Empire editorial: Update state's cost index for workers

Posted: Friday, July 15, 2005

Twenty years is too long to wait to update a cost-of-living index that affects how much state employees make in various cities. Much has changed over two decades, and the result is a penalty against thousands of state workers in the hub of state government, Juneau.

The capital is, according to multiple studies, the most expensive major city in Alaska. According to a study released by the Juneau Economic Development Council in December, Juneau is the most expensive major city in Alaska or Washington - well ahead of Seattle. Yet 20 years ago, researchers found a different result, and the state is still basing its paychecks on those numbers.

Using Anchorage as its baseline - with a cost-index score of 100 - the state assigned cost-of-living payments to its workers based on their city's or village's score. Juneau, along with Ketchikan, Kenai, Palmer, Seward and Sitka, rated just a 100 back then. Some of the most far-flung villages, where transporting goods is costly, rated tens of percentage points higher - a situation that likely would continue to today. But what does not continue is a higher cost of living in Fairbanks. The Interior's largest city rated 104 in the study 20 years ago, and therefore its state employees get 4 percent more than their counterparts in Juneau or Anchorage.

The JEDC index rated Juneau considerably higher than Fairbanks in cost of living, and a breakout of some of the comparative costs makes it easy to see why. A 2,400-square-foot house in Juneau was found to cost $390,000, compared to $349,615 in Fairbanks. The same box of breakfast cereal that went for $3.52 in Juneau was $3.07 in Fairbanks.

State officials say it would cost $500,000 for a new survey, and legislators are thinking about doing one. It's time to do it so that the cost-of-living adjustments can again serve their purpose: easing the burden of living in Alaska's costliest places.

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