HB441.DOC

SECTION 1. The legislature finds that the hourly minimum wage in Hawaii is not a living wage. The cost of living in Hawaii is the highest in the nation and according to the United States Census Bureau, Hawaii's poverty rate is the ninth-highest in the nation with one in six residents living in poverty. Research shows that many families live in poverty because they depend on low-wage work as the primary source of income. Additionally, women are disproportionately affected because over half of the minimum wage workers in Hawaii and two-thirds of the tipped workers in the nation are women. Raising Hawaii's minimum wage to a living wage and repealing Hawaii's tip credit will assist individuals and families living in poverty.

The legislature enacted Act 82, Session Laws of Hawaii 2014, to incrementally increase the minimum wage to $10.10 per hour by 2018. However, $10.10 per hour is not a suitable living wage for a single adult in Hawaii, much less an adult supporting children or others. According to data from the Massachusetts Institute of Technology, the living wage for an adult working full-time in Honolulu is $14.92. The living wage for that same adult nearly doubles with the addition of a child. Due to the large disparity between the current minimum wage and a living wage, many individuals work two or more jobs to maintain a basic standard of living for themselves and their families.

Hawaii has one of the lowest unemployment rates in the nation and there is fear that increasing the minimum wage will increase unemployment. However, numerous research studies found that higher minimum wages did not adversely affect unemployment rates, even when the increase was relatively large.

In 2016, numerous cities and states enacted legislation that raised the minimum wage based on the cost of living. In New York, the gradual increase of the minimum wage to $15 per hour will vary across the state based on geographical location and, in New York City, employer size. California's minimum wage will incrementally increase until it reaches $15 per hour in 2022 and each year thereafter, the minimum wage will be adjusted based on the cost of living in California.

The legislature further finds that raising the minimum wage and allowing the counties to establish higher minimum wages will enhance the standard of living for families and individuals in Hawaii. The legislature also finds that repealing the tip credit ensures that tipped workers will receive the minimum wage before tips, providing a more reliable source of income.

The purpose of this Act is to provide Hawaii's minimum wage workers and tipped workers with a living wage by adjusting the minimum wage to account for the high cost of living and repealing the tip credit.

SECTION 2. Section 387-1, Hawaii Revised Statutes, is amended by deleting the definition of "tipped employee".

["~~"Tipped employee" means any employee engaged in an occupation in which the employee customarily and regularly receives more than $20 a month in tips.~~"]

SECTION 3. Section 387-2, Hawaii Revised Statutes, is amended to read as follows:

"§387-2 Minimum wages. (a) Except as provided in section 387‑9 and this section, every employer shall pay to each employee employed by the employer, wages at the rate of not less than:

(1) $6.25 per hour beginning January 1, 2003;

(2) $6.75 per hour beginning January 1, 2006;

(3) $7.25 per hour beginning January 1, 2007;

(4) $7.75 per hour beginning January 1, 2015;

(5) $8.50 per hour beginning January 1, 2016;

(6) $9.25 per hour beginning January 1, 2017; [~~and~~]

(7) [~~$10.10~~] $12.50 per hour beginning January 1, 2018[.];

(8) $15 per hour beginning January 1, 2019;

(9) $19 per hour beginning January 1, 2020;

(10) $21 per hour beginning January 1, 2021; and

(11) $22 per hour beginning January 1, 2022.

(b) [~~The hourly wage of a tipped employee may be deemed to be increased on account of tips if the employee is paid not less than:~~

~~(1)~~ ~~25 cents;~~

~~(2)~~ ~~50 cents per hour beginning January 1, 2015; and~~

~~(3)~~ ~~75 cents per hour beginning January 1, 2016,~~

below the applicable minimum wage by the employee's employer and the combined amount the employee receives from the employee's employer and in tips is at least 50 cents more than the applicable minimum wage; provided that beginning January 1, 2015, the combined amount the employee receives from the employee's employer and in tips is at least $7.00 more than the applicable minimum wage.] On September 30, 2022, and on September 30 of each year thereafter, the department of labor and industrial relations shall calculate an adjusted minimum wage rate. The adjusted minimum wage rate shall be calculated to the nearest 5 cents using the Honolulu region consumer price index for urban wage earners and clerical workers, CPI-W, or a successor index, for the twelve months prior to September 1 of each year as calculated by the United States Department of Labor; provided that if in any year the adjustment based on the Honolulu region CPI-W would result in a lower minimum wage rate, the minimum wage rate shall not be decreased, and the adjusted minimum wage rate shall remain at the most recently established minimum wage rate. Each adjusted minimum wage rate calculated under this subsection shall take effect on the following January 1.

(c) Each county shall have the power to establish wages for employees employed within the county at rates that are higher than those established in subsection (a) and, beginning on January 1, 2023, subsection (b)."

SECTION 4. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 5. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	441
TWENTY-NINTH LEGISLATURE, 2017
STATE OF HAWAII