Immigration And A Thought From The Past – Thanks To Joe Screen
I was cleaning out my correspondence file and ran across a letter written while I was off island from a long departed friend, Joe Screen, former vice president of J. C. Tenorio Enterprises. Those of you who were on Saipan in the seventies and early eighties will remember Joe very well. He was one of the most irrepressible men I have ever known. In those days everyone knew Joe and if you, as a reader, were not around at that time – you missed something.
The letter from Joe was dated December 12, 1981 in which he remarked that he thought the Commonwealth’s economy had a ”black hand over it.” By that he meant that the economy had not developed the way everyone had expected since becoming associated with the American political family four years earlier in January 1978. For me the date of that letter provides an important benchmark in the economic evolution of the Northern Marianas’ economy. It is a date from which I measure the growth of the economy, and like the “Jabberwocky” bird who flew backwards looking at where he has been – rather than forward to see where he is going, 1981 will be my point of departure for this essay. While no one has a crystal ball to divine the future, a knowledge of history can be helpful in defining what the years ahead may be like. Peering through the looking glass to employ a favorite postulate, the “Generalized Iceberg Theorem” which states, “seven eighths of everything can’t be seen.” Let’s try to look at a fraction of what possibly might not be seen should the U. S. Government impose federal immigration laws within the Northern Marianas.
Tax generating businesses could possibly be severely constrained due to the shortage of nonresident employees; business revenues could decline and some firms may be forced to close; the market for leasing land could constrict. This would be followed by a reduction in tax collections which in turn would require a reduction in government provided services and, of course, government payrolls. The CNMI’s economy could shrink to some level equivalent to that of the early eighties – a point selected for this essay – and this could require an increase in federal budget support for schools, the hospital, etc. While the federal executive branch would be responsible for administrating the U. S. immigration law and possibly the minimum wage law, this action will quite possibly result in an increased requirement on the part of the U. S. Congress to provide an increase in expenditures in the islands to compensate for the lost revenue. It’s the “Jabberwocky effect”, looking backwards rather than forward. While any change in the economy may not be sudden or as drastic as the following figures present – there will be change. In examining “selected” economic indicators as they existed in the early eighties as compared with those of the most current data one finds that in 1995 the total reported business gross revenue was $2 billion – 260 million. In the early 80’s it was $244.4 million – a difference of 825 percent; wages paid in 1980 totaled $78.2 million as compared with $464.8 million in 1995 – a difference of 494 percent; some 15 years ago bank deposits were $104.2 million, in 1995 they were $425 million – a difference of 308 percent; the gross island product in 1980 was estimated at $105 million.
The most recent GIP estimate now indicates it at $584 million – a difference of 422 percent. In 1980 there were 3,093 nonresident workers, by 1996 there were 28,826, an increase of 832 percent. The loss of the Commonwealth’s control over immigration will cause the financial balloon to deflate to a level below the current level causing a reverse multiplier effect throughout the economy. The volume of imports could decline at a time when the interest on the port authority’s bond financing is fixed, this could result in an increase in import duties to meet their serial payments which in turn will push up the cost of living. It hasn’t happened yet – but it could. A lot of money has been placed at risk in the islands based on laws and regulations that prevailed at the time. My own estimate is about one half billion dollars in foreign investment has been spent in the islands over the past ten years. Such investment is risk capital. Nothing in business is certain and one enters the venture (perhaps adventure is a better word) and takes the risk that the endeavor will be a success and that the investor will be rewarded. The reward for taking the risk is the profit earned. The money which is put at risk is itself a product of thrift, prudence, planning, management and in some cases sacrifice. It is extremely rare for such money to flow into areas where these traits are not respected. From 1986 to the present, a period when such investment was being considered for the CNMI you can bet that all the laws and regulations in place at that time were scrutinized and found to be an incentive for taking the business risk. In my judgment such investment was made because of the confidence inspired by the American Flag and it was made under the impression that the area was safe from any drastic change in the rules.
To inform investors that the rules are now subject to change, at least as far as the ability to recruit workers is concerned, not only jeopardizes such investment but could call into question the investment reputation of both the Commonwealth and the United States and send the signal that the rules for doing business in the CNMI can change as a result of action taken by the federal government ten thousand miles away in Washington, D. C. I challenge anyone visiting Washington, D. C. to hail a taxi that is not operated by an individual other than a person from Ghana, Afghanistan or from some other nation who has entered the United States in recent years. It is doubtful that you can visit a single hospital in the United States that does not have Filipino staff on the payroll. The point being that if Congress has recognized that the mainland requires such skilled and unskilled persons and has permitted their entry, then it should be appreciated that the Commonwealth’s economy is similarly dependent. Turning briefly to the subject of minimum wage, some in the community point out that several major hotels in the Northern Marianas have expanded their facilities three times since their original investment. These observers reason that these hotels are so profitable they must have been able to amortize their initial investment in a relative short time and advance the opinion that since Guam and Hawaii pay the U. S. minimum wage – why can’t hotels in the CNMI do the same? Both Hawaii and Guam have a large population base including, among others, retired military personnel and citizens of the Federated States of Micronesia and the Republic of Palau who selected these islands as their first choice as employment locations and, unlike military personnel whose relocating expenses are paid by the military, islanders very often pay their own cost of relocating. This is not the case for nonresident workers in the Commonwealth who have their transportation recruitment expense paid by the employer. Additionally, many foreign investors in Guam and Hawaii own the hotel and land in fee simple with the result that their investment appreciates in value as the future unfolds there-by enhancing their initial investment. In the CNMI the opposite is true as the major hotels do not own the land having, in some cases only leased it for 55 years with the result that the value of their assets decline as the lease term is eroded until the end of the lease period arrives at which point they are left with no residual value and can only walk away when the property reverts to the original land owner. As a poor ol’ country boy injecting a little levity in an otherwise serious issue, to state that the matter of federal immigration and minimum wage is complicated is an understatement.
I have yet to see any problem, however complicated, which, when looked at the right way, did not become still more complicated. There is nothing so simple that it cannot be made difficult as pointed out by Mr. Dallin Oaks, President of Brigham Young University and President of the American Association of Presidents of Independent Colleges and Universities. He wrote an essay which appeared in the March 17, 1978 issue of the Congressional Record in which he listed three hypotheses derived from his research: (1) – The public is easily fooled by government claims; (2) – An uninformed lawmaker is more likely to produce a complicated law than a simple one; (3) – Bad or complicated law tends to drive out good judgment.