Seafood Plants Offset Wage Hike Through Room & Board

A machine slices Pacific cod at Alyeska Seafoods while processors create fillets. (Annie Ropeik/KUCB)
A machine slices Pacific cod at Alyeska Seafoods while processors create fillets. (Annie Ropeik/KUCB)

In the next few weeks, thousands of seafood processors will return to Unalaska for pollock B season. They’ll be earning more money, thanks to the state’s minimum wage hike — but they’ll also be paying more to live.

Added room & board costs are just one way processing plants are hoping to offset the wage increase.

Alyeska and Westward Seafoods have never charged for room & board. But on June 1, president Mark Johanson says that’ll change.

“This has been a very, very hard, soul-searching decision for us,” he says. “We’ve been trying to buck the trend, and make it a reasonable and a good place for people to work. The work is hard and challenging, and we understand that … but because of global competition and pressures, we have had to unfortunately make that decision.”

They’re implementing the state’s maximum room & board charge of $15 a day at their shoreside plants in Unalaska. Johanson says it comes out to about a dollar of every hour’s wages, including overtime. Since the minimum wage also went up a dollar this year, he says the changes are a wash, for now.

“And then, of course, as of Jan. 1, [2016], the minimum wage will increase again by a dollar,” he says “So there is no remedy on room & board — we’ll just need to either eat that cost or find other ways to become more efficient in our operation.”

Johanson’s also worried about the $1 to $4 million cost of adding employee health coverage under the Affordable Care Act. So in the long term, he’s hoping to pare down, and automate more of their processing lines.

That’s going to happen at UniSea, too. Unalaska’s biggest seafood processor has plans to shrink its pollock operations back into one factory in the next few years.

They’re also upping their room & board charge. It’s started at $10 a day for the past couple of years, decreasing the more a processor works. But this spring, facing a $3 million cost bump from minimum wage, president Tom Enlow says they’ve gone to the upper limit, too.

“We’re not really in a position to just take that cost — any cost increase, for that matter — and pass it onto our customers,” he says.

That’s because they’re working with set market prices for seafood, where costs are shared between the harvesters and the processors. Since the wage hike impacts the processors, Enlow says they may want to renegotiate those price formulas down the line.

But for now, room & board is their first line of defense, along with some cuts to staffing. That’s come through the natural attrition Enlow says they see at the start of every season.

“There’s always going to be a certain amount of workers that come up and say ‘Oh, I had no idea I was going to have to work all day,’ and they end up leaving,” he says.

This year, UniSea wanted to see how low they could go. They didn’t rehire for those empty jobs, and went through A season about 80 people short.

“Our crab and cod throughput always suffers when our headcount is down below a certain number, and we certainly saw that take place this year,” he says. “But it’s just all in an effort to try to hold those costs down.”

In pollock B season — which covers 60 percent of the year’s huge quota — they’ll move staff around and focus on producing surimi. Right now, there’s a better market for the imitation crab product than there is for fillets.

Over at Alyeska and Westward, president Mark Johanson says they’re keeping their headcount the same for now. In fact, they’ve had to work harder than normal to recruit to fill those jobs.

With higher wages up against room & board costs, and an improving job market down south, Johanson says it’s not as easy as it once was lure new processors up to Alaska.