Legislature(2003 - 2004)
05/01/2003 03:14 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 199
"An Act removing the annual adjustment to the minimum
wage based on the rate of inflation; and providing for
an effective date."
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR, provided
information regarding the legislation. He discussed the
history and methodology behind the bill, which tied the
minimum wage to the consumer price index (CPI) and/or one
dollar above federal standard. He suggested that an annual
increase in the minimum wage would have an inflationary
impact on the State's economy. He speculated that the
increases affected potential employers and would increased
unemployment. He noted competing theories regarding minimum
wage legislation. He noted that one point of view indicated
that legislative action created negative impacts, but that
the other side stated that increase in income had a positive
impact on lower income workers. He stated that he adhered
to the belief that the impact of increases were negative,
and quoted research by the Ohio University, analyzing law in
Washington State. Representative Rokeberg stressed that the
bill would not cut the minimum wage and emphasized that
Alaska's $7.15 per hour minimum wage was the highest in the
country. He questioned whether businesses could afford an
increase and suggested that the largest provider of jobs in
this sector was the hospitality industry. He stated that
the industry had been hit with a 27 percent increase. He
maintained that this sent the message the Alaska was not
"open for business".
BENJAMIN BROWN, ALASKA STATE CHAMBER OF COMMERCE testified
in support of the bill. He acknowledged the debate
engendered by the legislation. He suggested de-indexing the
Alaska minimum wage from the national index. He discussed
economic theories, such as the "invisible hand" theory. He
maintained that the "invisible hand" became visible when the
minimum wage increase was implemented with a tie to the CPI
index. He explained that employers were forced to pay the
amount specified by the state. He stated that the bill did
not reduce minimum wage, but created a system of
automatically deciding the proper minimum wage, rather than
allowing future debate based on the economy needs. He also
noted that some believe that using the consumer price index
created an artificial inflation in the economy. He added
that there was a suggestion that the legislature was
aggregating an earlier decision by de-indexing the minimum
wage, and suggested that there was no legal implication
against the State in this regard.
CHIP WAGONER, ALASKA CATHOLIC CONFERENCE testified in
opposition to the bill and expressed the Church's support of
the minimum wage. He discussed the concept of a "living
wage" to support individuals with dignity. He pointed out
that the current minimum wage still placed individuals below
the poverty level. He discussed the two public policy
issues when evaluating the minimum wage. He first emphasized
that the legislature should determine a floor below which
the legislature believed was an unjust wage. Once a just
minimum wage is determined by the legislature then it should
remain constant with the economy in terms of inflation
because below that minimum wage it becomes unjust. The
second public issue is economics. He suggested that the main
arguments against indexing dealt with the cost of jobs. He
urged the Committee to carefully examine the source of
information in this area. He noted that professionals in
this area could create information to support their
viewpoints. He suggested that the Employment Policies
Institute was historically against the minimum wage, and the
Economic Institute was historically for the minimum wage.
He discussed information from the state of Alaska. He noted
that according to Department of Labor and Workforce
Development there are only 14,000 people in Alaska earning
the minimum wage. He argued that 14,000 people earning
minimum wage would not create an inflationary spiral that
would affect the entire state of Alaska. Of these 14,000,
about a third were in the food service/drinking industry.
He noted that these industries were those against the
minimum wage increase. He argued that if there were going
to be a loss of jobs that it would have occurred between
December and January [2003] when there was a $1.5 overnight
increase in minimum wage. He acknowledged that there was a
six percent drop in employment, but pointed out that the
drop could be attributed to the seasonal drop, which
occurred at the same time in the previous year. He stated
that a similar situation occurred in Washington State. He
quoted the state of Washington concluded that: "There does
not appear to be a direct correlation between the index
minimum wage and the number of jobs in the food
service/drinking places industry." He concluded that a the
raise in minimum wage was only one factor among many in
terms of job loss and the numbers don't prove that there has
been a job loss in the food service/drinking places
industry.
DON ETHERIDGE, AFL-CIO testified on behalf of his 60,000
members in opposition to the bill. He noted that his
organization petitioned to achieve an increase in minimum
wage. He pointed out that the subsequent increase finally
raised Alaska's rank from being the lowest on the west
coast. He suggested that the first CPI increase should be
observed before repealing it. He noted that the first
increase would be a 14-cent increase that should not impact
businesses.
KAREN RUGINA, ALASKA HOSPITALITY ALLIANCE testified in
support of the bill. She provided information of losses
experienced by restaurants and hotels due to increases in
wages, and explained that hotels and restaurants operated on
a narrow margin. She suggested that the increase, in
combination with an increase in insurance and decrease in
customers. She suggested that benefits were being cut. She
gave examples of businesses that had decided not to come to
Alaska due to the increase in minimum wage. She noted a
natural CPI indexing occurred in the business with an
increase in menu prices. She concluded that this added more
uncertainty to an already uncertain climate.
JAY SUTHERLAND, ANCHORAGE, testified via teleconference in
support of the bill. He stated that he is a restaurant
operator and noted that his business had been forced to lay
off employees and suggested that there would be fewer future
jobs for youth. He noted that the CPI was suggested in
Washington State, and referred to its effects on the
industry. He maintained that businesses invested in other
states to avoid this restriction.
JOHN BROWN, PRESIDENT, LABOR COUNCIL, FAIRBANKS, testified
via teleconference in opposition to the bill. He noted that
50 thousand people signed a petition supporting CPI
indexing, and maintained that legislators had also voted to
support it. He suggested that workers needed a fair wage
and that if wages were not guaranteed it would negatively
affect the economy. He maintained that all businesses
competed on an equal basis.
JACK LEWIS, SOUR MINING COMPANY, ANCHORAGE, testified via
teleconference in support of the bill. He stressed that the
last increase was sizable and that, for the first time ever,
he was not able to pass along the increases in menu prices.
He referenced the liquor tax in addition to the minimum wage
increase. He noted the need to decrease benefit programs in
order to accommodate increases. He stated that he did not
support an automatic increase or the legislature suggesting
appropriate levels. He expressed concern over the increase
since customers were already eating out less.
Co-Chair Harris requested that the Department of Labor and
Workforce Development should produce an additional fiscal
note.
HB 199 was heard and HELD in Committee for further
consideration.
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