Legislature(2019 - 2020)BELTZ 105 (TSBldg)
02/27/2020 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearings | |
| SB182 | |
| Presentation: Alaska Hire | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 182 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
February 27, 2020
1:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Chair
Senator Gary Stevens, Vice Chair
Senator Elvi Gray-Jackson
MEMBERS ABSENT
Senator Mia Costello
Senator Joshua Revak
COMMITTEE CALENDAR
CONFIRMATION HEARINGS
Alaska State Board of Architects, Engineers, & Land Surveyors
Catherine Fritz - Juneau
- CONFIRMATION ADVANCED
Alaska Workers' Compensation Board
Nancy Shaw - Anchorage
- CONFIRMATION ADVANCED
SENATE BILL NO. 182
"An Act raising the minimum age to purchase, sell, exchange, or
possess tobacco, a product containing nicotine, or an electronic
smoking product; relating to the taxation of electronic smoking
products; and providing for an effective date."
- HEARD AND HELD
PRESENTATION: ALASKA HIRE
- HEARD
PREVIOUS COMMITTEE ACTION
BILL: SB 182
SHORT TITLE: AGE FOR NICOTINE/E-CIG; TAX E-CIG.
SPONSOR(s): SENATOR(s) STEVENS
02/10/20 (S) READ THE FIRST TIME - REFERRALS
02/10/20 (S) L&C, FIN
02/27/20 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
CATHERINE FRITZ, Appointee
Alaska State Board of Architects, Engineers and Land Surveyors
Division of Corporations, Business and Professional Licensing
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified as an appointee to the Alaska
State Board of Architects, Engineers and Land Surveyors.
NANCY SHAW, Appointee
Alaska Workers Compensation Board
Department of Labor and Workforce Development (DOLWD)
Anchorage, Alaska
POSITION STATEMENT: Testified as appointee to the Alaska Workers
Compensation Board.
TIM LAMKIN, Staff
Senator Gary Stevens
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Delivered a presentation and the sectional
analysis for SB 182.
MARGE STONEKING, Executive Director
American Lung Association of Alaska
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 182.
JOE DARNELL, Chief Investigative Officer
Tobacco Youth Education & Enforcement Program
Division of Behavioral Health
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 182.
DAN ROBINSON, Chief
Research & Analysis (R&A)
Division of Administrative Services
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Participated in the presentation on Alaska
Hire.
ROB KREIGER, Economist
Research & Analysis (R&A)
Division of Administrative Services
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Delivered the presentation on Alaska Hire.
ACTION NARRATIVE
1:30:47 PM
CHAIR CLICK BISHOP called the Senate Labor and Commerce Standing
Committee meeting to order at 1:30 p.m. Present at call to order
were Senators Gray-Jackson, Stevens, and Chair Bishop.
^Confirmation Hearings
CONFIRMATION HEARINGS
1:32:15 PM
CHAIR BISHOP announced the first order of business would be
consideration of governor appointees. He asked each appointee to
place their name and affiliation on the record, give a brief
introduction, and discuss the reason they want to serve on the
board or commission. He advised that public testimony would be
taken after all appointees had testified and the names would be
forwarded to the full body for consideration. The hearing was
not a recommendation on any subsequent vote.
1:33:07 PM
CATHERINE FRITZ, Appointee, Alaska State Board of Architects,
Engineers and Land Surveyors, Division of Corporations, Business
and Professional Licensing, Department of Commerce, Community
and Economic Development (DCCED) Juneau, Alaska, stated that her
consideration is a reappointment to a second term. She advised
that she has lived in Alaska since 1983 and has been a
registered architect since 1990. She said she grew up in a blue-
collar family and learned the value of accomplishing things for
oneself and others; that dreaming and problem solving go hand in
hand; and that making a great idea a reality takes compromise
and hard work. She lives by these principles.
