A Guide to Measuring Alaskas Cost of Living by James R Wilson and Brian N Rae

T he cost ofliving in Alaska and the way costs have changed over time are the most frequently requested pieces of information available from the Alaska Departshyment of Labors Research and Analysis section Unfortunately gettinga handle on the cost of living in Alaska is not a straightforward process

About the authors A Measure of Inflation or Cost Differences by Area

Brian Rae and James Wilson There are several different measures ofthe cost ofliving and each has its strengths are labor economists with the

Research amp Analysis Section and weaknesses First decide ifyou are interested in the change in prices in one Administrative Services Division place over a period of time (commonly referred to as the inflation rate) or the cost Alaska Department of Labor difference between two places at one point in time (Couched in questions like How 1hey are based in Juneau much more expensive is it to live in Fairbanks than Seattle) Detenniningwhatyou

need to know will help select the best cost ofliving index for you

How Well Does the Surveys Market Basket Represent Your Buying Habits

Since it is prohibitively expensive to price all items a consumer would purshychase cost of living surveys track price changes ofa sample of items from varishyous expenditure categories (such as housing expenses medical expenses food expenses etc) This sample of items is called the surveys market basket

When you choose a cost ofliving survey its a good idea to know what the surveys market basket is and what populations buying habits the survey is trying to simulate All surveys either give a listshying of the items which make up the market basket or define the type of household which the market basket was designed to represent For example the Runzheimer data presented in this artishycle assumes a family of four whose inshycome level would be $32000 in the aver shyage cost city of those surveyed

The Consumer Price Index shyThe Nations Inflation Measure

The majority ofrequests about Alaskas cost of living relate to how prices have changed over time The information is

FIgure 1

Consumer Price Index - Anchorage All Items amp Selected Components 1984-1990middot

165 -----------------------------------------~

166

145

135

125

116

96L------L------~-----L----~~====~~----~ 84 85 86 87 88 89 90

- AIlItm

---fr- Wdlcal

bull Data for first six months of year Source Alaska Department of Labor Research and Analysis Section

Alaska Economic Trends October 1990 1

Table I

Consumer Price Index - Urban Consumers All Items and Selected Components

Us Be Alaska

Food amp AllItemB All Items Lese Shelter Rousing Mampdical Beverage

us Anchonlg us Anchogo us Anchoge us Anchoge us Ancho l1middot annual Percent omnual Peot nnual PlC4nt annual Percent annual annual annual nnual annual annual

Year average chanlte vee chan averaI chang average chane average average averago averago avoralle average

1960 296 344 1965 315 64 353 26 1970 388 232 411 164 1975 538 387 571 389 1980 824 532 855 497 829 847 811 859 149 788 867 897 1981 909 103 924 8 1 910 98 920 86 904 925 829 869 935 943 1982 965 62 974 54 962 57 963 47 969 982 925 948 97 3 972 1983 996 32 992 18 998 37 999 37 995 990 1006 997 995 997 1984 1039 43 1033 41 1039 4 1 1038 39 1036 1027 1068 1055 1032 1032 1985 1076 36 1058 24 1070 30 1075 36 1077 1030 1135 1109 1056 1062 1986 1096 19 1078 19 l OS0 09 1112 34 1109 1026 1220 1278 1091 1108 1987 1136 36 1082 04 1116 33 U51 35 1142 975 1301 1370 1135 1131 1988 1183 41 1086 04 1169 39 1178 23 1185 954 1386 1458 1182 1138 1989 1240 48 1117 29 1216 49 1223 38 1230 963 1493 1544 l249 1172

1st half 1988 1168 1084 1144 1170 1172 958 1365 1430 1165 1135 1st half 1989 1227 51 1109 23 1204 62 1214 38 1217 958 1463 1531 1236 1164 1st half 1990 1287 49 1169 54 1262 48 1266 42 1268 1022 1591 1601 1310 1225

Notes The moat current Consumer Price Index data available for Alaska is for the first half of 1990 For comparability data for the finrt halfof 1988 and 1989 are given to show the percentage change over the year

Source US Department of Labar Bureau of Labor StatistiCB

often used to adjust rents wages or some other monetary payment for the effects of inflation The Consumer Price Index (CPI) is the only survey designed to answer such questions

The USDepartment of Labors Bureau of Labor Statistics produces the CPI in various metropolitan areas throughout the country In Alaska only Anchorage is surveyed The shortcoming ofhaving only Anchorage prices tracked is that while price trends in Anchorage reflect changes in the cost of living for many Alaskans the results might not be apshypropriate in rural or even far removed urban areas of the state

Table 1 and Figure 1 show Anchorage CPI data for various commodities over time Returning to the concept of the marketbasket items can be aggregated into commodity groups such as food and beverages housing transportation and health care By analyzing the differencshyes among groups one can see which costs are rising at rates different from the overall CPr For example Figure 1 shows how medical costs have increased

at a much more rapid rate than has the overall Anchorage CPl while housing costs have lagged behind

Housing Component Kept Anchorage Inflation Low Until Recently

Each commodity group is given a weight - its contribution to the overall cost of living While health care costs have shot up in recent years they account for only about 5 of the total cost of living Housingcosts on the other hand account for over 40 of the Anchorage CPI

The strong influence that housing costs have on the overall Anchorage CPI has been particularly noticeable the last several years (See Table 1 All Items Less Shelter andHousing Components) Falling home and rental costs nearly offset increases in the other components of the CPl so that the overall CPI rose only slightly The recent increase in inflation in Anchorage can be partly accounted for by the improved housing market With housing prices now in-

Alaska Economic Trends October 1990 2

creasing the Anchorage CPI is showing a much higher rate of inflation than previously

The housing cost componentis unique in the CPI in that it is one of the few durable goods priced Other than autoshymobiles other items in the CPI are nondurables or items generally conshysumed within a short time frame rangshying from food (several days to a few weeks) to clothing (several months to a few years) The CPI data assumes a consumer hasjust purchased or rented a home To gauge the change in prices this seems a logical assumption Howshyever to get a true picture of the changes in costs a family faces it might be inapshypropriate to assume rental agreements or mortgages are renegotiated every few months For this reason the overall CPI figures have understated the rate of inflation in Anchorage for many people during the past several years

CPI Measures Inflation- Not Living Costs Between Locations

CPI users should be aware of a common misinterpretation of the CPI index It most often occurs when users compare CPI numbers among areas For examshyple the annual average Anchorage CPI for 1989 of 1117 is lower than the Unitshyed States average of 124 This does not however mean that Anchorage has a lower cost of living than the average in the United States The CPI measures inflation and not costs The fact that the Anchorage CPI numberin 1989i5 smallshyer than the overall US index does not mean that Anchorage costs are lower only that Anchorage prices have not inflated as quickly as elsewhere in the US since the base period (In this case the base period or when the two indexes equaled 100 is 1982-84)

Costs could have actually risen by a greater amount in dollar terms in Anshychorage and still be below the US inflashyt ion rate For example ifa product costs on average $500 in the US but $1000 inAnchorage a 10 inflation rate would increase the price by 50 cents in the US but by $100 in Anchorage

Tabe2 shy

Cost of Food for a Week in Various Alaskan Communities

March 1990

Ratio of Food Cost to

Cost of Anchorage Food Average

Community 1 Week (percent)

Anchorage $10073 nJa Bethel 15074 150 Cordova 13939 138 Delta 12989 129 Dillingham 16750 166 Elim 17775 176 Fairbanks 10766 107 Homer 12127 120 J uneau 10022 99 Kenai 10767 107 Ketchikan 9470 94 Kodiak 12633 125 MatSu II 10401 103 McGrath 14787 147 Nome 15065 150 Petersburg 11341 113 St Paul 14214 141 SandPoint 14384 143 Sitka 11251 112 Tok 12901 128

Costs are for a family of four with elementary school children

11 MatSu areas 2 tax is the rate for Palmer and is not used in tabulating costs

Sales tax included in food and utility cost

Source Cost of Food at Home for a Week March 1990 University of Alaska Cooperative Extension Service US Dept of Agriculture and SEA Grant Cooperating

Place-to-Place Comparisons of Costs

Thereare several differentindices which compare living costs between places All of these cost of living indices have their strengths (and weaknesses) with some being more appropriate than others in certain circumstances For example some are not a comprehensive cost of living index but focus on one specific part of the cost ofliving An example of this type of survey is the Cost of Food at Home for a Week survey done quarterly by the University of Alaskas Cooperashytive Extension Service

Cost of Food at Home

The Cost of Food study measures the cost to feed various size families in difshyferent locations in Alaska The report also contains comparative information on some utility and fuel costs The Cost of Food at Home survey is not a compreshyhensive measure of the cost of living for communities inAlaska The survey only compares food costs in various Alaska communities One of its strengths is its wide geographic coverage It provides comparative measures for locations not covered by any other cost index

Comparing the cost of living between communities in Alaska is made difficult

Alaska ECQlIOmic Tnlds October 1990 3

Table 3

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent of of of

Anchorage Anchorage Anchorage MonthlYear Anchorage Fairbanks Average Juneau Average Bethel Average

978 $7667 $8415 1098 $7372 962 $11405 1488 12179 8580 9192 1071 7755 9004 12044 1404 980 8844 9054 1024 8592 972 13087 1480 981 8669 9847 1136 9395 1084 13866 1599 982 7730 9209 1191 9998 1293 12550 1624 983 8166 8379 1026 8862 1085 12830 1571 984 8422 9126 1084 9166 1088 13654 1621 985 8906 9008 1011 10661 1197 13813 1551 986 8725 9061 1039 8765 1005 13796 1581 987 8890 8512 957 8824 993 14081 1584 988 9099 9474 1041 9295 1022 13757 1512 989 9380 9433 1006 9673 1031 14065 1499 390 10073 10766 1069 10022 995 15074 1496

Family offour with elementary school children Sales tax included in food prices

- Data unavailable

Source Cost of Food at Home for a Week September 1978 to March 1990 University of Alaska Cooperative Extension Service

(cont on page 5)US Dept of Agriculture and SEA Grant Cooperating

by several factors Many goods and services available in larger cities are not readily available in some TUTal areas The buying habits of urban residents vary from people in rural communities Different consumption patterns in urshyban and rural areas complicate comshyparisons in the costofliving Subsistence contributions to some households also make cost of living comparisons more difficult The Cost of Food survey asshysumes that all goods are purchased in the local community - none are acshyquired through subsistence means or from merchants outside of the commushynity

Food Costs Are Higher in Rural A18Bka

Table 2 shows the cost offood for a week for a family of four with elementary school children for 20 Alaska communishyties The March 1990 figures show that Anchorage has the lowest costs of the areas surveyed The larger cities in Alaska have food costs which are fairly comparable to those in Anchorage

The CostofFood survey has consistently shown thatthe most expensive ci ties are the smallerand more isolated communishyties This continues to be true In places such as Bethel and Dillingham the costs are 50 to 70 higher than in Anchorage

