Legislature(2001 - 2002)

02/14/2002 01:52 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 14, 2002                                                                                          
                          1:52 PM                                                                                               
                                                                                                                                
TAPE HFC 02 - 26, Side A                                                                                                        
TAPE HFC 02 - 26, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:52 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative John Davies                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Carl Moses                                                                                                       
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Linda  Sylvester, Staff,  Representative  Kott; Ed  Flanagan,                                                                   
Commissioner, Department of Labor  and Workforce Development;                                                                   
Pam  LaBolle, President,  Alaska State  Chamber of  Commerce;                                                                   
Thyes Shaub, Lobbyist, National Federation of Business;                                                                         
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Karen Rogina, ARBA, Anchorage.                                                                                                  
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 56     An Act relating to minimum wages.                                                                                     
HOUSE BILL NO. 56                                                                                                             
                                                                                                                                
     "An Act relating to minimum wages."                                                                                        
                                                                                                                                
LINDA  SYLVESTER,  STAFF, REPRESENTATIVE  KOTT  testified  in                                                                   
support  of the  legislation on  behalf of  the sponsor.  She                                                                   
stated that HB 56 increases the  minimum wage to a level that                                                                   
will  help  ensure  a minimum  standard  of  living  Alaska's                                                                   
lowest paid workers.                                                                                                            
                                                                                                                                
Ms. Sylvester  maintained  that, since  1938 when the  United                                                                   
States established  the Fair  Labor Standards Act,  Americans                                                                   
have believed  that it is  appropriate for the  government to                                                                   
establish  a minimum  wage floor  for  workers. She  asserted                                                                   
that Alaska statutes were crafted  to echoed that conviction.                                                                   
The preamble of the Wage and Hour Act of 1959 states that:                                                                      
                                                                                                                                
   It is the public policy of Alaska to:                                                                                        
                                                                                                                                
   (1) Establish minimum wage and overtime compensation                                                                         
        standards for workers at levels consistent with                                                                         
        their health, efficiency, and general well-being;                                                                       
        and                                                                                                                     
   (2) Safeguard existing minimum wage and overtime                                                                             
        compensation standards that are adequate  to maintain                                                                   
        the health,  efficiency,  and general  well being  of                                                                   
        workers against unfair  competition of wage  and hour                                                                   
        standards that do  not provide adequate  standards of                                                                   
        living.                                                                                                                 
                                                                                                                                
Ms.   Sylvester   observed  that   the   proposed   committee                                                                   
substitute for HB 56 contained the following findings:                                                                          
                                                                                                                                
     An  increase in  the  minimum wage  will  help ensure  a                                                                   
     minimum standard  of living for the health,  safety, and                                                                   
     well being of every Alaskan.                                                                                               
                                                                                                                                
     The  Legislature   notes  that  currently,   Washington,                                                                   
     Oregon   and  California   have   surpassed  Alaska   in                                                                   
     providing  for  a minimum  standard  of  living for  its                                                                   
     workers.                                                                                                                   
                                                                                                                                
     Finally, the  Legislature finds that for  a minimum wage                                                                   
     to be fair, it must be indexed  to the cost of living to                                                                   
     help low-income workers keep pace with inflation.                                                                          
                                                                                                                                
Ms. Sylvester  observed that  HB 56 amends  section 2  (a) so                                                                   
that:                                                                                                                           
                                                                                                                                
   · Effective January 1, 2003, an employer shall pay each                                                                      
     employee not  less than $7.15 an hour,  for hours worked                                                                   
     in a pay period.                                                                                                           
   · As well, each year, not later than September 30, the                                                                       
     minimum wage shall be adjusted  for inflation, effective                                                                   
     the following year.                                                                                                        
   · The adjustment for inflation shall be calculated at 50%                                                                    
     of the Consumer Price Index  for Anchorage or $1.00 more                                                                   
     than the federal minimum wage, whichever is greater.                                                                       
                                                                                                                                
