MVA’s funding shortage reaches $1.9 million

Noting the high unemployment rate among the local populace, Gov. Juan N. Babauta yesterday issued a directive that would increase the minimum wage for all government and Capital Improvement Project contracts to $6.75 per hour effective Jan. 2005, besides maintaining $5.75 per hour rate that has been in effect since late April.

Babauta directed the Labor Department and the Workforce Investment Agency to identify unemployed resident workers who are available to work, and make them aware of the opportunities created by the governor’s directive. The governor instructed these agencies to train resident workers to meet job qualifications for government projects.

Babauta’s issued the directive days after the adoption of a new labor policy allowing nonresident workers to engage in multiple jobs.

The directive effectively expanded the coverage of May 2003’s Executive Order No. 228, which instructed the government’s contracting officers to ensure that companies with CIP projects worth over $2,000 will pay their workers the U.S. minimum wage.

The directive specifically pegged the minimum wage for employees engaged by contractors for upcoming government and CIP contracts at $5.75 per hour, maintaining the governor’s directive during his State of the Commonwealth Address last April 29.

It also mandated a minimum wage of $6.75 per hour effective Jan. 2005 for these contracts—higher by 50 cents than the $6.25 per hour rate entailed by his SOCA directive.

“Despite the economic development that has already occurred, unemployment among local people remains high, particularly among entry-level workers. For instance, the 2000 census revealed that of the 958 persons 16-19 years of age and not in school, 39 percent were unemployed,” Babauta said.

“This is the population of persons who might be expected to be starting their working life at minimum wage jobs. For these young people, however, there is a strong disincentive to look for work and accept employment, namely, the current minimum wage of $3.05 per hour—not a living wage,” he added.

Babauta said employers’ ability to meet their labor demand due to the high availability of foreign workers exacerbates the disincentive to the local workforce.

He said the minimum wage not only contributed to unemployment among local workers, but also pressured the government to hire a large workforce. He said the CNMI employs a larger workforce than the typical U.S. state, saying that the CNMI government employees-population ratio is 662 to 10,000. In typical U.S. states, the government worker-population ratio is 536 to 10,000.

Nonresident workers employed by contractors of government projects, though, would also enjoy the benefits from the minimum wage directive. Babauta issued yesterday’s directive to all government agencies, including autonomous ones.

The governor required that all advertisements for government contracts indicate that employees of contractors and subcontractors would get hourly wages not less than the U.S. minimum level.

“Every contract…shall provide that the minimum wage shall be posted by the service provider, contractor, or subcontractor…in a prominent and easily accessible place at the site of the work in English and in the native language of any nonresident worker employed,” Babauta said.