THIS is in response to Mr. Paul Barron’s letter, “Tiered System is Not the Answer.” Hopefully, this will illustrate that there’s so much to understand in sorting out the wage situation in the CNMI.
Just as I immensely respect Mr. Baron’s boss, Efrain Camacho, Mr. Paul Baron is a community man through and through. Paul serves his community on our Chamber’s education committee, and is currently involved in the selection process of our annual Saipan Chamber of Commerce scholarship fund awardees. Baron also volunteers for the Mathcounts Program.
I hope Baron doesn’t mind me recounting our telephone conversation, when after I read his letter finding fault with a position many hold as a solution to the minimum wage issue in the CNMI, I called to discuss this with him. Baron shares the view of others that it is simply a matter of elevating wages to the point of the elimination of benefits paid to the employees. And that we should just let the employees find their own housing, food and way to work.
Baron’s contention is true that it is hard to imagine being able to find a place to reside and buy food for less than $200 per month. What Baron was surprised to hear was that garment factories, many hotels, construction companies and other employers of guest workers do not supply these benefits to their workforce. They charge $200, or less, for having these essentials supplied to them, as per commonwealth labor laws.
What this means is that those companies would immediately have their wages adjusted, and their costs would elevate by $200 per month per employee, if Baron’s formula was applied. That means a hotel, or factory, with 500 employees would have to absorb an additional $100,000 per year, through increases in minimum wage rates.
We all know that these employees would have great difficulty arranging for housing and food at $200 per month, and this would have the net opposite effect of making it harder on them to earn a living.
Baron was also surprised to hear that the federal government, under the Fair Labor Standards Act, requires employers of off-island workers pay their cost of transportation to and from Saipan.
The overall effect of the formula that Baron, my friends Efrain Camacho and Joe Chiles, and others position, is that low wage industries that do not supply free food and housing will be the hardest hit. They already say that they cannot afford any additional increases. If we are all prepared to see them exit, taking jobs and revenue with them, then let the trade-off begin. I think this unwise.
That is why the tiered wage system appears to address this dilemma. In an industry separation methodology, it concludes what those average costs are and adjust based upon specific industry.
It means that those in the garment industry will be paid less than those in the shipping industry. It means that those in the banking and insurance industry will be paid more than in the hotel industry. It does not create a “caste” system. It allows for industry survival, where the overall standard rises across the board.
An across the board increase in wages does not do this.
I openly confess that the garment industry does “hold hostage” the minimum wage levels in other industries. There are also those, in other sectors, that will take advantage of that situation. They cry that they cannot afford an increase in their wage rates, when they are the ones paying benefits not even required under law. They pay them because they can afford them and because they can’t get their employees if they don’t.
Through a tiered wage system, those industries are adjusted based upon their ability to afford the off-setting approach that Baron, Camacho and Chiles profess.
The “caste” system is a misnomer. On the great American mainland, we have people earning $5.15 per hour and $27 per hour. The lower wages are paid in the factories and the higher hourly wage earners are elsewhere. That’s not a caste system. That’s the democratic, free enterprise, capitalistic, climb-the-ladder, get an education, make your own way, earn it by earning it way.
Without a change in the system, we will forever keep wages down. Or, you simply have to say goodbye to the garment industry and those companies that are unable, or unwilling, to pay those extras. Don’t get me going on that supposition.RICHARD A. PIERCE
President
Saipan Chamber of Commerce
