A bill that would increase the state’s minimum hourly wage has been modified to raise wages even more quickly.
House Bill 1191 originally proposed to increase the state’s minimum hourly wage by one-dollar increments each year starting in 2020, until it reached $15 an hour in 2024.
However, the bill has been amended to effect the same wage increase in only two increments: the first, in 2020, would raise the minimum wage from the current $10.10 an hour to $12; and the second would bring the minimum wage to $15 an hour beginning in 2023, one year before the original proposal.
The amended bill also removes a level of complexity regarding insured employees. While the original bill would increase the minimum wage up to $12.50 an hour for employees who receive health coverage through their employers, the most recent version of the bill eliminates that option, so that all employees would receive the same wage increase.
The Hawaii Island Chamber of Commerce, which had previously adopted a “wait and see” approach regarding the bill — unlike the Chamber of Commerce Hawaii, which has opposed the bill in all its forms since its inception — declared on Monday its opposition to the bill, for fear that increasing the costs for Hawaii businesses will push the state’s already high cost of living to intolerable levels.
“The question comes down to whether businesses can afford to increase wages without passing on the cost to the customer,” said Hawaii Island Chamber of Commerce President Gordon Takaki.
When the bill was first introduced, Takaki had said the chamber was resigned to some form of minimum wage reform being passed this year, regardless of the chamber’s opposition. Takaki reiterated that belief Monday, although he said the bill might change again before it can become law.
The newest version of the bill does feature a form of mitigation to offset the cost of a wage increase: an income tax credit of 20 percent of the total cost of the wage increase for qualifying small businesses with 50 employees or less. The tax credit would not exceed $50,000.
However, the tax credit might not be sufficient, according to some businesses.
Kelly Drysdale, director of logistics and human resources for the Kona Coffee and Tea Company, said even the $50,000 maximum would barely cover half of the company’s current medical insurance costs, let alone an increase in wages.
Takaki agreed, saying that while a $50,000 credit could help some businesses, it would by no means be a universal solution for everyone.
Should the bill be passed, Drysdale said, many businesses, including Kona Coffee, would be forced to cut hours for employees and raise costs for customers in order to survive.
Takaki added that an increase in wages could lead to “compression,” where low-level positions are elevated to a pay scale closer to more senior positions, leading to senior employees demanding pay rises of their own.
Drysdale said many of those minimum wage positions are not intended to provide a living wage on their own.
“We employ a lot of young people,” Drysdale said. “And a lot of these positions are like a stepladder to get people used to actual jobs. For a lot of people, we are not the last step in a career.”
Drysdale said Kona Coffee pays many of its roughly 25 employees a prevailing wage, but some positions are at the minimum hourly wage, although they make more than minimum wage thanks to gratuities.
“For the state to force businesses to pay an arbitrary amount, that’s not a solution,” Drysdale said.
The Senate Ways and Means Committee will hold a hearing regarding HB 1191 on Thursday. Written testimony can be submitted at capitol.hawaii.gov.
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