Gov. Neil Abercrombie on Friday signed a bill into law that will increase the state’s minimum wage to $10.10 an hour by January 2018.

The law will also expand a tip credit to 75 cents, but businesses will not be able to deduct the credit unless workers earn at least $7 more than the minimum wage, up from 50 cents.

The state’s $7.25 an hour minimum wage has not been increased since 2007. The tip credit is now 25 cents.

Businesses had warned that a minimum wage increase could lead to reduced hours and benefits for workers.

But the governor said he has heard the same complaints from business interests since the 1960s. He called the minimum wage a “survival wage,” and predicted that the hike would help boost the economy because workers would spend the higher pay locally.

Abercrombie was joined at the signing ceremony at the state Capitol auditorium by state Sen. Clayton Hee and state Rep. Mark Nakashima, the main negotiators on the minimum wage bill.