Study ranks Alaska second-best in US for income equality

Elwood Brehmer

Alaska has one of the healthiest income scenes in the country according to a recent state Department of Labor and Workforce Development report.

The state's 2011 median income of $67,825 ranked second among all states, Puerto Rico and the District of Columbia, behind only Maryland's $70,004 in median earnings.

Alaska's income gap, or the difference between high and low-income residents, ranked second lowest in the nation in 2011 as well. The income inequality data was provided by a U.S. Census Bureau study of all states using the "Gini coefficient" -- a way to measure and compare income disparity between states.

Wyoming, with a median income of $56,322 and Gini coefficient of 0.408, was the only state with a lower income gap than Alaska's coefficient of 0.410. The closer the Gini number is to zero, the smaller the income disparity.

The national averages for median income and Gini coefficient in 2011 were $50,502 and 0.475.

Colorado had the largest income gap with a 0.569 Gini coefficient. Washington, D.C., reported the second-largest income gap with a 0.534 coefficient on a $63,124 median income.

Alaska economist Neil Fried said teasing out a single cause for economic and social indicators such as a low income gap disparity can be difficult.

"There are a lot of different possibilities. Part of it might simply be our demographics. Since we're a much younger state we don't have a lot of people, for example, who have accumulated a lot of wealth," Fried said. "We don't have that kind of old wealth you see in a lot of states."

He noted that the state's small population and less diversified economy increase the likelihood residents will have more similar incomes.

Fried said other factors including Alaska's high-paying oil and gas industry and the fact that a high percentage of the state's young earners are in the military -- and so may earn more than their contemporaries in other states -- also could contribute to a narrower income gap.

The report found that Alaska has a higher portion of its wage earners reporting incomes of greater than $150,000 a year than other booming energy-producing states such as Texas and North Dakota. Also, nearly 20 percent of employed Alaskans made between $100,000 and $149,999 in 2011, compared with about 15 percent in Texas and just more than 10 percent in North Dakota.

By Elwood Brehmer
Alaska Journal of Commerce