Legislature(2001 - 2002)
04/30/2002 09:46 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 30, 2002
9:46 AM
TAPES
SFC-02 # 81, Side A
SFC 02 # 81, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:46 AM.
PRESENT
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Gary Wilken
Senator Alan Austerman
Senator Donald Olson
Senator Lyda Green
Senator Loren Leman
Also Attending: REPRESENTATIVE PETE KOTT; JANE WINEINGER, Staff to
Senator Green; JERRY BURNETT, Staff to Senator Green; ROBERT REGES,
Attorney representing the Alaska Forest Association; DON ETHERIDGE,
AFL-CIO; STEFANIE MADSON, Vice President, Pacific Seafood
Processors Association; BARBARA HUFF TUCKNESS, Director,
Governmental and Legislative Affairs, General Teamsters Local 959;
KRIS NOROSZ, Government Affairs, Icicle Seafoods;
Attending via Teleconference: From Delta Junction: PETER FELLMAN,
Staff to Representative John Harris; From Fairbanks: JOHN BROWN,
President, Central Labor Council; DON LOWREY; ED FLANAGAN,
Commissioner, Department of Labor and Workforce Development; From
Anchorage: RICH MASTRIANO, Director, Division of Labor Standards
and Safety, Department of Labor and Workforce Development; Off-net:
ROBERT WELLS, Director, Division of Agriculture, Department of
Natural Resources
SUMMARY INFORMATION
SB 353-AGRICULT. PROG.COORDINATOR/ANIMAL FEED
The Committee heard from the sponsor and the Department of Natural
Resources. A committee substitute and an amendment were adopted.
The bill was held in Committee.
SB 355-LET ME HELP ACCOUNT
The Committee heard from the sponsor and reported the bill from
Committee.
HB 504-WAGES FOR WORKERS IN FISHERIES
The Committee heard from the sponsor, the Department of Labor and
Workforce Development and representatives from the seafood industry
and labor unions. The bill was held in Committee.
CS FOR SENATE BILL NO. 353(RES)
"An Act relating to the labeling of animal and poultry feeds
and to the agriculture program coordinator; and providing for
an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
JANE WINEINGER, Staff to Senator Green, testified this bill relates
to agricultural programs and creates an Agricultural Coordinator
position within the Division of Agriculture to oversee organic crop
inspections, feed labeling and noxious weeds.
Ms. Wineinger noted Alaska is the only state without a feed
labeling process and that currently some feed imports into the
State contain weed seeds. She asserted Alaska has a problem with
noxious weeds, although not as serious as in other Western states
that must spend millions of dollars on eradication. She instructed
how noxious weeds impact the agriculture lands, railroad right-of-
ways, and hunting lands.
PETER FELLMAN, Staff to Representative John Harris, testified via
teleconference from Delta, that the industry requested assistance
in this matter. He told that as the agriculture industry has grown
in the State, the issue of noxious weeds has increased; however,
little funding has been provided to the Division of Agriculture.
Mr. Fellman informed that the federal government changed the
standards regarding the definition of organic and this legislation
would update State statutes to match the federal provisions. He
stated the Agricultural Coordinator would monitor the farmers to
ensure they meet the organic standards.
Mr. Fellman reiterated Alaska is the only state that does not
monitor the labeling of feed. He stressed that with the outbreaks
of mad cow disease, feed labeling has become important. He
expressed intent to verify that feed producers in Alaska are using
the ingredients they claim, as well as ensuring that rendered
animal parts, which could include contaminants, are not used.
Mr. Fellman listed the third purpose of the Agricultural
Coordinator to control noxious and invasive weeds. He noted that in
the previous year, funding was secured to attempt to control
noxious and advancing weeds. He specified Canadian Sow Thistle, a
hearty three to six foot tall rhizome plant that is difficult to
eradicate and kills grass. He noted the plant has migrated north
and is present in the Fairbanks area. He expressed concern that
this weed would endanger native plant species.
Mr. Fellman warned that addressing the problem immediately is the
only way to control these weeds without expending millions of
dollars. He indicated efforts have begun, but that a statewide
coordination is necessary. He also spoke of the importance of
documenting the presence of invasive weeds to obtain federal
funding to address the matter.
Mr. Fellman admitted the fiscal note is significant, but cautioned
that if the problems are not controlled the long-term costs would
be considerably higher.
