 Aloha, and welcome to the Ruderman Roundtable. I'm State Senator Russell Ruderman. I represent the Puna and Kaua District on the Big Island. And I host the Ruderman Roundtable here on Think Tech Hawaii every other week where we talk about good government issues and environmental issues affecting the state of Hawaii. My guest today is Gavin Thornton of the Hawaii Apple Seed Foundation. Thank you for joining me, Gavin. Thank you so much for having me. Gavin's the co-executive director of the Hawaii Apple Seed Center for Law and Economic Justice. Hawaii Apple Seed is part Think Tank and part advocacy organization seeking to promote policies that promote, that provide opportunities for all of Hawaii's residents to become self-sufficient and achieve their potential. So, tell me, Gavin, among the things that Apple Seed works on I know is issues related to people in poverty. Is that right? Is that one of your main focus? That's right. Really at the core of our mission is an anti-poverty focus. How do we lift people up out of poverty or help them lift themselves up out of poverty so that everybody in Hawaii has a fair shake achieving their potential? Wonderful. And what are some of the main ways that you work on that? Well, primarily we do research on policy issues, looking at things like affordable housing, what we call economic justice. So issues regarding state taxation, wages. We also look at access to healthcare and access to education. And also hunger issues. There are a lot of people in Hawaii that struggle to get food on the table and so we're concerned with those things because we see them at being at the core of what's necessary to provide for a stable foundation and a stable future for Hawaii. I see. It's amazing. Is it in a state as wealthy as Hawaii that we have such a problem with poverty? I mean, I think a lot of people are very surprised to find that out. Yeah, really it's a nationwide problem. And poverty to a large extent is relative and what we're seeing is a larger and larger divide between the people at the bottom of the economic scale and the people at the top. So those problems are becoming more and more pronounced and trying to figure out what do we do to help bring people back to where we were maybe 30 years ago in terms of being able to just have a good solid job and make ends meet and provide for your family, help your kids provide for their future, get them into college, whatever it might be. And before we get into the work that Apple C does, a couple of questions occur to me. One is what changed? What changed in the last 30 years? What made it so that there's this enormous gap between the very wealthy and the very poor and there's so much more of the poor these days? What changed? No, a lot of it appears to be wages not really keeping up with inflation. So especially over the last 10 years, 10, 15 years in Hawaii, we've seen housing costs which are one of the biggest drivers of poverty in the state. Housing costs have gone up and up and up and up at a pretty rapid rate and wages are going up but not nearly as quickly. So the divide between housing costs and wages is growing. There's an ever increasing gap. And because of that, people have a tough time making ends meet. Now in other parts, I mean, the housing cost is somewhat specific to Hawaii and certain very other high cost of living regions. But nationwide, has that been a big factor also? Or is there other factors that have created a larger poverty? So off the top of my head, I don't know with regard to housing. The issue of wage stagnation, people's wages not increasing over time relative to changes in cost of living, that is a nationwide problem. And we recently did a poll of Hawaii residents or commissioned a poll to be done that found that 48% of Hawaii residents were living paycheck to paycheck. So nearly half of our state is struggling financially. And I had initially thought that is a Hawaii problem, that large figure. But actually when you look nationwide, it's a nationwide problem. I've seen very similar figures mentioned in national reports as well. And my other sort of general question is, tell me, where does Hawaii Apple Seed, what does the name mean? Apple Seed Foundation, please. Sure, I don't know what name. I can't move forward unless I know what the name is. That's a question we get a lot. There are no apple trees in Hawaii. So about five years ago, we affiliated with the National Apple Seed Network. And it's a network of 17 organizations around the United States, one center in Mexico actually. And they focus on social justice, like anti-poverty issues. The origin of Apple Seed, I think is Johnny Apple Seed, going around and planning the seeds of change and opportunity. And that's really how we view our work, trying to identify those ideas, big or small, that will allow Hawaii to really grow and blossom into the place that we all want it to be, where everybody really has that opportunity to live up to their potential. So tell me briefly, a lot of folks that grew up in Hawaii, you may not know the Johnny Apple Seed story, so who is Johnny Apple Seed? I'm sorry, we're getting a little off track here, so we'll do this briefly. Well, this is a test that I might not pass. So I know a little bit about the fable. Johnny Apple Seed was a person during, I think, frontier days that went around with the, you know, I've seen cartoons of him, I guess, with a satchel on his side, full of Apple Seeds, planning Apple trees wherever he went. And so, you know, and I think the concept was just making the world a better place through that. Now here it's not through providing apples for people