The Cost of Food study shows an intershyestingcontrast between Alaska and othshyer areas of the United States In the lower 48 larger urban areas have high shyer costs for food and other goods and services than less populated areas In rural areas ofthe nation the costofliving is typically less than in larger urban centers The opposite is true for Alaska The more rural Alaskan communities have costs for food and otherbasics such as fuel which are much greater than in the states urban centers

Table 3 is a time series of costs for the last 13 years This table shows the difference in the cost of food between Anchorage and other Alaskan commushynities It also shows the changes in costs over time within each community in the study

ACCRA Cost of Living Index

Another place-to-place cost of living measure is provided by the American Chamber ofCommerce Researchers Asshysociation (ACCRA) The ACCRA cost of living study compares costs for roughly 290 cities in the United States The ACCRA study can be used to compare some costs among a few of Alaskas cities and other cities across the nation In the ACCRA study a standardized list of5 9 items is priced during a fixed period of time The items priced are intended to reflect the spending patterns of a midshymanagement household

Although state and local taxes are cershytainly a part ofthe actual cost of living the ACCRA index does not take them into account Because of the limited number of items priced differences in the ACCRA cost of living index less than three (such as 129 vs 131) are statistishycally insignificant A difference in the index greater than three can be considshyered to show a cost of living difference

AJaska Economic Trends October 1990 4

Table 3 (cont from page 4)

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent Percent of of of of

Month Anchorage Anchorage Anchorage Anchorage Year Nome Average Kodiak Average Kenai Average Tok Average

978 $11885 1550 $8248 1076 12179 12462 1452 10041 1170 980 13114 1483 $9942 1124 12084 1366 $10882 1230 981 15027 1733 11480 1324 982 14904 1928 983 13014 1594 10494 1285 8698 1065 984 14207 1687 11597 1377 8797 1045 12166 1445 985 15241 1711 10817 1215 9147 1027 11619 1305 986 14204 1628 10549 1209 9278 1063 12418 1423 987 14796 1664 10439 1174 9695 1091 11751 1322 988 14769 1623 11668 1282 9553 1050 11969 1315 989 12461 1328 10420 1111 13943 1486 390 15065 1496 12633 1254 10767 1069 12901 1281

ACCRA Index Places 4 Alaskan Cit ies Among Most Expensive

Five Alaskan cities participate in the quarterly ACCRA study - Anchorage Fairbanks Juneau Ketchikan and Kodiak The latest published numbers (1st Quarter 1990) show that four of Alaskas cities are among the 10highest cost areas studied (See Table 4) Anshychorage has the lowest index of the Alaska cities in the ACCRA study Acshycording to the index Anchorage has a cost of living roughly 27 higher than the all cities average Some cities known to have a high cost of living such as Boston New Yorkand Washington DC are not included in the current data

The Alaska cities in the ACCRA study have the highest costs for several of the six major components of the ACCRA index (See Table 4) For example Ketchikan was tops for transportation health care and miscellaneous Alasshykascitieshadthehighestindexnumbers for groceries and health care

ACCRA Points to a Smaller Difference in Housing Costs

Housing costs have always been thought of as exceptionally high in Alaska Alshythough they may be high the ACCRA housing index shows that some areas in the nation have comparable housing costs Generally the lowest rankings for Alaskas cities were in the ACCRA housing cost index The Anchorage utilshyities index was lower than about oneshyhalf ofthe cities in the ACCRA study

Comparative figures for Alaskan cities and other cities around the nation are presented in Tables 5 and 6 Table 5 shows the ACCRA cost of living indexes while Table 6 contains prices for some of the goods and services in the ACCRA study

The ACCRA cost of living study is deshysigned around spending patterns found in major American urban centers The data collected in the pricing survey is an attempt to match the items found in the larger areas This process tends to igshynore living costs found in atypical areas

Alaska Economic Trends October 1990 5

Table 4

ACCRA Cost of Living Index First Quarter 1990

Ranking of 20 Highest Index Cities

Total City Index Grocery Housing Util Transp Health Misc

Nassau-Suffolk NY 1593 1182 2370 2191 1281 1372 1223 KODIAK AK 1483 1435 1670 1917 1130 1812 1291 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 New London CT 1375 1175 2105 1263 1141 1298 1115 San Diego CA 1328 1047 2161 742 1346 1323 1084 J UNEAUAK 1328 1262 1286 1639 1210 1936 1193 Orange County CA 1307 1033 2267 735 1047 1331 1075 Hartford CT 1301 1162 1614 1240 1142 1411 1217 San J ose CA 1293 1064 2186 840 1058 1351 1023 FAIRBANKS AK 1282 1260 1049 1397 1302 1878 1277 Ventura County CA 1279 1033 2258 668 1019 1234 1049 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Los Angeles Coun ty CA 1274 1033 2113 756 1021 1285 1092 ANCHORAGE AK 1273 1293 1260 946 1184 1865 1292 Meriden CT 1269 1074 1812 1036 1021 1230 1183 Manchester NH 1208 1020 1555 1408 1074 1147 1058 Palm Springs CA 1203 1036 1580 916 1147 1290 1131 MontpeJier-Barre VT 1190 1058 1478 1617 1043 989 1008 Temecula CA 1180 988 1595 1004 1063 1256 1076 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Ranking of Alaska Cities by Category

Anchorage AK 14 3 27 173 7 5 2 Fairbanks AK 10 5 83 7 3 4 4 J uneau AK 6 4 25 4 6 3 6 Ketchikan AK 3 2 14 5 1 1 1 Kodiak AK 2 1 9 2 14 2 3

Source Cost of Living Index (291 Cities) 1st Quarter 1990 America n Chamber of Commerce Researcher s Association

Kodiak data 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

For example the transportation costs in the ACCRA study include items such as bus fare the price ofa gallon of gasoline and automobile wheel balancing

For many areas in Alaska such as Juneau Ketchikan and Kodiak a typishycal living cost may include expensive transportation just to leave town Air fare which may be a luxury or just one option for travel elsewhere is an essenmiddot tial in many areas of Alaska This examshyple illustrates how the ACCRA index might understate the differences beshytween some of Alaskas cities and the all cities average

The Runzheimer Living Cost Index

A slightly different approach to calculatshying the differences among cities is taken in a study commissioned by the Alaska Department of Labor Runzheimer Inshyternational a private research firm looked at the comparative incomes necshyessary to maintain a certain standard of living in 253 different areas ofthe counshytry This income approach takes into account certain elements often left outof other cost of living measures such as an areas tax rates

For this study a base family was creatshyed- two parents two children living in a 1500 square foot home with 3 bedshyrooms and 15 baths driving two automiddot mobiles This family had an income of $32000 in Standard City a fictitious city which had costs close to the median ofall the cities in the survey The stanshydard of living attainable in Standard City was then priced in each of the surshyveyed areas

The most recent Runzheimer survey using October 1989 data showsAlaskas cities to have quite moderate costs com-

Alaska Economic Trends October 1990 6

Tobie 5

ACCRA Cost of Living Index First Quarter 1990

All Misc Items Grocery Transmiddot Health Goods amp

City Index Items Housing Utilities portation Care Services

West ANCHORAGE AI 1273 1293 1260 946 1184 1865 1292 FAlRBANKS AK 1282 1260 1049 1397 1302 1878 1277 J UNEAU AK 1328 1262 1286 1639 1210 1936 1193 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 KODIAKAK 1483 1435 1670 1917 1130 1812 1291 Salt Lake Ci ty UT 929 900 823 864 952 950 1033 San Diego CA 1328 1047 2161 742 1346 1323 1084 Seattle WA 1132 1104 1377 640 1176 1365 1076

Southwest Albuquerque NM 991 963 1052 988 1009 1021 950 Dallas TX 1031 1054 989 1089 1100 1068 988 Phoerux AZ 1011 95 7 987 963 1046 1152 1029

Midwest Mi nneapolis MN 1029 928 1123 1052 1060 1075 986 Omah a NE 912 931 856 904 1023 838 915 Saint Louis MO 982 947 973 1111 986 973 961

Southeast Augusta GA 993 962 888 1156 1023 940 1026 Montgomery AJL 993 972 888 1152 959 1054 1025 Louisville KY 931 946 910 794 1024 884 959

AtlanticJNew England Baltimore MD 1114 1060 1141 1081 1128 1115 1129 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Source Cost of Livi ng Index (291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

Kodiak data from 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

pared to the other areas surveyed In this survey costs were only 29to 59 above Standard City (See Table 7)

One assumption critical to the results of the survey was the duration of home ownership Like the Consumer Price Index and ACCRA surveys the guideshylines in the Runzheimer survey assume a recent home purchase The volatility of the Alaska housing market greatly impacted the cost of housing in the reshysul ts Mortgage payments accounted for 25 of the famHys total living costs in Standard City Anchorage was only slightly higher than 25 while Juneau

and Fairbanks were between 20 and 25 of total living costs going towards mortgage payments

Several years ago when Alaskas real estate prices were at their highest a larger share of total income went toshywards housing costs Some ofthe higher cost areas of the country see the greatest difference in the housing cost composhynent - in Los Angeles over 40 of total living costs go towards mortgage payshyments Those persons who bought a home several years ago are paying off higher mortgage s than those reported in the Runzheimer report As Alaskas

housing market recovers mortgage costs win again rise increasing total living costs

Summary - Assess Your Needs and Be Aware of Index Limitations

Thefust question one must answer when looking for cost of living information is what type of comparison needs to be made Is one interested in how costs changed over time or how costs differ between places Answering this ques-

Alaska Economic Trends October 1990 7

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

Table I

Consumer Price Index - Urban Consumers All Items and Selected Components

Us Be Alaska

Food amp AllItemB All Items Lese Shelter Rousing Mampdical Beverage

us Anchonlg us Anchogo us Anchoge us Anchoge us Ancho l1middot annual Percent omnual Peot nnual PlC4nt annual Percent annual annual annual nnual annual annual

Year average chanlte vee chan averaI chang average chane average average averago averago avoralle average

1960 296 344 1965 315 64 353 26 1970 388 232 411 164 1975 538 387 571 389 1980 824 532 855 497 829 847 811 859 149 788 867 897 1981 909 103 924 8 1 910 98 920 86 904 925 829 869 935 943 1982 965 62 974 54 962 57 963 47 969 982 925 948 97 3 972 1983 996 32 992 18 998 37 999 37 995 990 1006 997 995 997 1984 1039 43 1033 41 1039 4 1 1038 39 1036 1027 1068 1055 1032 1032 1985 1076 36 1058 24 1070 30 1075 36 1077 1030 1135 1109 1056 1062 1986 1096 19 1078 19 l OS0 09 1112 34 1109 1026 1220 1278 1091 1108 1987 1136 36 1082 04 1116 33 U51 35 1142 975 1301 1370 1135 1131 1988 1183 41 1086 04 1169 39 1178 23 1185 954 1386 1458 1182 1138 1989 1240 48 1117 29 1216 49 1223 38 1230 963 1493 1544 l249 1172

