Although the cost of living in Hawaii is among the highest in the U.S., people earn less here than they could doing the same job on the mainland. A lot of jobs here pay the federal minimum wage, only $7.75 an hour, which isn’t bad when you consider the federal minimum wage for tipped employees is $2.13 an hour. In Hawaii, tipped workers are paid $7.00 an hour. (UPDATE: In 2014, former governor Neil Abercrombie (D) signed a bill that will raise the minimum wage for non-topped employees in Hawaii to $10.10 an hour, to be phased in gradually over the next four years.)
It is bad, however, when you consider that, had the federal minimum wage been adjusted for inflation every year since its establishment in 1938, it should now be at $10.71 an hour. In fact, the minimum wage was raised several times until 1968. Then Congress stopped correcting for inflation, and the real value of the minimum wage has been on the decline ever since.
In Hawaii, tourism is the biggest industry. A lot of people working restaurant, hospitality and service jobs are paid at or near minimum wage and many are tipped employees. Hawaii state income tax is 11%, the second-highest in the nation. The combination of low wages, high taxes and a high cost of living means a lot of people here must work two or more jobs to make ends meet.
At $7.75 an hour, a full-time employee needs to work 88 hours or more a week to afford a standard two-bedroom apartment in Hawaii. There is no state in the U.S. where an employee working full-time for minimum wage can afford a two-bedroom apartment working a standard 40-hour work week.
In 2008, candidate Obama pledged if he were elected, he would raise the minimum wage to $9.50 an hour by 2011. Like so many campaign promises, this never actually happened. In his State of the Union address earlier this year, President Obama called for the minimum wage to be raised incrementally to $9.00 an hour by 2105 and indexed to inflation. Just how shockingly inadequate is this gesture? Raising the minimum wage to $9 an hour would bring the inflation-adjusted value of minimum wage to what workers were earning in 1981.
Right now, an employee working full-time at minimum wage earns $14,500 a year. If Obama had kept his original promise to raise the minimum wage to $9.50 an hour, a full-time employee would now be earning $19,000 a year. But even if the minimum wage were adjusted for inflation and raised to $10.71 an hour, that is only $21,420 per year—just $1,785 a month before taxes. I’m not sure how many states there are where a single person, much less a single parent, can live on $1,785 a month, but Hawaii is definitely not one of them.
But let’s not lose sight of the main point here: Even $10.71 an hour is not a living wage. $25 an hour would be great for people and great for the economy, not only here in Hawaii, but all over the United States. The problem is the “job-creators” are creating low-wage jobs that don’t pay the rent. They don’t realize who the “wealth creators” are—the wage slaves that earn minimum wage so that the job-creators are able to take home more than 400 times as much money as the wealth-creators who actually do the all the real work.
It turns out, low-wage jobs are the new normal. So when you hear about more jobs being created, remember that they pay minimum-wage (not a living wage). This is where we get the term “working poor.” These are people who fall below the poverty line even though they have a job (or several).
For tourists and the wealthy, Hawaii is a paradise; I wonder if the low-wage workers who serve and support them feel the same?