Even as a Senate bill that would raise the state minimum wage to $18 an hour races through the state Legislature, state representatives are throwing their support behind a competing but similar bill in the House.
Like Senate Bill 2018, which passed third reading in the Senate last week, House Bill 2510 would increase the minimum hourly wage on an incremental basis until it eventually reaches $18 an hour.
The two bills differ in time scale, however. SB 2018 would increase the minimum wage in three increments, rising from the current $10.10 to $12 an hour on Oct. 1, to $15 an hour on Jan. 1, 2024, and to $18 on Jan. 1, 2026.
By comparison, HB 2510 would begin by raising the minimum wage to $11 per hour beginning Jan. 1, 2023, and then by a dollar every year until it reaches $18 an hour in 2030.
“I’ve reached out to some of our small businesses in Puna, and they’re supportive of a minimum wage increase up to like $12, $13 an hour,” said Puna Rep. Greggor Ilagan, a co-introducer of the bill. “But I am concerned about rural businesses that might not be able to handle a steep rise like what’s in the Senate bill.”
The House measure also addresses the state’s tip credit. A tipped employee today can be paid by their employer $0.75 less than minimum wage if and only if the employee receives at least $7 more than minimum wage from wages and tips combined. Under HB 2510, employers could pay workers $2.75 below minimum wage in 2030, as long as the worker still makes $7 above minimum wage in total.
But beyond the minimum wage, HB 2510 also has a host of additional clauses that would benefit low-income families throughout the state by offering tax credits and other resources.
“This bill is part of the House majority package,” said Hilo Rep. Richard Onishi, co-introducer of the bill. “The Senate bill only addresses the minimum wage issue, but ours addresses the low-wage earning families, what we call ALICE families.”
ALICE families — an acronym meaning Asset Limited, Income Constrained, Employed — made up nearly half of all Hawaii households before the pandemic, but make up 60% or more households in 2022, Onishi said.
The additional aid provided by HB 2510 includes new or increased tax credits for residents. Under the bill, the Earned Income Tax Credit would become refundable, instead of just being used as a credit against future tax liability.
“If you owe $100 in taxes, and you have a nonrefundable $1,000 tax credit, you get nothing back,” Ilagan explained. “But if it’s a refundable credit, then the credit covers your tax liability, and you get the rest of the $900.”
The measure also includes a clause offering a refundable “food/excise tax credit” to individuals making less than $30,000 a year or couples making less than $50,000 a year. The credit would equal $150 multiplied by the number of the taxpayer’s qualified exemptions.
The measure also would remove the age limit from the state’s household and dependent care tax credit, allowing taxpayers to claim people of any age as a dependent so long as that person is eligible to receive Social Security Disability Insurance.
The final provision of the bill would allow for the creation of an outreach campaign by the state Department of Taxation to ensure that low-wage earners are educated about their tax withholding options.
“There’s some stuff in this bill that we needed explained,” Ilagan said. “So, there’s definitely some education needed for people to learn about these credits.”
“We don’t want people to be overpaying,” Onishi said. “As a rule, we prefer it when they keep more money in their pockets.”
Onishi said HB 2510 will pass the House one way or another, but could not speak for how it will fare in the Senate. However, he added that he hopes and expects that a minimum wage increase will become law this year one way or another.
Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.