In a potential framework for an agreement, the state House Finance Committee on Thursday approved a bill that would increase the minimum wage to $10 an hour by January 2018 and expand the tip credit to $1 while shielding low-income workers.
The $7.25-an-hour minimum wage would gradually rise to $10 an hour over four years, giving businesses time to absorb the increase. The 25-cent tip credit — the amount businesses can deduct from the minimum wage for workers who earn tips — would rise to $1 over three years.
But in a new concept from the House, a "poverty threshold" would help protect low-income workers. Businesses would not be able to deduct the tip credit from workers who earn less than 250 percent of the poverty level, or about $33,500 a year.
"We want to make sure we never have a situation where people are making under the minimum wage" because of the tip credit, said Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), chairwoman of the House Finance Committee.
Several labor and social-service activists said privately Thursday that House Bill 2580 might represent the best chance at ensuring a minimum-wage increase this session. The minimum wage has not been increased in Hawaii since 2007, and negotiations disintegrated last session over the tip credit.
Sen. David Ige (D, Pearl Harbor-Pearl City-Aiea), chairman of the Senate Ways and Means Committee, called the "poverty threshold" approach to the tip credit "an intriguing idea."
"It is in the range of what we’ve been thinking of," Ige said of the House bill. "At least there has been talk around those general parameters as being kind of where we think we can find a meeting of the minds on the minimum-wage issue."
Ige was expected to speak with Sen. Clayton Hee (D, Heeia-Laie-Waialua), chairman of the Senate Judiciary and Labor Committee, about a Senate version of a minimum-wage bill.
Ige has scheduled Hee’s Senate Bill 2609 for Friday morning before his committee. Hee has sought to increase the minimum wage to $10.10 an hour, eliminate the tip credit and tie future increases in the minimum wage to the Consumer Price Index.
Hee has likened the tip credit to a tax credit for businesses.
"It would be difficult to support a $1 tip credit in my mind," Hee said in his initial reaction to the House bill.
Sherry Menor-McNamara, president and chief executive officer of the Chamber of Commerce of Hawaii, said the chamber appreciates that the House removed a provision from an earlier draft that would have tied the minimum wage to the Consumer Price Index. She said, however, that the increase to the minimum wage still seems steep.
"And, while the tip credit seems reasonable, we defer to the tip industry to determine what the right level is," she said in an email.
Drew Astolfi, executive director of Faith Action for Community Equity Hawaii, a faith-based social-service advocacy group, said the House bill was moving in the right direction. He said he would prefer that the minimum wage reach $10 sooner than four years, because low-income workers have been waiting so long for a meaningful raise.
He said expansion of the tip credit would still be significant even with the "poverty threshold." "It goes up to $1 now. It always seemed to us like that was a relationship between you and your waiter, not between you and the owner of the restaurant," he said. "On the other hand, we’re moving in the right direction, and we look forward to whatever happens in the Senate."
Earlier this month House and Senate leaders had privately reached consensus on raising the minimum wage to $10 an hour by January 2018 and expanding the tip credit to 75 cents. Hee, however, objected because he wanted a full debate over whether to keep a tip credit in state law.