Ms. Sylvester  explained that the  original version of  HB 56                                                                   
would have increased the minimum  wage to $6.90 in two steps.                                                                   
There  were  three hearings  on  the  bill, which  failed  to                                                                   
progress  beyond  House  Labor  and  Commerce  Committee.  An                                                                   
initiative  petition   was  subsequently  circulated,   which                                                                   
proposed to raise the minimum  wage to $7.15.  The initiative                                                                   
also proposed automatic  future increases tied to  the CPI of                                                                   
Anchorage, as opposed to relying  on federal or state action.                                                                   
The proposed  committee substitute offered  by Representative                                                                   
Kott  reflects  the  language  of the  initiative,  with  the                                                                   
exception that  the cost of  living adjustment factor  is set                                                                   
at 50% of the Anchorage CPI.                                                                                                    
                                                                                                                                
Ms. Sylvester  emphasized that the  "question of the  day" is                                                                   
whether  or not the  proposed committee  substitute  would be                                                                   
sufficient to  supplant the initiative petition.  The test to                                                                   
determine  if a  bill  supplants an  initiative  is found  in                                                                   
Warren v. Boucher.                                                                                                            
                                                                                                                                
Ms. Sylvester  added that Article  11, sec 4  Constitution of                                                                 
the State of Alaska states:                                                                                                     
                                                                                                                                
     INITIATIVE  ELECTION.  An  initiative  petition  may  be                                                                   
     filed  at  any  time.   The  lieutenant  governor  shall                                                                   
     prepare a  ballot title and proposition  summarizing the                                                                   
     proposed  law, and shall  place them  on the ballot  for                                                                   
     the  first statewide  election held  more than  120 days                                                                   
     after adjournment  of the legislative  session following                                                                   
     filing.                                                                                                                    
                                                                                                                                
The  Constitution  also  states:  If,  before  the  election,                                                                   
substantially  the   same  measure  has  been   enacted,  the                                                                   
petition is void.                                                                                                               
                                                                                                                                
Alaska statute, AS 15.45.210 states:                                                                                            
                                                                                                                                
     Determination  of  void  petition.   If  the  lieutenant                                                                   
     governor,  with the formal  concurrence of the  attorney                                                                   
     general determines  that an act of the  legislature that                                                                   
     is  substantially  the  same  as the  proposed  law  was                                                                   
     enacted after  the petition  had been filed,  and before                                                                   
     the date of  the election, the petition is  void and the                                                                   
     lieutenant governor shall notify the committee.                                                                            
                                                                                                                                
Ms.  Sylvester  explained that  the  test  of how  similar  a                                                                   
measure enacted by the legislature  and an initiative must be                                                                   
for the legislative measure to  invalidate the initiative was                                                                   
set out in Warren v. Boucher, 543 P.2d 731:                                                                                     
                                                                                                                                
     If the  main of  the legislative  act achieves  the same                                                                   
     general  purpose as the  initiative, if the  legislative                                                                   
     act  accomplishes  that  purpose by  means  or  systems,                                                                   
     which   are   fairly   comparable,    then   substantial                                                                   
     similarity  exists. It  is  not necessary  that the  two                                                                   
     measures correspond in minor  particulars, or even as to                                                                   
     all   major  features,   if   the   subject  matter   is                                                                   
     necessarily    complex    or   requires    comprehensive                                                                   
     treatment. The broader the  reach of the subject matter,                                                                   
     the  more latitude  must be allowed  the legislature  to                                                                   
     vary from the particular features of the initiative.                                                                       
                                                                                                                                
     It is  clear that the  legislative act need  not conform                                                                   
     to the initiative in all  respects, and that the framers                                                                   
     intended   that  the   legislature   should  have   some                                                                   
     discretion  in  deciding  how far  the  legislative  act                                                                   
     should  differ from  the provisions  of the  initiative.                                                                   
     The question,  of course, is how great  is the permitted                                                                   
     variance  before the legislative  act becomes  no longer                                                                   
     substantially the same.                                                                                                    
                                                                                                                                
