overall employment is increasing slightly in the Bethel Census Area. However, the employment picture is mixed when viewed by the individual economic sectors (economic base, private sector and government). During the 1990s, there was a 33% decline in the economic base, which includes businesses that create new wealth by generating exports or by displacing imports to Alaska. For the Bethel Census Area, the economic base includes tourism, commercial fishing and the federal government. The federal government is considered part of the economic base because federal expenditures are new money brought into the state. Employment in the economic base is down due to decreases in commercial fishing and seafood processing, and to a lesser extent decreases in federal employment. The declines in commercial fishing and seafood are due to very poor salmon runs and other factors such as increased competition with farmed salmon in world markets. Poor salmon market conditions led to the closing of the local seafood processor in the City of Bethel for the 2001 season with no plans to re-open it in the near future

Offsetting the employment losses in the economic base are more jobs in the private support sector and in state and local government. Employment in these sectors was up 11% and 15% respectively. The private support sector includes businesses in construction, retail trade, wholesale trade, services and finance-insurance-real estate. The growing employment is the result of an expansion in retail trade and services as the City of Bethel evolves into a regional economic hub for the Yukon-Kuskokwim Delta. Since 1995, employment increases in local government have more than offset job losses in state government.

Income from the economic base is relatively small and volatile when compared with the private support sector and state and local government.(Chart) After adjusting for inflation, the trends in earnings per job are flat for the workers in the economic base and the private support sector. In contrast, the trend in earnings per job is declining for state and local government workers.(Chart) This decline means that employment opportunities have expanded but that average wages per job have decreased. The flat trend in the economic base reflects a shakeout in the commercial fishing industry leaving the more efficient operators still in business. This outcome will be short-lived if salmon runs remain poor as in recent years. Gross earnings from commercial fishing are half of what they were before the collapse of salmon runs started in 1996.(Chart)

Unemployment

Unemployment rates in the Census Area were less than Alaska averages before the collapse of the salmon runs, but are now well above the statewide average.(Chart) This comparison is somewhat misleading since it does not reflect those adults who are not in the labor force. Those adults (45% in 1990) far exceeded those who were temporarily unemployed and were seeking new work for cash income. This high percentage largely reflects the amount of time and effort directed toward subsistence activities.

Over a year, there is a large variation in unemployment rates in the Bethel Census Area. This is characteristic of Alaska and is primarily due to the seasonal nature of an economy based on natural resources.(Chart) Changes in work force numbers indicate that the growth industries are in the private support sector - especially in health services and retail trade.

Subsistance

Wild-food harvests are extremely important for maintaining cultural traditions and are a primary source of sustenance. The figure above shows the high dependence on wild-food harvests in the Census Area's smaller communities. The figure also shows a much lower dependence on wild-food in the City of Bethel, where a cash economy predominates.

According to Alaska Department of Fish and Game surveys, the total annual harvest of wild foods is 11.2 million pounds or 690 pounds per person. While the average annual wild-food harvest ranges from 402 pounds to 1,328 pounds per person in the outlying villages, it averages only 261 pounds per person in the City of Bethel. Major fish varieties include salmon, herring, whitefish and halibut. Marine mammals harvested include three seal species (bearded, ringed, and spotted), beluga whale and sea lion. Land mammals harvested include caribou, moose, beaver and musk oxen. Wild foods, furs, and other products are commonly shared among kinsmen and friends. More detailed information about subsistence activity in the Bethel Census Area is here.

Per Capita Wealth

Per capita wealth is the sum of all cash income, such as wages, salaries and rents, plus state and federal entitlements (transfer payments), plus an estimate of the replacement value of wild subsistence foods harvested. Adjusting for inflation, the 1999 per capita income was $24,400, below the State's average of $25,700. Chart More important, the trend in per capita income since 1995 has been flat.(Chart) Per capita non-wage income such as medical assistance, income assistance, Bureau of Indian Affairs compacting dollars, Permanent Fund Dividends and other transfer payments was $5,100 in 1999 and has been increasing since 1995.(Chart) The increase is primarily due to larger Permanent Fund Dividends. A discussion of the methodology employed in determining income components is here.

On a per capita basis, food from subsistence activities accounts for about 35% of an individual's economic well being in the Bethel Census Area.(Chart)The Permanent Fund Dividend accounts for 12% of per capita income derived from wages and transfer payments and is more than double the Alaska average.(Chart)

Capital Improvement Projects

There are about $313 million in funded capital improvement projects in the Bethel Census Area. Thirty-four percent of these projects are designed to create greater economic development. The remaining projects are to improve health and safety (39%) and to improve or expand local services (27%). Examples of economic development projects include a halibut processing plant, airport improvements and a road to help access the Creek gold deposit. Health and safety projects include water and sewer facilities, new health clinics, replacement of bulk fuel tanks and an oil spill clean-up project. Improved and expanded services include local roads, boardwalks, residential homes, schools and electric utility upgrades. Another $44 million worth of capital improvement projects are in the planning stages. (Chart) Details on capital improvement projects on a per-community basis is available at the Alaska Department of Community and Economic Development RAPIDS web site.

