New minimum wage law takes effect Jan. 1

Posted: Thursday, December 26, 2002

ANCHORAGE (AP) -- More than 14,000 Alaskans could see a raise beginning Jan. 1 when the state's new minimum wage law takes effect.

The state's minimum wage will rise by $1.50 per hour to $7.15 per hour and give Alaska the highest such rate in the West Coast. Alaska had previously been the lowest among West Coast states.

While it's good news for low-income workers, businesses warn the cost will be borne by consumers. It could also cost jobs they said.

''There is going to be an impact on the Alaskan economic market,'' said Larry Baker, president of Restaurants Northwest Inc., which holds the Burger King franchise for Alaska.

''The consumer ultimately pays the bill,'' Baker said.

Restaurants Northwest Inc. has 22 stores in Alaska where approximately 15 percent of the employees earn the current $5.65 per hour minimum wage, Baker said. However, more than 85 percent of his workers currently earn less than $7.15 per hour.

Baker estimates the new law will cost his firm nearly $350,000 in additional expenses over the next year and result in a cut in the workforce and higher prices after the first of the year.

No immediate layoffs are planned, but the workforce could be cut by up to 10 percent, Baker said.

Industries likely to be hardest hit by the increase are food service, tourism and low-end retail, said Ted Quinn, chairman of the Alaska State Chamber of Commerce.

Alaska now has the lowest minimum wage on the West Coast, but the increase will put it above the $7.01 rate in Washington state, which ranks the highest among West Coast states.

Former Gov. Tony Knowles signed the wage increase into law before leaving office. Knowles had sought the increase in his 2001 address to the Legislature.

''Raising the minimum wage not only benefits our workers, but also the long-term growth and stability of the state's economy,'' Knowles said in signing the law.

The law was passed by the GOP-controlled Legislature after Alaska labor unions led a signature drive to place a minimum wage hike on the November 2002 ballot.

The new law was similar enough to keep the initiative off the Nov. 5 ballot. But one loophole in the law exempts employees under 18 years of age who work less than 30 hours per week.

Baker acknowledged that there would be an effort to keep minor employees under the 30-hour mark.

Talk of increasing the federal minimum wage to $7.15 per hour is another concern since Alaska law requires the state's minimum wage to be at least 50 cents higher than the federal wage, Baker said.

That could increase the state wage rate to $7.65, which would equate to a 35 percent increase in pay for minimum wage workers in Alaska, Baker said.

Cynthia Illeck, a spokeswoman for Wal-Mart Stores Inc., told the Alaska Journal of Commerce that two stores would be effected by the wage law. Wal-Mart operates six stores on Alaska and did not anticipate a price increase or layoffs, Illeck said.

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