Senator Ward moved to adopt CS SB 353, 22-LS1663\J, as a working
draft
Senator Olson objected.
Senator Olson asked the number of mill feed operations in the
State.
Mr. Fellman listed three and noted Alaska Mill and Feed has voiced
support of this legislation.
ROBERT WELLS, Director, Division of Agriculture, Department of
Natural Resources, testified via teleconference from an off-net
site in Palmer to note there might be an additional mill feed
operator.
Senator Olson asked about input from other operators.
Mr. Wells answered that the only business that has offered an
opinion on this legislation has been Alaska Mill and Feed.
Mr. Wells did not anticipate any opposition from the manufacturers,
noting they currently label products in accordance to the laws of
the State of Washington. He assured the Division "is committed to
working with the feed producers," and he was confident the
Department could establish an effective working relationship with
industry and not impose onerous regulations on the businesses. He
emphasized the feed labeling issue has arisen due to concerns about
rendering plants and the contents of food fed to animals. He shared
that the Federal Drug Administration has indicated the State
Division should have greater participation in the monitoring of
feed manufacturers.
AT EASE 9:58 AM / 10:01 AM
Senator Olson stated his intent to hear directly from industry on
this legislation, as it is their livelihood that is affected by the
feed they produce.
Co-Chair Kelly asked if Senator Olson had specific objections with
the provision in the proposed committee substitute.
Senator Olson had no specific objection to the committee
substitute.
A roll call was taken on the motion.
IN FAVOR: Senator Ward, Senator Wilken, Senator Austerman, Senator
Green, Senator Hoffman, Senator Leman, Senator Olson, Co-Chair
Donley and Co-Chair Kelly
OPPOSED: none
The motion PASSED (9-0)
The committee substitute was ADOPTED as a working draft.
Senator Ward expressed he was unsure whether he clarified his
motion to adopt the committee substitute as a working document and
surmised this caused confusion.
Senator Hoffman understood that Senator Olson's concern is with
passing this bill from Committee without input from the feed
producers.
Co-Chair Kelly announced he would hold the bill in Committee to
allow members an opportunity to solicit opinions from feed
producers.
Senator Green referenced a University of Alaska report titled
"Strategic Plan for Noxious and Invasive Plants Management in
Alaska". She stressed did not want the weed situation to advance
and become as serious as in other states.
Co-Chair Kelly asked if there is a similar bill pending in the
House of Representatives.
Senator Green affirmed.
Senator Austerman asked if this legislation also addresses seed
products imported to the State for planting and whether it would
provide for certification of the absence of noxious weed seed in
these products.
Senator Green affirmed.
Mr. Wells furthered that the Division "encourages" that imported
seed be certified. He understood that feed labeling requirements in
other states require disclosure of purity and germination rates. He
noted that farmers are "pretty cautious" about the seeds planted to
avoid weed infestation in their fields.
Senator Leman commented he is "skittish" about adding new State
positions, especially those established in statute. However, he
understood the necessity of this position and the importance of it
serving an advisory function rather than having the authority to
close an industry. He hoped this position could be shared with the
University of Alaska, Cooperative Extension Service, Plant
Materials Center, to allow maximized resource and minimized cost.
He expressed intent to pursue this option.
Amendment #1: This amendment provides that Section 7 of this
committee substitute, which stipulates that this legislation does
not apply to meat, fish or poultry, take effect July 1, 2002. This
amendment also inserts a new Section 14 to provide that Section 8,
AS 03.60.006. Agriculture program coordinator, of the committee
substitute take effect January 1, 2003.
Senator Leman moved for adoption.
There was no objection and the amendment was ADOPTED.
Co-Chair Kelly suggested Senator Olson communicate with Mr. Fellman
regarding his concerns about the impacts of this legislation on
industry. Co-Chair Kelly appreciated Senator Olson's considerations
for their interests.
Co-Chair Kelly ordered the bill HELD in Committee.
SENATE BILL NO. 355
"An Act establishing an account in the general fund to receive
general gifts, donations, and bequests to the State of
Alaska."
This was the first hearing for this bill in the Senate Finance
Committee.