1st half 1988 1168 1084 1144 1170 1172 958 1365 1430 1165 1135 1st half 1989 1227 51 1109 23 1204 62 1214 38 1217 958 1463 1531 1236 1164 1st half 1990 1287 49 1169 54 1262 48 1266 42 1268 1022 1591 1601 1310 1225

Notes The moat current Consumer Price Index data available for Alaska is for the first half of 1990 For comparability data for the finrt halfof 1988 and 1989 are given to show the percentage change over the year

Source US Department of Labar Bureau of Labor StatistiCB

often used to adjust rents wages or some other monetary payment for the effects of inflation The Consumer Price Index (CPI) is the only survey designed to answer such questions

The USDepartment of Labors Bureau of Labor Statistics produces the CPI in various metropolitan areas throughout the country In Alaska only Anchorage is surveyed The shortcoming ofhaving only Anchorage prices tracked is that while price trends in Anchorage reflect changes in the cost of living for many Alaskans the results might not be apshypropriate in rural or even far removed urban areas of the state

Table 1 and Figure 1 show Anchorage CPI data for various commodities over time Returning to the concept of the marketbasket items can be aggregated into commodity groups such as food and beverages housing transportation and health care By analyzing the differencshyes among groups one can see which costs are rising at rates different from the overall CPr For example Figure 1 shows how medical costs have increased

at a much more rapid rate than has the overall Anchorage CPl while housing costs have lagged behind

Housing Component Kept Anchorage Inflation Low Until Recently

Each commodity group is given a weight - its contribution to the overall cost of living While health care costs have shot up in recent years they account for only about 5 of the total cost of living Housingcosts on the other hand account for over 40 of the Anchorage CPI

The strong influence that housing costs have on the overall Anchorage CPI has been particularly noticeable the last several years (See Table 1 All Items Less Shelter andHousing Components) Falling home and rental costs nearly offset increases in the other components of the CPl so that the overall CPI rose only slightly The recent increase in inflation in Anchorage can be partly accounted for by the improved housing market With housing prices now in-

Alaska Economic Trends October 1990 2

creasing the Anchorage CPI is showing a much higher rate of inflation than previously

The housing cost componentis unique in the CPI in that it is one of the few durable goods priced Other than autoshymobiles other items in the CPI are nondurables or items generally conshysumed within a short time frame rangshying from food (several days to a few weeks) to clothing (several months to a few years) The CPI data assumes a consumer hasjust purchased or rented a home To gauge the change in prices this seems a logical assumption Howshyever to get a true picture of the changes in costs a family faces it might be inapshypropriate to assume rental agreements or mortgages are renegotiated every few months For this reason the overall CPI figures have understated the rate of inflation in Anchorage for many people during the past several years

CPI Measures Inflation- Not Living Costs Between Locations

CPI users should be aware of a common misinterpretation of the CPI index It most often occurs when users compare CPI numbers among areas For examshyple the annual average Anchorage CPI for 1989 of 1117 is lower than the Unitshyed States average of 124 This does not however mean that Anchorage has a lower cost of living than the average in the United States The CPI measures inflation and not costs The fact that the Anchorage CPI numberin 1989i5 smallshyer than the overall US index does not mean that Anchorage costs are lower only that Anchorage prices have not inflated as quickly as elsewhere in the US since the base period (In this case the base period or when the two indexes equaled 100 is 1982-84)

Costs could have actually risen by a greater amount in dollar terms in Anshychorage and still be below the US inflashyt ion rate For example ifa product costs on average $500 in the US but $1000 inAnchorage a 10 inflation rate would increase the price by 50 cents in the US but by $100 in Anchorage

Tabe2 shy

Cost of Food for a Week in Various Alaskan Communities

March 1990

Ratio of Food Cost to

Cost of Anchorage Food Average

Community 1 Week (percent)

Anchorage $10073 nJa Bethel 15074 150 Cordova 13939 138 Delta 12989 129 Dillingham 16750 166 Elim 17775 176 Fairbanks 10766 107 Homer 12127 120 J uneau 10022 99 Kenai 10767 107 Ketchikan 9470 94 Kodiak 12633 125 MatSu II 10401 103 McGrath 14787 147 Nome 15065 150 Petersburg 11341 113 St Paul 14214 141 SandPoint 14384 143 Sitka 11251 112 Tok 12901 128

Costs are for a family of four with elementary school children

11 MatSu areas 2 tax is the rate for Palmer and is not used in tabulating costs

Sales tax included in food and utility cost

Source Cost of Food at Home for a Week March 1990 University of Alaska Cooperative Extension Service US Dept of Agriculture and SEA Grant Cooperating

Place-to-Place Comparisons of Costs

Thereare several differentindices which compare living costs between places All of these cost of living indices have their strengths (and weaknesses) with some being more appropriate than others in certain circumstances For example some are not a comprehensive cost of living index but focus on one specific part of the cost ofliving An example of this type of survey is the Cost of Food at Home for a Week survey done quarterly by the University of Alaskas Cooperashytive Extension Service

Cost of Food at Home

The Cost of Food study measures the cost to feed various size families in difshyferent locations in Alaska The report also contains comparative information on some utility and fuel costs The Cost of Food at Home survey is not a compreshyhensive measure of the cost of living for communities inAlaska The survey only compares food costs in various Alaska communities One of its strengths is its wide geographic coverage It provides comparative measures for locations not covered by any other cost index

Comparing the cost of living between communities in Alaska is made difficult

Alaska ECQlIOmic Tnlds October 1990 3

Table 3

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent of of of

Anchorage Anchorage Anchorage MonthlYear Anchorage Fairbanks Average Juneau Average Bethel Average

978 $7667 $8415 1098 $7372 962 $11405 1488 12179 8580 9192 1071 7755 9004 12044 1404 980 8844 9054 1024 8592 972 13087 1480 981 8669 9847 1136 9395 1084 13866 1599 982 7730 9209 1191 9998 1293 12550 1624 983 8166 8379 1026 8862 1085 12830 1571 984 8422 9126 1084 9166 1088 13654 1621 985 8906 9008 1011 10661 1197 13813 1551 986 8725 9061 1039 8765 1005 13796 1581 987 8890 8512 957 8824 993 14081 1584 988 9099 9474 1041 9295 1022 13757 1512 989 9380 9433 1006 9673 1031 14065 1499 390 10073 10766 1069 10022 995 15074 1496

Family offour with elementary school children Sales tax included in food prices

- Data unavailable

Source Cost of Food at Home for a Week September 1978 to March 1990 University of Alaska Cooperative Extension Service

(cont on page 5)US Dept of Agriculture and SEA Grant Cooperating

by several factors Many goods and services available in larger cities are not readily available in some TUTal areas The buying habits of urban residents vary from people in rural communities Different consumption patterns in urshyban and rural areas complicate comshyparisons in the costofliving Subsistence contributions to some households also make cost of living comparisons more difficult The Cost of Food survey asshysumes that all goods are purchased in the local community - none are acshyquired through subsistence means or from merchants outside of the commushynity

Food Costs Are Higher in Rural A18Bka

Table 2 shows the cost offood for a week for a family of four with elementary school children for 20 Alaska communishyties The March 1990 figures show that Anchorage has the lowest costs of the areas surveyed The larger cities in Alaska have food costs which are fairly comparable to those in Anchorage

The CostofFood survey has consistently shown thatthe most expensive ci ties are the smallerand more isolated communishyties This continues to be true In places such as Bethel and Dillingham the costs are 50 to 70 higher than in Anchorage

The Cost of Food study shows an intershyestingcontrast between Alaska and othshyer areas of the United States In the lower 48 larger urban areas have high shyer costs for food and other goods and services than less populated areas In rural areas ofthe nation the costofliving is typically less than in larger urban centers The opposite is true for Alaska The more rural Alaskan communities have costs for food and otherbasics such as fuel which are much greater than in the states urban centers

Table 3 is a time series of costs for the last 13 years This table shows the difference in the cost of food between Anchorage and other Alaskan commushynities It also shows the changes in costs over time within each community in the study

ACCRA Cost of Living Index

Another place-to-place cost of living measure is provided by the American Chamber ofCommerce Researchers Asshysociation (ACCRA) The ACCRA cost of living study compares costs for roughly 290 cities in the United States The ACCRA study can be used to compare some costs among a few of Alaskas cities and other cities across the nation In the ACCRA study a standardized list of5 9 items is priced during a fixed period of time The items priced are intended to reflect the spending patterns of a midshymanagement household

Although state and local taxes are cershytainly a part ofthe actual cost of living the ACCRA index does not take them into account Because of the limited number of items priced differences in the ACCRA cost of living index less than three (such as 129 vs 131) are statistishycally insignificant A difference in the index greater than three can be considshyered to show a cost of living difference

AJaska Economic Trends October 1990 4

Table 3 (cont from page 4)

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent Percent of of of of

Month Anchorage Anchorage Anchorage Anchorage Year Nome Average Kodiak Average Kenai Average Tok Average

978 $11885 1550 $8248 1076 12179 12462 1452 10041 1170 980 13114 1483 $9942 1124 12084 1366 $10882 1230 981 15027 1733 11480 1324 982 14904 1928 983 13014 1594 10494 1285 8698 1065 984 14207 1687 11597 1377 8797 1045 12166 1445 985 15241 1711 10817 1215 9147 1027 11619 1305 986 14204 1628 10549 1209 9278 1063 12418 1423 987 14796 1664 10439 1174 9695 1091 11751 1322 988 14769 1623 11668 1282 9553 1050 11969 1315 989 12461 1328 10420 1111 13943 1486 390 15065 1496 12633 1254 10767 1069 12901 1281

ACCRA Index Places 4 Alaskan Cit ies Among Most Expensive

Five Alaskan cities participate in the quarterly ACCRA study - Anchorage Fairbanks Juneau Ketchikan and Kodiak The latest published numbers (1st Quarter 1990) show that four of Alaskas cities are among the 10highest cost areas studied (See Table 4) Anshychorage has the lowest index of the Alaska cities in the ACCRA study Acshycording to the index Anchorage has a cost of living roughly 27 higher than the all cities average Some cities known to have a high cost of living such as Boston New Yorkand Washington DC are not included in the current data

The Alaska cities in the ACCRA study have the highest costs for several of the six major components of the ACCRA index (See Table 4) For example Ketchikan was tops for transportation health care and miscellaneous Alasshykascitieshadthehighestindexnumbers for groceries and health care

ACCRA Points to a Smaller Difference in Housing Costs

Housing costs have always been thought of as exceptionally high in Alaska Alshythough they may be high the ACCRA housing index shows that some areas in the nation have comparable housing costs Generally the lowest rankings for Alaskas cities were in the ACCRA housing cost index The Anchorage utilshyities index was lower than about oneshyhalf ofthe cities in the ACCRA study

Comparative figures for Alaskan cities and other cities around the nation are presented in Tables 5 and 6 Table 5 shows the ACCRA cost of living indexes while Table 6 contains prices for some of the goods and services in the ACCRA study

The ACCRA cost of living study is deshysigned around spending patterns found in major American urban centers The data collected in the pricing survey is an attempt to match the items found in the larger areas This process tends to igshynore living costs found in atypical areas

