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Labor laws weigh heavily on Puerto Rico’s employers

New and existing labor laws restrict Puerto Rico’s economic growth and competitiveness

By MARIELLA PEREZ SERRANO of Caribbean Business

August 25, 2005
Copyright © 2005 CARIBBEAN BUSINESS. All Rights Reserved.

When it comes to labor laws, Puerto Rico is the most heavily regulated jurisdiction within the U.S., more than any federal or state jurisdiction. Furthermore, it is only going to get worse if proposed legislation calling for an increase in the Christmas bonus for private-sector employees, a hike in Puerto Rico’s minimum wage above the federal minimum, and providing part-time employees with vacation and sick-leave benefits, are enacted. The bills, submitted by legislators in the Senate and House of Representatives from both the New Progressive Party and the Popular Democratic Party, are projected to cost companies in Puerto Rico millions of dollars in added expenses.

In recent years, the need for developed countries and jurisdictions to become more competitive in the global marketplace has emerged as new markets–such as China, India, Dominican Republic, Mexico, and Latin America, among others–which open up and begin competing by offering lower wages and reduced operating costs. Even European countries and Japan, which were practically socialist in their labor laws, are drawing back. Yet, during those same years, little was done to promote Puerto Rico’s economic competitiveness on a global level. Now, proposed labor legislation is threatening to further increase the cost of doing business in Puerto Rico, impacting the island’s competitiveness and contributing to what is already a troubled economy.

If approved, the proposed labor regulations will have a major impact on the island’s businesses and ultimately limit the growth of Puerto Rico’s economy. The cost of complying with the proposed increase in the Christmas bonus, a higher minimum wage, and extending full-time benefits to part-time employees could send employers into a tailspin at a time when companies are already facing higher costs in fuel, utilities, transportation, and taxes.

Puerto Rico Chamber of Commerce (PRCC) President Marcos Vidal said, "The proposed labor bills will decrease the private sector’s competitive capacity even further because they will only serve to increase the operational costs of doing business in Puerto Rico."

The private sector must be able to play a key role in the island’s economic development since it is the primary division that will be able to absorb part of the payroll for those who are ultimately dismissed from the government. Instead, they are faced with a delicate economic situation, Vidal said. "Despite our best intentions to assist the government during its fiscal crisis, these legislative measures place a heavy burden on the private sector."

Manuel Reyes Alfonso, assistant executive vice president & director of legal affairs for the Puerto Rico Manufacturers Association (PRMA), said that instead of pushing the island toward competitiveness, we are becoming less and less competitive in today’s global marketplace.

"In Puerto Rico, we don’t have a problem of labor social injustice, it isn’t an issue," said Reyes. "There are plenty of federal and state laws governing employment issues," he said. "Our immediate problem is that of unemployment," he said. "The private sector is pro-employment. Every day we fight against our competition to keep employment in Puerto Rico.

"With 936 benefits gone and no apparent substitute for these incentives in the near future, we must realize there is an even greater need for competitiveness. However, if the average person in Puerto Rico is unaware of the need to compete, it is even worse within the government," Reyes stated, adding, "If the government is overly confident that this economic crisis will pass."

The labor sector has an urgent need to create a new agenda that can make workers more prosperous in our increasingly competitive global economy, pointed out Manuel "Coco" Morales, president of the local consulting firm Quality for Business Success (QBS) and an expert on competitiveness. "The formidable task consists of creating a vision of economic opportunity that actually may make workers want to join the competitiveness and global game," Morales explained. "Puerto Rico has to go beyond trade protection, higher taxes, and government support to be able to play in the new global economic scenario."

Morales added that what Puerto Rico’s labor movement really needs is a new generation of ideas, knowledge, strategies, and economic models to approach the reality of emerging competition from countries like China and India, among others. "Labor leaders should engage in working to transform education so future Puerto Ricans can compete in the knowledge economy and industries that will grow fastest. They also should work to make pensions and insurance benefits transferable to any kind of organization, so a worker won’t be trapped by benefits in any particular job or industry. The great challenge is to become partners with management to co-create the future economic, social, and institutional reality. Without such a new vision, economic growth and development won’t be possible. It is important to come to terms with the reality of the postmodern global economy," Morales explained.

