The amazing true socialist miracle of the Alaska Permanent Fund (2022)

The idea of a universal basic income — a check sent out by the government to every American, no strings attached, just for being alive — is sometimes decried as un-American, as a way for people to get money they didn’t work for.

But America contains one of the few places the policy has been tried at scale: Alaska.

The Alaska Permanent Fund is a state-owned investment fund established using oil revenues. It has, since 1982, paid out an annual dividend to every man, woman, and child living in Alaska. In 2015, with oil prices high, the dividend totaled $2,072 per person, or $8,288 for a family of four. By 2017, it had been cut down to $1,100 due to money being diverted to other purposes; in cheaper gas years, it can dip into the $800 to $900 range.

That’s not a living wage by any means, and it arguably doesn’t satisfy the “basic” requirement of “universal basic income.” But it’s a truly universal cash transfer program, the only one of its kind to be implemented in the United States, and it almost always offers families enough to eliminate desperate $2-a-day cash poverty.

Decades of conservative critics have decried cash programs like Aid to Families With Dependent Children or Social Security Disability Insurance, as vigor-sapping, soul-deadening subsidies for moochers, economic disasters that stunt growth and encourage sloth.

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So economists Damon Jones of UChicago and Ioana Marinescu of UPenn decided to figure out if Alaska’s cash payments were discouraging Alaskans from working. Their conclusion: not really. They find that “the dividend had no effect on employment” overall.

In other words: Alaska has figured out a way to use its oil wealth to give all its residents cash for free and wipe out extreme poverty — and it doesn’t appear to be harming its economy in the process.

Cash transfers didn’t lead to fewer working Alaskans

The challenge, in evaluating the effects of Alaska’s cash payments, is finding a baseline to which to compare the state’s outcomes. You can’t just compare Alaska after the policy was implemented in 1982 to Alaska before that, as there are plenty of other differences between the Alaskan economy in, say, 1981 versus 1983 (the US was in recession in 1981, for instance). And there’s no state that’s otherwise identical to Alaska that didn’t enact the policy to use as a baseline. Alaska is, as any resident will tell you, its own beast.

So Jones and Marinescu employ what’s known in the social sciences as a “synthetic control” method. Basically, they combine a number of other states whose patterns of employment, part-time work, and related statistics roughly match Alaska’s in the years before the policy was enacted. None of the states alone is a good comparison, but if you combine them carefully, you can come up with a “synthetic Alaska” for comparison.

Here’s how employment rate — the share of people currently at work, as a share of the overall population — evolved in Alaska versus synthetic Alaska, before and after 1982:

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The amazing true socialist miracle of the Alaska Permanent Fund (1) Jones and Marinescu 2018

There really isn’t much difference. Some years Alaska has higher employment than its synthetic counterpart, other years it doesn’t, but overall, they remain very close to each other. The cash payments don’t appear to have much effect.

To test how robust their findings are, Jones and Marinescu also compared Alaska’s employment rate to that of every single other state as well as DC, using every year of data they have, from 1977 to 2014. That’s 1,836 comparisons. The average difference between Alaska and other states in all those comparisons is -0.0004, vanishingly close to zero. That implies that their results aren’t just an artifact of which states they chose to be part of “synthetic Alaska.” The state just didn’t become an outlier with unusually high or low employment as a result of the Alaska Permanent Fund dividends.

They repeat the analysis for labor force participation — the share of the population either working or unemployed and actively looking for work — and similarly find no difference.

Where they do find a difference is part-time work, which increases in Alaska, compared to synthetic Alaska, after the cash payments are introduced:

The amazing true socialist miracle of the Alaska Permanent Fund (2) Jones and Marinescu 2018

The increase in part-time work isn’t huge — Jones and Marinescu estimate the increase in the share of the population that works part time to be around 1.8 percentage points — but it’s real.

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There are two things that could be going on here:

  1. People could be shifting out of full-time work and into part-time work because the dividend checks gave them money, enabling them to work shorter hours.
  2. People who weren’t working before the cash payment are driven to start working because of it, perhaps because it helps pay for transportation, child care, and other fixed costs of employment.

They find some evidence for the latter effect. “Some specifications suggest a marginally positive employment effect, which, in combination with the increase in part-time worked, could indicate new entrants into employment who work part-time,” they write.

That said, they also find evidence that the checks, on the margins, reduced work hours. But they conclude that this was mostly offset by the increased spending the checks enabled, which in turn helped businesses hire more.

When they split up businesses into “tradable” ones (like logging or oil extraction) that primarily sell their products to people and businesses outside Alaska, and “non-tradable” ones (grocery stores, accountants, landscaping) that sell only within Alaska, they found that employment rates at the latter held constant, and part-time work didn’t increase. That is, companies that benefited from new spending as a result of the checks didn’t cut employment at all. By contrast, part-time work did increase, and employment fell, in companies that sold goods outside Alaska, and so didn’t benefit from their customers suddenly having more money.

Alaska’s policy is unusually good and hard to replicate

“A universal and unconditional cash transfer does not significantly reduce aggregate employment,” Jones and Marinescu conclude. It’s an important conclusion, and one that other research, studying everything from “negative income tax” experiments in the 1970s to programs in Iran and at Indian reservations, confirms.

