‘Delay passage of minimum wage bill’

The Honorable Rafel S. Demapan, Speaker:
House of Representatives
19th Commonwealth Legislature

Dear Mr. Speaker:

Thank you for the opportunity to testify against the proposed House Bill 19-23, SD1, SD2, to increase the CNMI minimum wage to $7.25 per hour, which will take effect 90 days after becoming law.

I am very disappointed that the current administration is moving rapidly to fast track the CNMI minimum wage from the present $6.55 per hour to $7.25 per hour to please the federal government without any public hearings or to hear voices of our people.

I understand that the House passed H.B. 19-23 on Oct. 27, 2015, which will increase the CNMI minimum wage to match the federal minimum age applicable in the Commonwealth. The present federal wage is $6.55 per hour. This House bill will take effect 180 days upon becoming a law.

The Senate based their decision because the Saipan Chamber of Commerce supports this bill. As my good friend Francis said, “So if the Chamber agrees to the increase, let them pay their employees as high as they want to, but do not make it a law for businesses that will be severely affected.”

I am one of those local businesses that will be affected. Herman’s Modern Bakery has been in business for 71 years. It is a family-owned business that provides high quality fresh baked products and catering services to the Public School System, Office of Aging and we also provide baked goods to the marine prepositioned ships that you see outside the Saipan lagoon. Our present labor force is 122 employees in which 55 percent of them are local workers.

Our company, like other local businesses, is facing major challenges such as the CW-1 cap, alternate U.S. visa issue, recent typhoon recovery, increased gas costs and other expenses. We are faced today with a huge challenge that the CW-1 cap left is at 296; unfortunately, this does not give us the time to renew our bakers which are the key staff with our business. This only means that we’ll have to look at another alternative to keep them here while we are going to due process for next year’s cap. Bottom line, this only means additional cost that we have to spend in order to maintain their status here at home.

The rationale of putting more money into the pockets of our consumers right before the election is misguided. With the passage of the proposed bill, the cost of living will increase. That money supposedly going into the consumers’ pocket will be flying out to keep up with the increased cost of living.

We support pay increase for our workers and in fact we are paying higher salary to some of our employees. Our company will survive the immediate pay increase to $7.25 per hour but at a high price and we have to seriously assess how to streamline our operations in order to fulfill our contracts. One option is to decrease our workforce, including the employment of our local people.

I am humbly requesting you and the honorable members of the House, the Senate and the governor to seriously consider the grave consequences of this legislation. It will bring additional revenue for our government but it will close doors for small businesses. Please delay passage and allow the voice of the people to be heard so that we all can come to a favorable formula. Now is not the time to immediately increase the minimum wage. 2015 was a year from Typhoon Soudelor. I pray that 2016 will not be a disaster to small businesses.

Thank you for the opportunity to comment on the proposed legislation.

Anna Guerrero Hayes
General manager
Herman’s Modern Bakery