The Hawaii legislature approved Tuesday a bill to increase the minimum wage to $18 an hour by 2028. This is up from the $10.10 minimum.
Although the $18 minimum wage is the highest in the country, some states raise their minimum wages to reflect rising living costs. Inflation could lead to a higher minimum wages in California and other areas.
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 measure will be signed into law by the governor.
House Bill 2510 would increase the minimum wage in smaller increments over several years, before the implementation of the $18 minimum. Starting Oct. 1, the state's first wage rise under the bill would be $12 an hour. The wages would rise to $14 an hour in 2024, $16 an hour in 2026, and $18 an hour in 2030.
The bill's supporters claim that the increase is necessary due to the state's high living costs. However, some businesses argue that they will need to cut back on staff or shut down because they cannot afford higher wages.
Scott Saiki, Speaker of the State House, said that a study showing that 42 percent of Hawaiian households struggled to make ends meet was a key factor in his support for the higher wage.
The law doubles tip credit to $1.50 per year by 2028. Businesses can subtract this amount from employees' wages if they make minimum wage after accounting tips.
The bill makes the earned income credit permanent and refundable, which could reduce the taxes that low-income workers owe as well as increase their tax refund.
The current earned income tax credit for Hawaii expires in 2018 and cannot be refunded. Many low-income taxpayers cannot use the credit because their income is not high enough to pay significant taxes.