Ms. Sylvester  observed that the  initiative language  is not                                                                   
particularly  precise where it  discusses the increase  based                                                                   
upon CPI.  The initiative states  that the minimum wage shall                                                                   
be  adjusted  annually  for  inflation  by  "using  the  CPI-                                                                   
Anchorage."                                                                                                                     
                                                                                                                                
Ms.  Sylvester  maintained  that   the  lack  of  specificity                                                                   
indicates  that the  primary purpose  is to  tie the wage  to                                                                   
local economic  changes rather than rely on  keeping slightly                                                                   
ahead  of the  federal prevailing  minimum wage  or upon  the                                                                   
Alaska State Legislature  to inject a raise  into the minimum                                                                   
wage  scale. The  key element  is  that the  minimum wage  is                                                                   
attached  to   an  elevator  independent  of   the  political                                                                   
process. She concluded  that HB 56 is substantially  the same                                                                   
measure at 50% of the CPI of Anchorage.                                                                                         
                                                                                                                                
Vice-Chair  Bunde  questioned  if  there  is  any  indication                                                                   
whether or  not there would be  a lawsuit [if  the initiative                                                                   
were  suspended  with enactment  of  HB 56.].  Ms.  Sylvester                                                                   
responded that  there have been indicators that  the sponsors                                                                   
of the initiative are supportive.                                                                                               
                                                                                                                                
Vice-Chair Bunde  responded that  he has heard  concerns that                                                                   
jobs would  be lost,  as smaller  businesses are affected  by                                                                   
the increase.  Ms. Sylvester acknowledged  that the  issue is                                                                   
the dilemma  of the bill. She  pointed out that  the preamble                                                                   
of  the  Wage  and  Hour  Act   of  Alaska  instructs  worker                                                                   
protection. Only  a small percentage of Alaskans  are working                                                                   
at minimum wage.                                                                                                                
                                                                                                                                
Vice-Chair Bunde  maintained that  workers above  the minimum                                                                   
wage would demand similar increases  to retain their relative                                                                   
position above  the minimum wage. Ms. Sylvester  acknowledged                                                                   
that there  would be  some impacts on  the economy  since the                                                                   
legislation would increase the  minimum wage by 26 and a half                                                                   
percent.                                                                                                                        
                                                                                                                                
Vice-Chair  Bunde  observed that  there  is  currently a  low                                                                   
inflation rate,  but pointed  out that the  rate could  be in                                                                   
the double digits in the future.  He questioned the impact of                                                                   
double-digit inflation. Sylvester  responded that if the rate                                                                   
of  inflation,  in Anchorage,  follows  the same  pattern  as                                                                   
existed  through  the 1990's,  then  there  should  be a  one                                                                   
percent increase at 50 percent  of the CPI. She stressed that                                                                   
the earning power  of workers is being eroded by  the rate of                                                                   
inflation.                                                                                                                      
                                                                                                                                
Vice-Chair Bunde  questioned if the rate of  inflation during                                                                   
the 1970's  had been calculated.  Ms. Sylvester did  not have                                                                   
the inflation  rates for the  1970's but recalled  that there                                                                   
was  one year  during  that time  with  a negative  inflation                                                                   
rate, which would also be reflected in the minimum wage.                                                                        
                                                                                                                                
Representative  Harris  referred  to the  fiscal  impact.  He                                                                   
observed that  school bus  drivers receive,  by state  law, a                                                                   
minimum  of two  times the  minimum wage.  He questioned  the                                                                   
impact of the increase on state  school transportation costs.                                                                   
Ms. Sylvester  noted that most  of the school  transportation                                                                   
contracts would  expire in 2006.  She stated that  the impact                                                                   
would  not  be  immediate.  She observed  that  there  is  no                                                                   
guarantee that the  state of Alaska will continue  to pay for                                                                   
pupil transportation. She added  that most school bus drivers                                                                   
earn twice the minimum wage at  $11.30 an hour. In Anchorage,                                                                   
the maximum  salary of a school  bus driver is  $14.90, which                                                                   
is close  to where the statutes  would set their  salary once                                                                   
contracts expire.                                                                                                               
                                                                                                                                
