Legislature(2001 - 2002)

01/29/2001 03:15 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                        January 29, 2001                                                                                        
                           3:15 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Lisa Murkowski, Chair                                                                                            
Representative Andrew Halcro, Vice Chair                                                                                        
Representative Kevin Meyer                                                                                                      
Representative Pete Kott                                                                                                        
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Joe Hayes                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
HOUSE BILL NO. 81                                                                                                               
"An Act extending the termination date of the Board of Dental                                                                   
Examiners."                                                                                                                     
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 56                                                                                                               
"An Act relating to minimum wages."                                                                                             
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                              
BILL: HB 81                                                                                                                   
SHORT TITLE: EXTENDING BOARD OF DENTAL EXAMINERS                                                                                
                                                                                                                                
 Jrn-Date      Jrn-Page            Action                                                                                       
 01/19/01      0130      (H) READ THE FIRST TIME - REFERRALS                                                                    
 01/19/01      0130      (H) L&C, FIN                                                                                           
 01/19/01      0130      (H) REFERRED TO LABOR & COMMERCE                                                                       
 01/29/01      Text      (H) L&C AT 3:15 PM CAPITOL 17                                                                          
                                                                                                                                
BILL: HB 56                                                                                                                   
SHORT TITLE:  MINIMUM WAGE                                                                                                      
                                                                                                                                
 Jrn-Date      Jrn-Page            Action                                                                                       
 01/12/01      0071      (H) READ THE FIRST TIME - REFERRALS                                                                    
 01/12/01      0071      (H) L&C, FIN                                                                                           
 01/12/01      0071      (H) REFERRED TO LABOR & COMMERCE                                                                       
 01/16/01      0104      (H) COSPONSOR(S): HARRIS                                                                               
 01/19/01      0134      (H) COSPONSOR(S): MULDER                                                                               
 01/29/01      Text      (H) L&C AT 3:15 PM CAPITOL 17                                                                          
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                              
REPRESENTATIVE HUGH FATE                                                                                                        
Alaska State Legislature                                                                                                        
Capitol Building, Room 416                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT: Sponsor of HB 81.                                                                                           
                                                                                                                              
ROGER WORTMAN, Staff to Representative Pete Kott                                                                                
Alaska State Legislature                                                                                                        
Capitol Building, Room 204                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Spoke for Representative Kott, sponsor of                                                                  
HB 56.                                                                                                                          
                                                                                                                                
ED FLANAGAN, Commissioner                                                                                                       
Department of Labor & Workforce Development                                                                                     
P.O. Box 21149                                                                                                                  
Juneau, Alaska 99802-1149                                                                                                       
POSITION STATEMENT: Spoke on various aspects of the department                                                                  
with respect to HB 56 and Governor Knowles' proposed minimum                                                                    
wage legislation.                                                                                                               
                                                                                                                                
JOHN BROWN, President                                                                                                           
Fairbanks Central Labor Council                                                                                                 
819 1st Avenue                                                                                                                  
Fairbanks, Alaska 99701                                                                                                         
POSITION STATEMENT:  Spoke about HB 56 and the governor's                                                                       
proposed minimum wage legislation.                                                                                              
                                                                                                                                
ROXANNE SMITH, Waitress                                                                                                         
Hangar on the Wharf Restaurant                                                                                                  
4020 Deborah Drive                                                                                                              
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:  Testified on HB 56 and the proposed minimum                                                                
wage with regards to wait staff.                                                                                                
                                                                                                                                
JACK AMON, President                                                                                                            
Alaska Restaurant and Beverage Association                                                                                      
627 W. 3rd                                                                                                                      
Anchorage, Alaska 99501                                                                                                         
POSITION STATEMENT:  Spoke about HB 56.                                                                                         
                                                                                                                                
FRED ROSENBERG, Owner                                                                                                           
Red Robin Restaurants of Anchorage                                                                                              
4450 Cordova Street                                                                                                             
Anchorage, Alaska 99503                                                                                                         
POSITION STATEMENT:  Spoke about HB 56.                                                                                         
                                                                                                                                
BILL PARGETTER, Owner                                                                                                           
Applebee's Restaurant of Anchorage                                                                                              
4331 Credit Union Drive                                                                                                         
Anchorage, Alaska 99503                                                                                                         
POSITION STATEMENT:  Spoke about HB 56.                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 01-7, SIDE A                                                                                                               
Number 0001                                                                                                                     
                                                                                                                                
CHAIR LISA MURKOWSKI called the House Labor and Commerce                                                                        
Standing Committee meeting to order at 3:15 p.m.                                                                                
                                                                                                                                
HB 81 - EXTENDING BOARD OF DENTAL EXAMINERS                                                                                   
                                                                                                                                
Number 0040                                                                                                                     
                                                                                                                                
CHAIR MURKOWSKI announced the first bill to be heard would be                                                                   
HOUSE BILL NO. 81, "An Act extending the termination date of the                                                                
Board of Dental Examiners."                                                                                                     
                                                                                                                                
REPRESENTATIVE HUGH FATE, Alaska State Legislature, sponsor of                                                                  
HB 81, introduced the bill and had the following testimony:                                                                     
                                                                                                                                
     Under Alaska  Statute 08.03.101 (c)  (7), the  Board of                                                                    
     Dental Examiners  will terminate on  June 30, 2001.   A                                                                    
     report  released by  the legislative  budget and  audit                                                                    
     committee recommended  that the legislature  extend the                                                                    
     board's  date to  June 30,  2005.   This is  what House                                                                    
     Bill 81 accomplishes.  The  regulation and licensing of                                                                    
     qualified   dentists   and  hygienists   benefits   the                                                                    
     public's safety and welfare.   The board contributes to                                                                    
     the safeguarding [of] the  public interests by ensuring                                                                    
     competences  and  integrity   of  dentists  and  dental                                                                    
     hygienists.  As a retired  dentist, I believe the board                                                                    
     provides an  invaluable service and should  continue to                                                                    
     do so.                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE  said the Board  of Dental Examiners  and the                                                               
Dental  Society would  like  to  make some  amendments  to HB  81                                                               
regarding  the Dental  Practice Act  itself.   He asked  that the                                                               
bill be  held until  the amendments are  available, and  he would                                                               
then introduce them to the committee.                                                                                           
                                                                                                                                
CHAIR  MURKOWSKI stated  the  committee received  a  copy of  the                                                               
audit on  Friday.   She understood  that Representative  Fate had                                                               
not  had an  opportunity to  see  the letter  or understand  that                                                               
there were  some potential  amendments until  this morning.   She                                                               
said  that  the  committee  would  like  to  give  the  board  an                                                               
opportunity to consider the suggestions and proposals.                                                                          
                                                                                                                                
CHAIR MURKOWSKI said  that since the bill had  been introduced to                                                               
the committee, when the amendments to  HB 81 are ready, it can be                                                               
rescheduled and would fall under  bills previously heard.  [HB 56                                                               
was held over.]                                                                                                                 
                                                                                                                                
HB 56 - MINIMUM WAGE                                                                                                          
                                                                                                                                
Number 0339                                                                                                                     
                                                                                                                                
CHAIR MURKOWSKI  announced that the  next item of  business would                                                               
be HOUSE BILL NO. 56,  "An Act relating to minimum wages."                                                                      
                                                                                                                                
ROGER WORTMAN, Staff  to Representative Pete Kott,  sponsor of HB
56, stated  that HB 56 increases  the minimum wage from  $5.65 to                                                               
$6.40 per  hour the first  year, and then  to $6.90 per  hour the                                                               
second year.                                                                                                                    
                                                                                                                                
MR.  WORTMAN stated  that  Alaska lags  behind  other West  Coast                                                               
states, while the cost of living  in Alaska is equal to or higher                                                               
than  in those  other  states.   He said  the  last minimum  wage                                                               
increase was  in October 1997,  and with increased  inflation and                                                               
cost of  living, it is time  for wage adjustments.   He asked the                                                               
committee to support HB 56.                                                                                                     
                                                                                                                                
Number 0464                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  referred to page 2,  section 2, subsection                                                               
(c), which  addresses school bus  transportation for  bus drivers                                                               
with  the Department  of Education  and Early  Development (EED).                                                               
He said  bus drivers' wages are  tied to twice the  minimum wage;                                                               
if the minimum wage is raised,  the bar will be raised for school                                                               
bus  drivers.   This will  have a  direct impact  on the  cost of                                                               
transportation for education.                                                                                                   
                                                                                                                                
REPRESENTATIVE KOTT said  he had not seen a fiscal  note from EED                                                               
to determine  how this increase  in minimum wage will  affect its                                                               
[department's] cost.  He said  that right now, school bus drivers                                                               
are at  a premium and are  paid more than minimum  wage; they are                                                               
having a  hard time getting  drivers in various areas  around the                                                               
state.  He said there would  be adjustments to their minimum wage                                                               
based on this  bill, but it was  passed into law a  few years ago                                                               
[tying school bus drivers' wages to twice the minimum wage].                                                                    
                                                                                                                                
MR. WORTMAN referred to an  occupational survey done two to three                                                               
years ago by  the former Department of Labor.   He said according                                                               
to  data from  the fourth  quarter  of 1998,  there were  roughly                                                               
14,500 workers  with wages between  $5.65 and $6.50 per  hour and                                                               
the survey did not list specific occupations.                                                                                   
                                                                                                                                
REPRESENTATIVE  MEYER explained  that  "we" don't  know how  many                                                               
people are working  at the $5.65-an-hour wage  because the 14,500                                                               
workers refer to  the range [between $5.65 and $6.50].   He asked                                                               
if it  was known how  many of these  14,000 people were  heads of                                                               
households, high  school kids, or  people just  wanting part-time                                                               
jobs.                                                                                                                           
                                                                                                                                
Number 0723                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT  responded by  saying that those  numbers are                                                               
not available  by age  group.   He said the  report was  from the                                                               
fourth quarter of  1998, a select quarter which may  not be truly                                                               
indicative of the number of Alaskans earning minimum wage.                                                                      
                                                                                                                                
REPRESENTATIVE KOTT said many of  those low-end wage earners work                                                               
in part-time positions  in the fishing or  tourism industries and                                                               
in the  canneries.  He said  he suspects the number  of part-time                                                               
personnel  would  be  larger  based  on  the  number  of  college                                                               
students who work in those various fields.                                                                                      
                                                                                                                                
