CNMI CW Program: Detours from the roadmap?

October 22, 2011

Ads from the October 6, 2011 edition of the Saipan Tribune,
 page 22 show professional jobs such as teachers advertised
 for $5.05 per hour. (Click on the photo to enlarge)

With the passage of minimum wage legislation (P.L. 110-28) aimed at bringing the CNMI's wages in line with the U.S. minimum wage, combined with the passage of federalization legislation (P.L. 110-229) aimed at bringing the CNMI in line with the INA, I envisioned that the CNMI would be on a direct path to build a stronger economy with a more permanent and stable workforce. I did not foresee major roadblocks and detours in the plan that would stall the advancement.

There is no question as to why 90% of the CNMI's private sector workforce currently consists of foreign workers. Aside from the fact that many of the CNMI's U.S. citizens shun certain jobs such as farm work, domestic help,  janitorial positions, and labor intensive jobs, the low minimum wage is a major deterrent. Who can even afford to work for those low wages in a place where the utility rates are the highest on U.S. soil and other basic commodities are also off-the-charts highly priced?

Since the residents of the CNMI don't pay federal income taxes, the American taxpayers are burdened with the high cost of maintaining a low CNMI minimum wage that encourages cheap foreign labor and forces the majority of the CNMI workers and residents to live in poverty, qualifying them for federal assistance programs.

It should come as no surprise that the CNMI has the highest level of food stamp recipients per capita in the U.S. While across the nation 14.4% of all Americans rely on food stamps, in the CNMI a staggering estimate of one-third of U.S. citizen residents are eligible for food stamps. (That does not include the foreign workers who typically earn the lowest wages, but are not eligible to receive food stamps.) The demand for food stamps in the CNMI is so high that in June 2011 it was reported that there were 9, 700 receiving food stamps, with a waiting list of over 500. (The 2010 census revealed that the total population in the CNMI was 53,883 and other data from the CNMI government stated that there were 22,000 aliens in the CNMI, with an estimated 16,000 of them being foreign workers.)

When the first minimum wage increases hit the CNMI, the employers compensated by cutting workers' hours and benefits. Most foreign workers now work less than 40 hours per week, and almost all of them have endured major cuts to benefits. Even those who are working full-time, or 40 hours per week, fall far below the poverty level id they are earning minimum wage. In fact, a person in a family of four, could work two full time minimum wage jobs in the CNMI and still fall below the federal poverty level of  $22,350 for a family of four. Even if a person worked $5.05 for 40 hours a week, he would make only $10, 504 a year before taxes and deductions, which is even below the established federal poverty level of $10,890 for one person. Basically, both the local and federal minimum wages in the CNMI guarantee that workers will earn wages that are far below federal poverty-levels if they accept a minimum wage paying job.

What prospective employee wants to work for $3.05 to $5.05 an hour in the private sector when they could land a government job for 2-5 times the pay with a government job? The people with the highest paying jobs in the CNMI have been those who work in the public sector. Coveted government jobs are held out like carrots. Locals have learned that they need to show loyalty to those in power, promise a vote or block of votes, campaign for the "right" party (the one that ends up winning), keep their mouth shut and eyes closed, and kiss up to those in power in order to land (and keep) a high paying government job. Not just locals, but also U.S. citizens from the mainland, have played the carrot game with the local government to land or keep a high-paying government job or to land a pricey government contract.

Private sector wage levels in the CNMI are so out of kilter, that it's hard to imagine them inching closer to U.S. levels anytime soon. Private sector employers have reaped huge profits because they have been allowed to highly educated and skilled foreign workers for poverty-level wages to perform high level jobs. Where else in the U.S. can you find an accountant, nurse, electrical engineer, or architect who would work for poverty-level wages? Nowhere.

According to the U.S. Department of Labor, some employees are not be covered by the federal minimum wage provisions of the FLSA and may continue to be paid at the rate set by the CNMI Minimum Wage and Hour Act.

