STAND. COM. REP. NO. 24

Honolulu, Hawaii

, 2001

RE: S.B. No. 857

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 857 entitled:

"A BILL FOR AN ACT RELATING TO THE HAWAII LIVING WAGE LAW,"

begs leave to report as follows:

The purpose of this measure is to require private contractors who are contracted by the State to pay their employees a living wage.

Specifically, the measure establishes the minimum wage for the employees of vendors to the State at a "living wage" of $9.43 per hour, to begin on July 1, 2001, and provides a formula for annual adjustment thereafter. The measure also establishes a temporary advisory commission to evaluate the effects of implementing a living wage and requires the Department of Labor and Industrial Relations to enforce the implementation of the living wage.

Testimony in support of the measure was received from the ILWU Local 142, the National Association of Government Employees, the American Friends Service Committee - Hawaii Area Program, and the Kokua Council. The Chamber of Commerce of Hawaii testified in opposition to the measure.

Your Committee finds that a living wage paid to an employee should yield an amount upon which a family of four could survive at or above the federal poverty level. This reflects the spirit and the intent of the original minimum wage effected by the Federal Fair Labor Standards Act of 1938. The original minimum wage standard, which was deemed worthy of this spirit and intent, was that the minimum hourly wage should be one-half the national average hourly wage paid to non-farm, non-supervisory employees.

A weakness of this standard, based on a national average, is that in areas of the country, such as Hawaii, where the cost-of-living differential is substantial, the federal minimum wage falls far below the spirit and intent of a "living wage". For instance, in the 1994-1996 period, the cost-of-living differential for Hawaii from the national average was variously estimated by reputable sources to be between fifteen and twenty-five per cent. In fact, this differential is commonly referred to as the "paradise tax" or the "price of paradise."

Accordingly, the Legislature provided for a state minimum wage that is higher than the federal minimum hourly wage. In 1995, for instance, the federal minimum wage was $4.25 per hour, while Hawaii's was $5.25 per hour.

However, a problem has developed over the years, both at the federal level and here in Hawaii, with keeping the minimum wage a living wage. For instance, in February, 1995, the national average hourly wage, according to the U.S. Bureau of Labor Statistics, was $11.31. Yet the federal minimum wage at that time was only $4.25, instead of one-half of the $11.31 national average, or $5.65. Similarly, in Hawaii at that time, at a twenty-five per cent cost-of-living differential, the state minimum hourly wage calculated under the original federal standard would have been $7.06 ($5.65 x 125 per cent). At a lower fifteen per cent estimate of the Hawaii cost-of-living deferential, the minimum wage yielded from this formula would have been $6.51. Splitting the difference would have put the Hawaii "living wage" minimum wage at approximately $6.78 per hour.

Your Committee further finds that in the past ten years, over fifty living wage ordinances have been enacted throughout the United States without overburdening public resources and while concomitantly improving the living standards of low income workers.

Your Committee believes that the State should set an example in providing a living wage to those from whom it contracts goods and services. By doing so, the State will do its part to ensure that at least those employees who are employed by state contractors are paid a decent wage and therefore able to support their families.

Your Committee has amended the measure by making technical, nonsubstantive amendments for the purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 857, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 857, S.D. 1, and be referred to the Committee on Ways and Means.

 

Respectfully submitted on behalf of the members of the Committee on Labor,

____________________________

BOB NAKATA, Chair