H.B. NO.



















     SECTION 1.  The legislature finds that currently nineteen other states plus the District of Columbia have higher minimum wage rates than Hawaii.  Ten of these states index their minimum wage to inflation so that the real value of the minimum wage does not fall every year.  The states that index their minimum wage include Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont, and Washington.

     The legislature further finds that Hawaii's minimum wage rate was last raised on January 1, 2007 to the rate of $7.25 per hour and that Hawaii's minimum wage matches the federal minimum wage and is just $15,080 a year for a full-time, year-round worker.  The United States Census Bureau recently estimated that 17.4 per cent, or nearly one-fifth, of Hawaii residents live in poverty and Hawaii ranks as the seventh highest state with residents living in poverty.

     The legislature further finds that Hawaii is the most expensive state to live in.  The Third Quarter 2012 Cost of Living Data Series published by the Missouri Economic Research and Information Center ranks Hawaii as the state with the highest cost of living.

     On July 1, 2012, the $7.25 minimum wage would equal $6.30 an hour adjusted for the cost of inflation.  This represents a thirteen per cent erosion in the buying power for minimum wage workers since 2007.  If the minimum wage rate had kept up with inflation, then on July 1, 2012, the rate would have been $8.35 an hour.  For decades, the economies of Hawaii and the nation have been reorienting towards low-wage jobs and the recession and tepid recovery have only accelerated this shift towards low-wage jobs.

     The legislature further finds that an increase in the minimum wage will boost consumer demand and jobs because minimum and low-wage workers spend most if not all of their increased wages and therefore will generate economic activity to support our continued recovery from the recession.  Although Hawaii's official unemployment rate is slowly improving, according to the United States Bureau of Labor Statistics from the fourth quarter of 2011 through the third quarter of 2012, 13.7 per cent of the civilian labor force in Hawaii is unemployed or underemployed.  Considering this employment situation and a continued slow recovery, there is no better time to raise the incomes of minimum wage and other low-wage workers and generate some much-needed demand into the State's economy.

     The legislature further finds that the increase in the minimum wage historically has not impeded job growth in the State.  According to the research and statistics office of the department of labor and industrial relations, since 2002 the minimum wage has increased four times and on each of those occasions the seasonally adjusted job count has continued to grow.

     The purpose of this Act is to raise the minimum wage to further the economic recovery of Hawaii and lift Hawaii residents out of poverty and to match the minimum wage to the cost of inflation on an annual basis.

     SECTION 2.  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; and

     (3)] (1)  $7.25 per hour beginning January 1, 2007[.]; and

     (2)  $8.75 per hour beginning January 1, 2014.

     (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 [25] 30 cents 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.

     (c)  On or about September 30, 2014, and on or about each following September 30, the department shall calculate an adjusted minimum wage rate by increasing the current minimum wage rate as provided below.  The adjusted minimum wage rate shall be calculated to the nearest 5 cents using the consumer price index for urban wage earners and clerical workers, CPI-W, or a successor index, for the twelve months prior to each July 1 as calculated by the United States Department of Labor.  Each adjusted minimum wage rate shall be equal to or greater than the previous year's rate and shall take effect on the following January 1."

     SECTION 3.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.









Report Title:

Minimum Wage; Consumer Price Index



Increases the minimum hourly wage to $8.75 per hour beginning January 1, 2014; adjusts the minimum hourly wage thereafter in accordance with the consumer price index; and increases the tip credit to thirty cents.




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