The Population & Economy Of The Commonwealth – A Historical Perspective

The Population & Economy Of The Commonwealth

A Historical Perspective The CNMI's fascinating history is largely unknown to many otherwise knowledgeable people in the United States and elsewhere. The islands' history in many instances is far more interesting and intriguing that the history of some states in the Union as the islands have played a significantly more prominent role in world affairs and geopolitics than their size and resources would seem to indicate. The islands’ history has been both rich and tragic. The Mariana Islands (Guam, Rota, Tinian and Saipan) are the only areas under the United States flag to experience total devastation as a result of the Pacific war. They are also frequently subjected to the destructive force and rage of unpredictable typhoons, sometimes with a wind force exceeding 150 miles per hour and they are situated within the Pacific’s volcanic rim of fire. Little is known of the early prehistoric settlers of the islands. It is believed that they originated somewhere to the west and south of what is now the Mariana Islands. The first European contact occurred in 1521 when Ferdinand Magellan made his landfall at Guam. In 1668 a Catholic mission was established and the islands were named after Maria Anna of Austria the widow of Spain's Philip IV – thus the name Mariana. By 1815 a new wave of immigrants visited the islands from low-lying atolls in the Carolines southeast of the Northern Marianas. In 1898 as a result of war between the United States and Spain, a near bankrupt Spanish government sold the 14 islands north of Guam, (the Northern Marianas) to Germany. This occurred after the United States had taken control of Guam, largest and most southern of the islands, as a result of the Spanish American War.

The new German administration encouraged the development of agriculture and fisheries as well as the immigration of foreigners. By 1905 Japanese immigrants had so established themselves in the islands that they controlled 90 percent of all trade. In 1914 with the advent of World War One, Japan moved against the German possessions in the Pacific and forced the German administration out – expelling all citizens of Deutschland. Following the conclusion of hostilities in Europe and upon the creation of the League of Nations and the subsequent stripping of Germany of all her overseas colonial possessions, Japan succeeded in being confirmed as administrator of the islands receiving a Class C Mandate from the League in 1921 over all of Micronesia (except the U.S. Territory of Guam). While this move was made over the objection of the United States, which was not a member of the League, Japan successfully legitimatized its entry and control over 3 million square miles of the western Pacific an area as large as the continental United States. While not known at the time, the requisition of these "dry-land" assets by the Japanese in a vast universe of water would be the scene of bitter hostilities in less than a generation.

Japanese nationals moved to the Northern Marianas with intense interest in the cultivation of crops and the development of fishing and sugar enterprises. As tension increased between the United States and Japan, the latter withdrew from the League and by doing so unilaterally terminated the Mandate, which had forbidden militarization and fortification of the islands. Japan closed the islands and prepared for war. America's entry into the Pacific war occurred on December 7, 1941 when military installations in Hawaii were attacked by Japanese carrier based forces. For the next 30 months fighting continued in various locations in the Pacific with U.S. forces eventually attacking and neutralizing Japan's Micronesian Mandate within the central Pacific. For Saipan and Tinian this island hopping strategy culminated in the invasion of June 15, 1944. The island’s sandy beaches and mountainous terrain were the scene of one of World War Two's bloodiest battles. After the island's were secured by American military forces, airfields were constructed from which long-range B-29 aircraft attacked the Japanese home islands. In 1945 the airfields on Tinian were the busiest in the world. It was from one such airfield that the Superfortress Enola Gay was based and from which the first atomic bomb was launched for detonation over Hiroshima in August 1945 thereby hastening the end of the war. As a little known footnote to history the last surrender of World War II took place in the Northern Marianas on Anatahan Island north of Saipan when a group of Japanese holdouts finally surrender in 1952. In 1945 the United Nations was organized as a successor to the League of Nations and two years later the islands were placed under the purview of the Security Council with the United States appointed as administrator. The United States accepted the obligation to develop the area economically, socially, and politically for eventual self-government. This three million square mile area consisting of the Marshall Islands, Eastern and Western Carolines, and the Northern Marianas became known as the Trust Territory of the Pacific Islands and was administered first by the United States Navy and later by the U.S. Department of the Interior.

