Grassroot Testimony on the Minimum Wage Bill

To: House Committee on Labor & Public Employment

From: Grassroot Institute of Hawaii

President Keli’i Akina, Ph.D.

RE: SB2609 RELATING TO MINIMUM WAGE

Dear Chair and Committee Members:       March 18, 2014

The Grassroot Institute of Hawaii would like to offer its comments on SB 2609, which would provide for a gradual increase in the minimum wage with a provision for an unspecified tip credit.

Grassroot Institute is deeply concerned about the possible effect of this legislation on the state’s small businesses and a recovering economy. Moreover, we believe that this bill will fail in its intent to help lift the state’s working families out of poverty. As our attached issue brief explains, the proposed increase in the minimum wage will only benefit approximately 4% of low-income working families while raising the cost of low-skilled labor by 39%. In addition, an increase in the minimum wage will reduce teenage employment—an item that is often overlooked, but should be taken seriously by those looking to ensure the long term health of our economy.

In addition, the lack of specificity about the tip credit is an additional source of concern. The lack of a tip credit places a substantial burden on restaurants, which will be forced to privilege wait staff (who already average, with tips, salaries well above minimum wage) over back-of-the-house and non-tipped staff. In effect, this bill makes it more difficult to raise the dishwasher’s pay because the restaurant owner is required to spend even more on the sommelier.

Grassroot Institute of Hawaii looks for solutions that would strengthen our state’s economy and benefit both businesses and employees. You have heard from multiple representatives of Hawaii’s business community that this bill will not only be a burden, but that it will also have a negative effect on employment in general. Not only will companies in Hawaii be forced to lay off workers or cut hours or benefits in order to afford increased wages, but they are also likely to slow (or even eliminate) new hiring.

If we want to establish our state as a desirable place to do business, we cannot continue to treat company earnings as an endless well for the state to draw from on demand. A combination of tax relief and a reduction in the obstacles that the state places on business and entrepreneurship in Hawaii is the best way to move forward in improving both our economy and the situation of low-wage workers … not a minimum wage bill that will do little to help working families, while placing a significant burden on small business.

Thank you for the opportunity to submit our testimony.

Sincerely,

Keli’i Akina, Ph.D.

President, Grassroot Institute of Hawaii

Attached: Four Things You Should Know About the Minimum Wage Debate in Hawaii