JERRY BURNETT, Staff to Senator Green, testified this bill
establishes a new account in the general fund titled the Let Me
Help Account to allow those who want to pay taxes, or otherwise
increase State revenues, to contribute. He noted the funds donated
to the State of Alaska would be treated as a charity and deductible
from federal taxes.
Senator Ward asked if the bill contains a provision to allow an
applicant for a permanent fund dividend to donate the dividend
directly to the State treasury by an indication on the application.
Mr. Burnett replied that currently there is not, that the dividend
check must be received then donated. He noted this has been
discussed, as well as a provision that would transfer funds to the
Let Me Help Account in the amount of the dividends of those
qualifying residents who do not apply for a dividend.
Senator Leman liked the idea. He relayed a conversation at West
High School whereby students expressed to him that they would forgo
dividends for the benefit of the school and their education. He
stated that he produced a basket to collect dividend checks and
announced he would forward the funds to the Department of Revenue.
He informed that at the end of this gathering, the basket contained
no checks. He opined, however, that he is supportive of providing
an opportunity for those who wish to contribute.
Senator Leman asked if these funds when appropriated by the
legislature would be considered general funds or receipt supported
services.
Mr. Burnett replied the funds would be transferred from the Let Me
Help Account to the general fund. He pointed out that if the
legislature appropriated the funds before this transfer occurred,
they could be accounted as non-general funds.
Senator Green explained the reason she sponsored this legislation.
She told of varying correspondence she receives requesting either
significant taxation no taxation, and she realized there is no
consensus on the issue. She asserted that if donators wish to
designate the contribution for education, medical care, or other
specific services, this option should be available.
Senator Olson asked if there is a limit of how much could be
donated.
Senator Green thought the amount would be limitless.
Mr. Burnett clarified there are limits to the amount that qualifies
for federal tax credit. He understood this amount to be 50 percent
of gross annual income. However, he assured that any amount could
actually be contributed.
Senator Olson clarified the donators could designate the funds.
Mr. Burnett corrected that the bill does not currently provide for
this.
Senator Green offered a motion to "move Senate Bill 355 out of
Committee with individual recommendations."
Without objection SB 355 with Department of Administration zero
fiscal note, dated 4/10/02, MOVED from Committee.
CS FOR HOUSE BILL NO. 504(FIN) am
"An Act relating to the wages of people working in the
fisheries business."
This was the first hearing for this bill in the Senate Finance
Committee.
[This legislation authorizes certain seafood processors to deduct
room and board expenses from employees' salaries under certain
circumstances.]
REPRESENTATIVE PETE KOTT testified this legislation would "go a
long way" help the "ailing" fishing industry in that it would allow
fish processors operating in remote areas, to "penetrate the
minimum wage". He explained this would require a union-negotiated
contract between the employer and the employee in an amount not to
exceed $15 per day, and the employee must work minimum of eight
hours before the deduction could be made.
Representative Kott gave a history of this issue beginning with a
statute written in 1959, which stipulates that on an occupational
basis, the Department [which department is not specified,] could
allow employers to pay salaries below the minimum wage. He stated
this has been applied to cannery workers when, in accordance with
federal regulations, alternative public housing is available.
Representative Kott pointed out that in many remote seafood
processor locations, alternative housing is not available.
Therefore, he stated this legislation would "in essence… redefine
occupation" in that it clarifies whether an employee is in a
"remote" or "non-remote" position.
Representative Kott opined this legislation "has brought fairness
back to the table". He reminded that seafood processors operating
in a non-remote area has the ability to deduct room and board
expenses from employees' salaries.
Representative Kott noted that debate on this legislation in the
House of Representatives established that a charge of $15 per day
for room and board in seafood processing camps is reasonable. He
stated the employer could deduct a higher amount if it could
demonstrate that a higher amount is "more reasonable." However, he
predicted the employers would not undertake the effort required to
make such a demonstration.
Senator Wilken asked if premiums are paid to employees working in
remote locations.
Representative Kott did not think so, although he deferred to the
seafood processor representatives. He understood salary is based on
market factors. He surmised that most employees who select the
remote locations do so to ensure "they are not engaged in any
extra-curricular activities where they might spend their earnings,"
as their purpose is to work as many hours as possible to earn the
highest amount possible.
Senator Wilken asked if other industries in Alaska practice this.