Japanese facilities in the Northern Marianas had been totally destroyed and the infrastructure which remained in place was falling into disrepair from lack of maintenance. Dense jungle growth quickly reclaimed much of the landscape previously cleared for sugar cane which had been a subsidized activity during the Japanese period. At that time to even think of a hospitality industry based on Japanese tourists was an unimaginable dream. The economy was as listless as the doldrums which frequent the islands. Cold war tensions of the period resulted in the United States Navy virtually closing off the Marianas to all but the military and the indigenous population. This situation prevailed until the late fifties and early sixties. At that time there was actually very little potential for development and, more important, the population of some 6,300 people were too few to undertake the process to any significant degree. These were the days before widespread use of commercial jet aircraft when travel from Hawaii to these isolated islands required many exhausting hours. In the early fifties a flight from Honolulu to Wake Island required about nine and one half hours from Wake to Saipan was still eight hours further. In those days Japan was occupied by the United States Armed Forces. The country was concerned with its own reconstruction and had little interest in its former mandated islands. The Northern Marianas' economy was to languish undeveloped for an entire generation, some 33 years, following the conclusion of the Pacific war. First, as a result of sheer exhaustion and despondence and later (until 1973) as a result of American policy exercised on the basis of the ''most favored nation" clause within Article 8 (1) of the Trusteeship Agreement For The Former Japanese Mandated Islands. From 1947 until 1973 this policy to prohibit non American investment was referred to as the "denial principle." The United States Government was not particularly interested in the islands except for Saipan and its training base for Central Intelligence Agency covert operations for the Naval Technical Training Unit (an area now known as Capitol Hill) and did not wish to encourage investment from the nationals of other countries. The administering authority interpreted Article 8 (1) in such a manner to be an effective tool to prohibit foreign investment.

This policy precluded Japan from re-establishing itself in the Marianas and the other islands of Micronesia which were administered under the Trusteeship Agreement. It was largely through the efforts of the Saipan Chamber of Commerce at a meeting held at the Royal Taga Hotel in December, 1972 that the United States was convinced of the need to relax its policy and open the islands to foreign investment. Once the United States changed its policy toward outside investors there was still a strong desire by a somewhat xenophobic Congress of Micronesia to continue to control the introduction of foreign capital into the islands. This body, in which the Marianas District was represented, had enacted a rather stringent and restrictive Foreign Investor's Business Permit Act in 1970. This law remained in force in the Northern Marianas until 1983 when it was repealed. The door was opened to investment from all nations with few controls to regulate outside capital. On still another front, negotiations for self-government and the eventual termination of the United Nation's Trusteeship Agreement with the United States first began in the late sixties. Today’s unique relationship between the United States Government and the Commonwealth stems from the fact that the islands were never recognized as a permanent possession of any nation since they were taken from defeated Germany by the Allied Powers during World War One. Subsequently assigned to Japan under a mandate from the League of Nations, the islands' status did not change after they were occupied by United States armed forces in 1944. Indeed, since their purchase by Germany from Spain in 1899, and their assignment to Japan for administration in 1920 by the League of Nations, the Northern Marianas had no political identity among the countries of the world.

From the time of Germany's loss of the islands they were never regarded as a permanent colony within the exclusive sovereignty of any nation, except, of course, by Japan when it left the League before the outbreak of World War Two. At the conclusion of the Second World War the United States, not desiring to appear as having annexed the islands by virtue of "victor's rights", placed the islands under the supervision of the Security Council of the newly formed United Nations. As the Marianas where considered to be within a strategic area of the western Pacific they were to be overseen through the Security Council where the United States had veto power, rather than the U.N. General Assembly. The people of the Marianas were encouraged to choose their future political status from several options. These included: maintaining the status quo and remaining a Trust Territory; selecting independence; or becoming affiliated with the United States, either through a relationship of free association or a commonwealth status based upon a negotiated agreement which later became known as the Covenant. The Covenant describes the relationship agreed upon between the people of the Northern Marianas and the United States Government. No other United States territory or insular possession has a similar relationship. Alaska, Hawaii, Puerto Rico, the Virgin Islands, American Samoa, Guam and other Pacific possessions were all acquired under circumstances far different than that of the Northern Marianas. For a nation to acquire additional territory, a government must either annex an area by force of arms or by purchase from a sovereign government.The Northern Marianas was not a permanent legal possession of Japan at the time of the war as it had only been entrusted to Japan under a mandate by a group of countries through their organization – the League of Nations. Therefore, the United States could not strip territory from defeated Japan at the conclusion of hostilities since the islands were never recognized as a permanent legal possession of Japan in the first place.

