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Testifiers: Wage hike would help workers, hurt businesses

Legislature mulling proposal to increase minimum wage to $18 by 2026

A sign charts the increase in minimum wage for the state of Hawaii from $7.25 in 2014 to $10.10 in 2018. State lawmakers are considering a measure that would raise the minimum wage to $18 to 2026, a move welcomed by workers bogged down with high costs of living but opposed by businesses already struggling in the pandemic. On Monday, a Senate committee passed Senate Bill 2018, the first of many hurdles the measure will have to clear. The Maui News / COLLEEN UECHI photo

While many are supporting a bill that would gradually raise the state’s minimum wage to $18 an hour by 2026 to offset high costs of living in Hawaii, others, including some Maui businesses, say that the proposal is an “untimely” wage increase that would put already struggling businesses down.

The current minimum wage is $10.10 per hour in a state with the highest costs of living, and multiple residents say that “working families need and deserve a living wage.”

“I know raising the minimum wage would go a long way to supporting families like my own that work in the restaurant and tourism industry here on Maui,” Kahului resident Rebecca DiLiberto said in written testimony to the Hawaii State Senate Committee on Labor, Culture and the Arts on Monday afternoon.

The five-member committee, the first to hear Senate Bill 2018 this session at the Legislature, voted unanimously to pass the measure on Monday, which would raise the minimum wage over a period of four years, beginning with an increase to $12 on Oct. 1, 2022; $15 on Jan. 1, 2024; and $18 on Jan. 1, 2026.

It’s the first step in a long path for the bill, which will be heard next by the powerful Senate Ways and Means Committee at 10:45 a.m. Thursday.

Maui County Council Chairwoman Alice Lee is already backing the bill because it will help “Hawaii’s economy by giving workers greater purchasing power in the local marketplace.”

Citing the state Department of Business, Economic Development and Tourism, Lee said that a single adult needs an income of about $35,000 to achieve self-sufficiency in the state in 2018, while a single-parent with one child required $59,428.

“Yet, at the minimum wage of $10.10 per hour, a full-time employee earns only $21,008 annually,” she said in written testimony as an individual member of the council, as the full council has not had a chance to take a formal position yet.

Hawaii resident Ben Kilinski said he sees firsthand the many struggling working class families and graduating high school students leaving their homes for the Mainland.

“They are not leaving because they want to, but because of the extreme disparity between cost of living and working wages here in Hawaii,” Kilinski said.

But while a raise in the minimum wage might sound good at first, many argue that there will be repercussions on the employer, which will trickle down to the consumer.

“If labor costs are going to increase dramatically, then there will be a corresponding link to increased food prices and/or changes to the labor market,” said Lauren Zirbel of the Hawaii Food Industry Association, which represents about 200 grocery retailers, suppliers, producers and distributors of food and beverage products. “Reducing or eliminating taxes on groceries would be a better way to help working families, as we are the only state that taxes groceries currently.”

Zirbel said that lawmakers should keep in mind that Hawaii is consistently ranked one of the worst states in the U.S. to do business, and that excessively high minimum wages impact small or rural island communities the most.

Still, Republican Sen. Kurt Fevella of Oahu, a member of the committee, argued that prices at grocery stores and gas pumps have already been rising, which is impacting working families statewide.

“It’s time to make a change and we need to do this now,” Fevella said at the committee hearing. “We cannot wait until the end (of the) pandemic because our people are on the streets. If you look at the communities nowadays, we have homeless at bus stops all over the place because they cannot afford to feed themselves.”

Among the roughly 100 written and verbal testimonies, support for the bill came from state agencies, nonprofits and workers’ unions. The state Department of Labor and Industrial Relations, Hawaii Government Employees Association, United Public Workers, Common Cause Hawaii, Hawaii Public Health Institute and Hawaii Alliance for Progressive Action all supported the wage increase.

However, the Hawaii Restaurant Association representing 3,400 businesses noted that the food industry has been the hardest hit and “we have yet to recover.”

“Whenever you increase that starting (minimum) wage, please bear in mind that we also have to do a compression of the majority of our current workforce that are making over the new starting wage,” said Victor Lim, legislative lead for the association. “We have to keep reasonable gaps between rookies and tenured staff.”

Pamela Tumpap of the Maui Chamber of Commerce agreed that “this is moving very quickly,” with many businesses still healing from the financial downfalls during the COVID-19 pandemic in 2020 and 2021 and from the ongoing challenges with debt, monthly bills, supply chain demands, shipping costs and more.

About 21 percent of respondents to a Maui Chamber of Commerce survey said that they won’t be in business at the current minimum wage increase rate, Tumpap said.

Such an increase would be “devastating to businesses like ours,” Wayne Hikiji, president of Envisions Entertainment & Productions Inc. in Kahului, said in written testimony.

Under normal circumstances, a raise may be reasonable and sustainable, Hikiji said, however, “we are still in the midst of this unprecedented pandemic and economic crisis, and many economists predict that our economy will take several years to recover.”

To track the bill, view hearings or submit testimony on the measure, visit www.capitol.hawaii.gov/measure_indiv.aspx?billtype=SB&billnumber=2018&year=2022.

Livestreamed Senate hearings can also be viewed on YouTube at www.youtube.com/channel/UCekvvdL_uyq2DUyj1GjlrOA.

* Dakota Grossman can be reached at dgrossman@mauinews.com.

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