Alaska Economic Trends October 1990 5

Table 4

ACCRA Cost of Living Index First Quarter 1990

Ranking of 20 Highest Index Cities

Total City Index Grocery Housing Util Transp Health Misc

Nassau-Suffolk NY 1593 1182 2370 2191 1281 1372 1223 KODIAK AK 1483 1435 1670 1917 1130 1812 1291 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 New London CT 1375 1175 2105 1263 1141 1298 1115 San Diego CA 1328 1047 2161 742 1346 1323 1084 J UNEAUAK 1328 1262 1286 1639 1210 1936 1193 Orange County CA 1307 1033 2267 735 1047 1331 1075 Hartford CT 1301 1162 1614 1240 1142 1411 1217 San J ose CA 1293 1064 2186 840 1058 1351 1023 FAIRBANKS AK 1282 1260 1049 1397 1302 1878 1277 Ventura County CA 1279 1033 2258 668 1019 1234 1049 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Los Angeles Coun ty CA 1274 1033 2113 756 1021 1285 1092 ANCHORAGE AK 1273 1293 1260 946 1184 1865 1292 Meriden CT 1269 1074 1812 1036 1021 1230 1183 Manchester NH 1208 1020 1555 1408 1074 1147 1058 Palm Springs CA 1203 1036 1580 916 1147 1290 1131 MontpeJier-Barre VT 1190 1058 1478 1617 1043 989 1008 Temecula CA 1180 988 1595 1004 1063 1256 1076 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Ranking of Alaska Cities by Category

Anchorage AK 14 3 27 173 7 5 2 Fairbanks AK 10 5 83 7 3 4 4 J uneau AK 6 4 25 4 6 3 6 Ketchikan AK 3 2 14 5 1 1 1 Kodiak AK 2 1 9 2 14 2 3

Source Cost of Living Index (291 Cities) 1st Quarter 1990 America n Chamber of Commerce Researcher s Association

Kodiak data 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

For example the transportation costs in the ACCRA study include items such as bus fare the price ofa gallon of gasoline and automobile wheel balancing

For many areas in Alaska such as Juneau Ketchikan and Kodiak a typishycal living cost may include expensive transportation just to leave town Air fare which may be a luxury or just one option for travel elsewhere is an essenmiddot tial in many areas of Alaska This examshyple illustrates how the ACCRA index might understate the differences beshytween some of Alaskas cities and the all cities average

The Runzheimer Living Cost Index

A slightly different approach to calculatshying the differences among cities is taken in a study commissioned by the Alaska Department of Labor Runzheimer Inshyternational a private research firm looked at the comparative incomes necshyessary to maintain a certain standard of living in 253 different areas ofthe counshytry This income approach takes into account certain elements often left outof other cost of living measures such as an areas tax rates

For this study a base family was creatshyed- two parents two children living in a 1500 square foot home with 3 bedshyrooms and 15 baths driving two automiddot mobiles This family had an income of $32000 in Standard City a fictitious city which had costs close to the median ofall the cities in the survey The stanshydard of living attainable in Standard City was then priced in each of the surshyveyed areas

The most recent Runzheimer survey using October 1989 data showsAlaskas cities to have quite moderate costs com-

Alaska Economic Trends October 1990 6

Tobie 5

ACCRA Cost of Living Index First Quarter 1990

All Misc Items Grocery Transmiddot Health Goods amp

City Index Items Housing Utilities portation Care Services

West ANCHORAGE AI 1273 1293 1260 946 1184 1865 1292 FAlRBANKS AK 1282 1260 1049 1397 1302 1878 1277 J UNEAU AK 1328 1262 1286 1639 1210 1936 1193 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 KODIAKAK 1483 1435 1670 1917 1130 1812 1291 Salt Lake Ci ty UT 929 900 823 864 952 950 1033 San Diego CA 1328 1047 2161 742 1346 1323 1084 Seattle WA 1132 1104 1377 640 1176 1365 1076

Southwest Albuquerque NM 991 963 1052 988 1009 1021 950 Dallas TX 1031 1054 989 1089 1100 1068 988 Phoerux AZ 1011 95 7 987 963 1046 1152 1029

Midwest Mi nneapolis MN 1029 928 1123 1052 1060 1075 986 Omah a NE 912 931 856 904 1023 838 915 Saint Louis MO 982 947 973 1111 986 973 961

Southeast Augusta GA 993 962 888 1156 1023 940 1026 Montgomery AJL 993 972 888 1152 959 1054 1025 Louisville KY 931 946 910 794 1024 884 959

AtlanticJNew England Baltimore MD 1114 1060 1141 1081 1128 1115 1129 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Source Cost of Livi ng Index (291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

Kodiak data from 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

pared to the other areas surveyed In this survey costs were only 29to 59 above Standard City (See Table 7)

One assumption critical to the results of the survey was the duration of home ownership Like the Consumer Price Index and ACCRA surveys the guideshylines in the Runzheimer survey assume a recent home purchase The volatility of the Alaska housing market greatly impacted the cost of housing in the reshysul ts Mortgage payments accounted for 25 of the famHys total living costs in Standard City Anchorage was only slightly higher than 25 while Juneau

and Fairbanks were between 20 and 25 of total living costs going towards mortgage payments

Several years ago when Alaskas real estate prices were at their highest a larger share of total income went toshywards housing costs Some ofthe higher cost areas of the country see the greatest difference in the housing cost composhynent - in Los Angeles over 40 of total living costs go towards mortgage payshyments Those persons who bought a home several years ago are paying off higher mortgage s than those reported in the Runzheimer report As Alaskas

housing market recovers mortgage costs win again rise increasing total living costs

Summary - Assess Your Needs and Be Aware of Index Limitations

Thefust question one must answer when looking for cost of living information is what type of comparison needs to be made Is one interested in how costs changed over time or how costs differ between places Answering this ques-

Alaska Economic Trends October 1990 7

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

creasing the Anchorage CPI is showing a much higher rate of inflation than previously

The housing cost componentis unique in the CPI in that it is one of the few durable goods priced Other than autoshymobiles other items in the CPI are nondurables or items generally conshysumed within a short time frame rangshying from food (several days to a few weeks) to clothing (several months to a few years) The CPI data assumes a consumer hasjust purchased or rented a home To gauge the change in prices this seems a logical assumption Howshyever to get a true picture of the changes in costs a family faces it might be inapshypropriate to assume rental agreements or mortgages are renegotiated every few months For this reason the overall CPI figures have understated the rate of inflation in Anchorage for many people during the past several years

CPI Measures Inflation- Not Living Costs Between Locations

CPI users should be aware of a common misinterpretation of the CPI index It most often occurs when users compare CPI numbers among areas For examshyple the annual average Anchorage CPI for 1989 of 1117 is lower than the Unitshyed States average of 124 This does not however mean that Anchorage has a lower cost of living than the average in the United States The CPI measures inflation and not costs The fact that the Anchorage CPI numberin 1989i5 smallshyer than the overall US index does not mean that Anchorage costs are lower only that Anchorage prices have not inflated as quickly as elsewhere in the US since the base period (In this case the base period or when the two indexes equaled 100 is 1982-84)

Costs could have actually risen by a greater amount in dollar terms in Anshychorage and still be below the US inflashyt ion rate For example ifa product costs on average $500 in the US but $1000 inAnchorage a 10 inflation rate would increase the price by 50 cents in the US but by $100 in Anchorage

Tabe2 shy

Cost of Food for a Week in Various Alaskan Communities

March 1990

Ratio of Food Cost to

Cost of Anchorage Food Average

Community 1 Week (percent)

Anchorage $10073 nJa Bethel 15074 150 Cordova 13939 138 Delta 12989 129 Dillingham 16750 166 Elim 17775 176 Fairbanks 10766 107 Homer 12127 120 J uneau 10022 99 Kenai 10767 107 Ketchikan 9470 94 Kodiak 12633 125 MatSu II 10401 103 McGrath 14787 147 Nome 15065 150 Petersburg 11341 113 St Paul 14214 141 SandPoint 14384 143 Sitka 11251 112 Tok 12901 128

Costs are for a family of four with elementary school children

11 MatSu areas 2 tax is the rate for Palmer and is not used in tabulating costs

Sales tax included in food and utility cost

Source Cost of Food at Home for a Week March 1990 University of Alaska Cooperative Extension Service US Dept of Agriculture and SEA Grant Cooperating

Place-to-Place Comparisons of Costs

Thereare several differentindices which compare living costs between places All of these cost of living indices have their strengths (and weaknesses) with some being more appropriate than others in certain circumstances For example some are not a comprehensive cost of living index but focus on one specific part of the cost ofliving An example of this type of survey is the Cost of Food at Home for a Week survey done quarterly by the University of Alaskas Cooperashytive Extension Service

Cost of Food at Home

The Cost of Food study measures the cost to feed various size families in difshyferent locations in Alaska The report also contains comparative information on some utility and fuel costs The Cost of Food at Home survey is not a compreshyhensive measure of the cost of living for communities inAlaska The survey only compares food costs in various Alaska communities One of its strengths is its wide geographic coverage It provides comparative measures for locations not covered by any other cost index

Comparing the cost of living between communities in Alaska is made difficult

Alaska ECQlIOmic Tnlds October 1990 3

Table 3

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent of of of

Anchorage Anchorage Anchorage MonthlYear Anchorage Fairbanks Average Juneau Average Bethel Average

978 $7667 $8415 1098 $7372 962 $11405 1488 12179 8580 9192 1071 7755 9004 12044 1404 980 8844 9054 1024 8592 972 13087 1480 981 8669 9847 1136 9395 1084 13866 1599 982 7730 9209 1191 9998 1293 12550 1624 983 8166 8379 1026 8862 1085 12830 1571 984 8422 9126 1084 9166 1088 13654 1621 985 8906 9008 1011 10661 1197 13813 1551 986 8725 9061 1039 8765 1005 13796 1581 987 8890 8512 957 8824 993 14081 1584 988 9099 9474 1041 9295 1022 13757 1512 989 9380 9433 1006 9673 1031 14065 1499 390 10073 10766 1069 10022 995 15074 1496

Family offour with elementary school children Sales tax included in food prices

- Data unavailable

Source Cost of Food at Home for a Week September 1978 to March 1990 University of Alaska Cooperative Extension Service

(cont on page 5)US Dept of Agriculture and SEA Grant Cooperating

by several factors Many goods and services available in larger cities are not readily available in some TUTal areas The buying habits of urban residents vary from people in rural communities Different consumption patterns in urshyban and rural areas complicate comshyparisons in the costofliving Subsistence contributions to some households also make cost of living comparisons more difficult The Cost of Food survey asshysumes that all goods are purchased in the local community - none are acshyquired through subsistence means or from merchants outside of the commushynity

Food Costs Are Higher in Rural A18Bka

Table 2 shows the cost offood for a week for a family of four with elementary school children for 20 Alaska communishyties The March 1990 figures show that Anchorage has the lowest costs of the areas surveyed The larger cities in Alaska have food costs which are fairly comparable to those in Anchorage

