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Key Hawaii House committees approve minimum wage increase, earned income credit

Two key House committees gave preliminary approval this morning to a modest increase in the state’s minimum wage along with a package of tax credits designed to help working families in Hawaii, but critics say the bump in the minimum wage won’t do nearly enough to help the people who need it most.

House Bill 2541 would increase the minimum wage from $10.10 an hour today to $11 on Jan. 1, and continue to increase the minimum in small steps until it reaches $13 an hour on Jan. 1, 2024.

The measure would also create a refundable earned income tax credit for working families, and would increase the state’s food/excise tax credit to $150 per person for families that earn less than $30,000 per year.

State tax officials calculate that providing a refundable state earned income credit for the first time would cost the state about $41 million more a year. Sweetening the food/excise tax credit, which is designed to offset the impact of the state’s excise tax on food, would cost the state an extra $36 million, according to tax officials.

Critics of the minimum wage proposal observed that businesses ranging from McDonalds to Target to Starbucks already pay their employees more than the minimum that lawmakers are proposing to set at the beginning of next year, which suggests the bill won’t provide much relief to low-wage workers.

The organization Young Progressives Demanding Action argues that the proposed minimums are “far less than the more than $17 per hour that’s needed for a single adult to afford their basic needs.”

The tax credits for lower income workers will help, but “the refundable EITC provision in this bill fails to make up the difference in these wages,” according to testimony submitted by the group.

The United Public Workers union urged lawmakers peg the minimum at $15 per hour by 2024, while the ILWU Local 142 and the Hawaii State Teachers Association suggested the Legislature mandate a minimum wage of $17 by 2025.

The skeptics also find it telling that the Chamber of Commerce Hawaii did not oppose the proposed minimum wage increase to $13. In fact, the chamber described it as a “reasonable and incremental approach.”

The chamber has been a reliable opponent of minimum wage increases in years past, and the critics of this year’s package say the chamber’s support demonstrates that an increase to $13 over the next four years is too little, too late.

California, Washington and and District of Columbia have already approved minimum wages that are $13 or higher for employers with more than 25 employees, and 15 states have wage floors that are higher than the minimum in Hawaii today, according to the state Department of Labor and Industrial Relations.

The measure was approved by the House committees on Finance and Labor & Public Employment this morning, and lawmakers noted the measure is part of a larger package of bills that are all designed to help working families to cope with the increasing cost of living in Hawaii.

That package includes measures to provide more affordable housing, affordable child care and other benefits, lawmakers said.

When asked about the criticisms that minimum wage increase is too small, House Finance Committee Chairwoman Sylvia Luke noted that a number of business groups strongly opposed the minimum wage increase entirely. Labor Committee Chairman Aaron Ling Johanson said lawmakers are “trying to find the right price point.”

A minimum wage increase that is too dramatic might prompt employers to cut their workers’ hours, leaving them worse off than before, he said.

“From an everyday person’s perspective, we can’t let the perfect be the enemy of the good,” he said. “This one bill is not meant to be the panacea to fix everything.”

The measure now goes to the full House for further consideration.

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