A livable minimum wage
The past several decades have not been kind to Hawaiʻi’s working families...
Costs have skyrocketed while wages remain stagnant. Of the jobs that have returned in the wake of the Great Recession, many now offer lower wages and benefits, leaving Americans without college degrees particularly vulnerable.
Even as our economy continues to grow, even while unemployment is at a historic low, more than half of our working residents have barely enough to pay for a roof over their heads. A worker in Hawaiʻi needs to earn at least $17 an hour to afford a one-bedroom apartment.
At the current minimum wage, a worker who devoted 100 percent of her earnings towards rent, would still not be able to afford a market-rate apartment, let alone pay for food and transportation.
The state’s own data from the Department of Business, Economic Development and Tourism (DBEDT) points clearly to the solution: Raise the minimum wage to at least $17 per hour, with an adjustment for inflation every year so we don’t fall behind as the cost of living continues to rise in one of the most expensive states in the nation.
YPDA, along with other advocates in the Raise Up Hawaiʻi coalition for a living wage, will be asking our elected officials to deliver on their promises and pass a living wage bill in the 2019 legislative session.
Download a print version of our key talking points here.
$17 per hour is the self-sufficiency wage. According to the state’s own Department of Business, Economic Development & Tourism (DBEDT), a single, full-time worker with no children must make at least $17 per hour just to afford his or her basic needs. With the addition of a child, that number almost doubles, approaching $30 per hour.
The minimum wage was higher in 1968 than it is today. You read that right. The Hawaiʻi minimum wage in 1968 was $1.25. Adjusted for inflation, that equals $11.93 per hour. Hawaiʻi’s minimum wage is $10.10 today, or just $21,000 annually.
Fewer than 65 percent of jobs in Hawaiʻi pay a living wage. The myth that minimum wage jobs are for high school students and not meant to live on is as pervasive as it is false. In fact, fewer than two-thirds of jobs in Hawaiʻi pay enough to live on, affecting more than 200,000 workers. The reality is that a lot of minimum wage jobs are vital to the health of a functioning society. Simply put, we need people who take these vital jobs—like farm workers, housekeepers, nursing assistants, fishing industry workers, construction workers, and yes, fast food workers—to be able to lead secure, happy lives, so they’ll keep doing those jobs. And we should certainly pay them what they’re worth to society, which is at least a living wage.
The last minimum wage increase was great for the economy. Contrary to what the Chamber of Commerce and the Restaurant Association will tell you, increasing the minimum wage from $7.25 in 2014 to $10.10 in 2018 (a 40 percent increase, or 10 percent per year) has been great for business. In the year of data available after the minimum wage increased from $7.25 in 2014, Hawaiʻi saw a 6.4 percent increase in small businesses. Meanwhile, the number of restaurant server positions has increased by 20 percent between 2014 and 2018.
Raising the minimum wage does not cost people jobs. Decades of research shows that raising the wage does not lead to layoffs, as the controversial Seattle study claimed. Businesses would much rather make other adjustments, and are almost always able to do so. People working multiple jobs might leave one job once the other pays enough to live on, which would actually force businesses to compete for good workers, letting the market do what it does best. Unemployment in Hawaiʻi has decreased by more than 50 percent since the wage began rising in 2014.
Purchasing power will easily out-pace price increases. Another myth opponents like to toss around is that the price increases that accompany wage increases will negate the impact of the wage increases. The average company spends between 30-40 percent of its costs on employee wages. If completely passed on to the consumer, a 10 percent increase in wages each year would translate to a mere 3-4 percent increase in prices. A $6 sandwich might cost $6.25 after the first year’s increase.
Restaurants in particular raise their prices all the time. It’s a built-in feature of the consumer economy. Consumers have no trouble handling these incremental increases normally. They will have even less trouble when their take-home pay increases as a result of rising wages. This has been repeatedly proven in studies like this one from Purdue University, showing that the average cost of a Big Mac would rise by all of 22 cents, or this one from UMass-Amherst, which found that a wage increase from $7.25/hour to $15/hour, phased in over a period of four years, would have little to no impact on the fast food industry’s profit margins in general.