to enjoy, but providing the things that people need. One thing about planting the seeds of a tree is it's a long range project. You want to make the world a better place for a long time, not just today or tomorrow, but in the future. And by the way, there are some Apple trees on the big island up in Malacca. It's you won't find an apple crop in any stores, but we do, they experiment with apples and cold weather regions up there. Well, my kids actually absolutely love mountain apples, and so we have a neighbor that they go raid his apple tree, mountain apple tree every once in a while. Springtime. Yeah. So we talked about housing prices. That's certainly one of the biggest drivers of poverty, especially so in Hawaii, is that true? That's right. We have the highest cost of housing in the nation. We do. And so on a statewide basis, I think there are other localities like New York City, San Francisco, where you'll find little pockets where people are paying more than we are. But as a state, we are the big winners there. And that of course contributes to poverty and the inability of people to make ends meet. How did it get this way? What's the cause of our high housing prices? Goodness. I think there are many. You know, some obvious ones are high demand, like Hawaii is a wonderful place to be. That's why you and I are here and everybody else that's here like we like here and lots of people want that. Limited supply. I was at a presentation the other day and one of the things that I think urban planners, economists do when looking at housing prices is they take the 50 mile radius surrounding a city and examine the housing opportunities there for us. And Honolulu here, that 50 mile radius, a lot of it's ocean. I mean, there's just limited opportunity there. You know, one of the issues that we've started taking a look at is also non-resident purchasers of housing and other ways that our housing stock is kind of bled off. So Hawaii, in Hawaii, about a quarter of our home purchasers are non-residents, either foreign purchasers or mainland purchasers. So when you're looking at trying to increase supply and you see that you're losing 25% of our stock of every additional dwelling that you build, I mean, that can be a big problem. And then there's also another big issue that we saw last legislative session that keeps coming up is like Airbnb, the vacation rentals, people renting out their units illegally. We don't have- And that drives the price of housing up for those who live in those popular areas. Right. Very much so. Right. So with that issue, it's a mixed bag. I mean, a lot of people will say, well, look, like this is the only way we can afford to pay our mortgage is through renting our, part of our home for vacation rentals. The other side of the sword is that it takes up housing stock. It takes up a place where our residents need to live. So sometimes I've heard ideas floated for, is it legally possible to charge a higher, perhaps property tax rate for someone who's not a Hawaii resident? Is that legally or constitutionally possible? So that's something that we're looking at right now. And in fact, it's been in the news lately. So the property tax scheme here on Oahu was challenged recently. And at the lowest level court, the court decided that charging a different rate for different types of residents was not okay. I don't, I'm not up to speed on all the details there. So maybe it's not settled also. We don't know for sure the answer. Right. And what I can tell you is that it is not okay to discriminate on the basis of your citizenship in other states on the basis of your residency. So you definitely could not have a straightforward, you're not a resident of Hawaii or you haven't lived here for X number of years. So you have to pay more property taxes. I think it's pretty clear that you cannot do that. What you can do, maybe, although it sounds like maybe it's up in the air is say, well, if you are not an owner occupant, if you are renting out your home or leaving your home vacant as an investment property or whatever it might be, the question is, can you charge a higher property tax in that case? Okay. Well, thank you. We wanna talk also about taxes and wages themselves as the other aspects of the poverty situation. But we're gonna take a short break and then I'm here with Gavin Thornton of the Hawaii Apple Seed Center for Economic Justice. I'm State Senator Russell Ruderman at the Ruderman Roundtable, we'll be right back. Aloha. I'm Kaui Lucas, host of Hawaii is My Mainland every Friday here on Think Tech Hawaii. I also have a blog of the same name at kauilukas.com where you can see all of my past shows. Join me this Friday and every Friday at 3 p.m. Aloha. Hello, this is Martin de Speng. I wanna get you get excited about my new show which is Humane Architecture for Hawaii and Beyond. We're gonna broadcast on Tuesdays, 5 p.m. here on Think Tech Hawaii. Aloha, my name is Danelia D-A-N-E-L-I-A. And I'm the other half of the duo, John Newman, welcome. We are co-hosts of a show called Keys to Success which is live on the Think Tech Live Network series weekly on Thursdays at 11 a.m. We're looking forward to seeing you then. Aloha. Welcome back, I'm State Senator Russell Ruderman at the Ruderman Roundtable here with Gavin Thornton of the Hawaii Apple Seed Center for Economic Justice. Thank you once again for joining us, Gavin. Great to be here. So we were talking about poverty in the state of Hawaii and some of its causes and we're talking about housing a little bit. And of course wages are another important aspect of it. Tell me about our wages in Hawaii low compared