Guam is moving ahead with a law that will bump the minimum wage to $8.75 effective March 1.
Giving business owners a piece of advice on human resource management, Gov. Lourdes Leon Guerrero and Speaker Tina Muna Barnes have declined the Guam Chamber of Commerce’s request for a six-month moratorium on the minimum wage raise in the wake of what the business group called "economic apocalypse" resulting from coronavirus scare.
“When you give your employees a proper living wage, you communicate that you understand their value. It emphasizes that they are a vital piece of your success, not just an expense,” Leon Guerrero said in a letter to Chamber board chair Christine Baleto.
“And while I understand the cold nature of finances and bookkeeping, I would encourage you to take another perspective and view personnel costs as a worthwhile investment, not a primary overhead expense,” the former Bank of Guam president added.
Signed into law on Oct. 14 last year, Public Law 35-38 raises Guam's minimum wage from $8.25 to $8.75 per hour this year, representing the first installment of the two-tiered $1 hourly rate increase. The succeeding installment will come into force in March 2021, thus raising the hourly rate to $9.25.
Citing the economic impact of the novel coronavirus scare that caused more than 15,000 flight cancellations, the Chamber has appealed to the governor and the legislature to reschedule the minimum wage increase to Sept. 1.
But Muna Barnes is not convinced the current circumstances warrant a postponement of the scheduled wage hike.
“When looking at issues such as how the COVID-19 will impact Guam, we must do our due diligence as we look at this proactively,” she said. “Given that this particular scenario impacts both the health of our residents, as well as our economy, we must ensure that we do not jump to conclusions - but rather look at facts to base our decision.”
The speaker reminded the Chamber that those who work in the service industry are the backbone of tourism industry, one of Guam’s main economic drivers.
“I must say, these employees who work day-in-day-out are the same employees who have to work two to three jobs just to simply afford rent, put food on their tables, and clothes on their children's backs,” Muna Barnes said, adding that the employees “deserve more.”
Muna Barnes noted that even with cancellations, the Guam Visitors Bureau is still tracking a higher visitor arrival compared to the same period last year. “It is because of the hard work of the men and women at the Guam Visitor's Bureau, we have been able to surpass our own records for previous years, and I know they are working hard to keep this trend,” she said.
The Chamber has been opposed to the minimum wage increase even during the legislative discussion on the bill last year.
Leon Guerrero noted the advantages of investing in human resources, which she said works the same way in the government sector.
“It has taken all of my experience as an executive officer in the private sector and the majority of my first year in office to correct the significant financial woes in the government of Guam. Millions of dollars that were improperly utilized in the past have been returned,” she said.
“Processes have been revamped so that the government can finally be on top of its financial obligations. The government is now enabled to maintain a working cash flow even though our budget is significantly less than those of the previous years.”
The governor said her administration is not inclined to backpedal on minimum wage increase. “We have worked together to come up with solutions and pass laws that balance the needs of all stakeholders,” she said. “Balance is key to running any business. A sharp reaction without sufficient and reliable information would likely cause the consequences that you are asking me to avoid today.”
Although disappointed by the response, Baleto said the Chamber respects the governor’s decision.
However, Baleto warned that Guam is facing an “economic apocalypse” due to seat cancellations, which the Guam Visitors Bureau has projected to result in $9.1 million loss in revenues.
“In regard to this virus and its uncertainties, we continue to receive updates from businesses, as well as from companies that are not members, who are already feeling the negative effects of the reduction of customers,” Baleto said.
“This issue is no longer about just the minimum wage, but it is about avoiding closure of a business altogether. A great majority of our business entities on island, large and small, are employers who genuinely care about their employees, their families and their livelihoods.”
The minimum wage increase mandate takes effect when employers are in cutting hours, Baleto said.
“If the situation continues to worsen and a business closes down or has to cut its employees and now the owner is the sole employee , working to keep the business alive, this is a far greater detrimental effect on our community,” Baleto said. “We want employees to prosper and not be impacted by cuts in their hours or see their employment benefits reduced or eliminated altogether.”
Muna Barnes said there are avenues where the business community can offset any losses resulting from the impact of the outbreak.
She cited for example Bill 71-35, which seeks to lower the shipping cost of goods entering Guam.
"I am working closely with the oversight committee so that we can work expediently to move this bill to the session floor. That being said, given that this bill seeks to protect the bottomline and profit margins of certain businesses, I hope that especially during times like these, our business community steps up and shares these savings with their customers: the other businesses on Guam and ultimately our retail consumers," the speaker said.
"I will do my best in facilitating the advancement of Bill 71-35 but that being said, I won't protect your bottom line, at the cost of the working man/woman. I am now turning to our business community, appealing to your commitment of being stewards of our community, and the sense of lnafa'Maolek that is instilled in everyone who calls Guam home, to step up and take care of their employees as we weather this storm together."
Click here to subscribe to our monthly digital edition