The CostofFood survey has consistently shown thatthe most expensive ci ties are the smallerand more isolated communishyties This continues to be true In places such as Bethel and Dillingham the costs are 50 to 70 higher than in Anchorage

The Cost of Food study shows an intershyestingcontrast between Alaska and othshyer areas of the United States In the lower 48 larger urban areas have high shyer costs for food and other goods and services than less populated areas In rural areas ofthe nation the costofliving is typically less than in larger urban centers The opposite is true for Alaska The more rural Alaskan communities have costs for food and otherbasics such as fuel which are much greater than in the states urban centers

Table 3 is a time series of costs for the last 13 years This table shows the difference in the cost of food between Anchorage and other Alaskan commushynities It also shows the changes in costs over time within each community in the study

ACCRA Cost of Living Index

Another place-to-place cost of living measure is provided by the American Chamber ofCommerce Researchers Asshysociation (ACCRA) The ACCRA cost of living study compares costs for roughly 290 cities in the United States The ACCRA study can be used to compare some costs among a few of Alaskas cities and other cities across the nation In the ACCRA study a standardized list of5 9 items is priced during a fixed period of time The items priced are intended to reflect the spending patterns of a midshymanagement household

Although state and local taxes are cershytainly a part ofthe actual cost of living the ACCRA index does not take them into account Because of the limited number of items priced differences in the ACCRA cost of living index less than three (such as 129 vs 131) are statistishycally insignificant A difference in the index greater than three can be considshyered to show a cost of living difference

AJaska Economic Trends October 1990 4

Table 3 (cont from page 4)

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent Percent of of of of

Month Anchorage Anchorage Anchorage Anchorage Year Nome Average Kodiak Average Kenai Average Tok Average

978 $11885 1550 $8248 1076 12179 12462 1452 10041 1170 980 13114 1483 $9942 1124 12084 1366 $10882 1230 981 15027 1733 11480 1324 982 14904 1928 983 13014 1594 10494 1285 8698 1065 984 14207 1687 11597 1377 8797 1045 12166 1445 985 15241 1711 10817 1215 9147 1027 11619 1305 986 14204 1628 10549 1209 9278 1063 12418 1423 987 14796 1664 10439 1174 9695 1091 11751 1322 988 14769 1623 11668 1282 9553 1050 11969 1315 989 12461 1328 10420 1111 13943 1486 390 15065 1496 12633 1254 10767 1069 12901 1281

ACCRA Index Places 4 Alaskan Cit ies Among Most Expensive

Five Alaskan cities participate in the quarterly ACCRA study - Anchorage Fairbanks Juneau Ketchikan and Kodiak The latest published numbers (1st Quarter 1990) show that four of Alaskas cities are among the 10highest cost areas studied (See Table 4) Anshychorage has the lowest index of the Alaska cities in the ACCRA study Acshycording to the index Anchorage has a cost of living roughly 27 higher than the all cities average Some cities known to have a high cost of living such as Boston New Yorkand Washington DC are not included in the current data

The Alaska cities in the ACCRA study have the highest costs for several of the six major components of the ACCRA index (See Table 4) For example Ketchikan was tops for transportation health care and miscellaneous Alasshykascitieshadthehighestindexnumbers for groceries and health care

ACCRA Points to a Smaller Difference in Housing Costs

Housing costs have always been thought of as exceptionally high in Alaska Alshythough they may be high the ACCRA housing index shows that some areas in the nation have comparable housing costs Generally the lowest rankings for Alaskas cities were in the ACCRA housing cost index The Anchorage utilshyities index was lower than about oneshyhalf ofthe cities in the ACCRA study

Comparative figures for Alaskan cities and other cities around the nation are presented in Tables 5 and 6 Table 5 shows the ACCRA cost of living indexes while Table 6 contains prices for some of the goods and services in the ACCRA study

The ACCRA cost of living study is deshysigned around spending patterns found in major American urban centers The data collected in the pricing survey is an attempt to match the items found in the larger areas This process tends to igshynore living costs found in atypical areas

Alaska Economic Trends October 1990 5

Table 4

ACCRA Cost of Living Index First Quarter 1990

Ranking of 20 Highest Index Cities

Total City Index Grocery Housing Util Transp Health Misc

Nassau-Suffolk NY 1593 1182 2370 2191 1281 1372 1223 KODIAK AK 1483 1435 1670 1917 1130 1812 1291 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 New London CT 1375 1175 2105 1263 1141 1298 1115 San Diego CA 1328 1047 2161 742 1346 1323 1084 J UNEAUAK 1328 1262 1286 1639 1210 1936 1193 Orange County CA 1307 1033 2267 735 1047 1331 1075 Hartford CT 1301 1162 1614 1240 1142 1411 1217 San J ose CA 1293 1064 2186 840 1058 1351 1023 FAIRBANKS AK 1282 1260 1049 1397 1302 1878 1277 Ventura County CA 1279 1033 2258 668 1019 1234 1049 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Los Angeles Coun ty CA 1274 1033 2113 756 1021 1285 1092 ANCHORAGE AK 1273 1293 1260 946 1184 1865 1292 Meriden CT 1269 1074 1812 1036 1021 1230 1183 Manchester NH 1208 1020 1555 1408 1074 1147 1058 Palm Springs CA 1203 1036 1580 916 1147 1290 1131 MontpeJier-Barre VT 1190 1058 1478 1617 1043 989 1008 Temecula CA 1180 988 1595 1004 1063 1256 1076 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Ranking of Alaska Cities by Category

Anchorage AK 14 3 27 173 7 5 2 Fairbanks AK 10 5 83 7 3 4 4 J uneau AK 6 4 25 4 6 3 6 Ketchikan AK 3 2 14 5 1 1 1 Kodiak AK 2 1 9 2 14 2 3

Source Cost of Living Index (291 Cities) 1st Quarter 1990 America n Chamber of Commerce Researcher s Association

Kodiak data 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

For example the transportation costs in the ACCRA study include items such as bus fare the price ofa gallon of gasoline and automobile wheel balancing

For many areas in Alaska such as Juneau Ketchikan and Kodiak a typishycal living cost may include expensive transportation just to leave town Air fare which may be a luxury or just one option for travel elsewhere is an essenmiddot tial in many areas of Alaska This examshyple illustrates how the ACCRA index might understate the differences beshytween some of Alaskas cities and the all cities average

The Runzheimer Living Cost Index

A slightly different approach to calculatshying the differences among cities is taken in a study commissioned by the Alaska Department of Labor Runzheimer Inshyternational a private research firm looked at the comparative incomes necshyessary to maintain a certain standard of living in 253 different areas ofthe counshytry This income approach takes into account certain elements often left outof other cost of living measures such as an areas tax rates

For this study a base family was creatshyed- two parents two children living in a 1500 square foot home with 3 bedshyrooms and 15 baths driving two automiddot mobiles This family had an income of $32000 in Standard City a fictitious city which had costs close to the median ofall the cities in the survey The stanshydard of living attainable in Standard City was then priced in each of the surshyveyed areas

The most recent Runzheimer survey using October 1989 data showsAlaskas cities to have quite moderate costs com-

Alaska Economic Trends October 1990 6

Tobie 5

ACCRA Cost of Living Index First Quarter 1990

All Misc Items Grocery Transmiddot Health Goods amp

City Index Items Housing Utilities portation Care Services

West ANCHORAGE AI 1273 1293 1260 946 1184 1865 1292 FAlRBANKS AK 1282 1260 1049 1397 1302 1878 1277 J UNEAU AK 1328 1262 1286 1639 1210 1936 1193 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 KODIAKAK 1483 1435 1670 1917 1130 1812 1291 Salt Lake Ci ty UT 929 900 823 864 952 950 1033 San Diego CA 1328 1047 2161 742 1346 1323 1084 Seattle WA 1132 1104 1377 640 1176 1365 1076

Southwest Albuquerque NM 991 963 1052 988 1009 1021 950 Dallas TX 1031 1054 989 1089 1100 1068 988 Phoerux AZ 1011 95 7 987 963 1046 1152 1029

Midwest Mi nneapolis MN 1029 928 1123 1052 1060 1075 986 Omah a NE 912 931 856 904 1023 838 915 Saint Louis MO 982 947 973 1111 986 973 961

Southeast Augusta GA 993 962 888 1156 1023 940 1026 Montgomery AJL 993 972 888 1152 959 1054 1025 Louisville KY 931 946 910 794 1024 884 959

AtlanticJNew England Baltimore MD 1114 1060 1141 1081 1128 1115 1129 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Source Cost of Livi ng Index (291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

Kodiak data from 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

pared to the other areas surveyed In this survey costs were only 29to 59 above Standard City (See Table 7)

One assumption critical to the results of the survey was the duration of home ownership Like the Consumer Price Index and ACCRA surveys the guideshylines in the Runzheimer survey assume a recent home purchase The volatility of the Alaska housing market greatly impacted the cost of housing in the reshysul ts Mortgage payments accounted for 25 of the famHys total living costs in Standard City Anchorage was only slightly higher than 25 while Juneau

and Fairbanks were between 20 and 25 of total living costs going towards mortgage payments

Several years ago when Alaskas real estate prices were at their highest a larger share of total income went toshywards housing costs Some ofthe higher cost areas of the country see the greatest difference in the housing cost composhynent - in Los Angeles over 40 of total living costs go towards mortgage payshyments Those persons who bought a home several years ago are paying off higher mortgage s than those reported in the Runzheimer report As Alaskas

housing market recovers mortgage costs win again rise increasing total living costs

Summary - Assess Your Needs and Be Aware of Index Limitations

Thefust question one must answer when looking for cost of living information is what type of comparison needs to be made Is one interested in how costs changed over time or how costs differ between places Answering this ques-

Alaska Economic Trends October 1990 7

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

Table 3

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent of of of

Anchorage Anchorage Anchorage MonthlYear Anchorage Fairbanks Average Juneau Average Bethel Average

978 $7667 $8415 1098 $7372 962 $11405 1488 12179 8580 9192 1071 7755 9004 12044 1404 980 8844 9054 1024 8592 972 13087 1480 981 8669 9847 1136 9395 1084 13866 1599 982 7730 9209 1191 9998 1293 12550 1624 983 8166 8379 1026 8862 1085 12830 1571 984 8422 9126 1084 9166 1088 13654 1621 985 8906 9008 1011 10661 1197 13813 1551 986 8725 9061 1039 8765 1005 13796 1581 987 8890 8512 957 8824 993 14081 1584 988 9099 9474 1041 9295 1022 13757 1512 989 9380 9433 1006 9673 1031 14065 1499 390 10073 10766 1069 10022 995 15074 1496

Family offour with elementary school children Sales tax included in food prices

- Data unavailable

Source Cost of Food at Home for a Week September 1978 to March 1990 University of Alaska Cooperative Extension Service

(cont on page 5)US Dept of Agriculture and SEA Grant Cooperating

by several factors Many goods and services available in larger cities are not readily available in some TUTal areas The buying habits of urban residents vary from people in rural communities Different consumption patterns in urshyban and rural areas complicate comshyparisons in the costofliving Subsistence contributions to some households also make cost of living comparisons more difficult The Cost of Food survey asshysumes that all goods are purchased in the local community - none are acshyquired through subsistence means or from merchants outside of the commushynity

