Raise of minimum wage worries Hawai'i businesses
By Frank Cho
Advertiser Staff Writer
The state is preparing to raise the minimum wage nearly 10 percent starting Jan. 1 as many Hawai'i businesses owners continue to struggle with dwindling revenues in the wake of Sept. 11.
Passed by the Legislature earlier this year and signed into law by Gov. Ben Cayetano, the state will raise the minimum h
| Hawai'i wages to rise Jan. 1 | |
| • | Beginning Jan. 1, Hawai'i's minimum wage will go up from $5.25 an hour to $5.75. On Jan. 1, 2003, the minimum wage will rise again to $6.25 an hour. |
| • | For information, call the Hawai'i Department of Labor and Industrial Relations: |
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While employee advocates and social welfare groups welcome the raise — coming at a crucial time for Hawai'i workers struggling with reduced hours and their own financial difficulties in the wake of the terrorist attacks and the ensuing economic downturn — some businesses are concerned about the increase in cost to their already struggling businesses.
"This will come right out of the bottom line," said Pat McCain, president of the Hawaii Restaurant Association. "Restaurants are struggling. They were already on the edge and this is not going to cause them to create more jobs."
When the state held a special legislative session to develop an economic stimulus package for Hawai'i's economy in October, Cayetano did not offer to postpone the state minimum wage increase even though some business leaders who met with him had raised the idea.
The increase affects all businesses including hotels, restaurants and stores hit hard by the downturn in tourism following the Sept. 11 terrorist attacks.
"I am sure the employers have valid concerns," said Garry Kemp, assistant administrator with the state Department of Human Services' Benefit Employment and Support Services Division. "As we work with low-income individuals, there is bound to be a friction between low-income people and the need to earn more and people trying to contain their costs."
Hawai'i remains one of the most expensive places in the country to live, but it is also one of the most expensive places to do business. How much of a challenge the higher wages will be for employers is still not clear because many business say they already pay workers above the minimum wage.
"Most of the employers we represent are paying above the $5.75 so I don't think it's going to make or break companies at this point," said Connie Hastert, director of government affairs for the Hawai'i Employers Council.
Hastert said this does not mean there is not going to be an impact, but she does not believe the increase will likely push any businesses over the financial edge.
"A lot of companies have already laid off a bunch of people and sought ways to cut their costs," Hastert said.
Debbie Shimizu, executive director of the National Association of Social Workers Hawai'i Chapter, said she believes there will be a lot of competition between those who are trying to get off welfare and into the job market, and those who are being laid off because of Sept. 11.
"So we are going to see a big group of unemployed people and I think we need to sit down with businesses and talk about some creative solutions," Shimizu said.
McCain said there are some minimum-wage workers, waiters in high-end restaurants for example, who actually earn much more than minimum wage through tips, which can add up to hundreds of dollars a night. He said he would like to see employers get some credit for those positions, and so in turn be able to give larger raises to other lower-paying jobs.
But McCain said there is not a lot of sympathy for the business community and such a credit is unlikely right now. "Restaurant people are a hardy lot," McCain said. "And they are going to keep putting on a happy face and serving the people."
