Possible 'living-wage' law has support and opposition
Published: April 28, 2011
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ST. THOMAS - A recent study commissioned by the 28th V.I. Legislature examines the question of whether the territory should raise its minimum wage for taxpayer-funded workers to $10 an hour.
In 2008, the Senate passed Act 7027, requiring the V.I. Bureau of Economic Research to conduct a living-wage study and appropriating $200,000 for the task.
Dr. Zenia Kotval and Dr. John Mullin, from the Massachusetts-based consulting firm Mullin Associates, were the study's lead authors. Mullin is the graduate school dean and director of the Center for Economic Development at the University of Massachusetts Amherst. Kotval and Mullin are both consultants with the U.S. Economic Development Administration, according to Government House spokeswoman Julia Watthey.
The study defines a living wage as one that allows a full-time worker to support a family above the federal poverty line and without public assistance.
"Nothing fancy, no frills, no extras," Bureau of Economic Research director Lauritz Mills said. "That's what it costs for just very basic subsistence."
Those who want to bring a living-wage law to the territory say the federal minimum wage of $7.25 an hour does not cover the most basic life expenses anywhere in the country - let alone in the Virgin Islands, where costs for utilities, food and fuel are often significantly higher than on the U.S. mainland.
Employees of the government, workers from companies contracted to do business with the government and laborers employed at Economic Development Commission companies need to earn at least $10 to subsist, the report says.
The $10 figure, as well the study's other suggested wages, reflects employees' take-home pay after taxes, Mills said.
Single adults with children, the study says, should make a little more than $16 an hour, and if workers do not get health insurance through their jobs they should earn more per hour to offset the cost of staying healthy without insurance.
Increasing the minimum wage to a level between $10 and $16 an hour would affect 790 to 5,100 of the territory's workers who live above the federal poverty guidelines but still struggle financially, according to the study.
The territory could pay for the increased wages by increasing property taxes, raising the hotel occupancy tax, levying a new tax or re-appropriating tax revenue, according to Kotval and Mullin's analysis. The authors recommend using all of those methods in concert.
If the territory passed a living-wage law, it would be joining cities such as Boston, Cleveland, Los Angeles, Milwaukee, San Francisco and Minneapolis, the study said.
Most of the territory's workers who fall into the three categories - government workers, workers employed through government contracts and workers from EDC companies - already are making $10 an hour, according to the study. Mills attributed this, in part, to an existing V.I. law that prohibits full-time government workers' salaries from dipping below $20,000 a year.
There is a higher concentration of workers making less than $10 an hour within one branch of EDC companies: hotels, recreation facilities and marina and transportation businesses, the study said. A living-wage law would affect the wages of between 12 to 14 percent of those companies' workers, it said.
The study estimates that the territory's hotel and leisure businesses would have to increase their payroll by $2.4 million if the minimum wage went up to $10 an hour; by $4.2 million if it went up to $12 an hour; by $6.3 million if it went up to $14 an hour; and by $8 million if it went up to $16 an hour.
"Although the Hotel Association understands the intent of bringing Virgin Islanders out of poverty level, we're extremely concerned about the economic impact in these very, very difficult economic times," V.I. Hotel and Tourism Association president Lisa Hamilton said. Hamilton also was a member of the committee that worked on the study.
While many hotels start their employees at low wages, they also have "very progressive paths" that allow those employees to advance their position and pay, Hamilton said.
On the other side of the debate is Hamilton's fellow committee member Luis Morales, president of United Steelworkers Local Union 8249.
"They want to keep people in economic bondage," Morales said.
Low-paid hotel workers in the Virgin Islands are most often permanent community members who want to have a family, home and life working here, Morales said.
"All the studies show that in the Virgin Islands, in order just to break even, you need a minimum wage of $10 an hour," he said. "It has to be implemented now."
Senate President Ronald Russell said he anticipates that a living-wage law could meet resistance, given the territory-wide economic troubles and the $75.1 million budget shortfall facing the central government this fiscal year.
The territory has a larger-than-average number of residents who earn very little money. About 11 percent of the territory's households live on less than $10,000 a year, compared with 7 percent of households in the country as a whole, according to the study.
Mills said passing a living-wage law would be a good step toward decreasing the disparity between the territory's wealthy and poor and numerous "social ills" such as crime. "I think that's the bottom line: Life," Mills said. "What quality of life to we want to give our residents?"
- Contact reporter Karen Hollish at 774-8772 ext. 304 or email email@example.com.