Hawaii’s minimum wage is set to rise for the first time in more than four years.

The current minimum wage of $10.10 an hour would rise to $12 an hour in October under a measure that cleared a key legislative conference committee Friday afternoon.

Wages would then rise to $14 an hour in 2024; $16 an hour in 2026; and $18 an hour in 2028.

House Bill 2510, the minimum wage bill, is a compromise measure between the House, which called for delayed implementation of wage increases, and the Senate, which pushed for much faster wage increases. It still needs to pass a final vote in both chambers and be approved by Gov. David Ige.

Demonstration held in support of raising the minimum wage in Hawaii at the intersection of Ward Avenue and Kapiolani Boulevard.
Lawmakers are close to raising the state’s minimum wage as early as October. Cory Lum/Civil Beat/2022

State lawmakers are also softening the blow to some businesses, particularly restaurants, by pairing wage increases with increases in the tip credit in the latest draft of HB 2511. The credit would allow employers to pay tipped employees $1.50 an hour below the minimum wage by 2028 so long as an employee is earning more than the minimum wage after accounting for tips.

Republican Rep. Val Okimoto voted “with reservations” on HB 2510 – which amounts to a “yes” vote but signals concern on the part of the lawmaker. She said she supports extending the earned income tax credit.

“I really am concerned about what this minimum wage increase will do to our local businesses and what impact that would have,” Okimoto said.

The Hawaii Chamber of Commerce, which represents businesses in the state and opposed minimum wage increases in the past, supported incremental increases to the minimum wage this year.

Sherry Menor-McNamara, president of the chamber, said there’s still some worry over the impacts of wage increases on small business.

“But many of our businesses are resilient,” she said. “Hopefully they’ll find a way to weather this first wave of increases” in October.

The Senate has proposed more rapid wage increases since wages last rose in 2018. All of those measures failed. In 2020, the House and Senate had agreement on a measure to raise the minimum wage to $13 an hour by 2024 but the proposal didn’t pass as lawmakers focused their attention on dealing with the pandemic.

The latest draft of HB 2510 mirrors the House position on the bill. House Democrats did not want wages rising to $18 an hour until 2028, while the Senate pushed for raising the minimum wage to $18 an hour by 2026.

The minimum wage bill was in trouble again this year. The House and Senate were locked in negotiations until the middle of the week, when senators decided to yield to the House.

Center, Senator Brian Taniguchi and Representative Richard Onishi count the votes during the minimum wage conference committee vote.
State senators were forced to compromise on HB 2510. Cory Lum/Civil Beat/2022

Sen. Brian Taniguchi, who led negotiations on the bill, said in a press release that he was disappointed the Senate’s version did not win approval by both chambers.

Senate Preisdent Ron Kouchi said the measure just needed to move forward.

“While we didn’t get everything we wanted in the bill, the Senate recognized that the only way to ensure wage increases this session was to compromise with our House colleagues on the bill’s final language,” Kouchi said in a press release.

HB 2510 also makes the state’s earned income tax credit refundable and permanent, which could put more money back into the pockets of low-income workers. Right now, the state EITC can only be applied to outstanding tax obligations. Any leftovers wouldn’t be sent as a check until after tax filings are completed.

The federal EITC is already refundable. Households earning between $15,000 and $49,999 annually could claim state tax credits of about $425 a year, according to an analysis from the Hawaii Budget & Policy Center.

“Especially with inflation we know families are struggling to pay their bills, so it’s good to know they’ll get this tax credit,” said Nicole Woo, director of research and economic policy for the Hawaii Children’s Action Network.

Gavin Thornton, executive director of the Hawaii Appleseed Foundation, called the EITC provision a “win for everybody.”

“The money that struggling working families get from this gets pumped right into our economy,” Thornton said.

Lawmakers also passed a separate measure Friday to give $300 tax rebates to taxpayers earning $100,000 or less. Senate Bill 514 now heads to final votes in the House and Senate.

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