MS. FRITZ related that her career in public service provided a
good understanding of statutory and regulatory processes as well
as the role of this board. This has helped her effectively
respond to the business of the board and stay focused on the
board's mission. She said she is able to objectively consider
the regulatory needs of the profession. In the last year she
helped develop the board's Strategic Plan to guide its work and
she would like to continue to work on this and several other
projects if reconfirmed. She said it has been an honor to serve
on the AELS Board and she has demonstrated this by coming to
meetings prepared, engaging in committee work, and being
responsive to the board's business. She noted that she submitted
written testimony.
SENATOR STEVENS asked what has been the hardest part of serving
on this board.
MS. FRITZ replied it is a matter of trying to be understanding
and aware of the different but related disciplines because the
board has to make licensing decisions for 15 types of engineers
as well as land surveyors and architects. In some places there
should be differences and others there should be similarities.
CHAIR BISHOP asked her to comment on her time as adjunct
professor at the university.
MS. FRITZ said she was an adjunct professor for a project
management class at UAS. She found it very fulfilling to take
this aspect of her work and apply it to young students trying to
find their path, not necessarily in architecture.
CHAIR BISHOP asked if she shared her non-textbook, real-world
experience as an architect with her students to help put them
ahead when they enter the work world.
MS. FRITZ said yes; it's nice to give students a small picture
of where they might go in the future.
CHAIR BISHOP thanked her and asked Ms. Shaw to provide her
testimony.
1:39:28 PM
NANCY SHAW, Appointee, Alaska Workers Compensation Board,
Department of Labor and Workforce Development (DOLWD), Labor
Member, Anchorage, Alaska, stated that she has served on the
board [in the labor seat] for two years and was pleased to learn
the governor reappointed her for an additional three years. She
relayed that she was general counsel for the Teamsters Union for
15 years and continues to do a little work for the Teamsters and
Longshoremen in Anchorage. She listed her varied areas of work
to demonstrate that her background relates to workplace issues
across the state. She said her service on the board has provided
an opportunity to look at workplace safety issues from the
perspective of employers who have to assist employees recover
from injuries. She said the learning curve for board members is
very steep and after the training she's received the last two
years she feels she can now serve effectively.
CHAIR BISHOP found no questions and applauded her commitment to
serve.
CHAIR BISHOP stated that in accordance with AS 39.05.080, the
Senate Labor and Commerce Standing Committee reviewed the
following and recommends the appointments be forwarded to a
joint session for consideration:
Alaska State Board of Architects, Engineers, & Land Surveyors
Catherine Fritz - Juneau
Alaska Workers' Compensation Board
Nancy Shaw - Anchorage
Signing the reports regarding appointments to boards and
commissions in no way reflects individual members' approval or
disapproval of the appointees; the nominations are merely
forwarded to the full legislature for confirmation or rejection.
1:42:49 PM
At ease
SB 182-AGE FOR NICOTINE/E-CIG; TAX E-CIG.
1:43:45 PM
CHAIR BISHOP announced the consideration of SENATE BILL NO. 182,
"An Act raising the minimum age to purchase, sell, exchange, or
possess tobacco, a product containing nicotine, or an electronic
smoking product; relating to the taxation of electronic smoking
products; and providing for an effective date."
1:44:09 PM
SENATOR GARY STEVENS, speaking as sponsor of SB 182, stated that
this legislation is about protecting children from becoming
addicted to nicotine by restricting sales and possession of
various tobacco products to young people, including electronic
cigarettes. He said scientific evidence and public health
advocates have helped to put the use of traditional tobacco
products on the decline and tobacco manufacturers are responding
by offering new and more fashionable smoking options related to
e-cigarettes. These are designed to be particularly appealing to
young people. He said the claim that these products are safe is
simply not true and it is therefore important to act quickly to
protect young Alaskans who are being targeted.
1:45:46 PM
TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State
Legislature, Juneau, Alaska, began the presentation on SB 182
with a short video to demonstrate the importance of preventing
youth from accessing e-cigarettes because it is becoming an
epidemic.
MR. LAMKIN advised that the committee will hear that e-
cigarettes are not targeting youth, that e-cigarettes help
people quit smoking, that these products are safe and healthy,
and that taxation will kill the industry. He said he would
refute each claim.
