Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 1144 entitled:

begs leave to report as follows:

The purposes of this measure are to increase the minimum wage to $5.95 per hour beginning July 1, 2001, and $6.10 per hour beginning July 1, 2002; and to increase the tip credit to thirty cents per hour beginning July 1, 2001.

Your Committee received testimony in support of this measure from the Department of Labor and Industrial Relations (DLIR), Department of Human Services, Blueprint for Change, Hawai'i Nurses Association, ILWU, Hawaii Catholic Conference, and American Friends Service Committee. Testimony in opposition was received from the Retail Merchants Association, Hawaii Restaurant Association, The Hawaii Business League, and National Federation of Independent Business-Hawaii.

Your Committee finds the minimum wage increase was last increased in 1993 to the current amount of $5.25. However, inflation has eroded workers' purchasing power since then. Testimony of the DLIR indicates that today's $5.25 minimum wage is worth only $4.65 per hour, and would be worth $4.55 in 2002, and $4.45 in 2003, adjusted for inflation. Ten states or jurisdictions including the western states of California, Washington, Oregon, and Alaska have a higher minimum wage than Hawaii, ranging from $5.65 in Alaska to $6.75 in Massachusetts.

Your Committee further finds that Hawaii ranks in the top five states in cost of living. This measure is intended to provide a modicum of relief to Hawaii's workers from the high cost of living. Your Committee recognizes that $5.95 per hour may still seem inadequate, but your Committee is also concerned about negatively impacting small businesses in Hawaii.

Currently, employers are allowed to offset the minimum wage by twenty cents under the tip credit provision, and this measure would raise that amount to thirty cents. However, your Committee has reservations about this provision as there is no assurance that tipped employees are being paid at least the minimum wage with the application of the tipped credit. Your Committee believes that the minimum wage should apply to all employees, without adjustment.

In order to keep abreast with inflation, your Committee further finds that the minimum wage should be tied to increases in the consumer price index (CPI) so as to provide automatic wage increases.

Your Committee has amended this measure by:

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1144, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1144, S.D. 1, and be referred to the Committee on Ways and Means.