Legislature(2009 - 2010)BELTZ 211
02/12/2009 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB1 | |
| SB23 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 1 | TELECONFERENCED | |
| *+ | SB 23 | TELECONFERENCED | |
SB 1-ALASKA MINIMUM WAGE
1:36:53 PM
CHAIR PASKVAN announced SB 1 to be up for consideration.
SENATOR WIELECHOWSKI, sponsor of SB 1, said he would talk about
issues brought up in the last Labor and Commerce meeting. He
said a question was raised about the impact of increasing the
minimum wage on small business owners and business in general.
This question was posed last year in this committee when the
minimum wage bill discussed. An expert testified at that time by
the name of Dr. Paul Wolfson of Dartmouth College, and he
described a study by David Card from the University of
California Berkley and Alan Kruger of Princeton University that
examined fast food restaurants on either side of the
Pennsylvania/New Jersey border, comparing employment before and
after a minimum wage increase in New Jersey. That study found no
evidence that employment in New Jersey declined after the
increase.
SENATOR WIELECHOWSKI said that Dr. Wolfson also quoted Robert
Solow, an MIT economist and Nobel Prize winner, who did similar
research and concluded that the evidence of job loss is weak and
that suggests that at the most job loss is small. Dr. Wolfson
also talked about the work of Dr. Alan Blinder, a Princeton
economist and former vice president of the Federal Reserve
System, who after much study, stated "What's changed in the last
10 to 15 years is an accumulation of evidence that the
employment problem is not very significant."
1:40:17 PM
SENATOR BUNDE said he mentioned that one report said poverty
levels fell after the increase in minimum wage and asked if this
bill passes and the minimum wage become $8.74, would that bring
Alaskan people above poverty level.
SENATOR WIELECHOWSKI answered yes; poverty level for a single
person is roughly $14,000/yr.; this will increase that wage by
roughly $1500/yr. or $2000/yr.
CHAIR PASKVAN said there are three components to this bill: the
rate, the cost of living allowance, and whether or not there is
a tip credit provision.
1:41:39 PM
SENATOR WIELECHOWSKI explained that historically Alaska has
always had a higher minimum wage than the federal minimum wage
by about 0.50 cents. Prior to 2003, we were at 0.50 cents or
$1.00 above minimum wage. In July Alaska will be below the
federal minimum wage for the first time in the state's history
th
and we'll be 40 in the nation. This is one of the reasons he
felt strongly about having some sort of an index that at least
keeps us in line with the federal minimum wage. When this was
discussed in 2003, Alaska's minimum wage was increased from
about $5.00 to $7.15, and we were several dollars above the
federal minimum wage. And it had little impact on jobs.
On the cost of living allowance, Senator Wielechowski said the
problem we have is that costs for everyone increase every year,
particularly for low income Alaskans, and we know since 2003
costs have increased dramatically for fuel and food. If the cost
of living allowance adjustment been kept in, we would be at
$8.78 next year, and he wouldn't be here today. Now in going to
$8.78 people are saying that's too big of a jump. "And so, you
are never able to keep pace with inflation with that circular
argument."
1:44:01 PM
SENATOR WIELECHOWSKI said he didn't support the tip credit. "I
don't support taking wages out of the pockets of hard working
tip earners. It's not something I philosophically support; it's
not something that is found in many of the west coast states,
for instance." Washington, which next year will have a minimum
wage at $8.78, does not have a tip credit and neither does
Oregon.
1:44:43 PM
SENATOR MEYER asked if most states have a tip credit.
SENATOR WIELECHOWSKI replied yes.
SENATOR MEYER asked if the federal minimum wage is tied to an
index.
SENATOR WIELECHOWSKI answered no; the federal minimum wage has a
stair-step approach to the point where in July it will be $7.25.
1:46:18 PM
MARIE DARLIN, Coordinator, AARP Capital City Task Force,
supported SB 1. She pointed out that Alaska's cost of living is
the highest in the nation and it's becoming increasingly
difficult to get by on the minimum wage. Seniors are having to
go back in to these minimum wage positions, and that is another
reason to support higher wages.
1:48:38 PM
JACK AMON, owner, Marx Brother's Café and Marx Brother's
Catering, had serious concerns about how SB 1 would affect
restaurants. While the intentions behind SB 1 are good, the
benefit would accrue only to the highest paid employees because
they are the servers and already make at least $20/hr. in tips.
While the perception is that a minimum wage increase would help
back-of-the house employees such as dishwashers, the opposite is
true. Hourly rates are not their main source of income; what
shifts they work are. It's more important than how long they
work.
MR. AMON said he felt there is a lack of understanding of tipped
income. The federal government has included a tip credit since
the enactment of the Fair Labor Standards Act. It is required to
be reported and is subject to matching FICA and ESC
contributions. One-third of his taxable wage base is from tipped
income. Nationally, restaurants net between 7-9 percent of gross
sales; labor is a more significant expense comprising an average
of 20-30 percent of gross sales. The impact of this legislation
will be disproportionately borne by the restaurant industry, and
"Saying the increased costs can be passed on to consumers is a
fallacy. In these uncertain and troubling economic times, dining
out is considered a luxury and increasing prices can directly
lead to declines in business."
1:51:24 PM
CHAIR PASKVAN asked if one-third of his income base is from
declared tipped income, where the $7.15 fits in.
MR. AMON replied that $7.15 is the wage he pays, but he is also
required to pay matching taxes on his employee's tips. "It often
happens that the tipped income is so great that employees
generate a negative paycheck." Most servers make three times as
much in tips as their minimum paid wage of $7.15.
