Thousands of Alaska's lowest-paid workers are receiving a boost in their paychecks in the first couple weeks of this year.

Due to a change in state law, the state's minimum wage rose on Jan. 1 to $7.75 per hour.

Minimum-wage earners working full time can expect a $1,040 hike in their annual salary -- an additional $20 per week. That's on top of the $4 per week increase they received in July to keep Alaska's minimum wage even with the federal level.

By the most conservative estimates, the wage hike is directly affecting more than 8,000 workers in Alaska, more than half of them adults, according to state officials. Most of them are employed at hotels and restaurants, but they also work in seafood processing, the arts, health care, construction and other jobs.

State economists and business owners say many more workers who earn more than the minimum wage also will see a wage hike as employers adjust their pay scales to account for the new state law.

That "trickle-up" effect on wages will occur at a number of businesses -- from the family-owned Tastee Freeze ice cream shop in West Anchorage to Safeway Inc.'s chain grocery stores.

"The end of this week, or early next week, that's when we'll make adjustments to the other workers' pay," said Rich Owens, owner of the Tastee Freeze, last week.

Despite the higher minimum, the wage increase has not kept pace with inflation in recent years.

Some employers might increase their prices of their goods and services or trim their workforce to account for higher payroll costs. Some might employ fewer teenagers, because they might be able to hire more-experienced workers at the new minimum wage. Those are some of the things that can happen when labor costs increase, according to Brian Rae, a state economist

Some researchers in the Lower 48 disagree that minimum-wage increases reduce employment, however.

MIXED ASSESSMENTS

Businesses and minimum-wage employees reached last week had mixed opinions about how the increased wages will affect them.

Some workers said they were pleased with the wage increase.

Jerry Gage, who earns just above the minimum wage as a geophysical surveyor, said he hopes it will help everyone struggling with the cost of living in Alaska. But he's not sure yet whether the higher minimum will boost his own wage.

Roland Shanks, an Anchorage resident, said he wrote to legislators last year in favor of the increase, and he thinks lawmakers didn't go far enough. They should have required that Alaska's minimum wage rise each year with inflation.

"I get a cost-of-living raise every year, and so do people receiving Social Security, but minimum-wage earners don't. That seems kind of unfair," he said.

Heidi Hilmes, 17, earns the minimum wage at the Tastee Freeze eatery, her first job other than baby sitting. She said the wage increase will help boost her savings for attending college.

But Kimberlee Magee, a Denny's Restaurant server in Anchorage who has been paid the minimum wage for about a decade, believes the increase could harm workers.

Whether it's by trimming the number of jobs or other means, "Businesses are going to do whatever they have to do to cut expenses," she said.

Because she gets most of her income from tips, the increased minimum wage won't boost her income by much, Magee said.

One local employer, Safeway Inc., said it will raise its wages for a couple hundred employees in Alaska due to the new law, and the grocery chain won't cut jobs because of the increased payroll.

"We're still hiring (more people)," said Glenn Peterson, the company's Alaska district manager.

But Owens, owner of the Tastee Freeze shop, said he might have to increase his prices later this year due to the wage hike.

WAGE WARS

The state's minimum wage has been a sore point in recent years.

For decades Alaska's minimum stood at 50 cents above the federal minimum. By 2001, Alaska's minimum was $5.65 an hour, compared with the federal $5.15.

That year, several union leaders proposed a voter initiative to increase the Alaska minimum wage and adjust it annually for inflation.

In response, in 2002 the Republican-led Legislature passed a law setting Alaska's minimum at $2 above the federal rate and requiring an annual adjustment for inflation. Because this new law was so similar to what the union leaders wanted Alaskans to vote on, their initiative came off the ballot.

With the initiative threat gone, the Legislature rewrote the new law in 2003. It deleted the inflation adjustment and the long-standing requirement that the state's minimum exceed the federal minimum by a set amount. The new Alaska minimum wage was locked in at $7.15 an hour.

Democrats were incensed, but they were unable to win support to raise the rate or link it to inflation.

Until last year.

Congress boosted the federal minimum wage to $7.25 as of July. Alaska's rate was about to become obsolete. Democrats and Republicans last spring compromised on an increase. The new law restored the historic requirement that the state's minimum wage be 50 cents above the federal minimum starting this month, but didn't require inflation adjustments.

"At least we got an increase, but it's still the lowest on the West Coast," said Sen. Bill Wielechowski, D-Anchorage, a prime sponsor of last year's legislation. He originally proposed a new minimum of $8.65 per hour.

MORE CHANGES LOOMING?

Some Anchorage restaurant owners want legislators to revise Alaska's new minimum wage law this year. They say waiters and waitresses earn more in tips than they do from their minimum-wage salary -- in some cases a lot more than restaurant staff paid above the minimum wage.

"The challenge for the restaurant industry is that the (wage increase) doesn't go to the guys that make the least. It goes to those making the most," said Dale Fox, executive director of the Alaska Cabaret, Hotel, Restaurant and Retailers Association.

His group is trying to persuade legislators to allow employers to take a credit for a certain amount of tips earned by their workers against the employers' payment of the minimum wage.

At least some of the Democrats who supported last year's minimum-wage legislation oppose that change, called a tip credit. Not all servers get big tips, they point out.

"I have a lot of people in my district who are low-wage owners. I couldn't justify it," said Wielechowski, who represents Muldoon and Mountain View in the state Senate.

Rep. Craig Johnson, an Anchorage Republican representing the Oceanview, Klatt and Campbell Lake neighborhoods, introduced a bill for a tip credit at the end of last year's session. His bill is up for debate in the legislative session that starts this month.