Legislation to increase Hawaii’s minimum wage continues to evolve at the 2014 Legislature.

The latest version emerged Tuesday, when the House Committee on Labor and Public Employment approved a Senate measure that raises the minimum hourly earning from $7.25 an hour to $10.10.

But representatives altered Clayton Hee’s Senate Bill 2609 to better align it with a House-backed measure that has yet to be heard by senators, and to help businesses better absorb the additional cost.

SB 2609 now calls for increasing the wage to $10.10 on Jan. 1, 2018, rather than a year earlier as the Senate desired, allowing for a more gradual year-to-year increase.

A proposed House draft of the Senate bill also includes an idea from House Bill 2580, which is intended to protect low-income workers. Business would not be able to deduct a tip credit of $1 per hour from workers who earn less than 250 percent of the poverty level, or about $30,000 a year.

House Labor Chairman Mark Nakashima said he prefers HB 2580 — Hee has not scheduled that bill for a hearing in his Judiciary and Labor committee, so it’s probably not going anywhere — but he wants to keep the “discussion” going.

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Jenny Lee, Hawaii Appleseed Center for Law and Economic Justice.

“We have been through this a number of times and we continue to try and find a middle ground on where we are going to go on this,” he said after the hearing on SB 2609 on Tuesday.

That bill now heads to Sylvia Luke‘s Finance Committee. She is the author of the poverty threshold language, and she may well tinker with the bill further.

One thing that hasn’t changed in the Senate bill is that the state Department of Labor and Industrial Relations is not required to adjust the hourly wage in accordance with the Honolulu region consumer price index.

This all means Hee’s minimum wage bill continues to be the “vehicle” for increasing the lowest hourly pay rate, which rose to $7.25 in 2007.

Assuming Luke passes an amended version of SB 2609, it will head back to the Senate, which can choose to pass it as is. If not, the bill moves to a conference committee, where a similar measure died last year after the House and Senate could not agree on the tip credit level.

Legislators seem intent on not letting that happen this time, and compromise is in the air. By now, legislators are well-versed in the pros and cons for both, arguments regarding the minimum wage.

The arguments keep coming, though, and both sides were on hand to testify Tuesday on SB 2609.

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Roger Morey, Hawaii Restaurant Association.

On the con side there were people like Roger Morey, executive director of the Hawaii Restaurant Association. He reminded the House labor committee that his industry accounts for 85,300 jobs — or 14 percent of the state’s employment — and $3.8 billion in sales. Nine out of 10 local restaurants are small businesses with fewer than 50 employees.

“Whatever actions you take are going to have a significant impact,” Morey told representatives. “Of course this (the wage) is going to increase. We just ask that you not make it so steep so quickly.”

Kelii Akina, president of the Grassroot Institute of Hawaii, sought to dispel the perception that a wage increase will combat poverty. The real cause of poverty, he said, is Hawaii’s cost of living.

“We believe that this bill will fail in its intent to help lift the state’s working families out of poverty,” Akina said in written testimony. “The proposed increase in the minimum wage will only benefit approximately 4 percent of low-income working families while raising the cost of low-skilled labor by 39 percent.”

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Bart Dame, Progressive Democrats of Hawaii.

Those in favor of a wage increase include Jenny Lee, staff attorney with the Hawaii Appleseed Center for Law and Economic Justice.

“Restaurant owners are not justified in pitting ‘back of the house’ against ‘front of the house’ employees by demanding an increase in the tip credit,” Lee said in written testimony. “It has been argued that any increase in the minimum wage requires an increase in the tip credit so that they can pay a higher wage to untipped workers. However, employers with this goal can require a ‘tip pool,’ in which tipped workers contribute the gratuities they have received to a pool which is then redistributed to other restaurant employees, including to those at the ‘back of the house’ such as dishwashers, who are customarily untipped.”

Lee referred to a 2010 ruling from the U.S. 9th Circuit Court of Appeals on tip credits to back up her argument. She also supports “maintaining the buying power” of minimum wage workers by tying future increases in the wage to the consumer price index.

Bart Dame, of Progressive Democrats of Hawaii, said he would prefer that the $10.10 wage go into effect in 2017, not a year later. He also does not want to “let go of the CPI mechanism,” saying he had heard “no reasonable argument” for eliminating it.

As for the poverty threshold “trigger,” as it’s being called, Dame described it as “a very good way to balance the interests of employers and employees.”

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KeIii Akina, Grassroot Institute of Hawaii.

While a minimum wage increase seems a good bet this year, disagreement on the particulars remain.

Rep. Kyle Yamashita voted “with reservations” on SB 2609, saying he thought it would be “cleaner” to gradually increase the tip credit along with the wage, rather than employ the poverty threshold trigger. So did Rep. Aaron Johanson.

Rep. Roy Takumi also voted “WR,” and he shared several concerns about SB 2609.

Noting that the purchasing power of minimum-wage workers has eroded badly since 2007, Takumi said tying wage hikes to the CPI seemed a practical approach and not the “jarring disruption” some business advocates have warned of.

He also prefers that the $10.10 figure kick in three years from now, in 2017, because the cost of living will no doubt continue to rise as part of “historic trends.” And Takumi would also like the wage to increase by larger amounts in 2015 and 2016 to allow for “a more modest increase in the out years,” meaning 2017 and 2018.

Like many House reps, Takumi wanted to see the House bill pass. But he and his colleagues appear resigned to the Senate vehicle.

Contact Chad Blair via email at cblair@civilbeat.com or follow him on Twitter at @chadblairCB.

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