Legislature(2001 - 2002)
03/26/2002 01:35 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 56-MINIMUM WAGE
CHAIRMAN STEVENS announced HB 56 to be up for consideration.
MS. LINDA SYLVESTER, Aide to Representative Kott, sponsor of HB
56, said it increases the minimum wage to a level that will help
insure a minimum standard of living for Alaska's lowest paid
workers. It is an exact duplicate of the initiative petition
language.
What it basically does is effective January 1, 2003, an
employer shall pay each employee not less than $7.15
per hour for work in a pay period as well as each year,
not later than September 30, the minimum wage shall be
adjusted for inflation at 100% of the CPI at Anchorage.
It also includes that if the federal minimum wage
increases and Alaska's minimum wage looses ground
against that, it will always be $1 higher than the
federal minimum wage.
SENATOR TORGERSON said he knew that some other wages were tied to
the minimum wage such as busing contracts and asked what impacts
this would have.
COMMISSIONER ED FLANAGAN, Department of Labor and Workforce
Development, replied that there was discussion of that in the
House and a fiscal note was provided to House Finance. That is
the only wage that is specifically tied to the minimum wage.
There is reference in admin regs to make people salaried if they
become a supervisor in a fast food restaurant, for example,
instead of paying them by the hour and they have to be paid at
least two and half times the minimum wage.
SENATOR TORGERSON asked if the $7 included the $1 addition over
the feds.
COMMISSIONER FLANAGAN replied:
The way it's written now the $7.15 would be the minimum
on January 1. As there are annual adjustments, it would
either be the percent to keep up with inflation or if
the feds happen to make an increase, that dollar over
would end up being a greater amount. That would be the
only time that would enter in. Right now our law is
$.50 over and it has been since 1959. So, this would
create second time. It's an either or, whichever is
greater.
He said the department wholeheartedly supports the bill.
MR. CHIP WAGONER, Alaska Catholic Conference, said that the
Conference is the public policy arm of the Roman Catholic church
in the state of Alaska. At the September 21, 2001 meeting, the
Conference unanimously adopted a resolution in support of the
minimum wage increase and the automatic adjustment provision. He
said the Church supported a minimum wage as early as 1919, nearly
two decades before the federal Fair Labor Standards Act was
adopted. He said the reason for their position is based on their
social teaching.
The first is that we give a preferential option to the
poor and vulnerable. The test in the eyes of the church
of any civilization of a society and of an economy is
how the poor and vulnerable are treated…
A second catholic social teaching that applies to the
minimum wage is the concept of what work is. Work is
more than a job. Work in catholic social thought is a
way to participate with God's creation, a way to
contribute to the common good, a way to promote human
dignity and a way for people to meet their needs and
their community obligations. The church's teachings
promote the concept of what is called a living wage, a
wage which is adequate for workers to provide for
themselves and their families in dignity. This concept
has actually been adopted in over 80 communities
throughout the United States.
Now, a minimum wage that you are debating here
increased to $7.15 is not in Alaska a living wage. In
fact, if a person worked 40 hours a week, 52 weeks per
year, at $7.15, she would earn $14,872, which is below
the poverty threshold for a family of two. So although
an increase in the minimum wage is, as I said, a step
in the right direction, it's a long way before we reach
the living wage concept.
What the minimum wage does is not only helps to provide
for people in need, but it gives them a greater sense
of self esteem and self worth. Who benefits from a
minimum wage increase? These figures are federal
figures, but an increase in the minimum wage
disproportionately benefits women, minorities and the
nation's poor. In 1998, the Economic Policy Institute
study found that households in the bottom 20% of the
income spectrum, who receive only 5% of the total
family income, received 35% of the total benefits of
the last increase in the minimum wage at the federal
level. Of those affected by the last federal minimum
wage increase, 72% were adults and over and more than
half of the teenagers earning minimum wage when that
increased were in households that received below
average incomes. Over 60% of the workers benefiting
from the increase were women. African Americans
represented 11.7% of the total workforce that
benefited, but were 18% of the workers that were
actually benefited by the increase. Hispanic workers
represented 11.3% of the workforce, but were 14.4% of
the workers affected by the increase.
Another issue that has come up is - are jobs lost as
when employers have to lay off people in order to pay
for those who are still with them. The answer to that
question is no. Again, the EPI study failed to find any
systematic significant job loss associated with the
federal 1996 - '97 minimum wage increase. In fact,
economists Dave Card and Adam Kruger, were studying an
analysis of the minimum wage increase in New Jersey on
fast food workers in the early 90s and they found that
employment actually increased.
Also, Robert Solo, the MIT Nobel Laureate, wrote in
1995, that the main thing about the research is that
the evidence of job loss is weak and the fact that the
evidence is weak suggests that the impact to jobs is
small.
Lastly, the issue of school bus drivers has come up. To
my knowledge it's the only occupation that is actually
tied to the minimum wage increase to a minimum wage
statute. I think we need to recognize that we're
talking about two different public policies. The first
public policy with regards to this issue is providing
for the least amount of [indisc] increase in the
minimum wage. That's policy number one. The second
policy is the policy as it relates to school bus
drivers.
1:45 p.m.
MR. WAGONER said he researched the passage of that bill in 1990
and the reason school bus drivers are tied to double the minimum
wage is not to give them an increase in wages, but to establish a
floor for proficiency for school bus drivers because of their
concern about safety.
MR. JOHN WILSON, Outback Steakhouse Restaurant, said that raising
the minimum wage in the restaurant industry would create a 26.5%
increase in wages for anyone in the restaurant industry. "There
is not a business owner that I know of who can absorb an increase
like that without raising prices of their services or their
products…. In the end it's the consumer who gets hurt."
He said that 80% of restaurant workers' wages are for tips and
they already make $15 - $20 per hour depending on the type of
restaurant they are working in.
SENATOR DAVIS asked what figures he based the 26.5% increase.
MR.WILSON replied that minimum wage of $5.65 right now and going
to $7.15 per hour is a 26.5% increase.
SENATOR DAVIS asked if his restaurant paid the $15 - $20.
MR. WILSON replied yes.
SENATOR TORGERSON asked if he would rather have this issue
decided on the ballot, as the petition had been certified, and it
would be on the November ballot.
MR. WILSON replied that he would rather see it on the ballot.
SENATOR DAVIS moved to pass HB 56 from committee with individual
recommendations. There were no objections and it was so ordered.
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