Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 294 entitled:

begs leave to report as follows:

The purpose of this measure is to amend the law relating to employment.

Your Committee finds that although the minimum wage amount recently increased effective 2003, this increase has failed to keep pace with the escalating rate of inflation. A further increase is necessary in order to provide entry-level workers with adequate wages and increase their purchasing power. Furthermore, automatic annual adjustments are necessary to ensure that the amount remains in line with the current economic situation.

Additionally, your Committee finds that although Hawaii is fortunate to enjoy one of the lowest unemployment rates in the country, unemployment insurance tax relief is long overdue for employers within the State as well. Therefore, your Committee determines that at least temporary tax relief for calendar years 2005, 2006, and 2007 should be provided in order to promote business growth and economic prosperity through the creation of new jobs, the expansion of benefits, and the provision of pay increases to employees.

Accordingly, your Committee has amended this measure by replacing its contents with language that increases the minimum wage amount to $7 beginning July 1, 2005, providing for an annual automatic increase thereafter, and providing temporary tax relief to employers by lowering the maximum taxable wage base for calendar years 2005 through 2007.

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. 294, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 294, S.D. 1, and be recommitted to the Committee on Labor, for further consideration.