We finally have the answer to the minimum wage question, but what does that mean to us locally?

Food For Thought 6-1-07

Hi friends, this is Harry Blalock; General Manager for radio stations KZMI & KCNM. It’s that time once again to take a look at the issues of the week, and to offer some Food For Thought.

We finally have the answer to one of the questions that has been looming over our heads for months now. We knew that the U.S. politicians, primarily the Democrats, have been pushing very hard for a federalization of our minimum wage, and a takeover of our immigration. As of last weekend, we now have an answer to the minimum wage question. Both the U.S. House and Senate passed an Iraq war-funding bill that included an increase in the minimum wage, and the President signed it into law last Friday, or our Saturday. The CNMI is now to be under the federal minimum wage, which is on the way up to $7.25 an hour.

We didn’t get the deal we were hoping for, which would have given us a .35-cent an hour increase, and then had a special wage board determine when and if further increases could be implemented without serious damage to the economy. But we did get a better deal than the one that many of us had feared. The minimum wage will go up .50-cents an hour, 60 days after being signed by the President, or on July 25th. Then it will go up .50-cents a year starting one year from the date of signing, or May 25, 2008. We were afraid that it would be going up .50-cents an hour every six months, which would have been pretty difficult for many businesses to swallow, especially in this depressed economy we’re currently experiencing. So our minimum wage will be $3.55 an hour on July 25th, then jumps to $4.05 an hour on May 25, 2008. From that point it goes up .50-cents an hour every year until we reach $7.25 an hour, which won’t be until May 25, 2014. That gives us a little breathing room, and time for us to hit bottom and hopefully start the recovery that will follow.

There is no doubt about the fact that this is very bad news for the remaining garment industry on Saipan. Several of them may be closing down immediately as they feel they cannot shoulder any increase whatsoever at this point and remain competitive. Others have said that $4 an hour is their break-even point, and anything beyond that means they will no longer be profitable. So with that being said, it is very realistic to assume that the complete end of the garment industry will happen no later than May 25, 2008. That means substantially less tax revenues coming in for the government, and a big reduction in the number of contract workers on Saipan. Of course that will also be affecting many other businesses as well, all the small mom and pop stores around the garment factories, and any other business that does business with the garment factories. It also means that we will no longer be shipping any product out of the CNMI, so the cost of incoming freight will be going up drastically as well.

One of the aspects of the minimum wage increase that has a lot of people worried is the effect it will have on house workers or maids, farmers, and fishermen, as these are all job categories that have their own separate minimum wage, which is much lower than our regular minimum wage. According to the Lt. Governor and Attorney General, who were both on my talk show, Island Issues, last week, fishermen will be exempt from this new minimum wage increase so it should not affect their salaries. Farmers may also be exempt, if they are employed in a business that offers the produce or product for sale, and the business has over 500 man hours in a pay period, in other words they would have to have at least 7 farmers employed, working full time.

The bad news comes for those who employ house workers, maids, gardeners and maintenance workers for their households. These categories will be affected by the new minimum wage increase, and it will take effect on July 25th, not on the renewal date of their contract. They will also be converted at that time for a salaried worker to an hourly worker, who will be paid a minimum of $3.55 an hour, and they will also be entitled to time and a half for everything worked over 40 hours a week. Right now many of the contracts for house workers are for $300 a month, and require them to work from 6 am to 6 pm. So if you cut your house workers down to 40 hours a week, you will have to start paying them $142 per week beginning July 25th, or in effect nearly doubling their salary. According to the Lt. Governor, there are some deductions that are allowed if you’re providing their housing and their meals. But the Attorney General, Matt Gregory cautions that you may be getting into legal trouble if there is a dispute as to the real value of the housing and food you’re providing. You also need to be warned that if you are asking your house workers to work in excess of 40 hours per week, you must pay them time and a half. Even if they offer to extra hours for you at no cost, you would be foolish to let them do it without properly compensating them for it. If they file a labor case against you when they leave alleging that you didn’t properly pay them for all overtime worked, you could be on the hook for thousands and thousands of dollars.

Just another word to the wise where house workers are concerned, you should start having them fill out timesheets, giving an accurate record of the hours they actually worked, and have them sign it at the end of each pay period. Then you should keep those records as long as the employee is still on island so you have proof of their hours worked.

Yes, it’s going to be more work and definitely more expensive to have maids or house workers from this point forward, but frankly, the house workers have been underpaid and taken advantage of for years and years here. They have been made to work very long hours for very little pay, and it’s time that situation was made right. Our lawmakers made this separate class of workers that was paid far below the minimum wage so they could have their own servants and workers and pay them as little as possible. It’s my belief that this is one of the biggest reasons that the critics of the CNMI have fought so hard to take over our minimum wage and have it incorporated with the rest of the country. They saw this as a travesty that we were bringing in contract workers to be our maids and house workers and paying them as so ridiculously low a wage. It was self-serving of the lawmakers to create such a class of working poor just for their own benefit, and they still have this same greedy, self-serving attitude.

