Business

Phoebe Vanselow and Van Swanson sat in the waiting area at Ron’s Apothecary Shoppe Tuesday morning, waiting to get their flu vaccines.

The day before, they learned that the shop — which has been their primary pharmacy for decades — was closing its doors on Wednesday after nearly 50 years of service.

“We’re really sad it’s closing,” Swanson said. “We came here all the time.”

The pair are from Gustavus. They moved to Juneau two years ago. They said even in Gustavus, their family was ordering their prescriptions from Ron’s because of its quick service. They said its closure will be “a big loss” for rural communities in Southeast Alaska.

“The service that Ron’s has provided for smaller communities that are relying on things coming in the mail and air taxis is huge, and I don’t know how other pharmacies are going to pick that up,” Vanselow said.

Scott Watts co-owns the shop with his wife. They’ve run it since 2001, taking it over from Ron Sedgwick, the shop’s namesake and original owner. He opened the pharmacy in the late 1970s, near the airport, though it later moved to the Mendenhall Mall.

The Watts decided to shut down so they could retire. They started looking for a potential buyer before the pandemic but never found one.

Watts said he enjoyed running Ron’s because it gave him the freedom to provide more personalized care. But he said the biggest issue the industry faces today is dwindling insurance reimbursements for prescription drugs. As prescription prices continue to rise across the country, pharmacies – especially independent ones – are making less profit.

“The majority of our prescriptions are covered by insurance payments, and those are take-it-or-leave-it contracts,” he said. “And it’s getting very, very tight. It’s hard to pay the salaries, keep the lights on and do everything that we want to do.”

Tuesday morning saw a steady flow of customers to the pharmacy’s counter. Watts said the days leading up to the closure have been busy and bittersweet.

“The end result of retiring sounds great, but closing the store is very, very difficult,” he said.

Watts said the shop’s 10 employees are headed to the pharmacy at Safeway, along with many of the store’s customers. Vanselow and Swanson said Tuesday they aren’t sure what pharmacy they will use after Ron’s closes.

“I heard a bunch of these people are going to Safeway, so probably Safeway,” Swanson said.

Watts said he’s grateful for the support the store has received throughout the years. He said he and his wife plan to stay in Juneau and enjoy their retirement.

“It is truly wonderful and it has been great for us – I just can’t say enough about this community and people,” he said.

Alaska Airlines is buying Hawaiian Airlines for $1.9 billion. The companies announced the proposed merger Sunday at a press conference in Honolulu.

The combined organization will be based in Seattle under the leadership of Alaska Airlines CEO Ben Minicucci.

“As the two airlines rooted in the 49th and 50th state, both of which are uniquely reliant upon air travel, Alaskan and Hawaiians share a great deal in common,” Minicucci said.

At the press conference, he called out the friendship between late Hawaii and Alaska senators Daniel Inouye and Ted Stevens, and the political bonds shared by the native Hawaiian and Alaska Native groups. He said the airlines share a common corporate culture.

“We are aligned in the way we do business, the way in which we treat our employees, our engagement and support to the communities we serve,” he said.

Hawaiian Airlines serves about half the inter-island traffic in the state. Peter Ingram, Hawaiian Airlines’ president and CEO, says Honolulu will soon be an Alaska Airlines hub.

“This is the biggest announcement in Hawaiian’s history, and that’s saying a lot for a 94-year-old company,” Ingram said. “Our shared similarities, our people, and our values run deep, and that is what will ensure a prosperous future for both brands.”

The CEOs of each company say it will be 12 to 18 months before customers notice any changes, with schedules, frequent flyer programs and airline names staying the same. Minicucci promises the Hawaiian name will stay even after the merger is complete.

“The Hawaiian Airlines brand will remain, not only in name, but also in the distinctive branding that appears on the Hawaiian airplanes, at airports and other locations, and in the experience enjoyed by Hawaiian Airlines passengers, partners, employees, and the communities it serves,” he said.

It is very unusual in the industry for a purchased airline to keep its name and branding, according to Hawaii News Now business reporter Howard Dicus.

“It’s virtually unheard of,” Dicus said.

Dicus compared the promise to a combined tail design when United Airlines merged with Continental in 2010.

“This is more than a compromise. This is a recognition that the Hawaiian brand name has value,” he said.

