The bill to increase the federal minimum wage to $15 an hour by 2025 passed in the U.S. House of Representatives with a vote of 231-199.
If passed by the Senate and signed by the president, it would render moot the local effort to increase Guam's minimum wage to $9.25 by 2021.
H.R. 582, as originally introduced, would have increased the minimum wage from the current $7.25 to $15 an hour over a period of five years. That was changed in the House to mollify members concerned about the impact of the bill. In its new form, the bill would increase the federal minimum wage to $8.40 an hour when it becomes law, and would increase the hourly rate by a little over $1 every year until 2025 to $15.
Sen. Joe San Agustin, who introduced Bill 136-35, said the federal bill is another indicator that the issue of a living wage needs to be addressed.
"The House vote is a signal that it's time the minimum wage be raised to keep pace with inflation," San Agustin said. "Whether by local law or federal law, it's only a matter of when it will happen."
There was a public hearing on Bill 136 last month. Business leaders and economists were at odds over its impact on local jobs and the economy.
According to Guam Hotel and Restaurant Association representatives, more members who participated in a survey said they would raise prices if the wage bill were enacted, compared to those surveyed in 2017. More members this year also said they would reduce hours compared to 2017, although fewer this year said they would lay off workers.
However, economist Joseph Bradley, who is neither for or against the effort, said prices don't tend to rise with wage increases. The primary reason for this is that minimum wage increases affect a minute portion of total revenues for a business, he said.
Bradley is also a vice president at the Bank of Guam.
He added that businesses tend not to raise prices in the same amount that they've had to increase wages, and they take a small hit in profits so that wage increases "are spread between prices and profitability."