With the cost of living continuing to climb across Guam, lawmakers are debating a new minimum wage proposal that could reshape how wages are adjusted here.  But business leaders warn there’s more to the story than simply increasing pay.

Guam’s minimum wage has remained at $9.25 per hour since September 2021 – even as the island’s cost of living continues to rise faster than wages. According to Guam’s Consumer Price Index, costs for goods and services jumped 4% between the first and second quarters of Calendar Year 2024 alone, further stretching household budgets.

Today at the Guam Congress Building, Senator Joe San Agustin introduced Bill 4, a measure aimed at automatically adjusting the minimum wage each year based on changes in the CPI. “Without regular and predictable adjustment," the senator proclaimed, "the real value of minimum wage erodes, making it increasingly difficult for workers to afford necessities, such as housing, food, healthcare, and education.”

The bill would require the Department of Labor or Bureau of Statistics & Plans to calculate wage adjustments based on the CPI and inflation, with changes implemented each March. But business groups raised concerns that the proposal misunderstands how wage hikes affect the broader economy.

Executive director of the Employers Council, Catherine Gayle, warned that indexing minimum wage to CPI could fuel inflation rather than solve the issue of lowering it. “The real problem is inflation that is hitting individuals, not necessarily the issue of wages," she stated.

Gayle said the proposed mechanism could immediately raise Guam’s minimum wage by 24% and in turn would prompt businesses to raise their prices, cut hours, or reduce hiring to cover costs – a dynamic she described as an “inflationary feedback loop.”

Guam Chamber of Commerce president Catherine Castro echoed that raising minimum wage is only one piece of a much larger economic picture as Guam’s market does not stem from rapid wage growth or rising local demand, but from external and structural factors. Things like import dependence, shipping and fuel costs, utility rates, regulatory burdens, and federal policy decisions – all largely beyond local control.

“Guam’s CPI reflects these cost pressures, not local economic expansion or productivity gains," Castro said. "Automatically linking the minimum wage to CPI would impose additional and uncertain costs on employers already facing elevated operating expenses.”

Mary Rhodes, president of the Guam Hotel and Restaurant Association, also pointed to unintended consequences -- from employment taxes increasing, to compression of pay scales, non-consideration of tax exemptions, and risk to federal benefit program recipients.  “When you look at increasing minimum wage, which again is not a living wage. It’s really meant for people who are just getting a first job or people who are having a basic wage because they are getting additional compensation like tips or service charge," she said.

“You really have to look at the macroeconomics of what’s happening on the island, not the micro.”

Industry leaders stressed there is no doubt people deserve to earn a livable wage – to be happy and healthy – but they strongly believe this bill misdiagnoses the problem. With a second public hearing on Bill 4 scheduled for January 23, the hope is to hear more public testimony – particularly from workers and employees – to add perspective to today’s industry insight.