In a state that is ranked as the most expensive in the nation — for groceries, housing, utilities, transportation, health care and other indexes — it’s absurd to think someone can get by on $21,000 a year. Yet that’s what $10.10 an hour works out to.
That’s also the same figure as Hawaii’s minimum wage, which was stuck at $7.25 for eight years until the Legislature finally moved in 2015 to increase it annually to its current level.
Today many lawmakers and the governor are on the same page in calling for another increase in the minimum wage. Initial proposals range from $12 by 2022 to $17 by 2025. A consensus appears to be emerging that $15 may be an acceptable compromise, and that makes sense.
After all, that’s what the minimum wage will be in the District of Columbia in 2020, in California in 2022, in Massachusetts in 2023, and in New York sometime after 2020, when the rate will be adjusted annually for inflation until it reaches $15. Just this week, New Jersey became the fourth state to adopt a plan to gradually raise its minimum wage to $15 an hour for most workers, by 2024.
It’s no coincidence that D.C. and those four states are also among the most expensive places to live in this country.
A member of Living Wage Hawaii at a minimum wage hearing at the Capitol last month.
Cory Lum/Civil Beat
Similar to the last time wage discussions dominated our Legislature, differences this time boil down to business groups opposed to a wage hike and social progressives who support it. The former argues that the minimum wage is a “starting” or “floor” wage while the latter calls for a “living” or “fair” wage.
Raising the minimum wage appears to have public support in many parts of the nation. In recent years, voters in red states such as Nebraska, Missouri and Arkansas have approved wage hikes.
We encourage Hawaii legislators to rely on knowledgable, informed sources and to resist specious arguments on how a wage increase might slash jobs, shutter businesses and hurt workers and consumers. A good place to start is to look at what happened in other states and cities that recently increased their minimum wage.
Consider the following reports:
New York Magazine (September 2018): “In the first six major U.S. cities to raise their minimum wage above $10 an hour, workers’ earnings went up while job growth held steady or improved, according to a new study from Berkeley’s Center on Wage and Employment Dynamics.”
The New York Times (October 2018): “A research team including economists from the University of Washington has put out a paper showing that Seattle’s recent minimum-wage increases brought benefits to many workers employed at the time, while leaving few employed workers worse off.”
The Washington Post (November 2018): “Arkansas and Missouri voters approved substantial increases to their state minimum wages Tuesday as people across the political spectrum endorsed higher pay for low-wage workers. It marks a decisive victory for a liberal cause in two red states that strongly support President Trump.”
These are respected, reputable sources. But there is also a lot of false information influencing wage debates.
The Employment Policies Institute calls itself a nonprofit research organization “dedicated to studying public policy issues surrounding employment growth.” A recent report from EPI cited economists whose research led them to conclude that California’s $15 wage had led to significant job cuts.
That sounds like a strong argument for Hawaii to reject minimum wage increases. But, as the Times reported, EPI “is run by a public relations firm that also represents the restaurant industry, as part of a tightly coordinated effort to defeat the minimum wage increase that the White House and Democrats in Congress have pushed for.”
The Chamber of Commerce Hawaii and the Hawaii Restaurant Association have cited national reports to inform their testimony opposing a wage hike, suggesting the $15 wage in Seattle and New York had led to mixed or negative results. The HRA did not cite its data, but it appears to be from a New York City Hospitality Alliance survey. The alliance, no surprise, represents restaurants.
The chamber did cite the UW study on Seattle’s $15 wage. The problem is, UW released two studies, the second of which appeared to contradict the first. As a researcher explained to the Times, the truth about the impact of a wage hike is complicated. For example, it affects different groups of workers differently. But it was the first study, which said that Seattle’s minimum-wage increases “had large costs for workers,” that was capitalized on by wage increase opponents.
The chamber does make a good point that Hawaii businesses have burdens not shared by most states, such as a prepaid health care mandate. One of the proposed minimum wage bills, which could well emerge as the primary legislative vehicle, would provide a lower rate of wage increase for employees with health plans.
Another bill, this one favored by Gov. David Ige, would provide an income tax credit for qualifying businesses to offset the impact of increasing the minimum wage. That measure has been deferred, but the idea is worth exploring as lawmakers pursue a final bill.
Indeed, in addition to being an expensive place to live, Hawaii is among the worst states when it comes to business tax climate. It’s also in the bottom 10 for best and worst places for business overall.
The most critical data to keep in mind, however, is that Hawaii will likely continue to be an expensive place to live in the foreseeable future.
In its testimony in favor of a wage increase, a group called Living Wage Hawaii used Hawaii Department of Business Economic Development and Tourism statistics to show that “a single childless adult requires approximately $35,000 annually, or $17 per hour to be able to afford their basic necessities working 40 hours a week and 52 weeks a year.”
Meantime, as the Hawaii Appleseed Center for Law and Economic Justice put it in its testimony in favor of a wage hike, “You’d think that with the lowest unemployment rate in the nation, our workers would’ve seen big raises over the past few years. Yet we have the lowest average wage in the nation, when you adjust for our cost of living. Something’s out of balance. There’s a lot of evidence that it’s not just our prices, but also our low wages.”
Hawaii lawmakers and the governor have an opportunity to put things back into balance for low-wage workers. They can do so by finding ways to help businesses, including a gradual increase in the minimum wage.
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The members of Civil Beat’s editorial board are Pierre Omidyar, Patti Epler, Jim Simon, Richard Wiens, Chad Blair and Jessica Terrell. Opinions expressed by the editorial board reflect the group’s consensus view. Chad Blair, the Politics and Opinion Editor, can be reached at email@example.com.