‘Too much, yet too little’

The proposed minimum wage bill attempts “too much” but fails to adequately address the “discrepancies” in benefits between local and nonresident workers in the CNMI, according to Saipan Mayor Juan B. Tudela.

In his testimony before the House Committee on Ways and Means, Tudela said that House Bill 14-30 has good intentions but “many of the provisions are not well enough drafted or adequately thought through.”

Gov. Juan N. Babauta had also scored the bill in Tuesday’s hearing for being what he described as “economically reckless.” He suggested that the legislation was “discriminatory” and racist since some garment workers aren’t included, and biased against local residents as well.

Babauta also took a swipe at the bill’s author, Rep. Heinz S. Hofschneider, with whom he is running against for the gubernatorial post this November, as having voted against a previous minimum wage hike bill in 1994.

Hofschneider, however, said yesterday that an important issue such as changes to the CNMI’s minimum wage “deserves better public discussion than that provided by Babauta during Tuesday’s public hearing.

“I welcome the governor to the table,” Hofschneider said, “but he’s only been heard from occasionally on this issue in nearly four years. His one proposal is to go back to a 30-percent annual raise in the minimum wage. But without the changes in my bill, some variation on the old system remains in place and we all know this has failed for our workers.”

‘No question for need to raise wages’

Tudela said there is no question for the need to raise the minimum wage for local workers, who do not receive employer-provided benefits as nonresident workers such as housing, transportation, and medical expenses.

He said that, in considering the bill, there is a need to address the longstanding discrepancy of “why employers do not have to provide these same benefits for local workers.”

“How does this bill address these issues? Not particularly well, unfortunately,” said Tudela.

The minimum wage and the demands imposed by the Nonresident Workers Act both affect employer costs, but the way the bill attempts to deal with this fact creates difficulties, Tudela said.

The bill, authored by Rep. Heinz S. Hofschneider, aims to raise the minimum wage from $3.05 to $5 per hour and to repeal the statutory mandate on employers to assume liability and responsibility for all medical costs of nonresident workers.

It said that employers should rather offer health insurance benefits, for which they would be responsible for paying at 50 percent of the premium.

The bill also aims to restrict the Labor Director’s discretion to impose other terms and conditions to a nonresident worker’s contract relating to meals, lodging, and work site transportation.

Tudela said that CNMI employers are effectively paying $5 per hour or more when the costs of benefits are included.

“Regrettably, these wage levels inclusive of benefits are not uniformly distributed between resident and nonresident workers. As drafted, the bill fails to adequately address this situation within constitutional constraints,” he said.

Further, although the legislation deals with important issues, Borja said, “it attempts to do too much in a single bill, to the point of constitutional infirmity.”

He cited that Article II Section 5 of the CNMI Constitution requires that a bill shall be confined to one subject except bills for appropriations, codification, revision or rearrangement of existing laws.

“Early indication that HB 14-30 may not comply with this requirement is evident even in the title of the bill, which is to raise the minimum wage and to eliminate certain statutory requirements…—two purposes that are not obviously related into a single subject,” said Tudela.

‘My position is clear’

Hofschneider said that his effort in legislation introduced over a number of years has been to strike a balance between the employers who would have to pay an increased minimum wage and the individuals who provide the labor and live on their wages.

“We know that we must give employers incentives to offer higher pay, which in turn will grow our economy and give citizens in our community a better life,” Hofschneider said. “Employers must do their part as good corporate citizens and adopt ways to improve the well-being of their employees, which should include on-going training and educational opportunities, as well as benefits, including insurance and private retirement funds. Local businesses must be encouraged to adopt these practices over time.”

“Racism, discrimination and bias are negative words,” Hofschneider said, “and that is why the governor used them to describe my bill. And if there is any bias on my part, it’s in favor of U.S. citizens who won’t be going back to China as the garment factories close.”

Hofschneider said his record on the minimum wage issue is clear. “In three-and-a-half years as governor and with all his support at the Senate, you would have thought he could have gotten them to at least rubber stamp his minimum wage proposal for him,” he added.