to the cost of living. Is it average? Was that one of the causes here? Yeah, so unfortunately Hawaii has the lowest wages in the nation when you factor in cost of living. The lowest? The lowest. I was after teachers, I didn't know it was true for people in general. Right, so just across the board, lowest wages when you factor in cost of living. So you might have folks in South Dakota that are making less per hour. But they're buying their house for $80,000. Right, right, right. So that's a huge, huge issue for us. And figuring out what do you do to make up that ground? You know, high housing costs themselves wouldn't necessarily be bad if wages were also high. And low wages wouldn't necessarily be bad if housing costs and other costs of living were low. But it's the difference between those two. That's just a real killer for folks. What could be done about it? So one of the things that we're looking at in terms of wages is an increased minimum wage. Really bringing up the floor. And you know, there's a lot of talk, I think, out there about a living wage and paying people what they need to survive that really any job should pay that. I think that is a great idea. I am not optimistic that we're gonna get there anytime soon. If we bump up the minimum wage to, let's say, $15 an hour, it's really not gonna be close to what you need for a living wage, but it's gonna be a heck of a lot better for those folks. You know, where you have, if you have two income earners in the family, you're gonna be much closer to being able to make ends meet. So bumping up that minimum wage, there's, you know, we had a bump recently and in fact, the last increase will go into effect in 2018. In 2018, yeah. But after that. And that will bring it to $10 and 10 cents an hour. That's right, 10, 10 an hour, which is a great improvement. But when you look back over the history of why is minimum wage, you see that the minimum wage goes up every once in a while and then just stays stagnant for a long time until people realize, oh, this isn't working for folks anymore. And then it'll go up again, but stay stagnant. And so in effect, those people are getting a pay cut every year because cost of living, I mean, inflation is, you know, it just keeps going up and up and up. And so wages need to go up accordingly and we're not seeing that. So if we were to bring up the discussion of $15 an hour minimum wage, which by the way, I've been strongly looking into myself to try to introduce it or maybe to find someone more popular than me to introduce it. So maybe it'll succeed. But I feel like I'm in a good person to sort of champion that cost because I have 200 employees myself. If anyone should oppose it, I should be the one opposing it. And yet I have found that when you pay employees a living wage and when you pay them better and include them in the success, the businesses succeed on every level better. And it's an illusion to think a business can succeed while its employees cannot afford their life. But now since we're in the middle of this gradual increase to $10 an hour, do you think that if we were to start the discussion now and saying, hey, that's simply not enough, we really ought to be looking at 15 like these other high cost of living areas? Do you think that the attitude will be, well, wait, we haven't even finished raising it to 10. It's too early to talk about it or do you think there might be an open-minded discussion? I think there's a danger that some people will, in fact, say, we just did this, we just took care of it. But I have serious concerns with that thinking. Because that is what has led us as a state so many times to allow the value of that minimum wage go down and down and down. And the value of that, the value of inflation versus a stagnant minimum wage is worth thousands of dollars a year for a single earner. I mean, it's really a lot of money that we're talking about. That is lost to people because of inflation and because the minimum wage hasn't been adjusted for inflation. And so we think that it is very important going forward to make those adjustments. Now, there is a national push for a $15 minimum wage that's gained a lot of traction. And I think there's good reason for that because like we were talking about earlier, these problems with stagnating wages and increasing cost of living or national, like nationwide problems, they're not just specific to Hawaii. And so that's why we're seeing people that, I mean, really, if you are willing to put in a hard day's work, you should be able to pay for a roof over your head and to put food on the table. And I think people are really frustrated with the fact that that is no longer the reality. And that's kind of new in our society. I mean, up until a couple of decades ago, you could, if you worked full-time, you basically could afford life in most places in the country here. And I think a lot of people understand that like these minimum wage jobs, a lot of people say, well, those are jobs that like kids fill, but the reality is not that. That it is a small percentage of those jobs that are filled by like teenagers. And they're jobs that a lot of like adults have that are trying, that have families that are trying to make ends meet. A lot of those jobs are hard jobs. Hard jobs. On your feet all day. And it's not just teenagers, it's not just an entry-level wage is what you're saying. A surprising percentage of our workforce is at or near minimum wage. Right, right. And when you increase the floor, then hopefully, that's gonna bring things up for a lot of people that are at the bottom levels of our economy. Yeah, when the wage was 725, I