With the deal, Alaska is picking up $1 billion in equity and $900 million in debt with Hawaiian Airlines. Minicucci said conversations on a price began early this year. The price translates to $18 per share, which is more than four times what Hawaiian Airlines had been trading at, which was only $4 per share.

“Today we have a deal because we agreed on a price that was fair, that valued the company at the right place,” Minicucci said. “And airline shares have been very volatile and so we took that aside to say. ‘What is the company actually valued at?’ The price that we offered was fair.”

Alaska has a larger workforce, with about 23,000 employees compared to Hawaiian’s 7,000.  Ingram said job protection was part of the deal.

“It was important to us at Hawaiian to ensure that Alaska will maintain and grow union jobs in Hawaii, retain flight crew bases and operations in Hawaii, with Honolulu becoming a strategic hub for the combined company,” Ingram said.

Alaska has 300 planes now, primarily Boeing 737s. The airline will get 60 more aircraft from Hawaiian, many of which are wide-body jets for international flights.

Baltimore illustrator John de Campos was irate when he discovered that some of his original work had been used to train an artificial intelligence chatbot — without his permission.

“It’s so gross,” he says.

In just the past year, AI-powered programs like Midjourney and DALL-E have made it possible for anyone to create highly sophisticated images with just a few clicks of the keyboard.

For de Campos, that’s an outrage.

“The fact that human expression and art is now at risk and on the chopping block is super duper scary to me,” he says.

At the same time, de Campos, who aspires to make a living as a board game designer, has found ChatGPT to be a very effective helper when it comes to marketing his games on social media.

“I’ll say, these are the qualities of the game that we’re selling. Take all of this information, melt it down into 15 words or less. Give me five different versions written to sell this product on Instagram,” he says.

De Campos acknowledges the hypocrisy that this presents and says he’s trying to decide whether he should divorce himself from using any AI tool.

“I feel so strongly about the art side and not so much about the text side, but I’m kind of figuring it out,” he says.

A year after the launch of ChatGPT, people in all kinds of occupations are figuring out where to draw the line with AI. Attitudes toward the new technology vary widely, with little consensus over which tasks can and should be handed over to bots.

The fastest writing assistant

In Michigan, Ethan Kissel has been turning to AI for help with his job producing television commercials for local businesses.

“It’s really good for spitballing ideas,” he says.

In the past, Kissel would spend an hour or more writing a 15- or 30-second script, with the hardest part being the tagline — the last, most memorable sentence. He discovered ChatGPT can deliver dozens of taglines in just a matter of seconds.

“Most of them are probably trash,” he says. “But you take a bit from one and a couple words from another and fashion them all together, and suddenly you have something that you actually kind of like.”

Kissel can easily can envision a future in which copywriters become dispensable, along with voice actors who do narration. His company already uses an AI tool to fix mispronunciations if they’re short on time.

For now, though, Kissel is less worried about his own job. In addition to writing scripts, he also shoots and edits video and meets with clients. Being a jack-of-all-trades, he says, offers some protection.

“I don’t think it’s as scary of a problem for ‘the right now.’ But it is one that we need to discuss and plan for,” he says.

Change is coming fast

Across professions, there are hints of what the future holds. Newspapers have used AI to write recaps of high school sports matches. Video game companies are using AI to create new characters. Software developers are using AI to write code.

Karin Kimbrough, chief economist for LinkedIn, which is owned by Microsoft, doesn’t see AI coming for everyone’s jobs right away. But she says AI will undoubtedly change how most people spend time on the job.

“You might spend less time on routine tasks,” she says. “You might spend more time on things… that are really using your human-powered skills, your skills of empathy and ethical judgment, your skills of managing and leading people.”

Ultimately, Kimbrough says, the hope is that AI will make people more efficient and productive.

But there are lots of pitfalls to avoid along the way. The internet is filled with stories of AI chatbots confidently delivering complete fabrications.

A New York lawyer was sanctioned this year after being caught citing bogus cases in a lawsuit against an airline. In court, he admitted he had used ChatGPT for legal research and hadn’t bothered to double check the bot’s work.

Such cases make it easy to see how irresponsible use of AI could end up harming people and society.

Learning the shortfalls and potential

Jeffrey Garcia, a program manager for a tech company, has taken it upon himself to figure out what AI is good at and what it’s not, partly for fun but also to stay on top of developments that could shape his future employment.

