PDHblog This is a place for members of Progressive Democrats of Hawai‘i to express their thoughts, hopes and exasperations about political happenings.

February 12, 2014

In the Past, the State Legislature Has Allowed Minimum Wage to Fall. Repeatedly.

Filed under: 5Economics,HI Politics,Legislature — Bart @ 10:02 pm

Testimony from Progressive Democrats in Favor of a Minimum Wage Hike

HOUSE COMMITTEE ON LABOR AND PUBLIC EMPLOYMENT

Rep. Mark Nakashima, Chair

Rep Kyle Yamashita, Vice Chair

Feb 11, 2014, 9:00 a.m.

Conference room 309

HB 2580, RELATING TO LABOR IN SUPPORT, with AMENDMENTS

Aloha Chair Nakashima, Vice-Chair Yamashita and Members,

My name is Bart Dame and I am testifying on behalf of Progressive Democrats of Hawaii in support of

HB2580, but with a suggested amendment. We have read the other bills and have found things to like

in most of them, but believe HB2580 is the best vehicle to move forward, as it covers our concerns.

Except we believe the proposed wage hike is too low, given how the Legislature has neglected raising

the minimum wage for over seven years and the cost of living has severely eroded its value.

HB2580 would raise the minimum wage in three steps, to $9.50 in January 2017. We note Rep.

Takumi’s bill would raise it to $10.25 and the Governor’s bill would raise it to $10 even. While we like

Rep. Takumi’s bill, we can support the figure of $10.10, as it is consistent with the bill moving through

the Senate, as well as the Federal rate proposed by President Obama and the US Senate leadership.

We support also support the elimination of the tip credit and support the provision which would provide for

automatic hikes in the minimum wage, tied to the Consumer Price Index. We think this final provision,

which has not elicited much discussion, is vitally important.

We have attached to this testimony a chart of the historical rate of the minimum wage in Hawaii. That

is shown in the blue line. The orange line shows the value of the 1968 minimum wage, in current

dollars, which reflects where it would be, had the legislature raised it to keep up with the cost of living.

You will see a growing gap between the two lines, starting at about 1980. This gap replicates the

widening of incomes which occurred across the United States, as the wages of working people

stagnated. There is a myth going around that increased globalization has led to a decline of wealth in

the United States and the decline of income for middle and working class people is an inevitable

outcome of global competition. We disagree. Income in the United States has gone up during this

period, but it has not been shared equally. The rich HAVE been getting richer, the poor HAVE been

getting poorer and the middle class has been collapsing. And it is not the inevitable result of changes in

the economy, but the result of conscious action –and INACTION- of legislative bodies like this at the

state and federal level, lowering taxes on the wealthy, on corporations, on capital gains, weakening

labor laws, cutting social services and other programs, giving away tax credits to investors and

refusing to raise the minimum wage to help keep low-income workers from falling into poverty.

If you look at the graph, the widening gap between the orange and blue lines can be seen as a transfer

of income from lowly paid workers to their employers. We can see three lengthy periods where

previous legislators failed to raise the minimum wage to keep up with the rising cost of living. From

1981-1987, from ’93 to 2002, and from 2007 until now. Those are periods of 6 years, 9 years and now,

it will be 8 years if this bill passes. Should the legislature fail to enact the CPI provisions being

proposed, it is very likely this pattern will repeat itself.

We have seen testimony claiming the CPI provision will subject business owners to sudden, difficult to

anticipate increases, which will render budgeting difficult, even “impossible.” That strikes us as

absurd. Other costs for buinesses go up, such sometimes unexpectedly and at rates greater than the

CPI, yet businesses adapt to hikes in rent, utilities, gasoline, insurance, the cost of merchandise or

materials. Only the cost of labor cannot be adjusted to? And by chaining future hikes in the minimum

wage to the overall rate of the cost of other items, this makes wage hikes predictable and incremental.

Leaving it to legislative action, on the other hand, will inevitably result in sudden, difficult to anticipate

jumps when the legislators finally, after delaying for 6,8, or 9 years (!), finally get spurred into action by

the obvious injustice of forcing workers to work for less and less, in real terms, each year.

If business owners want to complain about the jump proposed with this bill, they should realize it

reflects their success, over the last 7 years, in preventing smaller hikes.

Please pass this bill, retaining the CPI provisions, but amending the amount of the hikes to those in the

Senate bill, SB2609.

Thank you for the opportunity to testify.

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