Pacific Island Times Vol 3 No 6 June 2019 | Page 5

Brief Chat
Dr. Roseann Jones,
UOG professor of economic
Weighing in on new wage hike proposal
By Julian North
“Innovation and new opportunities aren’t created by
government. They are often subsidized after the fact. It’s
usually some inventor, someone with a genius idea and a work
hard kind of approach that finds a market and builds it.”
I
’m honestly kind of tired of this minimum
wage conversation,” said Dr. Roseann Jones,
professor of economics at the University of
Guam “I would really like us to move to this pro-
fessional… to this middle wage raise, and how we
create that economic engine. I think we’ve got the
minimum wage covered.”
Bill 136-35 has once again thrust the minimum
wage into the forefront of public debate. Introduced
by Sen. Joe San Agustin, the bill calls for two in-
cremental raises in minimum wage rate, which will
consist of 50-cent increases from $8.25 to $8.75 by
March 2020 and then to $9.25 by March 2021.
In the 33rd Guam Legislature, then Speaker Ben-
jamin Cruz introduced Bill 312-33, which would
have raised Guam’s minimum wage increased to
$10.10 by 2018. The bill was passed by the legisla-
ture but vetoed by then Gov. Eddie Calvo.
As it stands, Guam’s current minimum wage is
$8.25.
The University of Guam’s Regional Center for
Public Policy hosted a research seminar to explore
market data collected both nationally and local-
ly that correlates with mandated minimum wage
values.
In a presentation titled “Another Look at Mini-
mum Wage: Current, Past and Future,” Jones used
employer surveys and workforce data to dispel
most arguments both for and against the mandated
raise in minimum wage.
Those who support a mandatory wage raise argue
that it would alleviate poverty, modulate wage in-
equality and adjust to changing cost of living. De-
tractors warn that such raises could lead to increase
in unemployment, a shift from full-time workers to
part-time, drive a change to technology over human
manpower, wage inflation and businesses relocat-
ing to other regions with cheaper labor cost.
Citing the Federal Reserve Board Meta Review
of Minimum Wage Increase, Jones said only two
conclusions can universally be drawn from mini-
mum wage increase: 1) it harms the prospects of
unskilled workers and 2) it does not solve poverty.
Locally, data was collected retroactively follow-
ing the previous minimum wage increase from
$7.25 to $8.25 in 2014.
The study conducted by UOG was framed by the
impact the wage increase had on business, as in the
private sector, the government and the household
of Guam residents and as such members of these
three focus groups were surveyed.
The results sound almost too good to be true:
business owners indicated that the wage increase
led to increased investments in training of employ-
ees, the expansion of their business to explore new
revenue streams, and contrary to original beliefs
size and average hours worked of the workforce
did not decrease and prices did not increase as a
direct result.
“Could it be that minimum wage increase is the
great secret to economic development?” Jones
quipped.
For employees and prospective workers, those
surveyed indicated that overall jobs were more
difficult to find, yet easier to hold on to and also
most households did not see a disqualification from
welfare assistance due to wage increases.
“Innovation and new opportunities aren’t created
by government. They are often subsidized after
the fact,” Jones said. “It’s usually some inventor,
someone with a genius idea and a work hard kind
of approach that finds a market and builds it. That
entrepreneurial spirit which we have in Guam is the
most successful market model where the govern-
ment stays in the background.”
While statistics paint a rosy picture, there was a
key data point that raised eyebrows for several of
those in attendance: of the Guam workforce which
is approximately 60,000 workers only 1.4 percent
or 890 workers occupy historically low-wage
earning occupations. Which prompted Jones to
speculate that a minimum wage raise has a minimal
effect on the macro outlook of the economy.
When pressed on where she stands on the new
wage increase proposal, Jones offered a cautious
support. “As proposed, I don’t see anything against
it and this point in time,” she said.
With Guam’s current economy, Jones said a wage
increase at this point won’t have a major impact on
the workforce.
“But we are an economy that is based on tourism
and military, and both of those have their cycles. If
our economy were to falter, we don’t undo mini-
mum wage laws, it’s hard to pull back a wage from
someone,” she said. “Those wage rates stick. The
government doesn’t undo and lower the wage rate,
which is when businesses would have to respond to
with layoffs and workforce reductions.”
In an economic analysis report released in
2018, the Market Research & Development not-
ed: “Businesses are struggling to figure out how
exactly to adjust their businesses to keep up with
the proposed increases in minimum wages. While
some respondents focus on employee retention and
opportunities for growth such as adding benefits or
training opportunities, other businesses intend to
cut hours or increase prices of goods or services.
Overall, there is not one single anticipated ap-
proach to addressing future wage mandates, nor is
there a single observed change in response to previ-
ous mandates. Employers want their employees to
succeed, and believe in paying living wages.”
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