In a modern economy, it is tempting to believe that wealth and income are the product of an enterprising individual. But both wealth and income ultimately come from two sources: natural resources and work. Some part of the labor input is cumulative and results in things like capital and technology, which are meaningful contributors to growing wealth and productivity.
Increasingly, the wealth and income of modern societies are being diverted to rents which are extracted by private interests. This is facilitated by government which serves a narrow minority to a greater extent than it serves the vast majority of people who comprise the working class.
The working class must come together to advance their common interest in a fairer economy that works for everyone. Build a fairer economy for the working class, I propose two broader strategies which address incomes: improving pay for work and providing more income security when working class people are temporarily or permanently unable to work.
Working class people broadly recognize that the minimum wage is not adequate in today’s economy. I believe the best evidence-based benchmark for a decent minimum wage in Guam is its January 2015 level. Reliable economic data are available for this period, when the minimum wage had its highest purchasing power in decades.
The Republican Calvo-Tenorio Administration commissioned a study of this minimum wage increase. Consistent with the broader economic literature, the study did not find any adverse impacts from the minimum wage increase, but found that low-income families benefited financially.
Despite a few minimum wage increases since then, the minimum wage has gradually lost purchasing power and its parity relative to average wages. The purchasing power of the minimum wage should be restored by increasing it by 35%, to $12.50 per hour, over the next 2 years. We can be confident, given our real experience with the minimum wage at this level of purchasing power, that this minimum wage level will be beneficial to low-wage workers, while not having any significant adverse impacts.
The pro-labor Leon Guerrero-Tenorio administration recently unveiled a 15% raise for teachers. This is a very important and necessary step to improve the conditions of work and learning in public schools. The last pay raise for teachers had been in 2022.
However, this increase leaves out support staff and most other public employees of the Government of Guam, who last received an increase in 2023. This may not seem like a long time, but private sector wages and the cost of living have increased at a fairly rapid pace, leaving the General Pay Plan roughly 10% behind where it should be to maintain its external competitiveness and meet the rising cost of living.
In addition to these wage policies, which would give workers a better share of Guam’s economic product, we must provide enhanced support to members of our community who are temporarily unemployed through no fault of their own and individuals who are unable to work due to workplace injury, permanent disability, or advanced age.
Every state and two territories, the U.S. Virgin Islands and Puerto Rico, have a system of unemployment insurance. Unemployment insurance works by establishing a small payroll tax on employers. A worker who is terminated through no fault of their own may apply for weekly compensation, which is typically about half of the worker’s weekly wage. While this system does not fully replace the worker’s wage, it will still help them when they face a transition to their next job. We should establish an unemployment insurance system to provide this much needed relief.
Under Guam’s Workers Compensation Law, employers are responsible for paying compensation to employees who are permanently or temporarily disabled equivalent to 2/3 of their weekly wage either indefinitely or until the employees’ recovery, respectively. While Guam’s maximum benefit is now $1,011 per week, this is low compared to most U.S. states, despite Guam’s relatively high cost of living. Increasing the maximum benefit would improve the standard of living of these individuals who face temporary or permanent disability. The additional income would ease the transition of individuals facing a temporary or partial disability, who may return to work on some basis.
In lieu of Supplemental Security Income (SSI), which would be provided to low income Social Security beneficiaries, Guam has the pre-SSI Aid for the Permanently and Totally Disabled, Aid to the Blind, and Old Age Assistance. These provide much lower benefits than SSI and is available to a small group of low-income disabled and elderly individuals. In my view, not only should the benefit amount be supplemented, but cash benefits should be available for individuals meeting a higher income threshold.
Our working class understands that not only do they need better wages to ensure they can afford a higher cost of living that has been developing for years, but that many working class people face conditions outside of their control for which they need transitional or permanent assistance to maintain a decent living. Income security is deeply important for working families and it is why working people stand together in solidarity for decent living for others.
Political leadership in these times means advancing a fairer economy that will benefit the working class, not just serving the wealthy few.