In June 1975 a plebiscite was held in which 78.8 percent of the votes cast by the people of the Northern Marianas indicated agreement in accepting a negotiated Covenant with the United States. In January 1978 the Northern Marianas became self-governing under the terms of the Covenant and the area's first elected governor assumed office. On May 28, 1986 the United Nation's Trusteeship Council determined that the United States had satisfactorily met its obligations to the islands and on November 4, 1986 United States citizenship was conferred upon those people in the Northern Marianas that met the necessary qualifications. From that point to the present the area experienced rapid economic growth. The above date may be considered the point of "takeoff" for the Commonwealth economy, the growth of which was stimulated by three principal factors, namely, the stability assured by an affiliation with the United States; the opening of air service to Japan; and the abandonment of restrictions on foreign investment, particularly in tourist related enterprises. This pace was accelerated greatly in l986 as a result of the Plaza Accords and the "Group of Seven's" policy to devalue the dollar in relation to the yen, which made Japan a financial superpower overnight and gave Japanese investors a half-price sale on "dollar-valued" real estate assets.

This led to a tremendous inflow of Japanese investment into the islands, forcing land values to skyrocket and increasing the cost of living. It is at this point that one is struck by a strange irony – United States Government expenditures within the Northern Marianas aside – large private American investment is somewhat conspicuous by its absence in the islands. It is something of a paradox that it has been largely private capital from a defeated former adversary rather than the wealth from the victor that has resulted in the reconstruction of Saipan's economy. Considering that the Japanese presence in the islands extended for a period of 30 years, as compared to almost one half century for that of America, it is somewhat surprising that the geographic and economic ties between the islands and Japan were reforged in the seventies. It is also interesting to note that the Philippines and the Mariana Islands, located as they are in the eastern hemisphere, are culturally oriented to the western hemisphere. As a predominately Catholic area, colonized first by the western nations of Spain and later Germany, the Northern Mariana Islands were under the influence of the eastern hemispheric nation of Japan for only two and one half decades, after which they were administered by the United States. By contrast there is no culturally oriented eastern hemispheric nation situated in the western hemisphere. On any given day in the Commonwealth, there are more Japanese present than non-indigenous, native born Americans. It must be said, however, that it is the stability assured by the American flag and the U.S. rule of law that has provided a safe business environment for Japanese and other foreign investment to flourish in the islands. Situated in a universe of water, the islands within the Marianas archipelago are the farthest stars out in the American galaxy. During the Trust Territory period and into the early years of the Commonwealth before the “boom” years of the eighties Saipan had only a single local bank consisting of 4,016 accounts with aggregate savings of $562,000. In 1970 the private sector consisted of 55 licensed business firms with total assets estimated at slightly less than $2 million. Only 957 privately owned vehicles were registered.

