Legislature(2007 - 2008)BELTZ 211
01/31/2008 02:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Achia Update | |
| HB226 | |
| SB153 | |
| SB187 | |
| SB197 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 153 | TELECONFERENCED | |
| *+ | SB 187 | TELECONFERENCED | |
| *+ | SB 197 | TELECONFERENCED | |
| + | HB 226 | TELECONFERENCED | |
SB 187-ALASKA MINIMUM WAGE
2:57:50 PM
CHAIR ELLIS announced SB 187 to be up for consideration.
2:58:03 PM at ease 2:58:44 PM
SENATOR WIELECHOWSKI, sponsor of SB 187, said Alaska's cost of
living is one of the highest in the nation. The cost of food,
housing, utilities, transportation and health care are far
greater here than in most states. Despite this, Alaska has the
lowest minimum wage on the west coast. Oregon, Washington,
California and Hawaii all have higher minimum wages, as do seven
other states. In addition, in 2009 the federal minimum wage will
increase to $7.25, surpassing Alaska's rate of $7.15.
SB 187 will increase Alaska's minimum wage from $7.15/hour to
$8/hour in 2009 and adjust it annually for inflation. If
Alaska's minimum wage, last raised in 2003, were to have kept
pace with the rate of inflation, it would be more than $8/hour
today. At least 10 states adjust their minimum wage annually for
inflation, including Arizona, Colorado, Montana, Nevada, Ohio,
Oregon, Washington and Wisconsin.
In 2009, federal minimum wage will increase to $7.25/hour
surpassing Alaska's, the first time since statehood that Alaska
minimum wage will be below the federal minimum wage. Since 1962
until 2003, Alaska's minimum wage was required by statute to be
at least $.50 above the federal level in recognition of our
higher cost of living.
3:00:01 PM
About 14,000 Alaskans (or almost 5 percent of the workforce)
earn the minimum wage, most are in accommodation and retail
services as well as food service, education services and
manufacturing. A full time worker that makes the minimum wage
earns less than $14,000/year - barely above poverty level and
$3,000 below poverty level for a family of two. Twenty-five
percent of those who earn between $7.15 and $8/hour are parents.
Many are the sole wage earners in their household. About 58
percent of minimum wage earners are adults, the average age
being 38. So, statistics don't support the often-heard statement
that minimum wage is for teenagers.
3:02:14 PM
SENATOR WIELECHOWSKI explained that Alaska law currently exempts
employees under 18 years of age who are working 30 hours or less
per week from the state's minimum wage. New economic studies
show little to no impact on small businesses regarding minimum
wage. Recently, over 650 economists including 5 Nobel Prize
winners and 6 past presidents of the American Economic
Association signed a statement stating that the federal and
state minimum wage increases can significantly improve the lives
of low income workers and their families without the adverse
effects that critics have claimed.
He mentioned that Senator Joe Thomas is a co-sponsor.
3:03:22 PM
VINCE BELTRAMI, President, AFL-CIO, supported SB 187. He said it
seeks to restore the annual inflation-proofing and bring the
minimum wage up to $8/hour or $1 dollar over the federal minimum
wage, whichever is greater. He added that other states, Oregon
and Washington being the closest examples, have minimum wages
over $8/hour and have an inflation adjuster equal to the
consumer price index (CPI). Washington voters approved that by a
2:1 margin, but before that in 1998 when Washington had the
increase on the ballot, a lot of corporate lobbying groups
warned of catastrophic consequences if an indexed minimum wage
were passed. Greg Weeks, Director, Washington Employment
Security Department, said that the Washington State economy
right now is a job engine drawing people from the sidelines and
into the job market. Job growth reports showed Washington
outpacing the nation with a 3.5 percent gain over the previous
year. Since Washington began regularly increasing the minimum
wage in 1999 employment in sectors that traditionally pay at or
near minimum wage have posted sustained job growth. For example,
eating and drinking establishments, the ones that often times
are worried about these types of increases, have added jobs
every single year in the state even after the post 911 recession
began. The state increased 10.1 percent in the restaurant and
bar employment, and overall non farm employment increased by 7.9
percent.
He said another study in 1998 failed to find any systematic
significant job loss associated with the 1996/97 federal
increase of $.90/hour, which amounted to more than 21 percent. A
recent fiscal policy institute study of state minimum wages
found no evidence of negative employment effects on small
businesses as a result of increases in the minimum wage.