His experimentation over the past year has given him a glimpse into the technology’s shortfalls and potential.

As a child, Garcia was always frustrated with his inability to replicate on paper beautiful images conjured up in his mind.

“I have a deep love for art,” he says. “But I suck at it.”

This past spring, he wondered, could he open an Etsy store with a few products created with Midjourney? His first undertaking: a vintage-style poster of a favorite bird, the Baltimore oriole.

The program delivered a fairly sophisticated image of an oriole in front of a Baltimore skyline, but there were a few problems. Garcia’s wife, a biologist, found extra toes on the bird’s feet. The skyline did include a few recognizable landmarks but wouldn’t hold up for anyone who knows the city.

Garcia didn’t go on to sell any of his posters but concluded it would be fairly easy to commoditize such a product, especially given the rapid advancements AI image-generating tools have made. This fall, he tried using the newly-released DALL-E 3 to create the same poster and got a much-improved image, though still not free of anatomical errors.

“It’s getting better, but still not good enough to pass the snuff of someone who knows what’s going on,” he says.

Experiments like this have informed how Garcia uses AI for work. He thinks of ChatGPT as a naïve assistant who can fairly effectively write first drafts, but whose work must be verified and edited.

And there are still some parts of his job that he’s not ready to relinquish. Correspondence is one of them.

“I don’t feel comfortable handing off this thing that I view as essential and deeply human to an automated system,” he says.

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An impending merger between two of the nation’s largest grocery chains has Alaska lawmakers worried about grocery options in the state. Alaska Congresswoman Mary Peltola hosted a virtual town hall on the subject Tuesday, taking the opportunity to get out in front of a hot-button issue.

Safeway and Carrs owner Albertsons and Fred Meyer owner Kroger announced this fall that they would sell hundreds of locations – including 14 in Alaska – to meet merger requirements. The buyer is New Hampshire-based C&S Wholesale Grocers.

Peltola wrote a letter to the Federal Trade Commission in August, asking the commission to block the merger. Alaska’s senators co-authored a letter in September, expressing “deep concerns” about how the plan would affect prices and competition.

In the tele-town hall Tuesday night, Peltola said she was nervous about what the merger could mean for grocery options in Alaska communities.

“Even with the best intentions, it’s just so hard for grocers who are not familiar with the challenges in Alaska…it’s just so easy for things to go sideways,” Peltola said.

The town hall saw unanimous opposition to the merger from attendees, many of whom expressed appreciation for Peltola’s advocacy. Some shared stories about the impact of grocery consolidation in their communities.

A Soldotna resident named Art said he saw negative effects like job loss and increased prices when Safeway and Carrs merged in 1999.

“We had this before. History repeats itself. If we don’t learn from history, we have a problem,” he said. “And Safeway and Fred Meyers down here in Soldotna are like eight or nine blocks apart. And both parking lots are full at any given time. What’s gonna happen?”

Experts have said the stores most likely to be sold off will be Carrs or Safeway stores that operate near a Fred Meyer. Peltola said that caused deep concerns for her.

“There’s no scenario where that’s a good outcome, if a community that size is losing a whole grocer,” she said.

Peltola asked many participants if she could use their comments and stories to present to the FTC. She said she’s hoping to see action from the commission, and that she invited its chair, Lina Khan, to come to Alaska and listen to constituents about how they may be uniquely affected.

The FTC is expected to continue reviewing the merger into early next year.

Alaska’s minimum wage will increase to $11.73 per hour next year, under the terms of a 2014 ballot initiative. The voter-approved statute, an attempt to keep up with inflation, mandates that the minimum wage must rise each year at the same rate as consumer prices in the Anchorage area.

But Dan Robinson, who leads the state’s labor research department, says there are probably very few Alaskans who currently make minimum wage. One McDonalds in Juneau, for example, has been advertising a starting pay of $18 dollars an hour, Robinson says.

“Market forces, as strong as they are with the labor shortage, have almost certainly had much more of an effect on how much people are making than the minimum wage has in recent years,” Robinson said. “Or will with this increase that’s coming in the beginning of 2024.”

Robinson said other than a small handful of states, most of the country hasn’t been using minimum wage to attempt to keep up with the cost of living in recent years.

