Small businesses, from mom-and-pop stores to our favorite okazuya, make up the fabric and livelihood of our communities. They provide goods and services, but furthermore, provide jobs for employees, and the families they support, and keep our economic engine moving forward.
Business owners are often perceived as only concerned about profits and not their employees. On behalf of our 2,000-plus members who employ 210,000-plus employees statewide, of which 80 percent is small business, I passionately refute this perception.
Local business owners do whatever they can to support their employees, not only because it’s good business, but because they consider their employees family and treat them as such. Profit margins are slim for many of these owners and oftentimes they are the last one to receive a paycheck.
With a minimum wage increase at the forefront at the Legislature, here’s why the Chamber does not believe raising the minimum wage will address the cost of living here in Hawaii — which is a real problem facing our community.
We support efforts to address the high cost of living. However, placing mandates on employers will increase the cost of doing business, which will be passed down to consumers and further increase the cost of living. At a certain threshold, costs cannot be passed down and businesses will need to look at downsizing. While some businesses can afford to pay above minimum wage, others can’t, forcing them to cut back hours, benefits and positions, as well as look to automation.
We need to ask ourselves, are we really moving the needle?
Minimum wage is not meant to be a living wage. It’s intended to be a wage at which companies can bring in unskilled workers and afford to train them until they build their skill level and earn increases, rising to the level of a living wage. That is how businesses retain employees, especially in this tight labor market.
Living wage takes into consideration size of household and the cost of food, child care, health care, housing, transportation and other necessities. Rather than increasing minimum wage, we should be discussing how we address the foundation of these cost drivers.
Many say that, with a low unemployment rate, a lot of businesses are already paying above minimum wage to compete for employees. However, a hike in minimum wage forces other wages within a company to increase. Otherwise, a more-experienced employee will earn the same amount as a newly hired employee, creating an inequitable pay structure and morale and retention issues, significantly raising labor costs and resulting in businesses having to make changes.
What happens when the economy takes a downturn? Will minimum wage decrease?
Health care is another important consideration. Under Hawaii’s Prepaid Healthcare Act, an employee’s share of health-care coverage cannot exceed 1.5 percent of his/her earnings, which means that employers are covering most, if not 100 percent, of their employees’ health care. This adds a minimum of $3/hour per employee on top of minimum wage. On average, employers pay $600/month per employee for health care. This is in addition to unemployment insurance, payroll tax, workers’ compensation, TDI (temporary disability insurance) and other costs.
These are some of the reasons we do not believe that raising the minimum wage is the solution. We recognize this is a difficult issue and decision for our legislators. We all agree that cost of living issues need to be addressed. The reality is that jobs, in some form or another, will be impacted with an increase. Let’s find ways to build a better business climate and lower our cost of living so our employees, employers, consumers and all residents of Hawaii can benefit.