The wage increase will not be all at once. Step-by-step implementation at at least 10 percent per year will catch us up to where we need to be in a reasonable time-frame while giving businesses ample time to adjust and plan accordingly. This approach has proven successful in both states and municipalities across the country, including Seattle, where a controversial study with serious methodology errors has been debunked.
Raising the wage increases productivity and actually saves money. Research also shows that businesses that raise their wages attract and retain better workers that show up with higher morale, increased loyalty and more productivity. Factor in a drop in the cost of constantly retraining new employees, as well as a drop in healthcare costs, and you’ve got yourself a cost-saving business model—more than enough to cover the wage increase without having to significantly raise prices.
Raising the wage will not cause a massive increase in your tax bill. Contrary to what many people think, if an increase in the wage bumps you up into a higher tax bracket, you don’t suddenly pay that higher tax rate on all your income—just on the income difference that put you over the bracket threshold. If you’re new income is $100 over the threshold, you only pay the higher tax rate on that $100, not your entire income. This is called marginal tax rates.
Raising the minimum wage benefits higher wage workers too. Just as a low minimum wage drags all other wages down, a high minimum wage gives workers in the skilled trades more leverage to demand higher wages. In fact, when the minimum wage is increased, everyone making within 150 percent of the new minimum ultimately sees a corresponding increase.
The Democratic Party of Hawaiʻi supports a livable minimum wage. The party passed a resolution in 2018 supporting a livable minimum wage and the legislative committee has made passage of legislation creating such a wage a priority issue for them. Hawaiʻi’s lawmakers are comprised of a super majority of democrats.
The majority of Hawaiʻi’s lawmakers say they support a livable minimum wage. Living Wage Hawaiʻi has compiled a list of legislators in both chambers (and the governor) who are on record as supporting the concept. It’s up to us to make sure a living wage bill gets put to a vote. Find out if your legislator has committed to support living wage legislation. If they have, thank them for their support and you look forward to helping them pass a bill this year. If they have not, ask them to sign on.
According to economist James Galbraith, raising the minimum wage would raise the incomes of 28 million Americans. Women would particularly benefit because they tend to work for lower wages than men. As Galbraith sees it, raising the minimum wage is family friendly policy.
To get the economy back on track, spending power has to be in the hands of those who actually spend in the real economy. That means regular people, not the super-wealthy who tend to hoard wealth or invest in financial products. The minimum wage story is not just a story about income inequality, but rather it’s about an elite that has hijacked the economic system and made it work less productively than before while redistributing more of what is working to themselves.
During the early part of the post-war period, particularly the 1950s and 1960s, entrepreneurship was more concerned with building productive capacity and putting workers to work actually making useful things as opposed to creating financial Frankenstein products like credit default swaps.
A higher minimum wage would also help to mitigate the abusive, exploitative working practices of a number of employers, who take advantage of the currently low minimum wage to seek cut-rate help. Such employers often use undocumented labor, which further undermines America’s working poor.
The past 40 years have witnessed a dramatic redistribution of national and personal income in favor of profits for the rich. At the same time, this period has been associated with a dramatic decline in the performance of the U.S. economy. Raising the minimum wage is the minimum we can do for those who have suffered from this economic crisis: the working population. It would be an act of justice, and an economically sound one at that.
Legislative committee emails
House Committee on Labor & Public Employment: LABTestimony@capitol.hawaii.gov
Senate Committee on Labor, Culture and the Arts: LCATestimony@capitol.hawaii.gov
Committee: Economic Justice
Rising Tide: 10 reasons for Hawaiʻi to support an increase to a livable minimum wage that rises with cost of living
Raise Up Hawaiʻi: The Fight For A Living Wage
Sign the Raise Up Hawaiʻi petition to show your support
Legislators: Join the Living Wage Hawaiʻi list of supporters