Representative Kott understood the other industries that are exempt
from the Wage and Hour Act are listed in statutes, and that the
seafood processor industry does not have a total exemption. He knew
of no other industry located in remote areas that pays workers a
salary below the minimum wage, with the exception of a housecleaner
working at a remote lodge. He commented that loggers, guides, etc.,
are usually paid higher salaries.
Senator Wilken asked what entity would make the determination
whether an employer could deduct more than $15 for room and board
per day.
Representative Kott answered the Department of Labor and Workforce
Development through a formal application process.
Senator Olson shared that he had worked a "slime line" to earn
money for college. He asked what provisions are made for an
employee who might chose other arrangements, such as "live in a
tent next to the facility." He remembered that some facilities did
not have enough housing for all employees.
Representative Kott predicted that most processors would "want to
take care of their employees." He spoke of the free market and the
intent for the employee to remain with the same employer for the
duration of the season. He stressed that processors compete against
each other and that $15 is the maximum amount that could be
deducted and suggested that actual rates could be significantly
lower. He agreed an employee could forgo the employer's food and
lodging and sleep in a tent.
Senator Olson noted the competitive nature is primarily the market
price. Therefore, he did not agree there is a competitive nature
that would benefit the employees.
Representative Kott replied that an employer must hire enough
employees in the event of a large "run". He stated that if the
amount of seafood received in an area were inadequate, the employer
would relocate the workers to another area experiencing a higher
harvest. He described seafood processing employees as wanting to
work and make as much money in as short a period of time as
possible as well as having an opportunity to visit Alaska.
Therefore, he surmised potential employees would consider the
salary and room and board deductions offered by each employer,
which he stated is the competition.
Senator Austerman furthered the competitiveness is due to short
fishing seasons and the need to staff all seafood processing
facilities during the same period of time. He predicted that if
salmon prices rebounded, employers would not charge for room and
board because of the competitive nature of obtaining and retaining
employees.
Senator Wilken addressed the fiscal note and asked the savings this
legislation would provide for seafood processors.
Representative Kott estimated "in the millions of dollars" given
the proposal to increase the State's minimum wage. He again
deferred to representatives of the seafood processing industry for
more precise figures. He relayed that in conversations with seafood
processors and through his research in the issue, he learned that a
few of the processors would go out of business. He stressed the
"biggest looser" in these cases are the communities where the
facilities are located because of the loss of the tax base.
ROBERT REGES, Attorney, testified on behalf of the Alaska Forest
Association, that this legislation does not distinguish between
rural and urban work locations with the exception of positions paid
below the minimum wage. He understood the necessity of this
legislation, as the proposed room and board deductions would reduce
an employee's wage below the statutory minimum amount. He noted the
logging industry deducts room and board expenses from the salaries
of its employees working in remote locations; however, he stressed
these deductions do not impact minimum wage as the workers earn
higher salaries.
Mr. Reges expressed concern about testimony presented in other
legislative committees by the Department of Labor and Workforce
Development, which "suggests that the urban/rural distinction
exists even if the deduction does not penetrate the minimum wage."
He pointed out that neither State statute nor federal law provide
such a rural/urban distinction.
Mr. Reges asserted that this legislation is not inappropriate for
those industries that pay workers a minimum wage, but stressed it
should not create an urban/rural distinction. He asked the
Committee to "set the record straight" on this issue. He clarified
he does not request changes to the bill.
Mr. Reges cited a poll conducted by the Alaska Forest Association,
and concluded that the practice of charging a nominal fee for room
and board in the camps has been a historical practice and currently
is "virtually universal". He furthered that during a review of this
matter, he talked to "all the other industries in the State" and
found that at one time, Southeast Stevedoring had taken room and
board deductions in remote locations and that currently surveyors,
fishery workers and loggers pay toward room and board expenses.
Senator Leman noted the witness was given the opportunity to "set
the record strait" regarding the intent that this legislation not
impact the forestry industry, which he just did. Senator Leman
therefore surmised it not necessary for the Committee to
specifically do so.
SFC 02 # 81, Side B
Senator Olson asked if the witness favors or opposes the bill.
Mr. Reges reiterated that although Alaska Forest Association is not
directly impacted by this fisheries-related legislation, there is
concern by the precedent it could establish.
