MiniMuM wage increase: More pros than cons

Increased minimum wage brings uncertainty

Inflation exacerbates a system that eats away workers’ limited resources.

Zoe Landi Fontana, The Weekly Journal

On Jan. 1, 2022, the Puerto Rico minimum wage rose to $8.50 from $7.25. Signed into law by Governor Pierluisi on Sep. 21 of last year, Act 47-2021 is a long-overdue attempt to bring the minimum wage into line with the cost of living through a series of periodic increases.

Unless disputed by the Minimum Wage Evaluation Commission, the minimum wage will rise incrementally every year until it reaches $10.50 on July 1, 2024. Act 47-2021 is the first minimum wage increase to be authorized by the local government. Prior to this, the minimum wage had not been raised since 2009, and only ever by federal mandates.

Increased Cost Of Living

Cited as the most pressing justification for increasing minimum wage, the U.S. Consumer Price Index (CPI) experienced a 7% hike last year, the largest increase since June 1982. The indexes for shelter and for used cars and trucks were the largest contributors to the increase, despite the energy index having decreased by 0.4% and food increased by only 0.5% last December.

For Puerto Rico, though, food and energy prices are always high. Inflation is up as well, exacerbating a system that eats away workers’ limited resources.

According to the U.S. Energy Information Administration, the residential electricity rate in Puerto Rico is 22.64 cents/kWh, while in the continental US, electricity costs about 14.11 cents/ kWh. From July 2020 to June 2021, 97% of the island’s electricity was generated by fossil fuel-fired power plants, with 44% from natural gas and 37% from petroleum. Renewables generate only 3% of the island’s electricity. LUMA’s chief regulatory officer, Mario Hurtado said that from April 2020 to November 2021, the price of a barrel of oil went from $17 to $70, and the price of natural gas almost doubled - rising to $4.57 per million BTUs.

Possible Side Effects Of Raising The Minimum Wage

Approximately 70% of businesses on the island are categorized as small and medium-sized enterprises, for which a $1.25 hourly wage increase is no small deal. Nevertheless, business leaders, entrepreneurs and even the Secretary of the Department of Economic Development and Commerce, Manuel Cidre, have admitted that the impact of the minimum wage increase has not been what many expected. Act 47-2021 also establishes a Minimum Wage Evaluation Commission, whose job is to determine whether the minimum wage needs to be increased after compiling an annual analysis on working conditions, benefits, cost of living, and other factors necessary in determining the minimum wage.

The Commission will have to keep in mind possible effects such as those found by a 2021 study made in California by Cornell University, Georgia Institute of Technology, and University of Washington researchers. The study, conducted among low-income workers at fashion retail stores, showed that an increase in minimum wage can worsen worker welfare by causing unintentional changes in the allocation of labor hours. Contrary to other studies that theorized that minimum wage improves worker welfare because overall employment stays the same, this study explored what happens when the business’s total labor-hours stay the same, but the allocation of hours changes. The researchers explained that when the minimum wage is increased by one dollar, the number of workers scheduled to work per week goes up, while the average hours per worker decreases. This is especially prevalent within the retail and service sectors.

In addition to losing eligibility for welfare

In fact,

Minimum wage in Puerto Rico will rise incrementally every year until it reaches $10.50 on July 1st, 2024.

“It (the minimum wage increase) should have been approved in two steps to minimize the impact.

José Joaquín Villamil Economist

benefits, decreased hours cause less consistent worker schedules. When worker schedules become less consistent - in terms of total hours per week as well as the timing of shifts – it’s more difficult to coordinate personal life or work a second job. Thus, attaining financial stability is more difficult.

But that is not the case in Puerto Rico because the Department of the Family submitted to the federal government the changes to amend the State Plan for the Nutritional Assistance Program (PAN, for its Spanish acronym) in order to adjust the eligibility levels and prevent those who benefited from the increase in the state minimum wage from losing benefits.

