With the cost of living swelling, momentum is gaining for raising Hawaii’s minimum wage. Recently, state lawmakers advanced several bills that would push Hawaii’s minimum wage to at least $15 an hour.
Initial proposals are varied —each outlines different provisions and schedules—but all aim to help Hawaii’s low-wage workers earn a living wage in one of the most expensive states to call home.
It’s still too soon to tell if any of the proposed bills will become law. However, with states and municipalities across the nation already making the move to a $15 minimum wage, Hawaii employers are keeping a watchful eye on the trend.
Continue reading to see how Hawaii’s business community is responding as well as tips for preparing for another minimum wage increase.
The heated debate over another minimum wage increase
When it comes to raising the minimum wage, the response from employers is mixed.
Some employers believe a $15 minimum wage will force them to make tough financial choices—reduce work hours, eliminate jobs, and/or increase prices—that will ultimately hurt those workers the hike is intended to help.
Business groups are speaking out against the proposed legislation, saying it will increase the cost of doing business to unsustainable levels.
Others are more welcoming towards the idea of a $15 minimum wage. They cite increased consumer purchasing power as a catalyst for happier employees, happier customers, and in return, better business.
What’s more is that some companies aren’t bothering to wait for a government mandate to raise their workers’ pay. Amazon implemented a $15 minimum wage for their employees back in November 2018; Target is vowing to pay all their employees $15 an hour by 2020.
And it’s not just large, national corporations who are upping their pay. Local Hawaii businesses are also feeling the pressure.
Expectations of higher pay already the norm
Despite the fact that Hawaii’s minimum wage is higher than it was four years ago, company pay scales continue to rise.
“Hourly wages have jumped at least $3 to $4 an hour in the last few years, just so companies can draw applicants in,” says ALTRES Industrial Manager Shani Silva.
With 25 years of hiring experience under her belt, Silva believes our workforce already has mounting expectations in pay and that companies are adjusting accordingly in order to attract and retain their workers.
This spike in pay is partly due to Hawaii’s low unemployment rate and, more interestingly, as a result of a growing disinterest amongst employees in company benefits packages.
“In the past, a company could keep their hourly pay low and offset it with an attractive benefits package,” says Silva.
“But what I see now is a workforce that is more interested in the pay a position offers, not so much in the benefits that come with it, however great they may be.”
While Silva acknowledges that a $15 minimum wage will have a significant impact on businesses, she also believes that it is an inevitable reality of living in Hawaii.
“We often think of minimum wage jobs as entry-level, short-term jobs, but many Hawaii families are already struggling to make a living at $15 an hour.”
How does Hawaii’s minimum wage compare to the rest of the nation?
At $10.10 an hour, Hawaii’s minimum wage is already above the federal minimum wage of $7.25 an hour, last increased over 10 years ago. This puts Hawaii among 28 other states (including Washington D.C.) who have a minimum wage above the federal pay floor.
Where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher minimum wage rate (Source).
Tips for preparing for a minimum wage increase
Even if your company doesn’t employ minimum wage or tipped workers, you still need to assess whether your current pay rates will continue to attract the same caliber of candidates and satisfy and retain your existing employees.
1. Review current wage and hour policies
Meet with your lawyer or HR consultant to review your company’s wage and hour policies. Address changes to overtime exemptions, wage structures, and tipped employees (if applicable). Non-compliance could result in labor violations and consequential liabilities, fines, or lawsuits.
2. Budget for increased taxes
When wages go up, so do payroll taxes. In addition to budgeting for hourly wage increases, plan for increases to social security, unemployment, workers’ compensation, and disability insurance expenses.
3. Conduct an in-depth job analysis
Take a hard look at the positions your growing and changing business needs and assess why you need them. You may realize that some positions are better suited for a temporary worker, while others could benefit from having a permanent dedicated employee. If there was ever a time to be strategic about the roles you fill and the people you fill them with, it’s now.
4. Find ways to improve company efficiency
Ask your employees for ideas on how to improve processes and cut costs. They are on the front lines of your business and may be able to offer insights that aren’t necessarily evident from the top down. Even if suggestions challenge longtime process or practices, it’s your job to ensure they are still helping, not hurting, your business.
5. Invest in existing employees
It may sound counter-intuitive to invest more time and resources into employees when you’re trying to manage growing labor costs. However, happy employees are good for business and can help your company be better prepared to handle future challenges, such as staff shortages or layoffs. Cross-train key employees, reward their commitment, and regularly acknowledge good work.
Addressing the effects that another minimum wage hike may have on your business and planning accordingly will help you tackle issues that arise and, more importantly, ease any impact to your company’s bottom line.