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There just doesn’t seem to be much evidence that giving people a modest amount of cash stops them from working entirely, or leads them to work significantly less.

But there’s a big caveat: Alaska pays these checks out of an investment fund financed by oil money. Taxing or collecting royalties for natural resources is just about the best way for the government to pay for stuff. Oil is in the ground, there’s a limited supply of it, and taxing it doesn’t reduce the amount left in the ground. It might reduce companies’ incentive to bring it out of the ground, but frankly, given climate change, that’s probably a good thing. Relying too heavily on oil money can cause political dysfunction, but distributing the money as cash to citizens helps reduce opportunities for corruption.

With exceptions like Texas and North Dakota, the rest of the US doesn’t have those kinds of oil reserves, which makes the math of financing a similar policy at the federal level tough. Hillary Clinton considered proposing a national expansion of the Permanent Fund under the title “Alaska for America” during the 2016 campaign, but couldn’t make the financing work.

Realistically, a similar policy at the national level would probably be funded the way the rest of the federal government is, with a mixture of income, payroll, and corporate taxes. Those are perfectly fine taxes, but standard economic theory predicts that raising them will, on the margin, discourage work, which might result in different effects on employment than Alaska’s policy has had.

But a similar policy financed by hyper-efficient taxes — like ones on land value, carbon emissions, alcohol, cigarettes, gasoline, and sugar — would likely do what Alaska’s policy does: reduce poverty, boost average incomes, and not harm the economy in the process.

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FAQs

How much do Alaskans get from the Permanent Fund? ›

The 2021 Permanent Fund Dividend amount is $1,114. Tax information can be found on our Payments menu.

Who qualifies for the Alaska Permanent Fund? ›

To be eligible for a PFD, you must have been an Alaska resident for the entire calendar year preceding the date you apply for a dividend and intend to remain an Alaska resident indefinitely at the time you apply for a dividend.

How much money do Native Alaskans get? ›

When first issued in 1982, the annual dividend provided $1,000 for each Alaskan resident. Since then, the annual dividend has varied from a few hundred dollars to more than $2,000 per person. In addition, Alaska is the only state without a state income tax or a state sales tax.

How much money do Alaskan residents get from oil? ›

14, 2021, at 5:05 p.m. JUNEAU, Alaska (AP) — What was once a joyous fall rite in Alaska has become another thing for people to bicker about — the amount of money residents receive from the state's oil wealth. Checks of $1,114 are expected to be paid to about 643,000 Alaskans, beginning this week.

What day is PFD deposited 2022? ›

Alaskans will Start Receiving the 2022 PFD on September 20th – Mike Dunleavy.

How much does Alaska pay you to live there per month? ›

In the past, citizens have qualified for up to $1,600 for simply living in Alaska, and in 2021 the amount was $1,114. All you have to do to receive this grant is to remain in the state for an entire dividend year!

Do Alaskans get paid monthly? ›

Alaska runs a program called the Alaska Permanent Fund, which, per the state website, allots an equal amount of the state's oil royalties to every resident through an annual dividend. In 2018, that dividend came out to $1,600 per person.

How long do you have to live in Alaska to get paid? ›

Criteria To qualify to get paid in Alaska

You must have plans of living in Alaska permanently. You will be disqualified if you are sentenced, convicted, or were incarcerated for a felony during the year. Most importantly, you must live in Alaska for at least 180 days in the year.

How much money do Native Americans get a month? ›

Members of some Native American tribes receive cash payouts from gaming revenue. The Santa Ynez Band of Chumash Indians, for example, has paid its members $30,000 per month from casino earnings. Other tribes send out more modest annual checks of $1,000 or less.

Do Alaskans get checks every year? ›

The first dividend plan would have paid Alaskans $50 for each year of residency up to 20 years, but the U.S. Supreme Court in Zobel v.
...
Annual individual payout.
YearDividend AmountInflation-Adjusted Dividend Amount (2021 USD)
2021$1114.00$1,114.00
39 more rows

Do all Alaskans get a stipend? ›

Look no further than the state of Alaska, which pays its residents over $1,000 every year just for living there. Permanent residents who opt into the state's Permanent Fund Dividend Division can receive yearly checks of up to $1,100 a year, according to its website.

Is Alaska Permanent Fund taxable? ›

Alaska Permanent Fund Dividends and Resource Rebate payments are taxable to either an adult or a child recipient and must be reported on a federal income tax return. Include these amounts on line 8f of Schedule 1 (Form 1040)PDF and attach to Form 1040 or Form 1040-SR.

Do Alaska residents pay taxes? ›

Alaska is one of only nine states with no income tax. That means employers do not withhold state or local taxes from Alaska resident's paychecks. While Alaska residents aren't charged state income taxes, they might have to pay other taxes.

Why do Alaskan residents get a dividend? ›

The Alaska Permanent Fund is an investment fund that invests capital that originates from surplus revenue obtained from Alaska's oil and gas reserves. The fund, which is a sovereign wealth fund, pays out annual dividends to every eligible citizen of Alaska.

