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.