State senators expressed confidence Friday that a minimum-wage increase would pass this session after the Senate Ways and Means Committee adopted a new draft.
The Senate bill would gradually increase the minimum wage to $10.10 an hour by January 2017 — up from $7.25 an hour — and provide an undetermined tip credit for businesses.
A previous Senate draft would have eliminated the 25-cent tip credit entirely and tied future minimum-wage increases to the consumer price index, which many lawmakers believed would have been too much of a burden on businesses.
The House Finance Committee on Thursday approved a bill that would raise the minimum wage to $10 an hour by January 2018 and provide a $1 tip credit. But businesses would only be able to deduct the tip credit from workers who earn less than 250 percent of the poverty level, or about $33,500 in wages and tips.
House and Senate lawmakers have now left themselves enough options — and have moved off hard-line negotiating positions — to produce an agreement that would increase the minimum wage for the first time since 2007.
"I know that there are a couple of areas of differences, but I think both the House and Senate are committed to passing the minimum wage," said Sen. David Ige (D, Pearl Harbor-Pearl City-Aiea), chairman of the Senate Ways and Means Committee.
Sen. Clayton Hee (D, Heeia-Laie-Waialua), chairman of the Senate Judiciary and Labor Committee, gave Ige prior concurrence to make the changes to Senate Bill 2609 on Friday. Hee had previously insisted that key provisions of the bill, particularly the elimination of the tip credit, not change.
"It appears to me more than ever before — particularly last year — that a minimum-wage bill will be established," he said. "And it appears to me that it’s going to be greater than $10."
Hee said the tip credit would also likely be significantly less than the $2 some of his Senate colleagues had wanted last session.
Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), chairwoman of the House Finance Committee, was also optimistic about a deal. "It seems like we’re getting closer to some type of an agreement on the minimum wage, and I’m looking forward to looking at the various items on the table," she said.
Several lawmakers said Friday that Luke’s recommendation of a "poverty threshold" as a trigger for the tip credit in House Bill 2580 is interesting but potentially complicated.
The proposal, which Luke used to justify a tip credit of $1, would help ensure that the lowest-paid workers who earn tips at least receive the minimum wage.
But some lawmakers privately described the idea as unworkable because it could be difficult for businesses to calculate.
If a "poverty threshold" were to fall out during the negotiations, several sources said, a $1 tip credit might not survive. The tip credit would likely be closer to 75 cents or 50 cents, sources say.
Unavoidably, in an election year, there is politics in the minimum-wage debate.
Ige, who is challenging Gov. Neil Abercrombie in the Democratic primary for governor, notified his supporters Friday afternoon via email that a minimum-wage bill had passed his committee. Abercrombie has called for a minimum-wage increase for the past two sessions. Ige had been partially blamed for the failure of a minimum-wage increase last session because of his preference for a higher tip credit.
Senate Minority Leader Sam Slom (R, Diamond Head-Kahala-Hawaii Kai) said majority Democrats are "hell-bent on passing something this year, being an election year."
Slom said the minimum wage is an entry-level training wage and was never intended to be a living wage. He said that less 3 percent of Hawaii’s labor force earns the minimum wage.
"It’s interesting that people that are not in business come and tell us what wages should be and what working conditions should be," he said. "My suggestion always is that those folks, as well intended as they are, should start their own businesses and then they could pay anybody whatever they want to pay — $15 an hour, $50 an hour, $100 an hour.
"But they would soon learn the costs of doing business and the very narrow margins of profit, especially here in Hawaii."
Sen. Russell Ruderman (D, Puna), founder and owner of Island Naturals Markets, which started as a small business and has grown to about 150 workers, said he is strongly in favor of a minimum-wage increase. He did say, however, that lawmakers were headed in the right direction by eliminating the link to the consumer price index, which could have caused unpredictability for businesses.
"I do think businesses can afford to pay their employees a living wage or at least begin to address that," he said.
