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