LIHUE — All four Kauai legislators said they support minimum wage increases and recognize the need for it, but what differs among some of them is how that vision should be carried out. Last week, a pair of House and
LIHUE — All four Kauai legislators said they support minimum wage increases and recognize the need for it, but what differs among some of them is how that vision should be carried out.
Last week, a pair of House and Senate bills in the state Legislature seeking to gradually raise the minimum wage over the next several years sailed through the final committees needed to bring them to a vote.
One difference between the two could come down to tip credit limits — the amount businesses are allowed to deduct from a tipped employee’s wages.
The bill in the Senate, SB 2609, would raise the current minimum wage of $7.25 by 95 cents each year, beginning on Jan. 1, 2015, until it reaches $10.10 by 2017.
It also proposes to change the state’s 25 cents tip credit, although that change hasn’t been specified yet, according to a draft of the bill.
Meanwhile, a similar bill that passed through the House Finance Committee on Thursday proposes to raise the current minimum wage by 50 cents to $7.75 on Jan. 1, 2015, and then 75 cents for every year afterward until it reaches $10 by 2018.
That bill, HB 2580, would also increase the tip credit by 25 cents each year until it reaches $1 by 2017 — if the gross amount an employee receives from wage and tips for a tax year is at least 250 percent of the poverty level set by the Director of Labor and Industrial Relations.
The latter of the tip credit proposals leaves some legislators wary of burdening restaurant owners with figuring their wait staff’s salaries based on gratuity over the course of a year.
Still, they said they’re happy to see progress on the minimum wage front, however it gets there.
“The good news is that we’re able to push through something to ensure that the opportunity to increase the minimum wage is still alive,” Sen. Ron Kouchi, D-Kauai-Niihau, said after the Senate’s version of the bill was approved on Friday, the deadline for all bills to pass through committees. “This is just the first step of the process but at least the discussion will continue as to how much we should raise the minimum wage and other elements.”
Although all four Kauai legislators like the idea of an increase, how it should be implemented is still up in the air.
“It just reflects some of the divergent views, so it gives an opportunity for people to determine where we are so we can search for a compromise,” Kouchi said about the differing minimum wage proposals in the two bills.
The last minimum wage increase happened in 2007, when it was raised from $6.75 to $7.25, according to a draft version of both bills.
“I think we all agree that the minimum wage needs to be adjusted to be more in line with the increased cost of living in Hawaii,” Rep. Derek Kawakami, D-Wailua-Haena, wrote in an email. “However, a balance must be met so that employers are not forced to lay off workers in order to stay afloat. If this were the case, such an initiative would be counter-productive.”
Kouchi said he supports the need to raise the minimum wage but explained that he will keep listening to public testimony to help him and other lawmakers determine which path is best.
Rep. James “Jimmy” Kunane Tokioka, D-Koloa-Wailua, said he also supports a minimum wage increase but is against eliminating the state’s tip credit for employers, which the Senate’s proposal could do.
As a former partner in three Kauai restaurants — two of which had tipped employees — Tokioka said he understands the challenges that many owners face when it comes to paying their employees.
Many tipped employees, especially those at higher-end restaurants, make sufficient money to supplement their minimum wage pay, he added.
“The restaurant business is the hardest business to be successful in,” Tokioka said. “It’s a struggle — you work off of very, very small profit margins. If restaurants have to pay their wait and bus help the minimum wage, when it gets to the $9 or even at the $8 range, that could decrease the amount of money that restaurants make, and right now, they’re just struggling.”
But Tokioka said he is also concerned with the most recent amendment in the House bill that would tie tip credit increases, and the applicability of the credit itself, to the annual gross income of employees and state poverty guidelines.
Under the proposed House bill, the tip credit would only apply to certain employees, whose income exceeds $33,550 — a unique model that, some labor advocates say, will help shield low-wage workers.
“It’s going to be an absolute nightmare for the restaurant owner to figure out an employee’s poverty threshold, when some people don’t even work a full year at a restaurant,” Tokioka said. “How are you going to figure out if you’re going to make $33,000 at the end of the year?”
What Tokioka said he would support, however, is a model where the amount of tips an employee claims in one day is used to calculate their hourly wage.
“It’ll just be another step that the restaurant owner would have to calculate but at least they can take the tip credit while the employee is there, because with the other way, you’re never going to know — you’re not going to know until the end of the year what the employee is going to be making,” Tokioka said.
Although the details of the tip credit still have to be worked out by the lawmakers in the House this week, Rep. Daynette “Dee” Morikawa, D-Koloa-Niihau, said she is glad that a compromise, to a certain extent, has been reached.
“It’s not a perfect bill yet, but at least we have a compromise from both sides,” Morikawa said. “It’s a complicated subject and I’ll admit that I’m not totally familiar with it — I’m just learning a little bit more every time it comes up. For me, I’m always about compromises, so I would support the tip credit, if I could.”
Both bills are scheduled to be taken up Tuesday by House and Senate lawmakers in their respective chambers at the Hawaii State Capitol building in Honolulu.
• Darin Moriki, staff writer and photographer, can be reached at 245-3681 or dmoriki@thegardenisland.com.
