Pay hike could
be a stretch

Some businesses fear an
increase in Hawaii's minimum
wage will force higher prices

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By Pat Omandam
pomandam@starbulletin.com

Victor Lim is not looking forward to the New Year, when it will cost him more to run his restaurants.

As the owner of seven McDonald's restaurants in Hawaii that employ more than 200 people, he said the mandatory pay hike in the state minimum wage to $5.75 from $5.25 on Jan. 1, means about a 10 percent increase in his operating expenses.

And looming a year later is another minimum wage hike, to $6.25 from $5.75.

The two-year minimum wage increase is among the handful of new laws that kick in at the start of next year and throughout 2002.

"The thing (raise) couldn't come at a worse time in our economy here," Lim said. "And I think one of the things that our legislators should think about is maybe postponing the second raise. ... If the economy continues to drag on the way it is, which it looks like it is at least for the next foreseeable future, it is going to continue to be tough on businesses."

Lt. Gov. Mazie Hirono signed the minimum wage bill into law last June after much debate before the state Legislature. The law grants a $1 increase over the next calendar year and raises the tip credit to 25 cents from 20 cents.

The credit applies to employers of tipped workers who are paid 20 cents less than the minimum wage so long as their tips make up the difference by 50 cents or more.

Legislators this spring argued the increase will help workers with entry-level jobs, especially those who were forced off the state's welfare rolls this month. They also delayed the start of the pay hike so businesses could prepare for it.

Nevertheless, opponents of the increases said it will be an additional burden for Hawaii businesses struggling to survive the post-Sept. 11 economic slump.

Bette Tatum, state director of the National Federation of Independent Businesses, said the group has lobbied hard to stop any minimum wage increase over the past eight years. But with many states raising their minimum wage, and a federal increase looming, it was only a matter of time before it was changed, she said.

"Certain people think it helps the working guy," Tatum said. "But small business is the working guy. Who do you think small business is? It's the employers who create the jobs."

Tatum said there is a "trickle up" effect for businesses whenever the minimum wage is raised because it tends to push up the pay scales for all workers. Employers also see increased costs in Social Security, Worker's Compensation, unemployment benefits and other areas because of it.

Lim said there's no guarantee prices at his restaurants will remain the same following the wage hikes. Already, businesses have faced substantial increases in insurance costs, and the Sept. 11 attacks haven't helped, he said.

"You try to absorb, and if and when you reach a point where you cannot absorb, then you have to go and raise prices," he said.

Meanwhile, another state law that takes effect in 2002 deals with the privatization of government services. Come July 1, government leaders can negotiate a process of managed competition with labor unions that will allow the state and counties to contract services to private companies or be performed in-house.

It remains uncertain what government services may be privatized, but the Cayetano administration is looking at privatizing state harbor operations at the Ala Wai Boat Harbor and at Keehi Lagoon.

Other state laws that take effect next year include:

>> Selective Service Registration. The law requires registration in the U.S. Selective Service System for all male citizens between the ages of 18 and 25 before they can apply for a Hawaii county driver's license or instruction permit.

Lawmakers felt it was important to protect state residents from the federal penalties associated with failing to register. Also, they wanted to ensure any future draft is fair and equitable to all potential draftees.

>> Tighter concession control. A one-year revocable permit is required for any concession operation on public property. Added to the definition of concession was the use of space on public property to display advertising or to conduct operations for communications or telecommunications purposes.

>> Equal parental rights. On July 1, state and county agencies must review all policies in contracts, programs and services affecting parental roles in children's health, welfare and education, to determine if they unfairly favor one parent over another. Maternity leave is excluded.

>> Needle exchanges. Also on July 1, the state will temporarily decriminalize for two years the sale of sterile syringes to people who may use them for injection of illicit drugs. Lawmakers believe by making sterile syringes accessible, the need to share hypodermic needles will diminish and in turn prevent the spread of HIV, hepatitis B, hepatitis C, and other fatal diseases.