Knowles, Rep. Kott offer plans to raise Alaska minimum wage

PHOTO/Rob Stapleton/AJOC
Gov. Tony Knowles and Rep. Pete Kott, R-Eagle River, think a hike in the state’s minimum wage is long overdue. But restaurant operators say state legislators should think the issue through very carefully. Restaurants, particularly the fast-food sector of the industry, could be severely affected, according to Jack Amon, president of the Alaska Hotel, Motel and Restaurant Association.

Knowles and Kott have both introduced bills raising the current $5.65 per hour minimum wage. Kott’s House Bill 56 was up for a hearing in the House Labor and Commerce Committee, chaired by Rep. Lisa Murkowski, R-Anchorage, in late January.

Kott’s bill would raise minimum pay from $5.65 per hour to $6.40 in the first year, and to $6.90 per hour in the second year. The governor’s bill would raise the minimum to $7.15 per hour, and then be automatically adjusted as living costs rise.

Legislators on the committee expressed frustration at the lack of information about how many workers in the state are actually paid the minimum wage and who they are.

"I think a raise in the minimum wage is long overdue, but who exactly is this bill supposed to help?" asked Rep. Norm Rokeberg, R-Anchorage.

State Labor Commissioner Ed Flanagan said the best information his department’s Research and Analysis section has is data gathered in the fourth quarter of 1998 that shows there were 14,400 employed Alaskans earning between $5.75 and $6.74 per hour.

"Because this survey was done in the fourth quarter, October through December, it’s very safe to assume that the number during the summer months is much higher," because the tourist season is in full swing, Flanagan said.

The research is part of a national survey paid for by the U.S. Bureau of Labor Statistics, the commissioner said.

National data shows the majority of minimum wage workers are adults, Flanagan said, but the department has no data as to ages of the Alaska workers or whether they are heads of households. Other data the state has indicates that about 32 percent work in restaurants and bars, he said.

"We have a real lack of data," Rokeberg complained. "How many of these 14,000 are heads of households? How many are kids?"

A survey of Alaska members of the National Federation of Independent Business, a small-business group, that was sent to legislators indicated that 15- to 19-year-old workers were the largest age group of employees among small businesses in Alaska, at 19 percent of the members’ work force.

Eighty-nine percent of the NFIB’s Alaska members also said they paid their employees more than the minimum wage.

Murkowski, who chaired the session, said, "We’re here to gather information on this issue and get it out on the table."

Kott said one of his goals was to separate the current link between the state and federal minimum wages. Current law has Alaska automatically 50 cents above the national minimum. "We ought to set our own," and not rely on the federal government, he said.

Flanagan said there hasn’t been an increase in the U.S. minimum wage for several years. "Until 1981 the federal government did a pretty good job of keeping the U.S. minimum wage in line with inflation. But from 1981 to 1990 there was no increase," he said.

The Knowles administration has tinkered before with a hike in the wage, but waited to see if Congress would act, Flanagan said. "We decided not to wait any longer."

Knowles chose $7.15 per hour as a proposed new minimum, the commissioner said, because at that level an adult working 60 hours per week -- one parent working 60 hours or one working 40 and a second working part-time at 20 -- would earn enough for a family to be at 105 percent of the established poverty threshold for Alaska.

Roxanne Smith, a waitress at The Hangar on the Wharf, a Juneau restaurant, told the committee a minimum wage hike would get her above the poverty level.

Her gross income last year was $11,000 including tips, on which she has to support two children. Since her employer doesn’t offer health insurance she relies on Denali Kid Care, a state medical program, for her children, and buys private catastrophic health coverage for herself.

Restaurant staff are commonly paid minimum wage and rarely get raises. Tips are not as lucrative as many believe because many foreign visitors who visit Juneau during summer, such as Europeans, are not used to tipping, she said.

But she still has 8 percent withheld from her wages for federal tax on assumed tips. Also, her employer requires her to pay the cost of any diners who walk out on checks, she said.

Restaurant operators presented a different picture to the committee. Amon, speaking for the hotel and restaurant association, said most restaurant operators pay more than minimum wage and that wait staff earn between $12 and $25 per hour when tips are included. He offered to provide the committee with payroll records of his member companies to prove that.

But there are typically no tips in fast-food restaurants, where unskilled or low-skill workers are the norm, Amon said. Generally fast-food operators employ young people, often in their first job, he said.

A hike in the minimum wage would force operators to squeeze out young or low-skill workers, according to Bill Pargetter, a veteran restaurant operator who now operates an Applebee’s franchise in Anchorage. He said that if he had to reduce his 85 workers to 75 to absorb cost increases, he would preserve jobs for his most experienced workers. An experienced waiter or waitress can handle five tables, Pargetter said, while an inexperienced waiter or waitress is usually restricted to three.

"... I’ll wind up cutting off the less skilled," Pargetter said.

Updated: 
02/10/2001 - 8:00pm

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