Advocates for a living wage will be asking our elected officials to deliver on their promises and pass a living wage bill in the 2021 legislative session. But we can’t do it without support from you.
It’s time to Raise Up Hawaiʻi
Every worker deserves a Living Wage.
Hawai‘i’s minimum wage increased to $10.10 on January 1, 2018. At this rate, a person working full-time, with holidays or vacation or sick time, takes home just $21,000 a year. The legislature in 2014 enacted incremental increases to Hawai‘i's minimum wage, with $10.10 as the last step, so it's been losing ground to inflation for more than 4 years. In fact, Hawai‘i’s full-time minimum wage workers have been losing the equivalent of over $500 per year to inflation alone.
With the highest cost of living in the nation, $10.10 is not a living wage for a single adult in Hawai‘i, much less adults supporting children and others. As low-wage jobs become the new normal, working families are falling further and further behind even as the economy continues to grow.
Any less than $18would not be enough to pay for basic needs such as food, housing, transportation, health care, let alone incidentals and emergencies. According to data from the Hawai‘i Department of Business, Economic Development & Tourism, the self-sufficiency income standard for a single adult with no children and with employer-provided health insurance in 2018 was more than $35,000 per year, or $16.90 per hour for full-time work with no weekdays off. With inflation, that’s $18.70 in 2021. The self-sufficiency wage for that same adult in 2018 rose above $28.50 per hour with the addition of a child.
Due to the large disparity between the current minimum wage and a living wage, many individuals work two or more jobs to maintain a basic standard of living for themselves and their families. While $18 is a good target for 2022 legislation, inflation and the cost of living will continue to rise. That’s why we are asking for legislation to include automatic inflation adjustments based on the consumer price index, to keep the minimum wage at a livable level in perpetuity.
The minimum wage has been falling behind the cost of living for nearly 40 years. If it had kept up with productivity and inflation, it would be $26 by now. The proposed increase in Hawai‘i would not happen overnight. Instead, it would be implemented in steps over multiple years to allow businesses to adjust accordingly. The next 8 highest-costs states, such as California, Washington, New York, New Jersey, Maryland and Washington D.C., have already passed laws to increase their minimum wage to at least $15 in steps. And our cost of living is higher than all of those jurisdictions..
Small businesses need customers. A $18 minimum wage would put additional money in the pockets of the people most likely to spend in their communities, and the higher wages mean more productive employees and lower turnover for small businesses. Research shows that higher wages raise worker morale, productivity, and loyalty, which reduces employers' turnover, hiring, and training costs.
Besides, the last time the minimum wage increased in Hawai‘i, by 39% between 2014 and 2018, small businesses thrived. Our state’s unemployment rate dropped by 52% over those 4 years. And over that same period, the number of restaurant servers in Hawai‘i rose by 32%.
Concerns about minimum wage increases causing prices to rise are overblown. While employers pass some of the higher labor costs to consumers, the price increases tend to be quite small. That’s because higher wages also mean higher employee productivity and lower turnover costs for businesses.
The overwhelming majority of research on the effects of past minimum wage increases on prices suggests that costs to consumers rise by less than 5 percent—typically far less—over several years, even in industries that employ a lot of workers at or near the minimum wage, such as fast food. Looking at Hawai‘i prices, that means the cost of a spam musubi, a fast food meal, or a gallon of milk would go up by only a few cents per year due to a minimum wage increase.
Despite claims to the contrary, decades of research has shown that raising the minimum wage does not increase unemployment rates.
The latest major study, in 2019, found that, on average, 138 major state-level minimum wage increases since 1979 significantly raised wages without reducing the employment of low-wage workers. Importantly, it also found the same positive outcomes for even the highest minimum wages.
In 2016, President Obama's Council of Economic Advisers looked at 19 recent state-level minimum wage hikes and concluded that "the recent legislation contributed to substantial wage increases with no discernible impact on employment levels or hours worked."
Another paper in 2015 analyzed 15 years of minimum wage research and found "no support for the proposition that the minimum wage has had an important effect on U.S. employment." A 2013 study reviewed the literature since 2000—including two meta-studies—and concluded that minimum wage increases "have no discernible effect on employment."
In 2017, a University of Washington paper that found negative job effects from Seattle's minimum wage increase made a lot of headlines mainly because it contradicted the existing body of research. In fact, a few days earlier, a University of California, Berkeley, study that found that Seattle's minimum wage increase had beneficial effects drew almost no media attention.
Since then, major flaws in the University of Washington paper have been found by economists at institutions such as the Economic Policy Institute, the University of California, Berkeley, and theCenter for American Progress. As a result, some eminent economists who initially affirmed the Seattle paper have retracted their endorsements of it.
Many people believe that low-wage workers are lazy or are just teenagers, but nothing could be further from the truth: many work more than one job to pay their bills and support their families. In fact, fewer than 1 in 10 minimum wage workers in Hawai‘i are teens, 6 out 10 are women, and 4 out of 10 have some college education.
The labor market is competitive, and a higher minimum wage drives all wages higher in the same way a low minimum wage drives all wages lower. A $18 minimum wage would give workers in the skilled trades more leverage to demand higher wages and fight back against the anti-worker policies that have made the rich richer and everyone else poorer.
Since 2019, the Raise Up Hawaiʻi coalition has been warning lawmakers that the growing gap between wages and cost of living would eventually bring our consumer spending-based economy to a standstill. The pandemic recession has accelerated that end result and made a raise in the state minimum wage more critical than ever.
This isn't about workers vs businesses. That's a false dichotomy. We need both businesses and workers to be able to thrive in order to end this recession quickly and get Hawaiʻi back on its feet. And we can do that. Working with policy experts and legislative champions, we can create a plan to raise Hawaiʻi's wages while also protecting locally-owned mom & pop shops.
This recession has hit the working class much harder than the 2008 recession did, and without swift action from lawmakers this coming session, Hawaiʻi could see a wave of evictions, a spike in homelessness and a long, dragged-out recession that will cause financial pain for years to come.
But if we work together, we can turn this situation around. We can invest in our communities and in our workforce and guarantee that everyone in Hawaiʻi is able to cover their basic needs, weather the pandemic, and even start spending some of that money at local small businesses again.
That's why we're launching the 2022 campaign to pass living wage legislation now: because we need as much public support and momentum as possible to convince lawmakers to step up and do the right thing.
There are many serious problems in our world, and we can’t solve them all at once. A $18 minimum wage is a winnable reform that will give Hawai‘i families a much-needed raise.
