Editorial: Continue review of minimum wage

The strike by Hawaii hotel workers ended with a ratified agreement on Tuesday and pay raises all around. But the workers’ rallying cry — “one job should be enough” — continues to resonate in high-priced Hawaii, where costs for everything, especially housing, make it nearly impossible for the lowest-paid workers to get by on one job.

So when next year’s legislative session begins, expect to see more lobbying for an increase in the minimum wage, now fixed at $10.10. Nate Hix, founder of the advocacy group Living Wage Hawaii, said he hopes the Legislature will do what it failed to do last session: raise the minimum wage to $15, or even higher.

It’s probably a long shot. The Legislature rightly worries about overburdening small businesses. And since approving gradual increases in the minimum wage, beginning in 2015 and ending just this year, lawmakers may be loathe to revisit the issue for the time being.

Still, discussion is needed.

Unlike some other states, Hawaii does not regularly adjust its minimum wage based on indicators like the Consumer Price Index (CPI). Instead, lawmakers look at the wage in the context of the overall economy and make a subjective determination from time to time. Such a system demands more frequent review, especially as housing and health care costs continue to rise significantly with no end in sight.

One thing is clear: The minimum wage will need to increase again. The question is, and always has been, how quickly and by how much?

Over the past 12 years, Hawaii’s minimum wage rose from $7.25 to $10.10 — an increase of $2.85.

During the last legislative session, a bill was introduced to raise it again over just two years, from $10.10 to $15 by 2020 — an increase of $4.90.

The measure, Senate Bill 2291, failed. But lawmakers likely will need to consider again the wisdom of raising the minimum wage so sharply and quickly.

The $15 minimum wage has become a popular goal of advocates locally and nationally, with a “Fight for $15” movement gaining publicity by taking on large corporations that pay low wages, like big-box retailers and fast-food chains.

The current $10.10 wage works out to about $21,000 a year. The U.S. Department of Housing and Urban Development (HUD) considers an income of $24,500 to be “extremely low” for an individual in Honolulu. Even $15 an hour, or about $31,000 a year, still would not reach what HUD considers “very low” income — $40,850. HUD’s income limits are used to determine eligibility for affordable and subsidized housing programs.

Proponents of a higher minimum wage argue that a $15 or higher hourly wage would give some of Hawaii’s estimated 30,000 minimum-wage employees more spending power that would return to the local economy — a virtuous circle that helps everyone, including the businesses that pay the higher wage.

Not surprisingly, the business community fiercely challenges the latter assumption. A higher minimum wage also increases other wage-based costs, including taxes for unemployment insurance, Social Security and Medicare, workers compensation premiums and temporary disability insurance, according to the Chamber of Commerce Hawaii.

Raising the wage of their lowest- paid employees would require employers to raise proportionally the pay of those making more. Employers also anticipate higher health insurance costs under Hawaii’s Prepaid Health Care mandates.

Still, there is little evidence that raising the minimum wage depresses the economy or increases unemployment. Even as the minimum wage rose, Hawaii’s economy prospered and the unemployment rate fell, to about 2 percent today.

The Legislature should revisit ways to make minimum wage increases work better, including tiered increases based on business size or tying them in part to the CPI.

Those who earn the least may not make what some consider a living wage, but they shouldn’t fall behind while everyone else surges ahead. That’s both unfair and unwise.