A Juneau business owner who is cutting one of two full-time employees at her store says Gov. Frank Murkowski's decision to end annual minimum wage increases would help small businesses like hers.
But an employee making near-minimum wage who works a few shops down at the Nugget Mall says low-wage workers have to pay their bills just like everyone else.
The reaction comes in response to Murkowski's approval of a bill that reverses a measure passed by the Legislature in 2002 to annually increase the state's minimum wage to keep up with inflation.
The law, passed in 2002, increased the minimum wage from $5.65 an hour to $7.15, making it the highest minimum wage in the nation. It also established an annual adjustment to the minimum wage based on the Consumer Price Index or $1 above the federal minimum wage, whichever is higher.
That law was passed in response to a ballot initiative that would have achieved the same goals, but the Legislature returned this year and cut the inflation-proofing component of the bill.
Had the ballot initiative passed, the Legislature would have had to wait two years before making any changes to the law. But since it was passed by the Legislature and not by ballot initiative, lawmakers were able to sidestep the two-year wait.
Jim Sampson, executive president of the Alaska AFL-CIO and sponsor of the 2002 ballot initiative, said he was disappointed with the decision, but he has not decided if he will file a new initiative.
Darlene McNaughton, who owns House of Gifts in the Nugget Mall, said automatically increasing the minimum wage threatens the existence of small businesses.
"Pretty soon you are going to have a 16-year-old making what a state employee makes," she said. "I don't see where the economy could handle that. ... How does a small business handle that higher rate of pay?"
McNaughton said she already is cutting her workforce to one full-time employee because she can't afford to pay two.
"It's hard to find people that are worth minimum wage," she said.
Lacey Eriksen, 20, works part-time at Scentiments gift shop at the Nugget Mall for $8 an hour during the summer. For the rest of the year she makes $11.95 an hour running the Mac's Cache bookstore at Juneau-Douglas High School.
Eriksen said the annual increase might not have helped her much, but it would be significant to some of her co-workers who live on minimum wage year-round.
"It's not really a big thing to me because it's a part-time job," she said. "But it would be different for (my friend) because she has bills to pay."
Murkowski, like many of his Republican colleagues in the Legislature, says automatic annual increases to the minimum wage would be too harmful to business.
"We are concerned with the long-term effects an automatic adjustment could have on smaller employers, such as those in fisheries, tourism, food service and retail stores," Murkowski said in a prepared statement. "The result would likely be fewer entry-level jobs in these areas, and less ability for small, local companies to expand and create new economic and employment opportunities."
Murkowski spokesman John Manly said the governor also signed the bill despite concerns that automatically increasing the minimum wage would undermine the public process and prevent individuals from speaking out on wage increases.
Jim Sampson, executive president for the Alaska AFL-CIO, said that the Legislature's decision to overturn the bill, signed in 2002 in response to the citizens' initiative, undermines the will of the people.
"They made a deal behind closed doors to pass it so voters couldn't vote on it, and then come back and make substantial changes," Sampson said. "People need to be concerned about how this impacts the initiative process."
Sampson said the ballot initiative was filed in 2002 after years of asking state lawmakers to address the issue. He noted that initiative sponsors decided to add the inflation-proofing component because of the Legislature's unwillingness to address the issue in the past.
"We put the CPI in so we wouldn't have to keep going back," he said.
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