Chair Nakashima, Vice-Chair Yamashita, Members of the Committee:
The League of Women Voters of Hawaii supports HB2580, which raises the minimum wage in $1 steps over three years ending in 2017; thereafter indexes the minimum wage to the annual cost of living increase; and eliminates the tip credit.
We draw your attention to the following facts:
1. The minimum wage is not enough to keep a full-time worker from dire poverty – e.g. a household income of less than $15,200 a year for a worker with one dependent. Is this how we encourage people to work?
2. Taxpayers have to pick up some of the needs of these very very poor working families – through SNAP (foodstamps), Med-Quest, public housing, etc.
3. The last 4 times Hawaii raised the minimum wage, the number of jobs increased over the next 12 months.1 This summer, more than 600 economists, among them Nobel laureates and past presidents of the American Economic Association. signed a letter to President Obama which stated that “the weight of evidence now shows that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front”.
4. When wages go up, taxable income goes up.
Advocates have been trying to raise the minimum wage since 2007, while the real incomes of those earning minimum wage continued to fall compared to other workers.2 Indexing the minimum wage to the CPI increases will keep minimum wage workers from falling further behind the rest of the working population.
We point out that it is very hard to formulate a tip credit which is fair to all concerned. While a few workers (e.g. wait-help in high-end restaurants) may get a substantial amount of their income from tips, most tipped workers receive little, and can’t count on tips to raise their incomes. It may be even harder to enforce the tip credit provisions. This dilemma leads us to support the part of HB 2580 which removes the tip credit from minimum wage calculations.
It is hard to think of any legislation this year which could so significantly affect the well-being of so many of Hawai`i’s residents, including many of our youngest residents.
We urge you to pass this bill. Thank you for the opportunity to submit testimony.
1 All Jobs Data from Research and Statistics Branch, Hawaii Dept. of Labor and Industrial Relations.
2 David Cooper and Doug Hall, analysis of Current Population Survey Ongoing Rotation Group microdata and U.S. Department of Labor Wage and Hour Division.