Labor: Minimum Wage Increase in Alaska
Issue Overview: The current minimum wage in Alaska is $7.15 per hour. This level was set in 2002. Congress passed a federal minimum wage increase to $5.85 per hour in July 2007, $6.55 per hour in July 2008, and finally $7.25 per hour in July 2009.
House Bill 42 and Senate Bill 187 propose to increase the Alaska minimum wage to $8 per hour. Thereafter it would be the greater of $1 more than the federal minimum wage or $8 adjusted annually by 100 percent of the increase in the Anchorage consumer price index.
Proponents of increasing the minimum wage suggest the cost of living has increased significantly since 2002, thus the minimum wage should also be increase. Proponents believe that the minimum wage should be high enough to support a family.
Opponents of increasing the minimum wage note that the minimum wage is an entry-level wage and few remain at that level for an extended time. One study shows that most minimum wage jobs are not career jobs. About two-thirds of minimum wage workers earned more than the minimum wage one year later. In the best longitudinal panel study of entry-level workers, only 14 percent earned less than $1 above the minimum eight years later.
Minimum wage increases hurt small businesses two ways -- both direct and indirect. The literature indicates employment losses of 2 percent to 6 percent for each 10 percent increase in the minimum wage. To cope with minimum wage increases, in addition to job cuts, small business owners reduce hours, leave jobs vacant, reduce wage increases, increase prices where feasible and take hits in the bottom line.
NFIB Position: Oppose.
Issue Status: Both bills died in committee. We can expect new bills next year as the federal minimum wage will exceed Alaska's minimum wage in the summer of 2009. A committee that was proposed to set the Alaska minimum wage at the federal minimum wage plus $0.50 may be the beginning point for next year's discussion.
What to Do: Talk to your legislators during the interim and let them know what an increase in Alaska's minimum wage will do to your business, both in terms of starting wages and those currently above minimum wage. Labor will be using this issue as a critical election issue.
Please send a copy of all letters and e-mails on this important issue to Member Support Manager Stacy Jenkins, fax: 360-943-2456. With any grassroots questions on this or other issues, please contact Jenkins toll free at 866-307-2846.
