



The arguments so far have ignored the active harm this legislation could do, as some workers will be priced out of the labor market altogether or will see their hours decreased, reducing their take home pay. Due to the high cost of living, 6.2 percent of workers in Hawaii work multiple jobs, often supplementing their full time job with other work in the service or hospitality industry. When this legislation increases the minimum wage they can be paid, many businesses will decide to cut hours or reduce the number of workers they add in busy months, instead hoping to increase productivity of the workers they do retain. While those retained workers will see an increase in pay, more will find their hours cut or be locked out of the job market altogether. Teenagers would also be likely to be priced out of their entry level jobs under this legislation, as employers will be unable to justify the increased cost of keeping them on for their low level of productivity; this would lead to lower human capital development, and more young Hawaiians could end up leaving for the mainland where there are more opportunities.

The cost of living is certainly higher in Hawaii than other states. A recent report from Vox found that Honolulu was the most expensive metropolitan area in the country, and my own research showed that the high cost of living in Hawaii was one of the reasons they had the most generous welfare package in the Work Versus Welfare study. This higher cost of living contributes to the broader problem of poverty in the state, which is without question a concern, but this minimum wage increase will do little to lift people out of poverty, and will actively harm others. It is not the answer the Aloha State needs.

Michael Tanner is of the Cato Institute.