A bigger bonus

One of the legislative bills that is expected to cost Puerto Rico’s business sector millions of dollars each year is the proposed increase in the Christmas bonus. On Feb. 3, the Puerto Rico Senate and House of Representatives proposed three separate bills with a common purpose: to increase the minimum amount in the Christmas bonus that private-sector businesses pay their employees. The Christmas bonus paid to government employees was increased last year during the Sila Calderón administration.

House of Representatives Bill (HB) 878, HB 783, and Senate Bill (SB) 268 are all aimed at amending Law 148 of June 30, 1969, better known as the Christmas Bonus Law. The proposed bills seek to increase the amount private-sector employers must pay their employees for the mandatory Christmas bonus. The Senate’s proposal establishes a gradual increase in the Christmas bonus from $200 to $500 per employee for every company with at least 25 employees over the next three years.

"The benefits provided to employees with these legislative bills are artificial. The measure [Christmas bonus] claims it will provide greater purchasing power to private-sector employees and prevent them from incurring greater debt during the holidays. At the same time, it will help the local economy. The reality is just the contrary," stated Reyes.

The Christmas bonus is nothing more than a salary increase, which has nothing to do with an employee’s productivity, Reyes pointed out. "There are over 10 proposals in addition to the three principal ones presented that seek to increase the (Christmas) bonus," he said. While it may sound outlandish, there is even one measure presented to include a summer bonus.

The proposed Christmas bonus bill establishes that every employer with at least 25 employees during the 12 months comprised between Oct. 1 and Sept. 30 is obligated to pay all employees who have worked for either 700 hours during the year, or 100 hours if the employee works on the docks, a Christmas bonus. The bonus will be equivalent to 3% for 2006 and 4% for 2007 of their salaries, based on up to $10,000 of the salary, and a 4% bonus up to $12,500 of the salary for 2008. The total amount of the Christmas bonuses shouldn’t exceed 15% of the employer’s net annual profits.

Secretary of Labor & Human Resources, Román Velasco recommended the Christmas bonus be increased to 5% of workers’ salaries up to a $10,000 maximum, which is $500 per employee for every enterprise, company, or business.

Increased benefits to part-timers

The Commonwealth also is seeking to increase the benefits businesses pay their part-time employees. HB 1601 of May 9 is a proposed amendment to Law 180 of July 27, 1998, known as "Minimum Wages, Vacation, and Sick Leave Act of Puerto Rico." The amendment seeks to provide vacation and sick-leave benefits to part-time employees.

These types of legislated benefits for part-time employees are virtually unheard of on the U.S. mainland and only serve to undermine our economy’s competitiveness, says Reyes, PRMA’s legal adviser & assistant executive vice president.

"Employees in Puerto Rico receive [by law] paid 15-day jury duty leave, paid maternity leave, severance pay, wrongful termination indemnities to employees, a Christmas bonus, and breastfeeding leave, all of which are practically unheard of by [legislated state] law in other [U.S.] jurisdictions," explained Reyes. Employers here must pay these benefits by law regardless of an employee’s performance. "We keep perpetuating the antagonist language of workers against employers," he said. "That is no longer the case. We keep forgetting multinational general managers of foreign companies doing business on the island are employees as well." It is no longer the helpless employees against exploiting managers. There are plenty of federal and local laws to prevent that.

With respect to part-time employees, the PRCC’s Vidal pointed out that vacation and sick-leave benefits were conceived for full-time employees who, by definition, have little time to deal with personal matters, hence the necessary vacation time, or because they get sick, hence the time to rest. "By definition, a part-time employee already has that time available," Vidal noted.

In February 2004, a study prepared for the PRCC by Jorge Galliano showed part-time employees, who are mostly students and working mothers, already are costly to private-sector employers. "What will happen with those employees who have two part-time jobs? Will they receive double benefits?" Vidal asked.

According to the proposed legislation, if a part-time employee worked 40 hours a month for two different employers for a total of 80 hours, he/she would receive 1.40 days of accumulated vacation time each month. On the other hand, a full-time employee would have to work 115 hours (35 additional hours) just to accumulate 1.25 days of accumulated vacation time per month. "By increasing the cost of employment, many businesses will be forced to reduce employees," Reyes explained.

