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5 days in Alaska: Minimum wage on ballot but eclipsed by other woes

Residents say dwindling oil reserves, an unstable tax base and rural poverty are state’s larger economic concerns

This is the second in a five-part series, “Fed up in Alaska,” exploring local issues that voters will take to the polls this November.  

ALEKNAGIK, Alaska — Jane Gottschalk is the mayor of Aleknagik, a small village (population 227) 330 miles from Anchorage and a boat ride away from the nearest paved road. In addition to her administrative duties, she spends her time stocking up for winter.

“This year, not everybody got their moose, you know,” she said, as she hung salmon outdoors to dry and laid whitefish in thin strips in the smoker. It’s work that she doesn’t get paid to do.

Aleknagik Mayor Jane Gottschalk estimates there are four full-time jobs in her village of about 200 residents.
Al Jazeera America

Alaska is one of five states in the country where minimum wage will be on the ballot this November, along with Arkansas, Illinois, Nebraska and South Dakota. If approved by voters, the ballot measure will increase the minimum hourly wage in Alaska from $7.75 to $9.75 by 2016. But the battle for a living wage is a little more complex in Alaska than it is in the Lower 48. With fewer than 2 percent of Alaskans earning at or below the minimum wage of $7.25 (compared with 4.7 percent of hourly paid workers nationally) the debate is simply less relevant. The state has other, more pressing economic concerns, some , including dwindling oil reserves, an unstable tax base and the divide between urban and rural areas — some of them unique to Alaska. 

In recent years, Alaska has done well compared with many states in the “Outside” — which is how the rest of the country is often referred to in Alaska. While other parts of the U.S. were crippled by the last recession, Alaska emerged comparatively unscathed.

During the recession, the United States lost 6.5 percent of its jobs nationally but only 5 percent in Alaska. Alaska’s median household income ($69,917) is more than 30 percent higher than the national average ($53,046). Alaskans don’t pay state sales or income taxes and, except for Anchorage, residents don’t pay property tax either.

But Alaskan reality is divided between urban and rural communities. Although 2014 unemployment rates in cities like Anchorage and Fairbanks were lower than the U.S. average, the statewide unemployment rate in August was 6.8 percent, compared with 6.1 percent nationally.

Last year roughly a third of Alaskans lived in rural areas. The combination of staggering distances between towns, poor roads and infrastructure and high energy costs make Alaska the fourth-most-expensive state to live in. According to the USDA, the poverty rate in rural areas in 2012 was 14.1 percent, while in urban areas it was 9.3 percent.

“There is distinct poverty in Alaska,” said Jonathan King, an Anchorage-based economist. “Rural poverty can be shocking.”

Gottschalk and her neighbors stock up for winter by drying fish and freezing berries, meat and vegetables.
Al Jazeera America

The distinctly Alaskan economy presents unique circumstances for rural communities. Dwellers of small villages across the state make ends meet with a combination of scattered income and resources from nature.

Subsistence fishing, hunting and foraging is legal in Alaska. The annual wild food harvest is nearly 300 pounds per person in rural areas, where getting by appears to have little to do with paychecks.

Gottschalk estimated there are four full-time jobs in her village, and they pay $12 to $14 per hour — much more than the $7.25 federal minimum wage.

Aleknagik resident and council member Margie Aloysius worked as a community health practitioner before she retired seven years ago. Like Gottschalk, she spends her fall months stocking up for winter. Her three freezers store ground moose meat, frozen greens and fish. It wasn’t a good year for berries, but she managed to barter for some high-bush cranberries — the only kind that grew this year. 

“To me, poverty, it’s not all about money,” Aloysius said. “I feel like we’re really rich because of all the resources we have.”

And in Alaska, natural resources are everything.

When oil started flowing on the North Slope in the 1960s, the Alaskan economy fired up. Today two-thirds of the state’s jobs come from the government or the oil industry.

In the early 1980s Alaska established the Permanent Fund under then-Gov. Jay Hammond to indirectly distribute oil revenues. Since then, every law-abiding Alaskan resident of at least one year and of any age has been eligible for an annual dividend — $1,884 per person this year.

But there’s trouble on the oil horizon. Production peaked in 1988 at 2 million barrels per day and has been falling ever since. In 2013 the North Slope produced half a million barrels per day.

Although there is a nest egg of some $8 billion to 12 billion, King estimated the state currently bleeds $500 million to $1 billion a year.

The amount of money coming in from taxes doesn’t cover spending, he said. But judging by a mere 30 percent turnout for the recent statewide primary elections, which included a referendum on taxes, many Alaskans aren’t too concerned.

“The average Alaskan is blissfully ignorant about the economy,” said King.

The cost of living in Anchorage is the fourth highest in the nation. According to the national cost of living index, four of the five most expensive cities to live in are in Alaska.

Most of the state’s low-wage workers are in the cities, and for low-wage workers the situation looks much like the situation for low-wage workers everywhere in the country.

Tuoi Yungvauer works the counter at a KFC in Anchorage. It’s the only job she’s had since arriving in Alaska from Vietnam in 1975. She used to earn minimum wage but now makes a little more — $9 an hour — as a cashier.

“Everything counts these days. Even if it’s a few cents, it counts,” said Yungvauer, who said she spends her dividend check to pay her federal taxes.

According to most observers, the minimum-wage measure is likely to pass in November in Alaska. Although there are campaigns to support the measure, for most Alaskans there are simply other things to worry about. 

To view the “Fed up in Alaska” series, tune in to “Al Jazeera America News” with John Seigenthaler this Mon. to Fri. at 8 p.m. Eastern time.

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