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Increasing Hawaii’s minimum wage to $15 an hour by 2023, as pending legislation would do, might seem like a good way to address the state’s notoriously high cost of living.
But the University of Hawaii Economic Research Organization warns policymakers to beware of unintended consequences. The question raised in a UHERO blog post: How high is too high?
The conclusion: The change, which amounts to a roughly 50 percent increase in the minimum wage, is high enough that nobody has been able to study the impacts, chiefly whether the increased wage will lead employers to cut back drastically in hiring.
UHERO is hardly a knee jerk opponent of minimum wage increases. In the past, the organization has said that small wages increases don’t necessarily lead to job cuts.
But UHERO isn’t saying that this time. The effect of the increase to $15 appears to be a clear example of a known unknown.
“The point we are trying to make is not that the $15 minimum is too high, but that it is well outside the range that has been studied extensively for US minimum wage changes over the past 25 years,” UHERO reports. “This, along with the changing Hawaii economic landscape with rising unemployment, falling employment, and dramatically slowing job growth all suggest that a cautious and possibly more gradual approach may be called for.”
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