Vidal agrees. "When operating costs get too high, companies tend to reduce their workforce to bring down their payroll costs. Furthermore, when reduction decisions need to be made, it’s those with fewer skills or those who have been in the company for the least amount of time that are let go," said Vidal, adding, "these measures are going to adversely affect those employees that the proponents of the bills claim to be protecting."

Hike in minimum wage

Commonwealth legislators also are seeking to increase Puerto Rico’s minimum wage. The Federal Fair Labor Standards Act (FLSA) establishes the federal minimum wage, which also applies to Puerto Rico. The minimum wage is $5.15 an hour and was effective Sept. 1, 1997. With some exceptions, overtime also must be paid for work over 40 hours a week. Employees who work for certain businesses or organizations are covered by the FLSA. These companies, which must have at least two employees, are those that generate at least $500,000 a year in business.

Local HB 1714 proposes an increase in the current minimum wage a worker receives in Puerto Rico over the established federal minimum wage. A hike of $0.25 per hour is proposed for 2006 (4.85% increase), rising every year by an additional $.20 until 2019, and then an annual increase of $.25 takes effect until the year 2030. Imposing increases in the minimum wage over the next 25 years without taking into consideration what Puerto Rico’s economy will look like by 2030 is simply unrealistic.

"Unfortunately, such an increase [in minimum wage] over the federal minimum-wage standard could be devastating to our local economy," explained PRMA’s Reyes, adding that such a measure would subsequently increase the already high operational costs in Puerto Rico. "We currently are undergoing an inflation problem on the island," he said, "increasing the minimum salary over the federal minimum salary would only make it [inflation] worse."

According to data released by the Puerto Rico Department of Labor & Human Resources, approximately 40% of all salaried employees receive compensation equal to the federal minimum wage. The proposed bill stated the measure is in response to other states that have approved higher minimum wages such as Florida and New Hampshire. "Whereas the purpose behind keeping a federal minimum wage is to protect marginalized social and economic groups, in Puerto Rico the federal minimum wage is considered the norm," explained Reyes.

Only 3.8% of the workforce in Florida and New Hampshire were at the federal minimum-wage level when these states increased the minimum wage over the federal level. "This meant that an increase in the federal minimum wage didn’t have a significant impact on their local economies," Reyes pointed out. "In Puerto Rico, where 40% of our workforce receives minimum wage, the effects of a possible increase could mean an avalanche of employment reductions and company closings. In Puerto Rico, the minimum wage isn’t marginal," he added.

"Most states haven’t increased the federal minimum wage for a reason," Reyes continued. States where there has been an increase in the federal minimum wage such as California, Connecticut, Massachusetts, New York, and New Jersey have per capita income at least three times as much as Puerto Rico’s and their unemployment rate averages about 5%. "These jurisdictions are extremely prosperous, whereas Puerto Rico’s per capita income is roughly $12,000 and our official unemployment rate is 12%, although everyone is aware that figure isn’t real. Unemployment is definitely much higher considering the participation rate on the island is below 50%," Reyes added.

A hike in Puerto Rico’s minimum wage also will lead to increases in the State Insurance Fund premium, Social Security payments, and the unemployment benefits companies have to pay for employees. Business leaders point out, however, that the proposed increases don’t take into account an employee’s productivity.

"The government has emphasized private-sector employers need to cooperate by absorbing those government employees who have been fired, but by increasing the cost of minimum salary, that will be almost impossible. We are totally against the minimum-wage increase," said Executive Vice President for Puerto Rico Product Association Rosalía de la Fuente.

The Puerto Rico Hotel & Tourism Association (PRHTA) also has voiced its opposition to an increase in the minimum wage. PRHTA President Wilhelm Sack said, "It seems almost incredible, with the staggering fiscal crisis this island is undergoing, that a legislative measure such as this one is even being considered. All of society’s sectors have been called on to cooperate with the situation, yet here is a measure to increase employee wages in the private sector. The government is practically broke, and now they want to come after us and make the private sector go bankrupt as well."

