Who can survive on $7.25?

New Year’s Resolution for Hawaii Lawmakers: Raise the Minimum Wage

Over 2.5 million low-paid workers throughout the country started the year right – with a raise. Unfortunately, none of these workers lives in Hawaii.

Thanks to minimum-wage increases scheduled to take effect on New Year’s Day in the 13 states of Arizona, Colorado, Connecticut, Florida, Missouri, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont, and Washington, the people who do the hard work of cleaning office buildings, serving food, and providing care for the elderly will receive a modest pay raise.

Four of these states – New Jersey, New York, Connecticut, and Rhode Island – approved minimum wage increases last year, while the remaining nine of the minimum wage increases are the result of these states having adopted a key policy reform known as “indexing,” which calls for automatic increases each year to keep pace with the rising cost of living.

Last spring, Hawaii had the chance to join these 13 states by passing legislation to raise the state’s minimum wage – currently stuck at the federal level of $7.25 per hour, or $15,000 for a full-time year-round worker.

This legislation would have also established automatic annual increases so that the state’s minimum wage would keep pace with the rising cost of living.

I hope that when lawmakers return to Honolulu in January for the new legislative session, they think about the opportunity that our state missed by failing to pass a minimum wage increase last year.

According to the nonpartisan Economic Policy Institute, the 13 minimum wage increases that took effect on Jan. 1 will generate $619 million in new economic growth as low-paid workers spend their increased earnings on the basics. 

Here in Hawaii, the increase to the minimum wage would have added an additional $55 million in consumption this year alone. That’s because every dollar a low-wage worker takes in goes right back out for groceries, gas, and rent – all paid into the local economy as opposed to being siphoned off-island for reinvestment elsewhere.

As stagnant wages and sluggish job growth continue to cloud the post-recession recovery, these minimum wage increases will help protect the purchasing power of low-paid workers’ paychecks, which in turn will boost consumer spending and promote economic growth.

Put simply, Hawaii cannot afford to allow the minimum wage to remain stagnant any longer. According to a report by the National Employment Law Project, 58 percent of all jobs created in the post-recession recovery have been low-wage occupations, and the Bureau of Labor Statistics estimates that six of the 10 occupations with the fastest-projected growth over the next 10 years will be low-wage jobs. Continuing to neglect the minimum wage at the same time as a growing share of workers find themselves relying on low-wage work to make ends meet is a recipe for disaster in Maryland.

Still, those who oppose any increase in the minimum wage will claim that business cannot afford modestly higher wages for the employees, even as the economic evidence makes clear that businesses that pay fair wages ultimately benefit from reduced turnover and higher worker productivity, as their employees are spared from the struggle of balancing two jobs in order to make ends meet.

In fact, the real strain on economic growth in today’s economy stems from the decision made by many national fast food chains and big box retailers to inflate their profits by paying rock-bottom wages, taking money out of local communities and impoverishing the customer base needed to sustain local economic growth.

The purchasing power of Hawaii’s minimum wage actually peaked 40 years ago, and would be worth roughly $10.70 in today’s dollars. Legislative inaction, however, has allowed the real value of the state’s minimum wage to erode as the cost of living continues to rise. 

For Hawaii’s lowest-paid workers – and the countless businesses across the state whose sales are shrinking because too many customers cannot afford basic expenses – raising the minimum wage remains an urgent priority.

For the sake of everyone working at minimum wage, I hope that a raise was on a lot of legislators' resolution lists. 

Jack Temple of the National Employment Law Project contributed to this commentary.

About the author: Drew Astolfi is the state director of Faith Action for Community Equity Hawaii, a grassroots faith-based organization founded in 1996 to address community social issues.

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