Workers who are among the lowest paid in Hawaii are getting a raise starting Sunday under a 3-year-old change to state law.
Those who earn the state minimum wage will receive $9.25 an hour, a 9 percent bump up from $8.50.
The raise represents the third consecutive annual increase to Hawaii’s minimum wage that began in 2015 after the Legislature passed a controversial bill in 2014 to move the wage scale floor from $7.25, where it had been since 2007.
One more increase is slated to take effect in 2018, when the hourly minimum wage will rise to $10.10.
The state Department of Labor and Industrial Relations advocated for the increases partly on the premise that low-wage workers would spend most or all of the resulting additional income and stimulate economic activity including more job creation.
Higher pay for largely entry-level jobs is expected to bubble up to more skilled jobs as employers face pressure to keep higher-paid positions competitive, especially as Hawaii’s unemployment rate hovers around the 3 percent mark, often regarded as full employment.
Some employers have warned that they would be forced to adjust in unpleasant ways, including raising prices, holding back on hiring, or cutting employee benefits.
Individuals earning Hawaii’s minimum wage don’t earn much compared with most of the workforce. A full-time worker at a minimum-
wage job would earn $19,240 a year. That’s about one-fourth of the $70,400 annual median income for a single person in Honolulu last year.
The DLIR does not have data or an estimate for how many people earn the minimum.
According to the U.S. Department of Labor, the estimated number of Hawaii workers whose hourly wage was equal to or less than the federal hourly minimum of $7.25 from 2007 to 2013 — when the federal and state minimums were the same — ranged from 4,000 to 15,000.
In 2015 there were an estimated 10,000 Hawaii workers earning no more than the $7.25 federal minimum. The federal minimum is overridden by Hawaii’s higher minimum, but workers at or below the federal minimum include tipped employees who report only their hourly pay rate.
Hawaii’s civilian workforce is made up of nearly 700,000 people. The U.S. Bureau of Labor Statistics said about 356,000 Hawaii workers were paid an hourly rate in 2015.
With its $9.25 minimum wage, Hawaii joins 14 other states with a minimum of at least $9 an hour this year. Those states include Nebraska at $9, Alaska at $9.75, Arizona and Vermont at $10, California at $10.50 and New York and Washington at $11, according to the National Conference of State Legislatures. About 20 states have either no minimum wage or a minimum at or below $7.25.
The increases set by Hawaii’s Legislature in 2014 were opposed by many businesses and employer groups, including the Chamber of Commerce of Hawaii, which warned that the hikes could lead some businesses to cut back on hiring or reduce hours or benefits for existing employees. Raising prices or living with less profit also were among expected considerations facing businesses that need to pay employees more.
Cheeseburger Restaurants Inc. said in written testimony on the 2014 bill that its annual labor cost for more than 500 employees at five local restaurants would grow by about $500,000 based on the minimum wage rising to $9.25 this year.
George Szigeti, president and CEO of the Hawaii Lodging &Tourism Association, described the hikes as too much for businesses to absorb.
“A dramatic increase in the minimum wage, even over the course of a few years, will have a negative impact on businesses that now must pay for increased wages without any related growth in profits,” he said in written testimony on the bill. “In order to meet the additional financial burden, many businesses will face the decision to either cut entry-level jobs or increase the price of their product, both of which are not good for our state.”
Supporters of the bill were largely local government agencies, unions and organizations representing seniors.
The Hawaii Appleseed Center for Law and Economic Justice testified that thousands of low-income workers would benefit from higher minimum wages, especially given that the cost of living here is almost
60 percent more than the national average.
Peter Mattoon, a representative of nonprofit Partners in Care, said in written testimony that higher wages would help people escape poverty and homelessness.
And Patricia McManaman, director of the state Department of Human Services, said in 2014 that the four annual minimum wage steps were the right thing to do: “It’s time for Hawaii to ensure that (the) poorest of our wage workers can at least support their most basic needs.”