On a gray afternoon in Juneau, 36-year-old Kristen Hemlock sat on her bed picking at a cold McDonald’s chicken sandwich, waiting for the checks to arrive. Her four-year-old son, Eli, chubby and dimpled, lay on his stomach on a bottom bunk two feet away, distracting himself with YouTube cartoons. Six-year-old Mason wasn’t home from school yet, permitting a fleeting truce in the brothers’ perennial war over her phone. In a home the size of a dorm room, it was a more reliable source of entertainment than their toy trucks and guns. Broken drawers spilled out of a chipped wicker dresser, and fleece blankets, one patterned with the phrase “I love you to the moon and back,” blocked light from the lone window.
The boys’ father, 35-year-old Daniel Varner, sat at a tiny table in khaki overalls and work boots, jiggling his leg.
“It’s delivery mail, isn’t it?” he asked Hemlock.
“Yeah, so it might be tomorrow.”
“Oh yeah, it’s not coming. I was thinking post office box.”
“It could.” Hemlock emitted the nervous laugh she reserves for her saddest stories. “I’m hopeful.”
Most of the family’s 52 neighbors at St. Vincent de Paul Society’s transitional housing shelter, a faded blue building on the outskirts of town, were also waiting for money.
It was October 4, and pretty much everyone in Alaska was expecting it, with varying degrees of impatience—$1,600 for every man, woman, and child. For nearly four decades, the Permanent Fund Dividend (PFD) program, designed to share revenue from the state’s oil wealth, has made flat annual payouts to anyone who has lived there for at least one calendar year, barring those with certain criminal convictions. While the program’s architects didn’t use the term, it’s the closest thing today to a universal basic income program that has durably existed anywhere in the world. (...)
Inadvertently, red-leaning and fiercely independent Alaska has become a global model for advocates of doling out “free money.” After visiting the state in July 2017, Mark Zuckerberg, a vocal basic-income booster, wrote in a Facebook post that the dividend provides “good lessons for the rest of our country.” The dividend has been a third rail in Alaskan politics for nearly four decades. But just as the hype around basic income is growing, the program is facing an existential threat. Plummeting oil revenue has left the resource-dependent state—the only one with no sales or personal income tax—with multibillion-dollar deficits. Even after dramatic spending cuts, savings reserves are dwindling. The local GOP establishment, with backing from wealthy corporate interests, has blocked virtually all attempts to generate new revenue through taxes. With money running out, elected officials have slashed annual checks in half, despite their popularity. In May, lawmakers voted for the first time to divert $1.7 billion away from dividends to pay directly for government spending. While imposing income taxes would affect the richest Alaskans most, smaller dividend checks, and the program’s uncertain future, are hitting low-income families hardest. (...)
The dividend’s origins are rooted less in idealism than in greed. In 1968, nearly a decade after Alaska joined the Union, the largest oil field in North America was discovered on its northern coast at Prudhoe Bay. Lease sales filled the young state’s coffers with $900 million, more than five times its annual budget. Within five years, the entire windfall was gone. Much of it paid for education and transportation projects, but some politicians and members of the public felt that spending had overinflated the bureaucracy. Jay Hammond, a trapper and fisherman elected governor in 1974, declared that the “nest egg” had been “scrambled.” He and other leaders decided the state ought to safeguard some oil revenue for future generations. In 1976, voters approved a constitutional amendment creating the Permanent Fund, a savings account that would be managed by a semi-independent, state-owned corporation and would take in at least a quarter of oil royalties and related income and invest it.
The fund’s principal could never be touched, barring a constitutional amendment, but Hammond strongly believed the earnings should go directly to residents. The self-styled “bush rat governor” had no interest in charity or wealth redistribution. Rather, influenced by consultants like Milton Friedman who advocated a federal basic income, he viewed recipients as shareholders that should benefit equally from ownership in “Alaska, Inc.” and could spend money more efficiently than the government. Hammond reasoned individual distributions would give the public a personal stake in keeping the fund safe—were politicians to fritter away or mismanage the savings, it would hit every resident right in the pocketbook. If oil was, in the words of OPEC’s founder, “the devil’s excrement,” breeding waste and corruption, Hammond argued a dividend would “at least halfway pin a “diaper'” on it.