“It’s kind of become – not kind of – it’s become a less relevant driver of anything,” Robinson said. “Because it just hasn’t nearly kept pace with inflation in most states, and that would be true for Alaska long term as well.”

A separate state law dictating the minimum compensation for salaried employees likely is a factor for many Alaska workers. Jeremy Applegate works in the state’s Wage and Hour department, and he said with the exception of government workers, if salaried employees are exempt from overtime pay, they generally need to be making at least double the minimum wage.

Applegate said his team made a point to include the minimum salaries in the wage increase announcement this year to help educate employers.

“Because it is a major way in which people can easily violate that,” Applegate said.

That minimum annual salary for exempt workers is rising from $45,136 this year to nearly $48,796.80 for 2024. Applegate said anyone with questions or concerns about Alaska’s wage rules can contact the Wage and Hour office.

Juneau’s population is aging, and unless more young people start moving to Alaska’s capital city, there may not be enough people to fill jobs and take care of its seniors.

That’s one of the takeaways from this year’s economic indicator report from the Juneau Economic Development Council.

“For the first time in our history here in Juneau, the over-60 crowd outnumbers the under-20 crowd,” JEDC Executive Director Brian Holst said at a presentation to the Juneau Chamber of Commerce last week.

Juneau’s birth rate isn’t high enough to maintain its population size without more people moving here. But Robin Thomas, an attendee at the presentation, said now isn’t a good time for people to have kids in Juneau.

“If you’re looking at considering having a child, you have to look at the cost of daycare, medical expenses and housing,” she said in an interview. “There’s a lot working against people.”

If that trend continues, it could mean even fewer people having children, lower enrollment in the Juneau School District, a smaller summer workforce and an increased demand for senior services and health care.

“This is going to have a big impact on how we think about what we should do as a community,” Holst said.

Where did the new housing go?

Housing continues to be a major barrier for people looking to move to Juneau. Business owners in the region have said the lack of housing is the biggest challenge to hiring and retaining workers.

That’s despite Juneau adding around 1,500 units over the last decade.

“Our population increased by, basically, zero,” Holst said. “So where did all the housing go?”

Holst said some of it has become short-term rentals, which may have doubled in 2022.

“We also know that tourism companies, to call them out a little bit, have had to purchase a residence for their workers,” he said. 

Juneau’s aging population is also affecting housing availability, as more seniors choose to stay in their homes. Holst said nearly 800 units are occupied by people over 65 years old who live alone. 

The number of Juneau home sales continues to decline after reaching a peak for the decade in 2021. That year, nearly 550 homes were sold. Just over 100 sold in the first half of this year.

Efforts to increase housing availability are in the works.

City leaders increased the size of grants to help people build accessory dwelling units and are considering adding new housing to Telephone Hill. Tlingit Haida Regional Housing Authority plans to build housing at Juneau’s Pederson Hill subdivision and is helping tribal citizens become homeowners. And an assisted living complex opened this summer, providing a new option for seniors looking to leave their homes but stay in Juneau.

But for now, the market is extremely tight. Homes that do go up for sale aren’t on the market for long. In 2019, the average number of days that homes were on the market was 18 days. In 2020, it dropped to 8, then to 5 for the following two years.

“As houses come on the market, despite high interest rates, they are going really, really, really, really, really quickly,” Holst said. 

High cost of living

So far this year, median prices have been $515,000 for single family homes. Renters in Juneau pay an average of $1,420 per month, and Juneau has a lower vacancy rate than the rest of the state.

“The vacancy rate and the price of an apartment are pretty tightly correlated,” Holst said. “If you don’t have a lot of competition, there’s not a lot of reason to lower your rent.”

And the prices of things like groceries and health care may also keep people from moving to Juneau. Juneau’s cost of living is higher than both Anchorage and Fairbanks.

Mining jobs pay the highest average monthly wages in Juneau, but Holst said many of those workers commute between Juneau and other places in the state or country.

“The wages are great. It would be great to have them. It would be great for our economy,” he said. “But they choose not to live in Juneau. Is cost of living part of that answer? I think it might be.” 

Holst said Juneau has a lot of good jobs to offer, but potential employees won’t make the move if they can’t afford to live here.

“We have a lower population, lower workforce, increasing seniors who require services, and yet we have an economy that is actually really solid,” Holst said. “We have mining jobs, we have fishing jobs, we have tourism jobs, but we don’t have the workers.”