Hawaii’s minimum wage is set to rise for the first time in more than four years.
The current minimum wage of $10.10 an hour would rise to $12 an hour in October under a measure that authorized a key legislative conference committee on Friday afternoon.
Wages would then rise to $14 an hour in 2024; $16 per hour in 2026; and $18 per hour in 2028.
House Bill 2510, the minimum wage bill, is a compromise measure between the House, which has called for delaying the implementation of wage increases, and the Senate, which has pushed for much faster salary increases. It still needs to pass a final vote in both houses and be approved by Governor David Ige.
State lawmakers are also softening the blow to some businesses, especially restaurants, by tying wage increases to tip credit increases in the latest version of HB 2511. The credit would allow employers to pay tipped employees $1.50 per hour below minimum wage by 2028. as long as an employee earns more than minimum wage after accounting for tips.
Republican Rep. Val Okimoto voted “with reservations” on HB 2510 – equating to a “yes” vote but signaling concern on the part of lawmakers. She said she supported extending the earned income tax credit.
“I’m really concerned about what this minimum wage increase will do to our local businesses and what impact it would have,” Okimoto said.
The Hawaii Chamber of Commerce, which represents state businesses and has opposed minimum wage increases in the past, supported phased minimum wage increases this year.
Sherry Menor-McNamara, president of the chamber, said there were still concerns about the impacts of wage increases on small businesses.
“But many of our businesses are resilient,” she said. “Hopefully they find a way to get through this first wave of increases” in October.
The Senate has proposed faster salary increases since the last salary increase in 2018. All of these measures have failed. In 2020, the House and Senate agreed on a measure to raise the minimum wage to $13 an hour by 2024, but the proposal did not pass as lawmakers focused their focus on the fight against the pandemic.
The latest draft of HB 2510 reflects the House’s position on the bill. House Democrats did not want wages to rise to $18 an hour until 2028, while the Senate pushed to raise the minimum wage to $18 an hour by 2026.
The minimum wage bill has been in trouble again this year. The House and Senate were locked in negotiations until mid-week, when senators decided to relent to the House.
Senator Brian Taniguchi, who led the negotiations on the bill, said in a press release that he was disappointed that the Senate version was not approved by both houses.
Senate Speaker Ron Kouchi said the measure just needed to move forward.
“While we didn’t get everything we wanted in the bill, the Senate recognized that the only way to secure pay increases this session was to compromise with our House colleagues on the final wording of the bill,” Kouchi said in a press release.
HB 2510 also makes the state working income tax credit refundable and permanent, which could put more money back in the pockets of low-income workers. Currently, the state EITC can only be applied to outstanding tax obligations. Leftovers will not be sent as a check until tax filings are complete.
The federal EITC is already refundable. Households earning between $15,000 and $49,999 a year could claim state tax credits of about $425 a year, according to an analysis by the Hawaii Budget & Policy Center.
“Especially with inflation, we know families are struggling to pay their bills, so it’s good to know they’ll get that tax credit,” said Nicole Woo, director of research and policy. economic for the Hawaii Children’s Action Network.
Gavin Thornton, executive director of the Hawaii Appleseed Foundation, called the EITC provision “a win for everyone.”
“The money that struggling working families get from this is injected directly into our economy,” Thornton said.
Lawmakers also passed a separate measure on Friday to give tax refunds of $300 to taxpayers earning $100,000 or less. Senate Bill 514 is now heading to final votes in the House and Senate.