Babauta in his testimony during the oversight hearing of the House Subcommittee on Fisheries, Wildlife, Oceans, and Insular Affairs on the impact of minimum wage increases in American Samoa and the CNMI, noted that the “economic prospects for American Samoa and the CNMI have fallen precipitously over recent years and remain bleak.”
He said Congress “may find it desirable to take additional action to postpone increases or re-establish the industry committee process.”
In 2007, U.S. Public Law 110-28 raised the federal minimum wage to $7.25 per hour and also mandated a gradual increase in American Samoa and the CNMI, done by 50 cents a year until it reaches the federal rate.
But Congress and President Obama postponed the 50-cent hike in the CNMI in 2011.
Babauta said “postponements over a long period of time may not be sufficiently nuanced to meet current goals, which envision moving toward the federal minimum wage without substantially curtailing employment.”
He added, “If…these territorial economies do not improve in the near future, the scheduled 50-cent increases may translate into new company closures and employee lay-offs.”
CNMI businessman Jim Arenovski, who testified via video conference, asked the subcommittee to “advocate a delay and [to] continue to monitor the situation in the Northern Marianas.”
He said a delay “would allow businesses to invest money in the hiring and training of U.S. workers in order to comply with that law.”
He added, “This is an issue of critical importance to employees and employers alike. What is of utmost importance is not simply that minimum wage are implemented but rather that they are implemented in the right way.”
According to Arenovski, “It is difficult for me to tell my 45 employees on Saipan that I am not supportive of these annual increases according to the current schedule. But I know that more increases will force me to reduce hours and staffing, leaving some employees out of work, or with fewer hours.
It simply makes no sense to have an increase in minimum wage that contributes to such a negative effect on overall employment. There is a saying that 50 percent of something is better than 100 percent of nothing. My staff understand that some wage is better than no wage. They also know that I have been in business on Saipan for 13 years and that I want to be in business on Saipan for least another 13 years.”