PRHTA Executive Director Clarisa Jiménez added that the minimum-wage proposal is based on erroneous analysis and is completely out of touch with Puerto Rico’s current labor reality. "There is talk about other jurisdictions where such measures have been implemented, but in none of those jurisdictions are there the wide array of employee benefits such as the ones already mandated by law in Puerto Rico. We have mandatory overtime pay after eight work hours in a day, mandatory Christmas bonus, mandatory severance pay of a week or more, mandatory vacation, and several months of maternity leave, among others," Jiménez stated. She also pointed out that increases in salary and benefits should be part of the collective-bargaining agreements between employer and unions. "In companies where there are no labor unions, wage increases should be based on the company’s operational reality."

Rick Newman, president of Flagship Services, said the increase in the minimum wage would represent a mortal blow to the tourism industry, already suffering the effects of the rising cost of living and cost of operations. Newman added that the hotel industry has already undergone a 4% decrease in hotel occupancy for fiscal 2004-2005 and can’t afford higher costs. "If these measures are enacted, the future of the tourism industry will be jeopardized," he stated.

Puerto Rico Products vice president says it is time for everyone to make sacrifices. "Considering the tremendous fiscal crisis we are undergoing, we find it unreasonable to increase the Christmas bonus," De la Fuente said. "It is time for everyone, including the government, to make cutbacks and sacrifices," she said.

Most regulated labor market

"Today, Puerto Rico employees have more labor benefits mandated by law than those of any worker in any other U.S. jurisdiction and the vast majority of workers at the global level," said PRMA’s Reyes, referring to data obtained from World Bank reports.

Among the benefits awarded to employees in Puerto Rico are the automatic application of federal minimum wage, paid vacation, sick leave, paid jury duty, paid maternity leave, breast-feeding license, and a Christmas bonus. Employees also are covered by the Closed Commercial Establishment Act and get more days off than any other commercial establishment in the mainland U.S. In the case of termination, employees receive compensation according to years of service.

Federal law requires all hours worked in excess of 40 a week are paid at the rate of time and a half the employee’s regular hourly rate. Under Puerto Rico law, employers are required to pay workers up to double time for hours worked in excess of eight in any given 24-hour cycle.

"As long as we keep increasing the operational costs of the private sector, we will continue to witness a gradual reduction in private-sector investment and employment, as well as a continuous exodus of businesses to countries where operational costs are less," said Reyes.

All these regulations only serve to eliminate labor flexibility, and there is ample evidence labor rigidity generates unemployment. As a result, official unemployment in Puerto Rico is more than double that on the U.S. mainland.

According to the World Bank report "Doing Business 2004, Understanding Regulations," rigid employment regulation is associated with more poverty in developing countries. This can be seen in the island’s current situation. "Over the past few years, there has been a decrease in private-sector employment, and we have seen many companies close down as well as reduce employees such as Hewlett-Packard, Pfizer, and Hershey’s earlier this year," Reyes said.

Puerto Rico’s vast employment regulations govern the individual employment contract, including the flexibility of hiring through part-time and fixed-term contracts, and conditions of employment, including the maximum number of hours in a workweek, premiums for overtime work, paid annual leave, and a minimum wage. It also governs flexibility of firing, including grounds for dismissal, notification rules for dismissal, priority rules for dismissal, and severance pay.

Although employment regulation generally increases the tenure and wages of incumbent workers, strict regulatory intervention also has many undesirable side effects, according to World Bank 2004 studies. The first is to limit job creation, and the second is the reduction in workforce flexibility. "By creating more regulatory measures and making it harder to do business on the island, they are generating unemployment," explained Reyes.

Since the 1950s, the relaxation of labor regulations in the U.S. has helped increase new employment opportunities by as much as 150%. For example, flexible labor regulation is associated with higher research & development investment in technology. The reason, according to the World Bank, is organized labor frequently resists attempts to acquire new technology, particularly if it is perceived to displace workers. Also, restrictions on hiring and firing have been shown to result in smaller firm size.

Surveys of managers also show employment regulation is a burden on businesses. Employment regulations were seen to be the major obstacle to improving productivity in Brazil, Chile, Colombia, India, Panama, Portugal, Thailand, Venezuela, Bolivia, Ecuador, Mexico, Uruguay, and Argentina. By contrast, employment regulation is associated with higher unemployment.

"There is a need for a 360-degree change in labor regulation in Puerto Rico for us to become competitive again," said Reyes. "Every month, we experience more company closings or reductions and we see very few expansions or any new companies establishing operations on the island to counteract the closings’ negative effect on our economy."

