Last week, I had a cup of coffee with the owner of my favorite restaurant, and we ended up talking only about next year's labor costs. Everyone I meet who runs a business in Anchorage shares the same concerns.

Let me summarize. Alaska's minimum wage will be $14 per hour starting July 1, 2026, and it will increase to $15 on July 1, 2027.

This is due to Ballot Measure 1, which passed in the November 2024 referendum. The approval rate was nearly 58%, so it was quite significant.

Before the vote, the minimum wage was $11.73. It will rise to $13 in July 2025, $14 this year, and $15 next year, meaning it will increase by over $3 in just three years.

And it doesn't stop at $15. Starting January 2028, it will be automatically adjusted each year based on the Consumer Price Index (CPI).

Honestly, this is what worries me the most. Once it's set, it will increase every year, so if you don't have a habit of budgeting long-term for your business, you'll quickly fall behind.

For reference, even at $15, Alaska will still have one of the lowest minimum wages among West Coast states. There was quite a divide among business owners on this issue during the vote.

However, it's not just about complaining. The law is already in place, and the date is set, so how you use the next eight months is crucial.

First, review your employee wage charts now. Count how many employees are currently earning between $14 and $15.

The calculations are simple. If one employee works 30 hours a week and their wage increases by $1, it will cost about $120 a month, or $1,560 a year.

Payroll taxes and workers' compensation premiums will also increase with wages, so the actual burden will be slightly higher. Be sure to check the numbers with your CPA.

Second, consider the wages of employees in higher positions as well. If a new hire is making $15 but a manager with three years of experience is making $15.50, how do you think that manager will feel?

This is called wage compression, and if you don't create a step-by-step wage increase plan in advance, it will all hit at once in July. Leaving even a few cents of difference is key to retaining employees.

Third, let's talk about employees who receive tips. Alaska does not have a tip credit, so servers must receive the full minimum wage in addition to tips.

I've seen several cases where people coming from other states didn't know this and made mistakes. It's completely different from places like Texas.

Fourth, employees who are salaried, like managers, also need to be reviewed. To qualify for overtime exemption, they must exceed the minimum weekly salary, which is tied to the minimum wage.

Starting July 2026, the minimum weekly salary will be $1,120, and from July 2027, it will be $1,200. If you pay below $62,400 annually, they won't be exempt and will need to receive overtime pay.

Many small businesses have set manager salaries around $50,000. You really need to calculate this in advance.

Fifth, double-check the overtime regulations. Alaska requires overtime pay not only for hours over 40 in a week but also for any hours exceeding 8 in a day.

When the hourly wage increases, the overtime rate will also rise. If your business has been scheduling shifts of 10 hours a day, adjusting the work schedule is the first step to saving money.

Sixth, don't forget about paid sick leave. Under the same Measure 1, starting July 2025, all employees will earn one hour of sick leave for every 30 hours worked.

If you have fewer than 15 employees, you can cap it at 40 hours per year; if you have 15 or more, the cap is 56 hours. This includes part-time and seasonal employees, and any unused hours carry over to the next year.

Sick leave hours are ultimately calculated at the hourly wage, so when the minimum wage increases, the cost of sick leave will also rise. Make sure to check that the hours accrued in your payroll system are accurately recorded.

So, how should you adjust prices? Personally, I would prefer to gradually raise menu prices in two or three increments starting in the spring rather than making a big jump all at once in July.

Customers are aware of the news. If prices increase by $2 all at once, they might be shocked, but if it's $0.50 over several months, they tend to accept it.

You also need to consider food costs. Since everything in Alaska comes by boat, the base costs are already high. By comparing suppliers and reducing waste, you can offset some of the labor costs.

Our second-generation workers take wage increases for granted. When I first immigrated and started working, I didn't even know what the minimum wage was; I just accepted whatever was offered. The world has changed a lot since then.

I don't fully agree with the government setting these numbers. However, I do believe that workers should be able to afford rent and live, and I think that adhering to established rules is a sign of a capable business owner.

Accurate regulations are well organized in the FAQ section of the Alaska Department of Labor's Wage and Hour page. Be sure to check any ambiguous points there.

July 1 of next year will come faster than you think. Take a moment this month to review your wage chart and work schedule. That's the first step.