Alaska Permanent Fund Dividend: It’s Not Just Free Money

It’s that time of year again: the Alaska Permanent Fund Dividends are on their way to most Alaskans. Once again, residents breathe a sigh or relief or rub their hands in glee, depending on their financial situation, while the rest of America scratches its collective head and dismisses Alaskans as a greedy, coddled bunch of undeserving malcontents.

I received the first Alaska Permanent Fund Dividend (PFD) back in about 1982. At the time I was grateful for the cash windfall, but worried about possible consequences of the new policy. I saw this as an open invitation for poorly informed southerners to move to Alaska, to get “free money.” I would gratefully continue to receive the checks as long as they came, but wouldn’t fuss if they stopped.

Since then, I’ve learned what the PFD really represents. This information is available for anyone who cares to know it, but for years the rest of the nation has seemed perfectly willing to ignore the rationale behind the PFD in order to continue scorning Alaskans.

According to Alaska’s constitution, the state’s resources belong to the people of Alaska. Because oil development started after statehood, petroleum is the only natural resource for which the state has been able to negotiate terms of sale. Theoretically, Alaskans should also receive fishing, mining, timber, and big game hunting dividends, but these natural resources have been extracted from Alaska since those years when it was, in effect, a helpless colony of the U.S.

So that’s the big secret: the oil belongs to the people, so they receive a portion of the profits from it. It’s that simple. We’re not getting a hand out, we’re getting a (symbolic) payment for the resources we’re giving up. I wish every state had this arrangement, but they don’t.

As for those who would move to Alaska to get a yearly payout of about $1000 per person, think again. Research our cost of living, including food, fuel and transportation costs; look at our lifestyle statistics: suicide rate, divorce rate, alcohol and drug abuse rates, and mental health statistics. For almost all Alaskans, balancing the cost of living in Alaska against the PFD shows a clear net loss. Even for our frugal lifestyle, a PFD only represents about two months operating expenses.

Anyone who encourages you to move to Alaska for the dividend either has no handle on their personal finances, or is trying to sell you something. Be very wary!

I was born in Alaska. It’s my home, and I love it dearly. I have many reasons for doing so, but the PFD isn’t one of them. If you want to move to Alaska, I suggest you have a better reason than receiving a yearly Permanent Fund Dividend.

For a collection of our frugal thoughts and practices, check out More Calories Than Cash: Frugality the Zeiger Family Homestead Way, our new eBook—exclusively (and inexpensively priced!) from our website!

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