Committee approves minimum wage increase

Republicans trying to limit inflationary adjustments

Posted: Thursday, February 07, 2002

Republicans in the Legislature are trying to limit potential increases in the minimum wage.

The House Labor and Commerce Committee on Wednesday approved an increase in the hourly rate from $5.65 to $7.15.

But by a 5-2 party-line vote, the Republican-dominated committee limited increases thereafter to 50 percent of inflation, not the 100 percent included in a pending ballot initiative.

It was unclear whether that deviation was significant enough to make the bill by Rep. Pete Kott substantially different than the initiative, now slated to go before voters in November. If Lt. Gov. Fran Ulmer and Attorney General Bruce Botelho determined that the two are sufficiently similar, the initiative would be pulled from the ballot.

Democratic Gov. Tony Knowles called for a hike in the minimum wage during his 2001 State of the State speech, noting that Alaska trailed the nearest West Coast state by 85 cents. State law sets the minimum wage 50 cents higher than the federal rate, currently $5.15.

Kott, an Eagle River Republican, introduced a two-step phase-in that would have increased the hourly rate to $6.40 this year and $6.90 in 2003, less than the $7.15 ultimately sought by Knowles and without the inflation-indexing sought by the governor. But no action was taken during the 2001 session.

Since then, a drive by the state AFL-CIO was successful in collecting the necessary 28,783 signatures to put a $7.15 minimum wage on the general election ballot. Polls show that nearly 80 percent of Alaskans support a higher minimum wage with built-in inflationary increases.

Some Republicans fear the economic fallout of a minimum wage increase. Anchorage Rep. Norm Rokeberg said the proposed 26.5 percent increase could put the seafood industry "out of business."

"The timing couldn't be worse for the economy," Rokeberg said. "I won't vote for it. Never, never."

State Labor Commissioner Ed Flanagan said, though, that studies on the last two increases in the federal minimum wage have shown a limited impact on businesses.

"The initiative does more harm than this bill does," Kott said.

Because he originally proposed no inflationary increases in the minimum wage, Kott said he was offering a 50 percent adjustment "in the spirit of compromise."

"If we leave the 50 percent CPI (Consumer Price Index) in there, I'm sure it'll be litigated," said Democratic Rep. Harry Crawford of Anchorage. Full inflation-indexing would prevent further political fights, he said.

"There's real people out there that have to make real payroll," said Rep. Andrew Halcro, an Anchorage Republican and business owner. "This is a huge step for a lot of businesses."

"There are also real people out there trying to make a living wage," Crawford responded.

"People don't give themselves jobs," Halcro followed up. "Employers create jobs."

Apparently not many workers would be affected. Estimates are that about 5 percent of employees statewide earn the minimum wage.

"I know in Fairbanks you can't hire anybody at minimum wage," said Rep. Joe Hayes, a Fairbanks Democrat.

The committee also narrowly defeated a proposed amendment by Crawford that would have allowed employers and employees to agree on a wage $2 under the minimum in exchange for "adequate" health-care coverage, as to be determined by the commissioner of labor. Halcro joined the two Democrats on the losing end of a 4-3 vote.

The bill now goes to the House Finance Committee. It does not have a employer's credit for tipped employees.

Bill McAllister can be reached at

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