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Puerto Rico CofC rejects minimum wage hike for construction workers

By on August 2, 2018

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SAN JUAN – Following Gov. Ricardo Rosselló’s executive order raising the minimum wage for construction workers under government contract to $15 an hour, the Puerto Rico Chamber of Commerce said the move could upend the local industry and should be repealed.

In a written statement, CofC PresidentKenneth Rivera said, “It is important to adequately address the issue of the minimum wage in Puerto Rico amid the complicated fiscal situation of the Island, but we believe this increase may cause a serious dislocation to Puerto Rico’s construction sector.”

The CofC president said economists such as Dr. José Caraballo have argued against substantial increases to the minimum wage. “In fact, the economist and author of the research [titled] ‘Is There a Minimum Wage Biting in Puerto Rico? Updating the Debate,’ has stated that an increase in the minimum wage to $15.00 is not adequate and that the data point out that the minimum wage in Puerto Rico should be $8.61 an hour.”

Rivera also said Nobel Prize-winning economist Joseph Stiglitz, “who historically has been an advocate of an increase in the minimum wage in the United States, acknowledged in his hearing on April 6, 2017, that it should be taken into account that an increase in Puerto Rico will not have the same result as in the United States,” adding, “This is so, because our income is a quarter of what is earned in the states.”

“Therefore,” Rivera said, “our first concern is what factors were used to determine the amount of $15 per hour.”

Another CofC concern: “The practical effect when implementing this requirement also worries us. In the case of a construction company that has public and private projects, it would have to be adjusting the hourly wage depending on what type of projects the employee is involved with. In addition, being realistic, construction employees will do everything possible to maximize their compensation per hour, which could cause resignations in projects underway, to go work on projects with the government.

“The Eighth Section of the Order intends for it not to have a retroactive effect on existing projects; however, in practical terms, there will be a negative effect on existing contracts. This could even mean that projects that have already begun could be affected to the point of stopping work in progress. And obviously, it could increase the future cost of construction on the Island.”

Executive order: Minimum wage for workers in gov’t-contracted construction is now $15

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