Alaskans to vote on measure raising the minimum wage and mandating paid sick leave

A sign outside of a McDonald’s restaurant in Midtown Anchorage, seen on Oct. 7, advertises openings for jobs that pay up to $16 an hour. Voters will decide the fate of a ballot measure that would set a $15-an-hour minimum wage by 2027 and mandate paid sick leave for workers. (Photo by Yereth Rosen/Alaska Beacon)

 Alaska voters will weigh in on a ballot measure that would increase the state’s minimum wage to $15 an hour by 2027 and require that workers get paid for up to seven days that they are off sick.

To backers, Ballot Measure 1 is about fairness for workers and overall state economic vitality.

“Fair wages and benefits make our communities, economy, and state stronger,” says the website of the organization that is sponsoring the initiative and gathered petition signatures to get it on the ballot, Yes on 1 for Better Jobs.

But opponents in business groups warn that the measure, if passed, would bring dire consequences.

To Sarah Oates, CHARR’s president, the consequences of Ballot Measure 1 would be dire.

“This is going to kill small businesses,” said Sarah Oates, president and chief executive officer of the Alaska Cabaret, Hotel, Restaurant and Retailers Association, known as CHARR.

Like the 2014 ballot measure that created the phased-in minimum wage increase that produced the current Alaska $11.73-an-hour level, this year’s ballot measure is largely the work of labor unions and labor advocates. One of the official sponsors, former state Labor Commissioner Ed Flanagan, was also a sponsor of the 2014 measure.

Polling suggests that the initiative is popular, and it has won support from some key groups. Those may include the Alaska Federation of Natives, which this week is considering an official endorsement. “Working families drive our economy, and when they can afford to buy basics or get sick without fear of not being able to pay their bills, Alaska is stronger,” says the resolution sponsored by the Knik Tribal Council that is being considered at this year’s Alaska Federation of Natives convention.

A third element of the measure would prohibit employers from forcing workers to participate in meetings concerning religious or political matters unrelated to their jobs, as described in the formal statement of support published in the Alaska Division of Elections’ official pamphlet.

“Alaska workers deserve freedom from their boss’ political points of view in the workplace,” said the statement, authored by Flanagan and two other prime sponsors, state Rep. Genevive Mina, D-Anchorage, and Fairbanks business owner Carey Fristoe.

The biggest financial backer is the Fairness Project, a Washington, D.C.-based labor-affiliated organization that supports ballot issues around the nation.

According to reports filed with the Alaska Public Offices Commission, the Yes on 1 campaign has raised $2.6 million, with half that total coming this year and the other half last year. The Fairness Project contributed most of that, but labor unions were also big contributors. 

Both opposition and support in business community

Lining up in opposition are several business organizations.

Along with CHARR, those groups include the Alaska Chamber, the Alaska Travel Industry Association, the Alaska Support Industry Alliance and several others. Representatives of those groups cite the sick-leave mandate as the most problematic, saying it has vague language that might be especially inapplicable to highly seasonal industries like tourism.  

For restaurants, mandated sick leave is particularly difficult, Oates said. “When you’re looking at an industry that requires in-person employment, on-premises employment, having somebody call out has a far more significant impact than other industries,” she said.

But the other elements are also problems for CHARR, she said.

Raising employee wages would put too much of a squeeze on an industry that has still not recovered from the COVID-19 pandemic and that has profit margins of 5% or below, she said. She pointed out that Alaska, unlike some other states, does not use a tip credit to factor gratuities into its calculation of minimum wage. “Even though on paper a tipped employee looks like they’re making the minimum wage right now, in reality they’re making two, three, four or more times that, depending on where they work and time of year and whatnot.”

The provision enabling workers to opt out of employer communications, though it has gotten less attention than the wage and sick-leave provisions, is also a problem, Oates said. It would hamper business owners’ ability to give full information about the effects of policy changes or unionization efforts, she said.

The statement of opposition in the Alaska Division of Elections pamphlet includes a passage concerning that provision.

“While labor interests claim they are protecting the constitutional rights of employees, Proposal 1 will impose a ‘gag order’ on employers by violating an employers’ right to free speech protected by the First and Fourteenth Amendments,” said John Thor Stacey, state director of the National Federation of Independent Business.

Opponents to Ballot Measure 1 are just starting to coordinate a campaign. A newly formed group called Protect Our Small Businesses & Jobs – Vote No on 1 has registered with the Alaska Public Offices Commission. As of Oct. 7, it reported $112.53 in income and $176 in expenses.

However, there are business owners who support the initiative. Some have banded together in a coalition called Alaska Businesses for Better Jobs.

Among the members is Derrick Green, owner of the Anchorage restaurant Waffles and Whatnot. At a news conference held by the group in September, Green said the sick-leave benefits he voluntarily provides to his workers paid off for the community, especially during the COVID-19 pandemic.

“The ability to go home when you have strep throat or you’re feeling nauseous or whatever symptoms may arise actually helped us as a business keep the community safer,” he said.

