The following is written testimony submitted to the Hawaii State Legislature against House Bill 441, which “increases the state minimum wage rate incrementally each year to attain the rate of $22 per hour beginning 1/1/22. Authorizes the department of labor and industrial relations to annually adjust the minimum hourly wage beginning on 1/1/23 in accord with the Honolulu region consumer price index [and] repeals the tip credit.”
Supporters of this and various bills to raise Hawaii’s minimum wage to $15 and beyond is no doubt intended to aid the many thousands in this state struggling to make ends meet working a minimum wage job. There have been countless studies done on the subject and I am inclined to agree with Representative Ing when he says, “raising the minimum wage to at least $15 an hour is the single most impactful policy for Hawaii’s most vulnerable.” We seem to be in disagreement, however, about whether this impact will be positive. Representative Ing surely means it will have a positive impact on our most vulnerable but it’s clear from the actual evidence not to be the case.
Supporters of a $15 minimum wage point to two studies; one by David Card and Alan Krueger from over two decades ago, and one by the leftist Economic Policy Institute done more recently in 2014 – the latter of which was cited by Democratic presidential candidate Bernie Sanders himself. What’s curious is that the authors of both these studies have recently said, essentially, they don’t know whether a $15 minimum wage would help anyone because they didn’t actually study a wage that high. Kruegar himself, in a 2015 New York Times op-ed wrote, “$15 an hour is beyond international experience, and could well be counterproductive.”
Seattle last year raised their minimum wage to $11 on its way to $15 and this was seen as a shining example of how the minimum wage will work in cities across the United States – including Honolulu. But a study commissioned by the city has shown quite the contrary. According to the study, the best estimate saw average workers’ earnings increase by only $5.54 per week. The worst estimate saw, after loss of hours and benefits were calculated, average workers’ earnings actually drop by $5.22 per week. And even Seattle could not escape the economic realities of artificially inflated wages and its effect on the labor force. It is a known fact that when you increase the costs of hiring labor, employers must either lower profit margins or pass some of that cost to customers. If these coping methods aren’t adequate businesses begin cutting hours, staff, and benefits. Hence why we see some estimates showing a net loss in total earnings despite higher hourly pay.
These figures don’t include the people who lost their job due to the minimum wage. And this, I believe, is the crux of our argument. According to the study, 1.2% of the workforce lost their jobs a because of the rise in minimum wage. 1.2% doesn’t sound like much until you realize that this 1.2% consists of the most vulnerable in their communities; the disabled, minority, uneducated, or unskilled – the very people that I’d assert you are trying to help. And this loss of about 7800 jobs isn’t a singular event. Jobs will continue to be lost and the most vulnerable Seattle residents will continue to be thrown further into poverty until the $15 minimum wage is reached. A simplistic way to project the job losses show a further total loss of nearly 19,500 jobs – a grand total of 27,300 of Seattle’s uneducated, unskilled, minority, disabled, and most vulnerable workers losing their jobs with almost no hope of competing against a younger, stronger, higher skilled workforce to get back on their feet – a workforce, I might add, that is now even more financially better off in relation to these people than they were before.
When we discuss progressive and moral policy, we’re talking about policy which helps the poorest, most vulnerable people in a society. But when a policy like this one improves the lives of people at the cost of the financial wellbeing and dignity of the marginalized people below them, it is neither progressive nor moral. It isn’t easy. We as constituents understand this. But we elected you to analyze critically, think counterintuitively, and look outside the box for appropriate solutions. Solutions like, if I may suggest, not forcing the poor to pay regressive taxes on goods they need such as a GET exemption on food, school supplies, feminine products, contraception, and medicine. I challenge you all to vote down these bills and be more creative with your legislation. Tell our state’s most vulnerable and marginalized people that you actually care and that they won’t have to shoulder the costs of your idea of progress. And most of all tell them that their lives, wellbeing, and dignity are worth more than an alliterated hashtag.
- Seattle study as published by the University of Washington
- $15 minimum wage as covered by Politifact