Legislature(2013 - 2014)HOUSE FINANCE 519
03/29/2014 01:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| Initiative: an Act Increasing the Alaska Minimum Wage | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
JOINT MEETING
SENATE JUDICIARY STANDING COMMITTEE
HOUSE JUDICIARY STANDING COMMITTEE
March 29, 2014
1:32 p.m.
MEMBERS PRESENT
SENATE JUDICIARY
Senator John Coghill, Chair
HOUSE JUDICIARY
Representative Wes Keller, Chair
Representative Bob Lynn, Vice Chair
Representative Lance Pruitt
Representative Max Gruenberg
MEMBERS ABSENT
SENATE JUDICIARY
Senator Lesil McGuire, Vice Chair
Senator Fred Dyson
Senator Donald Olson
Senator Bill Wielechowski
HOUSE JUDICIARY
Representative Neal Foster
Representative Gabrielle LeDoux
Representative Charisse Millett
OTHER LEGISLATORS PRESENT
Representative Sam Kito III
COMMITTEE CALENDAR
INITIATIVE: AN ACT INCREASING THE ALASKA MINIMUM WAGE
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
LIBBY BAKALAR, Assistant Attorney General
Civil Division
Labor & State Affairs
Department of Law
Juneau, Alaska
POSITION STATEMENT: Reviewed the minimum wage initiative and
provided a sectional analysis.
GREY MITCHELL, Assistant Commissioner
Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Discussed the regulatory and enforcement
aspects of the minimum wage initiative.
DAN ROBINSON, Chief Research Analyst
Department of Labor and Workforce Development
Juneau, Alaska
POSITION STATEMENT: Discussed the economic aspects of the
minimum wage initiative.
MICHAEL SALTSMAN, Director of Research
Employment Practices Institute
Washington, D.C.
POSITION STATEMENT: Testified on the minimum wage initiative.
ED FLANAGAN, Chair
Alaskans for a Fair Wage
Juneau, Alaska
POSITION STATEMENT: Sponsor of the minimum wage initiative.
REVERAND MICHAEL BURKE, Pastor
St. Mary's Episcopal Church
Anchorage, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative
VINCE BELTRAMI, President
Alaska AFL-CIO
Anchorage, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
NOAH SUNFLOWER, Organizer
Unite HERE Local 878
Anchorage, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
STACY ALLEN, Member
Laborers Local 341
Palmer, Alaska
POSITION STATEMENT: Testified in strong support of the minimum
wage initiative.
BARBARA HUFF TUCKNESS, Director
Legislative and Governmental Affairs
Teamsters 959
Anchorage, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
SHARON CLAWSON, representing herself
Anchorage, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
ZEBULON WOODMAN, Member
Laborers Local 942
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
KARM SINGH, Lineman Representative
Alaska IBEW 1547
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
KEVIN POMEROY, Business Manager
Laborers Local 1942
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
FAY GAVIN, representing herself
POSITION STATEMENT: Testified in support of the minimum wage
initiative.
ACTION NARRATIVE
1:32:02 PM
CHAIR JOHN COGHILL called the joint meeting of the Senate and
House Judiciary Standing Committees to order at 1:32 p.m.
Present at the call to order were Chair Keller and Chair
Coghill. Representatives Lynn, Pruitt, and Gruenberg arrived
soon thereafter.
^INITIATIVE: AN ACT INCREASING THE ALASKA MINIMUM WAGE
INITIATIVE: AN ACT INCREASING THE ALASKA MINIMUM WAGE
1:32:46 PM
CHAIR COGHILL announced the business before the committees was
to discuss the benefits and costs of increasing the Alaska
minimum wage.
1:33:44 PM
LIBBY BAKALAR, Assistant Attorney General, Department of Law,
stated that she was appearing at the request of the Chair to
provide an outline of the minimum wage initiative
("13minimumINW"). "An Act increasing the Alaska minimum wage to
$8.75 an hour effective January 1, 2015, $9.75 an hour effective
January 1, 2016, and thereafter adjusted annually for
inflation." She clarified that neither the Department of Law nor
any colleagues that were testifying on behalf of their
respective departments were taking a position on the initiative
bill. They were here to walk through the mechanics and offer a
neutral assessment of the costs and impacts of the ballot
initiative. She also clarified that DOL's role in the ballot
measure process was to represent the Lieutenant Governor and the
Division of Elections as they execute their constitutional and
statutory duties.
MS. BAKALAR stated that the Department of Law and the Lieutenant
Governor's office reviewed the ballot measure application to
determine whether or not it was compliant with the technical and
constitutional requirements of the ballot measure. DOL found it
to be a legally sound use of the initiative, recommended
certification, and helped author the ballot summary. Sufficient
signatures were subsequently gathered to place the measure on
the August 19, 2014 statewide primary election ballot.
