02/23/2009 03:15 PM House LABOR & COMMERCE

HB 29-ALASKA MINIMUM WAGE                                                                                                     
                                                                                                                              
3:23:07 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced the first  order of business would be HOUSE                                                               
BILL NO. 29,  "An Act increasing the minimum  wage; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
3:23:48 PM                                                                                                                    
                                                                                                                                
JENNIFER  SENETTE, Staff  to  Representative  Kurt Olson,  Alaska                                                               
State   Legislature,   on   behalf    of   the   prime   sponsor,                                                               
Representative  Kurt Olson,  offered to  present the  bill.   She                                                               
provided background  information on  the minimum wage  in Alaska.                                                               
She explained  since 1959 Alaska's  minimum wage has  been higher                                                               
than the federal level due to the  cost of living in Alaska.  She                                                               
offered  that on  July 24,  2009  the federal  minimum wage  will                                                               
increase to $7.25 per hour.   Currently, Alaska's minimum wage is                                                               
$7.15  per hr.    Thus, if  the  minimum wage  in  Alaska is  not                                                               
increased,  the  minimum  wage  in Alaska  will  fall  below  the                                                               
federal level.                                                                                                                  
                                                                                                                                
MS. SENETTE  explained that HB 29  would set the minimum  wage at                                                               
$7.15 or .50  cents higher than the federal minimum  wage.  Thus,                                                               
the proposed  change in HB  29 would effectively  change Alaska's                                                               
minimum  wage  to $7.75  per  hour.    She related  almost  9,000                                                               
Alaskans earn  under $7.75 per  hour and would benefit  from this                                                               
bill.  An  Alaskan working full time at the  current minimum wage                                                               
falls earns  $15,000 per  year, which is  just above  the federal                                                               
poverty level.   However, if the person earning  minimum wage has                                                               
a family,  the person would  often fall below the  poverty level.                                                               
She  offered that  increasing the  minimum wage  in Alaska  under                                                               
this  bill would  add  approximately $100  to  each minimum  wage                                                               
holder's monthly paycheck.                                                                                                      
                                                                                                                                
MS.  SENETTE pointed  out Alaska  has not  increased its  minimum                                                               
wage since 2002.  In 2003,  Alaska's minimum wage was the highest                                                               
in the  nation, but Alaska dropped  to the 11th highest  in 2008,                                                               
                                                                                                                                
and if  unchanged will drop  to 21stin   the nation.   She opined                                                               
that the  price of goods has  continued to rise while  wages have                                                               
remained stagnant.   Thus,  Alaska is  losing ground  compared to                                                               
other states'  wages.   Alaskan workers  "are feeling  the pinch"                                                               
she stated.  She further opined  that HB 29 would help vulnerable                                                               
Alaskans  by  placing Alaska's  minimum  wage  at its  historical                                                               
level.    She  mentioned  that   since  introducing  HB  29,  the                                                               
committee  has had  an outpouring  of feedback  throughout Alaska                                                               
from people  who support or oppose  the bill.  She  remarked that                                                               
the  minimum  wage  affects  many   Alaskans.    She  stated  she                                                               
anticipates  a  committee  substitute   would  be  introduced  to                                                               
address issues that have been raised.                                                                                           
                                                                                                                                
3:27:18 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON explained  HB 29 mirrors a bill that  died during the                                                               
last legislature.   He stated that  no changes have been  made to                                                               
last year's bill.   He recalled Representative  Gara and Crawford                                                               
were  joint  prime  sponsors  of the  previous  bill  and  helped                                                               
develop  last  year's  committee substitute,  which  dropped  off                                                               
inflation proofing.   He  said he hopes  to address  prior issues                                                               
that were identified in the bill.                                                                                               
                                                                                                                                
3:28:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE COGHILL  recalled several factors are  tied to the                                                               
minimum  wage in  Alaska,  including wages  for  those who  drive                                                               
school buses.   He  inquired as to  the formula  for establishing                                                               
minimum wages in Alaska.                                                                                                        
                                                                                                                                
MS.  SENETTE recalled  school  bus drivers  are  included in  the                                                               
formula but she was not certain of other factors.                                                                               
                                                                                                                                
CHAIR OLSON recalled  school bus drivers were paid  a multiple of                                                               
the wage, such as two or three times the minimum wage.                                                                          
                                                                                                                                
