Hawaii businesses say proposed minimum wage hike would hurt

by Merrilee Gasser, The Center Square, Jan 25, 2022

(The Center Square) – Industry leaders say a proposed minimum wage increase for Hawaiians disproportionately would harm small local businesses and drive up food prices.

The Senate Committee on Labor, Culture and the Arts heard public comment Monday on Senate Bill 2018, which proposes to raise the minimum wage over time from $10.10 an hour to $18 an hour. Proponents of the bill said it would help Hawaiians afford the rising cost of living by helping workers earn a living wage.

Business leaders such as Pamela Tumpap, the president of the Maui Chamber of Commerce, however, said the move would harm already struggling businesses still recovering from the COVID-19 pandemic. Tumpap said 21% of the chamber’s businesses said the proposed minimum wage increase would put them out of business.

“We keep hearing, ‘Businesses have recovered,’ ” Tumpap SAID. “They’re still in recovery with lower annual sales, supply chain issues, outstanding loans, having to pay back amounts owed on commercial rent and mortgages still, savings depleted due to the pandemic, and they’re trying really hard to keep all their people employed.”

Others who raised concerns spoke to how the bill could sabotage one of the very things it is meant to solve: helping families afford rising prices. Tina Yamaki with Retail Merchants of Hawaii said families would see prices go up even more as a result of the wage hike.

“Any time you touch pricing for retailers, we pass it on to the customers so don’t think that prices are going to remain the same. It’s going to go up substantially,”  Yamaki said.

She added a reason some states on the mainland can afford higher minimum wages is because those states don’t have to pay for medical costs for their employees as businesses have to do in Hawaii.

Lauren Zirbel with the Hawaii Food Industry Association, which represents about 200 food companies, also said the prices would spike with a wage hike.

“Note that retail grocery operates on about a 1% profit margin, so if labor costs are to increase dramatically there will be a corresponding link to increase in food prices and/or changes to the labor market,” Zirbel said.

She said an alternative solution could be reducing or eliminating taxes on groceries. She warned a rapid increase in the minimum wage would end up hurting small local businesses the most.

“We also wanted to note that Hawaii is consistently ranked one of the worst states in the United States to do business and that Hawaii is one of the only states where employers shoulder the burden of paying full medical insurance coverage, and we believe that should be considered while looking at the minimum wage,” Zirbel said.

Sen. Kurt Fevella, R-Ewa Beach, said now was the time to raise the minimum wage and disputed arguments that prices for customers would increase, saying customers have been experiencing price increases for several years already.

“The prices have been going up, don’t let the industry say any different” Fevella said. “The increases have been there, and we’ve been feeling it for a while.”

Fevella said as prices have increased, minimum wage workers have seen no increase in their paychecks for years.

Some of the speakers who raised concerns about the bill said they were in favor of raising the minimum wage but said the current proposal was too much too soon and asked for more time to work toward a solution that could help everyone.

The committee recommended approval of the bill, which now goes to the Senate Ways and Means Committee.