Businesses request new law to delay minimum wage increase

CANCELLATIONS: The vast majority of passengers at the A.B. Won Pat International Airport wore masks due to the threat of the novel coronavirus on Feb. 6. Thousands of reservations have been canceled by potential visitors, creating a shaky future for the island's tourism and service industries. David Castro/The Guam Daily Post 

The Guam Chamber of Commerce is asking Adelup and the Legislature to push back the effective date for this year’s minimum wage increase by six months.

Chamber officials said new legislation that would delay the implementation of this year’s minimum wage increase would “save jobs for companies that would be the most impacted by the economic uncertainty” caused by the novel coronavirus.

The letter, signed by Chairwoman of the Board Christine Baleto, notes that an earlier letter to the governor, dated Feb. 13, wasn’t responded to directly. The letter requested the governor issue a moratorium. Adelup officials told media that a moratorium couldn’t trump public law, and delaying the implementation of public law required a public law.

“The Guam Chamber of Commerce humbly requests that legislation not only be submitted by the Office of the Governor, but a special session be called to address this emergency,” Baleto’s letter states.

Public Law 35-38, which became law last year, increases the minimum wage from $8.25 to $9.25 over two years. The first 50 cent increase is scheduled to go into effect on March 1 this year – a little over two weeks from now. The second increase is effective March 1, 2021.

Chamber of Commerce officials are asking that the increase scheduled for this year be pushed back to Sept. 1. Baleto said increasing the minimum wage at a time when businesses are seeing a slump in sales could jeopardize companies – and with it the livelihoods of workers.

“The genesis of this request is related to the uncertainties of the novel coronavirus, which is impacting our tourism industry, primarily through cancellations by our visitors,” the letter states.

“As of this past Tuesday, media reports have stated that the Guam Visitors Bureau reported that around 15,139 potential tourists have canceled their flights to Guam. This is alarming.”

The cancellations have an estimated impact of $9 million on the economy. 

According to government officials, about 3,500 workers on Guam stand to receive a pay raise when the new minimum wage law goes into effect. Chamber officials said the current economic conditions and the minimum wage increase would strain companies and could harm those same workers. 

“In discussions with stakeholders in the tourism industry, which employ a large percentage of entry-level wage earners, the visitor cancellations are creating uncertainties on operations, and PL 35-38 creates an additional adverse impact,” the Chamber states.

The organization also notes that the benefits outlined in the revised Dave Santos Act and in recent legislation that reduces gross receipts tax for companies that earn $100,000 or less, “does not assist many of those who are directly, or indirectly, in the tourism industry.”

“Many of the workers who would be affected by reduced hours or layoffs work for companies that do not qualify for these exemptions,” Baleto stated. “For those small entities who do qualify, the savings provided by the mandate, which is up to $2,000 on business privilege taxes annually, would be able to offset the increases of just one employee. However, for those who employ multiple staff at entry-level position, not to mention possible wage compression for other employees, the savings would be welcome but not enough to balance operations with this new statute.”

The Chamber letter notes that the six-month delay would allow the government the opportunity to monitor the “impact this global virus would have on our economy.”

The letter also notes that “nothing prevents any entity from proceeding with their increases on March 1, 2020” even if a moratorium is granted as “some businesses are able to absorb the additional expense.”

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