The single credit union had a membership of 277 with total assets of $19,700. The 1,056 employed indigenous workers in the Marianas had wages that totaled $1.5 million annually and the population stood at 11,340 people.The Trust Territory Government, with it's large expatriate payroll, was the major employer. There was no foreign investment in any substantial amount. By the late summer of 1970 the islands were almost devoid of the amenities of the last quarter of the twentieth century. There was one black and white television channel available operating only a few hours each evening; there were only three food stores of any size with a very limited inventory; one cargo vessel a month called at the port. The airport was an open-air tin shack with one aircraft a day. Since the airstrip was not lighted and had no navigational aids, aircraft had to overfly the strip at a low altitude prior to landing to check the wind direction and to frighten stray dogs and cattle from the landing strip. There were no recreational craft in the lagoon except for a single glass bottom boat operated by a Palauan. There were only two hotels, the 73 room Royal Taga Hotel where the elegant Diamond Hotel now stands in Susupe and the Hafa Adai Hotel in Garapan which consisted of ten plywood bungalows each slightly larger than a shipping container. The number of island restaurants could be counted on one hand. There were very few automobiles on the island and those consisted mostly of second hand, rusted pick-ups. The Fire Department had a single red jeep with a garden hose and there was only one stop sign on Saipan's roadways at the entrance to the Royal Taga Hotel. To make an overseas telephone call one had to drive to the RCA office in Susupe and make the call from a booth.The economy was minuscule. In those days a Japanese visitor could only convert yen equivalent to $743. for trips outside Japan. Hardly a sum upon which to build a tourist industry. As late as 1980 the Commonwealth still had no economy to speak of, indeed, a very prominent businessman, the late Joe Screen, remarked that he thought the economy "had a black hand over it." It appeared in those days that the Northern Marianas, like the "economic basket cases" elsewhere in Micronesia that were previously part of the Trust Territory would forever remain a stagnate backwater entity doomed to remain on the federal dole. Saipan – The Last Battlefield of World War II To Enter A Reconstruction Phase In 1986 three fortuitous events occurred that had the potential to change the economy. One event was local, the others international. – The CNMI abandoned the formerly restrictive, xenophobic Congress Of Micronesia laws governing foreign investment and opened the economy to all investors; -The United States Government, at the Plaza Accords in New York, devalued the Dollar in relation to the yen which had the effect of providing the Japanese with a half price sale on real estate and other assets. Japanese investment flooded the island; – United States citizenship was conferred upon the people of the Commonwealth and when the American Flag went up it was a signal to all investors, domestic and foreign alike that many major United States laws prevailed providing the bedrock of stability creating the investment atmosphere permitting individuals and businesses to prosper and grow. The above factors presented a tremendous opportunity after decades of a low standard of living and limited business opportunities, to strive for the achievement of some degree of limited economic self sufficiency. The American Government's action was directly responsible for a flood tide of Japanese, Chinese, Korean and other investment in the Commonwealth. However, the limitations placed on the area by a small local population still had to be overcome. This was solved by the importation of alien workers without which no measurable development could ever occur. Applications for nonresident work permits soared from 2,866 in 1980 to 28,829 by the end of 1996.

