Guam business representatives testified Wednesday against a bill that would tie the island’s minimum wage to the Consumer Price Index, providing for an annual review of the wage and adjusting it for inflation.
Bill 4-38, introduced by Sen. Joe S. San Agustin, was intended to help maintain the purchasing power of minimum wage earners and prevent them from falling further behind the cost of living.
San Agustin said several states have similar laws, including California, Washington, Massachusetts and Oregon.
If implemented now, the minimum wage, currently $9.25 an hour, would be raised to more than $11.50, according to Catherine Gayle, executive director of the nonprofit Employers Council of Guam.
“When you increase wages, employers have to find the money somewhere,” she said. “The three key results will be an increase in prices, a reduction in hours/automation, which we are seeing much more now, and ultimately, benefits take an impact.”
Gayle said inflation on Guam is much higher than inflation throughout the rest of the country – almost double.
“The problem is, what is driving that?” she said. Tying the minimum wage to inflation creates a cycle that does not address what she says the real issue is: “the purchasing power of our people, our island.”
Catherine Castro with the Guam Chamber of Commerce testified that linking the minimum wage to the CPI would exacerbate the affordability problem.
“Many small and family-owned businesses, particularly those with narrow profit margins, may be forced to raise prices, reduce employee hours and limit hiring. These higher prices then feed back into the CPI, triggering further wage increases over time,” she said.
Mary Rhodes of the Guam Hotel and Restaurant Association said businesses – particularly in the visitor industry – are still recovering from the pandemic and Typhoon Mawar, which slammed the island in May 2023.
She spoke against “a wage increase at this time, especially in such a crucial moment where we've seen business closures and people are actually not hiring as much as what we've seen.”
Sen. Chris Barnett asked whether the business community representatives would support any minimum wage increase, and they all said they would not be in favor of an increase now.
“It's always said that we have to let the market dictate when the environment is good for a wage increase,” Barnett said. “But I've never heard a single person, whether they represent the Employers Council, GHRA, or any employer or business-type entity, come before the senators and say, ‘Yes, it's a great time. Let's do this.'"
Sen. Shelly Calvo said she might support a conservative minimum wage increase, but she knows a number of businesses will be closing in the next few months, and there is the potential to be “losing employment by the hundreds. So that is quite alarming for our community.”
The hearing will continue from 4 to 6 p.m. Jan. 23, to allow people who work to testify.
