CNMI to ask for suspension of minimum wage hikes

The CNMI will be asking the chairman of the U.S. House Education and Labor Committee, George Miller, to suspend the automatic minimum wage hike in the Northern Marianas and American Samoa in view of “significant economic difficulties” in the two U.S. territories.

Gov. Benigno R. Fitial has drafted a letter addressed to Miller, which essentially supports a letter written earlier by American Samoa Rep. Eni Faleomavaega.

The draft letter so far has the signature of Fitial and Senate President Pete P. Reyes.

Fitial, in a news briefing yesterday, called on Delegate Gregorio “Kilili” C. Sablan to also co-sign the letter with Faleomavaega “on behalf of the people and struggling businesses of the CNMI.”

“Given the vulnerable condition of our economy, I cannot emphasize to you enough how important federal minimum wage relief is for the CNMI economy at this time, when shipping and other business costs have increased, while visitor arrivals and revenues have substantially decreased,” he told Sablan in a letter.

The current minimum wage in the CNMI is $4.05 an hour, and will increase by another 50 cents to $4.55 an hour this year, when the islands have no more garment industry to speak of and tourism arrivals are very low. Public Law 110-28 allows the yearly increase in minimum wage until it reaches the federal minimum wage level of $7.25 an hour.

Fitial said he will ask for at least a two-year suspension of the federal wage law, and the imposition of a realistic wage rate that the CNMI economy can sustain at this time based on objective information.

“Considering our current financial challenges and the weakness of our economy, we ask you to support a reasonable modification in the application of federal minimum wage increases for the CNMI,” the draft letter said. “We join American Samoa in asking for this consideration in view of our significant economic difficulties.”

In the two-page draft letter to Miller, the local government said the automatic federal minimum wage increase could not have been imposed at a more vulnerable time for the CNMI economy, which is currently struggling through the worst economic depression in decades.

They cited major losses in tourist arrivals and the demise of the once almighty garment industry. By the end of February, the CNMI will not have a single garment manufacturing firm, from about three dozens in the ‘90s.

The CNMI’s tourism arrivals went from some 700,000 tourists in 1997 to fewer than 400,000 at the end of 2008. The islands lost significant flight capacity, including the withdrawal of regular Japan Airlines service and the loss of direct flights from Continental Airlines.

In March, Northwest Airlines will use smaller aircraft from Narita. In May, it will also cancel its nighttime flights from both Osaka and Narita. The Marianas Visitors Authority said the CNMI will lose 268 percent of its total air seats by Northwest, and $51.341 million and $168.118 million in direct and indirect economic opportunity, respectively, by the end of Fiscal Year 2009.

The CNMI’s economic difficulties are not confined to the loss of an entire industry and major losses in the tourism industry.

“We are also coping with a protracted public utility crisis, the global recession, a government pension fund crisis, and the application of sweeping new federal immigration and labor policies that may exclude two major tourism markets for the CNMI: Russia and China,” the CNMI draft letter says.

Fitial is expected to take up this issue with federal officials when he leaves on Feb. 17 for Washington, D.C. to attend various official functions.

These include the National Governors Association meeting on Feb. 21 to 23; the Pacific Basin Development Council meeting on Feb. 24; the Interagency Group on Insular Areas meeting on Feb. 24; a meeting with new U.S. Department of the Interior Secretary Ken Salazar on Feb. 24; and the U.S. Coral Reef Task Force meeting on Feb. 25.