HB1134 SD1 SSCR1207

STAND. COM. REP. NO. 1207

Honolulu, Hawaii

, 2005

RE: H.B. No. 1134

H.D. 2

S.D. 1

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 H.B. No. 1134, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO MINIMUM WAGES,"

begs leave to report as follows:

The purpose of this measure is to increase the minimum wage amount to $6.75 per hour beginning July 1, 2006 and $7.25 per hour beginning January 1, 2007.

Testimony in support of this measure was submitted by the Hawaii State Teachers Association and the ILWU Local 142.

Testimony in opposition to this measure was submitted by the Department of Labor and Industrial Relations, the Chamber of Commerce of Hawaii, the Retail Merchants of Hawaii, the Hawaii Business League, Gyotaku Japanese Restaurant, LWD, Inc., United Rim Transport, Inc., the Hawaii Automobile Dealers Association, the National Federation of Independent Business Hawaii, and two individuals.

Your Committee finds that although the minimum wage amount was recently increased, effective in 2003, the increase has failed to keep pace with the rate of inflation. As a result, a worker's purchasing power has continued to diminish over time. Prior to the most recent increase, no previous adjustment had been made to the minimum wage amount since 1993. In Hawaii, the cost of living is higher than that of much of the rest of the nation, which compels many individuals to work two jobs just to make ends meet. As it appears that we have now turned the corner, heading towards improved economic times, your Committee believes that it is necessary to assist entry-level workers to allow them to share in this period of economic growth and prosperity.

Your Committee further finds that some concern exists regarding the current tip credit law. Under the current law, an employer is allowed to take a credit for the tips that their employees may receive. A majority of the states across the nation have laws providing for tip credit allowances. Of those states with tip credit laws, the amount of the tip credit ranges from about one to three dollars, well over the twenty-five cents allowed here in Hawaii. Your Committee believes that one way to address the financial burden imposed upon employers due to the proposed increases in the minimum wage amount is to raise the tip credit amount to offset the additional costs.

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:

(1) Raising the minimum wage to $7 effective January 1, 2006, and to $8 on January 1, 2008;

(2) Increasing the hourly wage tip allowance from 25 cents to 75 cents effective January 1, 2006;

(3) Providing temporary tax relief to employers by lowering the maximum taxable wage base for calendar years 2005 through 2007; and

(4) Making technical, nonsubstantive amendments for purposes of clarity and style.

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 H.B. No. 1134, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1134, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor,

		____________________________ BRIAN KANNO, Chair