For economist José Joaquín Villamil the salary increase, –although he supports it– considers it should have been carried out in a growing economy and not in an economy “that has not grown as much.”

“It should have been approved in two steps to minimize the impact,” he argued.

In fact,

Beginning in March, and running through summer, Iberia will dedicate the design of one of its aircraft to Puerto Rico.

The delegation from Puerto Rico confirmed over 200 business meetings in Spain. >Courtesy

The International Fair of Tourism in Madrid ends with collaborations

Iberia Airlines will feature Puerto Rico on one of their planes this spring

Zoe Landi Fontana, The Weekly Journal

The Puerto Rico Tourism Company (CTPR, for its Spanish acronym) used the International Fair of Tourism (FITUR, for its Spanish acronym) in Madrid last week as the launching pad for its marketing strategies to promote the island to European audiences among 250,000 professionals from the global tourism industry. The delegation from Puerto Rico confirmed over 200 business meetings, amplifying support for touristic and commercial alliances between the island, Europe and Latin America. The PRTC estimates that the economic impact of the collaboration agreements made during the event could surpass $10 million.

“Our main goal at FITUR this year focused on Governor Pedro R. Pierluisi’s vision of continuing to bet and promote Puerto Rico as a first-class and safe destination for vacationing and doing business, which is also notable for its advanced health protocols to combat COVID-19. On the other hand, our ministerial agenda included participating in meetings and forums that would facilitate us the expansion and strengthening of our trade relations with Latin America and Europe,” said PRTC executive director Carlos Mercado Santiago, who was awarded the Medal of Merit for the Internationalization of Tourism in Latin America.

Discover Puerto Rico’s booth exhibited PRTC’s agro-tourism and sustainable tourism initiatives, hotel developments, tourist attractions and cultural experiences, as well as highlighting the island’s more contemporary attractions: the largest and most technologically advanced Convention Center in the Caribbean and the new entertainment center –“T-Mobile District,” which features concert halls, restaurants, hotels, urban “ziplines” and some of the most modern movie theaters in the Caribbean.

Discover Puerto Rico ended the tourism fair with 35 promotional interviews with the local media and over 31 business meetings with executives from various tourism companies.

Partnership With Iberia Airlines

A partnership between Puerto Rico and Iberia Airlines is another product of the networking and negotiations at FITUR.

This year, beginning in March, and running through summer, Iberia will dedicate the design of one of its aircraft to Puerto Rico. The airplane will feature designs that pay tribute to the landscapes and iconic images from the “La Isla del Encanto” and is scheduled for short and mediumlength flights to over 90 destinations, including Italy, France, the UK, and Germany.

This initiative is part of Iberia’s compromise to continue strengthening its commercial operations

in Puerto Rico. Iberia Airlines and PRTC also signed an agreement to continue supporting connections between Puerto Rico and Europe. The agreement includes a series of initiatives to promote the island through all the airline’s media channels, for instance, the on-board entertainment system, the airline’s Ronda magazine, as well as on its social media channels.

The Future Of Tourism Is Sustainable

The PRTC will go on to participate in the next Sustainability and Investment Forum, which will take place June 14 in San Juan, Puerto Rico at the District Convention Our main goal at FITUR this year Center. Their participation reaffirms focused on Governor Pedro R. their compromise to preserve the planet and Pierluisi’s vision of continuing to its biodiversity, reduce bet and promote Puerto Rico as the effects of climate change, and increase a first-class and safe destination for vacationing and doing the tourism sector’s resilience by fostering sustainable growth and business, – Carlos Mercado supporting the local community. The World Travel Executive Director, PRTC and Tourism Council will also be present at the forum. Julia Simpson, president and CEO of the WTTC, praised Puerto Rico’s handling of the pandemic, saying, “‘In addition, we acknowledge the great work that Puerto Rico has been doing in the face of the pandemic, as it has implemented strict biosafety protocols to preserve the health of travelers while keeping their tourist services open.”