There is a Labor Reform bill that is currently being debated in both houses. The lawmakers have been working on this bill for a year now, and it is supposed to fix many of the problems currently in our system. They were trying to get this bill out before the U.S. congress took any action, hoping that it would convince the U.S. that we were finally serious about cleaning up our own house. But the lawmakers couldn’t help but keeping their own self-serving interests included in this bill. In section 4952 of this bill, entitled, “Exit from the Commonwealth”, it says that a foreign national worker shall exit the Commonwealth within 15 days after the date of termination of the approved employment contract or renewal, except as provided for in this chapter. The very next section talks about exceptions for the periodic exit requirement. It says that a foreign national worker shall exit and remain absent from the Commonwealth for at least 6 months during every 42-month period. It goes on to say that this limitation does not apply to foreign national workers who are employed in professional or executive positions, or domestic workers. In the copy of the draft bill that I have, it describes an executive as someone making over $30,000 a year, and then goes on to clarify it even further.

So seriously, the only exemptions from the 6 month exit requirement are executives making over $30,000 a year and domestic workers, or maids? How do they come to the conclusion that executives and maids deserve to be in the same class and both be given exemptions to this law? I’m assuming that they figure it would be very difficult for a business to function without their key executives for 6 months every 3 ½ years, therefore it wouldn’t be a good idea to force businesses to do without their key people like that. But frankly, it’s going to be very difficult for many businesses to do without some of their key employees making less than $30,000 a year for 6 months too. Are they going to have to keep paying for that employee for those 6 months just to make sure they don’t take another job? And is the business going to have to try and hire someone to fill in for that employee for those 6 months? The lawmakers don’t really seem to care the impact this will have on businesses, yet look how they continue to take care of themselves. They made sure to exempt domestic workers from the 6-month exit requirement. God forbid that they should have to pick up after themselves, do their own laundry or cook their own meals for 6 months. So in other words, they see what a disruption it would be in their lives to not have their maids for 6 months, but they don’t seem to care about the disruption to businesses to have to do without employees for 6 months. Now if you ask the legislators, they will tell you it’s because the maids have become like family to them, and their children think of them as second mothers, therefore it would be very disrupting to the family unit to have to send the maids back for 6 months. But how many of you would work your family members like a dog, requiring them to work 12-15 hours a day, 6 days a week, sometimes 7, and only give them $300 a month for it? I suppose there are some legislators up there that would consider doing that to their own family members, but honestly I find it deplorable. And we wonder why the U.S. doesn’t trust us to get our own orders in affair, and to fix our problems. This is a classic example of even when the legislators try to fix a problem, as in the Labor Reform Act, they still can’t get it right and still try to exempt themselves from any pain or inconvenience. Until we show the U.S. that we really mean business, and are going to fix things properly, we should expect no less from them, we asked for this. Thanks legislators, evidently your counterparts in the U.S. Congress and Senate are paying attention, and they have heard you loudly and clearly. Again, do I really need to remind anyone why it’s time to clean house in the legislature in this coming election? This is the same kind of self-serving, garbage legislation they’ve been producing for years, and they still don’t get it. They are not in a class above the rest of us, but it seems that they have come to believe they are. Again, I believe there are a few exceptions up there, but I can count them all on one hand, with a finger or two left over. That’s pretty bad when you consider we have 27 legislators.

Yes, a minimum wage increase was long over due, it should have happened years ago when we promised the U.S. that we would raise our minimum wage. But since we couldn’t be bothered to keep our own promises, the U.S. is helping us to keep it now, and frankly, it could be a lot worse than it is. We should be counting our blessings that we have 7 years to catch up to the national minimum wage. Again, our own lawmakers could have, and should have done something about this long ago, but no, they were too busy trying to figure out how to get away with paying their own domestic workers next to nothing. They succeeded for years, but now the party’s over, and it’s time to start paying people accordingly. Now you need to decide if you really need maids, gardeners and maintenance workers around your house at the new rates. If you do, that’s fine, just pay them accordingly and don’t try cutting any corners, or making them work overtime without paying for it. If you do, I have a hunch it will come back to bite you in the butt when that worker leaves to go home. If you don’t need them or can’t afford them, you need to go down to the Department of Labor and see if you can get out of the contract early. But don’t think you can just keep paying them $300 a month after July 25th and get away with it. I believe that all contract workers will know their rights very soon, and even if they let you get away with paying them a lower amount for now, they will file a complaint against you before leaving, they would be foolish not to. If you have questions about any of this, I recommend you contact the Department of Labor immediately and get the facts. You simply can’t afford to not understand what is happening or how it will affect you.

I’m Harry Blalock, thanking you once again for giving me a generous slice of your valuable time, and allowing me to share my Food For Thought.