Representative  Harris asked  if  it would  be difficult  for                                                                   
someone bidding on a school bus  contract to calculate future                                                                   
wages. Ms.  Sylvester did  not think  it would be  difficult.                                                                   
She  observed  that the  Department  of Education  and  Early                                                                   
Development   seeks  to  encourage   competition.   They  are                                                                   
attempting to issue contracts  on a five-year scale. It would                                                                   
be fairly easy to predict the CPI.                                                                                              
                                                                                                                                
Co-Chair  Mulder   agreed  with  Representative   Harris  and                                                                   
expressed  surprise that  there  was no  fiscal  note by  the                                                                   
Department of  Education and Early Development.  He asked the                                                                   
sponsor  to request  a  fiscal note  from  the Department  of                                                                   
Education and Early Development.                                                                                                
                                                                                                                                
Co-Chair Mulder  pointed out that  the determination  of what                                                                   
is substantially  similar is like  "dancing on the head  of a                                                                   
pin". He expressed  concern that the duties  are regulated to                                                                   
the   lieutenant   governor  with   consultation   from   the                                                                   
Department  of   Law  to  determine  what   is  substantially                                                                   
similar. He  noted that  it is a  statutory delegation  not a                                                                   
constitutional  delegation. He  suggested that  the issue  be                                                                   
revisited  by  the  Legislature  to determine  if  it  is  an                                                                   
appropriate  abrogation, because  it is not  constitutionally                                                                   
required that  the lieutenant Governor be the  determiner. He                                                                   
reiterated  that  the  Constitution states:  If,  before  the                                                                   
election, substantially  the same  measure has been  enacted,                                                                   
the petition  is void. He  noted that the legislature  states                                                                   
through  statute that  if the lieutenant  governor,  with the                                                                   
formal concurrence  of the  attorney general determines  that                                                                   
an  act of  the  legislature  that is  substantially  similar                                                                   
should  be taken  off.  He  emphasized that  the  legislature                                                                   
should clarify the issue and set  up a mechanism that is more                                                                   
equitable.  He maintained  that it is  a political  football,                                                                   
which becomes  an inherently political decision  when left in                                                                   
the hands of the person that is running for governor.                                                                           
                                                                                                                                
Representative Whitaker stated  that he is confident that the                                                                   
intent  is  to  have  the  substantially  similar  questioned                                                                   
answered  by an  uninterested  third  party.  He agreed  that                                                                   
there is  no longer  an uninterested  third party and  stated                                                                   
that he would support  an effort [to assure that  there is an                                                                   
uninterested third party].                                                                                                      
                                                                                                                                
Vice-Chair Bunde questioned if  the statutory requirement for                                                                   
school bus drivers  should be should be continued.  He stated                                                                   
that he would not  want to take any action  that would remove                                                                   
state support for transportation.                                                                                               
                                                                                                                                
KAREN  ROGINA, ALASKA  RESTAURANT  AND BEVERAGE  ASSOCIATION,                                                                   
ANCHORAGE  testified  in  support.  She  explained  that  the                                                                   
Association  supports the  process of  directing any  minimum                                                                   
wage  increases through  the legislative  process instead  of                                                                   
the   ballot  process.   She   maintained  that   HB  56   is                                                                   
substantially  similar  to the  ballot initiative.  She  felt                                                                   
that tying  the increase  to the  CPI was inappropriate,  but                                                                   
would  support  a  50 percent  inflation  index  over  a  100                                                                   
percent  inflation index.  She  also spoke  in  support of  a                                                                   
graduated  effective date  to  allow employers  two years  to                                                                   
adjust to a 26 percent mandated wage increase.                                                                                  
                                                                                                                                