A higher minimum wage would boost Alaska’s economy, and it would help address the state’s chronic outmigration of working-age adults, ballot measure supporters argue.

A $15-an-hour wage is modest, particularly in Anchorage, where a large percentage of households are scraping by on low incomes, said Thea Agnew Bemben, owner of a consulting company. “When you think about the ability to build new housing, you have to have people who can pay rent. … These things are all connected, and I think getting to $15 is a good start,” she said.

While all employers would follow coalition members’ example and provide those benefits “in a perfect world,” reality requires the conditions to be set in law, said Jasmin Smith, an organizer of Alaska Business for Better Jobs and the president of the Alaska Black Chamber of Commerce.

“By it being an actual law that we all follow, I think it sets a good precedent and it levels the playing field,” Smith said at the news conference.

The sick leave change would vary by the size of the employer. Employees would receive one hour of sick leave for every 30 hours worked, with the total required per year capped at 40 hours for workers at businesses with fewer than 15 employees, and at 56 hours for workers at businesses with 15 or more employees. Employers could choose to provide more sick leave than these minimums.

Alaska’s minimum wage for 2024 is $11.73 per hour. The state will announce the 2025 minimum wage soon. Under current law, the increase is based on inflation as measured by the consumer price index in Anchorage over the previous year. With Anchorage’s 2023 inflation at 1.5%, the increase will be roughly 18 cents, for a total of $11.91 per hour starting in January. If Ballot Measure 1 passes, it would increase to $13 in July 2025, $14 in July 2026, $15 in July 2027 and by inflation annually beginning in January 2028.

Ballot measures elsewhere

Alaskans are not the only voters being asked to decide questions on minimum wage increases and paid sick leave.

In Missouri, there is a ballot measure that closely resembles the Alaska measure. It would increase the state’s minimum wage in steps to $15 an hour by the start of 2026, and it would require paid sick leave at varying levels, depending on business size. It follows past minimum-wage-increasing ballot initiatives that voters passed by wide margins in 2006 and 2018. As in Alaska, the Missouri initiative has been organized by labor unions and affiliated groups and people and is backed financially by the Fairness Project. As in Alaska, it is opposed by some business organizations that cite what they say is vague language.

In Nebraska, a measure on the ballot would require paid sick leave, also at different levels, depending on business size.

The mandates proposed in Alaska, Missouri and Nebraska exist in several other states.

Eight states and the District of Columbia have minimum wages of $15 or above, according to the U.S. Department of Labor, and Alaska has the lowest minimum wage of the West Coast states.

As of the end of last year, 15 states and the District of Columbia had laws mandating paid sick leave, according to the Kaiser Family Foundation.

Some of those laws were put into place by ballot measure, dating back to one approved by voters in Massachusetts 10 years ago, while others were in bills that lawmakers passed.

One persistent criticism of Ballot Measure 1 and others like it concerns the idea of legislating by initiative. Laws are more carefully crafted when they go through the deliberate legislative process, critics argue. And they say they are suspicious of the big organization that is bankrolling the campaign.

“Alaskans weren’t asked to weigh in and offer their input while this ballot measure was being drafted. In fact, it’s unclear who actually wrote the ballot measure and why. What we do know is that it’s being funded by shadow dark money organizations outside the state of Alaska,” Kati Capozzi, president of the Alaska State Chamber of Commerce, said at the first of two public hearings held last month on the initiative.

There have been attempts over the past years to pass bills in the Legislature to address the issues in Ballot Measure 1.

A bill that would mandate paid sick leave was introduced in 2015 by then-Rep. Geran Tarr, D-Anchorage, but it died without receiving a single hearing. Tarr in 2017 introduced another bill on sick leave, and it also died without any committee hearing it.

State lawmakers in 2002 passed a bill increasing the minimum wage, displaced a citizen initiative that would have put the matter on the ballot that year. But the following year, the Legislature removed the inflation escalator that had been an important feature of the citizen initiative.

That experience was followed by the 2014 ballot measure that resulted in the current minimum wage.

Despite the long history of public discussions about that issue, there are signs that Ballot Measure 1 is being overshadowed by a more heated debate over ranked-choice voting, the subject of a different ballot measure.

The public hearings on the minimum wage and sick leave measure held on the mornings of Sept. 23 and 24 drew far fewer participants than those held later those days on the ballot measure that would repeal Alaska’s new system of open primaries and ranked-choice voting.

Two people who called in to testify during the Ballot Measure 1 hearings tried to make arguments, instead, about ranked-choice voting.

One of those was Ellie Lanier of Valdez, who said she had strong opposition to ranked-choice voting. Informed that it was not the subject of the hearing, Lanier admitted that she did not know what Alaska’s minimum wage currently is or what Ballot Measure 1 would do. “I don’t have time to read the entire ballot measure,” she said. “I won’t comment on that because I’m not prepared.”