Torres, Demapan want $7.25 minimum wage by September
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.
Dustin Hoffman’s character in Accidental Hero movie explained to his son:
“The truth is a pile of shit from which everybody collects some shit, that fits, and says that it is the truth…” (Maybe it is not a 100% accurate quote but the meaning is correct).
I am very strongly suspicious that the debate about minimum wage and the “local labor force” fits to the quote above.
Of course, every normal businessman tries to cut operational costs – this the hard rule of business. But the Saipan reality is a little bit different. For instance, the CW-1 and H-1 application fees differ a lot. If you have one or two employes this is does not matter. But for a company with tens or hundreds employes it is a huge difference.
The truth is that with current deficit of labor force, businessmen already pay more (actually significantly more) as a minimum wages rate. But there, as usual, is a wrinkle: the higher rate did not solve the shortage in working hands problem.
This whole “proposal” to raise the wage it would seem would (should) be done in an attempt to attract more outside workers along with our locals to came back home to work and get away from the CW’s.
This should have been realized and thought about many years ago. Now that the Govt. and yhr private sector see that the feds are not fooling around, all seem to attempt to show they on board. (comical)
At this particular,time the majority and high demand of workers is in the construction trades. At least for the next couple of years until these ongoing structures are completed.
By raising the wage to only $6.73 hr in this construction trades area while raising the other areas to $7.25, will not bring in more US workers.
This looks like an attempt to appease the Chinese and NOT increase in the construction trades too much.
Possibly look at BIG operations and their pay scale on Tinian. If what Phillip Long stated in the past (not doubting him) is true their pay scale if above board and also they have an OJT program in place along with many US or others allowed workers from outside the NMI.
On the whole Construction is grueling work from a labor position to an equipment operator and Mechanic, also Construction is a high end cost to a business as it requires equipment maintenance, fuel and can involve high cost equipment and other break down that are very costly in both parts and downtime.
This is more compounded due to “cheap labor” such as operators as the inexperienced one will tear up a piece of equipment in a heart beat. (as is now with the CW’s)
Another thing if a contract is awarded already you can’t raise the labor rate in the middle of the contract unless there is a clause in place within the contract as it will cost the developer along with the construction company.
The construction trades should be one of the highest paid trades as is in other areas and the pay rate is based on the job description not as is now with a laborer making the same as an operator.
Even an operator’s pay is supposed to be based on the type of equipment operated such as a loader operator and a crane operator or a finish grader operator etc. These are all different levels of skills required along with the safety aspect to ground personnel.
By raising the wage is fine but workers under “H” visa are required to be paid more than the minimum wage in any area. In the pas, year ago in the NMI we paid the Davis Bacon (Guam rate ) per job description as was spelled out as there is no Davis Bacon specifically for the CNMI.
Also for Fed projects that wage is also spelled out for each workers all over from all the insular areas and and across the US regardless of what the company in each area regularly pays it’s workers on a regular basis.
It also requires an annual COLA (cost of living) increase.
Way long over-due, a real Good move Governor, Do it!!
Finally the Governor hits the nail on the spot! Good Job Sir….and to you too Ralph
911 did not affect the island of Guam. The buying power of wage earners continued to subsidize the economic impact of the recession of that time. Raising the minimum wage ensures money revolves fluidly….unless all these workers send all their money home all the time! Cap or Remittances i’d say!