Alaska hire vis-a-vis nonresident workers: political sensitivity not legally enforceable.

• Author: Bradner, Mike
• Position: OIL & GAS

"Alaska Hire"--it's one of those terms politicians like to use when they want sound-bites to beat up on oil companies, or any large industry for that matter.

The term relates to an employer's effort to hire workers locally, and essentially it relates to a desire to retain as many of the jobs and as much of the wages as possible of an economic activity within the local economy, and reduce the leakage of the benefits to outside the state.

There has always been a political sensitivity to Alaska hire because of the state's history of major resource industries coming to the state, extracting resources (whether salmon, gold or oil), exporting them and bringing most workers with them too. Many of these industries have been seasonal, so the workers would typically arrive in spring, often spending the summer in remote camps, and leave in the fall with their paychecks.

In modern times, industries like oil and mining bring jobs that are generally year-round, which are attractive and viable employment options for resident employees. Other industries provide relatively low-wage jobs--tourism and fish processing, for example--that are unattractive to many Alaskans.

Construction of the trans-Alaska oil pipeline in the 1970s prompted a huge effort for Alaska hire--which had mixed results--and discussions about local hire are emerging once again with the possible construction of a large natural gas pipeline.

Subject To Interpretation

The term "Alaska hire" has many components and interpretations. It relates to "local hire" for example, meaning hiring within a community or region, not just the state. Contractors on remote rural projects are often criticized for not hiring workers from a local village, even though their employees may all be Alaskans, but hired in the state's major cities.

Alaska Native Corporations, who now own some of the state's largest firms, encounter the criticism in a different way. Their management teams come under intense criticism internally for not hiring more shareholders, who are likely to live in Alaska but don't always: Many Alaska Native shareholders of Native corporations live in the Lower 48 states.

In order to address Alaska Hire, the task of Native corporation managers is two-fold: to hire as many Alaska residents and also as many shareholders as possible. Most Native corporations list percentages of both groups in their annual reports.

Because Alaska Hire is about keeping the money at home, it also relates to Alaska Buy, another dimension of the issue that is in some ways more complex. For example, how do companies measure "local" purchases? Counting the number and value of contracts let or checks mailed to vendors with local addresses is an easy way...