He related that vaping started in the 1940s but it was not seen
as a fashionable form of smoking. The practice was revitalized
in the early 2000s and it entered the U.S. market in early 2007.
The federal government has scrambled to catch up with this
elusive industry since then. These largely unregulated products
contain five known chemicals. He displayed a slide to
demonstrate that these ultra-fine particles that form an aerosol
are inhaled into the lungs. He said it would be difficult to
suggest that they are safe. He noted that the benefits of
ingesting vitamin E have been demonstrated but inhaling it as an
aerosol is very harmful.
MR. LAMKIN said some people argue that the expense of these
products is a barrier to youth access. He refuted that claim by
displaying a depiction of a $50 JUUL starter kit and $4-$5
refillable cartridges. He said these products are advertised
with a multitude of flavorings but it's primarily nicotine that
keeps customers coming back. He displayed a slide showing
vintage advertising of tobacco products alongside current
advertising of vaping products. He pointed out that vapor
product marketing is largely unregulated. The next slides show
different celebrities and young people using e-cigarettes,
including Donny Smokes, a social media celebrity who is alleged
to receive $1,000 per post. He called it a "youth frenzy" as
demonstrated by the social media postings and videos such as "My
First Time Vaping With Friends!" and "BAD IDEA Vaping in front
of my mom for the 1st time." He noted that the latter had more
than 1.5 million views.
1:53:53 PM
MR. LAMKIN displayed a slide showing the wide array of flavors
that are available for vaping and notied that the bill addresses
this aspect of e-cigarettes. The images depicted on this slide
refute the claim that these products are not marketed to youth.
This is one avenue for getting people addicted to nicotine. He
pointed out that these nicotine disguised flavors are completely
unregulated.
MR. LAMKIN said the argument that these products do not have
nicotine and are not addictive is refuted by a 2015 report by
the Food and Drug Administration (FDA). Testing found that over
99 percent of the tested products contained nicotine, even when
labeled nicotine free. The risks of e-cigarettes are not known,
but the FDA has not found that any are safe. They may help
someone stop smoking, but they do not treat the addiction.
Recent research indicates that more than half of adult e-
cigarette users also continue to use traditional cigarettes. He
pointed out that quitting means ending the addiction, not
switching to another method of nicotine delivery.
The 2017 Alaska Youth Risk Behavioral Survey indicates that 13
percent of high school youth currently use tobacco and 16
percent use e-cigarettes while 34 percent have tried tobacco and
40 percent have tried e-cigarettes. He offered his understanding
that the most recent data suggests that the current use of e-
cigarettes has almost doubled, from 16 percent to between 30-35
percent. Those numbers will be published in April.
1:57:00 PM
MR. LAMKIN pointed to the next slide that shows a wide variety
of the e-devices that have been confiscated in Anchorage
schools. He said these devices are in children's hands and they
are aware of the disparity between state and federal law.
Federal law prohibits, without exception, the sale or possession
of e-cigarette products to anyone under the age of 21. SB 182
will bring state law in line with federal law with the exception
of those in the military and in prison. He said the sponsor will
introduce amendments to SB 182 to remove those exceptions to
conform to federal law. State law currently allows those who are
age 19 to buy, sell, or possess cigarette products. He said the
federal government relies on the state for enforcement but the
state's enforcement hands are tied because of the conflict
between the laws. He reiterated that SB 182 will align state law
with the federal law. Furthermore, the bill will tax these
products.
MR. LAMKIN concluded the presentation by showing a picture from
1994 when the CEOs of the major U.S. cigarette manufacturers
swore under oath to Congress that their products were neither
addictive nor harmful to human health. He pointed out that
industry advocates today insist that e-cigarettes are neither
addictive nor harmful. They maintain these products are a safe,
healthy alternative to tobacco and that more time, research, and
data is needed to study their effect on human health. He said
this is a multibillion dollar business and lobbyists are in the
committee room and online right now monitoring the progress of
the bill.
CHAIR BISHOP asked him to go through the sectional analysis.
