Many a minimum-wage worker doubtless breathed a sigh of relief — if not tears of joy — when the Legislature moved a compromise version of House Bill 2510 out of conference committee last week. The bill moves to Gov. David Ige’s desk this week, and we urge him to sign it.
It’s been a long road getting to this wage increase, despite overwhelming evidence that too many of Hawaii’s workers can’t make ends meet with a
minimum-wage job.
The wage will rise to $12 per hour beginning Oct. 1; $14 per hour beginning Jan. 1, 2024; $16 per hour beginning Jan. 1, 2026; and $18 per hour beginning Jan. 1, 2028.
The preamble to the final version (CD1) of HB 2510 spells out the case for raising the wage, now and not later. A notable and troubling statistic: The percentage of households bringing in wages above the federally determined poverty line but short on savings and assets, who struggle to make ends meet, rose from 42% before the COVID-19 pandemic to a current 59%.
Increasing costs, combined with stagnant wages, contributed to this increase in “asset limited, income constrained, and employed” (ALICE) households.
“Increasing the minimum wage to support the working class is necessary to ensure that living in Hawaii is affordable,” the bill states. That’s the bottom line.
With Hawaii’s high cost of living, there’s a strong case to be made that the minimum wage here should be $15, as it is throughout California and in New York City. Massachusetts, another expensive state to live in, raises its minimum wage to $15 on Jan. 1.
A national Pew Research Center survey conducted in April 2021 found that 62% of Americans support a $15 minimum wage; such popular sentiment undoubtedly played a part in boosting legislators’ political will.
Still, analysts at the University of Hawaii Economic Research Organization (UHERO) have urged caution in raising the minimum wage too quickly, noting that research supported small, incremental increases as most effective in raising available incomes of the lowest-paid earners without causing price hikes. The cautious approach adopted by the Legislature, then, seems warranted, in that it allows businesses a period between each wage hike to adjust business practices.
The Hawaii Appleseed Center for Law and Economic Justice had advocated for the wage increase; executive director Gavin Thornton pronounced the compromise reasonable. “This is a tremendous step forward for working families,” he said. “It is really historic.”
Given the trends, and the need, it’s encouraging that the state is moving in the right direction — though ideally, it should be happening faster. By 2028, we’re likely to find that the cost of living has already outpaced the rise to $18 hourly.
HB 2510 also takes another overdue step to ease the burden on low-income workers: It makes the state’s earned income tax credit (EITC) refundable and permanent. Hawaii’s EITC had been scheduled to expire at the end of this year.
Making the Hawaii EITC refundable will benefit moderate- and lower-income families by an average $425 a year, according to Nicole Woo, director of research and economic policy for Hawaii Children’s Action Network Speaks. “It’s a wonderful win for Hawaii’s working families,” she said, noting that inflation hits these workers the hardest.
Those who qualified for a Hawaii EITC in past years should set a reminder for next year’s tax-filing season: If your Hawaii credit exceeded taxes owed in the 2018 to 2021 tax years, you can apply the “leftover” nonrefundable tax credit amounts to tax owed on 2022, 2023 or 2024 Hawaii income.
It’s good to see Hawaii recognize low-income workers’ need for better pay and tax relief, a welcome acknowledgement of their essential value.
