Livable wage can sustain our economy

Livable wage can sustain our economy

Originally published in the Honolulu Star-Advertiser, March 31, 2019

Kim Coco Iwamoto

Consumer spending is two-thirds of our economy. So when we scratch our heads about why Hawaii’s GDP is not growing as fast as the rest of the country, the answer lies in how much money our residents have to spend. At $10.10 an hour, our low-income workers clearly do not have enough to buy food and pay rent — in short, be “self-sufficient.”

And given our high cost of living, Hawaii has the highest average credit card debt per capita in the nation.

The state’s own Department of Business, Economic Development and Tourism (DBEDT) says that the “self-sufficiency” hourly rate in Hawaii today would require wages of $17 an hour. If our lowest wage workers were really earning that “self-sufficiency” rate today, then in five years, assuming a $1 yearly step increase, we could get them to $22 an hour by 2024.

We task DBEDT to research and analyze wages relative to cost of living to help policy-makers understand the threshold of “self-sufficiency.” We should not ignore its findings or the evidence before our eyes — lying on the sidewalks of what is now the houseless capital of the nation.

Besides, past increases to minimum wage have proven to be great for our economy. As the minimum wage increased from $7.25 to $10.10 between 2014-2018, unemployment reached record lows and employment all-time highs.

Thankfully, a majority of legislators here have publicly acknowledged that the minimum wage should be improved to be a living wage.

Coming out of the Great Depression, President Franklin Roosevelt stated: “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country … and by living wages I mean more than a bare subsistence level — I mean the wages of decent living.”

Today, we watch California, Illinois, Massachusetts, New Jersey and several cities make progress to a $15 minimum wage with $1 per hour per year annual increases. U.S. Reps. Ed Case and Tulsi Gabbard both support raising the federal minimum wage to $15/hour.

Even our conservative banks start their tellers at $15 an hour with health care, and most small businesses that value quality employees already pay more than the current minimum wage.

I join other Hawaii business owners and investors who recognize the economic sustainability of paying workers a livable wage.

Compared to similar kinds of businesses across the U.S., Hawaii companies allocate disproportionately larger slices of their expense pie chart to rent and utilities, and a smaller slice to human resources. Landowners get richer and the highest paid person in Hawaii is in charge of the electric company; meanwhile, most working families are living paycheck to paycheck.

The current remaining House bill draft related to raising the minimum wage would allow employers to pay $12.50 an hour in 2024 if they offer health care, and those who do not offer health care can pay their workers just $15. This increase would be staggered at $1 per year over five years.

Compare that to the proposed increases to the Legislature’s own wages: raising their minimum salary to $74,160 by 2024 — for a legislative session of only 60 days a year. There are no discounts linked to whether or not a legislator gets his or her health-care insurance from the state, other employer or spouse’s employer.

The least the Legislature can do is to raise the minimum wage of the state’s lowest wage earners to a livable wage by 2024. If not $22 an hour, then $17 an hour. If not $17 an hour, at least $15 an hour. A $12.50/hour rate is not an acceptable minimum wage in 2024; it is not sustainable, not “self-sufficient,” and definitely not a living wage.

Kim Coco Iwamoto is a lawyer and community activist.

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