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Study sees steep job losses under federalization
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Posted on Nov 26 2008
Under a federalized regime, unemployment by 2010 will soar to more than 30 percent for U.S.-qualified residents in the CNMI—making them desperate for jobs, according to a recent economic report.
Although federalization affects many low-wage foreign job holders, U.S.-qualified residents will also lose 2,630 high-wage jobs, about a fifth of the total jobs in 2005, according to the report by Malcolm D. McPhee & Associates and Dick Conway.
As unemployment increases, many of the U.S.-qualified residents will become desperate and, assuming no outmigration to the mainland United States occurs, “they will have to turn to the visitor industry for work,” the report states. The visitor industry will also be experiencing a loss of workers due to deportation by the federal government.
“In an effort to survive, establishments in the visitor industry will start offering significantly higher wages to attract the much needed workers,” the report states. “At the same time, these businesses will try to figure out ways of improving the efficiency of their operations. With a rising minimum wage, wages and salaries throughout the economy will increase, thereby enticing more people in the existing population to enter the labor force.”
The rising minimum wage will increase the attractiveness of the jobs, according to the report.
“Assuming that U.S.-qualified residents want to remain in the CNMI,” the report says, “the visitor industry and its multiplier effect on the rest of the economy create enough job opportunities to not only take care of the previously unemployed U.S.-qualified residents but also to draw many new people from the existing population into the labor force. Thus, the number of working U.S.-qualified residents rises to 15,270 in 2015, much higher than ever before.”
But, according to the report, the jobs offered will pay lower wages than most U.S.-qualified residents have come to expect.
“In cases like this, people tend to work more to make up the difference. This is why the scenario is also called the ‘make do’ scenario,” the report states.
The Office of the Governor commissioned the report with a grant from the Office of Insular Affairs.
