U.S. plan bodes ill to ailing tourism: HANMI

Imported labor is badly needed in the hotel industry to fill all of the available jobs which the small local population cannot provide, thus, imposing the federal labor and immigration laws in the CNMI would devastate the tourism industry, the Hotel Association of Northern Mariana Islands told the U.S panel during the recent 902 negotiations.

In a position paper submitted to the U.S. panel headed by Edward B. Cohen, HANMI said the tourism industry has been hardest hit by Asia’s financial crisis with hotel occupancy averaging only 58 percent in 1998 down from 85.57 percent in 1996.

Hotels have dropped room rates anywhere from 10 percent to 40 percent to lure more guests. In order to survive, most hotels have been forced to reduce costs wherever possible, including a 12 percent reduction in staff last year and a cut in working hours from 40 to 36 hours per week.

At this time when many destinations are competing for a bigger share in a shrinking tourism market, a high level of service which the non-resident workers can provide, must be maintained.

A study conducted by the association on the effects of minimum wage increase showed that a Saipan hotel with under 100 rooms must have an additional revenue of $459,000 to cope with additional costs on personnel and food and beverage.

If the hotel would eliminate staff to maintain current personnel cost, management would be forced to lay off 31 percent of their workforce, thus, affecting its quality of service.

Likewise, an increase in minimum wage for a resort with over 200 rooms must increase revenue by 3.9 percent to cope with personnel and food and beverage costs. It would have to lay off 24 percent of its workforce should it decide to maintain the current costs.

Unique
Any discussion on the CNMI’s minimum wage must take into consideration the unique market conditions of the island. Many outsiders make the mistake of comparing the CNMI to Guam which has had all the economic advantages brought about by the presence of the U.S. military bases.

HANMI noted that since World War II, Guam has enjoyed the multiplying benefits of thousands of high-paying federal jobs and many millions of dollars in infrastructure improvements made because of the U.S. military presence. The CNMI’s economy, on the other hand, has grown solely due to private enterprise.

The starting salaries currently being paid to alien workers in our hotels range from $3.10 to $4.25 per hour. Additional medical, transportation, housing, food and other benefits provide an equivalent of $1.45 to $1.70 more per hour which brings the total compensation package even in entry level positions close to or above the U.S. minimum wage.

Increase in CNMI minimum wage of $3.05 per hour to the U.S. $5.25 per hour force many hotels out of business.
association would be forced to hire from the U.S. mainland or Micronesia if they would be forced to send alien workers home. But hiring in mass from the U.S. mainland is cost prohibitive.

According to HANMI, most companies that have employed Americans from mainland report that they stay only one or two years before returning home to rejoin families or pursue greater choices in careers

“It is doubtful that many companies could afford the high costs of recruiting entry-level employees from 7,000 miles away, and then expect to recruit again every two years due to high turnover,” HANMI said.

Social cost
Although most workers from Micronesia came with no job skills, recruitment of hotel workers from neighboring islands has been made with some success.

Since there is no minimum wage in most parts of Micronesia, it is easy to assume then that it would be easy for hotels on Saipan to recruit experienced workers there for double their wages.

However, there are significant social costs to the local government as Micronesian family members who do not work have migrated to Saipan, Guam and Hawaii to rejoin their employed family members. In a typical Micronesian family, one person works to support six to eight relatives who come to live with them.

Those who don’t work enjoy all the rights of citizens to utilize a maximum level of food stamps, health and educational facilities, and other government services.

There is no doubt that the target of the proposed U.S. legislation on immigration and minimum wage is the garment industry, which employs nearly half of the total non-resident population of the CNMI and has grown competitive with U.S. mainland, according to the hotel association.

HANMI, which represents 76 percent of the hotels on the island, maintained that labor abuses do not occur in the tourism industry.