Representative   Croft   commented  on   the   "substantially                                                                   
similar" issue. He  stressed that the Warren  v. Boucher case                                                                   
dealt  with a  huge, complex  issue. He  maintained that  the                                                                   
case  noted  that  the  more   complex  the  issue  the  more                                                                   
latitude. He pointed  out that the [minimum  wage initiative]                                                                   
is a very simple case. He maintained  that the point of tying                                                                   
the  increase to  an  inflation  index is  to  keep the  real                                                                   
purchasing power  the same. If it  is indexed to half  of the                                                                   
rate the  real purchasing  power would  be decreased.  He did                                                                   
not think that the legislation  would implement the intent of                                                                   
the  initiative,  but  would  deteriorate  the  minimum  wage                                                                   
slowly in terms  of its buying power. He stressed  that there                                                                   
is a  huge difference between  keeping up with  inflation and                                                                   
not keeping up with inflation  and thought a court case would                                                                   
be the  most likely result. He  stressed that the  bill would                                                                   
not  keep   up  with  inflation   and  maintained   that  the                                                                   
legislature must  do something to  keep up with  inflation if                                                                   
the initiative is to be kept off the ballot.                                                                                    
                                                                                                                                
Co-Chair Mulder  disagreed with  the issue of  complexity. He                                                                   
maintained   that  the   issue   is  no   less  complex.   He                                                                   
acknowledged   that  there   are  less   moving  parts,   but                                                                   
emphasized that subtle ramifications  are complex. He did not                                                                   
think that it would  be a "slam dunk" issue. He  spoke to the                                                                   
issue  of  the  lieutenant governor  being  the  arbiter.  He                                                                   
stressed  that  a  more  objective  analysis  would  be  less                                                                   
suspect to  being political  and noted  that there  is always                                                                   
the relief or remedy  of court. He stressed that  if there is                                                                   
concern  about one  person's determination  that they  should                                                                   
look at a process  that is less suspect and  open to vagaries                                                                   
of campaign year politics.                                                                                                      
                                                                                                                                
Vice-Chair Bunde  saw negative  impacts in regards  to public                                                                   
policy and stated  that he preferred to let  the people judge                                                                   
the issue. He questioned if "it  is better to have fewer jobs                                                                   
that make two bucks  an hour more or is it  a case of getting                                                                   
100 percent  of nothing  because  you get a  raise and  loose                                                                   
your job".                                                                                                                      
                                                                                                                                
Representative Croft felt that  the Lieutenant Governor would                                                                   
take the  job seriously and  that the determination  would be                                                                   
made on  the legal advise provided  and the decision  made on                                                                   
the best estimate  of the information. He did  not think that                                                                   
the  current   Lieutenant  Governor   or  future   lieutenant                                                                   
governors would  base their decision  mainly or  partially on                                                                   
politics.                                                                                                                       
                                                                                                                                
Representative Whitaker stated  that there is no intention to                                                                   
impugn the Lieutenant Governor,  but to put the process above                                                                   
suspicion.  Co-Chair  Williams   agreed  with  Representative                                                                   
Whitaker's assessment.                                                                                                          
                                                                                                                                
PAM  LABOLLE, PRESIDENT,  ALASKA  STATE  CHAMBER OF  COMMERCE                                                                   
observed that  35 percent of  their members stated  that they                                                                   
could go with  a minimum wage [as proposed  by Representative                                                                   
Kott],  32 percent objected  and 28  percent were  undecided.                                                                   
Six  hundred  members  were  polled  and  they  received  100                                                                   
responses. She  observed that  69 percent of the  respondents                                                                   
pay $8.00  an hour or more  already, but noted that  they are                                                                   
concerned that the floor would  be raised. She added that 14%                                                                   
of  the respondents  stated that  the  increase would  reduce                                                                   
hours or jobs for part-time employees;  12% responded that it                                                                   
would reduce  hours for full-time  employees; and  18 percent                                                                   
stated  that it  would increase  prices  for products  and/or                                                                   
services.  She  stressed that  there  is  no support  for  an                                                                   
automatic increase  of the minimum wage. She  maintained that                                                                   
the legislature should initiate increases.                                                                                      
                                                                                                                                
