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Third 50 cent increase boosts hourly pay to $4.55

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, May 22, 2009)—By Tuesday, the CNMI's minimum wage will be $4.55 an hour as required by a 2007 federal law requiring a 50-cent increase every May until it reaches the federal wage floor of $7.25 an hour.

The current minimum wage is $4.05 an hour.

The new round of minimum wage increase comes at a time when the local economy is at its worst due to the demise of the once mighty garment industry, low tourist arrivals, a drop in business gross revenue, the global financial crisis, a decline in government collection from taxes and fees, and the uncertainties brought by the federalization of local immigration.

Richard Hamilton, senior investigator with the U.S. Department of Labor's Wage and Hour Division, yesterday said most employers in the CNMI are covered by the federal minimum wage law.

"The $4.55 an hour wage will begin officially on May 26," he said.

Added cost

Pete Igitol, director of Hafa Adai Beach Hotel, one of the biggest hotels in the CNMI, said yesterday the 50-cent increase in minimum wage will affect approximately 80 of their 127 current employees. He said they will comply with the federal law and raise the wages of their minimum wage employees.

"It's an added cost to us, especially with occupancy just about 55 percent as of now. We need to have more tourists to the CNMI," he told Saipan Tribune.

Igitol said Hafa Adai Beach Hotel, however, is not resorting to laying off people but has been cutting down expenses in some areas, like reducing overtime pay and putting a temporary freeze on hiring, except for critical positions.

The Hotel Association of the Northern Mariana Islands said the 50-cent wage increase will cost the hotel industry almost $1.7 million in added payroll costs annually.

The wage hike affects 68 percent or 1,802 of the total 2,636 employees of hotels that are members of HANMI.

Impact study

The Fitial administration has been pushing for a delay in the implementation of this next round of 50-cent minimum wage increase in until the U.S. Government Accountability Office conducts an impact study on the effect of the previous increases.

"Without an economic study to the contrary, we feel it is an additional load for a weak, struggling and vulnerable economy," press secretary Charles Reyes Jr. said yesterday.

GAO has recently begun work on preparing the minimum wage study that will look at the impact of past and future wage increases in the CNMI and American Samoa.

Congress was originally set to receive a GAO report on the minimum wage impact between March 15 and April 15, 2009, but a conference bill signed into law extended the deadline for Congress to receive the report to April 15, 2010.

Douglas Brennan, general manager of Microl Corp., said they will be adjusting the wages of their minimum wage employees on Tuesday to comply with the federal law.

"On Tuesday, our employees who are earning $4.05 an hour will be paid $4.55 an hour. We've been working on this for a long time. We are 100 percent compliant with the law," said Brennan, who is also the vice president of the Saipan Chamber of Commerce, the largest business organization in the CNMI.

Kyle Calabrese, executive director of the Saipan Chamber of Commerce, said he will be issuing a reminder today to member businesses about the 50-cent increase in minimum wage on Tuesday.


Denise Wong-Montenegro, a board member of the CNMI Chapter of the Society for Human Resource Management, said employers should have been prepared for the new round of minimum wage increase because it has been in effect since 2007.

"I am speaking here as an individual. The additional cost from the minimum wage increase should have been built on your budget since it became law," said Wong-Montenegro, who is also the training director manager for Hyatt Regency Saipan.

Cora Quiachon, an employee of Sierra's Pearl Shakes, said she hopes to be paid $4.55 an hour on Tuesday.

"That's why we raised some of the prices of our pearl shakes because of the minimum wage increase," she said.

While many businesses in the CNMI have to make the adjustments to comply with the federal wage law, others like IT&E do not have to make changes in their payroll because their employees are getting paid much higher than the minimum wage.

"It will have no effect on us as our employees are paid close to the federal minimum wage of $7.25 an hour," said Kathryn Barry, regional marketing director of IT&E.

Nine-step hike

Former President George W. Bush signed the federal minimum wage law on May 25, 2007. At that time, the CNMI's minimum wage was $3.05 an hour.

As required by law, the CNMI raised its minimum wage by 50 cents on July 24, 2007, which was 60 days after the bill was signed into law. It also marked the CNMI's first minimum wage increase in 11 years.

The July 2007 wage increase kicked off the nine-step increase of 50 cents every year until the CNMI's minimum wage reaches the federal wage floor of $7.25 an hour by 2015.

The second increase, from $3.55 to $4.05 an hour, took effect on May 26, 2008.

While the federal wage law raised the salary level mostly of private sector employees, the change was outweighed by the cost-cutting measures by employers that included not providing free housing or free transportation anymore, or reducing work hours.

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