Debunking the wage hike bogeyman

November 10, 2019

 

None of the scenarios painted by those opposing the minimum wage increase transpired when wage earners received additional $1 per hour in 2015. Guam’s economy didn’t turn into howling wasteland of masses desperately looking for a job when the hourly wage was raised from $7.25 to $8.25.

 

After a few failed attempts by former Sen. Benjamin Cruz, Guam’s minimum hourly wage officially goes up from $8.25 to $9.25 through a two-tiered installment that begins in March 2020.

 

Gov. Lou Leon Guerrero has signed into law Sen. Joe San Agustin’s Bill 136-35, now Public Law 35-38 amid the Guam Chamber of Commerce’s predictable opposition. Minimum wage, the chamber argued, should be determined by market conditions not “arbitrarily dictated” by the government. To which, the governor responded matter-of-factly. “Minimum wage has always been decided by the government not by the private sector.”  That was spot-on. When did we ever hear any chamber of commerce endorse a wage hike?

 

Previous studies indicated there is nothing to fear. “Leading indicators of Guam’s employment, inflation and other (data) confirm that minimum wage has not negatively impacted Guam’s economic program. Employment rates show continued job and wage growth,” states a wage study report prepared by the Market Research Development for the Guam Department of Labor.

 

Workforce increased by 2.2 percent; private sector jobs went up by 2.6, and government jobs, 1.2 percent. Inflation went down. Gross domestic product went up to $5.7 billion.

 

The study released in 2017 was a prerequisite to a new round of hourly wage increase — from $8.25 to $9.20 in 2017 and then to $10.10 in 2018 — which was proposed by former Senator Cruz and vetoed by then Gov. Eddie Calvo’s veto of the bill.

 

Those opposed to wage hike have reiterated their economic apocalypse warning, but based on the Guam business survey, few businesses reported reduction in the number of worker hours, or benefits in the year following the wage increase. “Many business interviewed indicated they had absorbed higher minimum wages with no major disruptions to their business activities, nor to the employees who work for them. Benefits, number of hours and fulltime employment did not change significantly,” the study said.

 

Survey among business owners indicate that, for some, the minimum wage became a catalyst for business reforms. “What is interesting is the reported actions by some firms to grow their businesses in new directions and to reevaluate their businesses to gain efficiencies,” the report said.

 

“Where the interests of businesses and households overlap appear to be on issues of developing workers skill,” the study found. “Businesses report wanting greater productivity from workers for whom they are now paying more. Households report a desire to improve their skills to move beyond a minimum wage income as they recognize the quality of life will improve with better opportunities, particularly the opportunity to reduce the number of jobs held to have a batter quality of life with family.”

 

These findings indicate the minimum wage increase may have been an incentive.

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