Puerto Rico Governor promises minimum wage increase in State of the Territory address

by Mar 8, 2017Headlines, Puerto Rico0 comments

On February 28, 2017 Governor Ricardo Rosselló stepped up to give his first state of the Territory address to the people of Puerto Rico. In the speech he outlines proposals for his administration that include the plans to address the financial crisis, as well as promising a wage hike to both private and public sector workers. This is different from the promise he made in January, when he said that on the islands there would be no change to federal minimum wage. He noted in January that while there would be changes to flexitime and maternity law, it would mainly be to the discretion of employers. The proposed increase in minimum wage is designed to boost morale of workers, but according to some could potentially hurt the economy and impact the governor’s bold debt repayment plan.

This is the latest change proposed to the minimum wage on the Islands after a proposed decrease in wages was rejected. In 2016, Puerto Rico had an initiative to reduce the minimum wage of workers below the age of twenty five to $4.25 an hour. The idea was that this lower wage would allow for more workers to be hired and increase the number of individuals in the workforce. This was rejected by the White House and Congressional members citing that, since overall, Puerto Rico was attempting to increase the quality of life  , lowering the minimum wage was a counterintuitive move. Others argue that by increasing the minimum wage now, that the number of those in the workforce would drop in a significant number and that the quality of life would go way down for those who were once employed but whose employers could no longer afford to keep them due to rising employment costs. Rosselló seems convinced that with increased revenue from budgets cuts across the board, an increase in wages would be a non issue and that Puerto Ricans would feel more secure and more able to prosper in their communities.

Rosselló also outlined other plans for the economy that would save 1.6 billion in government spending. Changes include cutting pension benefits upwards of $550 million,  eliminating tax incentives, and cutting subsidies to municipalities. He has also proposed cutting the amounts of government agencies housed on the islands from 131 to 35. He says he plans to do this without heavily impacting those currently working. The opposition says this is a foolish fantasy plan that cannot be sustained. While his plan is ambitious, it does not meet the mark of the $4.5 billion that the Oversight Board  recommended. This could prove detrimental to Governor Rosselló as his plan may be thrown out and substituted with a plan that the board creates. With a March 15 deadline drawing near, the board  is going to need to make the decision to approve the plan or create their own quickly, so that Puerto Rico can be put on a path of financial stability and fiscal responsibility.