visited, my wife's friend was working in a fast food place and we visited her and we talked to her and she had been working there eight years. And she was up to 825. And she was an adult with kids, right? So it's true that it's not just teenagers, it's not just entry-level. Now some people will say we can't afford it, right? People will say it'll hurt businesses, it'll cause businesses to lay people off. Do you think there's any truth to that? I have to confess that I am not a business person. Okay, well you've looked at some research but we've looked and by and large, that is not the case. I think what you articulated earlier about investing in your employees will reap significant returns for the business and I think the research bears that out. Now there are definitely a few businesses out there that would suffer as a result of minimum wage that might have to eliminate positions but that is I think the exception to the norm. I see. And another, when you look at it to me, increasing minimum wage is putting more of the burden of paying for our lives onto the private sector whereas right now if someone's at minimum wage and they can't afford their rent, they're probably receiving various forms of government subsidies, right? Food stamps, welfare, et cetera. Maybe subsidized housing. So has anyone ever looked at all the costs of what we as our government in society pay because of this poverty? Many of which costs would go away if we had a $15 minimum wage. Have we ever done that kind of balance sheet analysis of what would change? So I'm sure there's something out there. I think that kind of analysis is very difficult to do. It's definitely part of the discussion because that's a huge issue. Should we really be subsidizing employers that pay their employees too little to live off of? And I don't know how that makes a whole lot of sense. All right, so maybe a little research is due because I know when people say, well, we can't afford it. It occurs to me that we can't afford to keep doing what we're doing now. And when people talk about poverty and houselessness, we talk about incremental changes here and there. And this is the only thing I can think of that would lift hundreds of thousands of people out of poverty virtually overnight. And if that's not worth whatever, slight repercussions there are, I can't think of anything that is. So. Well, I think there actually is one other thing that would be helpful. And that's looking at our state tax structure because our state tax structure is one of the most regressive in the nation, or actually I should say, we're second worst in the nation in terms of taxing people in poverty. Are you talking about GE tax or state income tax? So it's everything. All of that, all together. It's everything. And the general excise tax is the primary real estate reason why that is the case. Why people who are low income are taxed at such high rates here. But because of that, so our lowest income folks are paying about 13% of their income in state taxes. 13%, that's a lot. Our folks at the highest ends of the income scale are paying about seven or 8%. So not quite half, but a lot lower tax rate. And what's happening is the same people that we're providing public benefits to to give a hand up. I mean, we're paying those benefits on one hand and we're reaching in their pockets and pulling out their earnings with another. And it just doesn't make sense. I know that for reasons like that, I know Apple Seed has worked a lot on things like the general excise tax credits, earned income tax credits and GE tax credits. Tell me about those. How would the earned income tax credits, how could that help the state of Hawaii? Do we don't have any EITC at this point, is that correct? No. So there is a federal earned income tax credit program. And what that does is it applies to workers, so people that have earned income. And for workers that get minimum wage, for example, they get a tax credit based on the amount that they earn. And so it's a way of rewarding work. It's a way of magnifying their earnings. It's considered to be one of the most effective anti-poverty programs. There are over 25 states in the nation that have a state counterpart. We are not one of those. We could, and that's one of the things we could do that would help by them cutting off a little bit, but because we just have a minute left, I'd like you to tell us, please Gavin, if someone wanted to get in touch with Hawaii Apple Seed or join you or support your efforts, how can they reach you and how can people get involved? Go to our website. It is H-I-Apple Seed dot org, O-R-G. H-I-Apple Seed dot org, okay. And we do a lot of work during the legislative session, sending out information about hearings that are coming up where people can testify and support these initiatives. Wonderful, thank you for doing that by the way. So you can sign up for our mailing list on our website. That's probably one of the best ways to get involved and our other contact information is there. Feel free to give us a call at H-I-Apple Seed dot org. Correct. Okay, well thank you so much for joining me and I want to say I'm a big fan of what Hawaii Apple Seed works on the work that Hawaii Apple Seed does. I've watched you advocate the legislature and I've looked at your agenda and I wish you paid a lot more attention to the ideas that you guys brought forward. I'm here with Gavin Thornton of the Hawaii Apple Seed Center for Economic Justice. I think I left the word Hawaii out there. And I'm State Senator Russell Ruderman on the Ruderman Roundtable in Think Tech, Hawaii. We'll see you again in two weeks. Mahalo.