MS. BAKALAR described the four sections proposed by the
initiative bill as follows: [Original punctuation provided.]
· Section 1. This section is a statement of findings and a
declaration. The section declares that an increase in the
Alaska minimum wage would help ensure a minimum standard of
living for the health and well-being of Alaskans; that
Alaskans working full-time at the current minimum wage earn
far below the federal poverty level for a family of three;
that several states in the Pacific Northwest have a higher
minimum wage; and that a fair minimum wage indexed to the
cost of living will help low-income workers keep pace with
inflation.
· Section 2. This section is a statement of purpose and
intent, providing that the bill intends to raise Alaska's
minimum wage to $8.75 an hour effective January 1, 2015,
$9.75 an hour effective January 1, 2016, and thereafter
adjusted annually for inflation.
· Section 3. This section would repeal and reenact AS
23.10.065(a). The section would require every employer to
pay each employee a minimum wage of $8.75 an hour effective
January 1, 2015, $9.75 an hour effective January 1, 2016,
and thereafter adjusted annually for inflation. The section
provides a method for calculating that adjustment, and
provides that the adjustment would apply to work performed
from January 1 through adjustment would apply to work
performed from January 1 through December 31 of the year
for which it is effective. The section provides that an
employer may not use tips or gratuities to offset payment
of the minimum wage, and that Tip Credit as defined by
relevant federal law does not apply to the minimum wage.
· Section 4. This section provides that if the minimum wage
determined under section 3 of the bill is less than one
dollar over the federal minimum wage, the Alaska minimum
wage shall be set at one dollar over the federal minimum
wage, and that the amount shall be adjusted in subsequent
years by the method set forth in section 3 of the bill.
MS. BAKALAR advised that the Alaska Constitution provides the
legislature with the opportunity to act on initiatives prior to
their appearance on the ballot by enacting substantially similar
legislation. Taking that action would void this initiative.
Whether such a measure would be substantially similar to the
initiative petition is a question of both fact and law that DOL
likely would be called upon to opine. The constitution also
states that a law enacted by initiative becomes effective 90
days after certification of the election at which it is passed.
It is not subject to veto and may not be repealed within two
years of its effective date, but it may be amended by the
legislature at any time.
1:39:08 PM
REPRESENTATIVE LYNN joined the committee.
CHAIR COGHILL asked if the findings and declaration in Section 1
are already in statute under uncodified law.
MS. BAKALAR said she'd need to review the uncodified law before
she could answer, but Section 3 does repeal and reenact AS
23.10.065(a) that currently states that the minimum wage is
$7.75 an hour until December 31, 2009 and thereafter not less
than $0.50 an hour more than the federal minimum wage. The
federal minimum wage was increased to $7.25 an hour when the
Fair Minimum Wage Act of 2007 amended the Fair Labor Standards
Act of 1938.
1:41:14 PM
GREY MITCHELL, Assistant Commissioner, Department of Labor and
Workforce Development, advised that he and Dan Robinson, the
chief of research and analysis for DOLWD, would jointly discuss
the economic, regulatory, and enforcement aspects of the minimum
wage proposal. He started with a brief discussion of the cost
impacts of the initiative that have been calculated to affect
three agencies. The Lieutenant Governor's Office will be
affected in the amount of $9,000 for travel to hold public
hearings on the initiative in two communities in each of the
four judicial districts. The Division of Elections has
calculated an estimated cost of $71,257 to certify the
initiative and review the initiative petition. This does not
include potential legal costs if the validity of the petition is
challenged. The Department of Labor and Workforce Development
has calculated costs, if the initiative passes, of $2,083 to
print publications that provide information about the minimum
wage.
1:43:38 PM
MR. MITCHELL discussed the enforcement aspects of the minimum
wage proposal. He reviewed current law under AS 23.10.065 that
sets Alaska's minimum wage $0.50 higher than the federal minimum
wage. He reported that about 20 percent of the wage claims
historically are related to nonpayment of minimum wage and the
remainder are for things like overtime, contract wages, and
return transportation deductions. This ratio has remained fairly
constant over time.
A petition in 2002 resulted in legislation in 2003 that
significantly increased Alaska's minimum wage from $5.65 an hour
to $7.15 an hour. Although this was a 27 percent increase in one
year, Wage and Hour experienced no discernible increase in the
percentage of wage claims related to minimum wage. The general
conclusion is that increasing the minimum wage does not increase
the likelihood that an employer will violate the minimum wage
requirements. Thus, DOLWD doesn't anticipate an increase in
enforcement efforts as a result of the petition.
