In January 2015, Hawaii’s minimum wage increased by 50 cents in the first of four annual increases that have lifted the floor on hourly pay here to the current rate, $10.10. State lawmakers are now weighing whether it should be bumped up again — but there’s more cause for caution today than there was in the minimum-wage debate four years ago.
Senate Bill 2291 would raise the wage to $12.25 next January, and to $15 in 2020.
Supporters of the push toward the $15-mark (roughly $30,000 annually for a full-time employee) assert that bigger paychecks could help workers make financial ends meet and boost the economy by giving some consumers more money to spend.
Opponents, meanwhile, worry that the move could lead to higher prices and job cuts.
It’s no surprise that SB 2291 is widely backed by labor organizations and nonprofits focused on poverty issues tied to Hawaii’s high cost of living — but strongly opposed by some business sector groups, especially those representing small shops now struggling to cover employee-related costs.
An estimated 4.6 percent of hourly workers statewide, or about 30,000 employees, are paid the minimum wage. And the current wage adds up to about $21,000 a year in gross income for full-time employment.
Some supporters point to Hawaii’s most recent self-sufficiency income standard for a single adult, which in 2016 was nearly $33,000 per year, or $15.84 per hour for full-time work. That standard jumps to $27 per hour for a worker with a child.
In written testimony, the Hawaii Appleseed Center for Law & Economic Justice said: “A $15 minimum wage would put money into the pockets of the people most likely to spend in their communities, and the higher wages mean more productive and loyal employees and lower turnover and training costs for local businesses.” That’s compelling.
But equally valid are the concerns of opponents who say that a $4.90 wage hike in the next two years — on the heels of the just-completed four-year climb — is too daunting for many local employers at a time when other costs, ranging from fees for unloading cargo in Hawaii ports to health care premiums, are expected to increase. 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.
What’s more, Hawaii is in a labor league of its own due to our prepaid health care law: We’re the sole state requiring employers to provide health insurance to employees, including part-time workers clocking in for at least 20 hours per week.
The Chamber of Commerce Hawaii, in its testimony, figured that with employers picking up the bulk of premium costs, the $10.10 wage is really at least a $13.36 value for a full-time employee. And following that calculation, the proposed $15 wage would yield a value shooting past $20 an hour for some workers.
Some larger businesses might absorb such payroll shock with little trouble, given the tax breaks President Donald Trump signed off on in December. But smaller franchises and mom-and-pop shops would likely feel financial pain, which would likely be shared with consumers in the form of higher shelf, menu and service prices. Also, of course, we could see a reduction in employee rosters.
What’s now known as the “Fight for $15” campaign got underway in 2012 when a few hundred fast-food workers in New York City walked off the job for one day, demanding higher pay. In recent years, advocates for low-income and underpaid workers say the trend has been set, with New York and California leading the way. Neither state, however, is prepping for an immediate across-the-board implementation.
In New York, a law passed in 2016 will raise the minimum wage to $15 in New York City (only) by the end of 2019. Neighboring counties will follow by 2021; and a timeline has yet to be set for the rest of the state.
California’s roll-out is based on business size — employers with 26 or more workers will start paying $15 per hour in 2022; and those with fewer employees are slated to start a year later. The state’s law notes that increases may be paused by the governor if certain economic or budgetary conditions exist.
If anything, our lawmakers should consider a similar tiered approach. Also, they should continue to address “living wage” concerns by other means, such as earned-income tax credits and more affordable housing.
The call for a minimum wage that keeps pace with cost-of-living price tags will never go away. But the floor could be based on gradual, tiered increases offset by other efforts that help low- and moderate-income workers and their families, as well as ease labor-related burdens shouldered by the business community.