Highway Inn Opposes an Increase in Minimum Wage to $12 on July 1 st, 2022.

Testimony in Opposition to SB676, Feb 8, 2021

Highway Inn's employees already earn more than $15 per hour because that is what the market for restaurant labor in Hawaii demands. Businesses need more flexibility to compensate their staff, not less.

The MOST IMPORTANT fact to understand is that in Full-Service Restaurants, most workers who earn minimum wage receive significantly more compensation in tips. In fact, in 2017, a full-time server reported over $72,000 in income on her W2. SB676 & similar bills create unintended and harmful consequences to employees, businesses, customers, and the local economy.

Moreover, Hawaii's employers also provide mandated healthcare for qualifying employees at almost $1,000 per older employee per month. We also have Paid-Time-Off and make 401(k) Contributions. We also have a kitchen service charge, introduced when tip pooling prohibited businesses from sharing a portion of gratuities to the kitchen staff that adds between $1 and $4 per kitchen employee.

SB676 will dampen the economy's recovery. Here is what will happen:

1. Restaurants will raise prices according to the increase in labor costs: a. The minimum wage increase's main recipients will be the highest compensated labor group that makes minimum plus additional gratuities of $15-$25 an hour.

2. Demand for restaurant meals will fall. Restaurants will earn less income than the increase in prices, and probably less overall because consumers have less expensive choices.

a. Restaurants will order fewer supplies, require less labor & seek more labor-saving pivots

b. Businesses compliance with income and labor reporting reqs. will decrease – we already lose employees to other enterprises paying staff 'off the books' & not reporting income

3. DoTax GET receipts, State-Tax, and other State income sources will fall as restaurants downsize.

4. Customer choice will diminish and tourists will have fewer places to spend their $s.

Restaurants are competitive businesses for both customers and labor. Government has recently learned that direct and targeted assistance to disadvantaged workers is the most effective form of economic aid and companies are not good proxies for government work as illustrated in 1-4 above.

There are already two established mechanisms to successfully manage wages at restaurants: using Federally approved Tipped Wages and permitting Tip Pooling among all staff. We strongly recommend a meaningful implementation of these laws here in Hawaii to reinvigorate our local restaurant businesses.

The CBO recently estimated that an increase in the minimum wage to $15 an hour would cause 1.3 million workers to lose their jobs. Hawaii needs to perform a similar analysis.

Thank you for allowing us to share our perspective on this critically important issue.

SB676: Text, Status

2013: How Hawaii Minimum Wage Workers Earn $24.24 per hour

2014: Flawed Minimum Wage Hike Advocacy Will Cost Hawaii's Poorest Workers $7M this Year