He reviewed the stepped increase to the minimum wage called for
in the initiative. The first year the minimum wage would
increase from $7.75 to $8.75 or 13 percent. The second year it
would increase to $9.75 an hour, which represents an 11 percent
increase on an annual basis. The increase from $7.75 to $9.75
over two years represents a 26 percent increase.
REPRESENTATIVE LYNN asked if the previous increase in minimum
wage resulted in employment loss, more part time jobs, or
reduced hiring.
MR. MITCHELL replied the minimum wage in Alaska was last
increased in 2010 from $7.25 an hour to $7.75 an hour and the
$0.50 an hour above the federal minimum wage elevator was
created. The percentage of enforcement actions related to
minimum wage remained fairly constant. He deferred to Mr.
Robinson to address the economic impacts.
1:47:48 PM
DAN ROBINSON, Chief, Research and Analysis, Department of Labor
and Workforce Development said the statistics for Alaska show no
discernable impact on employment. He acknowledged that there
were impacts, but there were enough things going on that it left
no clear mark. Some economists say a wage increase costs a
certain number of jobs and others disagree so it's a very hot
topic with no clear answer.
REPRESENTATIVE LYNN mentioned anecdotal evidence.
MR. ROBINSON said different studies show different things, but
in this case it's situation specific. If the wage goes from $3
to $4 it doesn't make much difference because the market has
long since left those wages behind. But if the wage goes from
$10 to $20 an hour, that affects people and employers and
different consequences could be expected.
CHAIR COGHILL recognized that Representative Lance Pruitt joined
the committee.
MR. ROBINSON continued to say that DOLWD estimates that about
3,000 or one percent of Alaska jobs pay $7.75. At $8.75 an
estimated 5,600 or 2 percent of Alaska jobs would be affected
and at $9.75, an estimated 18,200 or 5 percent of Alaska jobs
would be affected. In order of numbers impacted, the occupations
that would be most affected are seafood processing workers,
waiters and waitresses, food preparation and serving workers,
and retail salespersons. Young people are disproportionately
represented in these occupations; 36 percent of the workers in
these occupations are 25 years or younger whereas 17 percent of
all other occupations are 25 years or younger.
CHAIR COGHILL commented on the exclusion of the tip credit and
the category of lower wage workers that would benefit from the
minimum wage increase.
MR. ROBINSON acknowledged the observation.
MR. MITCHELL pointed out that current statute prohibits tip
credit so the initiative isn't introducing anything new in that
regard.
CHAIR COGHILL asked if that law had been tested.
MR. ROBINSON responded that current law prohibits tip credit so
minimum wage workers are covered by the existing $7.75 minimum
wage threshold.
CHAIR COGHILL asked if the current statute recognizes the
consumer price index (CPI) model.
MR. ROBINSON answered no.
CHAIR COGHILL asked if this is taken from the Anchorage base of
the Consumer Price Index (CPI).
MR. ROBINSON answered yes.
CHAIR COGHILL asked what that cost differential generally is.
MR. ROBINSON replied it varies, but an average over the last 10
years would be about 2 percent.
1:54:37 PM
CHAIR COGHILL asked if the findings and declaration in Section 1
are new. .
MR. MITCHELL replied that to his knowledge those have not been
outlined in previous legislative proposals, but it may have been
in the initial legislation.
CHAIR COGHILL observed that voting yes will send a clear message
that these are some of the things that people are thinking
about. He described it as the front door to the question on the
minimum wage and the CPI.
REPRESENTATIVE KITO III calculated that someone who works a 40
hour week for 50 weeks a year at the current minimum wage of
$7.75 will receive $15,500 per year; at $8.75 that is $17,500
per year; and at $9.75 that is $19,500 per year.
CHAIR COGHILL noted that the poverty level for Alaska is
generally $22,000.
1:57:47 PM
MR. SALTSMAN, Director of Research, Employment Policies
Institute (EPI), Washington, D.C., advised that EPI is a
nonprofit that focuses on policies that impact the entry level
job market. The National Federation of Independent Business
invited him to testify. He said that Alaskans for a Fair Minimum
Wage argue that the minimum wage should be used to lift families
out of poverty and that Alaska should seek to match Washington
State's higher rate. However, the evidence shows that that
policy hasn't been terribly effective in reducing poverty and
has actually been detrimental to vulnerable workers.
From 2003-2007, 28 states including Alaska increased their
minimum wage, but when economists from Cornell and American
University studied U.S. Census Bureau data from this time period
they found no associated reduction in poverty rates. They
identified a few problems. The first was that roughly 60 percent
of the people living in poverty were not employed and thus
couldn't benefit from the increase in the minimum wage. A second
problem was that fairly few minimum wage workers live in poor
households. In Alaska, for instance, U.S. Census Bureau data
shows that nearly two-thirds of the workers affected by a
minimum wage increase to $10 an hour are living with family or
are second or third earners in a household. Just 5.5 percent are
single parents. When all the sources of income in a particular
household are included, the average family income of an affected
employee in Alaska is over $73,000 per year. Acknowledging that
this doesn't suggest that everyone who earns the minimum wage is
a teenager living in a middle class household, he posited that
it does demonstrate the problem of using a blunt tool like a
minimum wage increase to address the complex problem of poverty.