Employees are not be covered if:

1) Their employer is small (doing annual gross volume of sales or business done of less than $500,000) and

2) The individual employee does not engage in commerce in the course of his or her work (that means, he or she does not make phone calls to the mainland, do janitorial work in buildings where goods are produced for shipment out of the CNMI, handle records of interstate transactions, swipe credit cards, do business over the Internet).

Most farmers and domestic helpers qualify to receive the federal minimum wage:

1) House workers and farmers who do not live with employer must also be paid time and one-half ($6.08) for every hour worked over 40 hours.

2) Live-in house workers and farmers will be exempt from overtime requirements. That means for hours worked in excess of 40 in a workweek, they need only be paid $5.05 per hour. Live-in house-workers and farmers still must be paid for every hour worked.

3) Employers of live-in house-workers and farmers may deduct a reasonable amount for room and board of up to $100 for housing and $100 for food per month.

Because the Fair Labor Standards Act (FLSA) only enforces federal minimum wage for businesses that have an annual gross volume of sales/business over $500,000, or those engaging in interstate commerce, many employers in the CNMI get away with wage theft.  The majority of the CNMI businesses that are typically small establishments with an annual gross business volume of far below the $500,000 threshold, so they are exempt from USDOL regulation. Businesses making under $5000,000 annually can continue to pay their employees at the CNMI's ridiculously low minimum wage rate of $3.05 an hour.

Foreign workers would have additional protection to ensure their rights if the U.S. Congress would properly staff and fund the federal departments and agencies including the USDOL USDOJ, and EEOC; and pass an amendment to the Fair Labor Standards Act (FLSA) reducing enterprise coverage in the CNMI to only $50,000 during the transition period or any extension of it.

As some have pointed out, the system has always been set up assuming that the state government would be the primary enforcer of wage laws. The CNMI has failed to enforce minimum wage laws or to effectively protect the workers from routine wage theft as the $6.1 million in unpaid judgements on CNMI DOL-issued Administrative Orders demonstrates.

No one believes that $3.05 or $5.05 an hour is a "living wage." It is not. The only reason we have low wages in the CNMI or in the mainland is because businesses profit from cheap labor and they are the ones with influence and power in Washington, DC, rather than the average tax-paying worker who struggles to pay monthly bills.

Most people supported the idea that regular minimum wage increases in the CNMI would make private sector jobs more attractive to local U.S. citizens, but delays in the increases have kept them ridiculously low and unattractive.

From Zaldy Dandan editor of the Marianas Variety:
According to one of our online commentators, “It will be interesting to see what [those who] do not want the minimum wage raised have to say after this govt goes broke and many are looking for jobs in the private sector.”

This may be hard to believe if you’re not on island, but the CNMI government is practically broke and it is still hiring political supporters. The government’s primary duty remains payroll. No surprise there because its primary constituents are its employees. Public services are now basically an afterthought. Because the law of inertia also applies to politics, expect CNMI politicians to continue doing what they’ve been doing until they absolutely can’t anymore.

Meanwhile, some locals who do not have the right connections on Capital Hill are leaving the islands. (A local lady I know got a job as a waitress at a restaurant and quit three days later because the manager wanted her to mop the floor. She refused not because she didn’t want to mop the floor, but because her friends might see her and tease her about it. She’s now in Hawaii with her sister.)

An additional 50-cent wage increase is not enough to persuade them to perform manual labor in the private sector, which also requires you to show up on time for work every work day. Next year’s wage hike will result in another round of layoffs and work-hour cuts. But don’t believe me. Ask any CNMI private sector employee you know.
Prevailing Wages

Several foreign workers who are in professional fields have expressed disappointment or confusion with the CW Program. Some wondered why their employers do not have to petition them under H1-B visas, but can petition them under a CW-1 visa even if they are in professional fields and have 4 year degrees.

The Immigration and Nationality Act (INA) requires that wages and working conditions of foreign workers should not negatively impact the wages and working conditions of the U.S. citizens who are employed in the comparable positions. It is a requirement that wages offered to a foreign worker be the prevailing wage rate for the job category in each determined county or area in the U.S. That is why a prevailing wage survey specifically for the CNMI was so important, and why it seems so odd that the it was until the 11th hour that a CNMI prevailing wage survey was conducted.

