SB 1-ALASKA MINIMUM WAGE  CHAIR PASKVAN announced SB 1 to be up for consideration. SENATOR THOMAS moved to adopt CSSB 1, labeled 26-LS006\E, and objected for discussion purposes. 2:05:23 PM CHAIR PASKVAN explained that SB 1 sets Alaska's minimum wage at $1 above the federal minimum wage. If they had used the same proportions of $.04 and $.42 applied to stamps over the last 50 years, Alaska's minimum wage would be an additional $5/hr. at $12.25. He found that the first legislature 50 years ago said the Alaska the minimum wage would be approximately 50 percent of the federal minimum wage, which in 2009 would be a difference of $7.25. If that same principle were applied now, $3.62 would be added to the current rate, which would equate to a $10.87/hr. minimum wage. At the same time the committee has heard from the business community that these are troubling times for the nation and he didn't want to impose too much of a burden at one time, so the CS is at $1 above federal minimum wage and it takes effect January 1, 2010. SENATOR BUNDE mentioned that the CS does not involve an automatic escalator or COLA. CHAIR PASKVAN said that was correct. SENATOR THOMAS removed his objection and therefore, version E was before the committee. 2:08:36 PM SENATOR BUNDE moved to adopt Amendment 1. 26-LS0006\R.2 Cook/Wayne AMENDMENT 1 OFFERED IN THE SENATE TO SB 1 BY SENATOR BUNDE Page 1, line 1, following "Act": Insert "relating to the minimum hourly wage," Page 1, line 12, following "section": Insert "except as provided in (d) of this  section" Page 2, following line 12: Insert a new bill section to read:  "* Sec. 2. AS 23.10.065 is amended by adding a new subsection to read: (d) An employer may apply tips or gratuities bestowed upon an employee as a credit toward payment of the minimum hourly wage required by this section equal to 30 percent of that minimum wage. The credit may be applied only if the (1) employee receives tips or gratuities in the course of the employment; (2) tips or gratuities equal or exceed an average hourly amount of at least $15 calculated for the pay period for which the credit is applied; (3) amount of tips or gratuities can be determined by the employee's declaration for purposes of 26 U.S.C. 3101 (Federal Insurance Contributions Act); and (4) employee was informed by the employer of the provisions of this subsection at least 30 days before an employer first elects to apply tips or gratuities as a credit toward payment of the minimum hourly wage of that employee." Renumber the following bill section accordingly. SENATOR THOMAS objected for discussion purposes. CHAIR PASKVAN announced an at ease at 2:09 p.m. 2:10:24 PM CHAIR PASKVAN called the meeting back to order at 2:10. SENATOR BUNDE explained that a lot of people from the hospitality industry have testified that wait staff is often in the $20-wage category and they would get a raise when the people in the back of the house who are already working for more than minimum wage, but substantially less than $20/hr. would not get a raise. He didn't think Amendment 1 would cost anything, and it would help businesses maintain jobs. SENATOR THOMAS said he didn't understand objections to tipped employees getting a minimum wage increase. Many places share tips. 2:15:21 PM SENATOR MEYER said he understands that 45 other states have some sort of a tip credit, and he asked Senator Bunde how he came up with 30 percent more versus 10 or 15 percent. He agreed with Senator Thomas that if he has a good waiter or waitress he wants to reward them, and this amendment would reduce what they would get. 2:17:57 PM A roll call vote was taken. Senator Bunde voted yea; Senators Meyer, Davis, Thomas and Paskvan voted nay; so Amendment 1 failed. SENATOR BUNDE said since the legislature proposed to receive a 50 percent pay raise and since the amount proposed in the CS was not based on any hard data, he wanted to offer conceptual Amendment 2 to: "Instead of a dollar more than federal minimum wage, which would make it $8.15 instead of $7.15, my amendment would make the minimum wage at $14.30, double what it is currently, similar to the proposal to double our legislative salary. That seems to be as much a precedent as anything." He added that with this amendment, people at minimum wage would make about $570/wk. or almost $2300/mo. or $27,500/yr. That would take them to about current legislative pay levels - substantially above the poverty level. SENATOR THOMAS objected and said that people are concerned with raising the minimum to $1 - $1.50, and they would be even more concerned with this figure. He believed the CS addressed the major complaints he has heard and he sees in most of the restaurants he goes to that people move up. People have said the reason they have the lower wage is because it's a beginning wage. 2:21:49 PM SENATOR BUNDE said, "The current proposal leaves people in poverty, and if you want to take them out of poverty, here's an opportunity to do it." SENATOR THOMAS said the restaurateurs who have commented anecdotally said few of these people were living in poverty and were making anywhere from $30,000 to $60,000. Some of that has to be taken factually. 2:22:35 PM A roll call vote was taken. Senator Bunde voted yea; Senators Meyer, Davis, Thomas and Paskvan voted nay; and so conceptual Amendment 2 failed. AL LEVINSON, Restaurant owner, Anchorage, wanted to know if the tip credit (Amendment 1) failed. CHAIR PASKVAN said that it had failed. 2:24:08 PM VINCE BELTRAMI, President, Alaska AFL-CIO, supported SB 1. However, he was a little disappointed they lowered the amount to $1 over the federal minimum wage and eliminated the CPI. Washington and Oregon have had good experiences using the CPI in terms of both jobs and business. Recent data shows that Washington had an over 10 percent increase in restaurant and bar employment from the time it passed the increase up until 2006, "which punched a hole in the argument that the minimum wage increase is bad for business." Other studies have shown no evidence of negative employment effects on small business as a result of increasing the minimum wage. MR. BALTRAMI said he found a paper published by the National Employment Law Project that speaks to Alaska's tipped employees. Senator Thomas and Senator Meyer hit the nail on the head when he said a tip credit is punitive to waiters and waitresses, some of whom are professional. A lot of people make their living on tips; since the last minimum wage increase in 2003, they have not had an increase. There has been a roughly 18 percent- increase in the cost of living without a comparable increase in pay. He has seen a lot of menu prices go up with the increased cost of business, but since employees aren't getting increases, he wasn't sure how negatively impacted the restaurant owners would really be with this raise. But higher wages could result in a positive impact of more people being able to go out and spend money and spend it in their establishments and in the general economy. He also mentioned that he is gathering the initial 100 signatures for a ballot initiative to raise the minimum wage to what was originally proposed in SB 1. SENATOR BUNDE asked if he would have supported his Amendment 2. MR. BELTRAMI replied there has to be an element of reasonableness, and it wasn't realistic. CHAIR PASKVAN closed public testimony. 2:30:59 PM SENATOR THOMAS moved to pass CSSB 1(L&C) from committee with individual recommendations and attached fiscal notes. SENATOR BUNDE objected. A roll call vote was taken. Senators Thomas, Meyer, Davis and Paskvan voted yea; Senator Bunde voted nay; so CSSB 1(L&C) moved from committee.