DON ETHERIDGE, AFL-CIO of Alaska, testified in Juneau against the
bill. He explained the organization's position that the industry
should not attempt to meet its "bottom line on the workers,
especially the workers that are just barely scrapping by now." He
realized this legislation resulted from pending efforts to increase
the minimum wage. However, he pointed out that because legislation
to increase the minimum wage has not passed, this bill should not
either.
Senator Wilken asked if this bill would go into affect regardless
of whether separate legislation to increase the minimum wage passes
the Legislature this session.
[An unidentified speaker answered yes.]
STEFANIE MADSON, Vice President, Pacific Seafood Processors
Association, testified in Juneau and described the trade
association and its 11 members. She noted the Association had 13
members the prior year but that a salmon processor operating in
Larson Bay has ceased operations, and a "floater", which operated
in Bristol Bay and the Aleutian Islands, has chosen to remain in
Seattle for the season.
Ms. Madson relayed the Association has been contacted by State
agencies and some legislators, asking what efforts could be
undertaken to assist the seafood industry. She listed tax credits
as one consideration, but noted a business must first be profitable
in order to pay taxes. She informed that other options were
considered, but dismissed due to the significant expense to the
State. She asserted however, that this legislation would be "a tool
in the tool box" for processors to react to market conditions and
to the "changing nature of the seafood industry."
Ms. Madson compared this tool to requests made by commercial
fishers to authorize the formation of associations to purchase
commercial fishing permits from fishers. She qualified that neither
tool would be utilized by all of the seafood processors or all of
the commercial fishers, but stressed the option would be available.
She was unsure of the number of seafood processors that would
utilize the room and board deduction authorization and to what
extent it would be used. She reiterated Representative Kott's
assertions regarding the competitive nature of employee recruitment
for seafood processors.
Ms. Madson noted this bill has been amended to insert the $15
maximum daily deduction and the provision that an employee must
work a minimum of eight hours each day the deduction is made. She
stated these changes resulted from concerns raised by the
Department of Labor and Workforce Development about the possibility
of employees earning a "zero paycheck working for the so-called
company store".
Ms. Madson pointed out many industries have been exempted from wage
and hour mandates, including: shrimp pickers, many agricultural
positions, baby-sitters, workers on fishing vessels, and at-sea
seafood processors. Therefore, she surmised this legislation is
not a "red herring" and is rather a "correction to what we believe
is an inequity in regulations."
Ms. Madson addressed concerns voiced about the distinction of wages
paid to workers operating in remote and non-remote locations. She
asserted, "The seafood industry cannot be described with the same
adjectives." She listed the differences in how the various seafood
processors operate: a salmon processor operating only in Southeast
Alaska; a salmon processor with facilities located in many areas of
the State, some remote and some non-remote; or a ground fish
processor operating in the Aleutian Islands that does not process
salmon. She furthered that each company handles transportation,
laundry facilities, medical expenses, and other issues differently.
She noted the "package" of an employer is designed to attract and
retain employees, and that an employee accepts a package based on
the needs of that employee.
Ms. Madson emphasized the seafood processors industry is labor
intensive and employs many workers. She added it is one of the
remaining industries with entry-level positions available for those
with no education or work history to develop skills that are
transferable to other industries.
Ms. Madson shared that the Association's goal is to contribute
further to the State's economy by developing value-added products.
She cautioned this would be difficult to accomplish if the industry
is not provided the necessary tools that provide flexibility to
adopt operations to the changing market needs.
Ms. Madson maintained that commercial fishers would not be
adversely impacted by this legislation, although she could not
guarantee they would be paid higher amounts. She asserted this
matter is a processor issue, not a harvester issue.
Senator Wilken repeated his earlier question regarding the amount
the seafood processors would save if this legislation were adopted.
Ms. Madson estimated the amount to be "in the millions" of dollars,
noting the cost of a minimum wage increase would be tens of
millions of dollars to one of the largest seafood processors, as
indicated in written testimony provided to the House Labor and
Commerce Committee [copy not provided]. She qualified the
ramifications are unknown and exampled the deduction of room and
board expenses from federal taxes. She stated, "So we're not sure
exactly what the benefit will be other than we know we need some
tools to help us get through this difficult time." She offered to
report to the Legislature in the future, how the industry has been
able to "take advantage" of the provisions in the legislation.