MR. SALTSMAN said the Congressional Budget Office (CBO) recently
released a report on the President's minimum wage proposal that
spotlighted the unintended employment consequences of a higher
minimum wage. Washington State currently has the highest minimum
wage in the country and proponents argue that Alaska ought to
emulate Washington. In 2013 the unemployment rate in Alaska was
about 6.5 percent and in Washington it was about 7 percent.
Those numbers are roughly similar, but the situation was very
different for young adults age 16-19. In Alaska where the
minimum wage is $7.75 an hour, teen unemployment was 17.5
percent. But in Washington state where the minimum wage is $9.32
an hour, the teen unemployment rate was 30.6 percent.
MR. SALTSMAN said that a careful look at the data shows that a
higher minimum wage has played a role in Washington's current
situation. Analyzing data from 2005-2011, economists from Miami
and Trinity University estimated that over 4,300 fewer teens had
jobs in Washington state due to the higher minimum wage. An
article in the Seattle Weekly provided a striking example of how
these jobs are eliminated. Restaurants in the largest city in
the state generally stopped hiring busboys and are scheduling
fewer servers per shift. These consequences are broadly
consistent with what is known from the economic research on
minimum wage increases. Since the early 1990s, roughly 85
percent of the credible academic studies on this subject show
that a higher minimum wage reduces employment for less skilled
and less experienced employees like teenagers. There are
outliers, but they're in the distinct minority.
He said that the nonpartisan Congressional Budget Office
understood this, which is why it estimated that raising the
minimum wage to $10.10 would result in the loss of 500,000 jobs
nationwide. Using a similar methodology, the economists
referenced earlier estimated 400-1,100 lost jobs in Alaska if
the minimum wage went to $10.10. This loss of opportunity at the
bottom rungs of employment is a concern because teens that miss
out on early career experiences are at a distinct disadvantage.
Research shows that high school seniors with a part-time job
earn higher wages 6-9 years after graduation than their
counterparts who didn't have a job. Lengthy spells of
unemployment have also been shown to increase the risk of future
unemployment for young people. The conclusion is that the last
thing Alaska should be trying to do is emulate the youth
unemployment rate that currently exists in the state of
Washington.
MR. SALTSMAN discussed better alternatives to raising the
minimum wage. He said the federal Earned Income Tax Credit
program provides a substantial income boost to low income
families without the unintended consequences of a higher minimum
wage. For example, in Alaska the minimum wage for a single
parent with two children is already above $10 an hour due to the
roughly $5,200 annual payment this family receives in addition
to the earnings at work. Many states have chosen to provide a
state supplement to this payment and the results have been very
impressive. Researchers from the University of Georgia and San
Diego State University found a one percent drop in state poverty
rates for each one percent increase in the state's earned income
tax credit. He suggested that if Alaska is interested in
reducing poverty rates, this policy should ultimately be the
topic of conversation. He said this suggestion is based on the
empirical research that's looked at poverty rates, employment
rates in states that have raised their minimum wages compared to
those that haven't. This research clearly shows that while a
higher minimum wage might not reduce poverty, it does reduce
employment.
REPRESENTATIVE KITO III noted that earlier testimony from the
Alaska Department of Labor and Workforce Development indicated
that when Alaska's minimum wage increased 27 percent it resulted
in no measurable difference in employment. The initiative
proposes a 20 percent increase over a longer period of time. The
DOLWD also indicated that in Alaska, 36 percent of the people
that would be affected are 25 years or younger so the proposed
increase will impact 64 percent of people 25 years or older. He
said he thinks this may be the same situation that's seen in
other states.
MR. SALTSMAN cautioned against looking at overall employment
levels when trying to determine the impact of a higher minimum
wage. It could have a devastating impact on the small subset of
the workforce that's earning a minimum wage, but it would not
show up in the overall employment numbers. Historically
economists have looked at the employment of subgroups and used
regression analysis to compare employment levels in a state that
did raise the minimum wage versus one that did not to see if
other factors have been controlled. The consensus has been that
each 10 percent increase in the minimum wage has approximately
reduced employment by 1-3 percent for those affected groups.
Based on the past, people should anticipate this happening in
Alaska.
MR. SALTSMAN said that the U.S. Bureau of Labor Statistics last
week reported that just over 50 percent of the people who earn
the minimum wage are age 16-24. But the question that should
ultimately be asked isn't about the age of the workers earning
minimum wage; it's whether this is an effective way to reduce
poverty and target the people that need help. The data cited
earlier suggests that it has not had the impact that proponents
wanted it to have.
