Alaska’s minimum wage has increased annually since voters tied the hourly rate to inflation in 2014. Earlier this month, it went up by $0.18 per hour, from $11.73 to $11.91.
But this year, the minimum wage is going up twice. On July 1, it’s jumping by more than a dollar – to $13 per hour. That’s after voters passed Ballot Measure 1 last November. The initiative increases Alaska’s minimum wage to $15 per hour by 2027. And it requires employers to offer one paid hour of sick leave for every 30 hours worked by an employee.
Statewide, 58% of voters backed the initiative. But it failed on the central and northern Kenai Peninsula.
Michelle Miller has co-owned Jumpin’ Junction off Kalifornsky Beach Road with her husband, Kevin, for about eight years.
“We say we’re the only entertainment center on the peninsula – indoor entertainment for the whole family,” she said.
Jumpin’ Junction has blacklight mini golf, inflatable bounce houses and an arcade. The business also has 10 part-time employees, who Miller says will be affected by the changes approved by voters. Miller says most of their employees are teenagers who start at minimum wage.
She says she didn’t know the minimum wage and sick leave were on the ballot until about a week before the election.
“I am embarrassed to say – and I'm very politically active – I had no idea until I started researching the other ballot measure,” she said. “I'm like, ‘Well, if there's a two, what's one?’”
She’s talking about Ballot Measure 2, which would have repealed Alaska’s open primary and ranked-choice voting systems. That initiative narrowly failed.
She says the results were frustrating and a little scary. But she understands why some people supported the initiative.
“I get wanting to support the little guy,” she said. “But I think a lot of people forget, or when they see that wording, they think the Walmarts, the Safeways, the Freddies. That's not us.”
For Jumpin’ Junction, higher wages for employees will come with higher prices for customers. Miller says they’ll have to invest in software that can track employee hours to comply with the new rules around sick leave. Their business won’t be able to participate in as many community fundraisers. And Miller says she and her husband have long-term concerns.
“We also realize we are a luxury,” she said. “If you need to feed your kids or bring them to Jumpin’ Junction, you're going to feed your kids. We're a luxury, and we're going to be at the bottom of the list, and we know that, and it's going to hurt, and hopefully we can stay open.”
Not all businesses oppose the changes, though. More than 120 businesses around the state created Alaska Business for Better Jobs, a cohort supporting Ballot Measure 1.
David Ottoson was a part of that coalition. He owns Rainbow Foods, a small grocery store across the street from the state capitol building in Juneau.
He has about 30 employees who all make more than minimum wage and get paid time off, and have for years. Ottoson said that means they won’t have to make any changes to comply with the new law.
“It just made a lot of sense to raise the minimum wage, because it hasn't been raised in such a long time. That’s kind of pitiably low compared to the cost of living,” Ottoson said.
Ottoson said he boosted wages and started offering leave during the COVID-19 pandemic, when he struggled to find workers and wanted employees to have paid time off if they got sick. He said the results were surprising. Ottoson said Rainbow foods has been more profitable than ever the last few years
Ottoson said it’s about thinking of employees as assets. Investing in those assets, he said, has helped recruitment and retention. And ultimately, that’s good for business.
“If you take the viewpoint that they're an asset, then you want to invest as much as you can in training, in wages to the extent you can,” he said.
Since the ballot measure passed, the state’s labor department has been fielding a flurry of inquiries from businesses around the state.
Jeremy Applegate heads the state labor department’s wage and hour office. He’s tasked with ensuring employers follow the state’s labor laws, including enforcing the minimum wage. Ahead of the July 1 implementation, he says their department is trying to get the word out about what the new rules mean for businesses.
“It's just the timing that people are concerned with and then having to pay attention to the salary thing we're talking about,” he said. “But the the sick leave is a new is a new avenue that everybody's obviously concerned with, because it's new and and with new comes uncertainty, and with uncertainty comes, you know, fear
For instance, he says people don’t always realize minimum wage increases also impact how much salaried employees are paid. State law exempts certain salaried workers from its minimum wage and overtime rules. But, it also says those employees must make at least double what they would if they were working an hourly position at minimum wage.
“It's a hidden cost to businesses with regard to wages,” he said. “This isn't the only time it wasn't considered. Back in 2014, a lot of employers were like, ‘Whoa, wait a minute. What do you mean? It increases the salaries of my salaried employees as well?’ And it's like, yeah, because it's based on double the minimum wage.”
Applegate says their office relies on employees speaking up if they suspect their bosses aren’t following Alaska’s wage laws. He says it costs an employer less to bring themselves into compliance than for an employee to file a claim and for the state to investigate.
“If you could see to it that you're doing the right thing and following the law and making this correction, that would be great,” she said. “ … We can do a lot through education without having to open an investigation, but if we do have to open an investigation, that's something we'll do.”
He says the two things he gets asked about most are how the new sick leave rules impact minors and how business owners can engage in the regulatory process.
State law currently exempts minors working less than 30 hours per week from paid sick leave requirements. Starting Jan. 1, minors will be eligible for sick leave the same way other workers are – one hour of paid sick leave per 30 cumulative hours worked.
And Applegate says employers should get on the state regulatory commission’s mailing list to stay informed about any regulations put forward to enact the new rules.
Any business with questions about how the new rules will impact their operations should reach out to the state wage office by calling 907-269-4900. Applegate says his staff are also wrapping up a document of frequently asked questions, which they hope to publish soon.