CHAIR OLSON,  in response to  Representative Coghill,  stated Ms.                                                               
Senette could acquire  more information for the  committee at the                                                               
next hearing.                                                                                                                   
                                                                                                                                
3:30:27 PM                                                                                                                    
                                                                                                                                
CRYSTAL  SCHOENROCK,  4Lands  Bar,  stated she  was  speaking  on                                                               
behalf  of herself.   She  related she  is also  a member  of the                                                               
Kenai Peninsula  Alaska Cabaret, Hotel, Restaurant  and Retailers                                                               
Association  (CHARR)  and   National  Federation  of  Independent                                                               
Business (NFIB).  She offered  that she  is somewhat  against the                                                               
minimum wage since she has a  number of part-time employees.  She                                                               
opined  it will  make it  hard  on the  employer to  make up  the                                                               
difference in wages  since business is slow.   She further opined                                                               
that she cannot  afford to lose help and does  not want to layoff                                                               
any employees.   She surmised  if she must layoff  employees, the                                                               
employees would probably have to  draw unemployment insurance and                                                               
possibly resort to public assistance.                                                                                           
                                                                                                                                
MS. SCHOENROCK  said she cannot afford  to take any more  loss or                                                               
to pay  additional wages.   She expressed concern that  the Kenai                                                               
Peninsula has  been impacted  by the closure  of the  Agrium Inc.                                                               
plant, and  with fewer tourists  due to increases in  fuel costs.                                                               
She offered  her understanding of the  issues surrounding minimum                                                               
wages,  but reiterated  she could  not afford  to pay  additional                                                               
wages.   She mentioned shipping  costs have also increased.   She                                                               
concluded by saying, "I'm kind of in a tight bind here."                                                                        
                                                                                                                                
3:33:02 PM                                                                                                                    
                                                                                                                                
LARRY HACKENMILLER  stated he was representing  himself but noted                                                               
he is also a  member of the NFIB and ICHARR.   He related that HB
 is  another minimum wage  bill.  He  stated one good  thing is                                                               
that HB  29 does not  connect wages  to the consumer  price index                                                               
(CPI).   He noticed that  the bill  proposes a 50  cent increase,                                                               
which is the lowest wage increase  for bills of this type.  "That                                                               
doesn't make it a good bill; just  two good points in a bill," he                                                               
said.  He opined that when  discussing the poverty level, that he                                                               
assumed  the federal  rate of  $7.15 per  hour is  the basis  for                                                               
comparison.  He  offered that the federal rate  was enacted years                                                               
before the economy and fuel cost  issues arose.  He said, "It's a                                                               
bad  time to  basically raise  anything."   He described  his own                                                               
experience, such that his son worked  as a luggage person for one                                                               
of the tour  companies and earned the minimum wage,  but he lived                                                               
also at  home.  He  said he did not  know how many  others shared                                                               
his experience.                                                                                                                 
                                                                                                                                
MR.  HACKENMILLER  surmised  that   employees  in  the  food  and                                                               
beverage industry  receive tips and  make well above  the $15,000                                                               
per  year.    He  related his  understanding  that  during  prior                                                               
hearings  it was  difficult  to determine  how  many people  were                                                               
married who  held minimum wage  jobs.  He expressed  concern that                                                               
tip credits cannot  be used to calculate the minimum  wage and he                                                               
expressed  interest   in  learning  the  reasoning   behind  that                                                               
exclusion.   He further opined  that tips help keep  the industry                                                               
low  in terms  of employer  costs.   He said  he did  not believe                                                               
employees who also  earn tips are making less  than poverty level                                                               
wages.   He mentioned  that the  employer must  pay taxes  on the                                                               
wages.    In closing,  Mr.  Hackenmiller  summarized that  HB  29                                                               
contains "two good points and the one bad point".                                                                               
                                                                                                                                