REPRESENTATIVE KITO III noted the U.S. Department of Labor
national statistics show that 50 percent of the people who earn
the minimum wage are between the ages of 16 and 24 whereas the
Alaska Department of Labor and Workforce Development statistics
indicate that for Alaska that number is 36 percent. He asked if
that impacts the analysis.
MR. SALTSMAN replied in either case the people who earn minimum
wage are disproportionately young. He suggested that the
discussion gets bogged down discussing the ages of who is
affected as opposed to whether this is an effective way to help
the people it's intended to help.
2:09:33 PM
REPRESENTATIVE GRUENBERG joined the committee.
CHAIR COGHILL asked the initiative sponsor to come forward.
2:12:42 PM
ED FLANAGAN, Chair, Alaskans for a Fair Wage, sponsor of the
initiative, stated that this is an ad hoc group formed for the
specific purpose of getting the initiative on the ballot and
getting it passed. He noted that a recent focus has been to keep
the initiative on the ballot. The principals are Tom Cashen, Jim
Sampson, and himself, all of which are former state labor
commissioners. He said they've waited for ten years for somebody
to correct what was done to the minimum wage in 2003 when the
indexing that passed the year before was repealed. They got
tired of waiting and decided to do it themselves. Alaska unions
have largely funded the group to do the work to get it on the
ballot. The effort was successful and the petition drive
resulted in 36,500 valid signatures from registered voters
including the required seven percent in 33 districts.
MR. FLANAGAN reviewed the minimum wage in Alaska. Existing law
sets it at $0.50 over the federal minimum wage. The federal
minimum wage is $7.25 and Alaska's is $7.75. He noted that the
$0.50 premium was established in the first state legislature in
1959 when the federal minimum wage was $1.00. That 50 percent
differential has fallen to a 7-8 percent. Currently, a fulltime
worker earning $7.75 an hour earns $16,120 annually. This is
$8,600 below the federal poverty threshold for a family of three
in Alaska and $13,700 below the federal poverty threshold for a
family of four. Alaska had the highest minimum wage in the
nation for about four decades after statehood and is now behind
17 states and the District of Columbia. Even low-cost-of-living
states like Arizona and Florida have a higher minimum wage than
Alaska. Eleven states provide for indexing based on the consumer
price index. In Anchorage, we're lucky to have one price index;
the rest of the country, except for Alaska and Hawaii, is under
all the same CPI whether it's Mississippi or Seattle. Alaska has
the Anchorage CPI and it averages about 2 percent. The minimum
wage went to $7.15 in 2002 and if the index had not been removed
by the legislature less than a year after passing it, it would
be at $9.53 an hour right now. That would be the highest in the
nation.
He discussed earlier failed attempts to raise the minimum wage
and the AFL-CIO effort between the 2001 and 2002 sessions to
gather 50,000 signatures and qualify an initiative for the
ballot. The legislature suddenly became interested and passed a
bill raising the minimum wage from $5.65 to $7.15, which was a
27 percent increase. There were a lot of predictions of gloom
and doom and the National Restaurant Association and the local
chapters were adamant that it would be a shock to employment in
the state. What actually happened is that between 2002 and 2003
employment in low wage industries, particularly the ones like
seafood processing, accommodations and food service drinking
establishments saw an increase that was higher than the increase
in the overall non-farm wages in Alaska. There might have been
other factors, but that was fairly glaring evidence that there
was not the kind of negative impact that the prior speaker
mentioned. What he said is also belied by the very CBO study
that he cited. The CBO found just a 0.3 percent job impact for
the federal minimum wage going up from $7.25 to $10.10.
MR. FLANAGAN said that when Speaker Kott was asked about the
speculation that the legislature passed the bill to keep the
issue off the ballot, he said that wasn't his motivation. He
said he thought it was better for the legislature to address the
measure so they could change the inflation provision next year
if they decided to do so. If the change were made through a
ballot initiative the legislature would need to wait two years.
However, the unfortunate fact is that less than a year later the
legislature came back and repealed a significant portion of the
bill by removing the indexing provision that was strongly
supported in polls and would have passed if the initiative had
gone to the vote.
MR. FLANAGAN said that history explains why the initiative
supporters are very concerned with comments about the
possibility of a bill. If a bill supplants this initiative and
thwarts the will of 36,000 Alaskans who signed it, there is no
reason to believe that the same thing wouldn't happen again. He
noted that a subset of the hospitality industry currently is
looking for people to do just that. He urged the committee and
legislature to let the initiative go to a vote of the people.
