SEDC: $1 wage increase is bearable

A Strategic Economic Development Council committee believes that the local business community will be able to support a $1 per hour minimum wage increase over a year.

“The SEDC committee determined that a $1 wage increase over the course of a year would not arbitrarily impact local businesses,” said the Saipan Chamber Commerce in its notice to members yesterday.

SEDC consists of Chamber officials and members.

In its notice, which solicits members’ comments on the issue, the Chamber cited that reports such as the “1997 Hay Study on Economy and Wages” as well as the Department of Labor negotiation with Hawaii’s Local 5 Labor Union “determined actual benefits to nonresident workers to be $4.15 per hour with minimum benefits.”

The Chamber said that based on SEDC’s position, a Wage Review Board composed of industry leaders and government agencies “would be the most equitable method to ensure that wage increases would not detrimentally affect certain industries.”

It said that between July 1, 2007, and Dec. 1, 2007, the Wage Review Board would actively meet to analyze reports and data that would best determine the ability for industries to raise wages by an additional 50 cents and forward the decision by the board to the Legislature and Administration for further deliberation.

The current minimum wage is at $3.05 per hour.

The Chamber said that, based on the SEDC analysis, when a CNMI minimum wage of $4.05 is reached, the Legislature would be requested to repeal all benefits required under CNMI law.

“At this rate, nonresidents and residents would be equally compensated,” it said.

In a recent statement, the Chamber said it supports a minimum wage increase but it should include all the benefits given to nonresident workers.

“The Chamber believes that benefits are a real cost to the employer and a gain to the employee. Any calculation of wage must include benefits that are given to nonresident workers; when included, the value of these benefits brings the actual minimum compensation higher than $3.05 per hour,” said Chamber president Charles V. Cepeda earlier.

At the same time, he said that the CNMI has a tiered wage system “by default.”

He said one tier is that of nonresident workers in the farming and fishing sector as well as housekeepers. These workers are usually paid $300 a month, which if quantified is only paid $1.8 per hour at 40 hours a week.

Another tier would be the employees who are paid $3.05 per hour, with deductions for their room and board.

“It is time to formally recognize these tiers and use them for the economic growth of our community,” said Cepeda.

The Chamber official had called on the Legislature to “validate the legality of the existing Wage Review Board Law” and the governor to appoint members to the Wage Review Board by the end of the year, with a report due back from that Board no later than June 30, 2007.

Cepeda said this board will need up-to-date and accurate economic indicators and statistics to apply a proper formula to CNMI wages.

He said the board must have representatives from both the CNMI government and private sector industry leaders to carefully analyze these statistics and determine wages.

This developed as the House of Representatives has pending bills seeking to increase the minimum wage in the CNMI.

In the United States, the Democrat-dominated Congress is also expected to push and possibly pass a bill raising the CNMI minimum wage to the federal level, which is currently set at $5.15 per hour.