FROM 2001 to 2020, the number of foreign workers in the CNMI fell to about 9,700 from 36,300 — a 73% decline.
The overall number of CW-1 permits approved by U.S. Citizenship and Immigration Services dropped from a high of 13,685 for fiscal year 2017 to 5,365 for fiscal year 2021.
The number of approved CW-1 permits for fiscal year 2021 was over 6,000 below the updated 2021 cap established in 2018.
U.S. workers were about half of the workforce in 2016 but rose to 59% in 2020, due in part to the Northern Marianas Long-term Legal Residents Act of June 2019 that allowed foreign workers with employment visas who met certain qualifications to become long-term residents of the CNMI.
These are among the findings of the latest Government Accountability Office report on the CNMI’s “workforce trends and wage distribution.”
The GAO is “the audit, evaluation, and investigative arm” of the U.S. Congress.
In its latest CNMI report, the GAO noted that the size of the islands’ overall workforce grew from 2016 to 2017 before contracting by about 2,000 workers in 2018, and dropping by more than 5,000 workers from 2016 to 2020.
Declining visitor arrivals
The ongoing Covid-19 pandemic “has had a significant effect on tourism, which is the CNMI’s primary industry. Tourism from Asia declined significantly beginning at the onset of the pandemic in January 2020. According to tourism data provided by the government, visitor arrivals declined by about 85 percent in March 2020 compared with March 2019 in the prior year. The number of visitor arrivals declined every year between fiscal years 2017 and 2021…and sharply following the beginning of the pandemic, from 653,150 in fiscal year 2017 to 5,365 in fiscal year 2021.”
The GAO also noted that the local economy “faced challenges prior to the pandemic. It was still recovering from the effects of Super Typhoon Yutu, which devastated the CNMI in October 2018, causing extensive damage to homes, businesses, and infrastructure, including to the Saipan International Airport. The U.S. Department of Commerce’s Bureau of Economic Analysis…said that the CNMI’s inflation–adjusted Gross Domestic Product…fell by 19.3 percent in 2018 and another 11.2 percent in 2019 with sharp declines in tourist spending, casino gambling revenue, and private fixed investment.”
Moreover, revenues “from casino gambling dropped over 80 percent in 2020, according to BEA. The Imperial Pacific International Casino located in Saipan temporarily closed in March 2020 due to the adverse impact of Covid-19. The Commonwealth Casino Commission also suspended the casino’s gaming license in April 2020 due to the casino licensee’s failure to pay the casino regulatory fee and annual casino license fee, among other things.”
Covid impact
The Covid-19 pandemic led to large declines in the number of employees in the CNMI, the GAO report stated.
“According to tax data from the CNMI Department of Finance, the number of workers in the CNMI dropped by 13 percent from 2019 to 2020. This decline in workers is largely due to economic hardship during the pandemic, primarily in the tourism industry.”
To understand the impact of the pandemic on wages and employment by industry, the GAO said it used the Prevailing Wage Study or PWS, an annual study of employers in the CNMI.
“According to the PWS, tourism-related industries experienced some of the strongest workforce declines during the pandemic. For example, the workforce for the accommodation and food services industry declined by 67 percent between 2019 and 2021.
“Other industries’ workforces also declined, by an average of 32 percent, according to the PWS. These workforce reductions are on top of previous economic declines following Super Typhoon Yutu in 2018.”
In addition, “the PWS data indicate that most of the CNMI employees who lost their jobs during the pandemic were low-wage employees…. The number of employees in the PWS earning less than $8 per hour declined by 68 percent from 2019 to 2021. The number of employees in other wage groups in the PWS also declined, but typically by much smaller amounts. This decline is partly due to tourism, the sector hit hardest by the pandemic, also being one of the lowest-paying sectors in the CNMI. According to the PWS, in 2019 the median hourly wage was $8.65 in the CNMI, but it was $7.55 per hour or less in tourism-related industries, such as arts and entertainment and accommodation and food services.”
The federal minimum wage is $7.25 per hour.
“According to CNMI business representatives, unemployment payments during the pandemic made it more difficult to hire workers, which may have also contributed to the decline in employment of low-wage workers between 2019 and 2021,” the GAO report stated.
“Due to a decline in low-wage employment, nearly all workers currently employed in the CNMI earn above the minimum wage, although few workers earn high wages, according to the PWS. In 2021, 94 percent of workers in the PWS earned more than the minimum wage of $7.25 per hour, an increase from 73 percent in 2019. However, even with the reduction in low-wage employment, 73 percent of workers counted in the 2021 PWS earned less than $15 per hour.”
To read the full report, go to https://www.gao.gov/assets/gao-22-105271.pdf
