Friday, February 1, 2008

187. Minimum Wage in the CNMI

The CNMI got a 50cent raise in minimum wage (to $3.55) last July 2007, and is set to have another 50cent raise (to $4.05) this May 26, 2008.

It comes as no surprise that our illustrious governor is trying to put the kibosh on this next incremental raise, and all future scheduled raises (50cents each year through 2015, until we reach $7.25, which will be the minimum wage in the U.S. set for year 2009). He lobbied heavily against the first increase, and effectively insisted on having the minimum wage law include requirements for a study by the Department of Labor on the effect of the raises.

And he is not alone--the representative to the U.S. Congress from American Samoa has introduced a bill to stop the incremental minimum wage increases, which also apply to them.

The U.S. Department of Labor has now issued its report, and the Variety and Tribune have each reported the governor or his spokespeople saying how this report completely vindicates their argument that raising minimum wage in the CNMI is harmful to our economy.

Thanks to Ken Phillips at SOSaipan for a link to the actual report, which I've linked to, also, here.

Ken's comments are also helpful in orienting a reader to the report's "findings."

CNMI Governor Fitial is using the age-old practice of "spin" to argue that the DOL's latest report supports suspension of the minimum wage hike. See, e.g. this Variety news story or this Tribune story.

The spin includes distortions of what the report actually says, what people in the CNMI think about raising minimum wage, and characterization of the report as reaching a conclusion against implementation of the next minimum wage increase.

1. According to the Tribune article, "Increasing the CNMI wage to $7.25 an hour, the report said, is comparable to raising the U.S. minimum wage to $16.50 an hour." NOT TRUE.

First of all, the report actually says "The scheduled increase in the minimum wage to $7.25 (by 2015) will likely affect at least 75 percent of wage and salary workers in the CNMI. By comparison, in order to directly affect 75 percent of U.S. hourly workers, the minimum wage would need to be raised to $16.50, the 75th percentile mark for wage and salary workers who are paid hourly rates."

What this means is that the CNMI has a much larger segment of its working population suffering from the low minimum wage than the U.S. does. In the U.S., minimum wage is truly a "floor" and many workers obviously earn more than the minimum, which is why it would take such a much larger increase to effect 75% of them. This is not an argument AGAINST raising minimum wage here, but only highlights the urgency and desperation of why we need these incremental raises.

Second of all, the report is comparing apples and oranges--or really today and many years hence. The CNMI is not facing a raise to $7.25 this year. We are facing a raise to $4.05 this May. NOTHING in the report tells us what that is comparable to in the U.S.

2. The governor reports a "broad concensus" against raising the minimum wage to the next level here. Jeff Flores has already spoken out here that he disagrees, and doesn't believe people here are uniformly against raising minimum wage.

It's time to show that the Governor is misstating the facts about what the people in the CNMI want. Every worker here who earns minimum wage of $3.55 who is in favor of raising their minimum wage to $4.05 should contact Mr. George Miller or any of the representatives on the House Committee on Education and Labor. Any other person, whether you earn minimum wage or not, who feels it's important to raise the CNMI minimum wage to $4.05 this May, can also express their views to the committee members. You can see the full committee roster here. Or you can just write or call: Democratic Staff, 2181 Rayburn House Office Building, Washington, DC 20515, (202-225-3725).

3. The DOL report includes statements about the past that are informative, but nothing it says about the present effect of the minimum wage here or the likely effect another raise may have is at all reliable. The report itself denies reliability.

It notes that there are many adverse economic factors. In discussing the garment industry, the report says that lack of data make it impossible to distinguish among the various adverse factors as to which are having the greatest impact. (page 31)

Although the report paints a bleak picture and talks about how difficult having a raise in minimum wage is when times are tough, it also suggests that the tourism industry may rebound. If it had applied its own logic to this statement, this might suggest room for absorbing the impact of the minimum wage hike.

But most telling is this: "The CNMI does not yet have in place macroeconomic data collection and accounting-systems technology capable of generating information on total output and its components on a monthly or quarterly basis. As a result, there is not a way to provide objective measures of productive capacity, capacity utilization, employment, wages or unemployment rates...In the absence of complete and accurate macroeconomic data, there is no objective method to guage the level of aggregate economic activity, the level of employment it supports, or other important measures such as total personal income, consumption, savings and other metrics that explain the well-being of the population and the average citizen...The lack of such data are especially a barrier to assessing the current and future impact of the recent and scheduled increases in the minimum wage."

In other words--they're just guessing, and can't say anything objective.

The Governor's spin is nothing but more twist against what is fair and just--a living wage for workers.


KAP said...

Thanks for the kind words. It will be fun to see how this dog and pony show plays out-- the report being the dog.

lil_hammerhead said...

You always put together such a good breakdown.

O. Calimbas said...

others (i.e., tina sablan) are realizing the value of this report in much the same way as you and kap. see article in today's tribune.

the report seems to hinge on a fairly abstract axiom: don't raise the minimum wage during an economic downturn. it sounds basic and is probably true. on the other hand, any economic proposition is most likely supported by a variety of political assumptions.

Anonymous said...

A judge is supposed to be fair and unbiased, but quiet frankly, your left leanings are starting to resemble the instigators here like Doromal (who lives in Florida), Hodges (Mr. zero employees), and half cast Tina.

Saipan Writer said...

Dear Anon,

1. I'm not a judge. I was a appointed as a special judge in the 1990's, but my term expired before the new millenium.

Besides, judges are "fair and unbiased" as to matters brought before them, but they are also human beings with intelligence. In my experience they usually have opinions on issues of importance, although, as judges, they are more reticent about expressing them publicly.

Not being a judge, I do not need to be reticent.

2. I am opinionated and lean left. I don't mind being in the company of Tina Sablan and Ron Hodges, both of whom I respect and believe are highly intelligent and thoughtful in their analyses, if also ardent. I am less familiar with the integrity of Wendy Doromal, who has obtained a fair amount of publicity for causes that I generally support (if not in all details).

3. I like your use of the word "instigators." It has the sound of fresh beginnings and new starts in it. I'm guessing you meant something less polite, something about stirring up trouble with lies where calm and harmony would otherwise exist. That is not what's happening here.

I simply analyzed a dry, boring report from a DOL official and contrasted it to the uses its been put to by others. Perhaps they are the "instigators" in the sense you meant?

Ron Hodges said...

That was a fine analysis of our wage situation, both factual and eloquent.

I think the FFF group is grasping for straws to protect business associates...but what do I know, I am just a school teacher that would gladly retire from letter writing if Saipan Writer and O'Harnett continue!

anon.- To mask your identity raises concerns about your sincerity and courage.

On a lighter note, the FANTASTICS were great, we attended Thursday.

Anonymous said...

Wait a minute. $4.05 is a living minimum wage in Saipan??? Hardly, unless you are local and have been handed land and housing for free.