How much is PFD 2022? ›

Mike Dunleavy said the 2022 Permanent Fund Dividend could be more than the $3,200 agreed to by lawmakers. Payouts to eligible residents will begin on Sept. 20 for Alaskans already qualified and on Oct. 3 for those who asked for a paper check.

How much is Alaska's PFD this year? ›

This year's $3,200-per-person payout includes a $650 payment meant to offset high energy costs. PFDs are scheduled to arrive a few weeks earlier than usual. Last year, PFDs went out in mid-October.

How much are the dividends in Alaska? ›

Legislature approves budget with $3,200 payout per Alaskan after House balks at bigger figure. Three minutes before 11 p.m. on the last day of its regular session, the Alaska Legislature finalized a state budget that will pay each eligible Alaskan about $3,200 later this year.

How much is a loaf of bread in Alaska? ›

The Cost of Living in Alaska
ItemCost in SeattleCost in Nome
Apples$1.69 / lb.$5.99 / lb.
Tomatoes$1.79 / lb.$5.49 / lb.
Large bread loaf$1.25$2.59
12 large eggs$2.29$3.79
4 more rows
Apr 4, 2016

How much money do you need to live comfortably in Alaska? ›

Typical Expenses
1 ADULT2 ADULTS (1 WORKING)
0 Children2 Children
Required annual income after taxes$29,933$65,157
Annual taxes$4,853$10,563
Required annual income before taxes$34,786$75,720
7 more rows

How much is the minimum wage in Alaska? ›

What is the minimum wage in Alaska? Alaska is one of 29 states with a minimum wage above the federal minimum wage of $7.25. The minimum wage in Alaska was $10.19 throughout 2020 and will increase to $10.34 on January 1, 2021. Notably, Alaska does not allow a tip credit against the state's minimum wage.

What state pays you $10000 to move there? ›

Consider renting an apartment in Tulsa or checking out houses for rent to get a feel for what it's like to live in Tulsa before putting down roots. You'll receive $2,500 up front and the rest of the $10,000 within your first year after moving to Tulsa.

Can you live in Alaska without a job? ›

Employment. We do not recommend moving out of state alone, especially to Alaska, without having a job lined up. There are a lot of job opportunities available, but unless you have unlimited funds, having secure employment in place is a must before you make the move to Alaska.

How much is a bag of chips in Alaska? ›

“Goes In With $100, Comes Out With A Bag Of Chips”: Folks Online Are Surprised To See How Expensive Groceries Are In Rural Parts Of Alaska. For those who have always been fascinated by traveling and especially by places that are hard to get to, TikTok user @emilyinalaska_ shares what it is like to live in Alaska.

How much does a house in Alaska cost? ›

In general, homes cost a little more in Alaska than the rest of the U.S. According to NeighborhoodScout, the state median home value is $265,385. Furthermore, 71.8% of the homes in Alaska fall somewhere between $108,722 and $435,285 in value.

Can you still claim land in Alaska? ›

No. Homesteading ended on all federal lands on October 21, 1986. The State of Alaska currently has no homesteading program for its lands.

Who owned Alaska before Russia? ›

Interesting Facts. Russia controlled most of the area that is now Alaska from the late 1700s until 1867 when it was purchased by U.S. Secretary of State William Seward for $7.2 million, or about two cents an acre. During World War II, the Japanese occupied two Alaskan islands, Attu and Kiska, for 15 months.

Can you just move to Alaska and live off the land? ›

It is legal to live off the grid in Alaska, as long as you follow the rules of the state. In the USA, the laws and regulations differ from state to state, so it's not entirely legal to live off the grid in the USA wherever you please.

What is the warmest it gets in Alaska? ›

The highest is 100 °F (37.8 °C) in Fort Yukon on June 27, 1915. The lowest Alaska temperature is −80 °F (−62.2 °C) in Prospect Creek on January 23, 1971, 1 °F (0.6 °C) above the lowest temperature recorded in continental North America (in Snag, Yukon, Canada).

How much is Alaska's PFD this year? ›

This year's $3,200-per-person payout includes a $650 payment meant to offset high energy costs. PFDs are scheduled to arrive a few weeks earlier than usual. Last year, PFDs went out in mid-October.

How does the Alaska Permanent Fund work? ›

The Alaska Permanent Fund is an investment fund that invests capital that originates from surplus revenue obtained from Alaska's oil and gas reserves. The fund, which is a sovereign wealth fund, pays out annual dividends to every eligible citizen of Alaska.

How much money do you get for living in Alaska? ›

Alaska pays each of its residents up to $2,000 every year, and there are barely any conditions. America's largest and most sparsely populated state pays every permanent citizen a share of the state's oil wealth as part of the Permanent Fund Dividend Division, part of the Alaska Department of Revenue.

Do Alaskans get checks every year? ›

This is not a hypothetical question. In Alaska, most residents receive annual dividend payments from the state's Alaska Permanent Fund (APF). The fund, established in the 1970s, generates the money by investing oil-related revenue.

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