2:23:36 PM
He said that the CBO study that the prior speaker mentioned
examined the effects on employment under $9 and $10 scenarios,
and the $9 scenario projected a possible 0.1 percent employment
loss. By inference, the initiative proposal would result in 500
jobs lost in the Alaska economy. Goldman Sachs published a
response to that CBO study on March 25th stating the following:
Economists are split on the question of whether a
minimum wage hike would reduce employment. In our
view, the CBO's recent estimate of a 500,000 hit to
the level employment, .3 percent is likely a bit
toward the upper end of reasonable estimates both
because many studies find no significant impact to
minimum wage hikes on employment and because the
offsetting boost to demand is likely to be larger than
usual at present. Any impact on the monthly payroll
numbers would likely be small relative to normal
volatility and would likely be concentrated in retail
trade and leisure hospitality sectors.
MR. FLANIGAN discussed the history of the tip credit and the
effort by the industry in 1996 to get a tip credit passed in
Alaska. Had that effort succeeded, tipped employees would still
be getting just $5.25 an hour. The bill proposed by the
initiative repeals and reenacts [AS 23.10.065(a) to reaffirm the
longstanding Alaskan ban on tip credit.
He said that studies have shown that over 77 percent of Alaska
workers earning minimum wage are over the age of 20. He
commented that if they're living at home it's probably because
they can't afford to leave. He also pointed out that critics
like Mr. Saltsman may not be aware that workers under age 18
that work no more than 30 hour a week are exempt from the Alaska
minimum wage law, only federal law applies. That provision dates
back at least to 1981. He said that better estimates show that
over 30,000 workers that are paid at or near the minimum wage
would benefit from this measure.
2:27:17 PM
MR. FLANIGAN said that recent polls and conversations with
Alaskans who signed the initiative petition show that this
measure crosses party lines. He said his experience in District
1 was that 2 out of 3 people signed the minimum wage petition.
He expressed confidence that Alaska voters will do the right
thing and vote to replace the inadequate statement in wage law
with the initiative proposal. He also expressed hope that the
legislature will do the right thing by allowing the people to
vote on the measure.
Addressing an earlier question from Chair Coghill, he said the
findings in Section 1 are the same as the 2002 initiative, but
they're not in statute.
2:29:55 PM
REVERAND MICHAEL BURKE, Pastor of St. Mary's Episcopal Church,
Anchorage, Alaska, stated that the core of his family's success
has been a strong work ethic and unshakable belief that hard
work and following the rules will yield a better life for
yourself and your family. He said the Alaskan dream rests on
that belief but he fears that it's slipping away for working
families at the lower economic level.
He described the situation of a family with three children that
he works with. The husband works 60 hours a week at two minimum
wage jobs and attends school at night. Using HUD data on fair
market value for housing in Anchorage and the standard 30
percent for housing, he needs to work 113.8 hours a week to pay
rent for the family. Even if both adults work they can't make it
because they can't each work nearly 57 hours a week and still
care for their children. The result is that they cycle in and
out of shelters. Citing data from the Alaska Housing Finance
Corporation (AHFC) that shows that just as many people are on
the wait list as have housing vouchers throughout the state, he
said the answer isn't to simply keep increasing the social
safety net. The answer is to make hard work pay. At $9.75 an
hour the family of five will still face challenges, but it's
within reach if they're willing to work hard.
REVERAND BURKE concluded his comments urging legislators to give
the people a straight up vote on the initiative to raise the
minimum wage and link it to the CPI. This will reincentivize
hard work and put the Alaska dream back in reach.
2:39:31 PM
VINCE BELTRAMI, President, Alaska AFL-CIO, Anchorage, Alaska,
testified in support of the initiative to raise the minimum
wage. He stated that he would address the purpose of the
hearing, the opposing testimony, and the notion of substantially
similar legislation. Starting with the first point, he suggested
coming to some understanding on what the committee intends to do
with the information that's gathered from the hearing.
CHAIR COGHILL explained that the intention is to give people an
idea about the impacts of the law and whether there are
competing economic or legal issues.
MR. BELTRAMI asked for confirmation that the committee doesn't
have the authority to change the language in the initiative or
take it off the ballot.
CHAIR COGHILL said that's correct. The hearing is intended to
look at the proposed law, what it does, and the impacts.
MR. BELTRAMI took issue with the opposing testimony of Mr.
Saltsman from the Employment Policy Institute. His boss is
Richard Berman, a man the news show 60 Minutes once dubbed Mr.
Evil because he's a media hit man for hire. He's created a web
of organizations whose names are cleverly disguised to sound
legitimate when he attacks organizations like Mothers Against
Drunk Drivers. The Employment Policy Institute is a very good
example because the name copies the liberal think tank called
the Economic Policy Institute. The Employment Policy Institute
receives millions in undisclosed funds to attack people on
behalf of corporations. It's the farthest thing possible from an
advocate on what's best for American workers.
