S.B. NO.














relating to minimum wage.





     SECTION 1.  The legislature finds that the hourly minimum wage in Hawaii is adjusted to account for the increase in the cost of living.  According to the United State Census Bureau, Hawaii has the highest cost of living, yet it is the ninth poorest state in the United States.  In addition, although there is a 4.4 per cent unemployment rate in Hawaii, 17.3 per cent of Hawaii's population lives in poverty.

     For seven years, the minimum wage in Hawaii has remained at $7.25 per hour while the costs of goods and services have increased.  For example, seven years ago the average price of gas was $2.81 per gallon.  Today, it is approximately $3.98 per gallon depending on the price of crude oil.  This is a price increase of thirty-one per cent.  The median price of a single-family home in Honolulu rose 14.2 per cent from 2012 to 2013.  The median home price is currently $685,000.

     Minimum wage workers in Hawaii working forty hours per week currently earn $15,080 per year.  The annual income for minimum wage workers is approximately the same amount as the cost of the least expensive new vehicle in Hawaii, which is a 2014 Ford Fiesta priced at $14,745.  Currently, minimum wage workers in Hawaii earn $58 per day, while Hawaii's average hotel room rate is $355 per night.

     Minimum wage workers' annual income is less than half of the annual salaries of many entry level occupations in Hawaii.  According to state and city and county of Honolulu websites that provide information on entry level salaries for state and county employees, minimum wage workers earn at least $24,124 less per year than refuse workers, $28,679 less per year than teachers, $29,596 less per year than firefighter recruits, and $37,972 less per year than police recruits.

     Despite having the highest cost of living in the nation, Hawaii does not have the highest minimum wage.  The State of Washington has the highest minimum wage at $9.32 per hour.  In addition to Washington, twenty other states and the District of Columbia have higher minimum wages than Hawaii.  In recognizing the necessity for parity in pay, the city of SeaTac in Washington enacted an ordinance to provide a minimum wage of $15 per hour for hospitality and transportation workers.

     On the national level, the United States Senate is working to raise the federal hourly minimum wage.  Currently, Senate Bill 1737 proposes to "directly help American families" and strengthen the American economy by raising the federal minimum wage level to $10.10 over the span of three years.  This legislature, like the United States Senate, is committed to economically lifting minimum wage workers and their families' income.

     The legislature recognizes its obligation to increase the hourly minimum wage to $10.10 over the span of three years.  By raising the minimum wage to $10.10 per hour, minimum wage workers in Hawaii will earn $21,008 annually.  Furthermore, the legislature finds that the "tip credit" has made Hawaii's service workers particularly vulnerable because of the variability of customer tips that subsidize their low wages.  The legislature further finds that removing the "tip credit" will treat all workers equally.  Finally, adjusting the minimum wage based on a local index that will more accurately reflect Hawaii's economic changes and avoid the need for continual review by the legislature.  These adjustments to the minimum wage will strengthen Hawaii's economy by helping to lift minimum wage workers and their families from poverty.

     The purpose of this Act is to give Hawaii workers a higher wage that recognizes the increases in the cost of living and enables them to build a better life.

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

     "§387-2  Minimum wages.  (a)  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:

     (1)  $6.25 per hour beginning January 1, 2003;

     (2)  $6.75 per hour beginning January 1, 2006; [and]

     (3)  $7.25 per hour beginning January 1, 2007[.];

     (4)  $8.20 per hour beginning January 1, 2015;

     (5)  $9.15 per hour beginning January 1, 2016; and

     (6)  $10.10 per hour beginning January 1, 2017.

     [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 25 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 50 cents more than the applicable minimum wage.]

     (b)  On September 30, 2017, and on September 30 of each year thereafter, the department of labor and industrial relations shall calculate an adjusted minimum wage rate.  The adjusted minimum wage rate shall be calculated to the nearest 5 cents using the Honolulu region consumer price index for urban wage earners and clerical workers, CPI-W, or a successor index, for the twelve months prior to September 1 of each year as calculated by the United States Department of Labor; provided that if in any year the adjustment based on the Honolulu region CPI-W would result in a lower minimum wage rate, the minimum wage rate shall not be decreased, and the adjusted minimum wage rate shall remain at the most recently established minimum wage rate.  Each adjusted minimum wage rate calculated under this subsection shall take effect on the following January 1."

     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.












Report Title:

Labor; Minimum Wage; Tip Credit



Increases minimum wage rate to $8.20 per hour beginning on 01/01/15, $9.15 per hour beginning on 01/01/16, and $10.10 per hour beginning on 01/01/17.  Repeals the tip credit.  Authorizes the department of labor and industrial relations to adjust the minimum hourly wage to the nearest 5 cents based on the Honolulu region consumer price index beginning on 09/30/17 and on September 30 of each year thereafter to take effect on the following January 1.




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