Economics of Liberty

White House Whines About Minimum Wage Provision In Puerto Rican Debt Bill

By Connor D. Wolf 

 White House Principal Deputy Press Secretary Eric Schultz denounced a plan Friday to let Puerto Rico set a minimum wage for younger works below federal standards.

Puerto Rico faces profound fiscal problems over its growing $70 billion in debt. Congressional lawmakers introduced a measure Wednesday aimed at getting the region out of financial difficultly. Schultz encouraged lawmakers to exclude an provision in the bill that would allow the region to drop its minimum wage below the federal standard for workers younger than 25 years old. The intent of the provision is explicitly to improve employment opportunities for young people.

“We believe there is still time for those provisions to come out and we would strongly urge members of the House of Representatives and the United States Senate to do just that,” Schultz told reporters. “It also doesn’t make a lot of sense that if we’re trying to grow the economy and stabilize the economy in Puerto Rico that they can’t even make a livable wage.”

Schultz added it didn’t make much sense for younger works to be punished for the poor fiscal decisions that caused the problems. The federal minimum wage at the moment is $7.25 an hour. Puerto Rico would have the ability to drop the minimum wage for workers younger to just $4.25 an hour.

“So we do believe those provisions are misguided,” Schultz continued. “We are disappointed the bill includes those unhelpful measures.  I will say they’re better than the original proposal, which I believe they’re now temporary.  But we ultimately believe they should come out.”

Economists often cite the minimum wage as causing financial problems by increasing the cost of labor for businesses. Young workers are some of the most at risk of being hurt because they tend to be low-skilled and new to the workforce. The Puerto Rico debt bill aims at reversing some of the stress minimum wages put on younger workers who are struggling to find work in the troubled region.

The minimum wage provision is just one piece of the bill which aims at addressing the fiscal problems in the region. The main purpose of the bill is to create a board tasked with overseeing a debt restructuring plan. President Barack Obama would have the authority to appointee seven officials to sell government assets, consolidate agencies and fire Puerto Rican officials.

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