PFD trims Alaska's income gap

Posted: Wednesday, September 25, 2002

ANCHORAGE - Alaska has the smallest gap between rich and poor of any state, in part due to permanent fund dividends.

Figures released Wednesday by the U.S. Census Bureau showed that while the gap between rich and poor grew by about 3.1 percent nationally during the 1990s, it barely budged in Alaska during the decade. The findings are based on household income data gathered during the 2000 census. The Census Bureau measured the gap by using a statistical formula used by economists to measure disparity of income.

Economists say there are several factors that level the playing field in Alaska, including the Alaska Permanent Fund dividend paid out annually to every eligible man, woman and child in the state. The size of this year's dividend, to be announced tonight, is estimated at about $1,550.

"Our low income people are not as low income as the rest of the nation because they all get a dividend," said Larry Persily, deputy commissioner of the Alaska Department of Revenue.

A family of four will get a payout from the state's oil wealth savings account will mean a cash infusion of about $6,000 this year. Low-income households saw their incomes rise during the 1990s as the dividend rose.

At the same time, the technology boom that fueled the explosive economic growth of the 1990s in the Lower 48 largely bypassed Alaska, said Gunnar Knapp, an economist with the Institute of Social and Economic Research at the University of Alaska Anchorage. As a result, Knapp said, working Alaskans probably didn't see the big increases in household income seen by those in other states.

"I'm not aware of any billionaires in Alaska. Maybe if you're a billionaire you don't live here, you live in Palm Springs or Beverly Hills or New York or someplace glamorous," Knapp said. "We've got plenty of people living in nice homes, but we don't have super-rich people."

Also contributing to the narrow gap between rich and poor is Alaska's relative shortage of low-paying jobs.

"We don't have a lot of migrant farm workers or a huge retail industry or service industry. Yes we have McDonald's and Wal-Mart, but not as many as in other places," Knapp said. "A very significant part of our employment is in government and those are reasonably well-paying jobs."

There is less wage disparity in the government work force than in corporate America, said Lee Huskey, an economics professor at the University of Alaska Anchorage.

"The top guys don't make that much more than those in the middle," Huskey said.

Another factor that tends to narrow the gap is the relatively young age of Alaskans. The median age in Alaska was 32.4 in 2000, compared with 35.3 nationally.

"Older people make higher salaries and have greater wealth and nonsalary income," Huskey said.

According to the census figures, Sitka showed the biggest increase in the gap between rich and poor in Alaska, a change believed to be linked to the closure of the Alaska Pulp Corp. mill in 1993, said Neal Gilbertsen, economist with the state Department of Labor.

"I would guess that there were a lot more high-paying jobs that were replaced by lower-paying jobs," Gilbertsen said.

While the census figures indicate the income gap in Alaska is narrow, they don't take into account the differences in the cost of living throughout the state. Incomes are lowest in much of rural Alaska, where the cost of living is highest.

State Rep. Albert Kookesh, an Angoon Democrat and co-chairman of the Alaska Federation of Natives, said the narrowing of the gap between rich and poor does not address the limited employment opportunities in rural communities.

"The reality is that, in rural Alaska, the jobs are just not there. Those that are there are associated with the school system, the National Guard - nothing tied to economic development, just jobs tied to getting along and surviving," Kookesh said.



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