REPRESENTATIVE MEYER said  he would like information  on how many                                                               
of those  14,000 people  making between $5.65  and $6.50  work in                                                               
the restaurant  industry.  He  said the restaurant  industry pays                                                               
closer to minimum wage and tips are  added on top of that.  So to                                                               
say  they  are  getting  minimum   wage  probably  isn't  totally                                                               
accurate.                                                                                                                       
                                                                                                                                
REPRESENTATIVE KOTT said in the  report [occupational survey done                                                               
by the  former Department of  Labor] stated that 32  percent were                                                               
working in  the restaurant and  beverage industry; it  was broken                                                               
down to that extent.  He said  he wasn't aware of a breakdown for                                                               
age group or single-parent workers.                                                                                             
                                                                                                                                
REPRESENTATIVE CRAWFORD informed the  committee that according to                                                               
the  governor's report,  70 percent  of  those receiving  minimum                                                               
wage are adults,  with many employed in  seafood processing, food                                                               
service, daycare, retail, security, and delivery services.                                                                      
                                                                                                                                
Number 0949                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  the  committee does  not have  the                                                               
information  before them  to make  a  decision on  who is  really                                                               
being impacted.  He said  the department had indicated there were                                                               
14,500  people, but  of those,  6,000 are  in the  hospitality or                                                               
restaurant  industries.   He asked  whom  it is  that "they"  are                                                               
trying to help.                                                                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG stated that the  passing of this bill [HB
56] might  help the  state budget  significantly by  reducing the                                                               
number of  people receiving  Alaska Temporary  Assistance Program                                                               
(ATAP) benefits; keeping people moving forward in the program.                                                                  
                                                                                                                                
MR. WORTMAN said  this [legislation] would affect  the quality of                                                               
life for those 14,500 people  who struggle with basic necessities                                                               
including food, shelter, clothing,  fuel, and transportation.  He                                                               
said the information regarding the  percentage of young people or                                                               
first-time job holders [earning minimum wage] was not available.                                                                
                                                                                                                                
REPRESENTATIVE ROKEBERG  said it is  possible that 6,000  [of the                                                               
14,500]  people  earning  minimum  wage work  in  the  restaurant                                                               
industry.   He said  these people are  actually making  more than                                                               
minimum wage  when tips are factored  in.  He said  Alaska is not                                                               
one of  the 43  states that  allow a  tip credit.   He  asked Mr.                                                               
Wortman  if the  actual  number of  people  earning minimum  wage                                                               
might be more like 8,000 [people], instead of 14,500.                                                                           
                                                                                                                                
MR. WORTMAN answered by saying, "If indeed the 6,000 is                                                                         
correct."                                                                                                                       
                                                                                                                                
REPRESENTATIVE  ROKEBERG reiterated  that he  would like  to hear                                                               
more information about  whom they are trying to  help [by raising                                                               
the minimum  wage].  He said  the job market, in  the crucible of                                                               
free enterprise,  is setting wages  to a  large extent.   He said                                                               
this is found not only in  Alaska but also in Washington [State],                                                               
Oregon,  and  California, which  like  Alaska  don't have  a  tip                                                               
credit  and do  have minimum  wages  that are  similar to  [those                                                               
proposed in] the bill that Representative Kott introduced.                                                                      
                                                                                                                                
Number 1146                                                                                                                     
                                                                                                                                
CHAIR MURKOWSKI pointed out that  the purpose of having this bill                                                               
heard early  is to get  some of the  questions out on  the table.                                                               
She  was  pleased to  see  Jim  Nordlund, Director,  Division  of                                                               
Public  Assistance,  Department  of   Health  &  Social  Services                                                               
(DHSS), here  to talk about  the ATAP component of  minimum wage.                                                               
She said  this is  the first  hearing on minimum  wage and  it is                                                               
important to let  the DLWD know what  the committee's information                                                               
needs are.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  KOTT revisited  the question  of whom  "they" are                                                               
trying to help.   He said he would submit  that "they" are trying                                                               
to help all  people who are making $5.65 [an  hour], whether they                                                               
are on one of the state's  assistance programs or are high school                                                               
seniors, because  they have  the same  cost of  living.   He said                                                               
they  probably wouldn't  have the  same conditions  as others  in                                                               
that  category.    He  said  that  while  there  could  be  6,000                                                               
employees in the restaurant and  beverage industry receiving some                                                               
substantial amounts of  monies in tips, they don't  know how many                                                               
fall  within  that 14,000  because  many  are making  well  above                                                               
minimum wage and well above the $6.50 [dollars an hour].                                                                        
                                                                                                                                
REPRESENTATIVE ROKEBERG  referred back  to subsection (c)  [of HB
56]  regarding bus  drivers and  asked  if it  was the  sponsor's                                                               
intention to  reconfirm, as a matter  of state policy, or  if the                                                               
drafters  put the  bus driver  provision in  the bill  because it                                                               
includes minimum wage.                                                                                                          
                                                                                                                                
MR. WORTMAN  said he  assumes the school  districts fund  the bus                                                               
drivers  and get  the  contracts, which  have  certain rules  and                                                               
regulations.   He said  he, too,  would like  to know,  and could                                                               
bring that up at the next meeting.                                                                                              
                                                                                                                                
Number 1392                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT answered by saying  it is a reconfirmation of                                                               
established policy;  the legislature  established a  minimum wage                                                               
and [the provision  that states] that bus drivers  should be paid                                                               
double.  He said "they" are  just elevating them to that standard                                                               
based on the policy that was set three to four years ago.                                                                       
                                                                                                                                
REPRESENTATIVE  ROKEBERG said  bus  drivers  handle children  and                                                               
should be adequately  paid.  He said some  smaller communities in                                                             
the state have  a hard time finding  bus drivers.  He  said if he                                                               
were a  commercial fisherman  in the summer  and wanted  to drive                                                               
bus in  the winter, he  might be willing to  do it for  less than                                                               
double the minimum wage.                                                                                                        
                                                                                                                                
REPRESENTATIVE  ROKEBERG suggested  the committee  might want  to                                                               
revisit the  topic [double  minimum wage  for bus  drivers] since                                                               
it's included  in the bill.   He said the cost  of transportation                                                               
might be going up due to fuel increases.                                                                                        
                                                                                                                                
REPRESENTATIVE  KOTT  said  he  did  not know  of  a  bus  driver                                                               
anywhere [in  Alaska] making  less than $12.00  per hour,  and he                                                               
recalled seeing LaidLaw advertising for  bus drivers in the paper                                                             
and paying well above $11.30.                                                                                                   
                                                                                                                                
Number 1500                                                                                                                     
                                                                                                                                
REPRESENTATIVE  HALCRO  stated  that   if  bus  drivers  are  not                                                               
attracted for less than $11.30 per  hour, the same would apply to                                                               
the normal minimum wage; an employer  would not be able to hire a                                                               
skilled person for $5.65 an hour  but would need to pay them what                                                               
the market would  bear.  He said if one  accepts the argument for                                                               
school bus  drivers, it  would be  the same for  the rest  of the                                                               
occupational lines as it relates to minimum wage.                                                                               
                                                                                                                                
REPRESENTATIVE KOTT  agreed and said  that in his trade  he can't                                                               
pay someone minimum wage but must  pay a fair market wage that is                                                               
well above that.                                                                                                                
                                                                                                                                
REPRESENTATIVE MURKOWSKI  asked about the rationale  for changing                                                               
Alaska statutes.   She  said that  traditionally Alaska  has been                                                               
tied  to  the federal  minimum  wage,  which  is .50  cents  over                                                               
[minimum  wage],  since  1959.   She  asked  why  Alaska  doesn't                                                               
continue to be tied to the federal minimum wage.                                                                                
                                                                                                                                
REPRESENTATIVE KOTT  explained that the rational  was that Alaska                                                               
ought to  control its  own destiny  and not  rely on  the federal                                                               
government to dictate  what the minimum wage should be.   He said                                                               
this gets  Alaska out from  underneath [the  federal government's                                                               
control] so that  in times of economic well-being,  we can adjust                                                               
it accordingly.                                                                                                                 
                                                                                                                                
REPRESENTATIVE ROKEBERG said there  was legislation introduced in                                                               
Congress  that  would accomplish  much  of  what [HB  56]  would,                                                               
except  the  [Alaska] legislature  would  not  regain control  of                                                               
setting minimum wage.                                                                                                           
                                                                                                                                
REPRESENTATIVE   KOTT   commented    that   Congress   introduced                                                               
legislation that would increase the  federal rate to $6.15, which                                                               
is a $1.00 increase.  He  said the situation is different up here                                                               
[in  Alaska], and  we  don't  need to  tie  minimum  wage to  the                                                               
federal minimum wage.                                                                                                           
                                                                                                                                
ED  FLANAGAN,  Commissioner,  Department  of  Labor  &  Workforce                                                               
Development (DLWD), said he and  the governor both appreciate the                                                               
committee taking  this legislation up.   He said it  is important                                                               
legislation  for Alaskan  workers, particularly  those that  need                                                               
help the most.                                                                                                                  
                                                                                                                                
COMMISSIONER FLANAGAN  said he would  like to talk about  some of                                                               
the  differences  between  Representative  Kott's  bill  and  the                                                               
governor's for minimum wage.                                                                                                    
                                                                                                                                
COMMISSIONER FLANAGAN explained  that the DLWD does  not have age                                                               
and  household  status data  by  wage  category; the  70  percent                                                               
figure  [mentioned   by  Representative  Crawford]  was   from  a                                                               
national  survey which  showed that  70 percent  of minimum  wage                                                               
earners   were  adults.     He   said  the   best  state-specific                                                               
information  the DLWD  has is  from  the occupational  employment                                                               
survey; the most  recent is from the fourth quarter  of 1998.  He                                                               
said it is a  good measure but shows actual wages  in ranges.  He                                                               
said they  don't have  the number [of  people] making  $5.65 [per                                                               
hour], but  the survey shows  14,400 people making  between $5.65                                                               
and $6.74, not $6.50.                                                                                                           
                                                                                                                                
COMMISSIONER FLANAGAN  said according  to the survey,  32 percent                                                               
represents  [minimum  wage  employment in]  eating  and  drinking                                                               
places,  not  6,000 [people]  but  4,664,  and includes  untipped                                                               
employees.   He said the  DLWD might be  able to break  down some                                                               
information  by  occupation  for  wait  staff  personnel  in  the                                                               
average annual jobs  by monthly average.  He said  the DLWD could                                                               
try to refine some of that data for the committee.                                                                              
                                                                                                                                
