‘Not all businesses can afford to pay hike in minimum wage’

Not all employers could afford to increase the minimum wage of their workers, especially small businesses like mom and pop stores. The minimum wage will increase to $6.55 per hour from $6.05 starting on Sept. 30, 2016, another step before it goes to the federal level of $7.25 in 2018.

Saipan Chamber of Commerce president Velma Palacios said this has been one of their concerns when they held a recent poll among their members. The small business owners’ operations would be adversely effected if it would increase the hourly rate of their employees right away.

“[Small business owners] has been our concern. Our only concern was, like the mom and pop stores, the very small businesses. Right now, I know a lot of people and business like that and they may not be able to have that increase right away,” said Palacios.

One way that the CNMI government and the business sector could cope with the wholesale increase in minimum is having a salary range for each job category, a practice now being followed by three U.S. territories—American Samoa, Puerto Rico, and the U.S. Virgin Islands. Guam’s minimum wage is $8.25, $1 higher than the federal rate.

American Samoa’s minimum wage rate divided for its 16 industries is from $4.58 to $5.99 broken down into $4.58 for garment manufacturing; $4.60 for miscellaneous activities; $4.81 for government, $4.90 for hotel; $5.00 for retail, wholesale, and warehouse;

Bottling, brewing, and dairy workers receive $5.09 an hour; $5.16 for fish canning and processing; $5.23 for private hospitals and educational institutions; $5.40 for printing; $5.38 for tourism and travel; $5.41 for ship maintenance; $5.50 for construction; $5.53 for publishing; $5.75 for petroleum; and $5.89 for finance and insurance.

Shipping and transportation has three classes with those in A (stevedoring, lighterage, and maritime shipping agency activities) getting $5.99; B (unloading fish) $5.82; and C (other activities) $5.78.

Puerto Rico also varies by industry from $5.08 to $7.25, while the U.S. Virgin Islands too follow the federal rate of $7.25 an hour except for businesses that have an annual gross receipt of less than $150,000 where $6.90 is used.

$7.25 before 2018

Palacios said even with the minimum wage at $6.05 most of their members are already paying higher than the minimum wage. “Because we have to remain competitive and as a business we also wanted to retain our productive workers.”

She added that Chamber members are also supporting or immediately complying with the $7.25 federal minimum wage even before the Sept. 30, 2018 full implementation not just a hike of 0.50 centavos.

She said majority that they polled approved having the CNMI minimum wage at the federal level. “We conducted a survey among our members, both the minimum wage and the prevailing wage, and majority of them support an increase of the minimum wage to $7.25, not only the .50 cents increase that it would take effect on Sept. 30.”

“Most of our members are already paying more than the [current] minimum wage of $6.05. Most of the Chamber members have the capacity to pay the increase on the minimum wage on Sept. 30,” added Palacios.

Rep. Angel Demapan (R-Saipan) also has a pending bill, House Bill 19-187, in the CNMI Legislature that also aims to increase the Commonwealth’s minimum wage “sooner than the federal transition period provided by U.S. Public Law 10-28.”

Palacios said that increasing the minimum wage would make the CNMI more competitive especially with the current situation in the CW-1 transitional worker visa program. “Right now we’re experiencing a shortage in labor and we also have competition.”

“People or employees and residents have that opportunity now to go and seek jobs elsewhere. So as a business you want to pay your employees well and to retain them to because it is hard to find workers that you had already invested with.”

“If you lose them, you have to start over, and that’s been a difficult thing for most businesses right now,” added Palacios.

Continued development

Delegate Gregorio “Kilili” Sablan (Ind-MP) said raising the minimum wage is one way to bring more U.S. workers to the CNMI. “Since the minimum wage began to increase in 2007, the number of U.S. workers rose from 13,246 to 15,137, according to date from the [CNMI] government.”

The data is inclusive of workers from the Freely Associated States. The average annual wage paid to U.S. workers also increased from $10,685 to $14,296 in the same period.

Sablan said that on Sept. 30, 2017, the minimum wage would increase to $7.05 before reaching the federal level of $7.25 in 2018. He, however, co-sponsors House Resolution 2150 in the U.S. Congress to lift the minimum wage to $12 per hour with annual increases after to be determined by the U.S. Department of Labor.

Hotel Association of the Northern Mariana Islands chair Gloria Cavanagh also said their member hotels have the capacity to pay their employees the .50-cent increase but cautioned that tourism is a “fragile industry.”

“HANMI fortunately does have the capacity this time to absorb the expense. [But] we must always remember that our tourism market is an extremely fragile industry,” said Cavanagh.

“Since the increase of funding for [the] Marianas Visitors Authority from the additional five percent Hotel Occupancy Tax in 2013, Saipan has experienced healthy annual occupancy rates and increase average rates. We must encourage keeping the integrity of these funds.”

House Speaker Rafael S. Demapan (R-Saipan) believes that now is the time for CNMI residents, who studied and worked in the mainland, to comeback to the island and work here. “With the continued development, I would like to think that our people somehow would comeback to the island and work here.”

“Because some of them studied in the mainland and it would be better for them to come back here and share what they have learned, since right now the salaries are competitive and the minimum wage is going up to the federal level in two years time.”

He added that some of the CNMI residents decided to leave during the time when the economy was stagnant. “They left because at that time, at that point, the economy was stagnant, there were not enough employment opportunities, and the minimum wage then was low.”

“I think this is the right time for them to return and work again in the CNMI while minimum wage is increasing. That would certainly help our people if they consider coming back and again be a part of the local economy.”