Knowles introduces minimum wage hike

Posted: Wednesday, January 17, 2001

JUNEAU (AP) -- Gov. Tony Knowles proposed a two-stage increase in Alaska's minimum wage Wednesday that would also boost the wage in future years to keep up with inflation.

The bill -- promised in the Democrat's State of the State speech, joins a competing measure introduced by a Republican leader in the House last week.

Knowles' proposal would raise the minimum wage from $5.65 per hour to $6.40 in October, and then to $7.15 a year later.

''We're going to extend Alaska's current era of prosperity to even more Alaskans,'' Knowles said.

Alaska's minimum wage is currently set at 50 cents more than the federal minimum wage of $5.15, but is lower than the minimum wage in Washington, Oregon or California.

A single parent of two children who works for minimum wage is well below the poverty rate and cannot hope to rise out of poverty, Knowles said.

The Knowles administration sees a minimum wage increase as an extension of the state's welfare reform effort, which has move thousands of people off welfare in recent years.

''We know that people will almost always choose work over welfare if they can support their families,'' said Karen Perdue, commissioner of the Department of Health and Social Services. ''We think we're going to save about a million dollars a year in welfare benefits.''

A 1998 survey by the Department of Labor and Workforce Development found that 5.5 percent of the workers who were paid on an hourly basis -- about 14,000 people -- earned between $5.65 and $6.74 per hour. However, that estimate could be low because the survey was conducted near the end of the year instead of during the busy summer fishing and tourist season.

Last week, House Rules Committee Chairman Pete Kott, R-Eagle River, introduced a bill that would increase the minimum wage to $6.40 per hour next January and $6.90 in 2003. Aside from the final amount the only major difference between the bills is the inflation increase built into the governor's measure, which calls for a yearly adjustment to match the consumer price index.

Both House Speaker Brian Porter, R-Anchorage, and Senate President Rick Halford, R-Chugiak, have expressed reservations about automatic increases. But Kott said he wasn't necessarily opposed to the idea.

''We kept it very vanilla to start with,'' Kott said.

Labor Commissioner Ed Flanagan said the yearly inflation increases would be small.

''We're talking literally pennies, 10 or 12 cents a year,'' Flanagan said.

The biggest opposition could come from the restaurant industry, which has advocated a system that would partially exempt workers who receive tips from the minimum wage.

''It costs jobs in the hospitality industry,'' Rep. Norm Rokeberg, R-Anchorage, said of an across-the-board increase. The increase would also force restaurants to pay their waiters and waitresses more while forgoing raises for kitchen workers. ''It moves wage increases from the back of the house to the front of the house,'' Rokeberg said.

Knowles' proposal specifically rules out a tip credit, and Knowles -- who owns a downtown Anchorage restaurant -- said he would not support one.

''I worked for 30 years in the food and beverage industry,'' Knowles said. ''They need a basic minimum wage just like anybody else.''

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