Two years ago, the Hawaii Legislature increased the state’s minimum wage by 50 cents in the first of four annual increases that will lift hourly pay to $10.10 next January. This week, it bumped up by 75 cents to $9.25.
In the islands and elsewhere across the country, supporters of a wage higher than the current $7.25 federal floor say it will help workers make their financial ends meet and boost the economy by giving some consumers more money to spend. Opponents, meanwhile, say that the move will lead to higher prices, job cuts and more automation.
Hawaii is among 19 states starting the new year with a higher minimum wage; later this year, two more states and Washington, D.C., will see increases.
New York and California plan to put in place a statewide minimum wage of $15 in 2021 and 2022, respectively. That wage floor (roughly $30,000 annually for a full-time employee) was pie-in-the-sky laughable just four years ago — when a couple hundred fast-food workers staged a one-day strike for the fledgling Fight for $15 campaign. Now advocates for low-income workers say the trend is set and other states will likely follow.
Fight for $15 certainly has thousands of backers in the local labor market as the Hawaii Appleseed Center for Law and Economic Justice has testified that the cost of living here is almost 60 percent more than the national average. And the so-called living wage — the amount a person needs to afford life’s basic necessities — is $14.23 hourly for a single adult, according to a calculator devised by Massachusetts Institute of Technology.
But can Hawaii handle a $15 minimum wage? While our state is among those most in need of higher pay, it’s also ill-equipped to make that happen due to mid-Pacific isolation and heavy reliance on low-paying service sector and tourism-related jobs.
While larger businesses might absorb the payroll shock, smaller franchises and mom-and-pop businesses already contending with high costs tied to matters ranging from employee health insurance to a ramping up of fees for unloading cargo in Hawaii ports would surely struggle. They would pass along a slice of the burden to consumers with higher shelf, menu and services prices. Another slice would involve reduction in full-time employee rosters. But that’s nothing new to many low- and moderate-wage workers here who have long juggled at least two jobs.
Last year, the federal minimum wage, which has remained fixed since 2009, became a popular platform plank for presidential candidate Bernie Sanders, who called it “starvation pay.”
That sentiment was echoed here in a report released in April by the Hawaii Appleseed Center, which ranks Hawaii’s average private-sector wages among the lowest nationwide when adjusted for the cost of living. For example, when Honolulu’s average private-sector wage of $25.10 per hour is adjusted for the cost of living, it tumbles to $14.66. The national average is $22.39.
Chances are that at this time next year, when the last of the state’s staggered pay hikes reaches $10.10 and the Legislature is poised to convene, there will be a call for a continued bump upward.
Lawmakers should prep for that probability by taking a hard look at options not tied to wages, such as establishing earned-income tax credits and nailing down more affordable housing. Also, in anticipation of an expected rise in employer use of automation, Gov. David Ige and others are seeking to step up state investments in education and training that lay the foundation for more high-paying technology-focused innovation sector jobs in the islands.
The call for a minimum wage that keeps pace with cost-of-living figures will not go away. But the floor could be increased at a continued gradual pace if offset by a balance in efforts that help low- and moderate-income workers and their families while easing wage-related burdens shouldered by the business community.