COMMISSIONER FLANAGAN  said when  considering an increase  to the                                                               
minimum  wage, it  is important  to  not just  consider those  at                                                               
minimum wage  right now,  because it will  help all  people under                                                               
the new proposed  increase.  He said the $6.74  cutoff, under the                                                               
second  year of  Representative Kott's  bill, represents  the low                                                               
number for the people who got  a raise.  He said the occupational                                                               
employment survey  is only done  in the fourth quarter,  which is                                                               
not  likely  to  be  the high  quarter  for  low-wage  employment                                                               
because  that would  be October  through December.   He  said the                                                               
actual number  of people  making less than  $6.75 per  hour would                                                               
most likely be higher in the third quarter.                                                                                     
                                                                                                                              
COMMISSIONER FLANAGAN  explained that doing  an ad hoc  survey to                                                               
look at the  third quarter would be pretty expensive.   He stated                                                               
"they"  [the  DLWD]  looked  at  job  orders  last  week  in  the                                                               
Anchorage and  Mat-Su Valley job  centers and found 454  open job                                                               
orders.   He  said  employers  could have  been  looking for  one                                                               
employee or for four employees.  He  said only 12 of the 454 were                                                               
paying the minimum wage; 146 didn't  state a wage but were listed                                                               
as "depending  upon experience."   Out of  308 [job  orders] that                                                               
listed the  wage, 12 said  $5.65 and 25  said $6.40 per  hour and                                                               
under.                                                                                                                          
                                                                                                                                
COMMISSIONER  FLANAGAN said  the Anchorage  job center  had 4,000                                                               
total job  orders for the second  half of [year] 2000;  one third                                                               
did not state a wage, and of  the 3,000 that did state a starting                                                               
wage, approximately  150 or  1.5 percent paid  $6.40 per  hour or                                                               
less.  He  said of those 150, about 50  were paying minimum wage.                                                               
He explained that  employers are listing jobs with  the DLWD that                                                               
pay  minimum wage;  many are  in  the beverage  industry, but  in                                                               
other industries too.                                                                                                           
                                                                                                                                
COMMISSIONER  FLANAGAN  said  the   breakdown  from  that  fourth                                                               
quarter  of 1998  [from the  occupational employment  survey] for                                                               
the 14,400  people earning minimum  wage included: 32  percent in                                                               
eating  and  drinking  places;  8.75  percent  in  amusement  and                                                               
recreation  services;  5  percent   in  educational  services;  4                                                               
percent  in  government;  and  4  percent  in  food  and  kindred                                                               
products, which includes mostly seafood workers.                                                                                
                                                                                                                                
COMMISSIONER   FLANAGAN   addressed   the   differences   between                                                               
Representative Kott's bill [HB 56] and  that of the governor.  He                                                               
said the  governor's bill has  earlier effective dates,  with the                                                               
increase [in  minimum wage] to  take place  on October 1  of each                                                               
year in  question.  He said  Congress does not address  the issue                                                               
of increasing  the minimum wage as  often as it should.   He said                                                               
it  was done  fairly regularly  prior  to 1981,  and the  federal                                                               
minimum wage  kept pace pretty  well with inflation, which  was a                                                               
bipartisan effort.   He said between  1981 and 1990 there  was no                                                               
increase  in the  federal minimum  wage and  thus no  increase in                                                               
Alaska's minimum wage.                                                                                                          
                                                                                                                                
COMMISSIONER FLANAGAN  said the [Alaskan] administration  had not                                                               
introduced  this legislation  for  the past  two  to three  years                                                               
because there was  supposed to be federal  legislation that would                                                               
make an  increase.  He  said after  the 1996 and  1997 increases,                                                               
the Alaskan  legislature didn't want  to confuse the issue  if it                                                               
was going to happen.                                                                                                            
                                                                                                                                
COMMISSIONER  FLANAGAN said  Congress seems  incapable of  taking                                                               
care of minimum  wage, and there is a proposal  in at the moment,                                                               
but the administration has said that  it would only support it if                                                               
the states could opt out.  He  said this doesn't make sense for a                                                               
federal minimum wage  because the states can set  their own wages                                                               
for non-federal "stuff" now.                                                                                                    
                                                                                                                                
COMMISSIONER FLANAGAN  said the governor did  introduce this bill                                                               
now  because it  doesn't look  like  Congress can  get around  to                                                               
doing it.   He  said Alaska's  minimum wage  should be  $6.50 per                                                               
hour, which is  what it would have been, had  the initiative been                                                               
successful.   He said the  initiative failed by  1,000 signatures                                                               
last year to be put on November's ballot.                                                                                       
                                                                                                                                
COMMISSIONER FLANAGAN  said "we" need  to give employers  time to                                                               
prepare  [for increases  in minimum  wage]  and to  phase in  the                                                               
increase, in  two steps, to get  to a minimum of  $7.15 per hour.                                                               
He  said if  the federal  government ever  did increase  [minimum                                                               
wage] to $6.15, Alaska would be $1.00 over the federal wage.                                                                    
                                                                                                                                
CHAIR MURKOWSKI asked  how the minimum wage numbers  in the bills                                                               
were derived.                                                                                                                   
                                                                                                                                
COMMISSIONER  FLANAGAN said  a four-member  family  with the  two                                                               
parents working  60 hours  per week and  making $7.15  [per hour]                                                               
would be at 105  percent of the poverty level for  2000.  He said                                                               
by  the time  the $7.15  [proposed minimum  wage] kicks  in, they                                                               
would be around or just under the poverty level.                                                                                
                                                                                                                                
Number 2227                                                                                                                     
                                                                                                                                
COMMISSIONER  FLANAGAN said  the proposed  minimum wage  increase                                                               
puts  Alaska pretty  much  in  line with  what  other West  Coast                                                               
states are  paying.   He said  30 percent  of those  migrating to                                                               
Alaska come  from California, which  has a minimum wage  of $6.25                                                               
that will rise  to $6.75 next year.  Washington  [State] has just                                                               
gone to $6.72 with its first Cost of Living Allowance (COLA).                                                                   
                                                                                                                                
COMMISSIONER  FLANAGAN  said  the low-wage  employers  would  get                                                               
advance notice, but October 1  is a more appropriate [start date]                                                               
than January 1 for the raises.  He said:                                                                                        
                                                                                                                                
     The other  difference is, of  course, ... not  only the                                                                    
     $7.15  but  in  the  out  years,  the  cost  of  living                                                                    
     increase.    Now,  people  have   a  lot  of  different                                                                    
     opinions about COLA,   when you are applying  a COLA to                                                                    
     someone  who  makes $50,000  or  $75,000.   Well  maybe                                                                    
     there is  a point in taking  issue with that.   I don't                                                                    
     know.   But  the Consumer  Price Index  (CPI) has  been                                                                  
     readjusted  federally in  the last  couple of  years to                                                                    
     more  accurately  reflect   differences  in  purchasing                                                                    
     power and replacement items and  things like that.  ...                                                                    
     It  has been  toned down  somewhat in  its impact,  and                                                                    
     when we  look at what  we are applying the  standard of                                                                    
     living [to],  we are  applying the  CPI to  somebody at                                                                    
     the  poverty level,  at best,  if we  go to  $7.15.   I                                                                    
     don't  think that  it is  unreasonable.   It also  lets                                                                    
     everybody  know  what  to  expect, as  far  as  we  can                                                                    
     project future increases.                                                                                                  
                                                                                                                                
COMMISSIONER  FLANAGAN  commented  that last  year's  legislature                                                               
addressed the problem with  workers' compensation benefits, which                                                               
hadn't gone up  for 17 years and that  tied compensation benefits                                                               
to the  average weekly  wage in Alaska;  the minimum  and maximum                                                               
benefits will go up some, with time.                                                                                            
                                                                                                                                
COMMISSIONER  FLANAGAN reiterated  that  the primary  differences                                                               
[between Representative  Kott's bill and the  governor's] are the                                                               
effective dates,  the different  amount, and the  CPI.   He urged                                                               
the legislature  to look  seriously at a  CPI adjustment  to keep                                                               
pace with basic inflation.                                                                                                      
                                                                                                                                
CHAIR MURKOWSKI  said the  [proposed minimum  wage of]  $7.15 per                                                               
hour would put Alaska at the top.                                                                                               
                                                                                                                                
COMMISSIONER  FLANAGAN affirmed  that on  October 1,  2002 Alaska                                                               
would have  the highest minimum wage,  with Washington's reaching                                                               
$7.08 in January  2003.  He said  Alaska has been at  the top for                                                               
30 years  because Alaska has  paid .50 over the  federal [minimum                                                               
wage].                                                                                                                          
                                                                                                                                
CHAIR MURKOWSKI  said it  is no  longer as  expensive to  live in                                                               
Alaska as it  once was, and it  is far more expensive  to live in                                                               
metropolitan  areas  such as  San  Francisco,  Seattle, or  other                                                               
places  in the  Lower 48.   She  asked how  the drop  in cost  of                                                               
living was being adjusted for, in increasing the minimum wage.                                                                  
                                                                                                                                
COMMISSIONER  FLANAGAN said  the  cost-of-living differential  is                                                               
the counterweight to  the per-capita income not being  the top of                                                               
the  heap  like  it was  for  years.    He  said if  the  federal                                                               
government didn't  go up to $5.15  and Alaska is up  to $7.15, it                                                               
would represent a  40 percent increment.  He said  in 1959 Alaska                                                               
was saying  that Alaskans should  make 50 percent more;  now it's                                                               
10 [percent].                                                                                                                   
                                                                                                                                
Number 2433                                                                                                                     
                                                                                                                                
COMMISSIONER  FLANAGAN  explained  that most  of  Alaska's  basic                                                               
costs  have not  gone down  when compared  with the  rest of  the                                                               
country except for certain areas  like Boston, San Franscisco, or                                                               
Seattle.   Responding  to another  question, he  stated that  the                                                               
DLWD does not track individual wage  files and the length of time                                                               
an individual works at minimum wage.                                                                                            
                                                                                                                                
REPRESENTATIVE  MEYER   said  it  is  realistic   to  think  some                                                               
employers  will start  employees  out at  minimum  wage and  then                                                               
boost  them up  once they  have proven  themselves and  look like                                                               
they are  going to work out.   He said  it would be good  to know                                                               
how long people stay at minimum wage.                                                                                           
                                                                                                                                