Wade Hampton Census Area: Economic Overview

General Statewide Economic Information here

Overview

Located in Southwestern Alaska, the Wade Hampton Census Area is composed of 21 small communities with mostly Alaska Native populations and essentially subsistence-based economies. The economic base is small and consists of commercial fishing, fish processing, fire fighting, fur trapping and Alaska Native arts and crafts. Villages are primarily located to take advantage of subsistence resources. The provision of supplies and services are a large component of the cash economy. Opportunities for year-round employment are primarily in the areas of federal, state and local government as well as public education and various village organizations. Most new jobs are in services run by Native organizations that provide housing, health care and other social services. Transfer payments (Permanent Fund Dividends, Aid to Families with Dependent Children, and food stamps) also make up a large part of the cash economy.

Two Community Development Quota (CDQ) groups are active in the region. The Yukon Delta Fisheries Development Association serves six communities, including Emmonak and Mountain Village. Coastal Villages Region Fund has 20 member communities ranging from Quinhagak in the south to Kipnuk and Chefornak in the north. Each group provides employment opportunities in the Bering Sea ground fishing industry and also in the local shore-based CDQ salmon and halibut plants.

Located on the north bank of the Andreafsky River, St. Mary's is the region's economic and transportation hub. The economy in St. Mary's is subject to seasonal fluctuations due to the summer fishing season. A cold storage facility is available. Poor fish returns during the past two years have adversely affected the community. The communities rely heavily on subsistence wild foods.

Communities on the lower Yukon are traditional Yupik Eskimo villages that combine a subsistence culture with other influences such as mining, trading posts and missions. Marshall was a placer mining camp during the Gold Rush days and now is home to a fish processing operation. Russian Mission was the first Russian American Company fur trading post on the Yukon, in 1837. Emmonak sits at the mouth of the Yukon River. The city has a seasonal economy based on commercial fishing. Emmonak is becoming a center for commercial fishing and processing on the lower Yukon River. Three fish processing plants now operate in Emmonak. The community of Alakanuk, located in the Yukon Delta National Wildlife Refuge, has a seasonal economy almost entirely dependent on salmon and roe herring.

The economic base of the Wade Hampton Census Area dropped 23% from 1995 to 1999. The decrease was primarily due to poor salmon runs beginning in 1996 and cutbacks in federal government spending. Gross earnings from commercial fishing were 24% less than what they were before the collapse of salmon runs. (Chart) A small, emerging tourism industry and income from fur trapping and Alaska Native arts are helping to offset the decline in commercial fishing and seafood processing. In contrast to the economic base, the private support sector has grown 66%. State and local government has grown 16%.

In 2000, there were $243.8 million of federal and state capital improvement projects for schools, sewer and water projects, airports, utilities and other structures. During construction, capital improvements bring cash into the economy. However, these projects provided only limited opportunities for local employment.

Regional Native Corporation. Thirteen Native regional for-profit corporations were established by the 1971 Alaska Native Claims Settlement Act (ANCSA) that settled aboriginal land claims in the state. At the same time, some 200 village for-profit corporations were formed. An overview of all the Native regional corporations (Alaska Business Monthly, March 2001) is here. The Wade Hampton Census Area, along with the Bethel Census Area, is located within the Calista Corporation region. Fifty-six villages dot the region, forty-six of which are incorporated as individual ANCSA village corporations. Calista's 13,300 shareholders are mostly Southwestern Yupik Eskimos, most of whom still speak their traditional languages and live a largely subsistence lifestyle. Key Calista businesses include rural newspapers, oil well services, business services, title insurance, equipment leasing, computer consulting, real estate, environmental consulting, construction and wholesale distribution. Total revenues in 2000 were $13.6 million. Details on the corporation's revenues and major business activities, and a narrative discussion, are here.

