Former Secretary Carlos Rivera explains why he supports returning the minimum wage review to the Legislature.
Carlos Rivera Santiago, Esq., Former Secretary of Labor
When we talk about the minimum wage, we are referring to the minimum amount an employer is required to pay an employee for each hour worked. In other words, the minimum wage is not a maximum wage, nor does it necessarily represent the wage that every employer must pay in all cases. It is a starting point within the labor market, not a substitute for the broader analysis that must be conducted regarding productivity, experience, training, retention, cost of living, the employer’s financial capacity, and the actual conditions of each industry.
For this reason, any serious discussion of the minimum wage in Puerto Rico must be conducted responsibly. It cannot be limited to political slogans or emotional arguments. The minimum wage directly impacts workers, but it also affects small and medium-sized businesses, municipalities, nonprofit organizations, the agricultural sector, the service sector, consumers, and Puerto Rico’s economic development. Raising it without analysis may sound appealing in public discourse, but if done without weighing its consequences, it may end up harming precisely those it is intended to benefit.
In the past, Puerto Rico had a Minimum Wage Board that operated for many years. However, that model was eventually discarded, among other reasons, due to questions about its effectiveness and ability to respond in a flexible and responsible manner to the island’s economic realities. That historical experience should serve as a warning to us: decisions regarding the minimum wage should not rest on bureaucratic structures disconnected from a broad public discussion or from the necessary economic data.
In 2021, under a government shared between the Executive Branch and the Legislative Assembly, the debate over the minimum wage was one of the central issues in public policy. As part of that process, Executive Order OE-2021-035 established the Governor’s Advisory Group on the Minimum Wage, composed of representatives from various sectors, including economists, union representatives, business associations, and government officials. That group was tasked with evaluating the issue and formulating recommendations aimed at raising the minimum wage without jeopardizing Puerto Rico’s economic stability.
The result of that process was the introduction of a legislative measure that culminated in the passage of Act No. 47-2021, known as the Puerto Rico Minimum Wage Act. That law established a phased increase in the minimum wage: $8.50 per hour effective January 1, 2022; $9.50 per hour effective July 1, 2023; and $10.50 per hour effective July 1, 2024, unless the Minimum Wage Evaluation Commission issued a mandatory decree varying said increase. Since the Commission did not halt or modify the $10.50 increase, it took effect as legislated.
This reality is important. The minimum wage of $10.50 currently in effect in Puerto Rico was not the result of an isolated decision by a Minimum Wage Commission. It was the outcome of a public, legislative, and executive process involving diverse sectors, economic analysis, and democratic debate. In other words, the current increase arose from a combination of technical evaluation, political consensus, and legislative approval.
That point is not insignificant. The Legislative Assembly provides a public forum where measures can be discussed, amended, evaluated, and scrutinized. It allows for the participation of employees, employers, economists, government agencies, private organizations, unions, merchants, and citizens. In addition, it has institutional tools such as the Legislative Assembly’s Budget Office, known as OPAL, which can conduct analyses on fiscal impact and compliance with the PROMESA Act when appropriate.
A Minimum Wage Commission, on the other hand, concentrates a decision with enormous economic and social impact in the hands of a small group of people. While it may be valuable as an advisory or technical body, it does not necessarily replace the broad, transparent, and participatory debate that must take place when seeking to alter a public policy that affects virtually every sector of Puerto Rico’s economy.
Eliminating a Minimum Wage Commission does not mean eliminating workers’ acquired rights or reducing the current minimum wage. The minimum wage of $10.50 is already established by law. What is being evaluated is what should be the appropriate mechanism for establishing future increases: whether through a commission with limited membership or through the ordinary legislative process, open to all sectors and subject to public scrutiny.
Recent experience shows that the legislative process works. In 2021, a phased, responsible increase was achieved as a result of a broad discussion process. The needs of workers were taken into account, as were Puerto Rico’s economic realities. That model produced the minimum wage that is currently in effect.
Therefore, the real discussion should not be whether or not Puerto Rico supports higher wages. We should all aspire workers to earn more and for there to be better job opportunities. The real discussion is how we achieve that without hindering job creation, without penalizing small business owners, without expanding the informal economy, and without making economic decisions based on improvisation.
Puerto Rico needs better wages, but it also needs more jobs, more investment, greater productivity, and greater economic stability. An increase in the minimum wage must be analyzed with seriousness, transparency, and responsibility. It must be done by listening to all sectors, not through a decision concentrated in a limited group that, however technical it may be, does not replace the breadth of the legislative process and citizen participation. If there are plans to revisit the minimum wage in the future, it must be done by following that same path: with openness, data, citizen participation, fiscal responsibility, and respect for Puerto Rico’s economic reality.
This OpEd was originally published in Spanish in InDiario.
