Increasing wages will do more harm than good

Like everyone else, I am in support of raising the minimum wage but it must be done in a way that minimizes the negative effects of a raise. This is the reason I support the incremental increases recommended by the Congressional Budget Office. So instead of planning increases in 50 cent increments for two more years, they are planning to do it immediately because it is an election year and they have little else to offer.

The Legislature has a bill pending to raise the minimum wage increase immediately, irrespective of the impact on medium to small businesses. No doubt some employees will benefit from the increase but many businesses will be harmed by this enormous and unplanned increase. Instead of hiring new employees, new employment in small to medium size businesses will cease to make up for the increase. Prices will go up adding to the overall cost of living and in some cases, business activity will decline. Current wages may be cut and benefits eliminated altogether because most benefits in the private sector are elective.

Many businesses are still recovering from the decade-long stagnation and only now able to make business investments like upgrades in technology or property. Some businesses can simply tack on the cost of these increases to prices but not all businesses can do that easily. Hotels can add to the cost of rooms and this affects mostly tourists but local small or mid-size businesses rely on residents, which may not be able to afford these increases resulting in a decline of services.

A certain amount of political moves are acceptable during an election season but it is unwise to mess with more serious policy matters purely for political gain.

Since we are barely recovering from decades of economic decline it is irresponsible for the government to add more cost to business and the community without adequate study and consideration. The Legislature acts as though it prints money. The Congressional Budget Office studied the minimum wage issue in 2013 and published a report determining that incremental increases over a fixed period of time was the approach that generated the least number of negative effects. For our Legislature to do otherwise is reckless, harmful, and to do it in an election campaign season is even more damaging because they are prepared to take action to hurt local businesses and a fragile economy purely for political purposes.

Juan S. Tenorio (Santiago)
Dandan, Saipan