Report Title:

Minimum wage

 

Description:

Sets minimum wage at fifty cents above the federal minimum wage.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

166

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

Relating to the minimum wage.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the minimum hourly wage paid to an employee should be sufficient to yield a "livable wage" to a person who works forty-hours-per-week and fifty-two weeks per year. This is the spirit and intent of the Fair Labor Standards Act of 1938, as amended, which is the federal law that sets the minimum wage.

The weakness of having a national minimum wage based on national averages is that many areas in the country, including Hawaii, have substantially higher costs of living than others. During the period from 1994-1998, the cost of living in Hawaii was measured by various sources to be from twenty-five to forty per cent higher than the national average. Because of this, when applied to Hawaii, the federal minimum wage standard falls far short of providing a fair, livable wage to a full-time worker.

To account for this discrepancy, the legislature has, in previous years, set the state minimum wage at a substantially greater rate than the national standard. In 1995, the Hawaii minimum wage was $5.25, which was a full dollar higher than the national minimum wage. However, Hawaii's minimum wage is now only ten cents above the national standard of $5.15, as our wage has remained fixed while the federal rate has increased. This problem of maintaining a state minimum wage that consistently accounts for Hawaii's higher cost of living will not be solved as long as the Hawaii minimum wage is set at a specific amount.

To ensure that Hawaii's minimum wage is consistently higher than the national minimum wage, it must be set relative to the national rate, rather than at a fixed amount. However, it is also prudent fiscal policy to ensure that this amount remains within strict boundaries and is easily determinable. Therefore, the most effective and sensible solution is to set the state minimum wage as fifty cents greater than the federal minimum wage. This allows for the state minimum wage to increase automatically relative to national standards, while remaining a reasonable figure that is easy to determine.

It is commonly asserted that raising the minimum wage has detrimental effects on both employers, employees, and the economy in general. However, there is no credible evidence offered to support the dire results that have been predicted by some critics. In fact, many reputable studies have shown that any such negative effect to be negligible, or have produced inconclusive results.

On the other hand, past experience has shown that raising the minimum wage can have observable and significant positive effects even beyond the stated purpose of providing immediate financial relief to minimum wage workers. It has generally been shown that raising the minimum wage tends to elevate all employee wages, so it is not just a benefit for lower-end workers (although they see the most immediate effects). The increased overall wages also benefit everyone as they generate increased associated income tax revenues. Furthermore, raising the minimum wage saves money spent on welfare payments as a higher minimum wage can lift some individuals and families out of the need for welfare benefits. This takes some of the social responsibility to help Hawaii's needy citizens out of the hands of the government and places it in the private sector where it need not be supported by tax dollars.

The purpose of this Act is to effect all of these positive results by establishing the state minimum wage as fifty cents above the federal minimum wage rate.

SECTION 2. Section 387-2, Hawaii Revised Statutes, is amended to read as follows:

"§387-2 Minimum wages. Except as provided in section

387-9 and this section, every employer shall pay to each employee employed by the employer wages at the rate of not less than [$3.85 per hour beginning January 1, 1988, $4.75 per hour beginning April 1, 1992, and] $5.25 per hour beginning January 1, 1993[.] and not less than fifty cents greater than the federal minimum wage as established in the Fair Labor Standards Act of 1938, as amended, beginning January 1, 2002. The hourly wage of a tipped employee may be deemed to be increased on account of tips if the employee is paid not less than twenty cents below the applicable minimum wage by the employee's employer and the combined amount the employee receives from the employee's employer and in tips is at least fifty cents more than the applicable minimum wage."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval.

INTRODUCED BY:

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