JNB wants Heinz’s bill junked

Gov. Juan N. Babauta backed yesterday the move to increase the minimum wage in the CNMI—not the immediate increase as envisioned by Rep. Heinz S. Hofschneider’s bill but a gradual one that can be absorbed by businesses.

In his testimony during yesterday’s public hearing at the House of Representatives, Babauta said that House Bill 14-30, a bill that aims to immediately raise the minimum wage in the CNMI from $3.05 per hour to $5, “is seriously flawed” in that it is “economically reckless,” creates a huge liability for the taxpayers, and discriminatory against a certain group of workers.

Babauta said Hofschneider’s bill is “economically reckless” because it pushes for a sudden leap from $3.05 per hour to $5.

Unlike the government, which can use federal grants, he said businesses could not absorb the additional cost at once. The government currently pays $6.25 per hour for capital improvement projects.

Babauta said the bill also shifts the cost of healthcare for nonresident workers to taxpayers.

“Yes, the bill seems to require health insurance for alien workers. But don’t be fooled; read between the fine print. Health insurance is optional. The taxpayers will end up paying for the aliens’ health care,” he said.

Babauta said the bill is a classic example of an unfunded liability since the Legislature will be creating an expense without appropriating any money to cover the cost.

Further, he said that if the health insurance for alien workers is not a false promise, “it seems odd that that Rep. Hofschneider only wants health insurance for aliens.”

“What about local workers?” he asked.

Babauta also took particular note of the bill’s exclusion of garment sewer and cutters from the wage increase.

“It is just cutters and sewers who are singled out. Is this an attempt to exclude a certain nationality—Chinese workers—who make up the bulk of cutters and sewers? I hope there is not some latent racism here. All I can say is, the bill is unfair,” he said.

For these reasons, Babauta asked the House Ways and Means Committee, chaired by Rep. Norman S. Palacios, to scrap H.B. 14-30.

Instead, the governor called on the panel to pass his previously submitted proposal to raise the minimum wage at 30 cents a year. He challenged the Legislature to pass a minimum wage increase bill before the Nov. 5 general elections “to show the people where we really stand” on the issue.

“The public knows this Legislature can act quickly when you really care about the issue. We have seen you railroad bills through here in weeks or even just a few days—when you really care,” he said.

Babauta and Hofschneider are both running for the gubernatorial post this November.

During the hearing, Hofschneider noted that the exemption of certain garment workers was made due to the projected departure of the garment industry. He indicated that China would swallow up the local garment industry.

As to marginalized local workers, Hofschneider said there is no room for the governor’s interpretation because “the bill is clear.”

In his testimony, which he read before the panel, Babauta noted that Hofschneider voted to stop raising the minimum wage increase in 1994. When he revived it three years ago, he said the 13th Legislature refused to act on it.

“Ironically, it was Rep. Hofschneider, the sponsor of today’s bill, who voted to stop raising the minimum [wage] in 1994. We would have U.S. minimum wage today if not for his vote,” he said.

As speaker of the 13th Legislature, Babauta said that Hofschneider could have led the move to raise the minimum wage.

Hofschneider was reached for comments yesterday but he was not available.

Among others, H.B. 14-30 aims to repeal the statutory mandate on employers to assume liability and responsibility for all medical costs of nonresident workers.

It said that employers should rather offer health insurance benefits of which they would be responsible for paying at least 50 percent of the premium.

The bill also aims to restrict the Labor Director’s discretion to impose other terms and conditions to a nonresident worker’s contract relating to meals, lodging, and work site transportation.