REPRESENTATIVE  MEYER said  he also  believes that  "we" need  to                                                               
help those  that need the  help the most.   He said if  there are                                                               
heads of  households making  minimum wage,  they need  some help.                                                               
He explained that some employers  are willing to hire handicapped                                                               
people and start  them out at minimum wage knowing  that they are                                                               
not going to perform as efficiently [as others might].                                                                          
                                                                                                                                
Tape 01-7, SIDE B                                                                                                               
                                                                                                                                
COMMISSIONER FLANAGAN  said the research and  analysis section of                                                               
the DLWD  does not  track people who  make sub-minimum  wage, but                                                               
the  Division of  Vocational Rehabilitation  (DVR), DLWD,  might,                                                               
since there is a provision in  the law for a sub-minimum wage for                                                               
people in certain types of programs.                                                                                            
                                                                                                                                
COMMISSIONER FLANAGAN  said the legislature should  keep in focus                                                               
that it is a  minimum that is being set.   He recognized that the                                                               
market  determines the  vast majority  [of wages],  but over  the                                                               
years  it has  become  obvious  that government  has  a place  in                                                               
setting the floor;  the floor is not being set  very high even at                                                               
$7.15 [per hour] two years from now.                                                                                            
                                                                                                                                
COMMISSIONER FLANAGAN stated  there is a basic equity  for an 18-                                                               
year-old kid or a disabled person  who might not otherwise have a                                                               
job, and he asked, "What is that time out of their life worth?"                                                                 
                                                                                                                                
COMMISSIONER FLANAGAN  said the last  time the minimum  wage went                                                               
up, people said it would kill  jobs in the beverage industry; but                                                               
that didn't  happen, and  the monthly  average employment  in the                                                               
food and  beverage industry in 1997  went up 4 percent,  the year                                                               
the  second of  the last  two  increases took  effect.   [Average                                                               
monthly  employment] went  from 1.3  percent the  next year  to 3                                                               
percent  the following  year,  which  is well  in  excess of  the                                                               
averages for statewide employment for all jobs.                                                                                 
                                                                                                                                
COMMISSIONER FLANAGAN  said there is  much less debate  about the                                                               
job-eliminating effects of a minimum wage increase [now].                                                                       
                                                                                                                                
REPRESENTATIVE MEYER asked  if the increased cost  of the minimum                                                               
wage was  passed on  to the  consumer by  increasing the  cost of                                                               
living.                                                                                                                         
                                                                                                                                
COMMISSIONER FLANAGAN said  much of the cost  probably was passed                                                               
on to the consumer, which he thought was justified.                                                                             
                                                                                                                                
CHAIR MURKOWSKI  returned to the  issues of sub-minimum  wage for                                                               
people who might  be handicapped and exemptions  from the minimum                                                               
wage in statute  that relate specifically "to  physical or mental                                                               
deficiencies,  age or  injury."   She  said it  also states  that                                                               
"they are subject to the restrictions  and for the period of time                                                               
that  are fixed  by the  commissioner."   She asked  Commissioner                                                               
Flanagan about those restrictions and the periods of time.                                                                      
                                                                                                                                
COMMISSIONER FLANAGAN said  in his two years  as commissioner, he                                                               
does not  believe there have  been any petitions of  that nature.                                                               
He  said there  might be  some ongoing  [petitions] that  predate                                                               
him, and the DLWD could provide the information.                                                                                
                                                                                                                                
CHAIR  MURKOWSKI  referred  to  subsection  (2)  and  (3)  of  AS                                                               
23.10.070 which states:  (2) an  apprentice at the wages that are                                                               
approved by the  commissioner; or (3) a learner at  the wages and                                                               
subject to the restrictions and for  the periods of time that are                                                               
fixed by the commissioner.                                                                                                      
                                                                                                                                
COMMISSIONER FLANAGAN said that  section was pretty much obsolete                                                               
because it  goes back  to when  the minimum  wage was  higher and                                                               
construction wages were  lower.  He said, "You could  have had an                                                               
apprentice."   He said he thought  she was referring to  law from                                                               
the 1960s.  He referred to the  youth provision in effect.  If an                                                               
employer has  an employee under the  age of 18, and  they work 30                                                               
hours or less per week, the  employer is exempt from [paying] the                                                               
employee Alaska's  minimum wage.   He  said employers  can create                                                               
opportunities for  youth under  this provision  and are  bound by                                                               
the  federal  minimum wage.    He  said  that  after age  18  the                                                               
employer would be bound by the Wage and Hour Act.                                                                               
                                                                                                                                
REPRESENTATIVE  ROKEBERG  referred  back  to  the  exemptions  to                                                               
minimum wage and verified with  Commissioner Flanagan that he did                                                               
not recall signing any requests  which would allow an employer to                                                               
pay an employee the learner wage.                                                                                               
                                                                                                                                
COMMISSIONER  FLANAGAN reiterated  that  the  learner request  is                                                               
basically  obsolete   and  transitioned   in  the   direction  of                                                               
apprenticeships.      He   said  the   DLWD   could   check   the                                                               
administrative and legislative history.                                                                                         
                                                                                                                                
REPRESENTATIVE ROKEBERG said [Tom  Cashen], the former Department                                                               
of  Labor's  commissioner,  indicated  there had  never  been  an                                                               
approval  by the  DLWD's  commissioner for  any  form that  would                                                               
approve  a learner's  wage.   He  said  Alaska Statute  23.10.070                                                             
provides for  an exemption  for a  learner wage  but historically                                                               
there has  never been  an approval by  the commissioner  of labor                                                               
for one.   He said  last year  this committee had  legislation on                                                               
the subject.                                                                                                                    
                                                                                                                                
Number 2147                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG emphasized  that  he would  like to  see                                                               
this area of legislation be addressed  since it is germane to the                                                               
exemptions under minimum wage and  how they work, particularly in                                                               
relationship to  the disabled community.   He wasn't sure  if the                                                               
disabled community was aware that  there is the possibility of an                                                               
exemption under the law.                                                                                                        
                                                                                                                                
COMMISSIONER  FLANAGAN  said the  DVR  branch  could address  the                                                               
federal  legislation that  allows for  handicapped exemptions  in                                                               
certain cases, which he believes is utilized in Alaska.                                                                         
                                                                                                                                
REPRESENTATIVE  ROKEBERG  mentioned   the  occupation  employment                                                               
survey [which referred to the  minimum wage ranging from $5.65 to                                                               
$6.74] and  said it  is conceivable that  some [of  those 14,500]                                                               
people  are being  paid  above the  minimum wage.    He said  the                                                               
committee is not sure what the  numbers are.  He said Alaska does                                                               
not have good statistics on a lot of things.                                                                                    
                                                                                                                                
REPRESENTATIVE  ROKEBERG  referred   to  Commissioner  Flanagan's                                                               
advocacy of the  CPI, which he said is very  inflationary, and he                                                               
asked:                                                                                                                          
                                                                                                                                
     Isn't  it  true  that  [one of]  the  basic  tenets  of                                                                    
     organized  labor  [is]  that collective  bargaining  is                                                                    
     something  that  is  sacrosanct   and  kind  of  a  key                                                                    
     principle to  organized labor  and its  relationship to                                                                    
     business?                                                                                                                  
                                                                                                                                
COMMISSIONER FLANAGAN  said he  didn't see the  relevance in                                                                    
this context.   He went on  to say that in  this regard they                                                                    
are   talking  about   people  that   are  almost,   without                                                                    
exception, unrepresented by a union.                                                                                            
                                                                                                                                
REPRESENTATIVE ROKEBERG  said as a legislative  body, "they"                                                                    
are to act  on the law to allegedly protect  the interest of                                                                    
workers.  He  said to him it goes against  the whole concept                                                                    
of collective  bargaining where labor and  management are at                                                                    
the  table   bargaining;  politicians  and   government  are                                                                    
bargaining  on   behalf  of   workers  with   business  only                                                                    
marginally represented.                                                                                                         
                                                                                                                                
COMMISSIONER   FLANAGAN   explained   that  if   labor   and                                                                    
management  were involved,  as  in  a collective  bargaining                                                                    
relationship, the  workers would probably be  making well in                                                                    
excess of the minimum wage, so  it wouldn't be an issue.  He                                                                    
said it is entirely  appropriate for government to establish                                                                    
a floor for workers whether  they are unionized or not; this                                                                    
has been the policy of our country since 1934.                                                                                  
                                                                                                                                
COMMISSIONER  FLANAGAN  referred  back  to  the  eating  and                                                                    
restaurant  component  [of  the   industry]  that  has  been                                                                    
growing  at 3  to 4  percent and  the issue  of the  lack of                                                                    
effect from the  last minimum wage increase.   He said there                                                                    
have been more high-end eateries  in Anchorage over the last                                                                    
four years,  which seem to  be doing  pretty well.   He said                                                                    
not  a lot  are going  out of  business, as  projected would                                                                    
happen  if the  businesses weren't  spared the  $.40 minimum                                                                    
wage increase.   He said the growth  supports the contention                                                                    
that it has not had an  adverse effect on businesses, but he                                                                    
admitted that there had not been a survey done.                                                                                 
                                                                                                                                
REPRESENTATIVE  ROKEBERG communicated  that  in Juneau  many                                                                    
restaurants have  gone out of  business in the last  four or                                                                    
five years.   He said the  tourism industry has been  one of                                                                    
the  only areas  of growth  in the  economy during  the last                                                                    
couple of  years, and  he thinks  the eating  and restaurant                                                                    
are tied directly to that particular industry.                                                                                  
                                                                                                                                
COMMISSIONER  FLANAGAN said  the average  monthly employment                                                                    
over  the course  of  the  year has  gone  up; many  sectors                                                                    
besides  tourism have  enjoyed  employment  growth over  the                                                                    
last six years.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  ROKEBERG  asked  if  there  is  any  way  to                                                                    
measure  the effect  that raising  the minimum  wage has  on                                                                    
cutting benefits.                                                                                                               
                                                                                                                                
COMMISSIONER   FLANAGAN  said   the  DLWD   does  not   have                                                                    
information on benefits because they  only survey wages.  He                                                                    
said it could  be the case [that business might  have to cut                                                                    
back  on  benefits].    He  conjectured  that  the  bulk  of                                                                    
employers  paying  under   the  $6.50-per-hour  range  don't                                                                    
provide benefits.                                                                                                               
                                                                                                                                
