GUEST: Minimum wage increase a must in battle against poverty
A big shout out to the YWCA Kaua’i for bringing to light the intersection of racial justice and economic disparity. I am a proud participant in the Stand Against Racism Challenge event and a strong advocate of the important work we all need to do to better ensure everyone has access to a fair economic playing field.
When the United States was climbing out of the Great Depression, President Roosevelt enacted the new Deal which included public works programs, welfare, social security. Due to the phenomenal level of unemployment across the country and the masses of people looking for work, employers were not compelled to pay fair wages, hence “sweat shops” popped up. To combat the unfair reduced wages, the President and Congress created by law a minimum wage of 25 cents per hour, however, racism tainted the final application of this law.
While President Roosevelt intended for the minimum wage to be applied to all economic sectors, Congress cut out the work areas that employed predominately Black workers such as farming and domestic service areas. It remains true today, that people of color make up the highest portion of workers in minimum wage jobs.
According to Labor statistics, the leisure and hospitality industry has the largest percentage of hourly wage workers. In Hawai’i, leisure and hospitality make up 21% of the economy. The Hawai’i minimum wage was last increased in 2018 and has been holding at $10.10/hr or $21,000 per year. The largest number of Hawaiian workers are employed in the accommodation and food services area. It’s important to understand that there is a difference between a minimum wage and a living wage. A living wage enables a person to support a family, engage in public life and maintain a reasonable standard of living. The living wage as calculated by MIT for Hawai’i State and Kaua’i County, for a single person without children is about $19/hr or $40,000 per year.
The minimum wage system is broken. Given the high cost of housing and food in Hawai’i, many hourly workers have packed it up and moved. On Kaua’i, there is a shortage of hourly workers and employers have had to raise wages to $15-$25 per hour to keep staffed in order to keep their business doors open. Yet, even these higher wages are barely enough, 40-60% of non-white households are struggling below the living wage. Not making a living wage has far reaching impact that perpetuates disparities in education opportunities, access to healthcare, etc.
Access to education as a path to increase earnings is hampered by lack of economic resources. Poorer neighborhoods have less access to the internet, laptops, transportation and childcare. The schools many have less revenue to pay teachers or provide supplies and materials to students. Students may be less able to compete for university entrances and financial aid. Put together, this creates a vicious cycle as many hourly workers may live and raise their families in lower income neighborhoods due to low pay.
I hope this information has inspired a better understanding of racial justice and economic disparity or inspired additional outreach in our community. There continues to be discussion at the State Legislature about raising the Hawai’i minimum wage, you can review House Bill 2510 for more information about what is being proposed.
Marjorie Bennett is a partner at Chicago Partners, Hawai‘i, a wealth-management firm.
Thanks for writing our small paper with your big city mumbo jumbo and getting everyone all worked up about increasing minimum wage. Why stop at $25/hr? What about inflation? I wonder what a real scholar who has studied economics and provided analysis without an agenda has to say?
“Unfortunately, the real minimum wage is always zero, regardless of the laws, and that is the wage that many workers receive in the wake of the creation or escalation of a government-mandated minimum wage, because they lose their jobs or fail to find jobs when they enter the labor force. Making it illegal to pay less than a given amount does not make a worker’s productivity worth that amount—and, if it is not, that worker is unlikely to be employed.”
― Thomas Sowell, Basic Economics: A Citizen’s Guide to the Economy
Minwage laws, unless they set a floor below the average entry-level wage job, result in some workers getting more pay, but more workers losing hours and more jobs not offered. The net effect is not helpful for the entire group of workers and prospective workers whose skill and credential levels are at the lower end of the scale. Employers find ways to get the same work done with fewer hours, automate some tasks, reprogram some activities to use less labor, and choose, when doing new lines of business, less labor-intensive ways to do it. Overall result, less employment earnings for all.