Guamanians living paycheck to paycheck saw the minimum wage increase as promised, but they also have seen the cost of living on island rise and their earning power decline.
The minimum wage on Guam went from $8.75 an hour to $9.25, in accordance with Public Law 35-38, on Sept. 1, 2021. The rising cost of goods, however, canceled out the wage increase for many workers.
"That's the problem with inflation – it erodes income. We always think about how much we make as opposed to the spending power of our dollar," Guam finance expert David John said last month.
The reality is that a dollar isn’t as strong as it used to be.
In today’s economy, the value of a dollar has shrunk to 48 cents on Guam, compared to its purchasing power in 1996.
If a dollar had the same power it did in '96, then today’s dollar value would equate to about $1.81.
Based on the Guam Occupation and Employment Wage Estimates comparison report from May 2020, a total of 64,820 individuals were employed on the island.
At the time, the average hourly wage on Guam was $9.06, or $18,850 annually. This reflects the 10th percentile of the island’s earning power. At the 90th percentile, the average hourly wage is $31.88, the average annual wage $66,303.
Some 49,780 work in the private sector; 11,850 are employed by GovGuam and 3,190 are working for the federal government.
For 2021, data released Friday in the latest OEWES report for May 2021, shows employment levels declined to 58,390 working adults. Not much changed between 2020 and 2021 as the minimum wage increase came late in the year.
Members of Guam's working class in the 10th percentile of hourly earning power on average made only a penny more last year: $9.07. That’s $18,870 on average annually.
At the 25th percentile, Guam workers made $10.79 an hour on average and $22,440 annually. At the 50th percentile, workers earned $14.31 an hour or $29,760. At the 75th percentile, the pay was $22.97 hourly or $47,780 annually. At the 90th percentile, workers made $35.22 hourly or $73,260 annually.
Increases to minimum wage are crucial to the workforce’s earning power, but is $9.25, enough?
$2,583 in monthly expenses
Comparing the earning power to how much people might spend to keep a roof over their heads, food in their bellies and gas in their cars - surviving to the next paycheck may be a struggle a large number of island residents face.
With fuel costs nearing $6 a gallon in recent weeks and food prices up 10.5% in the fourth quarter of 2021, the cost of living on Guam has skyrocketed.
The same report showed fish and seafood prices alone went up 29% and the cost of beef spiked by 26%.
Before recently reported inflation, the cost of living on Guam ranked the sixth highest among all states and territories. While the Department of Labor does not publish such statistics, it noted that making enough to live paycheck to paycheck depends on a number of factors.
“It would depend on many factors, and the amount could vary widely depending on various factors such as personal thrift, health conditions, owned housing accommodations and access to public assistance programs," said Gary Hiles, Guam Department of Labor chief economist. “(Massachusetts Institute of Technology) has a living wage calculator. Guam is not on the list, but since the cost of living is higher on Guam, the amount needed would be above that of most states.”
According to the Guam Chamber of Commerce, the approximate monthly expenses for a two-person household include:
• Rent for a 900-square-foot furnished accommodation in an expensive area: $2,551.
• Rent for a 900-square-foot furnished accommodation in a normal area: $1,815.
• Basic utilities for two people in a 900-square-foot apartment: $418.
• Cable internet service: $76.
• Daily basic food: $14.
• Dining out/entertainment: $49
For a family of four, costs can easily double.
Other necessities that factor into monthly budgets include the price of child care and schooling. On Guam, monthly day care costs range from $240 to more than $400. Private school tuition for elementary to high school can cost from nearly $500 to more than $800 per month.
If, on average, a single person is earning $9.25 an hour and is employed full time, the person's gross pay would be $740 for 80 hours. That adds up to $1,480 a month.
To pay for housing, utilities, cable and internet services, daily food and occasional dining out, based on the Guam Chamber of Commerce data, a single person would need to earn at least $2,583 a month.
That's a monthly difference for a full-time, minimum-wage worker of $1,103.
Except for the price of fuel and some food items that go up and down, the cost of many of today's consumer goods and services are not coming back down, so workers have to "out-earn inflation," John has said.