According to the World Bank, improving the flexibility of employment laws while maintaining fundamental workers’ rights requires several reforms. Among them, introducing part-time and fixed-term employment contracts, reducing the minimum wage for young workers, and allowing for the shifting of work time between periods of slow demand and peak times that have proven successful in several countries. Other possible reforms for countries with greater administrative capacity include providing unemployment benefits to workers in times of low demand (short-time compensation) and using a negative income tax in place of a minimum wage.

Furthermore, Christmas bonuses should be based on an employee’s productivity. "Not only is it extremely costly, we are the only jurisdiction in the U.S. with a legislated mandatory Christmas bonus, and even as appealing as it may sound to employees, it is actually a burdensome additional cost to companies, both local and foreign, doing business in Puerto Rico," Vidal said.

During the Calderón administration, the Legislature increased the Christmas bonus to $1,000 for all government employees. The legislative measure was unanimously approved. Government employees already receive the highest median weekly salaries in Puerto Rico, according to figures released by the Puerto Rico Department of Labor & Human Resources (see sidebar). Today, the commonwealth government is facing a fiscal crisis and doesn’t have sufficient revenue to pay its payroll, much less additional bonuses.

The big picture

As Puerto Rico faces an economic crisis, it is clear the island lacks a socioeconomic development program. There is a complete lack of understanding of the dynamics of a global competitive market. For years, the island built its economic development on federal tax incentives and federal transfer payments to the population. As a result, the average citizen doesn’t realize what is needed to become a global competitor in the 21st century.

The proposed labor measures under consideration are just artificial subsidies and aren’t based on sound productivity fundamentals. For decades, Puerto Rico’s taxpayers have been subsidizing government employees. Now, the government wants to mandate the private sector subsidize its own employees as well.

"We can’t increase employees’ benefits in an economy where there aren’t sufficient employment opportunities," said Reyes. "By creating all these regulatory measures, we are making it harder to attract U.S. mainland or foreign investment. What are we going to say to make companies want to come to Puerto Rico when we don’t have federal tax incentives, the minimum wage is higher than the federal, electricity is more expensive, water rates are higher, and the permit process is arguably much more difficult and complicated than our competitors," he stated.

Instead of finding ways to make it more difficult and expensive to operate on the island, we should be looking at the U.S. mainland and other competitive jurisdictions around the world, Reyes commented. "The deregulation practice in the U.S. is partly the explanation behind its economic strength," he added. "We need to stop looking at economic development with disapproving eyes."

Puerto Rico has been overconfident that the problems and challenges faced will eventually be resolved. Yet, none, the government, political parties, or the private sector, have developed a coherent socioeconomic plan for the island. There should be plenty of concern over the proposed labor regulations as they will be counterproductive to our economic development.

The Puerto Rico Legislature began a new session last week amid an unsustainable fiscal crisis in the public sector–a crisis mainly created by the gigantism of government employment and its widely recognized inefficiency, along with a lack of productivity.

With an already stagnant economy, Puerto Rico is pursuing the wrong path of economic growth. "Puerto Rico’s main problem is its lack of economic development; there is no economic development plan," said Reyes, stressing the lack of analysis and impact demonstrated in the proposed legislative measures.

"It is very convenient to selectively compare ourselves to the U.S., but when it is pointed out to the Legislature that in the U.S. there are no legislated mandatory Christmas bonus, paid vacation and sick leave, no paid maternity leave, no paid jury duty leave, among others, it is clear to see the local Legislature hasn’t been able to follow the example of deregulation that has maintained the U.S. with an average 5% unemployment rate," Reyes said. "The government has opted for legislative measures without considering the financial impact of such legislative measures to the island’s economy.

"Puerto Rico needs to maximize its opportunities; we have created an artificial economy. An economy such as ours can never be equal to the U.S. by means of executive orders or laws. There is a need for a profound economic analysis," Reyes concluded.

Government employees receive highest weekly salaries

Recent report shows they not only bagged the highest salaries, but also received the highest increase from the previous year


In April, the Commonwealth of Puerto Rico Department of Labor & Human Resources issued a report on employment and unemployment in Puerto Rico. One of the tables included in the report showed wage and salary median weekly earnings divided by industry group.

