THE LIBERTARIAN PARTY OF HAWAII

625 Keawe St, Honolulu, HI 96813 (808) 537-3078

TESTIMONY

COMMITTEE ON LABOR
COMMITTEE ON TRANSPORTATION, MILITARY AFFAIRS
AND GOVERNMENT OPERATIONS

Dear Committee Members:

We oppose HB#2118

Starting a new business is a risky endeavor. Buying an existing business is also a risky proposition. A managers role is to increase market share and profits for the benefit of the stockholders. The better a manager performs his role the greater will be his compensation. Employees play an important part in determining the success of a business. Therefore, a manager must make careful decisions regarding who they choose to hire. An omniscient manager would always hire the most productive employees available. Unfortunately, few managers are all knowing, therefore, optimal choices in hiring are not always made. While most employees may perform satisfactorily, the productivity level of employees does vary widely. I'm sure most of you have peers, which are less productive than yourself. Alternately, you may have peers who are more productive than yourself.

During a recession a company may have fewer customers and therefore less income. Consequentially, managers must decide what or who to cut. A loyal manager looking after the best interests of the stockholders will cut the least productive employees. The seniority of an employee ought to have little or no weight. Let's look at the case of Jane who was hired two years ago and Mary who was hired two years and one day ago. Both Mary and Jane perform their roles satisfactorily. Mary has seniority. However, Jane through her own individual initiative has increased her knowledge and therefore productivity to the company far beyond that of Jane. 

Unfortunately, economic realities dictate that either Jane or Mary must be cut. Logically, the manager would cut the less productive Mary. However, if SB 2118 is passed. Then by government command Jane would have to be cut. Now, imagine how Jane would feel being cut after she had put in all that extra effort to learn and become a more productive employee. What message, ought the government send, to your children? 

An alternate scenario might be that Jane and Mary are roughly equally productive. In this case the manager could flip a coin and cut, or he could offer a pay cut to both of them and retain them both. Now, I know no one is ever happy with a pay cut, however, in some circumstances it might be preferable to being laid off. Again if SB 2118 is passed then by law, the manager cannot even offer this option to Jane and Mary. If this bill is passed maybe we should ask the sponsors of this bill to deliver the termination message.

HB2118 is bad for business. It is bad from every point of view. In my opinion, it is the investors point of view which ought to be focused upon. An investor by his nature has money and is competent in the management thereof.  An investor can and does choose investment opportunities throughout the world. Will SB2118 make investment more or less attractive in Hawaii? As has been clearly illustrated this bill is bad for business because it limits the decisions a manager can make. In fact this bill causes a conflict of interest for the manager between acting in the best interest of the stockholders and obeying a nonsensical law. Obviously, it is bad for the employees. And it is bad for consumers who will have to pay higher prices to compensate for state mandated inefficiencies. The cumulative effect of all these problems combine to further discourage the investor who in the final analysis has the greatest effect on whether Hawaii prospers or declines.

Oops, sorry, right now, right here, it is the members of this committee, who have the greatest effect on whether the great people of Hawaii prosper or decline. It is all up to you. Your duty and responsibly to the great people of Hawaii is clear.

Oppose HB#2118

Thank you

John Orendt