Hawaii may become the first U.S. state to increase its minimum wage to $18 an hour by 2028 as it looks to battle rising housing expenses and higher costs of living.

The minimum wage bill was approved by the state’s Democrat-controlled House and the Senate and now goes to Gov. David Ige for approval, according to the Times Union. Ige, who has said he supports the increase, is expected to sign the bill into law.

Under the new bill, the minimum wage would be increased in increments over the course of the next six years, with the first hike starting on Oct. 1, which would raise the rate to $12 an hour. The minimum wage would then increase to $14 in 2024, $16 per hour in 2026, and finally, reach $18 per hour in 2028.

Hawaii currently has a minimum wage that is $10.10 per hour.

The state could potentially have the highest minimum wage in the U.S. if other states don’t hike theirs higher based on cost-of-living rates by 2028. Currently, California has a $15 an hour minimum wage, which could go higher than $18 by 2028 due to cost-of-living increases.

Hawaii’s cost of living was a primary factor in passing the bill in the House and Senate, as state analysis published in December indicated that a single person who works 40 hours a week needs to earn $18 an hour to afford housing and other essentials in the state, the Times Union reported.

“People should be able to afford their basic needs on 40 hours a week,” Nate Hix, the director of Living Wage Hawaii, an advocacy group that supports the new minimum wage increase, told the news outlet. “Otherwise people are forced to work multiple jobs or sacrifice their basic necessities like food, shelter, clothing.”

While many are in support of the new $18 per hour minimum wage, some business say they will have to close or cut their staff to afford the new increase.

The state’s Chamber of Commerce opposed the bill, saying in written testimony obtained by the Times Union that many of its members will have layoffs and close their doors because of the higher wages. The organization added that its members are already paying health insurance for those employees that work over 20 hours a week, adding $3 to $4 to their hourly wage.

However, the bill does allow for a $1.50 tip credit by 2028 to be subtracted from hourly wages if workers earn enough in tips.

The legislation also provides an earned income tax credit that would now be refundable and permanent, cutting taxes for some low-income workers while potentially increasing their tax refund.

But some business owners claim the wage increase will just hurt their customers.

Michael Miller, the director of operations at Tiki’s Grill and Bar, a Waikiki restaurant, told the Times Union that the cost for everything will just go up based on the wage increase.

“Who then pays for that? The consumer pays for that,” he said.

The news of the potential minimum wage increase in Hawaii comes as several retailers have hiked their minimum wage for workers.

Target announced in February that it was raising its starting wage up to $24 per hour. Costco also increased its minimum wage for workers to $17 an hour in October, while Amazon is paying employees an average minimum starting wage of $18 an hour.

The country’s largest private employer, Walmart, also raised the hourly wages for its 565,000 workers in the U.S. in September to include a minimum of $1 extra per hour.

Macy’s also bumped worker pay to $15 per hour last year, while IKEA increased worker wages to $16 an hour as they looked to attract more employees amid a tightened labor market.

Minimum wage
Low-wage workers protest outside the offices of New York Gov. Andrew Cuomo, May 30, 2013. New York restaurateurs urged Cuomo on Tuesday not to raise the minimum wage for tipped workers for at least another five years. Mike Segar/Reuters
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