Number 1857                                                                                                                     
                                                                                                                                
REPRESENTATIVE HALCRO  said government does have  a role [in                                                                    
affecting change in  the minimum wage], but  he is concerned                                                                    
that the  committee is  being asked to  make a  major policy                                                                    
change, which  will have a significant  impact on employers,                                                                    
with  only anecdotal  evidence.   He  referred  back to  the                                                                    
sponsor's  testimony,  the  governor's  press  release,  and                                                                    
Commissioner Flanagan's testimony  that included information                                                                    
from Jim Nordlund,  Director of Public Assistance.   He said                                                                    
that numbers are  being thrown around but he is  not sure if                                                                    
there is anything concrete.                                                                                                     
                                                                                                                                
COMMISSIONER FLANAGAN  said the percentage of  poverty level                                                                    
someone makes at this wage  [minimum wage] is the main issue                                                                    
for him,  and one could  [even] argue the [validity  of the]                                                                    
poverty level set by the federal government.  He said:                                                                          
                                                                                                                                
     But  $20,000 for  a family  of  four in  this state,  I                                                                    
     don't care where you live  and how much the prices have                                                                    
     gone down  compared to other  places in the  state, and                                                                    
     that  if a  single mom  with  two kids  is making  this                                                                    
     wage, whether  she is making  it for three months  or a                                                                    
     year  or two  years  -  is making  66  percent of  that                                                                    
     poverty  level -  I think  that is  unconscionable.   I                                                                    
     think that these statistics are  plenty to hang our hat                                                                    
     on,  and  we will certainly ... try and  refine them as                                                                    
     much  as  we  can   without  getting  into  any  voodoo                                                                    
     numbers.   We  are trying  to  give you  the best  real                                                                    
     numbers we  have.  And  I don't think  federal studies,                                                                    
     in  terms of  a  percentage, ...  that  70 percent  are                                                                    
     adult,  are  necessarily   meaningless  when  they  are                                                                    
     applied to  Alaska.  We  are different, but we  are not                                                                    
     all  that  different.    We   are  providing  the  best                                                                    
     information  we have.   We  will certainly  try and  do                                                                    
     better.                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROKEBERG asked the committee how many businesses                                                                 
would close if  the minimum wage were raised.   He also asked how                                                               
many  of   those  14,000  people   are  actually  the   heads  of                                                               
households.   He said the  vast majority of these  people [making                                                               
minimum wage] are young and are just starting out.                                                                              
                                                                                                                                
COMMISSIONER FLANAGAN  said he  did not  think that  young people                                                               
just  starting  out  represented  the vast  majority.    He  then                                                               
referred to  a survey of  the National Federation  of Independent                                                               
Business (NFIB)  members; the majority who  responded didn't like                                                               
it [an  increase in  minimum wage],  but two-thirds  didn't think                                                               
that it would have an impact on their businesses.                                                                               
                                                                                                                                
CHAIR MURKOWSKI referred to the  NFIB survey conducted on January                                                               
24, 2001,  and said there  were a fair  number of people  who did                                                               
not  respond to  all  of the  questions.   She  referred back  to                                                               
Representative Halcro's  concern about  whom the  14,500 includes                                                               
[receiving minimum wage].  She  said the survey indicates that of                                                               
those surveyed  there were more  people in the  15-to 18-year-old                                                               
age bracket  than any others,  and 31  percent were not  heads of                                                               
households.  She said "we" have  limited hard and fast numbers in                                                               
Alaska,  but  the current  ones  from  Alaska indicate  the  very                                                               
opposite of what Commissioner Flanagan has said.                                                                                
                                                                                                                                
COMMISSIONER FLANAGAN said  the DLWD would get  the committee the                                                               
best information possible.                                                                                                      
                                                                                                                                
Number 1564                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD said he started  out at minimum wage, and                                                               
when he left there were more  adults working at minimum wage than                                                               
kids coming  to work.   He said earning  minimum wage is  part of                                                               
the social  contract that people  in organized labor  have fought                                                               
for,  like [other  employee protection]  issues  such as  workers                                                               
safety, unemployment  insurance, and  workers' compensation.   He                                                               
said this is  the basic floor under the people  at the bottom end                                                               
of the employment force.                                                                                                        
                                                                                                                                
REPRESENTATIVE CRAWFORD  said Roxanne  Smith, an employee  of The                                                               
Hangar on  the Wharf Restaurant  ("The Hangar"), was  present and                                                               
is a good example of a  person who would benefit from an increase                                                               
in the minimum wage; she is  the head of household with two kids,                                                               
and  her  total  wages  for  last year  totaled  $11,000.    This                                                               
[proposed wage increase]  would help her get out of  poverty.  He                                                               
said  he is  disappointed the  committee  is not  going with  the                                                               
higher bill  but would  go along  with HB  56 if  it were  a sure                                                               
thing.  He  said it is absolutely essential to  raise the minimum                                                               
wage as soon as possible.                                                                                                       
                                                                                                                                
REPRESENTATIVE HALCRO said the committee,  before making a policy                                                               
change, wants to ensure that  the minimum wage increase will help                                                               
those  that  need  it the  most.    He  went  on to  say  that  a                                                               
percentage  of  the workforce  is  seasonal,  with people  making                                                               
minimum wage but taking that  employment understanding there will                                                               
be  tips.     He  reiterated   that  the  committee   needs  more                                                               
information.                                                                                                                    
                                                                                                                                
Number 1347                                                                                                                     
                                                                                                                                
JOHN BROWN, President, Fairbanks  Central Labor Council, spoke in                                                               
favor of  the bill.  He  urged the committee to  consider some of                                                               
the  points in  the  governor's  bill as  it  relates to  earlier                                                               
effective dates,  a tie to the  CPI, and a higher  [minimum wage]                                                               
rate.   He said "we"  owe Alaska  due consideration of  this bill                                                               
because we  owe it to  the people  making these wages;  that they                                                               
have the essential needs for their quality of life.                                                                             
                                                                                                                                
MR.  BROWN said  he did  not know  how Roxanne  Smith, the  woman                                                               
working  at The  Hangar, could  even  come close  to meeting  her                                                               
needs.  He said the minimum wage needs to be raised soon.                                                                       
                                                                                                                                
Number 1189                                                                                                                     
                                                                                                                                
ROXANNE  SMITH, Waitress,  The Hangar  on  the Wharf  Restaurant,                                                               
said  people  in  the  industry  do make  minimum  wage  and  not                                                               
everyone makes tips.   Many people think that  making tips allows                                                               
one to continue  to live.  Many people from  Europe and Canada do                                                               
not tip but the workers still  get charged 8 percent of the sale;                                                               
this is  taken out no  matter what,  and paid to  the government.                                                               
She said:                                                                                                                       
                                                                                                                                
     This doesn't  count for  people who  walk out  on their                                                                    
     tickets.  Lots  of people come in, eat, leave.   We pay                                                                    
     for that  because most of  the time wait staff  is also                                                                    
     in charge  of the  money.   So we  have a  report [and]                                                                    
     everything is computerized  at the end.  It  gives us a                                                                    
     report,  which is  what we  owe that  company.   And if                                                                    
     there is  a walkout,  it is  our responsibility  to pay                                                                    
     it.                                                                                                                        
                                                                                                                                
     We  do not  get health  insurance.   Our ...  employers                                                                    
     most  of  the  time   don't  provide  health  insurance                                                                    
     because it  is too  expensive and  we are  not fulltime                                                                    
     employees.     A  lot  of  times,   especially  in  the                                                                    
     wintertime, we usually  get maybe 25 hours  a week, and                                                                    
     that is if  you've worked there long  enough and [have]                                                                    
     proven that  you can  stay and you  are a  good worker.                                                                    
     So  a lot  of people,  they have  their kids  on Denali                                                                    
     KidCare, food  stamps [and] things  like that  in order                                                                    
     to compensate.   ... I  couldn't imagine my  wage being                                                                    
     less.                                                                                                                      
                                                                                                                                
MS. SMITH  said with  children she  could not  live on  less, and                                                               
with her children now  she does not live on her  check.  She said                                                               
she has  been a waitress  for 11  years making minimum  wage, and                                                               
wait staff  usually never get raises.   She said the  only way to                                                               
move up  in the business is  to become a manager,  which requires                                                               
working 50 to 60  hours a week and being on salary.   She said it                                                               
would not be worth it for her  to leave her children for 60 hours                                                               
a week.                                                                                                                         
                                                                                                                                
MS. SMITH  said she tries to  keep her children out  of childcare                                                               
as much as possible, to raise  them herself.  She reiterated that                                                               
she works  between 20 to 25  hours a week and  grossed $11,000 in                                                               
2000, which included tips.  She  said sometimes in the winter she                                                               
works fewer hours because the restaurant  is not as busy, so they                                                               
cut back  her hours, but in  the summertime she works  more hours                                                               
because there is a need.                                                                                                        
                                                                                                                                
MS. SMITH said  they [wait staff] have to share  15 to 20 percent                                                               
of their tips with the bar staff  and 10 to 15 percent with those                                                               
that bus  the tables.   The paperwork  that someone  completes to                                                               
work in  a restaurant states  that the  hours are varied  and the                                                               
employee  will be  paid  minimum  wage.   She  said  there is  no                                                               
probationary period in the restaurant  business, and people hired                                                               
as wait staff never get a raise.                                                                                                
                                                                                                                                
Number 0830                                                                                                                     
                                                                                                                                
REPRESENTATIVE CRAWFORD asked  if it is common for  wait staff to                                                               
get health care or retirement of any sort.                                                                                      
                                                                                                                                
MS. SMITH  said she was not  aware of that happening,  but that a                                                               
larger company  might offer it.   She said nine times  out of ten                                                               
with the  health care industry an  employee would have to  work a                                                               
minimum  of hours,  usually a  30-hour work  week, to  get health                                                               
benefits.  If an employee doesn't  have this number of hours, the                                                               
company  can't provide  insurance and  the worker  would be  more                                                               
expensive for  the company.   If the  company does offer  it, the                                                               
employee pays  it out  of his  or her  check, which  usually runs                                                               
around  $300 dollars  a month  with a  $1,000 dollar  deductible.                                                               
She said she currently has  major medical insurance with a $1,000                                                               
deductible.                                                                                                                     
                                                                                                                                
MS.  SMITH said  her  children are  currently  on Denali  KidCare                                                               
because  she can't  afford to  have  insurance for  them and  she                                                               
receives no child support.                                                                                                      
                                                                                                                                
MS. SMITH said  if she had more  money due to an  increase in the                                                               
minimum wage, she could do  more with her children, and childcare                                                               
would be easier to pay for.                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT  asked Ms. Smith  if there  is a rate  of pay                                                               
that is  below what she would  work for and that  would cause her                                                               
to quit.                                                                                                                        
                                                                                                                                
