News Releases

GVB: Minimum Wage Hike Will Cause Layoffs

April 29, 2014

Membership survey shows decrease in jobs, hours and benefits.

(Tumon, Guam) The Guam Visitors Bureau (GVB) has polled its membership to get the tourism industry’s position on Bill 316, which proposes to raise the minimum wage 39% over the next three years. Out of 95 respondents representing 11,043 employees, 80% were against raising the minimum wage. Nearly 60% said they were likely to reduce the number of employees if the minimum wage increases as proposed.

When asked, “If you reduce your number of employees, how many do you estimate that you will have to let go?” the total number of jobs lost was 674. Moreover, 68% were likely to decrease hours, and 66% would reduce other benefits like health care.  Additionally, 78% indicated they would like to raise prices, but may not be able to since 92% responded that their customers are price sensitive.

“We understand that lawmakers want to help people, but forcing the free market to raise the minimum wage will have the reverse effect, leading to a decrease in jobs and hours, and an increase in prices. We recommend a full economic study that analyzes the ramifications this will have on our investor climate and every single person on this island.” said GVB General Manager Karl Pangelinan.
“Guam is already up against stiff competition in the tourism sector, competing against destinations with much lower costs of doing business. Plus, with the devaluation of the Yen, Guam has already become a more expensive destination for Japanese visitors, our primary market. In this current environment, it is not the time to raise costs, which will lead to higher prices and a decline in our visitor industry.”

The GVB Board of Directors passed a motion to oppose the minimum wage hike proposed in Bill 316. GVB Board Chairman Mark Baldyga said, “Unlike other sectors of our economy, tourism offers many entry-level jobs such as for students and unskilled workers. One out of three people on our island have a tourism-related job. This bill will cause our member companies to cut jobs, hurting the very people it is intended to help. In addition, it will also hurt other employees currently earning above minimum wage with 77% of our members stating that they are likely to eliminate wage increases for all other employees to make up the cost. It will cause significant damage to Guam’s fragile tourism industry that is just now finally beginning to get back on its feet after two decades of challenges.” 

Baldyga said that he looked forward to working with lawmakers to explore alternatives that would both bolster the economy and raise wages in a sustainable way.

GVB will be submitting testimony to the 32nd Guam Legislature during the public hearing on Bill 316 at 2 p.m. on Wednesday, April 30. Both Pangelinan and Baldyga encourage everyone in the tourism industry to do the same and let their concerns be known to lawmakers.