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Monday, April 21, 2014

NMI minimum wage hike OK’d

Minimum wage increase The CNMI’s lowest-paid workers will be getting a 50-cent wage increase this July, after President Bush signed into law yesterday the bill approving the first minimum wage increase in the CNMI in 11 years.

That 50-cent increase on July 24, which will raise the CNMI minimum wage of $3.05 an hour to $3.55 an hour, will kick off the nine-step increase of 50 cents every year that will eventually raise the CNMI minimum wage to the federal level of $7.25 an hour.

The wage hike bill applies to both the Northern Marianas and American Samoa.

H.R. 2066 also includes a provision requiring the U.S. Labor secretary to conduct a study to assess the impact of the wage increases and to project the impact of any further wage increase on living standards and employment rates in the CNMI and American Samoa. The study must be done two years and two months after the bill becomes law.

The legislation will increase the local wage floor by $4.20 in nine steps, over an eight-year period. This is an eased version of the original wage hike bill, which proposed to raise local minimum wage to federal level over just four years.

The swift passage of the minimum wage hike bill came about because it was attached to the Iraq war spending bill as a rider.

Nine-step increase

Under the new law, the CNMI minimum wage would go up to $3.55 an hour 60 days after the bill is signed into law. The bill became law yesterday, May 25 in the U.S. mainland. Sixty days after that falls on July 24.

The next increase—to $4.05—will occur one year after the bill is enacted—or 10 months after the first increase.

The wage rate would continue to rise by 50 cents every year after that, hitting $7.05 in seven years. The final 20-cent increase, which would take place in 2015, would bring the local rate to the federal level of $7.25 an hour.

Currently, a person working 40 hours per week at the current minimum wage of $3.05 makes about $6,344 a year. An increase to $7.25 would boost that to just over $15,000 a year.

The CNMI minimum wage was last increased in 1996.

In an interview Friday, Gov. Benigno R. Fitial said the approval of the wage increase “would fast track the demise of the local garment industry.”

Rep. Ray Yumul, co-chairman of the House Committee on Commerce and Tourism, had expressed a plan to introduce a bill providing tax relief to small businesses to help them absorb the additional cost. Local business would not be able to avail of tax breaks offered by the federal wage hike bill, as the CNMI has its own tax laws.

Federal wage hike

At the federal level, the wage hike bill raises the U.S. minimum from the current $5.15 per hour to $7.25 per hour over two years. This is the first increase in the federal minimum wage in a decade.

Also included are $4.8 billion in tax cuts demanded by Republicans to ease the effect of the wage increase on small businesses.

Democratic Senator Edward M. Kennedy called the increase one of "the proudest achievements of this new Congress."

This would be the first change since the federal minimum wage went from $4.75 to $5.15 on Sept. 1, 1997, under former President Bill Clinton and a Republican-controlled Congress.

The liberal-leaning Economic Policy Institute, a research group in Washington, estimates that 5.6 million workers—or 4 percent of the work force—earn less than $7.25. (With AP)

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