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Debate on ballot measure to hike minimum wage gets audience, despite lack of organized opposition

Suzanna Caldwell
Former Labor Commissioner Ed Flanagan, co-sponsor of Ballot Measure 3, testifies in a hearing about the Alaska minimum wage during the 2014 legislative session. Flanagan argued the initiative, which would increase Alaska's minimum wage, during a public event in Anchorage on Wednesday. RICHARD MAUER / Anchorage Daily News

In the almost 20 years Alaska Common Ground chair Cliff Groh has been involved in the organization, he has spent a lot of time organizing, participating and moderating debates.

So when it came time to find an Alaskan willing to argue against Ballot Measure 3, an initiative that could increase Alaska’s minimum wage, he was surprised to find it was a challenge to come up with participants.

“It’s usually not this hard,” Groh said.

Part of that is timing -- it’s still early for the initiative, which will be voted on in November's general election -- but the topic is also far from controversial. So far, no formal group has organized to oppose the measure. A poll conducted by the Alaska House Majority Caucus in March found that 69 percent of respondents supported a minimum wage increase. Even the Republican-led House of Representatives passed a substantially similar measure during this year’s session, though the bill never made it through the Senate.

After scouring the business community, Groh said the organization couldn’t come up with anyone who would agree to participate in a debate. Luckily, Groh found himself at a “party” of economists -- the International Association of Energy Economists -- earlier this year and was able, through a little networking, to find Kyle Hampton, an assistant professor of economics at the University of Alaska Anchorage and director of the UAA Center for Economic Education.

Hampton took on Ed Flanagan, former Department of Labor commissioner and current co-sponsor of the measure that would increase Alaska’s minimum wage. The initiative would increase the minimum wage from $7.75 per hour to $8.75 an hour in 2015, then increase it another dollar in 2016, after which it would be adjusted annually for inflation. If the federal minimum wage increases to an amount over those figures (which is likely, given the current push by the White House to raise it to $10.10) the minimum wage would be $1 over the federal minimum.

Hampton argued in front of a crowd of about 75 people at the Wilda Marston Theatre at the Loussac Library that the minimum wage is mostly an arbitrary figure that doesn’t necessarily lift people out of poverty. He suggests that the wage increases offer a short-term solution to a long-term problem of poverty.

Flanagan argued that it’s more than time for an increase in the wage, since it hasn’t increased in five years. It’s remained stuck at $7.75 -- 50 cents above the federal minimum -- since legislators moved to “gut” a 2002 law that would have matched the minimum wage with the cost of living index. Had that provision stayed in the earlier bill, the minimum wage would be $9.53 today.

Flanagan noted that Alaska, which was long a leader in having one of the highest minimum wages in the country, has the 19th highest wage today. If the initiative doesn’t pass, Alaska will drop to 21st.

According to the Economic Policy Institute, some 44,000 Alaskans would be affected by an increase in the minimum wage. However, Hampton noted that preliminary data from the Congressional Budget Office, which looked at how people would be affected by a $10.10 increase at the federal level, unemployment could rise to somewhere between 1.6 to 17 percent. Hampton noted that equates to about 400 to 4,600 Alaska jobs lost.

According to the state Department of Labor and Workforce Development, less than 1 percent of the overall workforce makes minimum wage, or just under 3,000 jobs.

Hampton said while employers will bear the brunt of the cost in the short term, they will eventually look for outside solutions to their labor needs -- whether that’s through labor-reducing technology, outsourcing jobs or simply not hiring, leading to slow moving unemployment. He argued that unemployment is far more detrimental to society.

“Money lost isn’t the issue,” Hampton said. “It’s the human cost to the most vulnerable in our society.”

Those options include looking at other options include wage subsidies that spread wealth but don’t burden those already in need. One way could be increasing the federal earned-income tax credit.

Flanagan disagreed, saying the program already costs the federal government $54 billion a year and only provides a little less than $2 an hour in wage increases.

But Hampton said those costs were better spread out among different socio-economic groups, mostly coming from the richest Americans. That statement found jeers from the crowd.

Hampton still argued that more pointed help is the real solution to address poverty, not a scattershot approach of arbitrarily increasing the minimum wage.

“I want the same thing as everyone else,” Hampton said. “I just come from this bizzaro-economics world.”

Flanagan was willing to concede that a high minimum wage, like the $15 increase recently approved in Seattle, could have potential negative impacts, including job loss. He countered that the Alaska increase is far more modest in scope and still an important increase for those low-wage workers.

“But what would you tell them about not having a modest increase in minimum wage?” Flanagan said. “... You’re telling people they’ll be better off without a $2 raise? Good luck.”

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