Restaurant industry worried by minimum wage increase

Posted: Tuesday, January 30, 2001

JUNEAU (AP) -- In the first hearing Monday on a proposal to raise the minimum wage, a Juneau waitress told legislators an extra 75 cents an hour would help her make ends meet. But restaurant industry officials argued it could hurt their businesses and their employees.

The House Labor and Commerce Committee took no action on the bill Monday. House Bill 56 by Rep. Pete Kott, R-Eagle River, would raise the minimum wage from $5.65 to $6.40 in 2002 and to $6.90 an hour in 2003.

Rep. Norm Rokeberg, R-Anchorage, said he wants to amend the measure to exempt employees who receive tips from the increase.

Roxanne Smith, a waitress at The Hangar in Juneau, said she'd like to see her wage go up. She makes about $11,000 a year working an average of 25 hours a week, and that's not enough to support herself and her two children, she said.

She makes minimum wage, plus tips, but said many people, especially tourists from other countries, don't tip. She relies on a state program to provide health care for her children and doesn't indulge in luxuries such as movies and vacations.

''You don't live on your check,'' Smith said. ''You don't have a big check.''

But restaurant industry officials said raising the minimum wage could hurt their businesses and their employees.

One Anchorage restaurant cut employees' health benefits the last time the minimum wage went up and another eliminated paid vacations, said Jack Aman, president of the Alaska Restaurant and Beverage Association.

''Those benefits do get cut back anytime we're faced with mandated increases,'' Aman said.

Fred Rosenberg, owner of Red Robin Restaurant in Anchorage, said none of his employees make minimum wage other than the servers, and when tips are counted they make far more than that. A few years ago servers in his restaurant reported making $12-$20 per hour in tips.

He sympathizes with Smith, but said her problem is that she works part-time in a seasonal industry.

''That's not a minimum wage issue,'' Rosenberg said.

Rokeberg said the tip credit amendment he plans to offer would not let employers pay servers less than the current minimum wage but would exempt those employees from receiving an increase. Rokeberg said he doesn't oppose the bill itself.

It's not clear how many Alaskans would see their paychecks go up if the bill passed.

Ed Flanagan, commissioner of the Department of Labor and Workforce Development, said a 1998 report indicates 14,400 workers in Alaska make between $5.65 and $6.75. The department does not have information on how many of those actually make the minimum wage, what age they are and how many are heads of household.

Committee members expressed frustration with the lack of definitive information. Committee Chairwoman Lisa Murkowski asked the administration and the restaurant industry to provide more data if it's available.

She plans to bring the bill up again in a couple of weeks and said she also intends to appoint a subcommittee to look at some of the issues involved, including the tip credit idea. Murkowski said she believes the bill can make it through the Legislature this session.

Its sponsor, Kott, is in a powerful position as chairman of the House Rules Committee.

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