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Analysis shows Fairbanks is the best place for a raise. Is it?

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Atlantic Monthly Cities :

Fairbanks, AK - A survey published on the Atlantic Monthly’s website shows Fairbanks saw the largest overall increase in annual wages and salaries between 2010 and 2011.  Those numbers aren’t necessarily wrong, but the number crunching does leave some questions unanswered.

The Martin Prosperity Institute, a Canadian think-tank based at the University of Toronto’s Rotman School of Management, compared mean, or average, wage and salary data from 395 U.S. metropolitan areas in years 2010 and 2011. Results show Fairbanks with the highest overall increase.  Dan Robinson does research and analysis for the Alaska Department of Labor and Workforce Development.  He says the US Bureau of Labor Statistics warns against comparing their data in such a way.

“Anytime you’re talking about mean wages, you have to be a little careful not assume that means anybody got an actual raise," he explains.  "Because it’s just an average, so if you get a light change in industry composition, for example, higher wage jobs, then your average will go up without anyone having gotten a raise, so there are some assumptions there that hard core data people would steer away from.”

Kevin Stolarick did some of the number crunching for the blog post that reports the findings on the Atlantic Monthly’s website.  “It’s not hardcore, peer-reviewed academic science," says Stolarick.

The survey doesn’t say anything about changes in overall employment or fluctuations in the economy.  Stolarick and his colleagues did a similar comparison for 2005 and 2006 data as well.  Fairbanks ranked fifth amongst the same cities in those years.  He says altogether, the results aren’t that surprising, but they do raise questions about what is happening in Fairbanks.

"The cost of living is higher, so that would explain why the average wage is higher, but on the other hand, that one year growth, or the five year growth, that’s something else," says Stolarick. "That doesn’t explain the kind of sudden growth in the more recent period."

But it would take a lot of digging to find out what it really is.

"It’s really trying to understand what the actual jobs are and how the mix of jobs have changed," he explains.  "[It's] the kinds of people filling the jobs, and how many jobs are there, where are the jobs, is it more educated people , is that driving wages up, is it different kinds of education, different kinds of jobs, are manufacturing jobs getting replaced by higher paying design jobs?  You know, those kinds of trends which you’ve seen other places.”

Some of the increase could be linked to higher-paying jobs related to natural resources development: things like engineering.  Stolarick says that’s a trend playing out across North America.

“One of the things we see a lot in Canada is a tremendous investment in engineering surround the oil industry, clearly it’s gotta be playing out at some level in Alaska as well because we’re also seeing in East Texas and Louisiana as well," he says.

Bloomington, Indiana, Iowa City and Dubuque, Iowa round out the top four metropolitan areas in analysis.  In fact, the top ten cities showing the largest uptick in salaries all have a few things in common.

“A lot of university towns, right a lot of state employees," he says.  "A lot of people who work for the government who are getting automatic increases anyway.”

Even though the data may not accurately reflect actual changes in wages and salaries in Fairbanks, data from the Alaska Department of Labor does show that 330 jobs were added to the economy between 2010 and 2011.  That doesn’t mean the city is seeing a major boom, but it does suggest Fairbanks is faring better than many of other metropolitan areas in the country.