Alaska PFD amounts for the last 10 years. Graphic courtesy of Avery Williamson.
Every year Alaskan residents look forward to October because the Permanent Fund Dividend means more money in their bank accounts. Though everyone is eager for extra money, the Alaska Permanent Fund may have more disadvantages than we think.
The state has seen declining oil production and revenue for decades, yet Alaskans have grown dependent on the yearly disbursement, which won't last forever.
Many Alaskans count down the days until the PFD disbursement because this money helps them make it through the year.
According to a study by the Economic Security Project, “79% of Alaskans say the PFD is an important source of income for people in their community, with 85% saying it helps the Alaskan economy and 81% saying it improves their quality of life.”
This statistic raises a question: Is there a problem if 79% of Alaskans rely on the PFD for income?
In an interview with Paul Dunscomb, a professor in the Department of History at UAA, he describes Alaskans’ dependency on the PFD.
“It’s certainly the case that for many rural Alaskans the PFD is a vitally important segment of their yearly income,” said Dunscomb.
“Whether this represents a good thing or a bad is perhaps more debatable.”
In addition to dependency, research shows that poor spending habits and substance abuse increase in correlation to the distribution of the PFD.
In an article from the UAA Institute of Social and Economic Research, Associate Professor of Economics Mouhcine Guettabi wrote:
“Alaskans spend significantly more non-durables (such as cosmetics, cleaning products, food, fuel, and other consumables) and services in the month when they receive the dividend payment, and this excess consumption persists over the first quarter after the dividend payment.”
Some people also spend their PFD on drugs.
“In the four weeks after the distribution of the PFD, what we’re calling substance use-related incidents increase by about 10%,” Alaska Public Media reported.
Lastly, the viability of the PFD must be considered. The fund emerged to give residents a portion of oil revenues, but Alaska’s oil production has decreased significantly since 1976.
According to the Alaska State Profile and Energy Estimates, Alaska’s “annual oil production was the lowest in more than 45 years” in 2021 and 2022.
This statistic brings to question the long term viability of the PFD.
“The problem is that since the collapse of the price of oil in 2014, Alaska’s career as a petro-state came to an end, and while oil and gas will always be an important part of Alaska’s economy, it will never be able to support us in the style to which we have become accustomed,” said Dunscomb.
Here's the reality: Alaska is no longer an oil-state. This means we simply don't have enough money to give away to every resident each year.
The PFD’s evolution into an important source of income for many Alaskans can have dire consequences. If PFD payments become a thing of the past, people will struggle to support themselves and their families. Currently, the state has no plans for averting this probable scenario.
Our state has changed drastically since 1976, it's time the PFD does too.
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