“Because we think we’re doing pretty well, we have a hard time taking an honest look at ourselves and how we’re doing for our lower income families,” Lee says.
Lee is quick to acknowledge that by some measures, Hawaii looks good. The median household income over the past five years averaged $67,492, which was 27 percent above the national average. Only 10.8 percent of Hawaii residents were living below the official poverty level over the same five year period, according to the Census Bureau, compared to the national average of 14.9 percent. And we enjoy great weather, a healthy amount of exercise, and it all adds up to a good quality of life.
But this isn’t the whole story, Lee said.
For the last several years, the Census Bureau has been testing a new set of supplemental poverty guidelines which take into account differences in both available benefits and necessary expenses, such as differences in housing costs.
Hawaii is one of 13 states where our poverty rate measured by the new supplemental guidelines is considerably higher than the older “official” rate, jumping to a three-year average of 17.3 percent. By these measures, Hawaii has the 9th highest percentage of residents living in poverty among all 50 states and the District of Columbia, according to a census report published in November 2013.
“So while we don’t think of ourselves as a high poverty state, the truth is we are,” Lee said. “We have to acknowledge we are not doing enough to address the issue of poverty.”
Lee is an advocate for raising the state’s minimum wage, which she calls “a critical step.”
“People can do everything right, work 40-50 hours a week at minimum wage, and still not be able to support a child,” Lee said. “These are people working, and working hard, in jobs that are critical to our tourism industry. They’re essential, we can’t function without them.”
Lee and other advocates were encouraged when Governor Abercrombie put an increase in the state’s minimum wage near the top of his legislative agenda during Tuesday’s State of the State address. Up to that point, it looked like the issue might be pushed to the sidelines, as it wasn’t mentioned in House Speaker Joe Souki’s opening day remarks last week, and earned just a one-line reference in Senate President Donna Mercado Kim’s recitation of “other issues” expected to come up this year.
You would think boosting the wages of Hawaii’s lowest-paid workers would be a political slam dunk in a heavily Democratic state where it is very expensive to live, and in which the dominant political party traces its heritage back to the ballot box revolution of 1954 that sought to end the economic and social inequalities of Hawaii’s plantation past.
But this is also a state which relies most heavily on the general excise tax, a particularly regressive form of compounding sales tax adopted back in the 1930s when the Big Five plantation companies controlled much of the economy and a large part of the privately held land. Their goal was to raise revenues from a broad base while minimizing property taxes on their huge land holdings. The GET does just that, bringing in the largest share of state revenues, while those who own real estate continue to enjoy one of the lowest property tax rates in the country.
In a sense, Hawaii has a progressive political tradition cloaking a tax system that relies on low and moderate income residents paying more than their fair share.
But with Governor Abercrombie following both President Obama and Pope Francis in putting income inequality on the public agenda as both an economic and moral issue, advocates of economic justice are feeling cautiously optimistic things could begin to change during the current legislative session.
Hawaii’s minimum wage mirrors the federal wage of $7.25, meaning that no other state has a lower minimum wage, and it hasn’t changed since 2007. The minimum wage would have to be increased to $8.26 an hour just to keep up with inflation since 2007.
There are now 21 states, plus the District of Columbia, with a higher minimum wage than Hawaii, Abercrombie said. The governor suggested taking the minimum wage to at least $8.75 by the beginning of next year. Sen. Clayton Hee is reportedly preparing a bill that would take the minimum to $10.10, and then tie future increases to the rate of inflation.
But even the higher figure would not allow minimum wage workers to make ends meet in Hawaii even while working full-time. A single adult employed full-time in Honolulu would need a minimum of $12.91 to support themselves, while a single adult with one child would have to earn $25.83 an hour to get by, according to a living wage calculator developed by a professor at the Massachusetts Institute of Technology. Estimates for “living wages” on the neighbor islands vary slightly, but all require more than $10 an hour even for a single individual without dependents.
“Even if the minimum wage is raised, it’s still going to be tough for minimum wage workers to make it,” Lee says. “But it will at least reduce the widening inequality in Hawaii, and will also help other workers making just above the minimum, whose wages would likely rise as well.”
A bill to raise the minimum wage died in conference committee at the end of the 2013 session when an agreement couldn’t be reached on the so-called “tip credit,” which allows employers to reduce the minimum wage paid to employees eligible for tips.
Hotel, bar, and restaurant operators lobbied hard to boost the tip credit substantially, and when Senate negotiators held out for a large increase, the measure died in conference.
The governor, in his State of the State, said he was open to “a reasonable accommodation.” But advocates are not necessarily ready to go along.
“The tip credit undermines our workers,” Lee says. “Tips are money they earned, and letting employers shift the burden of paying minimum wage to customers is not right, not fair to workers.”
In the end, though, advocates are still optimistic that the minimum wage bill will be passed this year in some form.
One other development worth noting is an the loose coalition of groups that have come together to support not only the minimum wage increase, but a related series of tax proposals designed to benefit low and moderate income families. The groups include the Appleseed Center, and range from several labor unions, led by Unite HERE Local 5 and the ILWU, through religiously grounded groups like FACE (Faith Action for Community Equity) and Catholic Charities, groups addressing issues of homelessness and early childhood education, and the progressive wing of the local Democratic Party.
Such a coalition, if it matures, could itself become a influential group going forward. That, in my view, is something to look forward to.