Opinion: Increased pay from Ballot Measure 1 will recirculate through Alaska’s economy

You might have voted for Ballot Measure 1, to increase Alaska’s minimum wage and establish the state’s first sick leave requirement, because you think every person should be able to make a living wage. You might have voted against it because you don’t want to force a burden on already struggling small businesses. Both are great reasons. In the search for the right balance between them, there’s an aspect that I don’t see being discussed much.

I think everyone can agree that all Alaskans ideally would earn a living wage. No one is against the concept of not starving, right? Also, I don’t think most of us spare much concern for the ballot measure’s impact on international mega-corporations. The choice hinges on the burden on Alaska’s small businesses.

When small businesses pay out money, they want and need to see a benefit. On the face of it, Ballot Measure 1 is a cost without a benefit. Employers get less, employees get more. Why on Earth would a small business vote for that, much less support it?

Say a person gets paid $20 for an hour of work. She spends it at a nearby coffee shop for drinks and a snack. The owner of the coffee shop spends it on beans from a local roaster. The roaster spends it on dinner at a restaurant, and the restaurant owner sets it aside to buy more salmon the next morning. That $20 generated $100 of local economic value in 24 hours.

This is an economic concept called the “velocity of money.” That’s a speedy $20 bill, and that’s very good for the local economy.

[Alaskans backed a measure to raise the minimum wage and establish sick leave. Now employers are trying to make it work.]

Contrast that with Alaskans for whom all income is dedicated to necessities. People who are struggling just to survive also do not add much to the local economy. Then, contrast it on the other end of spectrum, with millionaires who will use that $20 to increase their personal worth, literally removing it from the economy.

There IS a tangible benefit. As Ballot Measure 1 goes into effect, wages will go up for our friends and neighbors, people we see every day. Many who previously struggled will have a few more dollars to spend on things like coffee, restaurants and locally sourced pet supplies.

Sales revenue will go up for most of those same small businesses, including mine. I will use it to further increase wages so I retain the best people, and the cycle will restart.

Twelve years ago, Americans were asked how much more should a CEO get paid than their average worker. Their responses averaged out to 6.7 times more. They thought that in a perfect world, the highest-paid employee would make about seven times what the average worker makes. Not the lowest, the average. When asked what they thought that pay ratio actually was 12 years ago, they guessed about 30-to-1.

Ask yourself that question. How much do you think it should be?

In the 1950s and ‘60s, America saw the rise of the biggest middle class the world had ever seen. Back then the CEO-to-average-worker pay ratio was about 20-to-1. In 1990, it was 56-to-1. In 2022, that number averaged 350-to-1.

Jeff Bezos doesn’t shop at my store. But my friend at the coffee shop is stopping by after her shift. I did vote my conscience, and my pocketbook as well. I really think this will be good for all of us.

Mark Robokoff lives in Anchorage and owns AK Bark, a pet supply store with a focus on Alaska-made merchandise.

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