Minimum Wage

May 27, 2008

The CNMI federal minimum wage is now $4.05 per hour. It was increased Monday by $ .50 for most of the lowest paid employees in the CNMI. The overtime rate for hours worked over 40 hours per week is now $6.08. Some employees will still be paid the CNMI minimum wage rate of $3.05 per hour, as the Marianas Variety reports:

Some employees in the CNMI will not be covered by the minimum wage provisions of the FLSA and may continue to be paid at the rate set by the CNMI Minimum Wage and Hour Act.

Employees will not be covered if:

1) Their employer is small (doing annual gross volume of sales or business done of less than $500,000) and

2) The individual employee does not engage in commerce in the course of his or her work (that means, he or she does not make phone calls to the mainland, do janitorial work in buildings where goods are produced for shipment out of the CNMI, handle records of interstate transactions, swipe credit cards, do business over the Internet).

Most farmers and domestic helpers qualify to receive the federal minimum wage:

1) House workers and Farmers who do not live with employer must also be paid time and one-half ($6.08) for every hour worked over 40 hours.

2) Live-in house workers and farmers will be exempt from overtime requirements. That means for hours worked in excess of 40 in a workweek, they need only be paid $4.05 per hour. Live-in house-workers and farmers still must be paid for every hour worked.

3) Employers of live-in house-workers and farmers may deduct a reasonable amount for room and board of up to $100 for housing and $100 for food per month.

The minimum wage still can not keep up with the ever-rising prices on basic needs and the high prices of commodities according to this Marianas Variety article:

Speaker Arnold I. Palacios, R-Saipan, expressed hope that the islands’ higher minimum wage rate will entice more locals to join the workforce.

The local private sector remains highly dependent on guest workers. Locals prefer to work for the CNMI government which offers high salaries and more benefits.

But while the islands’ minimum wage has increased, so did the prices of basic commodities and gasoline.

Palacios said it’s true that the 50-cent increase on the CNMI’s minimum wage rate is still not enough given the economic situation on the islands.

But he said “this is better than nothing.”

High Prices

Gas prices are almost $5.00 a gallon in the CNMI with Mobil's self-service regular gas on Saipan now costing $4.449 a gallon, and super unleaded is now $4.599 a gallon, according to the Saipan Tribune. Diesel fuel now costs $5.119 a gallon.

For full service, Mobil's regular gas is now $4.579 a gallon, while its super is now $4.719 a gallon. Motorists on Rota and Tinian have it even worse. The price for a gallon of regular gas on Rota was $5, with diesel fuel set at $5.75. Gas costs $4.940 a gallon on Tinian with diesel at $5.409 a gallon.

Food costs and medical care have also increased at a faster rate than wages. The Marianas Variety reported:

The consumer price index for medical care and food expenses in the CNMI increased by over 7 percent for the first quarter of 2008, compared to the figure for the same period in 2007.

The cost of electricity for residential customers rose from 17.6 cents/kwh to 35.7 cents/kwh.

If people in the states are hurting from high prices and low salaries, one can only imagine the difficulties for minimum wage earners in the CNMI where wages are even lower and the cost of living is even higher.

Meanwhile Back in Washington...

Included in FY 2008 War Supplemental bill that was passed by the US Senate last week, was legislation calling for further studies on the impact of the minimum wage on the CNMI and American Samoan economies.

The bill requires the Government Accountability Office to conduct a study to:

• Assess the impact of the 2007 and 2008 minimum wage increases in the CNMI and American Samoa on rates of employment and the living standards of workers, with full consideration of the other factors that impact rates of employment and the living standards of workers such as inflation in the cost of food, energy, and other commodities, and

• Estimate the impact of any further wage increases on rates of employment and the living standards of workers in the two territories while considering other factors that may impact the rates of employment and the living standards of workers, including assessing how the profitability of major private sector firms may be impacted by wage increases in comparison to other factors such as energy costs and the value of tax benefits.

The report must be submitted to the U.S. Congress no later than April 15, 2009.

The bill also requires, with the same regularity and to the same extent as is done for the 50 states:

• The U.S. Department of Labor to include, but report separately on, the CNMI and American Samoa in its household surveys and establishment surveys,

• The Bureau of Economic Analysis of the Department of Commerce to include, but report separately on, the gross domestic product data of the CNMI and American Samoa, and

• The Bureau of the Department of the Census of the Department of Commerce to include, but report separately on, the population estimates and demographic profiles from the American Community Survey.