Vice-Chair  Bunde thought  that cost  of services would  rise                                                                   
with wage  increases and  questioned why  only 18 percent  of                                                                   
the respondents would  raise the cost of their  products. Ms.                                                                   
LaBolle observed  that 69 percent  of those surveyed  already                                                                   
pay beyond $8.00 per hour.                                                                                                      
                                                                                                                                
Vice-Chair Bunde  concluded that there  would be no  net gain                                                                   
because the cost  of living would increase with  the increase                                                                   
in wages.                                                                                                                       
                                                                                                                                
Representative  Harris asked when  the last time  the minimum                                                                   
wage  was  increased.  He  pointed  out  that  inflation  has                                                                   
continued  to increase.  He noted  that  the federal  minimum                                                                   
wage  has only  been increased  once in  20 or  25 years.  He                                                                   
stressed the need  to consider the purchasing  power of lower                                                                   
wage  employees.  He  stressed  that  there has  to  be  some                                                                   
responsibility to bring up the wages of lower paid workers.                                                                     
                                                                                                                                
Ms. LaBolle  pointed out  that 35  percent of those  surveyed                                                                   
supported  Representative  Kott's   proposal.  The  strongest                                                                   
opposition is  to the Governor's  proposal and  the automatic                                                                   
increase mechanism.                                                                                                             
                                                                                                                                
In response to  a question by Co-Chair Williams,  Ms. LaBolle                                                                   
expressed  her hope that  the Legislature  would resolve  the                                                                   
question as best  as they can, without long term  harm to the                                                                   
business  community. Co-Chair  Williams assured  her that  it                                                                   
was their intent to do so.                                                                                                      
                                                                                                                                
THYES SHAUB,  LOBBYIST, NATIONAL  FEDERATION OF  INDEPENDEDNT                                                                   
BUSINESS  (NFIB)   provided  members  with  a   Statement  of                                                                   
Opposition and  the results of  a survey (copy on  file). She                                                                   
noted that NFIB  tends to represent business with  5 or fewer                                                                   
employees. She observed that many  businesses do not have the                                                                   
ability to increase prices when their costs increase.                                                                           
                                                                                                                                
Co-Chair Mulder observed that  33 percent of the NFIB members                                                                   
responding  to the survey  stated that  a minimum wage  would                                                                   
result  in the reduction  of hours  and/or  jobs for full  or                                                                   
part-time  employees.   He  stressed  the  need   to  proceed                                                                   
cautiously.                                                                                                                     
                                                                                                                                
Ms.  Shaub  observed that  [the  affect  of  a raise  in  the                                                                   
minimum  wage on  increases  to product  cost]  is a  complex                                                                   
issue and  differs from  business to  business. She  observed                                                                   
that the survey showed that the  largest bracket [19 percent]                                                                   
of  minimum  wage employees  were  15  -  18 years  old.  She                                                                   
stressed  that  small  businesses utilize  minimum  wage  for                                                                   
seasonal and entry-level employees.                                                                                             
                                                                                                                                
ED FLANAGAN, COMMISSIONER, DEPARTMENT  OF LABOR AND WORKFORCE                                                                   
DEVELOPMENT  expressed   appreciation  for  changes   in  the                                                                   
proposed committee substitute  which more closely reflect the                                                                   
Governor's  original bill  and  the initiative.  He  observed                                                                   
that 50,000  Alaskans  signed the initiative.  He noted  that                                                                   
most businesses  must pay over  the minimum wage in  order to                                                                   
attract workers. The only difference  [between the Governor's                                                                   
proposal and Representative  Kott's] is the level  of the CPI                                                                   
He noted that the last federal  raise to the minimum wage was                                                                   
a two step increase:  .50 cents in October 1996  to $4.75 and                                                                   
a .40 cent raise  in September 1, 1997 to $5.15.  The Alaskan                                                                   
minimum wage was increased at  the same time to $5.65 [by the                                                                   
end of the second  year]. He noted that testimony  during the                                                                   
last increase  predicted reductions in the food  and drinking                                                                   
industry  jobs.  Statistics  show  that  there  has  been  an                                                                   
increase every  year since the  increase and reductions  were                                                                   
not realized. There have been  four minimum wage increases in                                                                   
the last 12 years.                                                                                                              
                                                                                                                                