3:07:07 PM
In Anchorage, since 2003 when Alaska's minimum wage was
increased to $7.50/hour the cost of living has gone up more than
15 percent. So the lowest of the state's wage earners are
loosing ground. Had the legislature left the inflation-proofing
in in 2003, we would be at $8.50/hour and at that rate a full
time worker would have an annual income of about $16,600, about
$1,000 below the federal poverty level. He said inflation
adjustments would make labor costs predictable for employers,
help to get more Alaskans closer to being off of the poverty
rolls and would increase the amount of money circulating in our
economy, which should stimulate our consumer markets. "It's very
clear that increases to minimum wage won't hurt our economy, but
in fact will help it," he concluded.
3:07:35 PM
SENATOR JOE THOMAS, co-sponsor of SB 187, added the current
minimum wage creates a net income of $13,068/year or $1089/month
and the basics of living every month puts an average family of
three in the hole by about $740/month. This obviously
contributes to the situation where somebody else is somehow
supporting those folks, and that needs to be taken into
consideration in looking at the impact. Making people more self
sufficient takes less money from the welfare agencies, he
emphasized.
CHAIR ELLIS noted that Grey Mitchell, Director, Division of
Labor Standards and Safety, Department of Labor and Workforce
Development (DOLWD), was available to answer questions.
3:09:27 PM
PAT LUBY, Advocacy Director, AARP, supported SB 187 and said a
living wage should be their target, not just the minimum wage.
Each year Alaska has an increase in older workers. Many of them
want to work and draw salaries. A second significant group is
retirees who find that inflation increases in health and
utilities or the loss of a spouse force them back into the
workplace. This trend will likely increase in the future and
many of these retirees can only find jobs at the minimum wage.
He said the new federal government's poverty level for a single
person in Alaska is $13,000. None of these folks are getting
rich, he said; they are only going to get by and he supported
helping them.
3:10:52 PM
PAUL WOLFSON, Tuck School of Business, Dartmouth College, New
Hampshire, said he received a PhD in Economics from Yale in 1989
and he had been employed in many good positions. Michelle
Sydeman [staff to Senator Wielechowski] asked if he would
testify on the minimum wage. He said he had published three
papers on the minimum wage. While he hadn't had a chance to look
at specific data for Alaska, he wanted to talk about the
economic profession's view of the current minimum wage.
He said before 1990, almost all economists would have agreed
that the minimum wage would reduce employment, but in the last
20 years a great deal of research has indicated that might not
be correct. The most prominent research, by David Card and Allen
Kruger (professors at Berkeley and Princeton), examined fast
food restaurants on the Pennsylvania/New Jersey border and
compared employment before and after the minimum wage increased
in New Jersey. They found no evidence the employment in New
Jersey responded badly to the minimum wage increases there. More
recently similar work has been published by three economists at
Berkeley; one looked at restaurants in San Francisco in 2004
when it imposed a minimum wage of $8.50 and compared them to
restaurants elsewhere in the Bay area. Even though their
estimate was more precise, they weren't able to detect an effect
that was different than zero.
In another study, the same three authors, instead of looking at
restaurants in the same area, looked around the country and
noticed a number of counties that were adjacent to each other,
but in neighboring states. One of those states at one time
raised the minimum wage while the other one did not. So they
looked at what happened to employment in those neighboring
counties, but they, too, were not able to find any effect of the
minimum wage on employment. However, they were able to explain
how other people found raising the minimum wage defective and
their explanation was that they were able to control for trends
in the regional economy that other people weren't able to
because they didn't have the same data structure.
MR. WOLFSON concluded that it is fair to say that the economic
profession no longer has a consensus view; economists can be
found on both sides of the issue, which is quite surprising.
Opponents of the two increases in the federal minimum wage that
occurred in 1996 and 1997 predicted massive job losses, but
instead the employments rates of the least advantaged workers
soared to unprecedented levels.
3:16:09 PM
SENATOR BUNDE said he would like to know where Alaska ranks for
cost of living and how many people in Alaska are calculated to
work at minimum wage and if they are one or two-earner families.
He also wanted Mr. Wolfson to explain his suggestion that
raising the minimum wage expanded jobs and if that encouraged
people to stay at that level rather than to move on. Often
minimum wage jobs are considered a starter job and you move on.
SB 187 was held for further work.
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