Hawaii Legislature Passes Bill Raising Minimum Wage to $18 | Your money
HONOLULU (AP) — Hawaiian lawmakers on Tuesday passed legislation that would raise the state’s minimum wage to $18 an hour by 2028, potentially the highest in the nation.
Proponents say the increase is badly needed in a state that regularly tops lists for the most expensive housing and cost of living. But some companies warn they will have to downsize or even close because they can’t afford the higher pay.
The $18 minimum would be the highest amount among the 50 states and the District of Columbia. However, some states automatically raise their minimum wage when the cost of living rises, which means places like California, which currently has a $15 minimum wage, could have a higher wage six years from now given the current situation. ‘inflation.
The House and Senate, both controlled by Democrats, approved the measure by wide margins. The bill now falls to Hawaii Governor David Ige, who has said he supports an $18 minimum wage.
The minimum wage in Hawaii is currently $10.10 per hour. The bill would increase the rate in increments over the next few years, starting with $12 on Oct. 1.
House Speaker Scott Saiki said a study showing 42% of Hawaiian households struggled to make ends meet was a big factor behind his support for the increase. The Hawaii State AFL-CIO also approved the move to $18.
Saiki said he wanted the minimum to rise in line with the consumer price index, but lawmakers failed to reach a consensus on that.
A state analysis released in December showed that a single person working 40 hours a week would need to earn $18 an hour to pay for housing and other necessities in Hawaii.
“People should be able to meet their basic needs 40 hours a week,” said Nate Hix, director of Living Wage Hawaii, an advocacy group pushing for a higher minimum wage. “Otherwise people are forced to work multiple jobs or sacrifice their basic needs like food, shelter, clothing.”
The Hawaii Chamber of Commerce said in written testimony that many of its members say they will lay off and some will go out of business with the rate hike. The business group said Hawaii’s unique requirement that employers provide health insurance to those who work more than 20 hours a week already adds $3 to $4 to workers’ hourly compensation.
Michael Miller, operations manager at Tiki’s Grill and Bar, a Waikiki restaurant, favors a gradual increase in the rate to $15 by 2027. He said the costs for everything related to labor will increase with the higher salary.
“Who pays then? The consumer pays for it,” Miller said.
The legislation expands the tip credit to $1.50 by 2028, allowing employers to subtract that amount from the wages they pay if workers earn enough in tips.
The bill makes the earned income tax credit permanent and refundable, which will help low- to middle-income workers reduce the taxes they owe and potentially increase their tax refund. Hawaii’s existing working income tax credit expires this year and is non-refundable, meaning many low-income taxpayers can’t use it because their income is too low to require significant taxes. .
Gerard Dericks, an economics professor at Hawaii Pacific University, said raising the minimum wage to improve living standards focuses on the symptom of the problem, not the underlying cause.
He said it would be better for Hawaii to reduce its cost of living, such as increasing housing by allowing more and taller residential towers to be built in Honolulu. Or by repealing the Jones Act, a 1920 law that requires shipping between U.S. ports to be provided by U.S.-flagged vessels. Proponents of the law say it is important for national security because it helps sustain the US shipbuilding industry.
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