As the young fund slowly built up principal, lawmakers debated how to spend the earnings. Most of them strongly opposed dividends, preferring to fund infrastructure or loans to small businesses. Many feared handouts would attract “freeloaders” to the state, or that people would stop working or waste money on frills and vices. But when oil prices soared after the Iranian revolution, there seemed to be enough revenue to go around. In 1980, legislators repealed individual income taxes and put the fund to use, enacting a dividend that would give every adult Alaskan $50 for each year they’d been a resident since statehood. The US Supreme Court ruled the seniority provision unconstitutional, so legislators replaced it with flat annual payouts, extending them to children and adding provisions that prevented recipients from losing federal public assistance because of any windfall. In 1982, Alaskans received their first checks of $1,000. It was the first time in contemporary history that a government had sent money to people just for living in its jurisdiction. (...)
Less than 150 miles from mainland Russia, the Iñupiaq village of Teller, population 228, sits at the base of a tiny sandspit on the edge of a bay bordering the Bering Sea. Unlike many Alaska Native villages, which are only accessible by plane or boat, Teller can be reached by a gravel road that winds through rust and ocher tundra meadows, interrupted by creeks and trampled by herds of reindeer and musk oxen. Beyond the beached skiffs and the sliced salmon draped over wooden racks, on Whale Street (if you hit Walrus Street or Sled Way, you’ve gone too far), a hand-painted sign marks the Teller Native Store, the only place in town selling groceries.
Inside on a Sunday afternoon, Albert Oquilluk lifted a freezer lid. Nothing but reindeer meat, at $14.49 a pound. “Usually, we just go out and get our own,” he said. Trailed by his six-year-old son, Urijah, he moved to a pair of refrigerators and peered at the racks. “No sausage, no bacon.” He threw a can of Spam in his shopping basket.
Most autumns, Oquilluk would have had stores of dried salmon at home, or he’d be out shooting ducks and geese. This year, he’d been lucky enough to land a temporary job as a heavy-equipment operator helping build a new dumping ground for the sewage that villagers collect in “honey buckets.” (Most homes don’t have plumbing or running water.) Normally, his only steady pay was a $125 monthly stipend for sitting on the tribal council, with some money on the side from plowing snow or driving people to clinic appointments. Oquilluk’s wife, Carolyn, works for the local government, but some years the family ends up on food stamps. The construction wages were a welcome boon, but he’d been working 10 hours a day, six days a week, since June. That left no time for fishing and hunting, which most villagers still do to supplement their diets.
Oquilluk is 48 with a round face and salt-and-pepper hair. He tossed a quart of ultra-pasteurized milk into the basket, then Krusteaz pancake mix, Sailor Boy Pilot Bread Crackers, Sun-Maid FruitBits, grape Kool-Aid, and 27 Otter Pops. Canned sweet potatoes, pickles, and pickled beets went in, too. There were no fresh fruits and vegetables—those had to be hauled or shipped from Nome, a small city about two hours away, or foraged in the form of wild berries or “beach greens.” Urijah sneaked some Goldfish crackers into the basket, and his father threw in a tin of beef jerky. The total for 11 items and the mess of Otter Pops came to $81.22.
The family’s dividends had arrived two days earlier and were paying for the groceries. All together, Oquilluk, his wife, and their four kids had gotten $9,600 after the cuts. Even given their flush year, that sum made up about 15 percent of their income. In leaner times, they needed the dividend to survive. Rural Alaska is expensive, with gas for their truck and boat costing more than $700 a month. Groceries top $1,000. This year, the money helped them buy things beyond the basics. Oquilluk and his wife had already spent about $2,000 on Amazon. They bought raw honey, kids’ clothing, boots, a boot dryer, a burger press, tongs, bowls, a come-along for hauling boats or marooned four-wheelers, a jigsaw for carving a traditional crescent-shaped knife called an ulu, a bucket seat cushion, a smartphone attachment for their spotting scope, and eight pounds of lard. They were thinking of splurging to send one of their daughters to attend tribal conferences in Anchorage.
