In January 2020, the regular legislative session kicked off with an ambitious package of bills aimed at tackling critical economic issues that have long-plagued Hawaii’s residents. With income inequality ranking high on that list, one measure called for boosting the state’s minimum wage from the current $10.10 to $13 by 2024.
It attracted early support from advocacy groups as well as from some key businesses and associations — but unfortunately, the bill stalled as the COVID-19 pandemic touched off economic fallout. Now, in tandem with a needed push to make Hawaii more affordable for working families, lawmakers must also fix their focus on business community recovery. Needed though it is, any minimum wage hike will be a tough sell this legislative session.
Before the pandemic hit, the state had been on a low-unemployment streak — 2.4% last March. Then, in April and May, jobless rates soared, hovering at 23%, with the number of people unemployed here topping 150,000. According to latest figures, in December, Hawaii tied another tourism-dependent state, Nevada, for the most unemployment, with a rate of 9.3%. The U.S. jobless rate was 6.7%.
In a recent survey spotlighting small businesses statewide, the Hawaii Chamber of Commerce Foundation found 2 out of 3 continuing to face struggles, with revenues dropping an average of 45% from 2019 to 2020. Further, almost half had reduced their workforce and noted that the hit would have been worse had they not received federal COVID-19 relief funds through the Paycheck Protection Program (PPP).
A recent University of Hawaii Economic Research Organization forecast optimistically predicted meaningful recovery in the state’s tourism sector taking hold as soon as midyear. But the gains tied to that in the overall business sector could be slow-moving. Most of the businesses surveyed by the Chamber foundation said they expected to be on the road to recovery at least until April 2022.
The largest portion of Hawaii’s small business sector is made up of mom-and-pops, operations with fewer than 100 employees. Clearly, helping them as they continue to stay afloat must rate as a priority. To that end, it’s encouraging that another round of PPP funding is in the works.
While reluctance to saddle businesses with another burden at this time is understandable, lawmakers should still forge forward with robust debate on the matter of minimum wage. It’s also encouraging to see Senate Bill 676, which would raise Hawaii’s minimum wage to $12 in July 2022 — giving more than a year for business recovery — advancing at the state Capitol.
Supporters of a higher floor wage have pointed out that Hawaii’s is lower than in other highest cost-of-living states; and that the others — California, New York, New Jersey, Massachusetts, Maryland and Washington state — have passed laws to raise their wage to at least $15 over the next five years.
Some of the bill’s backers have suggested amendments, such as bumping up the wage to $17 within the next several years. They make compelling arguments that due to Hawaii’s high cost of living, an increase is vital for workers at the bottom of the scale, including many who have been on the pandemic’s essential-worker front lines.
In testimony, Appleseed Center for Law &Economic Justice said: “Research shows that increasing minimum wage increases spending, putting money right back into local stores and restaurants. Raising the minimum wage helps keep money in our state, by directing it at the wallets of local workers.”
Timing, though, is everything in this precarious period. Making strong counterpoints, the bill’s opponents, including the Hawaii Chamber of Commerce, have asserted that the proposed increase could backfire, resulting in more layoffs as well as business closures and bankruptcies, reversing recovery gains.
On balance, legislators should continue to give SB 676 a close look and keep the wage debate alive in coming months, as the economic path forward becomes clearer.