Over an eighteen year period locally generated revenues in the Northern Marianas increased almost 45 times from $5 million in 1970 to $223.3 million in 1996. Imports jumped from $31.1 million (1979) to $628 million (‘95) and tourist entries grew from 22,337 (‘71) to 736,508 (‘96). The great boom period in Japan from 1986 to 1991 fueled Saipan's economic engine. Throughout the last half of the '80's, Japan registered huge annual trade surpluses, had an ever strengthening currency and one of the lowest interest rates in the industrialized world. Japanese banks overflowed with money, much more than they could accommodate by relending in Japan itself. It was this money that went abroad and around the world to finance a myriad of projects. Millions were invested in the Northern Marianas to launch the islands on the road to a thriving tourism industry. It is estimated that from 3/4 to one billion dollars in foreign investment has flowed into the Commonwealth. Principal among the investment incentives contributing to this growth were: local control of immigration to overcome the constraint of a small indigenous labor force. The Commonwealth – not unlike the continental United States and Hawaii -in the early years – has relied upon imported labor to develop its economy. Other incentives include the ability to offer wage rates lower than the United States minimum wage – at least for a period of time – and finally a lucrative tax rebate incentive similar to many states that offer a tax holiday. These incentives and the area’s association with the United States together with the advantage of being able to ship qualified manufactured products to the United States duty free combined to propel the CNMI’s economic “take-off.” Without the above incentives the economic progress the Commonwealth has attained would not have been possible. The Commonwealth's proximity to Asia places it within reasonable distances to 1.4 billion people with a combined gross domestic product equal to $2.9 trillion dollars. Japan alone accounts for 11 and 70 percent respectively of the regional totals mentioned above. The question might be posed as to why there is not more U. S. private investment in evidence in this American affiliated Commonwealth? The answer may lie in the geographic and demographic environment of the islands. The Commonwealth is somewhat isolated from the major suppliers and markets of North America and the concomitant freight costs associated with importing equipment and materials increases the cost of doing business. Sheer distance and the time involved in traversing the Pacific are factors which must be taken into consideration when planning projects. For example, the Commonwealth is about as far away from the U. S. west coast as, for example, Washington, D. C. is from Cairo, Egypt. The swiftness of jet aircraft, while having the apparent effect of shrinking distance, tends to distort the perception of time and space in the vastness of the Pacific. The Marianas archipelago is closer to Moscow than Washington, D. C. At 7,000 miles, the area is the most distant member of the American political family and the United States Capitol. The International Date Line is between Hawaii and the Mariana Islands. As a consequence of this geography, at no time do normal business hours on the United States east coast coincide with those of the Commonwealth. Indeed, telephone communication from the U.S. west coast and Hawaii, when conducted during normal business hours and work days can only take place 4 days a week or between Monday and Thursday ( in the US ), Tuesday to Friday (in the CNMI). Geography also separates the major population groups of Saipan, Tinian and Rota and fragments the small domestic market and adds to the expense of transportation and communication and thus somewhat limits the cohesiveness of the population. The separation of the three principal islands requires a tremendous duplication of government services as each island requires its own air and sea ports, power and water production facilities, schools and other public services which cannot otherwise be consolidated. The indigenous population of the CNMI is not much larger than many communities in rural America. With a large percentage under the age of 15 years and with a lesser number over 65 years of age, there are not enough local people to fill available jobs. One important issue facing the Commonwealth today in terms of the labor force concerns the large number of alien workers and there is a paradox inherent in the current labor situation since any successful attempt to stem the flow of nonresident workers could likely slow the pace of economic development since foreign workers are recruited precisely because the local labor supply does not meet current demands. Through the boom of the mid ‘80’s every sector of the economy grew at an annual rate of sixteen percent. During this period the CNMI experienced a rate of growth compressed into five or six years that would normally require a span of two decades or more to achieve.

The basic development issue several years ago was – must the islands be forever doomed to a small economy because they have a small local population? The Commonwealth now finds itself in the strange, if not unique, position of having an economy that has far outstripped the capacity of the indigenous population to provide the necessary workers for the labor force. No other area or country, with the possible exception of Saudi Arabia, is in a similar situation. For almost all other areas throughout the world the exact opposite is true, not enough jobs for the available work force to occupy. It was only a few years ago that the islands had no economy to speak of and the only employer of any size was the Trust Territory Government. In 1980 there were only 740 hotel rooms and tourist expenditures were $58.8 million. By 1995 the industry had grown to 3,561 rooms and the combined expenditures of 654,375 visitors has been estimated at $521.6 million. Between 1980 and 1995 there were 54,493 land transactions recorded, (not all involved leased land). In 1980 the number of occupied housing units in the islands totaled 3,373. By 1995 the number had increased substantially to 12,058 units. The Commonwealth's economy with its 4,257 licensed businesses now boasts total annual gross income of $ 2.26 billion (‘95) and functions between two economic forces. As a political entity affiliated with the United States, a thriving U. S. economy and a strong dollar is desired when Americans travel abroad, but, the reverse is true with respect to the Commonwealth’s tourism based economy since a strong dollar erodes the competitiveness of the area's Japanese based tourist industry there-by making the islands more expensive for the visitor when an increasing amount of yen is required to purchase the dollar. In 1970 a Japanese visitor had to pay 350.8 yen to purchase one U. S. dollar, today he or she need only pay about 115 yen. On any given day in the Commonwealth there are more Japanese present than non-indigenous, native born Americans. In terms of hotel ownership 61 percent of the rooms are owned and operated by the Japanese; 16 percent are owned by Chinese; 12 percent American and 11 percent are Korean owned. Several major resort hotels are planned for construction in the near future and a casino is under construction on the island of Tinian. The tourism sector has been so lucrative for investors that the area’s major hotels have undergone three phases of significant expansion since their original construction. Conservative projections of low and high scenarios to the year 2001 indicate that the Commonwealth can expect from 1.0 to 1.4 million visitors providing additional hotel rooms are available to accommodate this market. Visitor expenditures at that time have been conservatively estimated at $1.3 billion. To accommodate this market a total of 7,000 to 9,000 hotel rooms will be required in the Commonwealth’s inventory. Visitor arrival information reveal that the Commonwealth’s visitor industry in 1996 remained a vibrant sector. Air and sea entries were 736,508 for the calendar year representing an increase of nine percent over the previous year. It has been estimated that visitor expenditures were $587.8 million as compared with $539.4 million in 1995.