Food Costs Are Higher in Rural A18Bka

Table 2 shows the cost offood for a week for a family of four with elementary school children for 20 Alaska communishyties The March 1990 figures show that Anchorage has the lowest costs of the areas surveyed The larger cities in Alaska have food costs which are fairly comparable to those in Anchorage

The CostofFood survey has consistently shown thatthe most expensive ci ties are the smallerand more isolated communishyties This continues to be true In places such as Bethel and Dillingham the costs are 50 to 70 higher than in Anchorage

The Cost of Food study shows an intershyestingcontrast between Alaska and othshyer areas of the United States In the lower 48 larger urban areas have high shyer costs for food and other goods and services than less populated areas In rural areas ofthe nation the costofliving is typically less than in larger urban centers The opposite is true for Alaska The more rural Alaskan communities have costs for food and otherbasics such as fuel which are much greater than in the states urban centers

Table 3 is a time series of costs for the last 13 years This table shows the difference in the cost of food between Anchorage and other Alaskan commushynities It also shows the changes in costs over time within each community in the study

ACCRA Cost of Living Index

Another place-to-place cost of living measure is provided by the American Chamber ofCommerce Researchers Asshysociation (ACCRA) The ACCRA cost of living study compares costs for roughly 290 cities in the United States The ACCRA study can be used to compare some costs among a few of Alaskas cities and other cities across the nation In the ACCRA study a standardized list of5 9 items is priced during a fixed period of time The items priced are intended to reflect the spending patterns of a midshymanagement household

Although state and local taxes are cershytainly a part ofthe actual cost of living the ACCRA index does not take them into account Because of the limited number of items priced differences in the ACCRA cost of living index less than three (such as 129 vs 131) are statistishycally insignificant A difference in the index greater than three can be considshyered to show a cost of living difference

AJaska Economic Trends October 1990 4

Table 3 (cont from page 4)

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent Percent of of of of

Month Anchorage Anchorage Anchorage Anchorage Year Nome Average Kodiak Average Kenai Average Tok Average

978 $11885 1550 $8248 1076 12179 12462 1452 10041 1170 980 13114 1483 $9942 1124 12084 1366 $10882 1230 981 15027 1733 11480 1324 982 14904 1928 983 13014 1594 10494 1285 8698 1065 984 14207 1687 11597 1377 8797 1045 12166 1445 985 15241 1711 10817 1215 9147 1027 11619 1305 986 14204 1628 10549 1209 9278 1063 12418 1423 987 14796 1664 10439 1174 9695 1091 11751 1322 988 14769 1623 11668 1282 9553 1050 11969 1315 989 12461 1328 10420 1111 13943 1486 390 15065 1496 12633 1254 10767 1069 12901 1281

ACCRA Index Places 4 Alaskan Cit ies Among Most Expensive

Five Alaskan cities participate in the quarterly ACCRA study - Anchorage Fairbanks Juneau Ketchikan and Kodiak The latest published numbers (1st Quarter 1990) show that four of Alaskas cities are among the 10highest cost areas studied (See Table 4) Anshychorage has the lowest index of the Alaska cities in the ACCRA study Acshycording to the index Anchorage has a cost of living roughly 27 higher than the all cities average Some cities known to have a high cost of living such as Boston New Yorkand Washington DC are not included in the current data

The Alaska cities in the ACCRA study have the highest costs for several of the six major components of the ACCRA index (See Table 4) For example Ketchikan was tops for transportation health care and miscellaneous Alasshykascitieshadthehighestindexnumbers for groceries and health care

ACCRA Points to a Smaller Difference in Housing Costs

Housing costs have always been thought of as exceptionally high in Alaska Alshythough they may be high the ACCRA housing index shows that some areas in the nation have comparable housing costs Generally the lowest rankings for Alaskas cities were in the ACCRA housing cost index The Anchorage utilshyities index was lower than about oneshyhalf ofthe cities in the ACCRA study

Comparative figures for Alaskan cities and other cities around the nation are presented in Tables 5 and 6 Table 5 shows the ACCRA cost of living indexes while Table 6 contains prices for some of the goods and services in the ACCRA study

The ACCRA cost of living study is deshysigned around spending patterns found in major American urban centers The data collected in the pricing survey is an attempt to match the items found in the larger areas This process tends to igshynore living costs found in atypical areas

Alaska Economic Trends October 1990 5

Table 4

ACCRA Cost of Living Index First Quarter 1990

Ranking of 20 Highest Index Cities

Total City Index Grocery Housing Util Transp Health Misc

Nassau-Suffolk NY 1593 1182 2370 2191 1281 1372 1223 KODIAK AK 1483 1435 1670 1917 1130 1812 1291 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 New London CT 1375 1175 2105 1263 1141 1298 1115 San Diego CA 1328 1047 2161 742 1346 1323 1084 J UNEAUAK 1328 1262 1286 1639 1210 1936 1193 Orange County CA 1307 1033 2267 735 1047 1331 1075 Hartford CT 1301 1162 1614 1240 1142 1411 1217 San J ose CA 1293 1064 2186 840 1058 1351 1023 FAIRBANKS AK 1282 1260 1049 1397 1302 1878 1277 Ventura County CA 1279 1033 2258 668 1019 1234 1049 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Los Angeles Coun ty CA 1274 1033 2113 756 1021 1285 1092 ANCHORAGE AK 1273 1293 1260 946 1184 1865 1292 Meriden CT 1269 1074 1812 1036 1021 1230 1183 Manchester NH 1208 1020 1555 1408 1074 1147 1058 Palm Springs CA 1203 1036 1580 916 1147 1290 1131 MontpeJier-Barre VT 1190 1058 1478 1617 1043 989 1008 Temecula CA 1180 988 1595 1004 1063 1256 1076 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Ranking of Alaska Cities by Category

Anchorage AK 14 3 27 173 7 5 2 Fairbanks AK 10 5 83 7 3 4 4 J uneau AK 6 4 25 4 6 3 6 Ketchikan AK 3 2 14 5 1 1 1 Kodiak AK 2 1 9 2 14 2 3

Source Cost of Living Index (291 Cities) 1st Quarter 1990 America n Chamber of Commerce Researcher s Association

Kodiak data 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

For example the transportation costs in the ACCRA study include items such as bus fare the price ofa gallon of gasoline and automobile wheel balancing

For many areas in Alaska such as Juneau Ketchikan and Kodiak a typishycal living cost may include expensive transportation just to leave town Air fare which may be a luxury or just one option for travel elsewhere is an essenmiddot tial in many areas of Alaska This examshyple illustrates how the ACCRA index might understate the differences beshytween some of Alaskas cities and the all cities average

The Runzheimer Living Cost Index

A slightly different approach to calculatshying the differences among cities is taken in a study commissioned by the Alaska Department of Labor Runzheimer Inshyternational a private research firm looked at the comparative incomes necshyessary to maintain a certain standard of living in 253 different areas ofthe counshytry This income approach takes into account certain elements often left outof other cost of living measures such as an areas tax rates

For this study a base family was creatshyed- two parents two children living in a 1500 square foot home with 3 bedshyrooms and 15 baths driving two automiddot mobiles This family had an income of $32000 in Standard City a fictitious city which had costs close to the median ofall the cities in the survey The stanshydard of living attainable in Standard City was then priced in each of the surshyveyed areas

The most recent Runzheimer survey using October 1989 data showsAlaskas cities to have quite moderate costs com-

Alaska Economic Trends October 1990 6

Tobie 5

ACCRA Cost of Living Index First Quarter 1990

All Misc Items Grocery Transmiddot Health Goods amp

City Index Items Housing Utilities portation Care Services

West ANCHORAGE AI 1273 1293 1260 946 1184 1865 1292 FAlRBANKS AK 1282 1260 1049 1397 1302 1878 1277 J UNEAU AK 1328 1262 1286 1639 1210 1936 1193 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 KODIAKAK 1483 1435 1670 1917 1130 1812 1291 Salt Lake Ci ty UT 929 900 823 864 952 950 1033 San Diego CA 1328 1047 2161 742 1346 1323 1084 Seattle WA 1132 1104 1377 640 1176 1365 1076

Southwest Albuquerque NM 991 963 1052 988 1009 1021 950 Dallas TX 1031 1054 989 1089 1100 1068 988 Phoerux AZ 1011 95 7 987 963 1046 1152 1029

Midwest Mi nneapolis MN 1029 928 1123 1052 1060 1075 986 Omah a NE 912 931 856 904 1023 838 915 Saint Louis MO 982 947 973 1111 986 973 961

Southeast Augusta GA 993 962 888 1156 1023 940 1026 Montgomery AJL 993 972 888 1152 959 1054 1025 Louisville KY 931 946 910 794 1024 884 959

AtlanticJNew England Baltimore MD 1114 1060 1141 1081 1128 1115 1129 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Source Cost of Livi ng Index (291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

Kodiak data from 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

pared to the other areas surveyed In this survey costs were only 29to 59 above Standard City (See Table 7)

One assumption critical to the results of the survey was the duration of home ownership Like the Consumer Price Index and ACCRA surveys the guideshylines in the Runzheimer survey assume a recent home purchase The volatility of the Alaska housing market greatly impacted the cost of housing in the reshysul ts Mortgage payments accounted for 25 of the famHys total living costs in Standard City Anchorage was only slightly higher than 25 while Juneau

and Fairbanks were between 20 and 25 of total living costs going towards mortgage payments

Several years ago when Alaskas real estate prices were at their highest a larger share of total income went toshywards housing costs Some ofthe higher cost areas of the country see the greatest difference in the housing cost composhynent - in Los Angeles over 40 of total living costs go towards mortgage payshyments Those persons who bought a home several years ago are paying off higher mortgage s than those reported in the Runzheimer report As Alaskas

housing market recovers mortgage costs win again rise increasing total living costs

Summary - Assess Your Needs and Be Aware of Index Limitations

Thefust question one must answer when looking for cost of living information is what type of comparison needs to be made Is one interested in how costs changed over time or how costs differ between places Answering this ques-

Alaska Economic Trends October 1990 7

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

Table 3 (cont from page 4)

Cost of Food at Home for a Week 1978-1990

Percent Percent Percent Percent of of of of

Month Anchorage Anchorage Anchorage Anchorage Year Nome Average Kodiak Average Kenai Average Tok Average

978 $11885 1550 $8248 1076 12179 12462 1452 10041 1170 980 13114 1483 $9942 1124 12084 1366 $10882 1230 981 15027 1733 11480 1324 982 14904 1928 983 13014 1594 10494 1285 8698 1065 984 14207 1687 11597 1377 8797 1045 12166 1445 985 15241 1711 10817 1215 9147 1027 11619 1305 986 14204 1628 10549 1209 9278 1063 12418 1423 987 14796 1664 10439 1174 9695 1091 11751 1322 988 14769 1623 11668 1282 9553 1050 11969 1315 989 12461 1328 10420 1111 13943 1486 390 15065 1496 12633 1254 10767 1069 12901 1281