CHAIR COGHILL said he'd like each person's testimony to stand on
its own merit.
MR. BELTRAMI refuted earlier testimony that increasing the
minimum wage does not help to reduce poverty. He pointed out
that even some of the Employment Policy Institute's own research
shows that increasing the minimum wage helps reduce poverty.
Also, Goldman Sachs said that inflation would probably increase
just one tenth of one percent if the minimum wage was increased.
2:45:40 PM
MR. BELTRAMI addressed the notion of substantially similar
legislation. He noted that Representative Pruitt recently
indicated that the House might introduce a minimum wage bill
since over 70 percent of poll respondents stated support for the
initiative. Representative Pruitt further stated that nobody
wants this to appear politically motivated because this is what
constituents want. However, the political dynamic and motivation
for keeping the issue off the ballot is quite transparent for a
lot of people based on what happened in 2002. The AFL-CIO
collected and submitted over 50,000 signatures and the
legislature supplanted the initiative measure with a
substantially similar bill and then stripped it the next year.
That undermined the process and deprived the Alaska voters of a
personal liberty.
MR. BELTRAMI reminded the legislators that tens of thousands of
Alaskans in more than three-quarters of the legislative
districts in the state signed this initiative petition and all
Alaskans should be allowed to exercise the right to vote on the
measure on the ballot. If substantially similar legislation is
introduced, he committed AFL-CIO support to any legislators that
resist its introduction or vote against it because the measure
should go to the voters.
CHAIR COGHILL advised that the purpose of the meeting is to talk
about the impacts of the initiative to the economy, not to
discuss political strategy.
2:50:31 PM
NOAH SUNFLOWER, Organizer, UNITE HERE Local 878, Anchorage,
Alaska, said this is a hotel and restaurant workers union. He
addressed two points Mr. Saltsman made. He advocated an earned
income tax credit as opposed to an increase in the minimum wage,
but what this means is that instead of employers paying workers
more, tax dollars will be used to pay people more. The second
point was that raising the minimum wage increases teen
unemployment. Mr. Sunflower said he'd like to be able to pay a
teen to mow his lawn. It takes about a half an hour and if he
paid $7.75 that would be double the current minimum wage.
MR. SUNFLOWER relayed that Local 878 has ongoing contract
disputes with two hotels in downtown Anchorage. Their wages are
lagging the wages for the rest of Anchorage and they can't find
people to clean rooms for $12 an hour so they've resorted to
using J-1 Visa workers. That takes work away from Alaskans.
2:55:13 PM
STACY ALLEN, member, Laborers' Local 341, Palmer, Alaska,
testified in strong support of the initiative to increase the
minimum wage. Union members from Local 341, Local 942, and Local
71 will be out in force to see that this initiative becomes law,
she said. It's a labor and human rights issue.
2:56:02 PM
BARBARA HUFF TUCKNESS, Director, Legislative and Governmental
Affairs, Teamsters 959, Anchorage, Alaska, testified in support
of the minimum wage initiative. She relayed that she and a few
union members volunteered to gather signatures statewide. The
union doesn't represent any minimum wage workers, but they hope
that the initiative will help workers that have no
representation. On behalf of those unrepresented voters, she
asked legislators to allow voters to vote on the measure.
2:57:16 PM}
SHARON CLAWSON, representing herself, Anchorage, Alaska,
testified in support of the Initiative. She explained that her
support for the initiative is the result of concern about the
effects of poverty on children, especially in school
achievement. Research shows that 25.9 percent of working
families in Alaska are considered to be among the working poor
and one-third of children in the U.S. with single mothers live
in poverty. Poverty in Anchorage schools seriously affects
achievement; this past school year 48 percent of Anchorage
School District (ASD) students qualified as economically
disadvantaged and 25.8 percent are considered transient or
homeless. While raising the minimum wage in Alaska won't
alleviate all poverty, it will make a difference, she said.
3:00:07 PM
ZEBULON WOODMAN, Laborers Local 942, Fairbanks, Alaska,
testified in support of the initiative to increase the minimum
wage. He said he'd like Alaska wages to be high enough to draw
people from rural areas where the unemployment is high to areas
in the state that have tourism so the industry doesn't import
low-wage J-1 Visa workers from overseas. Also, when the minimum
wage is so far below the poverty level that many families need
public assistance to survive, everybody should be ashamed.
MR. WOODMAN refuted Mr. Saltsman's testimony that increasing the
minimum wage in Washington state resulted in higher
unemployment. What actually happened since Washington residents
voted in 1998 to raise the state's minimum wage and link it to
the cost of living is that those wages have climbed to the
highest in the country and job growth has increased .8 percent
on an annual basis. Furthermore, payrolls at Washington's
restaurants and bars have expanded 21 percent and poverty has
trailed the U.S. level for the last 7 years. He concluded saying
that there's no reason that Alaska shouldn't have the highest
minimum wage in the country and Alaskans should have the
opportunity to vote on the measure.