MS. SMITH  said if  the minimum  wage were  reduced to  $2.80 per                                                               
hour, there would  be no way she could work  because she wouldn't                                                               
be able  to afford childcare,  which is $35  dollars a day.   She                                                               
said  when the  topic  of  minimum wage  comes  up, people  start                                                               
talking  within the  industry [referring  to a  comment she  made                                                               
about tip credit].                                                                                                              
                                                                                                                                
Number 0570                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  said there was  a tip credit bill  a few                                                               
years ago,  and a rumor was  started that the minimum  wage would                                                               
fall to  $2.13 an  hour.  He  said the bill  up here  [in Alaska]                                                               
actually made an increase; no one got his or her wages cut.                                                                     
                                                                                                                                
MS.  SMITH  said she  worked  in  Washington [State],  where  the                                                               
minimum wage was  reduced to $2.70 or $2.33 per  hour and she was                                                               
supposed to  make up  for it in  tips; this was  a few  years ago                                                               
when she first started working.                                                                                                 
                                                                                                                                
REPRESENTATIVE HAYES asked  Ms. Smith if she knew  how many 15-to                                                               
18-year-old people work at The Hangar.                                                                                          
                                                                                                                                
MS. SMITH  said most  of the  people who work  at The  Hangar are                                                               
around 25 to  30 years of age; they support  themselves and go to                                                               
college.                                                                                                                        
                                                                                                                                
Number 0360                                                                                                                     
                                                                                                                                
JACK   AMON,   President,    Alaska   Restaurant   and   Beverage                                                               
Association,   stated  the   hospitality  industry   is  severely                                                               
impacted  by increases  in  the starting  wage.   He  said it  is                                                               
important to address who is working  at this wage.  He said there                                                               
are  two  segments  within  the  industry:    the  table  service                                                               
segment, which  includes tipped employees; and  the quick-service                                                               
segment, which includes the fast food operators.                                                                                
                                                                                                                                
MR.  AMON said  according  to their  industry records,  including                                                               
payroll  records,  tipped  employees in  the  industry  generally                                                               
range in salaries  from $12 to $25  dollars per hour.   He said a                                                               
tip to  them is not  just an  incidental amount of  money because                                                               
tips count as wages with the  Internal Revenue Service (IRS).  He                                                               
said tips count as wages when  paying payroll taxes.  He said the                                                               
quick-service   industry  includes   many  young   people;  their                                                               
employers have to  train them because they are  just learning how                                                               
to work.                                                                                                                        
                                                                                                                                
MR.  AMON said  dishwashers, prep  cooks, and  so forth  would be                                                               
helped by [an  increase in the] minimum wage.   He said in Alaska                                                               
they are paid  substantially above the minimum wage.   He said in                                                               
the industry  a successfully run  restaurant might net  between 5                                                               
to 8  percent of gross  receipts; an  increase in the  labor cost                                                               
has a significant impact on industry.                                                                                           
                                                                                                                                
Number 0204                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked Mr. Amon if  he recalled testimony                                                               
a couple of years ago regarding  the La Mex Restaurant chain that                                                               
had to forgo the health  insurance program for over 300 employees                                                               
because of the last minimum wage increase.                                                                                      
                                                                                                                                
MR.  AMON  said  it  was  an effect  of  the  last  minimum  wage                                                               
increase, and  there was  another operator  who cut  out vacation                                                               
pay.   He said  it often  affects the ability  to give  raises to                                                               
people working in  the back of the house such  as dishwashers and                                                               
prep cooks,  those making $7,  $8, and $9  dollars per hour.   He                                                               
said  he  knows from  personal  experience  that this  can  cause                                                               
friction  between staff  working in  the  front and  back of  the                                                               
house;  the most  highly compensated  employees get  minimum wage                                                               
increases when they are well above minimum wage.                                                                                
                                                                                                                                
Number 0117                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KOTT   asked  Mr.  Amon  to   elaborate  on  what                                                               
employers pay  on the reportable  tips, because he  had mentioned                                                               
the  payroll  tax.    He  asked if  there  were  other  [employer                                                               
payments] like Medicaid, Medicare, and Social Security.                                                                         
                                                                                                                                
MR. AMON  said they [the  restaurant industry] pay  "matching" on                                                               
all  of  those programs.    He  said  employees are  required  by                                                               
federal  law to  report 100  percent  of tips;  employers can  be                                                               
subject to IRS  audits and held liable on  social security taxes.                                                               
He  referred to  the Bubble  Room [Restaurant]  in Florida  where                                                               
employees  were assessed  penalties on  unreported tips;  he said                                                               
employers become  liable whether the  employee is honest  or not.                                                               
He said  that credit cards [machine  receipts] are a good  way to                                                               
track reported tips.                                                                                                            
                                                                                                                                
TAPE 01-8, SIDE A                                                                                                               
                                                                                                                                
Number 0029                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT asked  Mr. Amon if the bill  [HB 56] includes                                                               
a tip  credit provision, and if  so, would it offset  any minimum                                                               
wage increase passed on to the employer.                                                                                        
                                                                                                                                
MR.  AMON said  it would  mitigate things  for the  table service                                                               
industry  but cautioned  not to  forget the  fast food  component                                                               
that  employs largely  teenagers.   He  said there  is a  federal                                                               
provision  that allows  an employer  to employ  someone under  18                                                               
years  of age,  for the  first 90  days, and  pay them  less than                                                               
minimum wage.   He said this  would greatly help that  segment of                                                               
the industry.                                                                                                                   
                                                                                                                                
MR. AMON said the 30-hour  [learner wage] provision exists in law                                                               
but  he  has   heard  from  the  fast-food   operators  that  the                                                               
compliance is  difficult and oftentimes  not worth the risk.   He                                                               
reminded  the committee,  when looking  at  the 18-year-olds  and                                                               
their first  jobs, not to  forget about the fast-food  segment of                                                               
the industry.                                                                                                                   
                                                                                                                                
Number 0118                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked about  the enforcement of  the 30-                                                               
hour rule.                                                                                                                      
                                                                                                                                
MR. AMON  said he had heard  [that it's not worth  the risk] from                                                               
operators in  the fast-food  segment but he  does not  fall under                                                               
that segment and couldn't give  personal experience.  He said the                                                               
food segment  of the industry was  unable to be at  this hearing.                                                               
He thanked the  committee for studying the issue  and said "they"                                                               
could  provide  testimony  from  the  fast-food  segment  of  the                                                               
industry.                                                                                                                       
                                                                                                                                
REPRESENTATIVE ROKEBERG  asked Mr.  Amon if  he could  supply the                                                               
committee with  the amount  of payroll tax  burden per  dollar of                                                               
increase [of the minimum wage].                                                                                                 
                                                                                                                                
MR.  AMON said  the  Alaska Restaurant  and Beverage  Association                                                               
would  provide that  information and  also supply  information on                                                               
low  check averages  from  a  wide range  of  operators, to  show                                                               
payroll records of  what the actual tip income is  from an actual                                                               
payroll, not just anecdotally.                                                                                                  
                                                                                                                                
Number 0212                                                                                                                     
                                                                                                                                
REPRESENTATIVE  ROKEBERG   asked  Mr.   Amon  about   the  Alaska                                                               
Restaurant and  Beverage Association membership and  reaching out                                                               
in the  state.  He  asked Mr. Amon if  he knew whether  the 4,600                                                               
[people on minimum  wage] in the eating and  beverage area seemed                                                               
consistent with his figures.                                                                                                    
                                                                                                                                
MR. AMON  said that number  sounded low for tipped  employees; he                                                               
generally sees  that amount  in Anchorage alone.   He  said there                                                               
are  many restaurants  that give  long-serving, tipped  employees                                                               
raises, which  may also  include added  responsibility.   He said                                                               
many operators try to offer health  care, which does get cut back                                                               
with mandated increases.                                                                                                        
                                                                                                                                
MR. AMON  said there is  an ongoing  struggle in the  industry to                                                               
provide health care  for employees as an association,  to be able                                                               
to  pool   and  offer  an  association-based   health  care  plan                                                               
(indisc.).   He said there are  other reasons why it  is becoming                                                               
more  difficult, but  many employers  would like  to offer  their                                                               
employees a plan.                                                                                                               
                                                                                                                                
REPRESENTATIVE  HAYES asked  Mr.  Amon  if the  mean  age in  his                                                               
organization  is above  the 15-to-18  range, excluding  the fast-                                                               
food sector.  He asked if Mr.  Amon had any numbers that he could                                                               
provide to the committee.                                                                                                       
                                                                                                                                
MR.  AMON  said  he  didn't  know if  they  could  provide  those                                                               
numbers,  but operations  serving alcoholic  beverages have  more                                                               
employees over  18 years of age.   He said those  are the tipped,                                                               
back-of-the-house  employees, whether  they are  18 or  not.   He                                                               
said  it is  difficult to  find a  dishwasher who  will work  for                                                               
$5.55 an hour.                                                                                                                  
                                                                                                                                
Number 0551                                                                                                                     
                                                                                                                                
MR. AMON  said people who work  in his organization for  a period                                                               
of time  are motivated to  take on responsibilities even  if they                                                               
are not asked.   He said good wait staff  earn their increases by                                                               
their value to the organization.   He said the organization could                                                               
survey its  membership to provide  information on  wage increases                                                               
based on merit.   He said tipped employees are  motivated more by                                                               
keeping a  restaurant's seats full  than by  a one-dollar-an-hour                                                               
raise.                                                                                                                          
                                                                                                                                
Number 0617                                                                                                                     
                                                                                                                                
FRED  ROSENBERG, Owner,  Red Robin  Restaurants and  Kid Zone  of                                                               
Anchorage, stated he  has no employees making  minimum wage other                                                               
than [food]  servers.   He said there  are some  tipped employees                                                               
that make  in excess of minimum  wage; they hire people  that are                                                               
better at their job and are paid more money.                                                                                    
                                                                                                                                
MR.  ROSENBERG said  he submitted  payroll records  with reported                                                               
tips  to  this   committee  a  couple  of  years   ago.    "They"                                                               
arbitrarily pulled  names off a  list, whited out the  names, and                                                               
submitted the  documents at  a prior  hearing.   He said  at that                                                               
time, the  lowest person was  making roughly $12.00 [an  hour] in                                                               
tips,  and the  highest person  was  making between  $18 and  $20                                                               
dollars per hour, which was  in addition to earning minimum wage.                                                               
He  said it  was found  that anyone  working for  the company  at                                                               
least three months  was making more than $17 per  hour on the low                                                               
side, which is reasonable compensation.                                                                                         
                                                                                                                                
