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.