According to Senate Bill 2609, the premise for increasing the minimum wage is "to give Hawaii workers a higher wage that recognizes increased costs of living and enables them to build a better life."
While we all want to eliminate poverty in Hawaii and our nation, we need winning solutions that avoid unintended consequences and improve lives.
We have been sharing our concerns with legislators statewide on the high raises proposed in the two remaining bills.
HB2580 increases the minimum wage to $10 per hour by 2018 as follows (It also increases the tip credit by 25 cents each year through 2017):
* Jan. 1, 2015 - 50 cents.
* Jan. 1, 2016 - 75 cents.
* Jan. 1, 2017 - 75 cents.
* Jan. 1, 2018 - 75 cents.
SB2609 increases the minimum wage to $10.10 per hour by 2017 as follows (The tip credit remains as an unspecified amount):
* Jan. 1, 2015 - 95 cents.
* Jan. 1, 2016 - 95 cents.
* Jan. 1, 2017 - 95 cents.
We are hearing that there is a "commitment" by members of the House and Senate to pass a minimum wage increase, but it is a work in progress. Yet, both proposals are still targeting a hike to $10 per hour (or more) over time.
We are not unilaterally opposed to a minimum wage increase, however businesses are still struggling. We must consider our economic recovery and understand how businesses and the community will be impacted.
A column on The Hawaii Senate Minority website by Senate Minority Budget Analyst Paul Harleman shares "Four Things You Should Know About The Minimum Wage Debate In Hawaii."
Here are highlights:
1. Raising the minimum wage will benefit fewer than 4 percent of low-income working families.
State Department of Labor and Industrial Relations testimony on SB2609 notes a total of 14,303 individuals earned $7.25 or less in 2012. Adjusted for teenage and part-time employment, the total number of individuals who are working full time and who are most likely supporting a family amounts to 3,700.
According to the United States Census Bureau Supplemental Poverty Measurement statistics, 231 Hawaii families lived in poverty in 2012.
The facts indicate that fewer than 4 percent of low-income working families would benefit from the proposal.
2. Raising the minimum wage increases the costs of low-skilled labor by 39 percent.
Government mandates to increase the minimum wage increase the cost of low-skilled labor without improvements in productivity. For every $1 increase in the minimum wage, employers pay $1.12. SB2609 brings the minimum wage to $10.10 over three years. This means the wages of full-time worker earning minimum wage, 40 hours a week, will increase by $6,642, which represents a 39 percent increase.
Large increases in the cost of labor without offsetting increases in productivity can lead to either higher prices of goods and services or reduced employment.
3. Raising the minimum wage will not lift working families out of poverty.
Multiple studies during the last decade have generally concluded that past minimum wage increases had no effect on poverty.
4. Raising the minimum wage is expected to reduce teenage employment.
For each 10 percent increase in the minimum wage, teen employment is expected to be reduced by 1 to 3 percent. This will have an adverse effect on the estimated 1,900 teenagers with minimum-wage jobs.
Some say jobs will not be impacted, but that is not what we are hearing. The wage cost for three workers making minimum wage is currently $21.75 per hour. In three years, with SB2609, the wage cost for two workers making minimum wage will be $20.20 per hour. Then add increased payroll taxes, wage compression issues and more.
Legislators appear intent on passing a large minimum wage increase. Contact them to have your voice heard.
* Pamela Tumpap is president of the Maui Chamber of Commerce.