When discussing the inadequate and unequal structure of the economy, progressives tend to focus on things like poverty, income inequality, and wages. These are seen as the stuff of people’s everyday experience with the economy and as the areas that deserve our most pressing attention.

But the most unequal aspect of our economy is actually the way in which our national wealth is distributed. The top ten percent of American households own around three-fourths of the nation’s wealth while the bottom fifty percent owns virtually none of it. While the precise distribution of wealth has changed a bit over time, in the data that we have, the vast majority of the national wealth has always been in the hands of a relatively small slice of the population.

Most efforts to tackle wealth inequality focus on the national level. But states can and, in at least one case, have had a huge impact on the way that wealth is distributed among residents of the state. In this paper, we look at wealth inequality in Washington and propose that Washington create an Alaska-style Permanent Fund aimed at gradually reducing wealth inequality in the state.

The paper contains the first effort we know of to measure state wealth inequality by merging multiple years of data from the Survey of Income and Program Participation. The paper also provides a household-level, adult-level, and person-level estimate of wealth inequality, the latter two of which are rarely reported in studies of wealth inequality.

Using this same method for Alaska also allows us to produce the first estimate of how much the Alaska Permanent Fund (APF) reduces wealth inequality in the state.

As of the writing of the report, the APF, which is primarily invested in stocks, bonds, and real estate, was valued at $75 billion, which is equal to more than $100,000 for every resident of the state. Even though each resident of Alaska is entitled to an individual dividend from the APF, the value of the fund is not ordinarily counted towards the wealth of each Alaskan household. But, as we see in the graph below, when we count each Alaskan’s share of the fund towards their own wealth, inequality in the state winds up radically lower than any other state in the country.

Including the APF cuts the wealth share of the wealthiest ten percent from 67 percent to 48 percent while more than tripling the wealth share at the middle of the wealth distribution.

Given this success, we conclude that Washington state, and other states looking to reduce wealth inequality, would be wise to copy the Alaskan model.