Among the groups included in the study were agriculture, construction, manufacturing, commerce, service industries, and public administration. Finance, insurance, real estate, transportation, communication, and public utilities were considered, but didn’t have enough data to be included in the chart. Of all the industry groups included, it was public administration employees who had the highest salary in April 2004 and April 2005. The group also had the highest increase in weekly salary during the year-long period.

While the average weekly earnings in all industries were $240.10 in April 2005, the weekly earnings for public administration employees were $394.00, the highest of any other industry. The same point is seen in April 2004, when the average weekly earnings were $240.20 for all industries, while for public administration employees it was $345.90.

From April 2004 to April 2005, average weekly salaries for all industries decreased by 10 cents. For public administration employees, however, weekly earnings increased $48.10 during the year, the equivalent of 13.91%. The sector that followed in growth was construction, which increased $24.20 or 10.9% during the year.

Wage & Salary Median Weekly Earnings

Industry: April 2004 / April 2005 / Change / % Change

All industries: $240.20 / $240.10 / -$0.10 / -0.04%

Construction: $221.80 / $246.00 / $24.20 / 10.91%

Manufacturing*: $295.00 / $299.60 / $4.60 / 1.56%

Commerce: $159.60 / $ 158.00 / .-$1.60 /1.00%

Finance, Insurance & Real Estate: N/A** / N/A**

Transportation, Communications & Public Utilities: N/A** / N/A**

Service Industries: $224.80 / $230.00 / $5.20 / 2.31%

Public Administration: $345.90 / $394.00 / $48.10 / 13.91%

*With the exception of home needle

**Not enough cases in the sample for a reliable estimate

Source: Commonwealth of Puerto Rico Department of Labor, April 2005

Puerto Rico's Legislated Benefits for Part-Time Employees

Social Security (6.20% SS & 1.45% Medicare) 7.65%

Unemployment 5.40%

Federal Insurance Contribution Act (FICA) 0.08%

Nonoccupational Disability Insurance (Sinot) 0.30%

State Insurance Fund 3.40%

Christmas Bonus 2.00%

Maternity Leave (8 weeks) 100.00%

Jury Duty License (effective March) 15 days

Witness Leave (in criminal cases) 100.00%

Source: Puerto Rico Chamber of Commerce, 2005

Submitted Labor Bills That Will Affect Private-Sector Employment in 2005

Topic: Project Number / Commission / Description

Working Mothers: SB 139 / Government Labor Affairs, Health & Women's Affairs / Amendment to law protecting working mothers extends resting period from 4 weeks to 8 weeks after birth

Unionization of Judicial Branch Employees: HB 275 / Labor & Work Affairs / Amendment to Labor Relations Law giving judicial branch employees the right to join labor unions

Minimum Wage, Vacation, & Sick Leave / HB 608 / Labor & Work Affairs / Amendment to Labor Relations Law–vocation and sick leave to include all employees working from 40 to 155 hours a month

Employment Termination: HB 631 / Labor & Work Affairs / Amendment to Wrongful Termination Law to increase amount of payment employees receive in wrongful termination cases, establish a new indemnification formula, and increase period employee has to present claim against employer

Christmas Bonus: HB 783 Labor & Work Affairs / Amendment to Christmas Bonus Law to increase private-sector employees' Christmas bonus from 2% to 5%

Employment Termination: HB 795 Labor & Work Affairs / Amendment to the Wrongful Termination Law to protect employees' reinstallment to previous job position

Christmas Bonus: HB 803 / Treasury & Financial Affairs / Amendment to lottery law to give a $300 Christmas bonus to lottery agents

Summer Bonus: HB 832 / Budget & Federal Affairs, Veterans Affairs / To create a $200 summer bonus to be awarded every July to employees; this bonus will be tax-exempt

Minimum Wage, Vacation, & Sick Leave: H8 1121 / Labor & Work Affairs / Amendment to Minimum Wage, Vacation & Sick Leave Law to allow a seven-year term for employees to toke judicial action against employers

Wrongful Termination: HB 1196 / Labor & Work Affairs / Amendment to Wrongful Termination Law to include that if an employee is over 55 years of age & has worked for an employer for five years or more s/he can be reinstalled

Christmas Bonus: SB 74 Government Labor Affairs / To increase Christmas bonus payment to private-sector employees to 3% of total salary up to $10,000 maximum salary

