Military spending in Alaska has outsized impact on state's economy

Military impact on Alaska's economy waves and wanes, but at least since World War II, the military has been one of Alaska's economic mainstays, says state labor economist Neal Fried.

In fact, Fried noted in the December issue of Alaska Economic Trends that according to University of Alaska Anchorage economists, only oil and federal spending generate more jobs and income in the state.

One of the first acts of the federal government after purchasing Alaska on March 30, 1867, was to send Army troops to Alaska to occupy and administer the new territory. During World War II, more than 100,000 troops were assigned to the state, along with billions of dollars for infrastructure.

Then came the years of the Cold War, when Alaska's proximity to the Soviet Union cemented the military's role in Alaska's economy for decades to come, Fried said.

The military's influence on Alaska's economy can also be viewed as one of the state's leading exports, which are especially relevant because they bring new money into the state, Fried said.

The benefits are similar to those from exporting gold, oil or fish, but instead of a commodity, the military "sells" national defense, a service the rest of the country is willing to pay for, he said.

Looked at another way, the military's share of Alaska's federal gross domestic product has surpassed civilian federal spending since 2003. Tens of thousands of service members and their families live in Alaska and spend money here, and with them comes money to build and maintain large, sophisticated facilities.


Many of those soldiers, plus civilian and contractor employees live off base, and with those living on base spend a significant share of their income in the surrounding community. Millions more dollars are spent locally on procurement and construction.

Since 1940, international events that had little or nothing to do with Alaska have affected alternating military buildups and cutbacks. The list of military buildups, including World War II, is a long one.

Military reductions of note have included the loss of nearly a quarter of the state's military population between 1990 and 2000, with the closing of several military installations.

Terrorist attacks on Sept. 11, 2001, and wars in Iraq and Afghanistan led to a huge influx of military personnel to Alaska, with Alaska-based servicemen playing a large part in these conflicts. Federal expenditures also grew, in part to the influence of the state's congressional delegation.

Over the past decade this expansion has been significant to Alaska's broader economic growth. The military's share of the state's gross domestic product grew substantially from 2001 through 2011, with the increase in construction money probably having a bigger effect on the economy than the increase in troops.

Fried notes that nearly all of the state's military installations underwent complete makeovers, and Fort Greely received a new anti-ballistic missile facility.

Between 2003 and 2010 alone, military spending was approximately $500 million a year on construction in Alaska. Associated General Contractors said that between 2005 and 2009, 10 percent or more of all construction in the state was defense related, peaking at 19 percent in 2006.

The military's economic reach also stretches into a large federal civilian workforce. As of 2012, Alaska had more than 7,000 defense-related civilian jobs with a payroll of $452 million and average earnings of $62,278.

These jobs ranged from specialized professionals at the U.S. Army Corps of Engineers to retail workers employed in commissaries.

Margaret Bauman is a reporter with The Cordova Times.