Bill would raise minimum wage

Posted: Tuesday, February 19, 2008

Alaskan's holding down minimum-wage jobs and struggling to make ends meet could see their paychecks grow beginning next year.

A bill proposed by five Senate democrats would boost the minimum wage rate to $8 an hour from the current $7.15. If adopted by the Legislature, Senate Bill 187 would take effect Jan. 1, 2009.

Sen. Tom Wagoner, R-Kenai, said Monday he likely would support an increase to the minimum wage to help struggling workers.

Sen. Gary Stevens, R-Kodiak, meanwhile, had significant concerns with inflation proofing provisions in the bill.

Senate Bill 187, now in the Senate Finance Committee, would set Alaska's minimum wage at either $1 more than the federal minimum wage, or $8 an hour, whichever was greater. It would require the Alaska Department of Labor and Workforce Development to adjust the state's minimum wage for 100 percent of inflation no later than Sept. 30 of each year, making the adjustment effective at the beginning of the next calendar year. Inflation would be based on the Anchorage Consumer Price Index (CPI).

In a sponsor statement, Democratic Party co-sponsors Bill Wielechowski, of Anchorage, Joe Thomas, of Fairbanks, and Kim Elton, of Juneau, said an increase in the minimum wage was needed to help families cover the costs of basic necessities.

The cost of living in Alaska is among the highest in the nation, yet the state has the lowest minimum wage on the west coast. Oregon, Washington, California and Hawaii all have higher rates, as do seven other states, they said. Beginning next year, the federal minimum wage will increase to $7.25, passing Alaska's current $7.15 hourly rate.

Alaska's minimum wage was last increased in January 2003. Had the wage kept pace with inflation, it would more than $8 today.

Some 14,000 Alaskans, about five percent of the workforce, earn the minimum wage. That's less than the poverty level for a family of two. A quarter of those earning between $7.15 and $8 an hour are parents, sponsors said.

"Economic studies show that higher wages lead to greater productivity, lower recruiting and training costs, decreased absenteeism and increased worker moral," sponsors said. "Studies have not documented negative employment impacts job loss due to increases in the minimum wage."

Sen. Gary Stevens, R-Kodiak, who represents portions of the lower Kenai Peninsula, sees it differently. He said Monday that SB 187 concerned him, especially the automatic nature of the inflation proofing.

"I think it can be dangerous to small businesses,' he said. "The problem with these jobs is that often those are the jobs most disposable by a small business. If they are facing higher wages, you could see them cut or the hours reduced.

"When you mandate these increases, it always seems like there are less jobs available," he said.

Asked if that applied to Alaska, Stevens acknowledged he had seen no studies showing that the increase to $7.15 an hour in 2003 had reduced minimum-wage jobs in Alaska.

He did note that most workers do not remain at the minimum wage for long. Within a year, he said, about two-thirds have received wage increases.

The bill could be changed in the Finance Committee, perhaps significantly. Stevens said if the annual inflation adjustment were not automatic, he could support a minimum wage increase.

Sen. Wagoner doesn't expect the bill to make it out of the Senate Finance Committee. If it does, he'll probably back it.

"You know, $8 an hour is not much these days," he said Monday. "And there are so many young people coming out of high school with no skills. That's where they start."

He doesn't buy arguments that businesses would suffer harm.

"If businesses all had to pay $8 an hour even for flipping hamburgers, then the price of hamburgers may have to go up 15 cents. That won't break anybody," he said.

Wagoner voted differently five years ago during his first legislative session in 2003. The year before he took office, state lawmakers were presented with a popular ballot initiative that would have boosted the minimum wage and protected it from inflation. To keep it off the ballot, they voted to increase the minimum wage to $7.15 an hour, included annual inflation proofing and required that the state's minimum wage top the federal minimum wage by at least $1.

The following session as a freshman senator, Wagoner found himself bound by caucus rules to follow a Republican majority position opposing the inflation proofing and "$1 more" provisions.

In a strictly party-line vote, Senate Republicans succeeded in stripping those provisions from the law, though they left the minimum wage at $7.15 an hour.

Wagoner said he would have voted differently had he been able to.

"I've never been afraid of upping the minimum wage," he said.

The 2003 vote left the Alaska minimum wage stagnated, even as the cost of food, medicine, heating energy, gasoline, housing and other essentials began sapping the poor of resources.

Wielechowski acknowledged making SB 187 into law might be an uphill battle. He said he was prepared to push hard for it, but also was open to compromise. He wasn't sure how things would turn out Monday.

"You need 11 votes to get anything passed around here," he said.

He warned, however, that if SB 187, or something like it, fails to emerge from this Legislature this year, state voters could take the lead.

"I've just spoken to people who are ready to do another ballot initiative," he said. "Probably for more (per hour), and cost-of-living adjustments, and at least $1 above the federal minimum. And it will pass."

Given what happened five years ago, he doesn't see the Legislature passing a bill just to pull such an initiative from the ballot.

Wielechowski's aide, Michelle Sydeman, said Senate Finance Committee members would likely consider changes to the measure. How those might manifest, she couldn't say.

"I think there is room to accommodate different peoples' concerns," she said.

Hal Spence can be reached at

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