The Commonwealth closed the year with 3,847 rooms in its inventory, an increase of eight percent or 286 additional rooms over those available in 1995. Since 1980 the increase in visitor arrivals has averaged 11.6 percent annually. Only one year (1982) in the past seventeen years witnessed a decline in arrivals and that was a minuscule three percent drop. Air craft landings at Saipan International Airport increased twenty five percent over those of 1995 for a total of 36,852 in 1996. Projections to the year 2001 indicate visitor expenditures for air arrivals will be in the vicinity of $1.4 billion (low) to $2.7 billion (high). At that time the CNMI could expect to accommodate from 10,700 (low) to 13,400 (high) visitors on the islands on any given day. Population Growth The Commonwealth’s population increased 35.8 percent to 58,846 by late 1995.This was an increase of 15,501 over the 43,345 people enumerated in 1990. The 1980 census recorded 16,780 people residing in the islands resulting in an increase in the population of 42,066 or 250.7 percent since that period. In 1995 males and females were about evenly split at 29,276 (49.8%) and 29,570 (50.2%) respectively. United States citizens account for 46.7 percent of the inhabitants (with those born in the CNMI equal to 37.7 percent with the remaining 9 percent made up of other ethnicities). remember the term “American” is not an ethnic classification. Those of Chamorro ethnicity made up 23.5 percent of the population; the Filipino community equaled 33.1 percent followed by the Chinese at 11.5 percent; Carolinians registered 4.0 percent; Koreans at 3.9 percent and the Japanese only 1.6 percent. The remaining 22.4 percent consisted of other Pacific islanders and Asians, whites and blacks , (the two latter groups at 0.04 and 0.01 percent respectively). Several other ethnicities made up the balance of the population. In 1995, 11,525 students were enrolled in school. The work force consisted of 34,669 people 16 years of age and over, working 35 hours a week or more. The unemployment rate was 7.5 percent within a labor force of 35,664, (comprised of those between the age of 16 and 64 years of age who are either employed or unemployed) . This is in contrast with 1990 and that year’s working population of 25,965 within a labor force of 28,664 and an unemployment rate at that time of 9.4 percent. How the Commonwealth can have a nonresident work force of the size it currently sustains and still have unemployment is an interesting contradiction. Per capita income information currently available reveals the following: whites $25,721; Chamorro $9,127; Palauan $6,029; Filipino $5,137; other Micronesians $3,656. The overall average per capita income for the islands was $6,986 with an average of 4.5 people per family. Per capita income declined somewhat from the 1990 level of $7,199 which is a result of an increasing number of low wage earners but it is up substantially from the $2,418 per capita income in 1980. Of the total of 12,058 occupied housing units in 1995, 4,038 were owner occupied with 5,219 renter occupied, 2,801 units were occupied without payment of rent by the occupants.

