Hawaii's minimum wage could soon be raised to $18 an hour

Hawaii lawmakers passed legislation Tuesday that would boost the state's minimum wage to $18 an hour by 2028, potentially creating the highest minimum wage for workers in the U.S.

Hawaii's minimum wage is currently $10.10 an hour. The bill would raise that rate in increments over the next several years, starting with a jump to $12 on October 1.

Advocates say the raise is badly needed in a state that routinely tops lists for most expensive housing and cost of living. But some businesses are warning they will have to cut staff or even close because they won't be able to afford to give the greater pay. 

Still, a state analysis published in December showed a single person working 40 hours a week would need to earn $18 an hour in order to pay for housing and other basic necessities in the Aloha State.

"People should be able to afford their basic needs on 40 hours a week," said Nate Hix, the director of Living Wage Hawaii, an advocacy group that has been pushing for a higher minimum wage. "Otherwise people are forced to work multiple jobs or sacrifice their basic necessities like food, shelter, clothing."

The Chamber of Commerce of Hawaii said many of its members will lay people off and some will close because of the wage increase. The business group said Hawaii's unique-in-the-nation requirement that employers provide health insurance to those working more than 20 hours a week already adds $3 or $4 to the hourly compensation of workers.

Michael Miller, the director of operations at Tiki's Grill and Bar, said he favors gradually hiking the rate to $15 by 2027. He said costs for everything involving labor will go up with the higher wage.

"Who then pays for that? The consumer pays for that," Miller said.

About 20 states — including Ohio and Missouri — increased their minimum wages this year. Some of the highest minimum wages in the nation now include Massachusetts with $14.25, Washington state at $14.49 and California at $15. 

Jobs in some states like Alabama and Georgia still have a $7.25 minimum wage — which mirrors the nation's average.

States aren't the only layers of government raising wages. Los Angeles County in California will raise its minimum wage requirement to $16 an hour starting July 1. Malibu will also raise its minimum age to $15.96 by the same date.

Support from governor

Hawaii's House and Senate, both controlled by Democrats, approved the measure by wide margins. The bill now goes to Hawaii Gov. David Ige, who has said he supports an $18 minimum hourly wage.

The legislation also expands the tip credit to $1.50 by 2028, allowing employers to subtract that amount from the wage they pay if the workers earn enough in tips.

The bill makes the earned income tax credit permanent and refundable, meaning it will put money in workers' pockets even if they don't have any tax liability — which will help low- to moderate-income workers cut the taxes they owe and potentially increase their tax refund. Hawaii's existing earned income tax credit expires this year and is not refundable, meaning many low-income taxpayers can't use it because their earnings are too low to require significant taxes.