The minimum wage in Hawaii could rise as high as $17 an hour under several new bills in the state Legislature, which has some businesses worried about their future.
There currently are four different proposals before lawmakers, ranging from minor to drastic, that would increase the minimum wage from the current $10.10 an hour.
The simplest of these proposals— Senate Bill 285 — would increase the minimum hourly wage to $11 by the beginning of next year, while also removing language allowing tips to count toward an employee’s wages.
Another proposal, SB 676, would increase the minimum wage to $12 per hour beginning July 2022, while SB 677 would instead increase it to $15 an hour beginning June 2023.
The most drastic and complicated proposals are House Bills 21 and 600, which would impose annual increases to the minimum wage in $1 or $1.50 increments until finally stopping at $17 an hour. For HB 21, that limit would be reached in 2028, while HB 600 would reach that limit in 2026.
HB 600 also removes the same tip-related language as SB 285 does, but also establishes that possible future minimum wage increases after 2026 would be determined based on the Honolulu region consumer price index.
Opponents say wage increases could have dire consequences for businesses struggling to survive in the wake of COVID-19.
Victor Lim, legislative lead for the Hawaii Restaurant Association, said now is the wrong time to try to push a measure that will increase costs for businesses.
“Last year, there was a proposal for an increase to $13 an hour, which we kind of supported — but that was before the pandemic,” Lim said. “The pandemic threw a wrench into everything.”
Part of the trouble, Lim said, is that while many restaurants already pay some or all of their employees more than minimum wage, an employer likely would end up increasing wages for all employees to avoid wage compression, where less-paid workers receive a pay increase, but higher-paid employees don’t.
The Hawaii Island Chamber of Commerce submitted a letter to legislators urging them not to make any increases to the minimum wage.
“The impacts from COVID-19 on our businesses will continue to be a concern,” the letter states. “As businesses look at their expenses amidst these economic challenges, payroll is and will always be the biggest expense that is focused on first. We cannot afford to lose our workforce to unemployment. Help our businesses survive during this time with thoughtful, calculated and informed legislation. We ask you not to increase the minimum wage.”
“It would kill us,” said Debbie Ching-Maiava, general manager of Ken’s House of Pancakes in Hilo.
Ching-Maiava said she employs about 40 workers, each of whom work between 30-40 hours a week. A minimum wage employee at Ken’s working 40 hours a week would see their pay increase from $404 to $680 a week if the minimum wage rose to $17 an hour. But if all 40 employees received the same pay increase, it would cost Ken’s an additional $11,040 per week.
Ching-Maiava said an increase to $15 an hour would still have been steep before the pandemic, but now, with only half of the restaurant’s seats available for dining, it would crush the business.
However, Ching-Maiava added that an increase to $17 an hour by 2028 might be doable “with all things going well with the pandemic.”
“It’s just terrible timing,” Ching-Maiava said. “They’re trying to squeeze the small businesses at the worst time.”
Mari Leung, owner of Cafe 100, agreed. While Leung said her business is doing well enough despite the pandemic that she has been considering offering raises to employees, she said any such wage increase will have to be offset some other way.
“We do pay our workers above minimum wage already, so the $11 an hour wouldn’t be too bad, maybe,” Leung said. “But $17 an hour? Our business is selling affordable meals for the whole family, and I don’t think we’d be able to keep doing that if it went that high.”
While business at Cafe 100 is down because of the pandemic, Leung said she is largely happy with how her business is faring these days, and would rather not upset the applecart with a sweeping wage increase.
Not all restaurant owners agree. Rhonda Nichols, owner of the Hilo Burger Joint, said a wage increase would be a benefit for workers that business owners can weather.
“I believe a rising tide raises all ships,” Nichols said. “If a guy working at Taco Bell is getting $15 an hour, then he’ll have more money to spend here.”
Nichols said she has some concerns about how tips might be handled if the minimum wage rises, but explained that she wouldn’t balk at an increase to $15, $17, or even $20 an hour.
“I have to do what I have to do. I own this property, and I have to run a business,” Nichols said. “If that means a hamburger’s going to cost $20, then that’s what it’ll take.”
Nichols said some people who oppose the bill are “so far removed from what it’s like to be a worker,” and added that she maintains a loyal staff by helping them in ways beyond only wages.
“I think some of these people have never known what it’s like to be poor,” Nichols said. “I know it, I’ve lived it, my employees have lived it, and they’re counting on me.”
“Our workers are all we have,” Nichols went on. “I would be nothing without my workers, I can’t do all of this myself.”
Email Michael Brestovansky at firstname.lastname@example.org.