Top Cities for a Salary Increase

By Lisa Scherzer 

Fairbanks, Alaska may not the first place you'd think of for booming wage growth. But according to research done by the University of Toronto's Martin Prosperity Institute (MPI) that analyzed wage data from the Bureau of Labor Statistics, the most lucrative salary gains for workers from 2010 to 2011 were in the remote Alaskan city, home to Fort Wainwright military base and the University of Alaska Fairbanks.

The research found 370 out of 395 metros — 94% — saw wage and salary growth over that time period. MPI broke down its findings into two groups: overall metros with the biggest average wage increases, and large metros (those with over one million people) with the biggest increases. The lists are below, courtesy of TheAtlanticCities.com.

Workers in Fairbanks saw an average annual salary increase of $2,700, while Bloomington, Ind., and Iowa City, Iowa, followed with $2,460 and $2,330, respectively.

Good News Follows Bad

The good news for these cities belies findings from a National Employment Law Project reportpublished last week, which found that most of the jobs added to the economy during the recovery have been concentrated in lower-wage occupations, which grew 2.7 times as fast as mid-wage and higher-wage occupations.

Not so surprisingly, cities in the San Francisco Bay Area — home to the tech industry — top the second list analyzing large cities. Workers in San Jose, Calif., got paid an average of $2,030 more in 2011 than the year before, the biggest raise among the large metros, followed by Seattle, Oakland, Calif., and San Francisco.

So what accounts for these cities' robust wage growth? Places with greater concentrations of college graduates tend to have a more skilled workforce and a creative class of professionals in the science, tech, business and management professions — and those cities are doing better, says Richard Florida, director of the Martin Prosperity Institute and editor-at-large of The Atlantic Cities.

Several of the smaller metros are home to large state universities, including Bloomington (University of Indiana), Iowa City (University of Iowa), and Champaign-Urbana (University of Illinois at Urbana-Champaign). Fairbanks, though, is a bit of an outlier, he says, because Alaska is an expensive place to live, so higher wages are required to cover the relatively higher costs.

The report notes that most of the larger cities had high salaries to begin with, just as many of the metros in the first list were starting from smaller annual wages. Three of the top 10 large metros had average wages of over $60,000 a year, and only Fairbanks among the overall metros list had an average wage above $50,000 in 2011.