1:53:51 PM
DAVE LAMBERT, Fairbanks, said he contracts with nonprofits to
raise money for them. The maximum price he can charge per item
is fixed by state law; so he cannot raise prices. His employees
survive on tips; he has employees at minimum wage who claim they
make $80,000/yr. There needs to be some way to credit for tips;
39 states have a tip allowance. He said he would like his job to
be guaranteed inflation-proofed, too, and if they do that, they
would do it for all state contracts, too.
1:55:32 PM
BOB CARL, Wasilla restaurant owner, said he employs 27 people.
He has been hammered this past year by raising costs - a 30
percent increase in freight costs and utility expenses going
through the roof - and he didn't know how he could bear an
increase in labor costs. Eighty percent of his employees still
live at home. You are not supposed to be able to live on the
minimum wage; it is a learning wage. "Somebody's got to teach
kids how to get into the workforce....accountability,
responsibility, how to report to a job." People get moved up as
they become more proficient. A lot of these jobs are not
intended to be career jobs; his industry can't pass the costs on
and he has already absorbed other costs. He will likely
eliminate 5-7 jobs if this passes. But if this ultimately drives
him out of business, all 27 jobs will be lost.
1:59:22 PM
BRUCE BURNETT, owner, T.G.I. Friday's Restaurant, Wasilla,
supported having a tip credit. He said it is misconstrued that
Alaska has the highest cost of living; at least Hawaii and San
Francisco are higher; also, 46 other states have tip credits.
Fuel costs went up 30 percent last year and he is already
working on a small margin. This bill would cost him 2 percent of
his bottom line, and he would have to let one manager and others
go if SB 1 passes.
2:02:35 PM
CHAIR PASKVAN asked what he has in mind in terms of tip credit.
MR. BURNETT answered that Texas and Florida have a minimum wage
of $2.13 for tipped employees and he would suggest starting with
that. They should at least freeze wages where they are for the
hospitality industry.
2:03:17 PM
GLORIA BURCELL, restaurant owner, Fairbanks, opposed SB 1. She
said the wait staff are the only employees who make minimum wage
and they are the highest paid in her establishment. It was
already hard enough to get through the winter and she would have
to cut jobs; there isn't any other way to make it.
2:05:04 PM
TAMMY GRIFFIN, Chair, Alaska Hotel and Lodging Association, said
she is the director of operations for a hotel management
company. She is a life-long Alaskan, and when she first started
out in the industry she lived on tips, alone; she didn't get a
paycheck.
MS. GRIFFIN looked at the Wage and Hour Division of the U.S.
Department of Labor website that indicate on January 1, 2009
forty-three states offered a definition of tipped employees and
a minimum dollar amount they can make so that no tipped employee
would ever go below a minimum wage. Most states have specified
$20/hr.-$30/hr. The 2007 Wage Watch Survey sponsored by the
Alaska Hotel Alliance indicated there are literally zero job
classifications within the hotel industry that are at or even
close to minimum wage other than tipped employees who are often
the highest paid.
2:08:42 PM
DALE FOX, President and CEO, Alaska Cabarets Hotel, Restaurants
and Retailer Association (CHARR), opposed SB 1. There is a
national crisis out there, he said, and some people feel it has
passed Alaska by. But he cited how all tourism bookings are down
and said that retail sales are down to the lowest in years.
Unemployment is the highest in five years and restaurants are
seeing their seventh consecutive month of declines. Revenues are
down significantly and expenses are up. He said most minimum
wage earners in Alaska are tipped employees or young people who
are growing job skills. He has heard from members that an
average wait person in a restaurant earns $40,000-$60,000/yr. in
tips alone. He asked them to consider inserting tip credits into
SB 1.
2:12:13 PM
LARRY HACKENMILLER, National Federation of Independent Business
(NFIB), said he is also a small business man. He opposed SB 1.
He said he couldn't understand why in this particular bill, the
sponsors are so against tipping credit, but they are using the
poverty level as their argument to increase the minimum wage.
Economists made these statements in 2006 and they are probably
the same ones who have been at the helm for the last three
years; so he wouldn't put a lot of credit in that. He also
stated that the consumer price index (CPI) is inflationary, and
he didn't know why the minimum wage had to be connected to it.
He would have to pay more Workers' Compensation (CPI) because
that is based on gross salaries, along with more federal and
state taxes. The only reason this came up is because the
sponsors wanted to attach the CPI to the minimum wage years ago.
When it comes to poverty level, you aren't dealing with the 7
percent that they say makes the minimum wage or less. Those
economists are dealing with the 93 percent of workers who make
good money and they have no idea of how to run a small business.
2:15:01 PM
CHAIR PASKVAN ended public testimony and encouraged letters and
email on SB 1; he then held SB 1 for further work.
2:15:32 PM
CHAIR PASKVAN called an at ease at 2:15.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB01 - Alaska Minimum Wage - Bill Packet.pdf |
SL&C 2/5/2009 1:30:00 PM SL&C 2/12/2009 1:30:00 PM SL&C 2/17/2009 1:30:00 PM SL&C 2/24/2009 1:30:00 PM |
SB 1 |
| SB23 - Restore Defined Benefit - Bill Packet.pdf |
SL&C 2/12/2009 1:30:00 PM SL&C 2/19/2009 1:30:00 PM SL&C 2/26/2009 1:30:00 PM |
SB 23 |