Hawaii Raises Its Minimum Wage to $10.10 an Hour, Strikes a Big Blow Against Tipping

A blog about business and economics.
April 30 2014 1:57 PM

Hawaii Raises Its Minimum Wage to $10.10 an Hour, Strikes a Big Blow Against Tipping

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A McDonald's breakfast, Hawaii style.

Photo by Phil Mislinski / Getty Images

Lawmakers in Hawaii, that faraway archipelago of sunny liberalism, have voted to raise the state’s minimum wage to $10.10 an hour, up from the federal floor of $7.25. It will become the fourth state to pass a minimum at or above the $10 mark, joining a club that includes California, Maryland, and Connecticut, along with Washington, D.C. (which is almost like a state, considering it has a bigger population than Wyoming). 

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate's senior business and economics correspondent.

President Obama has pushed to hike the federal minimum to $10.10 as well, but the idea isn't going anywhere so long as Republicans control part of Congress. That makes these state-level wins especially important for Democrats looking to get momentum on worker pay.

(Should you feel compelled at this point to jump into the comments section and start opining on minimum wage laws, I do ask that you start by reading this FAQ I put together a while back. Or, if you prefer, here’s Evan Soltas’ from Vox.)

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Now, for my money, the coolest part of Hawaii’s new law, which the governor is expected to sign today, is that it also applies to tipped workers, who unfortunately tend to be neglected during discussions about the minimum wage. Here’s how Bryce Covert at ThinkProgress explains it:

Workers who make less than $17.10 an hour including their tips will have to be paid the $10.10 wage plus tips, and the employers of those who make more than that level can deduct a 75 cent tip credit from their wage. By contrast, Maryland’s tipped workers’ minimum wage is still frozen at $3.63 an hour and in Connecticut it will remain at 63.2 percent of the higher wage, rising to $6.38 per hour once $10.10 takes effect. At the federal level, the tipped minimum wage remains at $2.13 an hour, where it has been for two decades.

A $10.10 minimum for waiters, cab drivers, and their tipped compatriots will be a huge deal. For a little perspective, consider this: There are about 1.5 million workers who earn the federal minimum wage. There are almost 1.8 million who earn less, in most cases because they are tipped. Especially in a service-heavy economy like Hawaii’s, this will likely put money in a lot of workers’ pockets.

Moreover, by raising the minimum so high, Hawaii may well be striking a large blow against the entire institution of tipping, which, as Slate has carefully explained, is an antiquated abomination (tl;dr version: Tipping doesn’t actually encourage better service, in part because service quality doesn’t really influence how customers tip, and forces low-wage workers to rely on the kindness of strangers for their pay). Chances are, at least some restaurants will say goodbye to tipping and begin adding a standard service charge to checks in order to cover the extra money they have to pay their waiters and waitresses out of pocket. Not all of them will do so. But it could be a start.