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Puerto Rico Debt Crisis: PROMESA Bill Passes House, Allows Provision Cutting Minimum Wage to $4.25 for Young Workers

First Posted: Jun 10, 2016 06:45 AM EDT
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The U.S. House of Representatives passed the PROMESA Act, which addresses Puerto Rico's debt crisis, but in the process also allows the commonwealth's minimum wage to drop to $4.25.

PROMESA: What's in the House Bill?

Members of the Congressional Hispanic Caucus (CHC) were prepared for a lengthy Thursday as the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) (H.R. 5278) was scheduled for a vote. The bill, also would allow the creation of an oversight board of Puerto Rico's debt and allow the commonwealth to restructure its debt, which has climbed over $70 billion. The aforementioned oversight board will be responsible in approving the governor's fiscal plan, annual budgets and enforce budgets.

PROMESA also includes a provision affecting the island's minimum wage, specifically for Puerto Ricans -- who are U.S. citizens -- at 25 years old and younger.

Lowest Minimum Wage in the U.S.

One of the controversial PROMESA provisions in the bill would make the commonwealth the home to the cheapest labor across the United States. The federal minimum wage is $7.25, but PROMESA will allow the island's wage to dip to $4.25, for at least four years, but, important to note, only for people 25 years old and younger.

Could the minimum wage increase?

The minimum wage can increase higher from $4.25 through the island's governor, but only if approved by the oversight board.

U.S. Rep. Norma Torres, D-Calif, a member of the CHC, introduced an amendment to PROMESA on early Thursday evening, which would eliminate the lowered minimum wage provision.

In a statement prior to the amendment's vote, Torres said, "The minimum wage provision in this bill is bad for young workers, and it's bad for Puerto Rico. It does not fix the island's problems and in the long run, may make them worse. The island is already experiencing a mass exodus of young people. Lowering wages will only compel more young people to leave and will have a detrimental impact on Puerto Rico's current and future workforce, its tax base, and ultimately its ability to repay its debt."

Torres added that it's understandable that sacrifices must occur, but it shouldn't happen to hard-working Puerto Rican youths.

The California congresswoman's amendment failed, 225-196. All 225 opposition votes came from Republicans. As a result, the lowered minimum wage provision will remain in the bill as it will proceed into the U.S. Senate.

Bipartisan Support But Split Among Latino Lawmakers

Throughout Thursday, lawmakers, from both major political parties spoke about PROMESA. While there was bipartisan support, including from House Speaker Paul Ryan, R-Wisc.; House Minority Leader Nancy Pelosi, D-Calif.; and CHC Chair Linda Sanchez, D-Calif., there were also opposition from prominent Latinos such as House Democratic Chair Xavier Becerra, D-Calif., and Rep. Luis Gutierrez, D-Ill.

Prior to the vote, Sanchez explained that PROMESA is not a perfect bill, explicitly acknowledging her opposition to the minimum wage, overtime protections and retirement pension benefits provisions.

"As I have done throughout my career, and throughout this process, I will continue to press for an increased minimum wage, expanded overtime protections, and adequate pension funding for all workers," Sanchez said in a statement, who also shared concern about the structure and function of the oversight board.

Despite the aforementioned concerns, Sanchez supported H.R. 5278, otherwise the commonwealth could encounter further financial issues.

Gutierrez opposed PROMESA. Gutierrez said the people of Puerto Rico deserve better and had urged fellow Democrats to oppose the structure of the oversight board. Speaking in Spanish, he said, "Esta no es mi promesa; mi promesa es que el pueblo de Puerto Rico se respete y que no se trate como si fueran colonizados esclavos."

Translated into English, Gutierrez said, and added, "This is not my promise; my promise is that the people of Puerto Rico be respected, that we don't treat them as if they were colonized slaves, I reject this bill. Let me tell you that my promise is clear; to continue my work to defend Puerto Rico. As it is said by the Puerto Rican people: 'Precious, it does not matter what tyrant treats you with bad intentions, precious you'll be.'"

In the end, PROMESA passed that House with 297-127 -- with 159 Democrats and 139 Republicans voting in favor. 

Following the vote, Rep. Raul Grijalva, D-Ariz., ranking member of the House Natural Resources Committee, said he's relieved PROMESA passed with bipartisan support but acknowledged H.R. 5278 is not the bill he or fellow Democrats would have written.

Grijalva said, "I still think the bill fails to provide enough material assistance to the people of Puerto Rico, the Oversight Board is too powerful and the provisions undermining minimum wage and the overtime rules don't belong in the bill. Like many of my colleagues, I had to accept that there was no other avenue available to address the debt crisis in Puerto Rico. Compromises had to be made to get the bill through a Congress we do not control."

"We overcame a major hurdle today," Grijalva said on Thursday.

The White House commended the House of Representatives for passing PROMESA, although also noting it's not a perfect bill but highlighted the bipartisan efforts. The White House called on the Senate to "act expeditiously" in reviewing and voting on the bill so President Barack Obama can sign before a July 1 debt payment deadline.

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For the latest updates, follow Latin Post's Michael Oleaga on Twitter: @EditorMikeO or contact via email: m.oleaga@latinpost.com.

Update: Article amended to correct title of Speaker of the House Paul Ryan.

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