Bill Raising Hawaii’s Minimum Wage Signed Into Law

Gov. Neil Abercrombie today signed into law a bill that will incrementally raise Hawaii’s minimum wage to $10.10 by Jan. 1, 2018.

Hawaii’s current minimum wage of $7.25 was set in 2007.

“A hardworking sector of our community has gone seven years without a raise,” Gov. Abercrombie said in a statement from his office, adding that the action will provide the lowest-paid workers “with the economic stability and security they deserve.”

According to Dwight Takamine, director of the state Department of Labor and Industrial Relations, raising the minimum wage creates businesses and jobs.

He said the last four times the minimum wage was increased, the number of businesses went up by an average of 2.4% and the number of jobs increased an average of 2.1 percent 12 months later.

“Minimum wage increases boost consumer demand and generate economic activity as workers spend more,” Takamine said.

President Obama last month was unsuccessful in urging Senate Republicans to follow Hawaii’s lead.

His labor secretary, Thomas E. Perez, said Hawaii’s action gives workers at the bottom of the income ladder a much-needed boost so that they can better afford the basics like rent and food for their families.

“And businesses will benefit, too, as that extra income is spent locally on goods and services, ultimately strengthening the bottom line,” Perez said.

Act 82 raises the state’s minimum wage to $7.75 per hour beginning Jan. 1, 2015, followed by annual increases to $8.50, $9.25 and finally to $10.10 per hour on Jan. 1, 2018.

The new law also affects the tip credit, which is the amount an employer doesn’t have to pay to tip-earning employees.

Under previous law for tip credits, employers were allowed to pay tipped employees 25 cents an hour below the minimum wage, provided the tipped employee received at least 50 cents in tips.

The new law raises the tip credit to 50 cents per hour beginning Jan. 1, 2015 and 75 cents per hour as of Jan. 1, 2016, as long as the combined amount the employee receives in wages and tips is at least $7 more than the applicable minimum wage beginning Jan. 1, 2015.

***Updated 2:04 p.m.***