What Is the Minimum Wage in Puerto Rico?

Bob Hand  | 

Since the early 20th century, federal minimum wage regulations have protected those in the U.S. from unfair pay as part of the Fair Labor Standards Act (FLSA), with some exemptions. However, this amount has been stagnant for the past decade. As a result, states and cities can set their own regulations to ensure that a greater percentage of their people can earn a living wage.

If you live in Puerto Rico or plan to move there soon, the minimum wage could have a major impact on your income. How does the minimum wage in Puerto Rico compare to the federally mandated minimum?

2019 Minimum Wage in Puerto Rico: $7.25 per hour

The minimum wage in Puerto Rican law is $6.55, which is lower than the federal minimum wage of $7.25. However, when the local minimum wage is lower than federal, employers must pay staff the higher amount. This makes the minimum wage in Puerto Rico $7.25 by default, with some exemptions.

Let’s take a closer look at how this impacts those earning this amount:

Tipped: $2.13 per hour

Because employers can deduct up to $5.12 per hour as a tip credit, the minimum wage for employees who receive tips is $2.13. This means that the tips that they receive must at least bring their earnings up to the mandated amount of $7.25. If they do not, the employer must make up the difference.

Weekly: $290 per week

Under the minimum wage in Puerto Rico, an individual working 40 hours each week earns $290 per week, before tax withholdings and insurance are deducted by the employer. This is lower than the required minimum wage for salaried employees to remain exempt, which is $455 per week.

Annually: $15,080 per year

Further extrapolated, a person earning a wage of $7.25 is earning $15,080 annually. This is slightly higher than the poverty threshold for a family of two adults. It is $14,380 shy of Puerto Rico’s annual median wage of $29,460.

Overtime: $10.88 per hour

For most hourly workers who exceed 40 hours a week, each hour beyond 40 is subject to an increased pay rate. The overtime pay rate is 1.5 times greater than standard wages. While local law demands an overtime rate of $9.83 in Puerto Rico, federal law mandates $10.88 per hour for overtime pay. This makes the minimum overtime rate the latter.

Minimum wage laws can give employees in certain sectors a good idea of what they will be paid upon moving to Puerto Rico. According to the Bureau of Labor Statistics, the positions with the lowest wages are construction workers, woodworking professionals, food preparation workers, retail workers, and sales workers. The median wage for these positions is between $8.49 and $8.62. This contrasts with the median wage across all industries, which is $10.01.

Note that employers in Puerto Rico not covered by the FLSA must pay employees at least 70 percent of the federal minimum wage, which is $5.08. Employers can appeal to the Secretary of Labor and Human Resources for a lower percentage if they can prove that the 70 percent rate would excessively limit the number of staff they could afford to keep employed.

Puerto Rico Minimum Wage News

While the minimum wage in Puerto Rico is evaluated annually based on the Consumer Price Index, it has not been raised since 2008. Will Puerto Rico see an increased minimum wage at any point in the near future?

It’s unlikely, but some political figures are looking to increase wages for specific employees. For example, a governor in Puerto Rico recently signed an executive order to increase wages for construction workers completing government projects to a minimum of $15.00 an hour. However, such measures are the exception rather than the rule.

Short of a change to federal law, a mandated minimum wage increase is unlikely. In fact, critics have pointed to the minimum wage as being a key factor to the current economic destabilization of the area, starting in 2006. Short of asking for a raise or taking on some side gigs, it’s unlikely that those getting paid the minimum wage will see increased wages in the near future.

If anything, we may expect to see more employer exemptions from the federally mandated minimum wage. Recent legislation is already taking steps in this direction.

For example, consider the Puerto Rico Oversight, Management, and Economic Stability Act. This act is intended to help address the fiscal crisis in the area by allowing employers to pay new hires under that age of 25 a wage as low as $4.25 per hour for the first 90 days of employment. Such measures are a sign that the minimum wage in Puerto Rico probably will not rise any time soon.

Image Source: https://depositphotos.com/

This post was updated July 17, 2019. It was originally published July 17, 2019.