Cruz wants minimum wage raised "responsibly" - KUAM.com-KUAM News: On Air. Online. On Demand.

Cruz wants minimum wage raised "responsibly"

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by Ken Quintanilla

Guam - It was earlier this week when Vice Speaker BJ Cruz introduced legislation aimed at raising the minimum wage. However, concerns have been raised as to how this would impact the business community.

Cruz introduced Bill 316 earlier this week - a measure he says would responsibility raise the minimum wage. "The proposed legislation will increase the minimum wage from $0.95 a year for the next three years, eventually it will cap out at $10.10," he explained.

The proposal was first announced during the Guam Women's Chamber of Commerce's forum on wage and compensation. Cruz crafted the legislation after a year of research with the University of Guam, the banking industry and the island's chief economist. Cruz says despite some assertions, jobs will not be lost as a result of this bill. In fact he says, after three minimum wage increases from 2007 to 2009, the numbers of jobs never dropped. "So this fallacy that it's going to cost jobs and we're going to lose jobs is completely untrue, and we've shown that it continues to rise in spite of it and so I think it's time," he said.

However not everyone feels this way. "Obviously we suppose the measure," said Guam Chamber of Commerce president David Leddy, saying he believes every employee should be given greater wages but based on their labor and effort. "We believe increases in wages should be based on the strength and health of the economy and we should allow our businesses, our job creators to be able to determine that and determine the balance base on the needs of their employees and the economic stresses they face."

He further believes arbitrarily increasing wages will come at a cost to businesses. "Whenever wages are increased arbitrarily there is that rippling effect where everything will increase to prices, goods and services, housing costs just like individuals, businesses that buy products and services to support their production, if prices go up they cut back on expenses as well including labor," he said.

It was just last month when the Chamber formed a legislative review committee aimed at gathering information on bills dealing with the commerce, business regulations and those dealing with the island's economy. Board chairman Peter Sgro meanwhile says despite what some economist may say, in his years of experience, when the minimum wage has gone up, so have prices. "Because I'm totally confident despite what any economist says, because it's one thing to be an economist but its another thing to own your own business it's not an easy thing that we have to do," he said.

Governor Eddie Calvo on the other hand believes there needs to be a balanced approach with this proposal saying on its own would not accomplish the vice speaker's intent. Today he backed efforts by the republican minority who late this afternoon announced plans to introduce a measure aimed at addressing higher costs. Senator Chris Duenas said, "So what we're going to do today is basically introduce a piece of legislation that will reduce the GRT by 5$ that will equate to an approximate 3.8% GRT gross receipt tax on our businesses."

This reduction would mean that for every $1,000 a business makes, the business will pay $38 in GRT instead of $40 which is based on the current rate. Governor Calvo says this bill would help alleviate some of the unintended consequences of just solely increasing the minimum wage. "If we can alleviate some of the pressures on the income producers, the businesses in those own companies that hire people, then that could help balance the effects of increased costs of the minimum wage increase," he said.

Calvo says if the proposal and Bill 316 are presented simultaneously to him, he would sign both measures. Vice Speaker Cruz meanwhile says an economic study is available on his website. A public hearing on bill 316 is set for April 23 at 530pm at the Guam Legislature. 

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