MR. ROSENBERG  said tipped employees  need to be  segregated into                                                               
two areas:   tipped  employees like  waiters and  waitresses that                                                               
get direct  tips; and the  tipped pool group like  the bartenders                                                               
and hosts.  He said they are  all making far in excess of minimum                                                               
wage.   He  said the  issue of  (indisc.) affects  their industry                                                               
only in  a negative way.   He said [raising the  minimum wage] is                                                               
inflationary, which drives the customer's  cost up and results in                                                               
less profit  for the business,  so the business attempts  to find                                                               
ways to  cut expenses.   He said vacation pay,  medical benefits,                                                               
and profit-sharing  plans will  have less  employer contribution,                                                               
especially  in  the cases  where  the  employer can  control  the                                                               
contribution.                                                                                                                   
                                                                                                                                
MR. ROSENBERG  said he  is sympathetic  to Ms.  Smith's situation                                                               
with two children and making her yearly wage.  He said:                                                                         
                                                                                                                                
     I have young children; I  am concerned about them also.                                                                    
     But what she was telling us  sounded to me like she was                                                                    
     a part-time worker, working in  an area that has strong                                                                    
     seasonal fluctuations.  She talked  about working 20 or                                                                    
     25 hours a  week.  If that is all  that that restaurant                                                                    
     can afford to have her,  I am sympathetic with both the                                                                    
     restaurant  -   not  having   enough  business   -  and                                                                    
     sympathetic with  her not having  the proper  amount of                                                                    
     hours  necessary for  her  to make  a  wage that  would                                                                    
     enable her  to live the  lifestyle that she  would like                                                                    
     to.  I wish she could get  more.  But, if she's a part-                                                                    
     time worker with strong  seasonal fluctuations, that is                                                                    
     not a minimum wage issue.   There are some other things                                                                    
     that  were mentioned  there about  people not  tipping.                                                                    
     Even Americans  don't tip sometimes, whether  by virtue                                                                    
     of  ... being  cheap  or [from]  getting poor  service.                                                                  
     But  the  reality is,  the  numbers  I gave  you,  with                                                                    
     respect  to  wages,  actually taken  from  our  payroll                                                                    
     records, were  actual wages,  meaning that  some people                                                                    
     tip 2  percent -  or don't  tip at all  - and  some are                                                                    
     tipping 20 percent or 25 percent.                                                                                          
                                                                                                                                
MR. ROSENBERG explained that looking  at credit card charges is a                                                               
guideline to  see what  people tip.   He  said generally  what is                                                               
found is  that tipped employees are  doing pretty well.   He went                                                               
on to say the law doesn't  allow a business to deduct an [unpaid]                                                               
check from  the server; by  law, the  server is not  obligated to                                                               
pay  and the  business is  required to  absorb it.   He  said the                                                               
committee  has  to balance  many  issues  that don't  necessarily                                                               
apply  to any  one employed  person.   He  added that  Washington                                                               
[State] has not had tip credit since he could remember.                                                                         
                                                                                                                                
MR. ROSENBERG said "they" do  give raises to minimum-wage servers                                                               
after  they  have  been  there   awhile  or  take  on  additional                                                               
responsibilities.   He  said most  do make  minimum wage  because                                                               
they are compensated very well with  tipped income.  He also said                                                               
many people work  two jobs in order  to work full time.   He said                                                               
the  restaurant business,  by its  own  nature, has  fluctuations                                                               
with meal  periods.  He  said if  there are servers  making tips,                                                               
they are probably making a "darn  good wage" and are not anywhere                                                               
near the poverty level.                                                                                                         
                                                                                                                                
MR. ROSENBERG said if teens  and handicapped people are not being                                                               
employed because of these [exemptions  to minimum wage], it hurts                                                               
the group.                                                                                                                    
                                                                                                                                
Number 1017                                                                                                                     
                                                                                                                                
MR. ROSENBERG, responding to a  question from Representative Kott                                                               
about the changes  his business had faced in  going through three                                                               
to four  minimum wage  increases, said  after the  [minimum wage]                                                               
increases they  had to discontinue  the paid vacation  policy for                                                               
employees starting  [work] after  that period.   He  said medical                                                               
benefits have  been reduced down from  a co-pay or shared  pay to                                                               
having the employees provide it themselves.                                                                                     
                                                                                                                                
MR.  ROSENBERG referred  to Ms.  Smith's  testimony about  health                                                               
insurance costing  $300 per  month; he  said health  insurance is                                                               
running about  $150 to $180 per  month for one person,  and would                                                               
be more  expensive with  children.   He said  the $300  per month                                                               
would be just about right with any number of children.                                                                          
                                                                                                                                
MR.  ROSENBERG  said  the  decisions   he  made  after  the  last                                                               
increases were  made at the  local level, and were  not franchise                                                               
policies; all of the businesses operate independently.                                                                          
                                                                                                                                
MR. ROSENBERG, responding to a  questions posed by Representative                                                               
Kott about  amending the bill  to include  a tip credit  and what                                                               
effect it would have on  hourly wage for tipped employees, stated                                                               
the policy would probably remain much  like it is with respect to                                                               
the  direct-tipped   employees;  they  can   get  time-in-service                                                               
raises.  He explained that adding  the tip credit to the bill [HB
56] would allow  there to be more money to  pay the people making                                                               
$8, $10, and $12 dollars per hour.                                                                                              
                                                                                                                                
Number 1183                                                                                                                     
                                                                                                                                
MR. ROSENBERG commented that his  company does not participate in                                                               
the    training   wage    provision   because    the   monitoring                                                               
[requirements] seem be more than they are willing to bear.                                                                      
                                                                                                                                
REPRESENTATIVE ROKEBERG said he does  not see any requirements in                                                               
state law [for monitoring].                                                                                                     
                                                                                                                                
MR.  ROSENBERG answered  by saying  that the  deterrence included                                                               
the record keeping  and the risk of not being  in compliance.  He                                                               
went on  to say  that even  if the  requirements were  easier, he                                                               
doesn't feel  they would  employ anyone at  that wage  since they                                                               
are paying  more than that today.   He said he  didn't think they                                                               
had any position starting at less than $7 dollars per hour.                                                                     
                                                                                                                                
Number 1245                                                                                                                     
                                                                                                                                
REPRESENTATIVE HAYES  asked Mr. Rosenberg  if the people  who are                                                               
making $17  to $25 dollars an  hour [referring to the  tip income                                                               
survey done by Mr. Rosenberg] are holding two jobs.                                                                             
                                                                                                                                
MR.  ROSENBERG assured  the committee  that what  he quoted  came                                                               
right from actual payroll records  for people that worked for the                                                               
company.   He said many of  these people work another  job and he                                                               
assumes they  make similar  wages there.   He said  these numbers                                                               
weren't averages but actual payroll records drawn at random.                                                                    
                                                                                                                                
Number 1304                                                                                                                     
                                                                                                                                
BILL PARGETTER,  Owner, Applebee's  Restaurant of  Anchorage, and                                                               
former owner of the McDonald's  Restaurants of Anchorage, said he                                                               
sold  the  McDonald's  Restaurants  in 1986  after  15  years  of                                                               
ownership.   He said the average  rate [of pay at  Applebee's] is                                                               
$11.04 per hour including (indisc.)  and excludes tip income.  He                                                               
said  he   employs  75  to   80  people:   50  are  in   the  tip                                                               
classification,  and 75  percent of  those 30  to 40  are in  the                                                               
$5.65-an-hour  minimum wage  classification.   He said  they also                                                               
receive $8 to  $10 per hour in direct tips,  which they pay taxes                                                               
on.                                                                                                                             
                                                                                                                                
MR.  PARGETTER said  the credit  card tips  in year  2000 equaled                                                               
13.43 percent [for his company],  with cash tips possibly being a                                                               
little  lower.   He  said  the  company encourages  employees  to                                                               
report  tips,  and  employees  at   $5.65  per  hour  are  making                                                               
considerably more than the minimum.   He said he does not have an                                                               
employee outside of this group that makes $5.65 an hour.                                                                        
                                                                                                                                
MR. PARGETTER stated the fast-food  business has entry-level jobs                                                               
that  employ people  with little  work experience.   He  said the                                                               
minimum  wage "we"  paid in  those days  [when he  worked in  the                                                               
industry] could keep employees working  for the company up to six                                                               
months.  He said the  company employed 850 entry-level employees,                                                               
and some  would remain  at minimum wage  because of  their value.                                                               
He said  perhaps the  committee could  look at  what type  of job                                                               
and/or training credits  can be given, instead  of worrying about                                                               
the  minimum  wage  to  give  people  a  positive  approach  when                                                               
considering entry-level positions.                                                                                              
                                                                                                                                
MR.  PARGETTER reiterated  that no  one  is being  paid close  to                                                               
minimum wage  now.  He said  as additional costs are  incurred in                                                               
wages,  representing roughly  30 percent  of base  costs and  the                                                               
number-two cost next to food and  beverages, it is the lower paid                                                               
employees  that get  cut from  the  company, and  the company  is                                                               
cutting out the  very person that [the minimum  wage] is targeted                                                               
to help.                                                                                                                        
                                                                                                                                
Number 1517                                                                                                                     
                                                                                                                                
MR. PARGETTER  said their  company has a  medical plan  that went                                                               
from paying  100 percent to paying  50 percent; it is  a high-end                                                               
cost  that   continues  to  climb,  and   when  getting  squeezed                                                               
[financially] they would  look at it again.  He  said the company                                                               
had vacation pay  at his three other  independent restaurants [in                                                               
Anchorage];  two  he  closed  due  to  cost  problems.    Harry's                                                               
Restaurant, the last one he had,  had full vacation pay.  He said                                                               
he has not  adopted it at the current restaurant  because he knew                                                               
there were some costs coming up in 2001.                                                                                        
                                                                                                                                
MR.  PARGETTER   closed  his  testimony  be   using  examples  of                                                               
Applebee's in  California, which has  a minimum wage with  no tip                                                               
credit like Washington [State] and Oregon  do.  He said 42 of the                                                               
50  states  have  tip  credit  programs,  not  all  as  tough  as                                                               
California's, which has had it the  longest.  He relayed that the                                                               
Applebee's  in  Southern  California  are  having  a  tough  time                                                               
because the  minimum wage has  tightened the situation  such that                                                               
they  can make  better money  in another  industry.   He said  it                                                               
doesn't take  much when a company  is netting 5, 6,  or 7 percent                                                               
for those things paternally.                                                                                                    
                                                                                                                                