Most importantly, they paid off some of the $5,000 plus late fees remaining on their loan for an 18-foot skiff and motor, which Oquilluk had bought so he could fish. “We’re almost three years overdue on payments. When they started cutting our PFDs, that’s when we couldn’t make a payment.”
The Oquilluks are better off than many of their neighbors in Teller, where almost 40 percent of residents live below the poverty line and income per capita is less than half the national median income. For some, the dividend is the only cash they get all year besides public assistance. Dividend checks play an amplified role in rural Alaska, with its isolation, lack of jobs, high living costs, and less reliable public services. Researchers at the University of Alaska-Anchorage estimate that eliminating dividends would increase the number of Alaska Natives living below the poverty line by about a third and boost poverty among elderly Native people in rural areas by 72 percent. Thanks to his job and the dividend, Oquilluk said, “we’re making ends meet.”
In some ways, the role the dividend plays in rural Alaska is similar to what advocates say a universal basic income could do: fill the gaps when there aren’t enough jobs to go around. Alaska’s dividend is not high enough to represent what advocates call a full basic income, defined as being enough to survive on and escape poverty, either on its own or combined with social services. But given that its payments are regular, unconditional, and doled out to virtually everyone, the Permanent Fund Dividend is the closest thing to an institutionalized universal basic income in the world today. For proponents of expanding the idea, the lessons are clear: Universal direct cash distributions work. And they become wildly popular once enacted, with beneficiaries even in an individualistic, conservative state finding ways to justify a government entitlement elsewhere embraced by radicals and leftists.
The boys’ father, 35-year-old Daniel Varner, sat at a tiny table in khaki overalls and work boots, jiggling his leg.
“It’s delivery mail, isn’t it?” he asked Hemlock.“Yeah, so it might be tomorrow.”
“Oh yeah, it’s not coming. I was thinking post office box.”
“It could.” Hemlock emitted the nervous laugh she reserves for her saddest stories. “I’m hopeful.”
Most of the family’s 52 neighbors at St. Vincent de Paul Society’s transitional housing shelter, a faded blue building on the outskirts of town, were also waiting for money.
It was October 4, and pretty much everyone in Alaska was expecting it, with varying degrees of impatience—$1,600 for every man, woman, and child. For nearly four decades, the Permanent Fund Dividend (PFD) program, designed to share revenue from the state’s oil wealth, has made flat annual payouts to anyone who has lived there for at least one calendar year, barring those with certain criminal convictions. While the program’s architects didn’t use the term, it’s the closest thing today to a universal basic income program that has durably existed anywhere in the world. (...)
Inadvertently, red-leaning and fiercely independent Alaska has become a global model for advocates of doling out “free money.” After visiting the state in July 2017, Mark Zuckerberg, a vocal basic-income booster, wrote in a Facebook post that the dividend provides “good lessons for the rest of our country.” The dividend has been a third rail in Alaskan politics for nearly four decades. But just as the hype around basic income is growing, the program is facing an existential threat. Plummeting oil revenue has left the resource-dependent state—the only one with no sales or personal income tax—with multibillion-dollar deficits. Even after dramatic spending cuts, savings reserves are dwindling. The local GOP establishment, with backing from wealthy corporate interests, has blocked virtually all attempts to generate new revenue through taxes. With money running out, elected officials have slashed annual checks in half, despite their popularity. In May, lawmakers voted for the first time to divert $1.7 billion away from dividends to pay directly for government spending. While imposing income taxes would affect the richest Alaskans most, smaller dividend checks, and the program’s uncertain future, are hitting low-income families hardest. (...)
