Employers Council Weighs In On GovGuam Pay Hikes

admin's picture

Increases would ‘widen gap’ between public, private sectors

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Feb. 5, 2014) – The economic disparity between the government of Guam workforce and private sector workers will widen with GovGuam's plan to implement pay raises, according to local business leaders, who also raised concerns about a government they say already spends too much of its revenue on pay and benefits.

The Legislature on Saturday approved a $7 million-a-year pay raise proposal that would benefit GovGuam employees who are under the merit system.

Gov. Eddie Calvo has proposed a $20-million-a-year raise that includes political appointees, such as cabinet officials, and a wide array of elected officials as well.

The governor wants his version of the pay raises implemented on Feb. 14. The Legislature's version, which faces a possible veto by the governor, proposes a Feb. 9 implementation date.

Monty McDowell, president of The Employers Council, an organization of private-sector employers, said while GovGuam's workers and officials stand to get pay raises, most of that cost will be paid by workers in the private sector.

GovGuam's executive branch employees, who will receive most of the raises, total 6,830, or 11.1 percent of Guam's total workforce, according to Guam Department of Labor statistics from last year.

Private sector is 75%

Guam's 45,800 private sector employees make up 75 percent of the workforce on the island.

They are employed mostly at hotels, restaurants, retail stores and construction sites, according to local labor department data.

When GovGuam workers get raises at the expense of mostly private sector workers and business taxpayers, Guam will become a community with a widening gap of lower-paid private-sector workers and GovGuam workers who receive raises despite GovGuam's cash constraints, McDowell said.

The average hourly wage in Guam's private sector was $12.81 as of June last year, while GovGuam's average hourly wage was $20.64, the Guam Department of Labor's Employment Report shows.

Department of Labor chief economist Gary Hiles said the agency's figure for the private sector includes supervisory positions, so the two average wages aren't directly comparable.

GovGuam wages also tend to be higher because many job categories require education degrees, while in the private sector, many workers hold entry-level positions in the services and other industries, Hiles said.

Skilled workers underpaid

David John, president of money and retirement management firm ASC Trust Corp., said many of GovGuam's workers, especially the skilled workers and managers, are underpaid.

There's a problem, however, with GovGuam's overall payroll costs compared to its revenue and the ballooning cost to taxpayers of the local government's defined benefit retirement plan, John said.

As of September 2012, $1.64 billion of the GovGuam Retirement Fund's future pensions remain unfunded, according to a recent report from the Office of Public Accountability.

"My issue with the current proposed (pay-raise plan) is as follows: first, we are giving raises without addressing the real problem with the government's current payroll structure and that is that the overall payroll costs as a percentage to the government's revenues are completely unaffordable, resulting in the government's inability to reinvest in capital expenditures as well as maintenance," John said. "Increasing payroll by an additional $20 million without tackling this issue is going to make it even harder to effectively manage much needed community services."

"Additionally, it is my understanding that the justification of many of the positions has to do with stateside wages," John said.

The local law that required a new GovGuam wage study states the goal is to make local government salaries comparable to national salaries for similar work.

However, the Hay Group consulting firm prepared a GovGuam pay scale that is about 85 percent of the national average, saying GovGuam cannot afford to pay its employees more than that.

"Guam should not compare our wage structure against the average state as our economy is not as robust," John said. "Wage structure should be based on purchasing power within the community."

Public services

McDowell also is concerned that as more of GovGuam's limited funds go into payroll costs, public services will suffer because non-payroll spending would diminish.

GovGuam doesn't have money to fix public schools or promptly pay private businesses that provide services to the government, McDowell said, but it has the will to implement raises for GovGuam workers and officials.

If a private sector worker and a GovGuam worker stand side by side, McDowell said, "the earning power of the private sector guy is less, while he has to support the pay increase for that other guy (in the government of Guam)," McDowell said. "There's a simplistic way to look at these things."

"It is going to be very demoralizing for the private sector workers. It is going to further drive a wedge between the haves and have-nots. The government of Guam employees are the 'haves' and the private sector employees the 'have-nots,'" McDowell said.

And because it's an election year, the pay raises will ultimately be implemented, even though some elected officials will initially voice opposition to it, McDowell says.

When GovGuam gets pay raises, either taxpayers pay more for government services, GovGuam reduces the level of public services to afford the raises, or both, he said.

McDowell said he remembers then-Gov. Joseph Ada's $5,440 pay raises for each GovGuam worker in 1990, as the Primary Election neared. It started as pay raises for teachers, and it became pay raises GovGuam-wide, he said.

Speaker Judith Won Pat, D-Inarajan, has questioned the timing of the pending raises because the Legislature had proposed pay raises in GovGuam that the administration didn't implement.

In 2011, the governor suspended pay raises because the local government was strapped for cash at the time. The administration now says the local government has the "means" to pay for raises.

The governor's office, when asked if his administration wants to leave an Ada-like legacy, has stated: "Everything he has done will be available for scrutiny at the voting booth."

"If the question is whether the governor decided to implement the raises for his political benefit, or for the benefit of the GovGuam workforce, then the answer is that he's been wanting to fulfill his promise to improve the lives of the employees for the past three years," according to a previously released statement from the governor's office.

McDowell said Guam's business organizations previously were active in forming a voting bloc and getting the private sector's voice heard on key issues that affected taxpayers' pocketbooks.

Business organizations created the Committee to Keep Guam working several years ago to oppose senators who supported tax increases.

The business community has an opportunity to reactivate that movement, he said.

"This is electioneering at its finest. There's no doubt," he said.

Rate this article: 
No votes yet

Add new comment