Many urban homes have no income

A new report on the minimum wage from the Graduate School USA for the Marshall Islands government notes that 17 percent of households in Majuro and Ebeye have no wage earner and are in need of alternative means of social protection aside from increasing the minimum wage. Photo: Wilmer Joel.

Here is a startling figure. Of the 5,318 households in Majuro and Ebeye, 909 of these have no wage earner.

The recent Technical Note by the Graduate School USA that focuses on the minimum wage reports on a recent RMI household survey and says the proposed basis for adopting an increased minimum wage is based on the “average household” in Majuro and Ebeye having one-and-a-half employees.

The report said for the two urban centers, a minimum wage increase will help safeguard the populations faced with increasingly high living costs. It is being proposed to raise the minimum wage in increments from its current $3.00 per hour to $5.25 per hour over the next three years.

But for the 909 households in the urban centers without a wage earner and in the remote outer islands, where there are fewer employed individuals, an increase in the minimum wage will not provide needed “social protection” for these groups.

“In the outer atolls the low number of average employees per household, and a majority without any wage earners, suggests that targeting a minimum wage as an element of social protection for this group would not be a suitable policy,” the Graduate School USA Technical Note said. “Rather, other means such as Universal Basic Income would be more appropriate.”

It also said a similar situation applies to the large number of households on Ebeye and Majuro that have no wage earner in them.

“909 households (17 percent of urban households) have no wage earners,” it said. “This suggests that development of a social protection framework would need to find an alternative means of income support for this group.”

And even many of those with a job are paid below the $3 minimum. One of three workers in the Marshall Islands is now being paid less than the $3 minimum wage, said a report for the RMI government by the Graduate School USA.

The report about the minimum wage in the Marshall Islands looked at MISSA employment and wage data, concluding that 3,695 workers out of the total 11,355 workers in RMI in 2022 were paid below the legally required $3 per hour salary.

Moreover the RMI national government and its agencies were in violation of the minimum wage law by paying 472 of its workers below $3 per hour, while local governments paid 485 of their workers under the minimum wage.

The private sector, however, has the most workers under the $3 minimum, with 2,290 — over half of the 4,047 private sector workers — paid below minimum wage, according to the report.

“If new minimum wage legislation is enacted, the private sector is expected to insure $18 million in additional labor costs,” said the report. “This represents a 46 percent increase in costs.”

The national government’s wage bill would increase by $3 million or about six percent. The largest percentage increase of a minimum wage — if followed — would be in local governments, which would have to increase their wage payouts by $5 million — a 52 percent increase in salaries compared to now.

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