The DOL website states: "The prevailing wage rate is defined as the average wage paid to similarly employed workers in a specific occupation in the area of intended employment."

The US Department of Labor website outlines the requirements for professional workers to be hired under H1-B visas:
Basic Provisions/Requirements
The INA allows employment of alien workers in certain specialty occupations (generally those requiring a bachelor's degree or its equivalent). Foreign workers such as engineers, teachers, computer programmers, medical doctors, and physical therapists may be employed under the H-1B, H-1B1, and E-3 visa classification. 
The INA sets forth certain prerequisites for employers wishing to employ H-1B, H-1B1, and E-3 nonimmigrant workers. To obtain H-1B or H-1B1 status approval, the employer must first file a Labor Condition Application (LCA), Form ETA 9035 or Form ETA 9035E, with the Department of Labor. The employer must state that it will: 
  • Pay the nonimmigrant workers at least the local prevailing wage or the employer's actual wage, whichever is higher; pay for non-productive time in certain circumstances; and offer benefits on the same basis as for U.S. workers;
  • Provide working conditions for H-1B, H-1B1, or E-3 workers that will not adversely affect the working conditions of workers similarly employed;
  • Not employ an H-1B, H-1B1, or E-3 worker at a location where a strike or lockout in the occupational classification is occurring, and notify ETA of any future strike or lockout; and
  • On or within 30 days before the date the LCA is filed with ETA, provide notice of the employer's intent to hire H-1B, H-1B1, or E-3 workers. The employer must provide this notice to the bargaining representative of workers in the occupation in which the H-1B, H-1B1, or E-3 worker will be employed. If there is no bargaining representative, the employer must post such notices in conspicuous locations at the intended place(s) of employment, or provide them electronically.
To some professionals, including teachers, architects, medical personnel, electricians, and others, the CW Program does not appear to be conforming to the INA, but making the CNMI a "special" case, which takes a dangerous detour in the wrong direction.  Instead of complying with requirements for H1-B visas and prevailing wage, the GW Program is making exceptions for professionals, as is the case for hiring nurses.

It was reported that 135 professionals at the Commonwealth Health Center were approved to be qualified for CW visas rather than H1-B visas. From the article:
Public Health Secretary Joseph Kevin Villagomez disclosed Friday that all 135 nonresident workers at the Commonwealth Health Center have been found qualified for a CW-1 visa.

This was confirmed, he said, by U.S. Citizenship and Immigration Services officials with whom the department recently met with to discuss the matter.

Villagomez said the bulk of the nonresident workers at the hospital are nurses.

It was earlier disclosed that the filing for CW-1 status for all foreign workers will cost the department about $120,000, compared to H-IB, visa which may cost up to $585,000.
The employer can decide to hire foreign professionals under an annually renewed CW visa rather than a H1-B visa traditionally used for hiring professionals to save money? H1-B visa holders also can be petitioned by employers for green cards, while CW visa holders cannot. Some are criticizing the CNMI-only transitional worker program for continuing to keep professionals at unprofessional pay levels and for denying them of a chance to gain status under the INA.

They may be correct. From the USCIS Q and A Sheet:
Q20. Are there any occupational categories which are excluded from eligibility for CW status?
A20. No
Some advertised wages do appear to be extremely low for professional positions.
From the Saipan Tribune, October 6, 2011, page 22 (see above ad)
Grace Christian Academy, Tinian Campus is looking for: 2 elementary school teachers and two junior high teacher – full time salary- $5.05 per hour.
Grace Christian Academy: one school custodial worker part time, 25 hours per week,  salary $5.05 per hour. 
From the DOL Job Vacancy site:
Accountant, Alexander, Inc. $5.05 - $7.25 an hour
Sous Chef, Tinian Dynasty Hotel $6 to $7 an hour
Administrative Manager Tan Holdings -$5.05 -$5.50 an hour
Graphic Artist - Glimpses of Saipan, Inc. $5.05 to $5.50 an hour
Refrigeration Mechanic, Coca-Cola $5.05 - $5.50 an hour
Nurse Assistant (requires 2 year degree in nursing) Pacific Medical Center, Inc. $5.05 - $9.00 per hour
Radiology Technician and Medical Technician (both positions require a bachelor's degree and 2 years experience) Pacific Medical Center $5.05 -$6.75 per hour
Electrician Tropical Gardens $5.05 to $5.50 an hour
These wages are far below the prevailing wages for comparable professions in the U.S. and even Guam. Would a U.S. worker accept wages like this after 4 years of college? Extremely doubtful. A graphic artist salary at entry level would be $20 per hour, and beginning radiology technician would average $24 an hour.

