There are three questions that need answers from the proponents of raising Guam's minimum wage. One: Why do employers pay the vast majority of people more than the existing minimum wage when they don't have to?
Second: If there are no negative consequences to raising the minimum wage, then why raise it a puny $1 an hour? Why not solve people's small and large problems for a long time and raise it to $50 per hour?
Three: Can any company in the world – aside from the government – continue to pay an employee $10 for $8 (or less) of productivity?
Could the answer to the first question be: because those people have learned how to work within the environment they are in; they are very productive and take responsibility; they show up on time for work; they think out of the box and are creative about reducing costs and improving product and efficiency, and they assume leadership in getting tasks done?
If that is the reason, how will society hire and train others to do the same thing when minimum wage makes their product or service uncompetitive? How many jobs will be lost/replaced by automation? The bottom line is that the market is always more efficient in paying the right wage instead of bureaucrats. Let competition (the market) decide what wages to pay.
Second: If your answer to this question is "that would be asinine!" How can $50 an hour be folly and $1 is pure genius? They both would be asinine – it is only a matter of degree. All arbitrary increases cause inflation directly or indirectly – the price of everything increases.
Third: This is really a rhetorical question. The answer is obvious, it is impossible and it only increases the cost of living.
There is a handbook for policymakers in Congress called Welfare and Poverty. In 2014 the United States had 100 anti-poverty programs (maybe the first one didn't work?) 70 for individuals and 30 for communities. The programs cost the taxpayers $680 billion to which the states added another $300 billion in one year. The gist of the article is that the government causes poverty. The article also spells out a bunch of reasons. The United Nations has a similar piece on how global governments cause poverty - how the system protects and perpetuates poverty.
"Nothing can add to your poverty faster than losing your job or not being able to get a starter job because of government intervention or regulatory impositions. All of us can more or less control our outlook on life, our attitude toward every situation, and our actions to enhance personal growth, but it really advances the potential for poverty when the government imposes obstacles inhibiting personal initiative. For many, high minimum wage cuts off the first rung of the economic opportunity ladder."
Indeed, our Legislature says this proposed increase is an anti-poverty proposal. Which is admitting all the other minimum wage laws failed. The reason is that the market is infinitely better than any manmade mechanism. We are in a wage growth market at the moment, let it work.
Carl Peterson is a Guam-based certified financial planner and president of Money Resources Inc.