2:00:16 PM
MR. LAMKIN summarized that SB 182 will bring all statutes
related to buying, selling, or possessing tobacco from a minimum
age of 19 to the age of 21. Further, it will bring all e-
cigarettes under the existing tax code for tobacco.
He paraphrased the sectional analysis for SB 182:
Sec. 1: AS 11.76.100(a), relating to selling or giving
tobacco to a minor, raises the minimum age from 19 to
21.
Sec. 2: AS 11.76.100(b), relating to the requirement
for vendors to supervise the operation of tobacco
product vending machines (TVM), amends the exemption
for TVMs situated in a private break room, provided
there is signage posted indicating the minimum age to
possess tobacco products is age 21 (from 19).
Sec. 3: AS 11.76.100(c), provides an exemption for
selling or giving tobacco products to incarcerated
minors, raising the minimum age from 19 to 21 years of
age.
Sec. 4: AS 11.76.105, relating to possession of
tobacco, electronic smoking products (ESP), or
products containing nicotine, raises the minimum age
to possess from 19 to 21 years of age.
Sec. 5: AS 11.76.106(b), relating to the 'behind the
counter' control provisions of selling tobacco
products, allowing exemptions for tobacco shops or
online sales, raising the minimum, age to sell from 19
to 21 years of age
Sec. 6: AS 11.76.109(a), relating to other products
containing nicotine, including chew, gum, patches, or
E-cigarette products, raises the minimum age to sell
or give such products from 19 to 21.
Sec. 7: AS 11.76.109(b), relating to exemptions to
selling products containing nicotine to persons under
the age of 21, if the product is FDA-approved,
prescribed by a doctor, or given by a parent or legal
guardian.
Sec. 8: AS 11.76.109(d), relating to the requirement
for vendors to supervise the operation of ESP or
nicotine product vending machines (EVM), amends the
exemption for EVMs situated in a private break room,
provided there is signage posted indicating the
minimum age to possess tobacco products is age 21
(from 19).
Sec. 9: AS 11.76.109(g), relating to the penalty for
selling or giving ESP or nicotine products to a minor
as being a violation, raises the minimum age from 19
to 21 years of age.
Sec. 10: AS 43.50.105(b), relating to wholesale
tobacco sales and licensees, to restrict licensees
from selling or transporting tobacco products to
persons that are at least 21 (from 19) years of age.
Sec. 11: AS 43.50.150(c), relating to state being in
partnership with municipalities in taxing tobacco
products, is amended to include taxing ESPs.
Sec. 12: AS 43.50.300, relating to existing state
excise tax on tobacco products, is amended to include
taxing ESPs.
2:04:54 PM
Sec. 13: AS 43.50.310(b) exempts the excise tax for
electronic smoking products that do not contain
nicotine, or those ESPs that are FDA-approved.
MR. LAMKIN noted that there are no FDA-approved electronic
smoking products at this time.
Sec. 14: AS 43.50.320(a), includes a requirement to be
licensed as a distributor of ESPs for those products
subject to an excise tax.
Sec. 15: AS 43.50.330(a), relating to annual reporting
requirements for tax purposes, amends existing tobacco
sales reporting to include ESP reporting.
Sec. 16: AS 43.50.335, relating to existing tobacco
tax credits and refunds for faulty or destroyed
products, to include credits for similarly faulty or
destroyed ESPs.
Sec. 17: AS 43.50.340, relating to existing record
keeping requirements for licensed businesses selling
tobacco products, to also be required to track sales
and product information on ESPs being sold.
Sec. 18: AS 43.50.390(1), relating to the definition
of a distributor of tobacco products, to also include
ESPs, for purposes of identifying business who bring
ESPs in and out of state, manufactures ESPs in the
state, or ships ESPs to retailers in the state.
Sec. 19: AS 43.50.390(5), relating to the term
"wholesale price" for purposes of taxing tobacco
products, includes ESPs as part of wholesale pricing
and taxing.