Senator Wilken asked if this legislation would be implemented this
summer.
Ms. Madson replied that because the hiring process is already
underway to recruit workers for the Summer 2002 fishing season, the
new provisions would not be implemented until the January 2003
season.
Co-Chair Kelly clarified this legislation is not linked to other
legislation that increases the minimum wage because of potential
legal issues. He reminded that a ballot initiative proposes to
increase the minimum wage. He suggested this bill could be held in
the Senate Rules Committee to allow the Senate Finance Committee to
hear the minimum wage legislation.
Co-Chair Donley agreed with the witness that there are numerous
exemptions to the minimum wage laws, many of which he concluded are
"archaic" and some are "bad public policy". Therefore, he asserted
it is unacceptable to argue in favor of this legislation based on
the existence of other exemptions. He opined that this bill should
"rise or fall on its own merit and not based on the fact that we
have a mucked-up, messy existing law."
BARBARA HUFF TUCKNESS, Director, Governmental and Legislative
Affairs, General Teamsters Local 959, referred a letter dated
4/29/2002, from Gerald Hood, Secretary-Treasurer [copy on file].
She explained the Teamsters and AFL-CIO are on record opposing this
legislation, although few seafood processor employees are members
of either labor organization, because the organizations have an
interest in the conditions of all workers in the State. She
stressed that from a political and corporate perspective, this
legislation establishes a position regarding a multi-million dollar
industry, with many owners residing out of the State. She
understood salmon catch numbers are reduced, but pointed out other
fisheries, such as Pollock harvests, have increased. She urged the
Committee to consider the message sent to minimum wage workers,
"that even though you're going to be working 16 hours a day on a
slime line, if you're lucky to get that many hours…" She disputed
statements that the majority of these workers are "college kids"
from the Lower 48, citing information provided by the Department of
Labor and Workforce Development indicating the average age of
workers in this field is 30 years.
Ms. Tuckness noted that with a collective bargaining agreement
process, there is the opportunity to renegotiate in a few years if
an employer is experiencing financial difficulty. She added that
the employer must provide proof as to the financial situation. She
remarked that this legislation instead establishes this provision
into law.
Ms. Tuckness requested the Committee consider other options to
assist the seafood processing industry "if indeed there are
problems." She disagreed that taking deductions from minimum wage
workers is appropriate action.
JOHN BROWN, President, Central Labor Council, testified via
teleconference from Fairbanks against this legislation. He asserted
it is wrong of industry to ask those who are least able to help
i.e., workers paid the minimum wage.
DON LOWREY, Business Representative, [organization name inaudible]
testified via teleconference from Fairbanks in opposition to the
bill. He remarked that workers in the fishing industry are hard
working, many have families, and that it would be wrong for them to
"loose money" by working in rural locations. He surmised the
companies "should feel blessed" that people are willing to work in
remote locations.
RICH MASTRIANO, Director, Division of Labor Standards and Safety,
Department of Labor and Workforce Development, testified via
teleconference from Anchorage that he is available to answer
questions.
ED FLANAGAN, Commissioner, Department of Labor and Workforce
Development testified via teleconference from Fairbanks to
"strenuously" opposite the bill, as it is "bad public policy". He
disagreed with the sponsor's testimony regarding the intent of the
first Alaska State Legislature in 1959 in establishing the Alaska
Wage and Hour Act. While he agreed the statute provides that the
Department "may develop regulations that would govern the deduction
of room and board on an occupation basis," he pointed out no
regulations were adopted during the eight gubernatorial
administrations, three political parties and 12 commissioners to
support such a deduction in remote locations. He noted the offer of
room and board provisions is to the benefit of the operators,
because if room and board were not available, there would be no
workers. He also agreed that in 1985 regulations were enacted to
establish a process for the deduction of room and board expenses;
however, it "codified the practice of the Department" to exclude
remote locations with no alternative housing available.
Mr. Flanagan qualified that the Department's position is that room
and board expenses in remote locations should not be deducted from
workers' salaries regardless of whether the worker earns a minimum
wage. He informed that Mr. Reges and the Alaska Forest Association
is involved in lawsuit, which would determine the legality of the
Department's position.
