THE proposal to increase the hourly federal minimum wage rate to $15 from $7.25 will negatively impact the operations of the Commonwealth Ports Authority and the tourism industry itself, CPA Board Chairwoman Kimberlyn King-Hinds said.
The wage hike is among the provisions of the $1.9 trillion American Rescue Plan Act passed by the U.S. House of Representatives, but it is expected to be removed in the U.S. Senate because its parliamentarian has ruled that the wage hike cannot be included in a reconciliation bill, which can be passed by a simple majority.
U.S. Democrats, however, can still introduce a separate wage-hike measure.
In her letter to U.S. Congressman Gregorio Kilili Camacho Sablan on Friday, King-Hinds said CPA “supports all wage levels that meet or exceed federal poverty guidelines.”
However, she said, CPA is concerned that there has been little or no discussion within the Commonwealth regarding the impact of a federal minimum wage increase on the Commonwealth government, economy, and businesses.
She said CPA, for its part, is concerned that an increased minimum wage “will negatively impact its ability to operate and maintain the continued employment of its personnel.”
“Likewise, there has been no study nor analysis on the impact this wage increase may have in the CNMI,” she added.
She said a few years ago, the U.S. Government Accountability Office conducted a wage study and in a report, the GAO had determined, citing CNMI Department of Commerce data, that “a majority of CNMI workers made the minimum wage in 2016.”
On Sept. 30, 2016, when the CNMI’s minimum wage increased from $6.05 to $6.55 per hour, the GAO estimated that approximately 62% (15,818 of 25,657) of the CNMI’s wage workers in 2014 would have been directly affected by the federally mandated 2016 wage increase. This was when many of the foreign workers were assumed to be making the minimum wage level, King-Hinds said.
The GAO report also found that a majority of CNMI workers earned below or at the then-existing minimum wage and that future wage increases would affect them, “particularly in the hospitality and construction industries.”
The GAO states that by the time the minimum wage reached $7.25 in 2018, approximately 68% of the CNMI’s wage workers would be directly affected.
“As we see in the GAO report, the applicability of the minimum wage increases to the CNMI had and continues to have a significant impact on the Commonwealth,” King-Hinds said.
She added that the other side of the impact is obvious: The cost of doing business for employers in the CNMI’s hotel, tourism, service, and construction industries will increase.
“Who will bear the cost and impact of the wage increase? The cost of building homes will increase. Hotel rates will increase,” King-Hinds said.
Additional costs, she said, will be incurred to revise contracts to account for minimum wage increases to comply with federal contracting requirements.
“CPA will have to increase fees and costs in order to safely operate and maintain its ports. These costs will undoubtedly be passed on to the traveling public and our industry partners. It will become more difficult to market the CNMI as a travel destination,” she said.
These impacts, she added, “will manifest during a time when the CNMI economy has buckled from a devastating typhoon in 2018 followed by a significant loss in tourism revenue in 2020” amid the global Covid-19 pandemic.
Given these realities, King-Hinds said, it is critical that Kilili and other members of the U.S. Congress carefully consider the impact of increasing the minimum wage in the CNMI.
In an earlier interview, Kilili, who caucuses with the Democrats, said he is introducing a bill for an 18-month delay in the implementation of the federal wage hike.
He noted that the CNMI “is not the only jurisdiction seeking some relief from the [proposed wage] increase.”
U.S. Congressman Gregorio Kilili Camacho Sablan, second left, poses with Commonwealth Ports Authority Chairwoman Kimberlyn King-Hinds, left, Vice Chairman Roman Tudela, 2nd right, and Executive Director Christopher Tenorio, right, after a meeting at Kilili’s district office in Susupe.
Contributed photo
