Legislature(2003 - 2004)
05/01/2003 03:14 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 199
"An Act removing the annual adjustment to the minimum
wage based on the rate of inflation; and providing for
an effective date."
REPRESENTATIVE NORMAN ROKEBERG, SPONSOR, provided
information regarding the legislation. He discussed the
history and methodology behind the bill, which tied the
minimum wage to the consumer price index (CPI) and/or one
dollar above federal standard. He suggested that an annual
increase in the minimum wage would have an inflationary
impact on the State's economy. He speculated that the
increases affected potential employers and would increased
unemployment. He noted competing theories regarding
minimum wage legislation. He noted that one point of view
indicated that legislative action created negative impacts,
but that the other side stated that increase in income had
a positive impact on lower income workers. He stated that
he adhered to the belief that the impact of increases were
negative, and quoted research by the Ohio University,
analyzing law in Washington State. Representative Rokeberg
stressed that the bill would not cut the minimum wage and
emphasized that Alaska's $7.15 per hour minimum wage was
the highest in the country. He questioned whether
businesses could afford an increase and suggested that the
largest provider of jobs in this sector was the hospitality
industry. He stated that the industry had been hit with a
27 percent increase. He maintained that this sent the
message the Alaska was not "open for business".
BENJAMIN BROWN, ALASKA STATE CHAMBER OF COMMERCE testified
in support of the bill. He acknowledged the debate
engendered by the legislation. He suggested de-indexing
the Alaska minimum wage from the national index. He
discussed economic theories, such as the "invisible hand"
theory. He maintained that the "invisible hand" became
visible when the minimum wage increase was implemented with
a tie to the CPI index. He explained that employers were
forced to pay the amount specified by the state. He stated
that the bill did not reduce minimum wage, but created a
system of automatically deciding the proper minimum wage,
rather than allowing future debate based on the economy
needs. He also noted that some believe that using the
consumer price index created an artificial inflation in the
economy. He added that there was a suggestion that the
legislature was aggregating an earlier decision by de-
indexing the minimum wage, and suggested that there was no
legal implication against the State in this regard.
CHIP WAGONER, ALASKA CATHOLIC CONFERENCE testified in
opposition to the bill and expressed the Church's support
of the minimum wage. He discussed the concept of a "living
wage" to support individuals with dignity. He pointed out
that the current minimum wage still placed individuals
below the poverty level. He discussed the two public
policy issues when evaluating the minimum wage. He first
emphasized that the legislature should determine a floor
below which the legislature believed was an unjust wage.
Once a just minimum wage is determined by the legislature
then it should remain constant with the economy in terms of
inflation because below that minimum wage it becomes
unjust. The second public issue is economics. He suggested
that the main arguments against indexing dealt with the
cost of jobs. He urged the Committee to carefully examine
the source of information in this area. He noted that
professionals in this area could create information to
support their viewpoints. He suggested that the Employment
Policies Institute was historically against the minimum
wage, and the Economic Institute was historically for the
minimum wage. He discussed information from the state of
Alaska. He noted that according to Department of Labor and
Workforce Development there are only 14,000 people in
Alaska earning the minimum wage. He argued that 14,000
people earning minimum wage would not create an
inflationary spiral that would affect the entire state of
Alaska. Of these 14,000, about a third were in the food
service/drinking industry. He noted that these industries
were those against the minimum wage increase. He argued
that if there were going to be a loss of jobs that it would
have occurred between December and January [2003] when
there was a $1.5 overnight increase in minimum wage. He
acknowledged that there was a six percent drop in
employment, but pointed out that the drop could be
attributed to the seasonal drop, which occurred at the same
time in the previous year. He stated that a similar
situation occurred in Washington State. He quoted the
state of Washington concluded that: "There does not appear
to be a direct correlation between the index minimum wage
and the number of jobs in the food service/drinking places
industry." He concluded that a the raise in minimum wage
was only one factor among many in terms of job loss and the
numbers don't prove that there has been a job loss in the
food service/drinking places industry.
DON ETHERIDGE, AFL-CIO testified on behalf of his 60,000
members in opposition to the bill. He noted that his
organization petitioned to achieve an increase in minimum
wage. He pointed out that the subsequent increase finally
raised Alaska's rank from being the lowest on the west
coast. He suggested that the first CPI increase should be
observed before repealing it. He noted that the first
increase would be a 14-cent increase that should not impact
businesses.
KAREN RUGINA, ALASKA HOSPITALITY ALLIANCE testified in
support of the bill. She provided information of losses
experienced by restaurants and hotels due to increases in
wages, and explained that hotels and restaurants operated
on a narrow margin. She suggested that the increase, in
combination with an increase in insurance and decrease in
customers. She suggested that benefits were being cut.
She gave examples of businesses that had decided not to
come to Alaska due to the increase in minimum wage. She
noted a natural CPI indexing occurred in the business with
an increase in menu prices. She concluded that this added
more uncertainty to an already uncertain climate.
JAY SUTHERLAND, ANCHORAGE, testified via teleconference in
support of the bill. He stated that he is a restaurant
operator and noted that his business had been forced to lay
off employees and suggested that there would be fewer
future jobs for youth. He noted that the CPI was suggested
in Washington State, and referred to its effects on the
industry. He maintained that businesses invested in other
states to avoid this restriction.
JOHN BROWN, PRESIDENT, LABOR COUNCIL, FAIRBANKS, testified
via teleconference in opposition to the bill. He noted
that 50 thousand people signed a petition supporting CPI
indexing, and maintained that legislators had also voted to
support it. He suggested that workers needed a fair wage
and that if wages were not guaranteed it would negatively
affect the economy. He maintained that all businesses
competed on an equal basis.
JACK LEWIS, SOUR MINING COMPANY, ANCHORAGE, testified via
teleconference in support of the bill. He stressed that
the last increase was sizable and that, for the first time
ever, he was not able to pass along the increases in menu
prices. He referenced the liquor tax in addition to the
minimum wage increase. He noted the need to decrease
benefit programs in order to accommodate increases. He
stated that he did not support an automatic increase or the
legislature suggesting appropriate levels. He expressed
concern over the increase since customers were already
eating out less.
Co-Chair Harris requested that the Department of Labor and
Workforce Development should produce an additional fiscal
note.
HB 199 was heard and HELD in Committee for further
consideration.
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