3:36:32 PM                                                                                                                    
                                                                                                                                
JOHN BROWN stated  that he is currently retired.   He offered his                                                               
support for  HB 29.   He said, "It's time."   He opined  that the                                                               
median family  income has not  kept up with inflation  for almost                                                               
35  years.   He  asserted  that  to  maintain a  vibrant  economy                                                               
requires decent wages.  He said,  "It amazes me when I hear CHARR                                                               
come down  here and keep wages  suppressed when most all  of them                                                               
are  dependent   on  discretionary  money  to   come  into  their                                                               
businesses.    It's  just...they   should  be  coming  down  here                                                               
screaming for  people to  get wage increases."   He  related that                                                               
unfortunately  it  is not  possible  to  police  tip wages.    He                                                               
recalled talking to  an employee who works for a  pizza place who                                                               
hardly receives tips, so the  employee relies only on the minimum                                                               
wage.   He said he  believes HB 29  should have a  consumer price                                                               
index  (CPI) escalator  in the  bill.   He opined  what the  U.S.                                                               
needs  is to  have 150  million people  earning decent  wages and                                                               
benefits.  He  said he hopes HB  29 will pass so  Alaska can move                                                               
on to a brighter future.   He concluded by stating the U.S. needs                                                               
to rebuild its economy "with real money."                                                                                       
                                                                                                                                
3:39:18 PM                                                                                                                    
                                                                                                                                
MARIE DARLIN, Coordinator, AARP  Capital City Task Force, offered                                                               
to speak in support of HB 29.   She explained that Alaska has the                                                               
highest  cost of  living in  the nation,  and generally  Alaska's                                                               
minimum wage has been higher than  the federal minimum wage.  She                                                               
emphasized  that  Alaska  also  has an  aging  population.    She                                                               
surmised that due to the higher  cost of living and problems with                                                               
investment  losses, many  older citizens  will continue  to work.                                                               
Thus,  the AARP  supports the  increase  for minimum  wage.   She                                                               
pointed  out  members   should  have  received  a   copy  of  the                                                               
publication, "Senior Snapshot" which  provides information on the                                                               
number of  seniors, ages 60 years  or older who live  in members'                                                               
districts, along with economic status.   She said she thought the                                                               
information  would help  legislators  determine  how many  people                                                               
will be  affected by the  minimum wage  in Alaska.   She surmised                                                               
that  Alaska is  number  one  in the  nation  for  the number  of                                                               
citizens aged 60 or higher.                                                                                                     
                                                                                                                                
3:42:13 PM                                                                                                                    
                                                                                                                                
MS. DARLIN,  in response to  Representative Neuman,  advised that                                                               
she  believes the  number  of senior  citizens  living in  Alaska                                                               
represent  over $1.5  billion dollars  in income.   She  reminded                                                               
members  that seniors  are valuable  to Alaska  since they  spend                                                               
their  money in  the communities  in which  they reside  and also                                                               
provide volunteerism in  Alaska.  She opined  that currently many                                                               
seniors  cannot  afford to  travel  due  to  the higher  cost  of                                                               
travel.    In  further  response to  Representative  Neuman,  Ms.                                                               
Darlin  opined  that  lower  income  seniors  spend  their  whole                                                               
paychecks.                                                                                                                      
                                                                                                                                
3:44:01 PM                                                                                                                    
                                                                                                                                
MS.  DARLIN, in  response  to Representative  Buch explained  the                                                               
statistics were compiled  from a McDowell Survey  performed a few                                                               
years ago  that examined  seniors.  She  offered her  belief that                                                               
the  study  can be  found  on  the  Alaska Commission  for  Aging                                                               
website at  http://www.hss.state.ak.us/acoa/publications.htm, and                                                               
noted the  "Senior Snapshot" can  also be found on  the website's                                                               
main page.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  COGHILL  recalled   previous  testimony  revealed                                                               
about  9,000  people  would  depend  on the  minimum  wage.    He                                                               
inquired  as to  whether Ms.  Darlin knew  how many  seniors will                                                               
depend  on  minimum   wages.    He  stated  he   would  seek  the                                                               
information from the website.                                                                                                   
                                                                                                                                
3:45:57 PM                                                                                                                    
                                                                                                                                
CHAIR OLSON  announced that he  would keep public  testimony open                                                               
on HB 29.                                                                                                                       
                                                                                                                                
3:46:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN inquired  as to  whether Alaska's  minimum                                                               
wage would  always be 50 cents  per hour higher than  the federal                                                               
minimum wage if HB 29 passes.                                                                                                   
                                                                                                                                
CHAIR OLSON answered yes.                                                                                                       
                                                                                                                                
3:47:03 PM