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Hawaii to raise minimum hourly wage to $10.10 by 2018

By Malia Mattoch McManus

HONOLULU (Reuters) - Hawaii Governor Neil Abercrombie on Friday approved a gradual hike in the state's minimum wage to $10.10 an hour, as Democrats seek to make raising pay for hourly workers an issue ahead of this year's midterm congressional elections.

The move makes Hawaii the latest in a string of Democratic-dominated states including California and Maryland to pass or enact legislation raising the minimum wage to at or above the $10 mark, according to the National Conference of State Legislatures.

The new law, approved overwhelmingly by Hawaii lawmakers in April, will raise Hawaii's base wage in stages to reach $10.10 by January 2018 from a current level of $7.25, which is also the federal minimum.

"In today's world that minimum wage is not a survival wage, certainly not in Hawaii," Abercrombie said, referencing Hawaii's high cost of living and rising housing prices.

Democrats headed by President Barack Obama have seized on the issue of raising the base wage of $7.25 as a way of stirring voter enthusiasm heading into mid-term elections in November.

Obama pushed Congress to raise the federal minimum wage to $10.10 but has failed to win the backing of the Republican-controlled House of Representatives.

In Hawaii, as at the national level, proposed increases have drawn strong opposition from some business owners, lobby groups, and economists, who say it will raise costs and eliminate jobs.

Opponents argued restaurants in particular would have to absorb rising costs in Hawaii's tourism-dependent economy, although they agreed that a slower phase-in would help businesses prepare.

Much of the Hawaii wage debate centered on tips. Under the measure, employers of tipped workers making less than $17.10 per hour including tips would have to pay $10.10 per hour. For workers making more than $17.10 per hour, employers can deduct a $.75 tip credit from the hourly wage.

Under the $7.25 hourly rate, the tip credit is currently $.25 per hour for those workers making at least $7.75 an hour.

(Editing by Cynthia Johnston and Ken Wills)

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