Population

Personal Income and Employment

Overall employment in the Census Area increased 20% from 1995 to 1999. However, the employment picture is mixed when viewed by the individual economic sectors (economic base, the private support sector and state and local government) as shown at right. For example, there was a 3% drop in the economic base that includes businesses that create new wealth by generating exports or by displacing imports to Alaska. The economic base in the Wade Hampton Census Area consists of commercial fishing, fish processing, tourism, a small federal government presence, fur trapping and Alaska Native arts. Since federal expenditures are essentially new money brought to the state, it is considered part of the economic base. Employment in the economic base is down due to decreases in commercial fishing and seafood processing, and to a lesser extent from cutbacks in federal employment. The decreases in commercial fishing and seafood were due to very poor salmon runs and other factors such as increased competition with farmed salmon in global markets. In contrast, jobs in the private support sector increased 48% and in state and local government 18%. The private support sector includes businesses in construction, retail trade, wholesale trade, services and finance-insurance-real estate. The growing employment is due to expansion in services, primarily those that are provided by Native organizations. From 1995 to 1999, employment in local government has been highly variable and dwarfs the number of state government jobs.

Income produced by the economic base is small and variable compared with income provided by the private support sector and state and local government. (Chart) From 1995 to 1999, income in the economic base fell 23%. In contrast, income in the private support sector jumped 66% and income from state and local government jobs rose 17%. The Permanent Fund Dividend, other government expenditures and the success of Alaska's Native regional corporations have allowed the private support sector to grow beyond the normal influence of the economic base.

Unemployment

Unemployment rates in the Wade Hampton Census Area have always been substantially higher than the statewide average. (Chart) The rates are not surprising since subsistence activities dominate life here and opportunities to generate cash from other activities are limited. The normal measure of unemployment (people unemployed and actively seeking work) is somewhat misleading in rural Alaska because it does not reflect the realities of a small cash economy and high dependence on a subsistence economy. A better indicator of unemployment is an estimate of the number of working-age adults who are not in the labor force. In the Wade Hampton Census Area, the number of adults not in the work force, 44.3% in 1990, was very high and far exceeded the regular measure of unemployment. The national norm for adults not in the work force is 20%. The higher percentages in Alaska reflect the amount of time and effort directed toward subsistence activities, as well as limited opportunities to earn cash. Over the course of a year, there is a large variation in unemployment rates in the Wade Hampton Census Area. This fluctuation reflects the seasonal nature of an economy based on natural resources and the limited opportunities to generate cash. (Chart)

Subsistence

Wild-food harvests are extremely important for maintaining cultural traditions and as a primary source of sustenance. The chart at right shows the high dependence on wild-food harvests in Wade Hampton Census Area communities. Based on Alaska Department of Fish and Game surveys, the annual harvest of wild foods in the Census Area is about 4.9 million pounds, or about 698 pound per person. Most of the wild food harvested is composed of fish (74% by weight), along with land mammals (9%) and marine mammals (13%). Birds make up 4% of the harvest by weight while plants contribute less than 1%. Major fish varieties include salmon, herring, whitefish and halibut. Marine mammals harvested include three seal species (bearded, ringed, and spotted), beluga whale and sea lion. Land mammals harvested include caribou, moose, beaver and musk oxen. Wild foods, furs, and other products are commonly shared among families and friends. More detailed information about subsistence activity in the Wade Hampton Census Area is here.

Per Capita Wealth

Per capita wealth is the sum of all cash income, plus state and federal entitlements (transfer payments), plus an estimate of the replacement value of subsistence foods. Adjusting for inflation, the 1999 per capita wealth in the Wade Hampton Census Area was $21,600, well below the statewide average of $25,700. (Chart) The trend in per capita wealth since 1995 has been flat. Per capita non-wage income such as medical assistance, income assistance, Bureau of Indian Affairs compacting dollars, Permanent Fund Dividends and other transfer payments was $5,900 in 1999 and has been increasing somewhat since 1995 (Chart) The increase was primarily due to significant growth in Permanent Fund Dividends during this period. (Chart) A discussion of the methodology employed in determining per capita wealth components is here.

On a per capita basis, food from subsistence activities accounts for about 44% of an individual's economic well being - the highest share for all the Alaska census areas. The Permanent Fund Dividend accounts for 21% of per capita income derived from wages and transfer payments and is triple the Alaska average of 7%. (Chart)

Capital Improvement Projects

In 2000, there were about $243.8 million in funded capital improvement projects in the Wade Hampton Census Area. Fifty-one percent of the funded projects were designed to improve health and safety and include airport improvements, sewer systems, water systems, washeterias, health clinics, landfills and erosion control projects. Another 43% of the projects were to improve or expand services, such as, local roads, boardwalks, residential homes and schools. Another 5% of the funded projects will build or replace basic infrastructure, including bulk fuel facilities, electric utilities, harbors and docks. One percent of the projects was to help establish new businesses, including a secondary fish processing plant, a traditional arts and crafts entrepreneurship project, a regional salmon-marketing project and the renovation of a hotel. Another $11.5 million in capital improvement projects is in the planning stages. (Chart) Details on capital improvement projects for every community in Alaska is available on the Alaska Department of Community and Economic Development RAPIDS web site.