Retailers: Federal minimum wage hike would be ‘disastrous’ for island SMEs
By The Star Staff
United Retailers Association (CUD by its Spanish acronym) President Jesús E. Vázquez Rivera on Tuesday opposed the proposal promoted by Gov. Pedro Pierluisi Urrutia to increase the federal minimum wage to $15 an hour in Puerto Rico.
“We know that the message of Governor Pedro Pierluisi to increase the minimum wage is a commendable one. We all want Puerto Rico to be prosperous and to improve the quality of life of its citizens, but we must see the reality of the country,” Vázquez Rivera said. “An increase of this magnitude would cause the closure of over 50% of the businesses of small and medium-sized entrepreneurs. Yesterday [Monday] we heard from the secretary of the Department of Economic Development and Commerce, Manuel Cidre, and in his explanation he talked about the impact this would have. In the megastores and large factories this salary could be paid, but the small and medium-sized companies, which are the largest employer, will find it impossible.”
The CUD leader said he believes that a gradual increase in the minimum wage would be more viable for employers.
“Representative Joel Franqui is submitting again a measure on salary increases, and the aforementioned bill has more viability, since it is one that aims to increase the minimum wage for several years, with real and competitive increases,” Vázquez Rivera said. “We have to be less passionate and see the reality of the Puerto Rican economy. First, the government has to improve the way it does business in the country. Every day there is a new increase -- electricity increases, water increases, we have an inventory tax, the cost of maritime transportation has risen significantly, and now there is also an increase in the transportation business. What business can increase a living wage for its employees when it has so many obligations to pay?”
The CUD president also insisted that increasing the minimum wage to $15 an hour would drive up payroll to $5 billion in the private sector. He said it will be very difficult to cover such an expense at a time of economic crisis, when in 2020 there were losses that exceeded $10 billion.
“They are marrying the increase in salary with tax credits, and that is a help, but the problem is not the credits, the problem is that there is a cash flow problem in all businesses, and the vast majority of them will not stay alive long enough to receive this tax aid,” Vázquez Rivera said.