Alaska has a reputation for being independent and self-sufficient. From territorial days, when the gold rush promised fortunes for those willing to work hard, to modern times, as politicians deride the federal government for standing in the way of Alaska prosperity.
But the state’s economy during the COVID-19 pandemic tells a different story, one that underlines a long history of Alaska being a massive beneficiary of federal spending.
During the first year of the pandemic, Alaska lost more than 50,000 jobs. Doom was predicted for the state’s economy.
But that didn’t happen. State labor economist Neal Fried said Congress kind of saved the day, with big COVID-19 relief programs.
“Who would’ve predicted that in 2020, overall income to Alaskans, even on a per capita basis, increased?” Fried said. “And why was because of all these transfer payments that people were receiving.”
Those transfer payments were from federal relief, including increased unemployment benefits, child care tax credits and stimulus checks sent directly to Alaskans. Fried said it totaled about $1.5 billion extra in personal income. He said to a lesser extent, federal benefits in 2021 helped to offset job losses as well.
But as the pandemic winds down, those extra benefits are disappearing, and the question is, what will replace it?
Fried said the state is on the road to job recovery, but it’ll still be years before employment reaches pre-pandemic levels.
Alaskans could get an additional chunk of money coming to them in the form of an energy relief check.
A proposal in the state House would pay an extra $1,300 on top of this year’s permanent fund dividend. That would mean roughly $2,500 total per person, the fifth highest PFD payout in history, adjusted for inflation. The extra relief check would put an additional roughly $840 million into the Alaska economy.
“Is that going to make up for all the other federal programs that are disappearing, like the child care credit, and even to some extent the rental assistance will begin to run out, although that’s still out there, and some of the other advanced benefits… that’ll be an interesting question,” Fried said.
Alaska benefits from this influx of federal money even as Alaska’s political leaders rally against big government and complain the feds are crushing Alaska’s economy.
“No state has been targeted more by the current administration than the great state of Alaska,” said Republican Gov. Mike Dunleavy at his state of the state address this year as he decried federal limits on increasing oil production. “At every turn, and since day one of this Biden administration, this hostility has been perfectly clear. They don’t care about Alaska, and they don’t care about you.”
The idea that the state is self-reliant and burdened by the federal government doesn’t ring true for Andrew Halcro, a political blogger and host of an Anchorage Daily News podcast.
“We’re not independent,” said Halcro, a former Republican legislator. “We’re not independent at all. If not for the kindness of the federal government, I don’t know where the hell we’d be.”
He said setting up a stable fiscal plan would move the state closer to being the independent, self-reliant place it claims to be. Until then, and until the employment picture improves, government payments will pay a big role in keeping Alaska’s economy afloat.
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