Work Hours: HB 145 / Government Labor Affairs / To reduce weekly work hours to 35 without reduction in payment

Christmas Bonus: SB 268 / Government Labor Affairs / To gradually increase the Christmas bonus to companies with at least 25 employees

Christmas Bonus / HB 878 Labor & Work Affairs / Christmas bonus increase from $200 to $500 for private-sector employees

Minimum Wage, Vacation & Sick Leave: HB 1601 / Government Labor Affairs / Amendment seeks to provide vacation and sick leave to part-time employees

Minimum Wage, Vacation, & Sick Leave: HB 1714 / Government Labor Affairs / Amendment to increase the state minimum wage from $5.15 to a $0.25 an hour hike for 2006

These bills have been submitted by the Legislature for the term January to June 2005

Source: Puerto Rico Manufacturers Association Report (PRMA), January 2005 to June 2005

Personal Income & Unemployment Rate

Area Name: Personal Income ($ U.S.) / Unemployment Rate

United States (Federal): 32,937 / 5.50%

Puerto Rico: 12,031 / 11.90%*

Alabama: 27,795 / 5.60%

Alaska: 34,454 / 7.50%

Arizona: 28,442 / 5.00%

Arkansas: 25,725 / 5.70%

California: 35,019 / 6.20%

Colorado: 36,063 / 5.50%

Connecticut: 45,398 / 4.90%

Delaware: 35,861 / 4.10%

District of Columbia: 51,803 / 8.20%

Florida: 31,455 / 4.80%

Georgia: 30,051 / 4.60%

Hawaii: 32,160 / 3.30%

Idaho: 27,098 / 4.70%

Illinois: 34,351 / 6.20%

Indiana: 30,094 / 5.20%

Iowa: 30,560 / 4.80%

Kansas: 30,811 / 5.50%

Kentucky: 27,709 / 5.30%

Louisiana: 27,581 / 5.70%

Maine: 30,566 / 4.60%

Maryland: 39,247 / 4.20%

Massachusetts: 41,801 / 5.10%

Michigan: 31,954 / 7.10%

Minnesota: 35,861 / 4.70%

Mississippi: 24,650 / 6.20%

Missouri: 30,608 / 5.70%

Montana: 26,857 / 4.40%

Nebraska: 31,339 / 3.80%

Nevada: 33,405 / 4.30%

New Hampshire: 37,040 / 3.80%

New Jersey: 41,332 / 4.80%

New Mexico: 26,191 / 5.70%

New York: 38,228 / 5.80%

North Carolina: 29,246 / 5.50%

North Dakota: 31,398 / 3.40%

Ohio: 31,322 / 6.10%

Oklahoma: 28,089 / 4.80%

Oregon: 29,971 / 7.40%

Pennsylvania: 33,348 / 5.50%

Rhode Island: 33,733 / 5.20%

South Carolina: 27,172 / 6.80%

South Dakota: 30,856 / 3.50%

Tennessee: 30,005 / 5.40%

Texas: 30,222 / 6.10%

Utah: 26,606 / 3.90%

Vermont: 32,770 / 3.70%

Virginia: 35,477 / 3.70%

Washington: 35,299 / 6.20%

West Virginia: 25,872 / 5.30%

Wisconsin: 32,157 / 4.90%

Wyoming: 34,306 / 3.90%

*As of July 2005

Sources: U.S. Bureau of Economic Analysis, 2004; Commonwealth of Puerto Rico Department of Labor, April 2005; U.S. Bureau of Labor Statistics; 2005

Legislated Benefits in U.S. States & Puerto Rico for Private Sector

Area Name: Private-Sector Minimum Wage / Vacation Leave / Sick Leave / Jury Duty / Witness Leave / Christmas Bonus / Maternity Leave / Breast-Feeding Leave / Overtime Pay

United States: $5.15 / – / – / – / – / – / – / – / Federal law provides all hours worked in excess of 40 a week be paid at a 1.5 rate

Puerto Rico: $5.15 / Yes, 1.25 days per month / Yes, 1 day per month / Yes, 15 days / Yes, depends on case duration / Yes, 2% of salary up to $10,000 max salary ($200) / Yes, 8 weeks / Yes, two 15 min. breaks a day for a one-year period / Puerto Rico state law provides all hours worked in excess of 8 during any given 24-hour cycle be paid up to double the rate