The dividend’s origins are rooted less in idealism than in greed. In 1968, nearly a decade after Alaska joined the Union, the largest oil field in North America was discovered on its northern coast at Prudhoe Bay. Lease sales filled the young state’s coffers with $900 million, more than five times its annual budget. Within five years, the entire windfall was gone. Much of it paid for education and transportation projects, but some politicians and members of the public felt that spending had overinflated the bureaucracy. Jay Hammond, a trapper and fisherman elected governor in 1974, declared that the “nest egg” had been “scrambled.” He and other leaders decided the state ought to safeguard some oil revenue for future generations. In 1976, voters approved a constitutional amendment creating the Permanent Fund, a savings account that would be managed by a semi-independent, state-owned corporation and would take in at least a quarter of oil royalties and related income and invest it.
The fund’s principal could never be touched, barring a constitutional amendment, but Hammond strongly believed the earnings should go directly to residents. The self-styled “bush rat governor” had no interest in charity or wealth redistribution. Rather, influenced by consultants like Milton Friedman who advocated a federal basic income, he viewed recipients as shareholders that should benefit equally from ownership in “Alaska, Inc.” and could spend money more efficiently than the government. Hammond reasoned individual distributions would give the public a personal stake in keeping the fund safe—were politicians to fritter away or mismanage the savings, it would hit every resident right in the pocketbook. If oil was, in the words of OPEC’s founder, “the devil’s excrement,” breeding waste and corruption, Hammond argued a dividend would “at least halfway pin a “diaper'” on it.
As the young fund slowly built up principal, lawmakers debated how to spend the earnings. Most of them strongly opposed dividends, preferring to fund infrastructure or loans to small businesses. Many feared handouts would attract “freeloaders” to the state, or that people would stop working or waste money on frills and vices. But when oil prices soared after the Iranian revolution, there seemed to be enough revenue to go around. In 1980, legislators repealed individual income taxes and put the fund to use, enacting a dividend that would give every adult Alaskan $50 for each year they’d been a resident since statehood. The US Supreme Court ruled the seniority provision unconstitutional, so legislators replaced it with flat annual payouts, extending them to children and adding provisions that prevented recipients from losing federal public assistance because of any windfall. In 1982, Alaskans received their first checks of $1,000. It was the first time in contemporary history that a government had sent money to people just for living in its jurisdiction. (...)
Less than 150 miles from mainland Russia, the Iñupiaq village of Teller, population 228, sits at the base of a tiny sandspit on the edge of a bay bordering the Bering Sea. Unlike many Alaska Native villages, which are only accessible by plane or boat, Teller can be reached by a gravel road that winds through rust and ocher tundra meadows, interrupted by creeks and trampled by herds of reindeer and musk oxen. Beyond the beached skiffs and the sliced salmon draped over wooden racks, on Whale Street (if you hit Walrus Street or Sled Way, you’ve gone too far), a hand-painted sign marks the Teller Native Store, the only place in town selling groceries.
Inside on a Sunday afternoon, Albert Oquilluk lifted a freezer lid. Nothing but reindeer meat, at $14.49 a pound. “Usually, we just go out and get our own,” he said. Trailed by his six-year-old son, Urijah, he moved to a pair of refrigerators and peered at the racks. “No sausage, no bacon.” He threw a can of Spam in his shopping basket.
Most autumns, Oquilluk would have had stores of dried salmon at home, or he’d be out shooting ducks and geese. This year, he’d been lucky enough to land a temporary job as a heavy-equipment operator helping build a new dumping ground for the sewage that villagers collect in “honey buckets.” (Most homes don’t have plumbing or running water.) Normally, his only steady pay was a $125 monthly stipend for sitting on the tribal council, with some money on the side from plowing snow or driving people to clinic appointments. Oquilluk’s wife, Carolyn, works for the local government, but some years the family ends up on food stamps. The construction wages were a welcome boon, but he’d been working 10 hours a day, six days a week, since June. That left no time for fishing and hunting, which most villagers still do to supplement their diets.
