Hawaii’s minimum wage places it somewhere near the middle of the pack among states, which is not an optimal position for a place where it is so expensive to live.
This concerns lawmakers, too, and they seem willing to boost the hourly rate from the current $10.10 to $13 by 2024. There seems to be some employer support for the idea — with positive testimony coming from key businesses and associations.
That is somewhat encouraging. The last series of stepped increases in the Hawaii minimum wage topped out two years ago. Meanwhile, other high-cost states, such as California (already up to $13), New York ($11.80) and Washington ($13.50), continued moving up. It’s good to see some upward mobility here as well.
But advocates have concluded that landing in four years on a $13 hourly rate still falls well short of Hawaii’s need, and they make a persuasive argument for raising the minimum further. The legislation at issue, House Bill 2541, is set to cross over this week to the Senate for continued hearings.
Just how much room there is for a further increase may hinge on giving the employers, especially smaller businesses, some flexibility to meet the minimum requirement, perhaps with a mix of pay and health benefits.
Such a structure should discourage employers from trying to save money by cutting back hours and cutting out health insurance, an outcome that would serve no worker.
HB 2541 is part of the broad-based initiatives being pushed by Democratic leadership to bolster the economic security of Hawaii’s poor and working people, many of whom continue to struggle to cover basic expenses.
The package also includes bills aimed at lowering the cost of early- learning and childcare programs over time and supports affordable housing, in a push to address two of the biggest financial burdens for the average household. These are longer-term campaigns, with results to come with time.
For the near term, the mission to help families make ends meet is being addressed by increasing pay packets and reducing the bite that taxes take out of them.
In addition to the pay hike, HB 2541 includes tax relief. It would make the state’s earned income tax credit (EITC) refundable. For individual taxpayers earning income less than $30,000 a year, it would increase the refundable credit for food and excise taxes to $150 multiplied by the number of qualified exemptions the taxpayer claims.
The EITC and the food/tax credit enhancements do help on the margins to give lower-income taxpayers some help. But, as advocates argue, they do not come close to the financial boost that a more substantial minimum wage would bring.
The entire rationale of the minimum wage merits a close look. Critics maintain that enforced minimum pay rates can result in job losses, as labor costs represent the lion’s share of a business’ budget, meaning that companies will cut their staff rosters and reduce workers’ hours to control expenses.
Increased costs are passed on to consumers through rising prices, curbing growth. Better than minimum-wage hikes are tax credits such as the EITC.
However, these arguments run counter to what’s already evident. Job losses have not been linked to past raises. The EITC is here but has not sufficiently offset the poverty levels witnessed in the spread of homelessness and social ills. Multiple studies have documented that nearly half the population barely gets by.
Hawai‘i Appleseed Center for Law and Economic Justice, the nonprofit advocacy group, asserts that $17 comes closer to what single people need to “meet their basic needs,” citing data from the state Department of Business, Economic Development and Tourism.
That is the minimum that Appleseed wants to see in place by 2025, adding $8,000 in annual income for full-time work — much more than most low-wage taxpayers here would receive in tax credits.
Of course, that is a steep climb especially for smaller businesses, already worried about the current coronavirus outbreak impacts and other economic upheavals.
Even keeping that in mind, there should be a way to nudge the minimum wage upwards, beyond $13 per hour. That should be the aim of ongoing negotiations between the House and Senate.
For example, one proposal last session would give a break to employers who do provide health benefits under the state’s Prepaid Health Care Act, a benefit required for all employees working at least 20 hours weekly. The pay rates for them could be lower than the top-tier minimum wage required of those that hire only part-time workers.
This structure could be reconsidered to give leeway to employers providing the crucial benefit, rather than driving them to cut employees and hours.
Legislative leaders and Gov. David Ige deserve support for taking this multipronged approach to an economic rescue plan. As the second half of the session begins, decisionmakers have to keep eyes on that prize, an assist that many Hawaii families have long needed, just to get by.