Legislature(2007 - 2008)BELTZ 211
01/31/2008 02:00 PM Senate LABOR & COMMERCE
Audio | Topic |
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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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