Alabama: NSP / No / No / No / No / No / No / No / N/A*

Alaska: $7.15 / No / No / No / No / No / No / No / N/A

Arizona: NSP / No / No / No / No / No / No / No / N/A

California:$6.75 / No / No / No / No / No / No / No / N/A

Colorado: $5.15 / No / No / No / No / No / No / No / N/A

Connecticut: $7.10 / No / No / No / No / No / No / No / N/A

Delaware: $6.15 / No / No / No / No / No / No / No / N/A

District of Columbia: $6.60 / No / No / No / No / No / No / No / N/A

Florida: $6.15 / No / No / No / No / No / No / No / N/A

Georgia: $5.15 / No / No / No / No / No / No / No / N/A

Hawaii: $6.25 / No / No / No / No / No / No / No / N/A

Idaho: $5.15 / No / No / No / No / No / No / No / N/A

Illinois: $6.50 / No / No / No / No / No / No / No / N/A

Indiana: $5.15 / No / No / No / No / No / No / No / N/A

Iowa: $5.15 / No / No / No / No / No / No / No / N/A

Kansas: $2.65** / No / No / No / No / No / No / No / N/A

Kentucky: $5.15 / No / No / No / No / No / No / No / N/A

Louisiana: NSP / No / No / No / No / No / No / No / N/A

Maine: $6.25 / No / No / No / No / No / No / No / N/A

Maryland: $5.15 / No / No / No / No / No / No / No / N/A

Massachusetts: $6.75 / No / No / No / No / No / No / No / N/A

Michigan: $5.15 / No / No / No / No / No / No / No / N/A

Minnesota: $5.15 / No / No / No / No / No / No / No / N/A

Mississippi: NSP / No / No / No / No / No / No / No / N/A

Missouri: $5.15 / No / No / No / No / No / No / No / N/A

Montana: $5.15 / No / No / No / No / No / No / No / N/A

Nebraska: $5.15 / No / No / No / No / No / No / No / N/A

Nevada: $5.15 / No / No / No / No / No / No / No / N/A

New Hampshire: $5.15 / No / No / No / No / No / No / No / N/A

New Jersey: $5.15 / No / No / No / No / No / No / No / N/A

New Mexico: $5.15 / No / No / No / No / No / No / No / N/A

New York: $6.00 / No / No / No / No / No / No / No / N/A

North Carolina: $5.15 / No / No / No / No / No / No / No / N/A

North Dakota: $5.15 / No / No / No / No / No / No / No / N/A

Ohio: $4.25 / No / No / No / No / No / No / No / N/A

Oklahoma: $5.15 / No / No / No / No / No / No / No / N/A

Oregon: $7.25 / No / No / No / No / No / No / No / N/A

Pennsylvania: $5.15 / No / No / No / No / No / No / No / N/A

Rhode Island: $6.75 / No / No / No / No / No / No / No / N/A

South Carolina: NSP / No / No / No / No / No / No / No / N/A

South Dakota: $5.15 / No / No / No / No / No / No / No / N/A

Tennessee: NSP / No / No / No / No / No / No / No / N/A

Texas: $5.15 / No / No / No / No / No / No / No / N/A

Utah: $5.15 / No / No / No / No / No / No / No / N/A

Vermont: $7.00 / No / No / No / No / No / No / No / N/A

Virginia: $5.15 / No / No / No / No / No / No / No / N/A

Washington: $7.35 / No / No / No / No / No / No / No / N/A

West Virginia: $5.15 / No / No / No / No / No / No / No / N/A

Wisconsin: $5.70 / No / No / No / No / No / No / No / N/A

Wyoming: $5.15 / No / No / No / No / No / No / No / N/A

*Every state can establish their own overtime pay in compliance with the Federal Fair Labor Standards Act (FLSA)

**The state law excludes from coverage any employment that is subject to the FLSA

NSP–No state provision

Sources: U.S. Bureau of Economic Analysis, 2004; Commonwealth of Puerto Rico Department of Labor, April 2005; U.S. Bureau of Labor Statistics, 2005

This Caribbean Business article appears courtesy of Casiano Communications.
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