Personal income in Alaska drops after decade of solid growth

Income in Alaska dipped in 2016 after a decade of growth, a drop driven by the one-two punch of job losses and Gov. Bill Walker's veto that slashed the Permanent Fund dividend to fight the state's giant deficits.

Alaska remains among the top states for per capita income but its national standing slipped to eighth from fifth. Total personal income statewide fell by 1 percent last year, to $41 billion from $41.5 billion in 2015.

The 1 percent drop is "modest" but "somewhat significant," considering it is a departure from a trend that saw average yearly growth of 4.8 percent over the past decade, said Neal Fried, a state economist who covered the topic in the May issue of Alaska Economic Trends.

In 2015, total personal income had risen 3.1 percent from the year before, he said Monday.

Alaska's 2016 per capita income was $55,307. That is $895 less than in 2015.

The per capita category consists largely of job earnings but includes other sources of income, such as rental income, Social Security or welfare, and state dividend checks. It counts every Alaskan, including children.

California was seventh in per capita income last year, at $55,987, just ahead of Alaska. The U.S. average was $49,571.


The last time Alaska was first nationally was in 1986, with per capita income at $19,969, Fried said.

Alaska's economic struggles have come as the U.S. economy improves. Nationally, total personal income rose 3.6 percent in 2016, Fried wrote.

Total personal income declined in only two other states last year, both of them producers of oil. It fell 1.7 percent in Wyoming and 1.5 percent in North Dakota. Like Alaska, economies in those states rely heavily on the energy industry, which has struggled since oil prices began sliding in mid-2014.

On Monday, Fried said Alaska's income growth before 2016 was in part tied to the expansion of high-paying jobs in the oil and gas industry, along with strong state spending on capital projects.

Conversely, the crash in oil prices led many companies in Alaska, starting in 2015, to begin cutting workers and projects. That eventually prompted job losses in other sectors, including in construction and professional services.

Also causing the drop in Alaska income: reduced dividend checks. Walker last year held 2016 dividend checks to about $1,000, cutting them roughly in half, after vetoing a portion of the Alaska Legislature's transfer of money to pay them.

"The reason for Alaska's modest decline is twofold: job losses and smaller Permanent Fund Dividend checks, both of which were expected," Fried wrote in Alaska Economic Trends, produced by the Alaska Department of Labor and Workforce Development.

"If only one of these factors had been in play, overall personal income might still have increased in 2016, but together the declines were too big," Fried wrote.

Bill Popp, president of the Anchorage Economic Development Corp., said Monday that about 700 jobs related to oil and gas have been lost in Anchorage over the last year. Other sectors, including construction, saw losses too.

Popp said the decline in the Permanent Fund dividend caused Anchorage retailers to hire fewer workers in the fall compared to the year before, when the annual dividend was $2,072, about double what it was in 2016, giving people more to spend.

"We've seen a bit of a decline in retail jobs," Popp said.

Fried on Monday said that total payroll in Alaska fell by $677 million in 2016, down 3.7 percent from the year before. Alaska had 6,462 fewer employed workers in 2016, down 1.9 percent from the year before.

Alaska's national income standing may continue to fall, Fried said.

"We don't forecast that but we know employment is still declining in 2017," while the overall U.S. economy remains relatively healthy, he said.

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or