Fact Sheet

A HAWAII LIVING WAGE LAW:
CONTRACTED STATE SERVICES

I Highlights

1. This study attempts to gather wage data for employees of private firms that have contracted to perform work for the State in FY 1998 and FY 1999. All state agencies in the three branches of state government were polled.

2. Most agencies (or their attached entities) had some work contracted out to private firms. About half did not pay their contracted private sector workers below a hypothetical Hawaii living wage during the two years under study.

3. A "living wage," in jurisdictions that mandate them, is pegged to federal poverty guidelines. Generally, it must be enough to enable a family of four to remain above the federal poverty level. The poverty level in Hawaii in 1998 was $18,920. Thus, in 1998, a hypothetical Hawaii living wage would have been $9.10. In 1999, it would have been $9.24. This is based on 40 hours of work per week for 52 weeks.

4. This study found that 583 employees who worked for private firms on contract with the State were paid below the hypothetical Hawaii living wage. The accuracy of this number should not be viewed as ironclad. It remains subject to certain limitations, including possible overstatement. Taken in the context of a statewide labor wage law, this number is relatively small.

5. This study also presents a brief overview of living wage laws, including the Baltimore, Los Angeles, and Chicago living wage ordinances and their effects.

6. A living wage law for Hawaii state government, if implemented, would have a much greater impact than any existing living wage law in other jurisdictions. By design, living wage ordinances have been targeted at the smallest and lowest jurisdictional levels of government, i.e. towns and cities. No living wage law has been implemented on a statewide basis or made to apply to an entire state government. Hawaii's state government takes on many responsibilities ordinarily falling to cities or counties in other states. Thus, its comparatively larger role would magnify the impact of a statewide living wage law.

1. What is the difference between a "living wage" and a "minimum wage?"

   A minimum wage merely establishes a floor for hourly wages that workers must be paid. Aside from the federal minimum wage, states set their own minimum wage levels.

   Supporters intend a "living wage" to be higher than a minimum wage. To do this, they define a living wage as an hourly rate of pay to enable one full-time wage earner to earn enough income to maintain a family of four above the federal poverty level. Federal poverty level guidelines are revised yearly by the Department of Health and Human Services. Calculations of the living wage invariably result in substantially higher rates of pay than either the federal or state minimum wages.

2. Are living wage laws the same everywhere?

   No. In terms of coverage, living wage laws have expanded to include employers and entities other than those contracted to perform government services. Some have expanded coverage to all businesses within a certain geographic area regardless of whether or not the firms have contracted to perform government services. Nonprofits, lessees and tenants of firms receiving aid, loan recipients, and other beneficiaries of government assistance such as bond financing, tax increment financing, tax credits, economic development aid, etc., have also been required to pay their workers living wages. Some ordinances require all workers in an affected firm to be paid living wages. Others limit the law to workers actually engaged in the contracted work.

   In terms of benefits, the amount of living wages differs across jurisdictions depending on the federal poverty level for a particular state. In addition, living wage laws have added benefits beyond wages. Some include health benefits, paid vacation and sick days, paid and unpaid emergency days and other benefits, including preferential community hiring practices, job creation requirements, and preferential treatment of labor unions.

3. Do living wage laws work?

   Supporters say they do. Opponents say they don't. Supporters say the cost is minimal and that city governments and firms can afford them. Opponents say they are not cost-effective and that more efficient and targeted means of income redistribution, such as the federal earned income tax credit can be used. Aside from the findings of "economic hired guns", ultimately, the issue is a political one.

   
    
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