CNMI Proposing Minimum Wage Increase To Federal Level By September

Draft would skip a couple of pay steps, help address economic downturn

By Dennis B. Chan

SAIPAN, CNMI (Saipan Tribune, July 8, 2016) – Gov. Ralph DLG Torres and Rep. Angel Demapan (R-Saipan) are finalizing a bill to potentially raise the local minimum wage to that of the federal level of $7.25 by this year, jumping a couple rungs up the annual wage increases set by the federal government that would’ve seen the CNMI implement a $6.55 minimum wage this Sept. 30.

The Torres administration yesterday indicated its desire to have $7.25 wage made law before this September date. The minimum wage now is $6.05.

“We are in the process of finalizing the language of the proposed legislation,” Demapan told Saipan Tribune yesterday. “At this point, the proposal is to increase the minimum wage to the national level of $7.25. However, for construction workers, we are looking at data to see if it would serve more beneficial to peg the minimum wage for construction at the prevailing wage rate of $6.73.”

Administrative sources say raising the construction wage to the prevailing wage could help eliminate any salary cost reasons construction companies cite in pursuing contract worker visas over H-visa workers, who must be paid prevailing wages. The prevailing wage rate could incentivize the pursuit of H-visas, over contract worker visas, administration sources also say, a move that Torres and business leaders have stressed to relieve the strain on the limited quota on contract workers in the Commonwealth.

The Torres administration, in a statement yesterday, said the drafted legislation will increase the local minimum wage ahead of the federal transition schedule and that Torres looks forward to its “introduction and passage prior to the 50-cent increase this September.”

“This is the opportune time to increase the minimum wage,” said Torres in a statement yesterday. “With the increased economic activity and additional investments in the CNMI, increasing wages will improve the livelihood of workers and balance the needs amongst the private sector.

“We are currently working with Rep. Angel Demapan to introduce legislation and have already drafted language together to move forward with the process,” the governor added.

Signed into law on May 2007 by U.S. Congress, the Fair Minimum Wage Act allowed for the transition of the Commonwealth to the federal minimum wage on alternate timetables.

The law mandates the CNMI to increase its minimum wage by 50 cents annually until it reaches the federal minimum wage floor of $7.25 an hour. Currently, the CNMI minimum wage is $6.05 an hour.

Last September, Demapan, the chair of the House Committee on Federal and Foreign Affairs, had expressed opposition to delaying the minimum wage increase.

Demapan says the draft legislation aims to encourage the equity and fairness amongst employees and employers as the Commonwealth slowly comes out its economic downturn.

“There is so much new data and developments to consider. The prevailing wage study and the latest GDP figures support efforts toward economic growth and shows promising signs for the future of our economy. In addition to establishing equity, increasing the minimum wage will also bolster employee confidence in the workplace,” Demapan said.

The announcement of a push for a raise of the local minimum wage ahead of the federal wage transition schedule comes a day after Saipan Tribune first revealed the Saipan Chamber of Commerce’s openness to such a jump up in the transition schedule.

In an interview Wednesday, Chamber president Velma Palacios said the business group would “definitely” support a raise in minimum wage.

“Most people are already paying that $7.25,” she told Saipan Tribune. “At the Chamber, our starting is $8. But in order to compete, we need to increase our wages.”

In the interview, Palacios largely defended local business’ wage practices, saying businesses are not “suppressing” wages, as some believe.

The criticism is largely borne out from those who would prefer that the contract worker program to end, without extension, in 2019 and say that businesses prefer the “cheap” labor of this program over attracting local or U.S. workers at higher pay scales.

Palacios believes businesses are increasing wages because of the higher wages the Saipan casino, Best Sunshine International, Ltd., has been offering, so they can keep their employees in place.

“It’s competitive right now. Everybody’s looking for people, for workforce. You want to maintain, retain your employees and the only thing is wage, benefits, and all that. So a lot of people are not paying that $6.05,” she said on Wednesday.

Saipan Tribune
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