Affected Workers

In October 2022, the Progressive Democrats of Guam released a platform which advocated returning the minimum wage to its purchasing power in the beginning of 2015, which would be around $11.25 by the end of 2024. The current proposal is to raise the minimum wage in two increments to $11.10 by March 2024, which would be restoring the minimum wage to its 2015 level. Below is the estimate of the direct impact by major employment groups from data in the May 2021 Occupational Employment Survey.

Major Occupation Group	Total Employment	Median Hourly Wage	Affected Employment (est.)	Percent of Employment Affected (est.)
Management Occupations	4,890	30.11	N/A	N/A
Business and Financial Operations Occupations	2,920	23.79	N/A	N/A
Computer and Mathematical Occupations	740	22.74	N/A	N/A
Architecture and Engineering Occupations	950	29.3	N/A	N/A
Life, Physical, and Social Science Occupations	580	24.56	N/A	N/A
Community and Social Service Occupations	800	22.56	90	11%
Legal Occupations	320	32.92	N/A	N/A
Educational Instruction and Library Occupations	4,500	23.08	N/A	N/A
Arts, Design, Entertainment, Sports, and Media Occupations	450	14.14	130	28%
Healthcare Practitioners and Technical Occupations	2,060	22.71	N/A	N/A
Healthcare Support Occupations	1,130	11.66	330	29%
Protective Service Occupations	2,450	18.09	700	28%
Food Preparation and Serving Related Occupations	5,580	9.86	4,400	79%
Building and Grounds Cleaning and Maintenance Occupations	2,170	9.78	1,600	74%
Personal Care and Service Occupations	770	9.44	590	76%
Sales and Related Occupations	4,750	10.62	2,570	54%
Office and Administrative Support Occupations	8,030	14.05	2,070	26%
Farming, Fishing, and Forestry Occupations	60	15.21	14	23%
Construction and Extraction Occupations	5,790	17.35	620	11%
Installation, Maintenance, and Repair Occupations	3,180	14.97	600	19%
Production Occupations	1,510	14.31	430	28%
Transportation and Material Moving Occupations	4,780	11.25	2,300	48%

Based upon the data in the Occupational Employment Survey, about 28% of jobs may be directly affected by raising the minimum wage to $11.10.

The State of the Economy

In September 2022, the unemployment rate reached 4.4% and the employment-population ratio had recovered to 55.4%. For reference, the unemployment rate for the five years preceding the pandemic was 4.6%, while the employment-population ratio was 55.6%. Employment at that time was, thus, at a level of normal employment. Attracting and retaining workers in Guam’s workforce will require an improvement in labor conditions that reflect the scarcity of labor, including improved benefits and higher wages. Raising the minimum wage aggressively will allow employers to make this adjustment without the risk of overshooting their competition in Guam’s labor market, putting them at a competitive disadvantage. It will also serve as a stronger incentive to attract and retain workers. A strong wage floor is a guarantee to workers that their labor will be compensated by a more decent hourly wage. Furthermore, increased pay will ensure that working families are better able to afford a good quality of life.

Studies on Increasing the Minimum Wage

Economic literature on increasing the minimum wage has developed significantly since a landmark study by economists David Card and Alan Krueger found that increasing the minimum wage did not lead to any job losses. The literature has mixed results, the best quality studies indicate that there is no statistically significant reduction in jobs by minimum wage increases. Below is a funnel graph which was used by the Center for Economic Policy Research to illustrate this point. Higher quality results are placed higher on the graph while lower quality results are placed lower on the graph.

As the quality of studies improve, the studies converge to show essentially no effect on employment by raising the minimum wage.

Guam Minimum Wage Study (2017)

Following the increase of the minimum wage in early 2015, the Guam Department of Labor hired Market Research & Development, Inc., (MR&D) to conduct a minimum wage study. The MR&D reported:

“The study hypothesized that the impact of this minimum wage increase would likely not have a significant effect on the overall condition of Guam’s economy. A review of the island’s macroeconomic indicators shows Guam to be in an expansionary phase of its business cycle. Leading indicators of GDP, employment, inflation, and others presented here confirm that the minimum wage has not negatively impacted Guam’s economic progress. Employment trends show continued job and wage growth.”

MR&D. Guam Minimum Wage Study (2017)

MR&D conducted a “Guam Business Survey” and “Guam Household Survey” as part of its study. The Guam Business Survey confirmed its finding about Guam’s economic health following the minimum wage increase. It found, “Few businesses report reduction in the number of workers, hours, or benefits in the year following the minimum wage increase to $8.25 per hour. Many businesses interviewed indicated that they had absorbed higher minimum wages with no major disruption to their business activities, nor to the employees who work for them. Benefits, number of hours, and full-time employment did not change significantly because of a higher minimum wage to $8.25 per hour.”

However, the results for minimum wage households were more significant. The study found that those households were better off following the minimum wage increase.

It seems unlikely that restoring the purchasing power of the minimum wage to its early 2015 level will have significantly different effects on Guam’s economy following its proposed implementation in March 2024.