ACCRA Index Places 4 Alaskan Cit ies Among Most Expensive

Five Alaskan cities participate in the quarterly ACCRA study - Anchorage Fairbanks Juneau Ketchikan and Kodiak The latest published numbers (1st Quarter 1990) show that four of Alaskas cities are among the 10highest cost areas studied (See Table 4) Anshychorage has the lowest index of the Alaska cities in the ACCRA study Acshycording to the index Anchorage has a cost of living roughly 27 higher than the all cities average Some cities known to have a high cost of living such as Boston New Yorkand Washington DC are not included in the current data

The Alaska cities in the ACCRA study have the highest costs for several of the six major components of the ACCRA index (See Table 4) For example Ketchikan was tops for transportation health care and miscellaneous Alasshykascitieshadthehighestindexnumbers for groceries and health care

ACCRA Points to a Smaller Difference in Housing Costs

Housing costs have always been thought of as exceptionally high in Alaska Alshythough they may be high the ACCRA housing index shows that some areas in the nation have comparable housing costs Generally the lowest rankings for Alaskas cities were in the ACCRA housing cost index The Anchorage utilshyities index was lower than about oneshyhalf ofthe cities in the ACCRA study

Comparative figures for Alaskan cities and other cities around the nation are presented in Tables 5 and 6 Table 5 shows the ACCRA cost of living indexes while Table 6 contains prices for some of the goods and services in the ACCRA study

The ACCRA cost of living study is deshysigned around spending patterns found in major American urban centers The data collected in the pricing survey is an attempt to match the items found in the larger areas This process tends to igshynore living costs found in atypical areas

Alaska Economic Trends October 1990 5

Table 4

ACCRA Cost of Living Index First Quarter 1990

Ranking of 20 Highest Index Cities

Total City Index Grocery Housing Util Transp Health Misc

Nassau-Suffolk NY 1593 1182 2370 2191 1281 1372 1223 KODIAK AK 1483 1435 1670 1917 1130 1812 1291 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 New London CT 1375 1175 2105 1263 1141 1298 1115 San Diego CA 1328 1047 2161 742 1346 1323 1084 J UNEAUAK 1328 1262 1286 1639 1210 1936 1193 Orange County CA 1307 1033 2267 735 1047 1331 1075 Hartford CT 1301 1162 1614 1240 1142 1411 1217 San J ose CA 1293 1064 2186 840 1058 1351 1023 FAIRBANKS AK 1282 1260 1049 1397 1302 1878 1277 Ventura County CA 1279 1033 2258 668 1019 1234 1049 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Los Angeles Coun ty CA 1274 1033 2113 756 1021 1285 1092 ANCHORAGE AK 1273 1293 1260 946 1184 1865 1292 Meriden CT 1269 1074 1812 1036 1021 1230 1183 Manchester NH 1208 1020 1555 1408 1074 1147 1058 Palm Springs CA 1203 1036 1580 916 1147 1290 1131 MontpeJier-Barre VT 1190 1058 1478 1617 1043 989 1008 Temecula CA 1180 988 1595 1004 1063 1256 1076 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Ranking of Alaska Cities by Category

Anchorage AK 14 3 27 173 7 5 2 Fairbanks AK 10 5 83 7 3 4 4 J uneau AK 6 4 25 4 6 3 6 Ketchikan AK 3 2 14 5 1 1 1 Kodiak AK 2 1 9 2 14 2 3

Source Cost of Living Index (291 Cities) 1st Quarter 1990 America n Chamber of Commerce Researcher s Association

Kodiak data 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

For example the transportation costs in the ACCRA study include items such as bus fare the price ofa gallon of gasoline and automobile wheel balancing

For many areas in Alaska such as Juneau Ketchikan and Kodiak a typishycal living cost may include expensive transportation just to leave town Air fare which may be a luxury or just one option for travel elsewhere is an essenmiddot tial in many areas of Alaska This examshyple illustrates how the ACCRA index might understate the differences beshytween some of Alaskas cities and the all cities average

The Runzheimer Living Cost Index

A slightly different approach to calculatshying the differences among cities is taken in a study commissioned by the Alaska Department of Labor Runzheimer Inshyternational a private research firm looked at the comparative incomes necshyessary to maintain a certain standard of living in 253 different areas ofthe counshytry This income approach takes into account certain elements often left outof other cost of living measures such as an areas tax rates

For this study a base family was creatshyed- two parents two children living in a 1500 square foot home with 3 bedshyrooms and 15 baths driving two automiddot mobiles This family had an income of $32000 in Standard City a fictitious city which had costs close to the median ofall the cities in the survey The stanshydard of living attainable in Standard City was then priced in each of the surshyveyed areas

The most recent Runzheimer survey using October 1989 data showsAlaskas cities to have quite moderate costs com-

Alaska Economic Trends October 1990 6

Tobie 5

ACCRA Cost of Living Index First Quarter 1990

All Misc Items Grocery Transmiddot Health Goods amp

City Index Items Housing Utilities portation Care Services

West ANCHORAGE AI 1273 1293 1260 946 1184 1865 1292 FAlRBANKS AK 1282 1260 1049 1397 1302 1878 1277 J UNEAU AK 1328 1262 1286 1639 1210 1936 1193 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 KODIAKAK 1483 1435 1670 1917 1130 1812 1291 Salt Lake Ci ty UT 929 900 823 864 952 950 1033 San Diego CA 1328 1047 2161 742 1346 1323 1084 Seattle WA 1132 1104 1377 640 1176 1365 1076

Southwest Albuquerque NM 991 963 1052 988 1009 1021 950 Dallas TX 1031 1054 989 1089 1100 1068 988 Phoerux AZ 1011 95 7 987 963 1046 1152 1029

Midwest Mi nneapolis MN 1029 928 1123 1052 1060 1075 986 Omah a NE 912 931 856 904 1023 838 915 Saint Louis MO 982 947 973 1111 986 973 961

Southeast Augusta GA 993 962 888 1156 1023 940 1026 Montgomery AJL 993 972 888 1152 959 1054 1025 Louisville KY 931 946 910 794 1024 884 959

AtlanticJNew England Baltimore MD 1114 1060 1141 1081 1128 1115 1129 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Source Cost of Livi ng Index (291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

Kodiak data from 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

pared to the other areas surveyed In this survey costs were only 29to 59 above Standard City (See Table 7)

One assumption critical to the results of the survey was the duration of home ownership Like the Consumer Price Index and ACCRA surveys the guideshylines in the Runzheimer survey assume a recent home purchase The volatility of the Alaska housing market greatly impacted the cost of housing in the reshysul ts Mortgage payments accounted for 25 of the famHys total living costs in Standard City Anchorage was only slightly higher than 25 while Juneau

and Fairbanks were between 20 and 25 of total living costs going towards mortgage payments

Several years ago when Alaskas real estate prices were at their highest a larger share of total income went toshywards housing costs Some ofthe higher cost areas of the country see the greatest difference in the housing cost composhynent - in Los Angeles over 40 of total living costs go towards mortgage payshyments Those persons who bought a home several years ago are paying off higher mortgage s than those reported in the Runzheimer report As Alaskas

housing market recovers mortgage costs win again rise increasing total living costs

Summary - Assess Your Needs and Be Aware of Index Limitations

Thefust question one must answer when looking for cost of living information is what type of comparison needs to be made Is one interested in how costs changed over time or how costs differ between places Answering this ques-

Alaska Economic Trends October 1990 7

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

Table 4

ACCRA Cost of Living Index First Quarter 1990

Ranking of 20 Highest Index Cities

Total City Index Grocery Housing Util Transp Health Misc

Nassau-Suffolk NY 1593 1182 2370 2191 1281 1372 1223 KODIAK AK 1483 1435 1670 1917 1130 1812 1291 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 New London CT 1375 1175 2105 1263 1141 1298 1115 San Diego CA 1328 1047 2161 742 1346 1323 1084 J UNEAUAK 1328 1262 1286 1639 1210 1936 1193 Orange County CA 1307 1033 2267 735 1047 1331 1075 Hartford CT 1301 1162 1614 1240 1142 1411 1217 San J ose CA 1293 1064 2186 840 1058 1351 1023 FAIRBANKS AK 1282 1260 1049 1397 1302 1878 1277 Ventura County CA 1279 1033 2258 668 1019 1234 1049 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Los Angeles Coun ty CA 1274 1033 2113 756 1021 1285 1092 ANCHORAGE AK 1273 1293 1260 946 1184 1865 1292 Meriden CT 1269 1074 1812 1036 1021 1230 1183 Manchester NH 1208 1020 1555 1408 1074 1147 1058 Palm Springs CA 1203 1036 1580 916 1147 1290 1131 MontpeJier-Barre VT 1190 1058 1478 1617 1043 989 1008 Temecula CA 1180 988 1595 1004 1063 1256 1076 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Ranking of Alaska Cities by Category

Anchorage AK 14 3 27 173 7 5 2 Fairbanks AK 10 5 83 7 3 4 4 J uneau AK 6 4 25 4 6 3 6 Ketchikan AK 3 2 14 5 1 1 1 Kodiak AK 2 1 9 2 14 2 3

Source Cost of Living Index (291 Cities) 1st Quarter 1990 America n Chamber of Commerce Researcher s Association

Kodiak data 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

For example the transportation costs in the ACCRA study include items such as bus fare the price ofa gallon of gasoline and automobile wheel balancing

For many areas in Alaska such as Juneau Ketchikan and Kodiak a typishycal living cost may include expensive transportation just to leave town Air fare which may be a luxury or just one option for travel elsewhere is an essenmiddot tial in many areas of Alaska This examshyple illustrates how the ACCRA index might understate the differences beshytween some of Alaskas cities and the all cities average

The Runzheimer Living Cost Index

A slightly different approach to calculatshying the differences among cities is taken in a study commissioned by the Alaska Department of Labor Runzheimer Inshyternational a private research firm looked at the comparative incomes necshyessary to maintain a certain standard of living in 253 different areas ofthe counshytry This income approach takes into account certain elements often left outof other cost of living measures such as an areas tax rates

For this study a base family was creatshyed- two parents two children living in a 1500 square foot home with 3 bedshyrooms and 15 baths driving two automiddot mobiles This family had an income of $32000 in Standard City a fictitious city which had costs close to the median ofall the cities in the survey The stanshydard of living attainable in Standard City was then priced in each of the surshyveyed areas

The most recent Runzheimer survey using October 1989 data showsAlaskas cities to have quite moderate costs com-

Alaska Economic Trends October 1990 6

Tobie 5

ACCRA Cost of Living Index First Quarter 1990

All Misc Items Grocery Transmiddot Health Goods amp

City Index Items Housing Utilities portation Care Services

West ANCHORAGE AI 1273 1293 1260 946 1184 1865 1292 FAlRBANKS AK 1282 1260 1049 1397 1302 1878 1277 J UNEAU AK 1328 1262 1286 1639 1210 1936 1193 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 KODIAKAK 1483 1435 1670 1917 1130 1812 1291 Salt Lake Ci ty UT 929 900 823 864 952 950 1033 San Diego CA 1328 1047 2161 742 1346 1323 1084 Seattle WA 1132 1104 1377 640 1176 1365 1076

