The Economic Importance of Alaska Labor Union Pension Funds

Abstract

Labor union retirees could choose to live anywhere and those that remain in Alaska and collect their pensions in Alaska add to total economic activity. Pension distributions are one important source of purchasing power that flows into Alaska supporting households and generating income and jobs in a wide range of economic sectors. In this way union pension payments are similar to the wages paid in our natural resource export industries like petroleum, mining, and fishing and to the distributions made through the Permanent Fund Dividend program. All of these bring new money from outside the state into Alaska where it becomes income for Alaskan households. When these households then spend this income, sales, jobs, and payrolls are generated in trade, services, construction, and other sectors of the local economy. As these dollars re-circulate through the local economy, additional sales, jobs, and payroll are generated through the process known as the multiplier. The size of the annual infusion of purchasing power into the economy from labor union pension funds, although modest in comparison to some other sources, is not insignificant. For example, in 2004 the union pension fund infusion of $147 million was about one-quarter as large as the distribution from the Alaska Permanent Fund. It was about 50 percent larger than the payroll of the mining industry.