The Hawaii Legislature may be dominated by labor-friendly Democrats, but it’s looking unlikely that any across-the-board minimum wage increase will happen this year.

Senators will vote this week on a bill to study the impact of raising the minimum wage to $15 per hour.

The House passed a bill Friday to give employers the option of offering paid sick leave to minimum wage workers, or else raising their wages. That now goes to the Senate.

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Sen. Donovan Dela Cruz, a Democrat who leads the Senate Ways and Means Committee, said the committee amended Senate Bill 3023 on Wednesday to add a section asking the state to study the best way to increase the minimum wage to limit harm to small businesses.

Rep. Aaron Johanson, a Republican-turned-Democrat who leads the House Committee on Labor and Public Employment, says watching minimum wage bills die in the Legislature every year inspired him to think of a more creative proposal.

House Bill 1727 gives employers the choice of offering minimum wage workers paid sick leave or raising their pay. Johanson says he’s already heard from some employers who would rather do the latter.

“It’s an attempt to be a fresh take on an issue that sometimes — because it comes up all the time — may not always receive due consideration because it seems so familiar,” Johanson said.

The revised measures ensure the minimum wage debate can continue this session, which is reaching its halfway mark.

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“There’s still a chance to potentially increase the minimum wage to $15, if not for everyone,” said Johanson, adding that under the House proposal, “The minimum wage worker would be better off in one way or another.”

Still, the lack of a straightforward measure to raise the minimum wage to $15 across the board is disappointing to many who say the increase is necessary to offset Hawaii’s high cost of living.

Hawaii’s minimum wage reached $10.10 this year, but studies show that a full-time job at that wage doesn’t come close to covering the cost of housing, food and other necessities. According to a 2017 study from the National Low Income Housing Coalition, $35.20 is the hourly wage needed to afford a two-bedroom home in Hawaii, the most expensive state in the nation.

Why The Study

Dela Cruz decided to push for a study instead of advancing a separate bill to raise the minimum wage after hearing concerns from small businesses.

“Some farmers have told me that they automated (tasks) instead of hiring,” said the senator, who represents central Oahu.

He wants the Department of Business, Economic Development and Tourism to submit a study to the Legislature 20 days before next year’s session, which starts in mid-January.

A labor committee hearing about raising the minimum wage earlier this session attracted familiar support from social organizations and opposition from the business community. The local Chamber of Commerce and Retail Merchants Association of Hawaii predicted job losses and business closures if the wage went up to $15.

The bill also proposed getting rid of the tip credit, which would impact the restaurant industry in particular.

Michael Miller, the head of Tiki’s Bar and Grill, wrote in testimony that his business might be forced to reduce employee hours if that proposal passed.

Dirk Koeppenkastrop, the founder of IL Gelato, wrote that wages higher than $10 per hour threaten the existence of his company, which relies on entry-level, part-time jobs.

“A scoop of ice cream at our store is $3.75 and already considered to be too expensive for local families. We get a lot of comments via social media and Yelp reviews that we are too expensive,” he wrote. “Our food costs in Hawaii are the highest of the nation. Our rents are the highest of the nation. Energy and insurance cost are higher than anywhere else. It is very difficult to operate a business in Hawaii.”

Their concerns are in line with a recent study of a minimum wage increase in Seattle that found it actually hurt workers by prompting employers to reduce hours and cut jobs. Other studies have found more positive results, such as improved health care in low-income communities.

Some business owners actually supported the wage increase, including Patrick Sullivan, the president of Oceanit, a local science and engineering company.

“As an employer to approximately 100 people, including summer interns and part-time college students, we have no objection to the increase in minimum wages to $15 an hour by 2021,” Sullivan wrote in testimony. “In an effort to secure and retain good talent, Hawaii must raise its minimum wages to be competitive with the other states.”

Accommodating Employers

Tina Wildberger who has managed a local ice company on Maui for nearly two decades, said increasing the minimum wage to $15 per hour at her company actually helped her business by improving employee retention. She said Thursday she understands why some organizations are worried about the impacts, but thinks lawmakers could find a middle ground.

“I think the bill could be worked to accommodate employers that would find this a difficult step to take in either making incremental change over time, or exempting certain small employers,” said Wildberger, who is running for a House seat in south Maui this year.

Los Angeles is increasing its minimum wage to $15 an hour by 2021, and allowing smaller companies to raise their wages more gradually.

That may be why Arianna Espinoza, a 20-year-old student at Hawaii Pacific University, earned $12 per hour working for the international clothing chain Zara while she went to high school in Los Angeles. But when she came to HPU – the first in her family to go to college — the same job at Hawaii’s Zara paid $10.10 per hour.

Espinoza still works 40 hours per week in retail while attending school full-time, and says she’s constantly tired. She feel like she’s in a Catch-22: “At the end of the day, if I can’t even put a roof over my head and I can’t afford to study, then I’m stuck in a minimum wage job (forever).”

Johansen from the House committee dealing with labor issues sympathizes with workers like Espinoza, but says that giving employers more flexibility might be necessary to get anything passed this year.

“Part of the strategy to advance these issues is to sometimes look at how do we repackage an issue,” he said Friday. “Sometimes out-of-the-box legislation ends up going further.”

“I’m committed to not just having the conversations but trying to shape policy that I think may actually have a chance of passage.”

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