Southwest Albuquerque NM 991 963 1052 988 1009 1021 950 Dallas TX 1031 1054 989 1089 1100 1068 988 Phoerux AZ 1011 95 7 987 963 1046 1152 1029

Midwest Mi nneapolis MN 1029 928 1123 1052 1060 1075 986 Omah a NE 912 931 856 904 1023 838 915 Saint Louis MO 982 947 973 1111 986 973 961

Southeast Augusta GA 993 962 888 1156 1023 940 1026 Montgomery AJL 993 972 888 1152 959 1054 1025 Louisville KY 931 946 910 794 1024 884 959

AtlanticJNew England Baltimore MD 1114 1060 1141 1081 1128 1115 1129 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Source Cost of Livi ng Index (291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

Kodiak data from 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

pared to the other areas surveyed In this survey costs were only 29to 59 above Standard City (See Table 7)

One assumption critical to the results of the survey was the duration of home ownership Like the Consumer Price Index and ACCRA surveys the guideshylines in the Runzheimer survey assume a recent home purchase The volatility of the Alaska housing market greatly impacted the cost of housing in the reshysul ts Mortgage payments accounted for 25 of the famHys total living costs in Standard City Anchorage was only slightly higher than 25 while Juneau

and Fairbanks were between 20 and 25 of total living costs going towards mortgage payments

Several years ago when Alaskas real estate prices were at their highest a larger share of total income went toshywards housing costs Some ofthe higher cost areas of the country see the greatest difference in the housing cost composhynent - in Los Angeles over 40 of total living costs go towards mortgage payshyments Those persons who bought a home several years ago are paying off higher mortgage s than those reported in the Runzheimer report As Alaskas

housing market recovers mortgage costs win again rise increasing total living costs

Summary - Assess Your Needs and Be Aware of Index Limitations

Thefust question one must answer when looking for cost of living information is what type of comparison needs to be made Is one interested in how costs changed over time or how costs differ between places Answering this ques-

Alaska Economic Trends October 1990 7

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

Tobie 5

ACCRA Cost of Living Index First Quarter 1990

All Misc Items Grocery Transmiddot Health Goods amp

City Index Items Housing Utilities portation Care Services

West ANCHORAGE AI 1273 1293 1260 946 1184 1865 1292 FAlRBANKS AK 1282 1260 1049 1397 1302 1878 1277 J UNEAU AK 1328 1262 1286 1639 1210 1936 1193 KETCHIKAN AK 1479 1375 1532 1458 1376 2025 1423 KODIAKAK 1483 1435 1670 1917 1130 1812 1291 Salt Lake Ci ty UT 929 900 823 864 952 950 1033 San Diego CA 1328 1047 2161 742 1346 1323 1084 Seattle WA 1132 1104 1377 640 1176 1365 1076

Southwest Albuquerque NM 991 963 1052 988 1009 1021 950 Dallas TX 1031 1054 989 1089 1100 1068 988 Phoerux AZ 1011 95 7 987 963 1046 1152 1029

Midwest Mi nneapolis MN 1029 928 1123 1052 1060 1075 986 Omah a NE 912 931 856 904 1023 838 915 Saint Louis MO 982 947 973 1111 986 973 961

Southeast Augusta GA 993 962 888 1156 1023 940 1026 Montgomery AJL 993 972 888 1152 959 1054 1025 Louisville KY 931 946 910 794 1024 884 959

AtlanticJNew England Baltimore MD 1114 1060 1141 1081 1128 1115 1129 Philadelphia PA 1275 1149 1399 1716 1089 1367 1154 Wilmington DE 1174 1041 1251 1392 988 1223 1182

Source Cost of Livi ng Index (291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

Kodiak data from 4th Quarter 1989 and is not comparable to 1st Quarter 1990 data

pared to the other areas surveyed In this survey costs were only 29to 59 above Standard City (See Table 7)

One assumption critical to the results of the survey was the duration of home ownership Like the Consumer Price Index and ACCRA surveys the guideshylines in the Runzheimer survey assume a recent home purchase The volatility of the Alaska housing market greatly impacted the cost of housing in the reshysul ts Mortgage payments accounted for 25 of the famHys total living costs in Standard City Anchorage was only slightly higher than 25 while Juneau

and Fairbanks were between 20 and 25 of total living costs going towards mortgage payments

Several years ago when Alaskas real estate prices were at their highest a larger share of total income went toshywards housing costs Some ofthe higher cost areas of the country see the greatest difference in the housing cost composhynent - in Los Angeles over 40 of total living costs go towards mortgage payshyments Those persons who bought a home several years ago are paying off higher mortgage s than those reported in the Runzheimer report As Alaskas

housing market recovers mortgage costs win again rise increasing total living costs

Summary - Assess Your Needs and Be Aware of Index Limitations

Thefust question one must answer when looking for cost of living information is what type of comparison needs to be made Is one interested in how costs changed over time or how costs differ between places Answering this ques-

Alaska Economic Trends October 1990 7

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

Table 6

ACCRA Cost of Living Index Cost of Select Items in Select Cities

First Quarter 1989

City G

lib round

Beef

112 gal Whole

Milk lIb Purchase

Coffee

House

Price

Total Energy

Cost 1 gal Hospital Gas Room

Office Visit

Doctor

West ANCHORAGE AK FAIRBANKS AK JUNEAUAK KETCHIKAN AK KODIAKAK Sal t Lake City UT San Diego CA Seat tle WA

$169 179 167 166 176 101 165 162

$201 197 184 204 196 143 126 13S

$359 $123785 345 99333 325 125000 363 156000 346 157500 279 83640 247 227000 302 143329

$10658 16014 18522 17332 218 77

9383 8051 6570

$110 $45250 122 32600 145 38000 145 42500 141 31200 093 26820 107 41900 092 30985

$6000 5380 4380 5650 4160 2600 3940 4100

Southwest Albuquerque NM Dallas TX Phoenix AZ

135 162 128

149 166 120

257 207 207

107398 95698 95823

10546 12026 10670

103 094 103

27300 27043 29838

3100 3528 3450

Midwest Minneapolis MN OmahaNE Saint Louis MO

110 144 139

136 121 132

251 225 277

117470 86940 98765

11523 9585

12323

109 0 99 092

33900 20640 25060

2940 2920 3370

Sou theast Augusta GA Montgomery AL Louisville KY

169 164 167

150 167 138

201 253 237

94400 90000 88130

12798 12549

8011

098 103 103

23750 22350 28768

3060 3940 2700

AtlanticlNew EnglanBaltimore MD Wilmington DE Phila delphia PA

d 143 169 151

139 122 110

271 251 299

123154 134751 141800

11620 15816 19914

106 095 104

31240 37133 42040

3120 3040 4420

ALL CITIES MEAN 151 141 254 104108 10906 104 25609 3010

All cities mean is the mean price of all 291 cities in the 1st quarter 1990 survoy

Source Inter-City Cost of Living Index(291 Cities) 1st Quarter 1990 American Chamber of Commerce Researchers Association

bull Kodiak data 4th Quarter 1989 and is not strictly comparable to 1st Quarter 1990 data

tion narrows the field ofappropriate cost of living surveys

Next a decision must be made on the suitability of different surveys - some surveys look at part of the total cost of livingpackage such as the Cost of Food at Horne survey Some surveys might look at a population unlike the one being studied The ACCRA surveys tnightnot reflect the cost of living for poverty inshy

corne levelfarnilies because it emulates a rnidrnanagement families spending patterns

In Alaska particularly in smaller comshymunities survey choices are few Only the Cost of Food at Horne and the ACshyCRA Cost ofLiving Index include more than the three largest Alaska cities_ These surveys have certain limitations in the scope of goods priced For this

reason a data user might be forced to use an index which only approximates cost of living differences

Given these limitations most cost of living questions involve some sort of compromise answer Still the indexes mentioned in this article provide inforshymation to help answer these questions When used with proper care the inforshymation can help you compare how far your dollar will go

ALaska Economic Trends October 1990 8

Table 7

Runzheimer International Living Cost Standards October 1989

Percent Percent Percent Misc Percent of of of Goods amp of

Total Standard Trans- Standard Standard Services Standard City Costs City portation City Housing City Other City

Anchorage $33886 1059 $4476 1168 $13914 1l04 $10727 1077 Fairbanks 32939 1029 4422 1154 12462 988 10949 1099 J uneau 33343 1042 4268 1113 12835 1018 1l260 1130 STANDARD CITY 32000 3833 12607 9961 Albuquerque 31174 974 3756 980 12163 965 9872 991 Atlanta 32957 1030 4193 1094 12889 1022 10227 1027 Augusta 32614 1019 3672 958 14157 l123 9775 981 Binningham 29871 933 3615 943 10054 797 9970 1001 Boston 41681 1303 4678 1220 22149 1757 9887 993 Chicago 36386 1137 4194 1094 16459 1306 10630 1067 Dallas 30959 967 4178 1090 11360 901 10307 1035 Denver 30898 966 4 158 1085 11438 907 9554 959 Detroit 34394 1075 4323 1128 14942 1185 9891 993 Honolulu 39658 1239 4790 1250 18311 1452 12230 1228 Indianapolis 30784 962 3879 1012 11033 875 9708 975 Jacksonville 30531 954 3931 1026 1l290 896 10232 1027 Los Angeles 41748 1305 5386 1405 22235 1764 10356 1040 Milwaukee 32556 1017 3713 969 13228 1049 9698 974 New York City 44359 1386 6584 1718 22986 1823 10719 1076 Philadelphia 37559 1174 4891 1276 16322 1295 10165 1020 Portland 32197 1006 4029 1051 12555 996 9590 963 San Francisco 48025 1501 5067 1322 29505 2340 10635 1068 Seattle 33254 1039 4183 1091 13992 1110 10453 1049 St Louis 32270 1008 3785 987 12674 1005 9938 998 Washington DC 39176 1224 4303 1123 19845 1574 10509 1055

Source R unzheimers Living Cost Index October 1989

Summary of Cost of Living Indexes

Survey Consumer Price Index

Population

All urban consumers(CPIshyU) or urban wage and clerical workers (CPIshy W)

Strength

Measures costs in one location over time the only available inflation measure

Weakness

Can only compare the change in the cost-of-living for different locations only available for Anchorage

ACCRA Cost Midmanagement level Compares many locations No tracking of changes over of Living Index family to a national average time lacks consistency in

price collection

Cost of Food Lower income individuals Compares minimum food No good comparison of at Home Study or families costs for smaller Alaskan national data only looks at

communities excluded food costs not entire cost of from other studies living

Runzheimers Family with $32000 in Considers income needed Does not directly address Living Cost Index income living in average to maintain a specific differences in prices

cost city standard of living in different cities includes taxes

Alaska Economic Trends October 1990 9