Guam Vice Speaker Cruz Proposes Higher Minimum Wage

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Ongoing worries it will constrict growth in private sector

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, May 6, 2016) – Vice Speaker Benjamin Cruz, D-Piti, introduced a bill Wednesday to increase the island’s minimum wage to $10.10 an hour by the start of 2018.

The minimum wage rate recently was increased from $7.25 to $8.25 through a similar measure Cruz wrote in 2014. If enacted, Bill 312-33 would incrementally increase the hourly minimum wage to $9.20 in 2017, then to $10.10 in 2018.

An increase in the minimum wage rate would be great for Scott Sablan, a 26-year-old Dededo resident who is currently the sole breadwinner of his household. He said his wife is currently taking time away from her studies at the University of Guam as they just recently had a son.

Sablan currently works 40 hours a week at the Shell gas station in East HagÃ¥tña, earning minimum wage. He said he also works full-time for a Pay-Less supermarket, where he makes more than minimum wage, but wouldn’t disclose his hourly rate there.

When Sablan was hired at Shell, he said, he thought it was only going to be a part-time position, but the gas station has needed him to work essentially full-time.

"No one who works a full-time job should have to live in poverty — which is why I fought to raise the minimum wage two years ago, and why I introduced Bill 312 to finish what we started," Cruz said in a press release.

Cruz had announced that he intended to introduce the minimum wage bill, but was allowing the Department of Labor and the Guam Economic Development Authority to comply with a separate law that required them to pay for an Independent Economic Impact Statement on the last minimum wage increase.

Under the law, the study was supposed to be completed and submitted to Gov. Eddie Calvo and Speaker Judith Won Pat’s office by April 30. The study has yet to be turned in.

"Thousands of working families have been patient, but I won’t allow delay to equal denial," Cruz stated in the release. "These families need a raise, and the forces that oppose them can’t win by simply kicking the bureaucratic can down the road."

While an increase in the minimum wage is enticing to the employees, some employers, such as Rubyjane Buhain-Redila, feel differently. Buhain-Redila, the owner of Java Hut Café in Tamuning, said the economy isn’t ready to sustain another increase in the minimum wage.

When the first raise went into affect in 2015, Buhain-Redila said she had to increase the prices on her menu, which prevented her from having to lay people off. She did, however, have to reduce their work hours.

"I had to increase every single item on my menu in order to sustain the cost of the increased rate for payroll," she said, adding, "I was forced to cut some hours and as owner I was forced to put in some hours as well. Because of the adjustments, I maintained the profit. Otherwise I would have struggled."

As for her plans should the bill pass, Buhain-Redila said she would have to increase prices again, but as far as staff goes, she’s not sure what actions she’ll take.

"At this point I’m not sure yet, I would have to check with the numbers and how it would affect payroll again," she said.

Cruz’s 2014 measure had sought to incrementally increase the minimum wage for three consecutive years, however, threats of a veto from the governor’s office prompted him to water down the bill so it only provided a $1 raise, to $8.25, on Jan. 1, 2015.

"I don’t believe in the government constricting the private sector’s ability to grow," Gov. Calvo said during his 2014 State of the Island Address. "Raising the minimum wage will cause job losses, increase prices for everyone … and won’t address wages that are a little bit higher, but still too low for living."

Citing the latest jobs data from the local Bureau of Labor Statistics, Cruz noted that 1,220 jobs were added to the private sector between December 2014 and December 2015. Within the first three months of the minimum wage increase, unemployment also decreased, from 7.7 percent to 6.9 percent.

"If you take an honest look at the facts, you will find that, contrary to what opponents have contended, raising the minimum wage will not eradicate jobs, incite massive inflation, or spur the use of public benefits," Cruz said in the release. "By giving minimum wage workers and their families a raise, we recognize right as well as reality."

Cruz also put forward a minimum wage increase as a solution to address the increase in Earned Income Tax Credits being filed on Guam – a concern that Gov. Calvo has expressed over the years.

Earned Income claims are tax refundable benefits for people who have low to moderate income. Unlike income taxes, which are paid to the government and refunded back to the taxpayer if they overpaid, Earned Income Tax Credits are another unfunded mandate the government is obligated to pay out.

The Office of Public Accountability reported that the amount of Earned Income claims has grown substantially since tax year 2000, when those tax credit payments represented 11 percent of the nearly $60 million in tax refunds paid that year.

Between fiscal 2014 and fiscal 2015, the Department of Public Health and Social Services reported a decline in the number of those who are eligible to participate in Medicaid and other welfare programs. The report attributed the decreased rates to the minimum wage hike.

According to the Public Health report, the number of those eligible for Medicaid and the Medically Indigent Program decreased by 1.64 percent between fiscal 2014 and fiscal 2015.

 

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