Understanding the minimum wage

When people talk about work and pay, the term "minimum wage" comes up a lot. Most people believe a minimum hourly wage must be paid to all workers at all times, regardless of their job. This seems simple, but in reality, how minimum wage works in the United States—and especially here in Alaska—can be surprising. Not everyone realizes that there are exceptions and special rules built into the law that sometimes confuse both workers and employers.

Let's start with the basics. Minimum wage is the lowest amount an employer is legally allowed to pay their workers per hour. In Alaska, that minimum wage has been $11.73 per hour, but big changes are coming soon that will raise paychecks for many people. Many Alaska workers making minimum wage are about to see bigger paychecks. Thanks to last year's Ballot Measure 1, the minimum wage will rise to $13.00 per hour starting July 1, 2025. And this is just the beginning. On July 1, 2026, the minimum wage will increase again, this time to $14.00 per hour. Then, on July 1, 2027, Alaska's minimum wage will rise to $15.00 per hour. After that, starting in January 2028, wages will go up every year to match increases in the cost of living, making sure workers don't fall behind as prices rise.

These new rules apply to all workers in Alaska, no matter how they get paid. Whether a person works by the hour, gets paid for each piece they make, or earns money through sales commissions, they must still earn at least the minimum wage for every hour they work. This includes restaurant servers, commission-based salespeople, and others. The only exceptions are certain types of jobs that have special rules, such as some trainees or students in specific programs, but these are rare and the law is very specific about who qualifies.

Even though some jobs, especially those that involve tips or commissions, might have a base pay that looks lower than minimum wage at first, Alaskan law is clear: employers must always ensure that total earnings bring no worker below the legal minimum wage for their hours worked. In some other states, businesses can pay "tipped minimum wage," but not here. Alaska does not allow a reduced wage for tipped workers—the state's minimum wage law covers everyone, and tips are extra on top of your regular paycheck. If a server receives low tips, their employer must add to their wages to reach the minimum wage.

This issue affects many people, according to annual reports from the U.S. Bureau of Labor Statistics. Nationwide, 1.0% of hourly paid workers earned the federal minimum wage, and about 1.2% earned less than the federal minimum wage. This comes out to about one million people, with most of these jobs in restaurants or service industries where tips or commissions are common. Sometimes, workers may end up making less than they should, either because business is slow or their employer is not following the rules. In Alaska, the law provides stronger protections.

Minimum wage workers tend to be young. Workers under age 25 represented 44% of employees paid the federal minimum wage or less. Among employed teenagers (ages 16 to 19) paid by the hour, 3% earned the minimum wage or less. Nearly 80% of minimum wage workers work in service occupations, mostly in food preparation and serving-related jobs where tips are common. Alaskans fare better than most: we have the lowest percentage of workers making minimum wage or less of every state in the nation.

It's not just hourly workers who benefit from these changes. Some workers who get a salary instead of an hourly wage will also see increases. Managers and professional workers who do not get overtime pay must now receive at least $1,040 per week, up from $952.80 per week.

If you are unsure about your pay or believe you are not being paid fairly, you have the right to ask questions. Workers and employers can learn more about Alaska's wage laws by visiting the state's website at https://labor.alaska.gov/lss/whhome.htm. For questions about the new rules, you can also call (907) 269-4900 or email statewide.wagehour@alaska.gov.

Christian M. Hartley is a 40-year Alaskan resident with over 25 years of public safety experience and public service. He runs a freelance business, Big Lake Writer, from home in Big Lake that he shares with his wife of 19 years and their three teenage sons.