How the Minimum Wage Affects the Workforce in Hawaii

July 5, 2018 Written by Oralie Chapman


While the federal minimum wage remains at $7.25 per hour, Hawaii's minimum wage was raised to $10.10 per hour effective January 1, 2018. This was the final increase from a minimum wage bill passed in 2014. According to the Economic Policy Institute, the change affected about 51,000 Hawaiian workers and translates to an extra $68.5 million in annual wages across the state. Data from the Massachusetts Institute of Technology finds that for a single adult without children to have a “living wage” in Hawaii they would need to earn $14.97 per hour. Hawaiian lawmakers have introduced bills to raise the minimum wage to $15 per hour or more but so far none have passed.


The debate over the minimum wage

Critics of raising the minimum wage express concern about the affect on small businesses, an increase in the cost of consumer goods and reduced employment. Proponents of higher minimum wage say that when low wage workers have more money in their pockets they can better afford food and housing without relying on state subsidies. Studies have shown that the 29 states that have raised their minimum wage over the Federal standard have had only minimal lost jobs. 


Future of minimum wage in Hawaii

The national Fight for 15 campaign remains a vocal force for raising the federal minimum wage to $15 per hour; by 2022, 17 percent of Americans will live in a state or city with a $15 hourly minimum wage. Four of Hawaii's banks - First Hawaiian Bank, Bank of Hawaii, Central Pacific Bank, and Territorial Savings Bank - chose to raise the minimum wage for their employees to $15 per hour in 2018.  


How wages are affected by Hawaii’s low unemployment rate

Oahu recently set the country’s record for lowest unemployment rate at 1.9%! 


Labor costs are the biggest expense for all businesses but with Hawaii’s unemployment rate under 2%, they are at an all-time high as employers compete to attract qualified workers by increasing pay and improving benefits.


Businesses should expect to offer competitive wages in order to attract talent, which may mean paying wages higher than the state minimum wage for jobs that would have traditionally been compensated at minimum wage.


Partnering with Makai HR

With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Partnering with Makai HR can reduce your labor costs while improving your employees work benefits; two musts in Hawaii’s current labor market. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet or phone. 


What are you waiting for? Companies who partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!