One hundred and nine hours a week, or 16 hours a day with no days off – that’s how much a worker in Hawai‘i earning the minimum wage has to work to afford a one-bedroom rental without being considered “cost burdened.” This data, from the National Low Income Housing Coalition, is Exhibit A in the growing set of evidence regarding Hawai‘i’s high cost of living, affirming what locals have known for years: that times are hard for a lot of residents. It’s a reality that’s easily overlooked here in paradise while we’re being paid in sunshine year-round.
Besides, at this point, just put the data in the file with the rest of the evidence.
Like the conclusion from the Bureau of Economic Analysis that Hawai‘i has the highest cost of living in the entire country. And the information provided by the National Low Income Housing Coalition which states Hawai‘i has the highest housing wage (“the estimated full-time hourly wage a household must earn to afford a decent rental home at HUD’s Fair Market Rent while spending no more than 30 percent of their income on housing costs”) in the nation.
And Aloha United Way’s findings from 2015, updated in 2017, that 48 percent of households across the state (51 percent in Maui County) earn below the requirement for a household survival budget (which factors in basic essentials of housing, child care, food, transportation, and health care).
And the state’s own findings from the Department of Business, Economic Development, and Tourism’s latest Self-Sufficiency Income Standard annual report, which says that on Maui in 2016, “A single adult with no children needed to earn an hourly wage of $17.08 to be able to meet its basic needs and to be economically self-sufficient.” At the report’s time of publishing, that meant a single worker needed to make more than double the minimum wage in order to meet the minimum self-sufficiency goals.
The list goes on. There seems to be no shortage of reports stating that it’s too difficult for a vast number of Hawai‘i residents to eke out a living.
The latest, released last week by Hawai‘i Appleseed Center for Law and Economic Justice, takes this problem and projects the effects of one effort to address it: raising the minimum wage.
The report, titled “The Effects of Boosting Hawai‘i’s Minimum Wage,” comes as the State Legislature moves forward HB1191, which increases the state’s minimum wage. Prior legislation provided for annual increases up until January 2018, when the wage was set at $10.10 an hour, where it remains today.
As currently written and amended by the State Senate, HB1191 increases the minimum wage to $12 an hour in 2020 and $15 an hour in 2023. State workers would instantly receive a bump to $17. The bill also allows small businesses (defined as having fewer than 50 employees) to apply for a tax credit that would cover 20 percent of the increase in wages paid from the previous year, up to a maximum of $50,000.
As we go to press, the bill is scheduled for an April 24 conference following disagreements between the State House and Senate. Legislators will have to resolve discrepancies between both versions of the legislation, including the House bill’s absence of a small business tax credit or provision for state employees, addition of a consideration for tipped employees, and more gradual plan to implement $1 raises until 2024, when the minimum wage would be $15. The House version of HB1191 also includes a provision for employers providing health insurance for employees. Those employers would see minimum wages rise by only 50 cents a year until reaching $12.50 an hour in 2024.
Unions and progressive groups have testified in support of the raise for minimum wage earners, while opposition against the bill largely comes from libertarian-leaning, free market groupies and businesses concerned about their bottom line and ability to hire low-skilled workers.
Indeed, as touched on by many testifiers, raising the minimum wage is going into uncharted territory. What could be the effects?
The University of Hawai‘i Economic Research Organization took up this question in a March 21 post titled “How high is too high? What’s known and unknown about minimum wage increases.”
Basically, it concludes, “The results could be unintended.”
That’s because “All existing studies of the minimum wage suffer from data and methodology shortcomings, so that there remains a great deal of uncertainty about the employment effects of a $15 or higher minimum wage.”
So with that grain of salt, the authors suggest a gradual and careful approach to raising the minimum wage. On the one hand, they cite a study that found a “10 percent increase in the minimum wage increases average earnings in the food service industry by 1.3-2.5 percent, with no significant negative impact on employment.” On the other hand, the rapid increase in Seattle’s minimum wage from $9.47 an hour to $13 an hour in less than two years resulted in a significant reduction in hours worked among restaurant workers due to employer’s increased expenses.
“The point we are trying to make is not that the $15 minimum is too high,” states the UHERO post, “but that it is well outside the range that has been studied extensively for U.S. minimum wage changes over the past 25 years.”
If the effects on employment are uncertain, what about the impact on the workers who would actually receive the raise in wages?
Queue Hawai‘i Appleseed’s latest report.
“The Effects of Boosting Hawai‘i’s Minimum Wage” examines a scenario in which the state increases the minimum wage to $17 an hour over the course of five years, ending in 2024. Counter to arguments made by some opponents of the increased wage, that the current minimum wage is appropriate compensation for low-skilled teenaged workers, the report finds that 95.5 percent of those who would see an increase in wages would actually be over 20 years old. More than 75 percent of them would be over 25. Further, 51.1 percent of affected workers would have some college education, hardly making them “low-skilled.”
Historically downtrodden groups would also see raises. Women, for example, would make of 55.7 percent of the individuals affected. Almost half (46.4 percent) of Native Hawaiian workers would get raises, as well as 63.4 percent of Pacific Islander workers.
Parents would make up 28.7 percent of the affected workers, and over half (52.9 percent) of single parents would see wage increases.
A majority of restaurant, agriculture, forestry, fishing, and retail workers would also reap higher pay.
The report adds that the debate should be expanded to include projections for broader impacts than simple employment.
“Not only would such a pay increase help to improve the living standards of affected Hawai‘i workers, it would also strengthen local businesses, as low-wage workers plow almost every additional dollar of earnings back into the local economy,” it states. “Studies that have looked beyond the narrow question of employment impacts has [sic] found clear, meaningful benefits from higher minimum wages to low-wage workers, their families, and their broader communities and economies.”
And so, the question of whether to proceed with caution or courage remains. Though, after reviewing the evidence file once more, I want to rephrase the it: Should we boldly do what’s right and just for the lowest earning, most downtrodden among us? Or do we settle for gradualism and the status quo?
Image courtesy Flickr-Viewminder