2:07:00 PM
Sec. 20: AS 43.50.390 provides a definition of
"electronic smoking product" consistent with use of
the phrase elsewhere in statute, specifying an ESP
means a:
(A)component, solution, vapor product, or other
related product that is manufactured and sold for
use in an electronic cigarette, electronic cigar,
electronic cigarillo, electronic pipe, or other
similar device for the purpose of delivering
nicotine or other substances to the person
inhaling;
(B) product under (A) of this paragraph that is
sold as part of a disposable integrated unit
containing a power source and delivery system or
as a kit containing a refillable electronic
smoking system and power source.
Sec. 21: AS 43.70.075(f), relating to business license
endorsements for selling tobacco products, amends the
existing requirement for signage to be posted on
vendor premises, stating it being illegal to sell
tobacco or ESPs to minors under the age of 21 (from
19).
Sec. 22: AS 43.70.075(m), relating to the process for
suspending business licensees holding a tobacco
endorsement, amends existing statute referring to
tobacco or ESPs being sold to minors under the age of
21 (from 19).
Sec. 23: AS 43.70.075(t), relating to penalties for
licensees violating the T21 laws, amends existing
statute for lessening the penalties if a license
holder has a written tobacco or ESPs sales policy to
include employees not selling tobacco or ESPs to
minors under the age of 21 (from 19).
Sec. 24: AS 43.70.075(w), relating to the appeal and
administrative process of license suspension, conforms
existing law regarding tobacco and ESP sales, to apply
to sales to minors under the age of 21 (from 19).
Sec. 25: AS 47.12.030(b), relating to the juvenile
justice system, and minors accused of possessing
tobacco, confirms existing law to apply to possession
by minors under the age of 21 (from 19).
Sec. 26: Applies an effective date of January 1, 2021.
2:08:35 PM
CHAIR BISHOP said he would hold his questions until the next
hearing so there was time to hear from the invited testimony.
2:09:16 PM
MARGE STONEKING, Executive Director, American Lung Association
of Alaska, Anchorage, Alaska, reported that Alaska achieved a 70
percent reduction in cigarette smoking among youth between 1995
and 2013 by following the Centers for Disease Control and
Prevention's (CDC) comprehensive tobacco control program that
includes a strong public media component, cessation systems, a
smoke-free workplace law, and increasing tobacco taxes. E-
cigarettes threaten that progress but raising the minimum sales
age to 21 is a tool to help stem this epidemic. She pointed out
that youth are particularly vulnerable to the impacts of tobacco
use and that the tobacco industry has long targeted this age
group. In fact, big tobacco spends about $17 million a year
marketing their products in Alaska while smoking costs the state
about $438 million annually in healthcare costs, 93 million of
which are Medicaid dollars.
MS. STONEKING said the data shows that 95 percent of current
tobacco or e-cigarette users started using tobacco before age 21
so it's particularly important to prevent teens from starting to
smoke. She described the spending bill that President Trump
signed in December 2019 that raised the legal age for tobacco
products from 18 to 21 as a major accomplishment. It became
effective on the date it was signed and there are no exemptions
anywhere in the U.S. She described the federal Synar Amendment
that requires states to enforce the minimum age laws or risk
losing substance abuse grant funds, and reported that Alaska has
been 95 percent compliant. She said SB 182 updates the statute
to reflect the age requirements in the new federal law and adds
electronic smoking devices to the definition of other tobacco
products so that they are taxed fairly along with all other
tobacco products. She said this will also reduce use by young
people because a ten percent increase at the cash register
reduces consumption among youth by about seven percent.
MS. STONEKING reported that a 2019 statewide poll for the
American Lung Association found that 73 percent of Alaskans who
were polled supported taxing e-cigarettes and vaping devices at
the same, 75 percent of wholesale, rate as cigarettes. She said
this is consistent with the $2 per pack tax on cigarettes so
$3.75 would be added to a $10 pack of Juul cartridges, for
example.
