Hawaii small-business association offers a better idea for State House to consider

News Release from NFIB Hawaii

HONOLULU, Feb. 26, 2019—Melissa Pavlicek, Hawaii state director for NFIB, made the following statement after yesterday’s passage of Senate Bill 789 by the Senate Ways and Means Committee. The bill would raise Hawaii’s minimum-wage rate in stages, starting with $12 beginning January 1, 2020, to $15 beginning January 1, 2023. The expedited vote was made to meet the cross-over deadline to the other chamber.

“What better time not to raise the minimum than now. NFIB’s Small Business Optimism Index, nationally and internationally regarded as the gold-standard measurement of the small-business economy, has been reporting record highs in hiring and employee compensation.

“Raising minimum-wage rates harms employment prospects, especially for the least skilled and young adults looking for their first job opportunities. Unemployment rates are low now, but to keep the small-business economy humming, this bill should be deferred. At a minimum, Hawaii’s legislators should wait to see what Congress does on the federal minimum wage.”

Pavlicek offered three facts for every policymaker to consider:

According to a U.S. Bureau of Labor Statistics report, Characteristics of the Minimum Wage Worker, “ … workers with wages at or below the federal minimum made up 2.3 percent of all hourly paid workers. Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly paid workers, they made up about half of those paid the federal minimum wage or less. Among employed teenagers (ages 16 to 19) paid by the hour, about 8 percent earned the minimum wage or less, compared with about 1 percent of workers age 25 and older.”

As for the arguments of higher minimum wages lifting anyone out of poverty, economist David Neumark, in a paper written for the Federal Reserve Bank in San Francisco, wrote, “… evidence simply does not provide a strong case for using minimum wages to reduce poverty. Similarly, recent research does not provide conclusive evidence that a higher minimum reduces government spending on welfare and other programs to support poor families, with the possible exception of food stamps.”

Michael Saltsman of the Employment Policies Institute points out that, “Since the last increase in the federal minimum wage was fully phased-in in 2010, both the number and percentage of people earning it has fallen every year, as employees earn raises through their own initiative. Multiple studies confirm that a majority of minimum wage employees–who are disproportionately young and less-educated–earn a raise within one to 12 months on the job.”

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For more than 75 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit www.nfib.com.