Commissioner  Flanagan  observed  that there  was  discussion                                                                   
about rising  the Alaskan  minimum wage  one dollar  over the                                                                   
federal minimum wage. The Alaskan  minimum wage was .50 cents                                                                   
over  the  federal minimum  wage  in  1959 when  the  federal                                                                   
minimum wage was one dollar.                                                                                                    
                                                                                                                                
TAPE HFC 02 - 26, Side B                                                                                                      
                                                                                                                                
Commissioner  Flanagan observed  that a  family of four  with                                                                   
one wage  earner working  60 hours  a week  or two working  a                                                                   
combined amount  of 60 hours  a week  at $7.15 an  hour would                                                                   
only be a few dollars over the federal poverty level.                                                                           
                                                                                                                                
Commissioner Flanagan  observed that  there has been  a major                                                                   
revision in how the CPI has been  computed. He noted that the                                                                   
increases  have been less  pronounced.  He observed that  the                                                                   
CPI is being applied  to the floor. He stressed  that it is a                                                                   
very small margin  for survival. The Administration  implores                                                                   
the adoption of the full CPI amount.                                                                                            
                                                                                                                                
Commissioner  Flanagan  summarized  that  Alaska's  last  two                                                                   
raises to  the minimum wage were  in 1996 and 1997  ($4.75 to                                                                   
$5.65). He thought that there had previously been a one-                                                                        
dollar increase in two steps in 1990 and 1991.                                                                                  
                                                                                                                                
Co-Chair Mulder pointed  out that most of the  increases were                                                                   
at .50  increments over  a five  to ten  year time frame.  He                                                                   
expressed concern with the CPI  adjustment. He estimated that                                                                   
the minimum wage would be doubled  over the next 10 years [if                                                                   
the full  CPI were used].  He acknowledged the  justification                                                                   
of incremental  increase but questioned  if that is  where we                                                                   
need to be, to provide entry-level jobs to kids.                                                                                
                                                                                                                                
Commissioner  Flanagan  stressed that  the  minimum wage  has                                                                   
lost more  ground  over the last  ten years  then during  any                                                                   
period   since  the  1950's.   There   used  to  be   federal                                                                   
adjustments three  times a decade,  which were the  result of                                                                   
bipartisan  efforts.  Before the  last  increase  in the  mid                                                                   
1990's the minimum  wage adjusted for inflation  proofing was                                                                   
80  percent of  the purchasing  power  that it  had had:  the                                                                   
lowest purchasing  power it  had at any  time. He  noted that                                                                   
the cost  of living in  Alaska has come  down in  relation to                                                                   
other states.  He observed  that the  perception is  that the                                                                   
minimum  wage earner  is a  teenager. The  low wage  industry                                                                   
includes  cannery, childcare  and food  service workers.  The                                                                   
minimum wage  in those  occupations is in  the late  20's and                                                                   
early 30's. He  maintained that even teenagers  working full-                                                                   
time,  even if  they  are living  at  home  should, make  the                                                                   
statutory minimum  wage. He maintained that  $7.15 results in                                                                   
a "fairly basic" floor. He noted  that the minimum wage would                                                                   
be $7.79 after  five years at  2 percent of the full  CPI. At                                                                   
one percent it would be $7.50 dollars per hour.                                                                                 
                                                                                                                                
Co-Chair Mulder noted that the Permanent Fund utilizes a 2.9                                                                    
percent inflation rate.                                                                                                         
                                                                                                                                
HB 56 was heard and HELD in Committee for further                                                                               
consideration.                                                                                                                  
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 2:55 PM                                                                                            

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