MS. STONEKING said the Alaska 2019 Youth Risk Behavior Survey
results have not been released but the expectation is that it
will show a drastic increase in the prevalence of e-cigarette
and vape usage, which is reflective of the 78 percent national
increase of youth vaping between 2017 and 2018. She said the
American Lung Association and its partners are working with
school districts to update policies and programs to respond to
this increase in youth vaping but the legislature needs to do
its part by passing SB 182.
2:19:10 PM
SENATOR STEVENS expressed appreciation that her testimony
touched on both the age and taxation issues and the idea that
education is necessary for children and adults. He noted his
surprise to learn from students and teachers that parents often
supply their kids with vaping products. He asked her to comment.
MS. STONEKING replied the American Lung Association is also
fighting the battle of misinformation about the safety of these
products and is encouraging parents to educate themselves by
looking at the video at thevapetalk.org.
CHAIR BISHOP suggested she leave her written testimony with the
committee aide.
2:21:03 PM
JOE DARNELL, Chief Investigative Officer, Tobacco Youth
Education & Enforcement Program, Division of Behavioral Health,
Department of Health and Social Services (DHSS), Juneau, Alaska,
said he would touch on what is happening in enforcement. He
explained that the youth enforcement program started in 2003
when underage sale of tobacco to minors was 36 percent. That has
dropped to the 4-6 percent range with education and changes in
the licensing laws.
When vaping became popular, baseline studies showed that
underage use of vaping products over a three year period was 37
percent statewide. When data from Anchorage was viewed
independently, it showed the sell rate of vaping products to
youth was 50 percent. Every other vape shop was blatantly
selling to kids, he said. The numbers started to drop once SB 15
went into effect on January 1, 2019. In Anchorage, sales dropped
from 50 percent to 30 percent.
He said SB 182 would align state law with the new federal law,
which would help both the state and businesses because the laws
conflict and this puts merchants in limbo. He said 95 percent of
the tobacco and e-cigarette vendors want to do the right thing
and follow the law but it's difficult when the laws don't jibe.
MR. DARNESS noted that the ads in convenience store windows now
feature e-cigarettes more frequently than tobacco. He said the
effort to reduce tobacco smoking in youth has been successful
and an equally robust effort is needed for electronic products.
2:24:48 PM
CHAIR BISHOP asked if the youth enforcement program receives any
federal money.
MR. DARNELL replied the program receives money indirectly
through the Tobacco Master Settlement Agreement.
CHAIR BISHOP said he wanted to know if the state would
jeopardize receipt of federal funds if it did not comply with
the new federal law.
2:25:40 PM
SENATOR STEVENS asked Mr. Darnell what happens to youths that
violate this law.
MR. DARNELL explained that the young people who work for the
enforcement program are interns with the state. They receive
several days of training and then visit tobacco/vape shops and
try to purchase product. If the intern is successful in
purchasing tobacco or e-cigarettes, the vender receives a
citation that requires a court appearance and a fine that ranges
from $300 to $500. Any convictions are sent to licensing and
that is used to suspend the tobacco endorsement. On the first
offense the retailer can show seven things they were doing ahead
of time to mitigate their suspension time. There is no
opportunity to mitigate a suspension after the first offense.
2:27:28 PM
CHAIR BISHOP held SB 182 in committee for future consideration.
2:28:09 PM
At ease
^Presentation: Alaska Hire
Presentation: Calculating Zones of Underemployment and Other
Measures Used in Alaska Employment Preference Determinations
2:29:16 PM
CHAIR BISHOP reconvened the meeting and announced the last order
of business would be a presentation on Alaska Hire by the
Research and Analysis Section of DOLWD.
2:29:39 PM
DAN ROBINSON, Chief, Research & Analysis (R&A), Division of
Administrative Services, Department of Labor and Workforce
Development (DOLWD), Juneau, Alaska, introduced himself and
advised that Mr. Kreiger would talk about the detailed
computations that are done in support of Alaska statutes and
regulations that historically have been used to grant
preferential hire for Alaska residents.
He noted that the role of R&A is primarily computational and
does not change with different administrations. Among other
things, they produce an annual report on nonresident workers in
Alaska that has specifics by industry and occupation which may
be relevant to the discussion today.
