Guam Governor Gives ‘Lukewarm’ Support To Minimum Wage Hike

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Calvo says detailed study needed to ensure increase won’t cost jobs

By Mar-Vic Cagurangan

HAGÅTÑA, Guam (Marianas Variety Guam, April 15, 2014) – Taking a lukewarm stance on a proposed minimum wage increase, the Calvo administration yesterday said any proposal to boost the hourly rate for Guam workers requires a thorough analysis lest it cost thousands of jobs.

"The wise thing to do is to gather data, conduct an independent study and make sure this will help workers and not hurt them," said Troy Torres, communications director for the governor's office.

Torres said Gov. Eddie Calvo would support a wage increase if a study concludes it will indeed help workers.

The administration's recommendation for a wage study came on the heels of Vice Speaker Benjamin Cruz's filing of a bill to raise Guam's minimum hourly wage from $7.25 to $10.10 incrementally over three years.

The administration, however, is apparently not too keen on a mandated wage rate.

"Setting an artificial floor on wages is a superficial solution to the problem, because it doesn't help those employees who make above the new minimum wage, if it does become law," Torres said.

He said the governor's "preferred tactic is to address economic development in a way that gives employers the ability to increase wages for all of their workers."

During his fourth State of the Island address in February, Calvo encouraged employers in the private sector to give their employees salary boosts.

"The problem isn't that GovGuam employees make too much money; it's that some private sector employees aren't being paid what they should be paid," Calvo said.

The governor said low wages that have hardly changed over the years against the backdrop of inflation "is what's causing thousands of workers to need food stamps."

"Investing in employees through wages, benefits and training equals greater productivity and better business," Calvo said in his address. "Imagine what this will mean for the employee who's spent the past 10 years earning less than $14 an hour while his cost of living went up and his family got bigger. Or the employee making $10 an hour who has to worry about day care she can't afford as a single mom."

He said higher wages "will lift thousands of people off the welfare rolls."

In a statement emailed to the Variety yesterday, Torres said Guam should first assess the possible impact of a minimum wage increase before moving forward with it.

"The discussions should also look at whether a minimum wage increase would force certain companies to lay off employees because they couldn't afford the raises," Torres said.

He cited a recent report by the Congressional Budget Office projecting 500,000 to 1 million people likely to lose their jobs by 2016 as a result of President Barack Obama's proposed federal minimum wage boost.

"Raising the minimum wage, if it's proven to be a good thing, is only one part of the solution," Torres said.

He said what matters more than the wage rate is the number of low-paid breadwinners who can't afford to support their families.

"A man making $15 an hour may seem to make a good wage, but not a good living if that is the only income for him, his wife and their two kids," Torres said. "The government can't swoop in and, with the flick of a wand, solve this issue."

Andrew Andrus, executive director of the Guam Employers Council, said it is expected of "the everyday politician" to "take advantage of the disenchanted to further a cause and promote adjustments in the distribution of success."

In the long run, Andrus said, the government of Guam will equally benefit from higher wages.

"Of course, with any mandated increase in wages, the amounts withheld from paychecks will increase so that the government will get its share," he said. "Need we pose arguments regarding that effect? Vote wisely."

Andrus said a minimum wage increase – which he expects to take place "sooner or later" – will entail "new products, services and customer demands, new industries, new opportunities, and new jobs requiring new skills, abilities and knowledge."

He said the new labor landscape created by a pay hike will be governed by new rules, values and standards.

"Today, we're inundated with a multitude of laws and regulations that employers must address to properly manage the work environment," Andrus said.

He cited an economic theory that the minimum wage increase is a double-edged proposition.

"With changes in the minimum wage, there will be a period of euphoria and rejoicing in some quarters, and there will be depression among those ill-affected by the change," Andrus said.

"But enterprise will survive and even thrive, and eventually those in the job markets who cannot or will not adjust will again express dissatisfaction with the distribution of success, and we'll have more laws, more adjustments, amidst more creativity, higher wages, greater costs, and the cycle goes on," he added.

Andrus said there are principles to effectively establish and manage pay structures in any given organization, be it public or private.

"Those organizations that have effective wage, salary and benefit structures will glide through the changes and thrive. Those that don't may endure, but with anguish," he said.

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