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What is The Minimum Wage in Alaska?
Personal Finance

What is The Minimum Wage in Alaska? 

For those just entering the workforce or looking at entry-level opportunities, it’s normal to wonder what the minimum wage is in their area. It helps them estimate how much they can earn if they are starting at the bottom and having to work their way up. Additionally, it can make it easier to decide what kinds of minimum wage jobs to pursue. Which allows them to focus on options where the compensation feels fair based on their effort. If you want to know what the minimum wage is in Alaska, here’s what you need to know.

What Is a Minimum Wage?

A minimum wage is a dollar amount reflecting the lowest amount an employer can pay a covered nonexempt employee per hour legally. It applies to the majority of the workforce, aside from a few special circumstance exceptions. This includes full-time students, young workers during their first 90 consecutive days of employment, disabled individuals working in accordance with specific contracts, student learners, and tipped workers.

While the general federal minimum wage is $7.25 per hour. For tipped workers, the minimum wage is $2.13 an hour. However, employers of tipped workers do have to ensure that. With tips, employees receive the equivalent of the minimum wage. If a worker’s tips leave them below $7.25, they are required by federal law to make up the difference.

States and cities are allowed to enact additional minimum wage laws. They have the ability to require a higher minimum wage locally, though they can’t make it lower. In those cases, employees must receive the higher minimum wage from their employer.

Additionally, states and cities can require employers to pay tipped workers a full minimum wage and not a reduced rate due to them earning tips.

What Is the Minimum Wage in Alaska?

In 2020, Alaska’s minimum wage is $10.19. This applies to all workers, including those who earn tips. That means, for example, restaurant workers must receive minimum wage from their employer. Anything they earn in tips is above and beyond that amount, only, and cannot be used as justification for paying less than minimum wage for their hours worked.

However, in January 2021, the Alaska minimum wage will rise. The new minimum wage will be $10.34, a $0.15 increase. The reason for the rise is a ballot initiative that was passed in 2014. It requires that the minimum wage be eligible for an annual adjustment. Allowing it to account for inflation.

As a result, Alaska’s minimum wage changes regularly. If it needs to be adjusted due to inflation, a new rate goes into effect on January 1 of the eligible year. There is a short delay in the calculation, however.

For example, an inflation assessment, focused on the Consumer Price Index in Alaska based on 2019 data, is what is leading to the minimum wage increase in 2021. Data from 2020 will be used to determine if an additional pay bump will occur in 2022.

The delay is based on when the appropriate data is available for review. Since 2020’s data won’t be complete until December 31, 2020, it can’t be reviewed until 2021. And, since changes go into effect on January 1. That means the earliest 2020’s data can have an impact is January 1, 2022.

Regardless of Inflation….

Additionally, regardless of inflation, Alaska’s minimum wage has to be a minimum of $1 above the federal minimum wage at all times. It’s required by law. While this likely won’t be relevant based on the existing federal minimum wage of $7.25, if the federal minimum wage is increased, it could result in a shift in the Alaska minimum wage.

For instance, if the federal government decided to make the minimum wage $10.00. Alaska’s minimum wage as at the 2021 rate of $10.34, Alaska would legally have to boost its minimum wage to $11.00, at a minimum.

However, it’s important to note that the last federal minimum wage adjustment occurred back in July 2009. Currently, there isn’t any legislation passed that would raise it.

Do you think the Alaska minimum wage is high enough? Why or why not? Share your thoughts in the comments below.

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