State employees in Juneau, Alaska's most expensive major city, are earning less money than state workers in Fairbanks and elsewhere because of a 1986 cost-of-living study.
Living allowances are given to state employees based on percentages from the 20-year-old McDowell Group index that used Anchorage as its baseline.
At the time of the study, the cost of living in Juneau, Sitka, Ketchikan, Wrangell and Petersburg was equal to Anchorage with base scores of 100.
But Fairbanks was considered more expensive, as it has a score of 104. Fairbanks employees still receive 4 percent more money than Juneau employees.
"Back then, Fairbanks may have been more expensive than Juneau," said Dan Robinson, economist for the Alaska Department of Labor. He added that the state has been slow to update the index.
The July edition of the department magazine Alaska Economic Trends includes research showing Juneau is one of the most expensive Alaska cities, topping the state in several categories, such as housing.
State employee unions and lobbyists have urged the Alaska Legislature to fund a new study that would help restructure the pay differential across the state, at a cost of about $500,000.
"It's supposed to be based on a system of fairness and it's just not fair," said Bruce Ludwig, business manager of the Alaska Public Employees Association/AFT.
The APEA has been fighting the battle along with other unions to get a new study. The pay differential applies to state employees under collective bargaining agreements.
Senate Bill 152, sponsored by Sen. Tom Wagoner, R-Kenai, appropriates the funds for a new study and would require it to be updated every five years. The bill is set to be reviewed by the Senate Finance Committee next year.
Efforts to reach Wagoner on Tuesday were unsuccessful, but in a written statement earlier this year he referred to the study as "outdated."
It's a "bitter pill" for Alaskans in Fairbanks and other places to accept as they stand to get a salary reduction, Ludwig said. He suggested the percentages be frozen for those areas until their pay evens out.
The index lists Fort Yukon, Barrow and Kotzebue with the highest costs of living, and receiving 42 percent more salary. Bethel and Nome also were high with 38 percent and 34 percent, respectively.
The McDowell Group study is still considered the most extensive research on the costs of living in Alaska, said Jim Calvin, a partner with the firm.
The study took two years, filled some 500 pages and cost about $300,000. Researchers took a different approach by looking at what people spent their money on, rather than just comparing prices of goods, said Calvin. The study factored housing, groceries, transportation, medical care and other economic sectors.
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