DC hearing on minimum wage hike’s impact on NMI, A. Samoa

The U.S. House Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs will hold an oversight hearing in Washington, D.C. on Sept. 23 at 9am to review the impact of the annual 50-cent minimum wage increases in the CNMI and American Samoa since 2007.

As of yesterday, the subcommittee’s website—http://naturalresources.house.gov/Calendar/EventSingle.aspx?EventID=260206—has yet to identify the witnesses invited until they have confirmed.

However, Delegate Gregorio Kilili Sablan said the witnesses invited include U.S. Comptroller General Gene Dodaro, Assistant Interior Secretary for Insular Areas Anthony Babauta, American Samoa Gov. Togiola Tulafono, and businessman James Arenovski from the CNMI.

Arenovski, when asked for comment yesterday, said he just got the invitation and has yet to know the parameters of the hearing. He said if he couldn’t be in Washington, D.C., he could also testify via videoconference.

Press secretary Angel Demapan said last night that Gov. Benigno Fitial has informed subcommittee chairman John Fleming that he will not be able to attend.

“It is not known yet whether anyone else will be testifying,” he added.

The CNMI’s current minimum wage is $5.05 an hour, a 67-percent increase from only $3.05 an hour before the wage law was enacted.

Sablan said a U.S. Government Accountability Office report on the impact of the minimum wage hikes will be a subject of the subcommittee hearing.

GAO is the investigative arm of the U.S. Congress.

The GAO report is mandated by law so that Congress can assess the effect the 50-cent annual wage increases are having on workers and the economies of the CNMI and American Samoa.

The 2010 report contributed to the decision to skip the annual wage increase in 2011.

When the minimum wage increases again in 2012, it will become $5.55 an hour in the CNMI.

“The [GAO] report observed falling employment in the Northern Marianas, but could not determine whether this was due to rising wages or was simply the result of the overall economic decline in the Commonwealth,” said Sablan.

Under federal law, the CNMI has to increase its minimum wage by 50 cents annually beginning 2007 until it reaches the federal wage floor of $7.25 an hour. However, another federal law allowed the CNMI to skip a 50-cent minimum wage hike in 2011.

GAO released in June this year its report on the employment, earnings, and status of key industries in the CNMI and American Samoa since minimum wage increases began.

The report says tourism employers will continue to cut regular work hours and freeze hiring as well as start laying off employees by early 2012 as a result of the annual 50-cent increase in the CNMI’s minimum wage.

By 2016 when the CNMI’s minimum wage is supposed to reach $7.25 an hour, 95 percent of workers in the tourism industry would have been affected.

For employers, the minimum wage hikes impose additional costs at a time when multiple factors are making it difficult to operate. Employers and employees also have mixed feelings about the minimum wage increases.