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With the cost of living skyrocketing in Hawaii, calls to increase the state’s minimum wage have grown louder. But would it even make that much of a difference?
While Hawaii suffers from income inequality, the problem of low wages is not unique to the islands. According to the Pew Research Center, while Americans are overall making more money today than ever before, the actual purchasing power of a worker’s pay has barely moved since 1964.
That year, the federal minimum wage was $1.15 per hour, while the average hourly pay for most Americans was just around $2.50 an hour. Adjusted for inflation, the purchasing power of 1964 wages today would equal $9.29 for the minimum wage, and $20.20 for average U.S. worker pay in constant dollars.
As we all know, Hawaii’s present minimum wage of $10.10 is nowhere near the amount of money needed to make ends meet. According to the National Low Income Housing Coalition, locals would have to work the equivalent of 143 hours a week at minimum wage to afford a two-bedroom rental home.
The Democratic Party of Hawaii, which supports “annual increases to the state minimum wage equal to the percentage increase of the Consumer Price Index,” has placed raising the minimum wage at the top of its legislative priorities for 2019.
The 30th Legislature, which convenes Wednesday, has new faces who might be able to realize better wages for local residents. Incoming House Rep. Amy Perruso of District 46, which covers Wahiawa, Whitmore Village and Launani Valley, says “overall, wages are depressingly low in Hawaii, and this an important factor in our inability to create the conditions of prosperity and possibility for our young people.”
Perruso, who holds a Ph.D. in political science, is optimistic about this upcoming session, and says addressing the minimum wage is a priority because it sets the baseline for all other incomes.
Sen. Donovan Dela Cruz, chair of the Ways and Means Committee, hopes what Gov. David Ige proposes as part of the administration’s soon-to-be-released legislative package will be “balanced in such a way that we can still provide incentives and relief to local small businesses and still achieve what he talked about in paid family leave and minimum wage.”
Dela Cruz wants a macroeconomic approach to the cost of living, factoring in not just pay, but growth that produces upward mobility.
“We have to do a lot better job in creating jobs and diversifying the economy,” says Dela Cruz. “There’s a lot that has to be done. We need to be creating a lot of better quality jobs with higher salaries.”
The Chamber of Commerce Hawaii did not respond to a request for comment on raising the minimum wage.
Unite Here Local 5, the union that recently won a pay increase for Hawaii hotel workers, recognizes that one of the hardest aspects of living in Hawaii is that holding more than one job is sometimes the only way locals can survive.
“One job should be enough to live in Hawaii, yet so many people work multiple jobs to make ends meet,” says Local 5 organizer Paola Rodelas, who supports raising the minimum wage as a starting point.
Rodelas cautions however, “The effect of raising the minimum wage will be mooted if the cost of housing, health insurance, child care, college, elder care, and other costs of living just take the wages back out of people’s hands.”
Asked what she thought the minimum wage should be, Rodelas says, “it’s hard to offer an exact dollar figure for minimum wage that would work for a single mother of two renting an apartment in Kaimuki, or a family of eight or nine people paying mortgage on a cramped one-bedroom house on the west side who have to commute into town every day. Frankly, working people do not yet have enough power in Hawaii to push the Legislature to raise the minimum wage as high as people need it.”
Keli`i Akina, an Office of Hawaiian Affairs trustee and Grassroot Institute of Hawaii president, is concerned about the employment impact of raising wages.
“Research overwhelmingly shows that forcing businesses to increase their starting wages causes them to employ fewer people and offer them fewer hours,” Akina says. “Lowering taxes, snipping red tape, and opening up more land so people could build homes would decrease Hawaii’s cost of living, which would effectively give everyone a pay increase.”
Kylie Bean, a senior at Castle High School, says that raising the minimum wage would give her a great entry level boost, but she worries about a scenario where experienced workers end up being paid the same as those getting their first job.
“If an office assistant is getting paid $15.22 an hour now to do to complex tasks, is it really fair if someone in fast food with no prior experience suddenly starts out at $15?” asks Bean. “That means a white-collar worker will make just 22 cents more to do a job that took years to get into.”
With $93,000 a year now considered low income for a family of four in Hawaii, raising the minimum wage may not bring enough relief to a problem that stems from low purchasing power in an asset bubble economy.
Local household debt, which has increased dramatically in bank card loans, suggests Hawaii residents are resorting more and more to credit as a means to pay the bills.
One thing is clear: whether it’s lowering the cost of living or getting a raise, a lot of us in Hawaii need help – and fast.
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