What You Need to Know About Alaska’s Minimum Wage

Nothing in this article constitutes legal advice. Please consult a tax attorney or tax professional if you have questions about minimum wage compliance.

Small business owners in the Last Frontier State know how important it is to stay up to date on minimum wage regulations. You want to make sure you’re complying, of course. But staying aware of upcoming changes also lets you better plan for your business’s future.

That’s why we put together this quick guide with some key information you need to know about the minimum wage in Alaska.

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What is the minimum wage in Alaska?

Alaska is one of 29 states with a minimum wage above the federal minimum wage of $7.25. The minimum wage in Alaska was $10.19 throughout 2020 and will increase to $10.34 on January 1, 2021.

Notably, Alaska does not allow a tip credit against the state’s minimum wage. In contrast, many states allow employers to pay tipped employees a lower cash wage.

Here are some of the exceptions to the minimum wage and overtime pay rules under the Alaska Wage and Hour Act:

  • Persons under 18 years of age who are employed on a part-time basis for fewer than 30 hours in any week

  • Persons employed in agriculture

  • Persons who deliver newspapers

  • Persons who serve on a voluntary basis to provide emergency medical services or ski patrol services, or work full-time with a fire department.

Some counties and cities can set their own wage laws, so be sure to check the standards in your city. It’s possible for the Anchorage, Alaska minimum wage, for instance, to change at a different rate than the rest of the state.

Will the minimum wage change in 2021?

As of January 1, 2021, the Alaska minimum wage increase brings wages up to $10.34 an hour. The state minimum wage has been rising annually since 2016, after voters passed a 2014 ballot measure that raised the minimum wage from $8.75 to $9.75. Since then, the Alaska minimum wage has been rising incrementally on an annual basis—to $9.89 in 2019, $10.19 in 2020, and up to $10.34 in 2021.

Are there plans to change the minimum wage beyond 2021?

According to the ballot measure passed in 2014, Alaska’s minimum wage will be adjusted for inflation each year after 2016. The measure also states that Alaska’s minimum wage must remain at least one dollar over the federal minimum wage.

How should small business owners prepare for changes to the minimum wage?

The Alaska minimum wage increase has grown steadily since its jump in 2016, but the four- and five-cent raises are not deemed substantial enough by some, and there are public calls for more substantial increases to keep up with the state’s high cost of living.

Here are some other steps you can take to make sure your business is ready for changes in the Alaska minimum wage, 2021 and beyond:

  • Evaluate your staffing: Take a look at your hourly, weekly, and monthly sales to determine if your current staffing levels are appropriate. Based on those sales and the rest of your finances, make a plan for any future hiring. Maybe you need to add a new full-time employee each year. Or maybe your sales are seasonal and hiring contract employees during your busy seasons makes more sense.

  • Hire the best: Hiring the right people is always important, but doubly so when you operate a small business. So take your time and cast a wide net when recruiting new employees. And once you have your team in place, make employee retention a priority by offering them a path to growth and development and by making your business an attractive place to work.

  • Upgrade your technology: When you automate complicated, time-consuming aspects of management, like payroll, you can spend more time focusing on issues like staffing and growing your business. Square makes it easy to get your business off to a good start. Learn how to do payroll yourself, avoid common payroll mistakes, and get your free EIN before you start the hiring process.

To make sure your business is prepared and stays in compliance with applicable wage laws, you should discuss Alaska minimum wage laws with your accountant and lawye