These consisted of government provided quarters and housing provided by business owners for their expatriate staff. People inhabiting group quarters (barracks and other structures) numbered 9,703 down from the 11,489 so housed in 1990. Private sector employment totaled 28,732 with the government employing 4,993. Self employed people accounted for 856 with 88 people performing unpaid family work. In 1994, Capitol Hill recorded the highest median family income at $42,622. The term “median” represents the middle value when each person’s income in that area of Saipan is ranked from the smallest income figure to the highest. In other words, that number which would fall midway in the ranking where there are as many figures below that amount as above it. The year 1994 is used in the ‘95 census because the government wanted each individual with an income to record their total annual income for an entire year. Since the census enumeration was undertake in mid and late 1995 before that year ended, the income earned in the previous year was recorded. With respect to the use of the term “family income”, a family is defined as consisting of all related members as opposed to a “household” which is made up of family and unrelated people or a unit consisting entirely of unrelated members. The average family size on Capitol Hill was 4.33 persons. The per capita income on the Hill was $9,842. and some change. Capitol Hill is followed by Navy Hill with a median family income of $34,848 with Garapan registering the lowest at $14,888. The median income for Saipan as a whole was $22,774, with a per capita income of $5,863 and 4.7 persons per family with 10,848 occupied housing units and 184 group quarters, (barracks, jails,etc.). The median age for Saipan was 28.1 years. Saipan’s 1995 population was 52,698. Median family income for other areas of Saipan are as follows: Gualo Rai – $31,222; San Vicente – $26,878; Dan Dan – $24,170; Koblerville – $22,860; San Roque $22,770; Tanapag – $22,478; Kagman – $20,232; San Jose – $20,194; San Antonio – $19,805, Chalan Kanoa – $19,616 and Susupe – $17,899. Tinian data are as follows: median income – $32,293; per capita income – $6,231; persons per family – 5.4; median age – 25.9 years; occupied housing units – 522; group quarters – 10 and a population of 2,631. Rota came in with a median income of $26,715; per capita income – $5,421; persons per family – 5.2; median age – 27.7 years; occupied housing units – 689; group quarters – 18 and a population of 3,509. The Economy The Commonwealth’s economic “boom” started around 1985 -’86. Several indicators of the Commonwealth’s phenomenal growth can be observed from the increase in locally generated government revenues.

Business gross revenue tax collections increased from $19.3 million in 1986 to $67 million in 1996 for an average annual increase of 16 percent. Revenues collected from the wage and salary tax jumped from $7.4 million in ‘86 to $53.9 million in ‘96 for an average annual increase of 40 percent. Impressive growth by any measure. Government income from the import and export tax averaged 18.7 percent and 20 percent respectively. Revenue generated from the hotel tax has averaged an annual rate of growth of 31.5 percent. On the expenditure side, in 1986 revenues required for government commitments were a mere $40.5 million. Ten years later, by 1996, they had increased five times to $216.8 million with the average annual growth rate of 19.2 percent. Expenditures also increased three and one half times from $59.3 million in 1986 to $209.8 million by 1996 for an average annual increase of 13 percent. It should be kept in mind that the Commonwealth, unlike Guam, has three principal islands which requires a tremendous duplication of services, three airports, three medical facilities, three public safety operations, etc. These services can’t be consolidated and thus the high cost of government operations. The extraordinary growth in government revenues was a result of two factors: an increase in taxes in 1995 but more importantly the striking performance of the private sector and the reported business gross revenue (BGR). In reviewing the most recent data available the reported BGR was nine times larger in 1995 than in 1985. In 1985 the BGR totaled $244.4 million and increased to $2.26 billion (est.) by 1995 for an average annual increase over the period of 21 percent. In terms of wages and salaries paid, these jumped from a total of $77.5 million in 1985 to $464.8 million in 1995 a six fold increase for an annual average over the period of 20 percent. However, all this was soon to change as the major Asian economies began to falter toward the end of the decade. The 1998 Recession The Japanese economic “bubble” burst in the early years of the decade of the nineties which curtailed large investment in the Northern Marianas.The local economy was further effected by the 1997 economic crisis in Korea, Thailand and other southeast Asian countries. The devaluation of their currencies resulted in making the Commonwealth a more expensive destination while, at the same time, making their respective countries less expensive to visit with the result that tourism entries in the Northern Marianas declined drastically. Hotel occupancies fell, airline flights to the islands were eliminated or reduced in frequency, marginal businesses closed, property rentals and used automobiles available for sale increased and government tax revenues declined.

All this occurred at a time when the Tinian Dynasty Hotel and Casino opened with the hope that the Chinese market would patronize the facility. The above occurred at a time when pressure mounted in the United States Congress to assume control of immigration to the Commonwealth and at the same time impose the United States minimum wage of $5.15 per hour. Pressure on the garment industry increased as a result of the adverse publicity received for various alleged violations of human rights.