Income

Alaska Per Capita Income

The most widely used and easily accessible personal income figure is the PER CAPITA INCOME estimate of the US Department of Commerce, Bureau of Economic Analysis (BEA). It is calculated by summing labor income, transfers, and asset income for a region and dividing by the population. It excludes capital gains and losses, includes the rental value of owner occupied housing, and counts pension income when it is earned (while people are working) rather than when it is paid during retirement.

We expect per capita income in Alaska to remain relatively flat over the next 10 years, after adjusting for inflation. This continuation of past trends will be the result of a continued decline in the average wage combined with a continued increase in the level of per capita transfers and asset earnings--driven at least partially by the ageing of the population.

Per capita income in Alaska in the most recent year, 2000, was $30,064--slightly higher than the US average of $29,676. Correcting for a cost of living anywhere from 10 to 25 percent higher than the rest of the country results in a COLA adjusted per capita income that is lower than the US average.

Anchorage and South Central Alaska

Anchorage per capita income has historically been above the US average. The most recent year for which regional income data is available is 1999. The unusually low figure for the Matanuska Susitna Borough may be the result of insufficient shifting of wages and salaries earned by Matsu residents in Anchorage back to their place of residence.

Other Definitions of Income

Income information is also collected and distributed by the following federal agencies

• Internal Revenue Service publishes data on the average adjusted gross income reported on federal income tax returns. Not everyone in a region is required to report their income to the federal government so this data is not a complete picture. The IRS definition of income includes capital gains and retirement income from pensions when received by retirees. Other definitional differences further distinguish it from PER CAPITA PERSONAL INCOME. This income concept is based on household reporting rather than the top down approach of the BEA.
• US Census, Census of Households collects information every 10 years on personal income during the previous year from a sample of households.
• US Department of Commerce, Current Population Survey is the basis for estimates of median household and median family income by state and region. Median income means that half of the households or families has income that is lower and half have income that is higher than the median. These estimates seem to be inconsistent with the PER CAPITA PERSONAL INCOME data of the BEA, after adjusting for definitional differences and income distribution differences, and should probably not be used until the reasons for these discrepancies can be clarified. For example according to the US Census Bureau, the median income for a 4 person family in Alaska increaed from $61 thousand (the average of 98-01) to $70 thousand one year later (99-02). To see this data, CLICK HERE and for the historical trend CLICK HERE.
• The US Department of Commerce estimates median household income by county using a model. These estimates are considerably different from those of the BEA.

In general, median (or average) family income will be greater than median (or average) household income because non-family households tend to have fewer wage earners. Median household income will tend to be larger, compared to per capita income, in places where the average household size is large. Also median income will be closer to the average income the more equal the distribution is across households.

After Tax Income

The tax burden is relatively light on Alaskan households as there is no state personal income or sales tax. Sometime during the decade 2000-2010 disposable personal income will fall relative to personal income due to the imposition of a state personal income tax and/or reduction in the size of the permanent fund dividend.

The Finance Department of Washington DC annually calculates the tax burden for families with incomes of $50, $75, and $100 thousand in the largest city in each state. Anchorage always ranks last in share of income paid in taxes.

The US Dept of Commerce, BEA calculates Disposable Personal Income for states and counties by subtracting federal, state, and local income taxes from Personal Income. This data also shows the relatively low tax burden for Alaska.

Income Distribution

While income inequality increased in most of the US during the 1980's and 1990's, it has decreased in Alaska according to a study by the Economic Policy Institute. In the late 1990's Alaska ranked 45 among the states in family income inequality. This can be attributed to a combination of the Permanent Fund dividend and the decline in the importance of high wage construction jobs in the economy.

Poverty

The US Census Bureau estimates the percent of the population in each state with incomes below the poverty level--a threshold level based on family size and other characteristics. This threshold is not Cost of Living Adjusted for different locations. In 1999 the poverty threshold for a 4 person family was $16, 895. The poverty rate in 1999 for the entire US was 12.6 percent. In Alaska it was 8.6 percent, one of the lowest rates in the nation. (The rate would be higher with a cost of living adjustment applied to the threshold, but lower if subsistence harvests were included as part of income.) To see the entire ranking, CLICK HERE. To see data on the share of children living in poverty, CLICK HERE.

Comparison of Per Capita Personal Income with the US Average

US average per capita income, adjusted for inflation, increased about 12 percent between 1990 and 1990. In contrast, Alaska per capita personal income was flat.

The share of personal income from wages has historically been less in Alaska than for the US as a whole, but during the 1990s income from transfers (mostly federal government payments and the Alaska permanent fund dividend) and income from asset earnings both grew rapidly. Today the composition of income among wages, transfers, and asset earnings is similar in Alaska to the US average.

Sources

US Department of Commerce, Bureau of Economic Analysis

Quarterly and annual personal income, per capita personal income, disposable personal income, and components of income for the states. Annual data for counties. This is the most authoritative source on income, although it has some shortcomings, particularly at the substate level.

US Department of Commerce, Bureau of the Census, Census of Population and Housing

The Census Bureau provides an estimate of income every 10 years at the state, census area, and place levels. This information is also broken out for households with different characteristics.

US Department of Commerce, Current Population Survey

The Current Population Survey gathers information on personal income at the household level. The published median household and family income for Alaska is difficult to reconcile with the BEA personal income data.

US Department of Commerce, Small Area Income and Poverty Estimates

The US Department of Commerce estimates income and the share of the population living in poverty annually at the county level. These estimates are model based.

US Department of Treasury, Internal Revenue Service

Based on tax returns generates reports showing the average adjusted gross income down to the zip code level.

District of Columbia Government, Office of Research and Analysis

Produces an annual report calculating the percent of income households in different states pay in state and local taxes.

Economic Policy Institute

In conjunction with the Center on Budget and Policy Priorities, studies income distribution and inequality among the states.

Institute of Social and Economic Research (ISER), University of Alaska Anchorage

ISER periodically prepares an economic and population projection for Alaska and its regions which includes income. The advantage of the ISER projection is that it is internally consistent with employment and fiscal projections.

Econdata Portal to Regional Data

This portal provides links to a large number of useful sites for obtaining information on personal income, transfers, and taxes.

Revised--June 19, 2001