But the House of Representatives may seek a slower wage increase after businesses raised concerns with the Senate’s proposal.
The Senate moved with lightning speed this week to pass a measure that would raise Hawaii’s minimum wage to $12 an hour by October and $18 an hour by 2026.
In an unprecedented move on Friday morning, the 25-member Senate voted 24-1 to pass Senate Bill 2018 in just the second week of the 2022 legislative session. SB 2018 gained early support, with 20 senators signing on to the bill.
Sen. Brian Taniguchi, who introduced the measure, said Hawaii has provided much help to employers in the last few years. He pointed to another measure this year that seeks to keep taxes on unemployment insurance low for employers.
“It’s time we help the thousands of struggling, low wage earners in our state,” Taniguchi said.
The measure easily cleared hearings in the Senate earlier this week even as some businesses and the Chamber of Commerce Hawaii raised concerns that the amount and rate of increases may be too much, too soon.
The Senate’s proposal could meet resistance in the House, which plans to package an increase in the minimum wage with tax relief for low-income families.
“The House’s strategy is to help working families, but also to help small businesses,” Rep. Richard Onishi, chairman of the House Labor and Tourism Committee, said.
House Bill 2510 would raise the minimum wage to $11 an hour starting Jan. 1, 2023. The measure would increase the minimum wage a dollar per year until 2030, when it reaches $18 an hour.
“We feel smaller increases over time will have less impact on smaller businesses over time,” Onishi said.
HB 2510 also would make an earned income tax credit for low-income individuals refundable and permanent and would raise another tax credit on food for some low-income families. Any wage increase proposals would need to clear Onishi’s committee.
House Speaker Scott Saiki said that while there’s no “exact science” as to how wages should increase, the schedule for increases should be well thought out. He is introducing a separate measure this year that would scale hourly wages in proportion to a three-year average of the consumer price index.
He said the House won’t move as quickly as the Senate on any measures to raise the minimum wage this session.
“We don’t want to rush,” Saiki said. “The minimum wage issue is too important to be rushed. We need to be deliberate about it.”
Some businesses opposed the Senate’s minimum wage proposal this week.
In written testimony to lawmakers, Sue Eldridge, owner of Aloha Hula Supply, said she worries that the rapid wage increase could shutter her 24-year-old business and put her and her employees out of work.
Fear of wage impacts on small businesses caused Sen. Gil Riviere to cast the lone “no” vote on SB 2018.
“I would consider something more modest,” Riviere said, adding that businesses in his North Shore district are mostly small businesses that may have a hard time weathering wage increases.
A survey of 355 businesses conducted by the Chamber of Commerce Hawaii found that a third of respondents said they would need to shut down their stores if wages increased to $18 an hour. More than half said they would need to reduce staff if wages went beyond $15 an hour.
But minimum wage hikes have had little long-lasting effects on businesses in most cases, according to a report from the state Department of Business, Economic Development and Tourism in 2020. It found that wage increases also have had little effect on the overall labor market in Hawaii.