Hawaii lawmakers pass bill to raise minimum wage to $18 per hour
The bill also makes the earned income tax credit refundable and permanent
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The Hawaii legislature passed a bill Tuesday to raise the state's minimum wage to $18 per hour by 2028, up from the current $10.10 minimum.
The $18 minimum wage would be the highest in the nation, although some states automatically raise their minimum wage to reflect the cost of living. This means areas like California could have a higher minimum wage by 2028 due to inflation.
Tips are seen on the bar at McSorley's Old Ale House, which, established in 1854, is referred to as New York City's oldest Irish saloon in Manhattan, New York, March 16, 2020. (REUTERS/Andrew Kelly / Reuters Photos)
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The bill overwhelmingly passed the state House and Senate, both of which are Democratic-controlled, and now heads to Democrat Gov. David Ige's desk. The governor is expected to sign the measure into law.
Activists appeal for a $15 minimum wage near the Capitol in Washington, Thursday, Feb. 25, 2021. ((AP Photo/J. Scott Applewhite) / AP Newsroom)
The legislation, House Bill 2510, would raise the minimum wage in smaller increments over the next several years before implementing the $18 minimum. The state's first wage increase under the bill would begin at $12 per hour starting Oct. 1. Wages would then increase to $14 per hour in 2024, $16 per hour in 2026 and $18 per hour in 2028.
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Supporters of the bill have said the increase is necessary given the state's high cost of living while some businesses say they will have to make staff cuts or even shut down because they will not be able to afford to pay their workers higher wages.
State House Speaker Scott Saiki said a major factor in his decision to support the higher wage was a study that found 42 percent of Hawaiian households struggle to make ends meet.
FILE PHOTO: Tips from a customer donation fund and a last paycheck for employees laid off from Farley’s East cafe, that closed due to the financial crisis caused by the coronavirus disease (COVID-19), sits on a counter at the cafe in Oakland, Califor … (REUTERS/Shannon Stapleton/File Photo / Reuters Photos)
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The legislation doubles the tip credit to $1.50 by 2028, which allows businesses to subtract that amount from an employee's wage if the worker makes minimum wage after accounting for tips.
The bill also makes the earned income tax credit refundable and permanent, which could cut the taxes low-income workers owe and potentially increase their tax refund.
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Hawaii’s current earned income tax credit expires this year and cannot be refunded. This means many low-income taxpayers are not eligible to use it due to their earnings not being high enough to require significant taxes.
The Associated Press contributed to this report.