Mr. Flanagan stressed that certain seafood and agricultural
positions are specifically exempted from minimum wage laws with the
intent to protect seafood-processing workers. He noted the
processors would benefit from the proposed room and board
deductions by millions of dollars and pointed out this money would
come from the lowest paid workers. He asserted that in the year
1999, 19,784 people were employed in Alaska as "cannery workers",
and that 6,350 of these were Alaska residents with a median age of
32 years. Therefore, he asserted the sub-minimum wage would not
only be inflicted on guest workers.
Mr. Flanagan spoke of efforts by the Department and the seafood
processing industry to increase the number of Alaska residents
employed in the industry. He appreciated this, but disapproved of
this legislation that would "help the industry on the backs of some
of the lowest paid workers in the State."
Mr. Flanagan expressed concern with the expressed intent of the
House Labor and Commerce Committee that this legislation be enacted
immediately to allow processors to implement the deductions in the
current year. He noted the minimum wage increase would not yet be
in effect, and the salary of workers currently earning $5.65 per
hour would be reduced to $4.65 per hour or less.
Mr. Flanagan addressed the competition for employees, surmising
that if the salmon prices increased, the processors would not
discontinue the room and board deductions. He pointed out that as
prices increase, the fishers, processors and the communities earn
more; however, the cannery workers are paid the same low wages.
KRIS NOROSZ, Government Affairs, Icicle Seafoods, testified in
Juneau about the US-owned company founded in Petersburg in 1965.
She supported the bill as it is an extension of "the current tool
that we have" to deduct room and board expenses in non-remote
locations. She pointed out the language is permissive rather than
mandatory.
Ms. Norosz commented on Mr. Flanagan's statement that this bill is
"riding on the backs of the lowest paid worker." She told of her
employment history with the company and the reduced retirement
benefits and bonus payments that are made at the upper management
level first and to entry-level workers last. She spoke about the
position of the chief executive officer that every employee is
important in making the company successful and she noted he began
working for the company in an entry level position.
Ms. Norosz stated the seafood processing industry is competitive
and that it is expensive to replace workers mid-season, therefore
it behooves processors to provide incentives to retain employees
for the entire season.
Co-Chair Kelly asked the average amount workers have earned at end
of a season.
Ms. Norosz responded the amount varies depending on the fishery,
such as salmon or crab.
Co-Chair Kelly asked the example given to potential employees
during recruitment.
Ms. Norosz estimated $5,000.
Co-Chair Kelly asked the length of the season.
Ms. Norosz answered the season in Petersburg begins in June and
concludes the end of August.
Ms. Madson clarified the Department of Labor and Workforce
Development estimates of 13,000 seafood processor workers,
indicates the amount to be approximately $7,000.
Co-Chair Kelly pointed out this is for three months of work and
asserted it is therefore unfair to claim that this legislation is
"doing anything on the backs of the lowest paid workers."
Senator Leman referenced earlier testimony that the cost of the
minimum wage increase would be millions of dollars and that the
impact of this legislation would be millions of dollars. He asked
if this legislation does not pass, whether adjustments would be
made to the price paid to fishers to account for the minimum wage
increase paid to cannery workers.
Ms. Norosz replied, "I guess what I've been trying to point out is
that I don't think there's any more fat to cut." She noted that in
locations where processors are authorized to make room and board
deductions, the amounts deducted do not cover the cost. She pointed
out that minimum wage earners in non-seafood processing jobs
located in Anchorage and other non-remote locations must "still go
home and feed themselves." She predicted it would be difficult for
these workers to provide three to four hot meals of unlimited
choices and amounts of food at a cost of $15 per day.
Senator Leman was equally concerned about fishers seeking a fair
price. He noted that of all reductions made by Icicle Seafoods, the
witness failed to list the reduced prices paid to fishers.
Ms. Norosz responded that adjustments have been made to the prices
paid to fishers and to services provided, including tenders.
Co-Chair Kelly asked if gloves and raingear are provided to seafood
processing workers.
Ms. Norosz answered that Icicle Seafood provides this gear,
although she was unsure about other companies.
Co-Chair Kelly listed the benefits to seafood processing workers
paying $15 for three meals and rent, and receiving gear, whereas
workers in other fields must purchase room, board and gear
themselves.
Co-Chair Kelly expressed intent to address separate legislation
relating to the minimum wage.
Co-Chair Kelly ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 11:16 AM
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