Oquilluk is 48 with a round face and salt-and-pepper hair. He tossed a quart of ultra-pasteurized milk into the basket, then Krusteaz pancake mix, Sailor Boy Pilot Bread Crackers, Sun-Maid FruitBits, grape Kool-Aid, and 27 Otter Pops. Canned sweet potatoes, pickles, and pickled beets went in, too. There were no fresh fruits and vegetables—those had to be hauled or shipped from Nome, a small city about two hours away, or foraged in the form of wild berries or “beach greens.” Urijah sneaked some Goldfish crackers into the basket, and his father threw in a tin of beef jerky. The total for 11 items and the mess of Otter Pops came to $81.22.
The family’s dividends had arrived two days earlier and were paying for the groceries. All together, Oquilluk, his wife, and their four kids had gotten $9,600 after the cuts. Even given their flush year, that sum made up about 15 percent of their income. In leaner times, they needed the dividend to survive. Rural Alaska is expensive, with gas for their truck and boat costing more than $700 a month. Groceries top $1,000. This year, the money helped them buy things beyond the basics. Oquilluk and his wife had already spent about $2,000 on Amazon. They bought raw honey, kids’ clothing, boots, a boot dryer, a burger press, tongs, bowls, a come-along for hauling boats or marooned four-wheelers, a jigsaw for carving a traditional crescent-shaped knife called an ulu, a bucket seat cushion, a smartphone attachment for their spotting scope, and eight pounds of lard. They were thinking of splurging to send one of their daughters to attend tribal conferences in Anchorage.
Most importantly, they paid off some of the $5,000 plus late fees remaining on their loan for an 18-foot skiff and motor, which Oquilluk had bought so he could fish. “We’re almost three years overdue on payments. When they started cutting our PFDs, that’s when we couldn’t make a payment.”
The Oquilluks are better off than many of their neighbors in Teller, where almost 40 percent of residents live below the poverty line and income per capita is less than half the national median income. For some, the dividend is the only cash they get all year besides public assistance. Dividend checks play an amplified role in rural Alaska, with its isolation, lack of jobs, high living costs, and less reliable public services. Researchers at the University of Alaska-Anchorage estimate that eliminating dividends would increase the number of Alaska Natives living below the poverty line by about a third and boost poverty among elderly Native people in rural areas by 72 percent. Thanks to his job and the dividend, Oquilluk said, “we’re making ends meet.”
In some ways, the role the dividend plays in rural Alaska is similar to what advocates say a universal basic income could do: fill the gaps when there aren’t enough jobs to go around. Alaska’s dividend is not high enough to represent what advocates call a full basic income, defined as being enough to survive on and escape poverty, either on its own or combined with social services. But given that its payments are regular, unconditional, and doled out to virtually everyone, the Permanent Fund Dividend is the closest thing to an institutionalized universal basic income in the world today. For proponents of expanding the idea, the lessons are clear: Universal direct cash distributions work. And they become wildly popular once enacted, with beneficiaries even in an individualistic, conservative state finding ways to justify a government entitlement elsewhere embraced by radicals and leftists.
by Katia Savchuk, Mother Jones | Read more:
Image: Ash Adams
[ed. I was initially against the PFD and thought about framing my first check instead of cashing it back in 1982. That idea didn't last long (like, before I could even buy a picture frame). I do think the PFD has had a big effect on the state's diversity bringing in lots of Samoans, Filipinos and other cultures with extended close-knit families. What was really crazy though was the near simultaneous abolishment of a state income tax.]
[ed. I was initially against the PFD and thought about framing my first check instead of cashing it back in 1982. That idea didn't last long (like, before I could even buy a picture frame). I do think the PFD has had a big effect on the state's diversity bringing in lots of Samoans, Filipinos and other cultures with extended close-knit families. What was really crazy though was the near simultaneous abolishment of a state income tax.]
