Leaders in both the state House and Senate are determined to raise the minimum wage this session, acknowledging that the current baseline wage of $10.10 an hour has not kept up with the economic times.
The two chambers have different proposals that now must be massaged into one. It’s a stubborn challenge that will test the give-and-take expertise of all parties, perhaps the most crucial and high-profile challenge of the session.
Both chambers have settled on $18 an hour as the right ending point; it’s how they get there that’s at issue. Senate Bill 2018 calls for an increase to $12 this Oct. 1, then peaking at $18 in 2026. Basically it comes to a $3-per-hour raise every two years.
Under House Bill 2510, the first increase is more, to $13 an hour, but coming a few months later, on Jan. 1, 2023. Increases of $1 would occur each year, ending at $18 in 2028, two years later than the Senate proposes.
The Senate version moved quickly and emerged unchanged with the 24-1 support of that chamber. The House bill started out as an eight-year plan that included changes in state tax credits, designed to give workers a further boost. Trims in the House Finance Committee moved it closer to the Senate proposal, yet a gulf remains.
Public testimony illustrates the precarious balance lawmakers must navigate. Even among those who favor an increase, many complain that $18 an hour falls short, and taking four or six years to get there means workers will never catch up. Those representing businesses, especially small businesses, say they simply cannot afford to pay that much.
Chamber of Commerce Hawaii called the need for an increase “urgent” — it’s right on that score — but wants it capped at $15, rolled out over five years, and warns that a more drastic increase could actually harm employees. A poll of Chamber businesses indicated that of 450 who responded, 66% would have to reduce staff if the minimum wage increased to $18; 27% said they would need to lay off half their workers.
Those are alarming percentages, but can be countered by studies — for example a 2020 report from the state Department of Business, Economic Development and Tourism — that say past increases in the minimum wage have had no negative impact on employment.
You’d need extra hands to juggle the competing viewpoints. On one hand, the minimum wage is supposed to be for untrained, entry-level workers, and $18 is a lot to pay for such labor. On the other hand, a full-time minimum-wage salary is all that some people have — at $10.10 per hour that’s a mere $21,000 per year. And because minimum wage puts upward pressure on what workers earn higher up the chain, it does have an overall effect on social welfare.
On one hand, employers carry mandated costs, such as health insurance, that go up when wages go up, and contribute to their struggle. On the other, more money earned means more money that can be spent in local businesses. And on it goes.
The only certainty is that Hawaii is behind other high-cost-of-living areas. Los Angeles, for example, already pays a minimum of $15 an hour, going up to $16.04 in July. A state Senate committee report on
SB 2018 states that 22 states have minimum wages higher than Hawaii’s. The time has come for a step up.
This is an insanely complex issue of many tentacles, but at bottom line we must try to do right by as many as possible — protect workers at the bottom of the pay scale without doing irreparable harm to employers. Both existing legislative approaches start with a modest bump fairly soon, then roll out gradual changes over several years, at least giving businesses time to adapt. The result won’t be perfect, but it will be necessary.
The worst thing that could happen would be for the session to end with no deal in place.