MR. ROBINSON said R&A's role in the process of determining a
zone of underemployment is to demonstrate the need by showing
that parts of Alaska have a higher unemployment rate than the
nation and that Alaska has an available supply of trained
workers if a preferential determination is made by the
commissioner.
2:31:32 PM
ROB KREIGER, Economist, Research & Analysis (R&A), Division of
Administrative Services, Department of Labor and Workforce
Development (DOLWD), Juneau, Alaska, stated that he has been
with Research & Analysis (R&A) for almost 20 years and has
worked specifically on the resident hire process since 2013.
MR. KREIGER stated that R&A was asked to provide details on how
zones of underemployment are calculated. Their role is limited
to running an established series of calculations every other
fiscal year. The commissioner uses these calculations to
determine zones of underemployment and which occupations qualify
for resident hire preference.
He displayed slide 3 that lists the relevant statutes and
regulations. He noted that the committee heard a detailed
discussion of Title 36 during the last hearing. He noted that AS
36.10.150 is specific to resident hire determinations. It gives
the commissioner of labor broad discretion in determining a zone
of underemployment. Regulations specifically called out in the
statute include:
• 8 AAC 30.064 - Hiring preference for residents of zone of
underemployment, which gives guidance on the numbers used
in the calculations and provides some examples of how to
run the calculations
• 8 AAC 30.068 - Determination that lack of employment
opportunities has substantially contributed to serious
social or economic problems. This must be taken into
consideration in the process but is not something that R&A
provides as a number. Past public testimony and other
published works have established a link between high
unemployment and social & economic problems and are
generally used in consideration of this regulation.
• 8 AAC 30.069 Determination of peculiar source of
unemployment is often referred to as the percent of
nonresident. It provides R&A with more specifics when
calculating the numbers.
2:34:21 PM
MR. KREIGER explained that R&A uses two main calculations. The
first is the zone of underemployment, which refers to the
geographic area for which resident hire preference applies. For
this purpose, the term refers to workers in a particular zone
that have the skill to do a job if work was available. The data
used to calculate the zone of underemployment are the Alaska and
U.S. average seasonally adjusted unemployment rates for the most
recent 12-month period. The rates of unemployment are compared
to see whether Alaska's rate was higher or lower than the U.S.
as a whole. If Alaska's rate was 10 percent higher, the
commissioner generally deems the entire state a zone of
underemployment.
MR. KREIGER displayed the calculation example on slide 6:
• For the 2019 determinations, unemployment rates were 6.8
percent for Alaska and 3.8 percent for the U.S.
• Alaska's unemployment rate was about 79 percent higher than
the U.S. rate. That is well above the 10 percent threshold
for the commissioner to declare a statewide zone of
underemployment.
The actual math calculations are as follows:
• 6.8 3.8 = 3.0 percent
• (3.0 / 3.8 ) * 100 = 78.9 percent above the U.S. rate
He noted that if the rate was 10 percent or lower, the
initial test would not qualify and the commissioner would
have the discretion to look at other methods.
MR. KREIGER said the second calculation R&A uses involves the
occupations within the zone of underemployment that qualify for
resident hire preference. This calculation looks at 23
occupations and applies formulas using internal data sets to
determine which occupations do and which do not qualify for
resident hire preference. The same occupations have been
evaluated for at least 25 years and were probably derived from
Davis Bacon regulations regarding prevailing wages on federal
and state construction projects. He noted that the occupations,
listed on slide 7, vary in skill level from highly skilled craft
occupations to culinary workers.