MR. PARGETTER  said the wait staff  make $5.65 per hour  and also                                                               
do some housekeeping routines.   He said the training position is                                                               
paid $1.00 an  hour more and requires  additional education, test                                                               
passing, and duties including training new employees.                                                                           
                                                                                                                                
REPRESENTATIVE HALCRO  asked Mr.  Pargetter if  there was  ever a                                                               
time, as the owner of  McDonald's [in Anchorage], when the market                                                               
conditions  didn't allow  him to  hire a  person at  minimum wage                                                               
because no one would work for that.                                                                                             
                                                                                                                                
MR. PARGETTER  said they were  not paying employees  minimum wage                                                               
in 1986  either.  He  said today an  employee would not  work for                                                               
less than  $7 dollars  per hour.   He  said there  is competition                                                               
with  the fast-service  restaurants for  hostess type  positions;                                                               
tipped employees that make an additional  $3 to $4 dollars on the                                                               
base wage.                                                                                                                      
                                                                                                                                
Number 1700                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG asked Mr. Pargetter  what he pays for the                                                               
training program  and if he has  employees under 18 years  of age                                                               
utilizing the 30-hour provision of the Wage and Hour Act.                                                                       
                                                                                                                                
MR. PARGETTER said  his companies in Anchorage have  not used the                                                               
training program  provision but said he  would look into it.   He                                                               
said in his restaurants that  serve alcohol, having someone under                                                               
the  age of  21  becomes  a liability,  which  they haven't  been                                                               
willing to take.                                                                                                                
                                                                                                                                
MR.  PARGETTER said  they like  [to  hire] people  with a  little                                                               
experience, which  is different  from a fast  food establishment.                                                               
He said in  the fast service restaurant business  you are getting                                                               
kids that  have never  worked in  their lives  and one  becomes a                                                               
second parent; problems  that one doesn't have as  a normal boss.                                                               
However, he  said they  would consider it  [use of  the learner's                                                               
wage].   He said when  he was in  the fast food  service business                                                               
before he thought he looked at  some of the potential programs to                                                               
help with labor costs.  He  said with 850 employees it would have                                                               
been  an area  that the  company would  have taken  advantage of.                                                               
However  he said  sometimes  those [cost  saving]  programs on  a                                                               
small scale are not worth the headache.                                                                                         
                                                                                                                                
Number 1820                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KOTT referred  back  to  Mr. Pargetter's  comment                                                               
that increases in  the minimum wage would hurt those  that it was                                                               
trying to help.  He verified that he had heard that correctly.                                                                  
                                                                                                                                
MR. PARGETTER  said that was correct.   He said a  business going                                                               
from 85 employees to 75 because  of costs would most likely leave                                                               
off the least-experienced  people and ask the other 75  to work a                                                               
little more.   He said  across the  country, over the  years, and                                                               
from  what he's  read, every  time there  is an  increase in  the                                                               
minimum  wage, the  low-skilled  people are  the  losers and  the                                                               
highest-skilled employees benefit.                                                                                              
                                                                                                                                
MR. PARGETTER  explained that an experienced  server could handle                                                               
five tables  with some ease,  and an inexperienced server  is not                                                               
able to  go over three  tables initially.  If  he had to  lay off                                                               
workers, he would keep the veteran [employee].                                                                                  
                                                                                                                                
Number 1983                                                                                                                     
                                                                                                                                
REPRESENTATIVE  KOTT  said  he  thought  it  was  good  that  Mr.                                                               
Pargetter encourages all  of these employees to report  tips.  He                                                               
asked what happens  when employees don't report  tips, when there                                                               
is  a  certain  amount  of  sales, and  it  shows  1  percent  of                                                               
gratuities associated  with that  amount of sales.   He  asked if                                                               
Mr. Pargetter,  as an employer,  is able  to charge an  8 percent                                                               
gratuity to wait staff in their monthly or weekly checks.                                                                       
                                                                                                                                
MR. PARGETTER said  as an employer he doesn't  have the authority                                                               
to do  that.  He said  they use the  credit card tips as  a guide                                                               
[of what should be reported].   He said he has "one-on-ones" with                                                               
employees, and if they don't want  to report at least 10 percent,                                                               
then they  can look for a  new job.   He said the IRS  would come                                                               
back to the employer, not the  employee, if tips were being under                                                               
reported.                                                                                                                       
                                                                                                                                
MR. ROSENBERG added  that they [business owners]  are required by                                                               
law, under  tip allocation,  to report tips.   He  concurred with                                                               
Mr.  Pargetter  that  "they"  routinely  encourage  employees  to                                                               
report all tips, and some do and  some don't.  He said they don't                                                               
know what the actual amount is,  but if the employee reports less                                                               
than 8  percent, the employer  is required  by law, to  report to                                                               
the federal  government as though  8 percent of their  sales were                                                               
received in tips.                                                                                                               
                                                                                                                                
MR. PARGETTER said  the 13.43 percent that was  mentioned is from                                                               
the  allocation-of-tips  formula  on  the  recently  filed  48027                                                             
[business  tax form].   He  added that  an underage  employee has                                                               
tips allocated back to him or  her by the employer and it appears                                                               
on that person's W2s.                                                                                                         
                                                                                                                                
REPRESENTATIVE  ROKEBERG  referred back  to  the  effect that  an                                                               
increase in minimum  wage would have on businesses.   He asked if                                                               
it would  be fair to  say that since  Alaska has not  changed its                                                               
minimum wage  in a  long time,  the decisions  are being  made by                                                               
politicians in Washington D.C?                                                                                                  
                                                                                                                                
MR. PARGETTER said  he thought it was, although  he really hadn't                                                               
given it  much thought.  He  said "they" are willing  to pay what                                                               
is  necessary, but  it  would  be nice  to  be  involved when  it                                                               
affects them.                                                                                                                   
                                                                                                                                
MR. ROSENBERG echoed  what Mr. Pargetter had said  and added that                                                               
"they" would  like to give input  so that a proper  and equitable                                                               
decision could be made for everyone.                                                                                            
                                                                                                                                
Number 2172                                                                                                                     
                                                                                                                                
CHAIR  MURKOWSKI  asked  Commissioner  Flanagan  to  present  the                                                               
committee  with  additional  information on  specific  exemptions                                                               
regarding  learners, apprentices,  and  people  with physical  or                                                               
mental  handicapped.   She said  she understood  that "they"  are                                                               
subject to  restrictions or  conditions that are  set.   She also                                                               
asked for help in accessing  accompanying regulations to help the                                                               
committee understand what is available.                                                                                         
                                                                                                                                
CHAIR  MURKOWSKI said  Commissioner  Flanagan  would provide  the                                                               
committee  with  a  breakdown  of  occupations  from  the  fourth                                                               
quarter of  1998.  She said,  too, that she understood  it may be                                                               
impossible  to  get statistics  on  certain  things such  as  the                                                               
number of  people at minimum wage  now and how many  are heads of                                                               
households, their ages,  and the length of time  on minimum wage,                                                               
but she said any information would be helpful.                                                                                  
                                                                                                                                
CHAIR  MURKOWSKI   said  the  committee  would   also  appreciate                                                               
information from the  industry testifiers that could  be used for                                                               
review.                                                                                                                         
                                                                                                                                
CHAIR  MURKOWSKI   said  she  has  spoken   with  Representatives                                                               
Rokeberg and Kott about forming  a subcommittee to look into some                                                               
of the  more dense  issues that  were discussed  and specifically                                                               
the tip credit.  She said she  is not sure the committee is ready                                                               
yet to  engage in a  subcommittee at  this point but  knows these                                                               
issues will take some time  outside of committee; Representatives                                                               
Crawford or Hayes will join  Representatives Rokeberg and Kott at                                                               
that point.                                                                                                                     
                                                                                                                                
CHAIR MURKOWSKI proposed  rescheduling the hearing on HB  56 in a                                                               
couple  of  weeks  and  mentioned  that she  would  like  to  get                                                               
testimony and  perspective from Jim Nordlund,  Director, Division                                                               
of Public Assistance, DHSS.                                                                                                     
                                                                                                                                
Number 2320                                                                                                                     
                                                                                                                                
REPRESENTATIVE KOTT said  he understood the tip credit  was to be                                                               
used against a person's hourly wage as a reduction.                                                                             
                                                                                                                                
REPRESENTATIVE  ROKEBERG  clarified  that  the  tip  credit  bill                                                               
before the  legislature two to  three years ago kept  the concept                                                               
of the  existing wage in statute,  and the increase to  $5.65 was                                                               
the baseline.   He said he believed the [tip  credit] federal law                                                               
to be  $2.13 an  hour.   He said  this legislature  could legally                                                               
lower  the  minimum  wage  to   $2.13  an  hour  for  the  tipped                                                               
employees.    He  said  many states  have  done  this,  including                                                               
Hawaii,  which  recently  established  the baseline  in  the  tip                                                               
credit.                                                                                                                         
                                                                                                                                
Number 2357                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROKEBERG  said it would  be up to  the legislature                                                               
to  establish  the basic  minimum  wage  that  would be  paid  to                                                               
everybody, whether  the $5.65 [per  hour] or an  additional wage.                                                               
He said:                                                                                                                        
                                                                                                                                
     And then  in the  future those people  hired, everybody                                                                    
     hired, would have to be  paid the minimum wage, but ...                                                                    
     the credit would be based on  those wages above it,  so                                                                    
     that [if a] person receives  that - in other words, say                                                                    
     we  went  the $6  an  hour,  established the  base  tip                                                                    
     credit (indisc.),  that would be the  minimum wage they                                                                    
     would receive.   If there are any  further increases at                                                                    
     other times, that  would be locked in.   If the minimum                                                                    
     wage for other people went  up, like, for example under                                                                    
     the current formula, [it would  be] tied to the federal                                                                    
     law.                                                                                                                       
                                                                                                                                
REPRESENTATIVE KOTT said the majority of states that have tip                                                                   
credits have reductions in the hourly wage.  [HB 56 was held                                                                    
over.]                                                                                                                          
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:40 p.m.                                                                                                                       
                                                                                                                                
                                                                                                                                
                                                                                                                              

Document Name Date/Time Subjects