At what price Juneau?

City cited as 3rd most expensive

Posted: Sunday, November 17, 2002

Visit www.google.com and do a search for "U.S. expensive cities." The first Web site listed claims that Fairbanks is the eighth most expensive U.S. city, Anchorage is the fourth and Juneau is the third.

The site, www.soyouwanna.com, identifies the American Chamber of Commerce Researchers Association as its source.

A Google search may not be the most scientific method for determining just how much Juneau residents pay for the privilege of living here, but it shows that Alaska's pricey image is upheld by popular American culture.

Juneau income

• The median income for a three-person household in Juneau is $58,700, according to the Alaska Housing Finance Corp.

• Any household that earns between 61 and 80 percent of the median income, or $35,221 to $46,950 for a three-person household, is "low income," according to the U.S. Department of Housing and Urban Development.

• Twenty-five percent of Juneau households, with an average of 2.6 people, earned below $49,999 in 1999, indicating close to a quarter of Juneau households are low income.

Not all reputations are valid, but this one, it appears, is backed up by facts. Whether it's for the beauty, the isolation, the people or the fishing, Juneau residents are not living here because it's cheap.

Statistics released over the last year by the Alaska Department of Labor and Workforce Development, the Juneau Economic Development Council and the University of Alaska Fairbanks Cooperative Extension Service indicate that Alaska in general and Juneau in particular are among the most expensive places to live in America.

The economic indicators released by the JEDC in October show that the cost of living in Juneau is 30.6 percent higher than the U.S. average. The statistic is based on a survey performed by ACCRA, a national nonprofit organization that researches economic and community development.

ACCRA asks volunteers in communities around the nation to fill out questionnaires on the prices of various items in the town, such as milk, eggs, apartments, houses, energy, telephone service, gas, hospital visits and haircuts. It uses the results to determine how the cost of living in one metropolitan area differs from other areas around the United States.

While the concept may be straightforward, economists are quick to note that measuring the cost of living is a complicated task with extremely variable results.

"Getting a really accurate measure of cost of living requires a really careful study," said Jim Calvin, a partner with the McDowell Group, the Juneau-based research firm that helped compile the JEDC economic indicators.

"It gets to be really complicated, especially with the ongoing national ones ... The Chamber of Commerce (ACCRA) study is volunteer-run, so they really don't have the oversight to make it consistent."

Calvin said the ACCRA results might be considerably different from a comprehensive cost-of-living study performed by professionals in Juneau.

"The ACCRA data might not be completely relevant to Juneau ... but it's the best we've got, so we use it," Calvin said.

The ACCRA results show health care and housing to be 65.4 percent and 44.9 percent higher than the U.S. average, respectively. Those categories show the highest discrepancy between costs in Juneau and the rest of the United States.

"My feeling on health costs in Juneau is there's probably a greater number of insured people here because of state and federal employment," said Lance Miller, executive director of the JEDC. "Because of our smaller population, there are fewer care providers and insurance will pay the going rate."

Calvin said the high medical costs may be attributed to Juneau's isolation.

"Alaska battles with the perception of being cold, wet and dark," he said. "They probably have to pay more to get the same caliber of person here, to recruit, attract and keep the high-quality professionals."

Housing rates in Juneau, already higher than the U.S. average, are among the highest in Alaska as well, according to the Alaska Housing Finance Corp.

The average loan for a single-family house in Juneau in the first quarter of 2002 was $184,244, more than $15,000 higher than the state average. Average rent for a two-bedroom apartment in Juneau is $892, higher than any other urban area reported on by the state Department of Labor.

The cost of groceries, though, went from being 28 percent higher than the U.S. average in 2001 to 24 percent in 2002. According to a report released by the UAF Cooperative Extension Service in June 2002, the cost of food at home for a Juneau family of four with children ages 6 to 11 is $108.13 a week.

A U.S. Department of Agriculture report said average weekly grocery costs in the United States for a family of that size spending thriftily in June 2002 were $107.50.

"Competition has a lot to do with it," Miller said. "The costs would probably be higher without Costco and Kmart in town."

Despite Alaska's wealth of natural resources, even fuel and timber costs are usually higher here than down south - an irony that can be explained best by Alaska's small population, Miller said.

"It's an economy of scale," he said. "Why aren't there more airlines, more services, more restaurants? We just don't have the population to support them.

"... We produce the raw product but not the final product," Miller said. "We really don't have the infrastructure and technical ability or the economies of scale to produce the full range of end products at a globally competitive price."

Although Alaska's remoteness and small population are major reasons for Juneau's high cost of living, they are not the whole story.

"It's a multi-layered issue, but it really is a market-driven subject," said Chris Miller, head of research and analysis at the state Department of Labor. "Basically, it's supply and demand."

On the other side of Juneau's high cost of living are the area's significantly higher incomes. The median household income in Juneau in 1999 was $64,877, according to U.S. Census results published in the JEDC economic indicators. The median household income for the whole United States, $44,641, was 31 percent lower than Juneau's. Whether Juneau's higher household incomes are a result or a cause of the higher cost of living is a subject of debate, Calvin said.

"Economists will spend weeks and weeks and weeks debating that question," he said. "It's very difficult to say."

Economists also don't agree on whether Juneau's higher incomes make up for the higher cost of living.

"I think because there is higher household income, that for the majority of people it's pretty good here," Lance Miller said. He is concerned about the sluggish growth of income in Juneau, though.

Per capita income in Juneau grew by only 1 percent between 1990 and 2000, compared to 14 percent in the United States on average. Those statistics should worry Juneau residents, Lance Miller said.

"Really what we tried to show in these indicators is that, yes, Juneau is higher than the rest of the U.S., but the rate of growth has fallen behind," he said. "There's a smaller margin between us and the rest of the country, and the cost of living has remained higher here while it's decreased in other cities in Alaska, such as Anchorage and Fairbanks, over the last 10 years."



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