3:02:19 PM
KARM SINGH, Lineman Representative, Alaska IBEW 1547, Fairbanks,
Alaska, testified in support of the Initiative. He said he's
listened to all the testimony and hopes that the committee has
come to the same conclusion that he has, which is that raising
the minimum wage is positive for the state. He also expressed
appreciation for the Chair's statement that the committee had no
plans to interfere on the people's right to vote. He encouraged
continuing on that course.
CHAIR COGHILL restated that this is a hearing to collect
information so that Alaskans can hear the substance of the
issue.
3:03:40 PM
KEVIN POMEROY, Business Manager, Laborers Local 1942, Fairbanks,
Alaska, testified in support of the initiative to increase the
minimum wage. He said there's been lots of talk lately about
making Alaska friendly for business, investing in Alaska's
future, and making Alaska competitive. He asked if Alaska
shouldn't also be a friendly place for its workers. It's common
knowledge that people with entry-level jobs who have more money
in their pocket at the end of the month will spend that at local
businesses. He urged legislators to let Alaskans vote on the
minimum wage initiative and warned against giving the voters a
sense of Deja vu.
3:05:13 PM
FAY GAVIN, representing herself, Anchorage, Alaska, testified
that she is a minimum wage worker who moved to Alaska 40 years
ago to follow her dream. She came as a single parent with two
daughters and she couldn't afford to feed and house them. She
found help and a pay raise by joining the hotel and restaurant
union. She urged legislators to help all Alaskans to climb out
of poverty by working for a living wage and to let Alaskans vote
on the initiative.
3:07:23 PM
CHAIR COGHILL asked Mr. Flanagan to differentiate between a
living wage and a minimum wage.
MR. FLANAGAN said that a minimum wage has a floor whereas a
living wage is usually local or municipal. He noted that a lot
of small business people have said that they couldn't in good
conscience pay their workers less than $10 and they certainly
wouldn't pay $7.75, but a "low-road" employer next door may do
that.
CHAIR COGHILL asked his perspective on teen workers and the
minimum wage.
MR. FLANAGAN reiterated that a long-standing provision in Alaska
law allows employers to pay someone who is under age 18 less
than minimum wage. What that means is that an employer wouldn't
have to pay the additional $0.50 above the federal minimum wage.
With regard to the testimony about teen unemployment, he said he
didn't believe that Alaska was affected but if teens are being
displaced in some places it's because adults have had to take
minimum wage jobs that teens used to get.
3:13:21 PM
CHAIR COGHILL asked if the state has had to fine or take legal
action against employers that paid less than minimum wage.
MR. MITCHELL confirmed that DOLWD has a certain percentage of
wage claims every year that fall into the minimum wage category.
AS 23.10.110 provides a penalty for that and it's double the
amount of the unpaid wages.
CHAIR COGHILL asked if there's just one multiplier in statute
and that it's for school bus drivers.
MR. MITCHELL said that multiplier is for two times the state
minimum wage but it wouldn't take effect until the contracts are
renegotiated. The one other multiplier relates to overtime
exemptions for administrative, executive, and professional
employees who have to be paid two times the minimum wage for the
first 40 hours of work under a salary agreement. That would have
an impact if the minimum wage is increased.
REPRESENTATIVE KITO III commented that his experience with the
tip credit issue is that service employees generally work fewer
than 40 hours, so allowing them to receive tips in addition to
the minimum wage allows them to make enough money to pay rent or
groceries that probably would be out of reach if the tips was
credited against their wage.
CHAIR COGHILL thanked the participants.
3:17:04 PM
There being no further business to come before the committee,
Chair Coghill adjourned the joint meeting of the Senate
Judiciary Standing Committee and the House Judiciary Standing
Committee at 3:17 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Written Testimony - Min. Wage - Zebulon Woodman.pdf |
SJUD 3/29/2014 1:30:00 PM |
Minimum Wage Initiative |
| Written Testimony - Min. Wage - Kevin Turkington.pdf |
SJUD 3/29/2014 1:30:00 PM |
Minimum Wage Initiative |
| Written Testimony - Min. Wage - Kevin Pomeroy.pdf |
SJUD 3/29/2014 1:30:00 PM |
Minimum Wage Initiative |
| Written Testimony - Min. Wage - Juneau Chamber.pdf |
SJUD 3/29/2014 1:30:00 PM |
Minimum Wage Initiative |
| Written Testimony - Dee Longenbaugh.pdf |
SJUD 3/29/2014 1:30:00 PM |
Initiative Hearings |