2:39:05 PM
MR. KREIGER explained that for an occupation to be eligible
for resident hire employment preference, all three of the
following criteria must be met:
• Nonresident percentage in the occupation is over 10
percent
• Percent of total residents in that occupation who are
unemployed is over 10 percent
• Percent of unemployed residents with experience in
that occupation relative to its total workers is over
10 percent
MR. KREIGER explained that slide 9 is an excerpt of the
actual table for employment preference determinations for a
zone of underemployment. The example shows just carpenters
and engineers & architects but the actual table lists all
23 occupations. Column 1 is the total resident workers
identified in the particular occupation; column 2 is the
total nonresident workers in the occupation; column 3 is
the percent nonresident workers in the occupation; column 4
is the number of resident workers identified as unemployed
or looking for work in the occupation; column 5 is the
percent of unemployed residents in the occupation; and
column 6 is the percent of available unemployed residents
relative to total workers in the particular occupation. For
an occupation to qualify for resident hire preference,
columns 3, 5, and 6 must be over 10 percent. He noted that
in this example, all the criteria for carpenters are met so
the occupation qualifies. In the case of engineers and
Architects, column 3 qualifies but columns 5 and 6 do not.
He said he selected these occupations because they have
similar numbers of total workers and similar numbers of
percent nonresident but the number of workers identified as
available or looking for work in the occupation is much
less for engineers and architects. As a general rule, there
are fewer people with architect and engineering skills than
people with carpenter skills.
MR. KREIGER described the four primary sources of data used
in the occupational calculations:
• Wage records used to calculate workers by occupation
These records are derived from reports from employers who
participate in the unemployment insurance program and file every
quarter. For every worker who earned wages, the employer reports
the occupation, which borough or census area the person worked,
and the total wage they earned. From this information, R&A is
able to identify the people working in each of the 23
occupations. He noted that information is entered into columns 1
and 2 of the table described in slide 9.
• Permanent Fund Dividend applications used to
calculate Alaska residency columns 1 and 2
Someone who applies for a Permanent Fund Dividend in either
of the two most recent years is considered a resident for
the purpose of this analysis.
• Claims for unemployment insurance used to determine
number of unemployed workers available for work This
gets information for column 4
R&A looks at the work history of people who have active
claims for unemployment insurance to see if the work is in
an area related to the 23 occupations listed on slide 7. If
the person has work experience in the previous quarter but
happens to be collecting unemployment insurance in the
quarter under analysis and they are a resident, the
information goes into column 4. That is the supply of
unemployed residents available for work.
• Active resumes and work history in ALEXsys Used to
identify workers looking for work in particular
occupations
In addition to the people who have a work history in
ALEXsys and are actively looking for work in any of the 23
occupations, R&A also does general work searches for those
occupations and adds the information to the unemployment
insurance claims.
Cleanup and checking is done to ensure that people aren't
counted more than once and the result is two unique
datasets that are used for analysis.
2:44:42 PM
CHAIR BISHOP asked for a description of ALEXsys.
MR. KREIGER explained that it is an online job-seeker
resource that allows someone to set up an account, create a
resume, search for jobs, apply for jobs, and receive labor
market information for a certain area.
2:45:48 PM
MR. ROBINSON added that the broad purpose is to identify
the supply of workers who are qualified and looking for
work in the relevant occupation.
MR. KREIGER said what isn't known is the percentage of the
total people looking for jobs who actually use ALEXsys. He
said we suspect it is probably a fraction of the total
people looking for work so the numbers R&A uses are
probably conservative.
CHAIR BISHOP suggested the committee go to the Job Service
to see how ALEXsys works. He described it as a
comprehensive tool.
MR. KREIGER said the math that R&A uses is not complicated
but the hard part is how to combine the data sources to
come up with the numbers in a consistent and defensible
way.
2:47:32 PM
SENATOR GRAY-JACKSON said she assumes the two occupations
shown on slide 9 are just a sample.
MR. KREIGER said that's correct. The calculations are run
for each of the 23 occupations. He noted that the chart on
slide 9 shows the actual data for those two occupations for
the most recent quarter, which is always the third quarter.
2:49:04 PM
CHAIR BISHOP thanked the presenters and reiterated that
Research & Analysis is one of the best assets the
Department of Labor and Workforce Development (DOLWD) has.
He said, "I'll put them up against any research and
analysis department in any state in the union."
2:50:32 PM
There being no further business to come before the
committee, Chair Bishop adjourned the Senate Labor and
Commerce Standing Committee meeting at 2:50 p.m.