Others question the range of wages in the prevailing wage survey. But isn't the survey just that –a survey that must reflect the reported range of wages if that is what the wages actually are being paid?

The Saipan Chamber of Commerce's prevailing wage survey was funded by a $16,150 technical assistant grant from the U.S. Department of Interior  awarded to conduct a 2011 survey of wages, salaries and benefits. The Chamber contracted out the survey to the Guam Employers Council.

Another survey was contracted out by Governor Fitial for $15,000 to in a sole-source contract to Data Talks owned by former NMC instructor Wil Maui. Maui formerly worked for the CNMI Department of Commerce.

While the Chamber's survey is completed, the Data Talk survey is expected to be completed sometime this month or next.

A census of all private and public businesses is also taking place this month with the CNMI Department of Commerce heading that endeavor.

I am perplexed why if the Chamber prevailing wage survey was done with federal funds, the Saipan Chamber of Commerce claims copyright ownerships of the documents. From the Prevailing Wage Survey posted on the Chamber website:
PLEASE NOTE: The 2011 SURVEY OF WAGES and SALARIES Among Specified Jobs and Organizations in the CNMI, Summary Report is copyrighted in 2011 by THE SAIPAN CHAMBER OF COMMERCE. All reproductions of this report or any portions thereof are prohibited without written permission from THE SAIPAN CHAMBER OF COMMERCE and appropriate procedures will be taken to protect the privileges of the copyright. However, copies of the Summary Report are available for sale from THE SAIPAN CHAMBER OF COMMERCE.
On the Methodolgy Page of the report, the Chamber claims that it is the owner of the wage and salary report and is "authorized" to copyright it. It also claims the copyright to the benefits report that it prepared. The federal government authorized the Chamber of Commerce to profit from a report that was funded by federal tax dollars? Since federal funds paid for the survey it seems that it should be public information. If is actually is now public, then the Chamber may want to take down the copyright restriction statements.


Anonymous said...

"There is no question as to why 90% of the CNMI's private sector workforce currently consists of foreign workers. Aside from the fact that many U.S. citizens shun certain jobs such as farm work, domestic help, janitorial positions, and labor intensive jobs, the low minimum wage is a major deterrent.

Completely wrong. There are millions of Americans that work hard labor jobs.

60% of Americans pay absolutely ZERO Federal Income Taxes.

Wendy Doromal said...

12:55 I should have written CNMI U.S. citizens, because that is what I am talking about. In the CNMI that is an accurate statement. Of course, you do know that millions of Americans in the mainland will not perform farm work? In fact, because of Alabama's anti-immigrant law, thousands of migrant workers are leaving the state and crops rotting in the fields. That is because citizens refuse to perform that backbreaking work. 

(Read this: Few Americans Taking Immigrants Work)

Regarding taxes, I am not talking about the mainland US citizens who make so little that they are not taxed or those who legally fall under one of the Congressionally approved tax loopholes. And the number is 45%, not 60%.

You know that no one in the CNMI pays federal income tax. The CNMI takes money from the U.S. tax payers, but the residents, regardless of their earnings, do not pay federal income tax.

Anonymous said...

Tax cuts for rich cost the poor Americans:

Anonymous said...

PSS has a nuring assistant program, but instead of hiring the new graduates, businesses such as Pacific Medical Center can hire "nursing assistants" with bachelor of nursing degrees for $5.00/hr.

Businesses are cheating both non-residents and local workers alike.

Anonymous said...

The DHS OIG needs to do an investigation of the fraudulently low prevailing wages being perpetrated on the CNMI.