What federalization means to me

In June 2009, a major change will begin to affect our islands. The United States has decided that it is time to change our ways concerning entry and employment of nonresident workers on our islands. As we all know, it is called the federalization law.

It is not my intent to debate here whether it will be or will not be good for our islands. I only wish to explain how it will affect my present companies and my employees and how I am planning for it. Perhaps this discussion may also help other businesses see that this federalization law is not a doomsday act. If used properly we will realize many new and exciting ways of doing business on our islands.

Since the announcement of the federalization act, my staff has begun to slowly revamp our workforce. Up to recently, the workforce was composed of the usual 80 percent nonresident workers and the rest 20 percent of resident workers. However, since last October, we have begun to replace nonresident workers with local employees. Today we have about 50 percent local workers and adding more everyday as we find them.

We have found that this new workforce is quite good, capable and willing to work. We have had one or two bad lemons, but most of our new employees are very good and loyal. They show up daily and work hard.

I am mentioning this because unlike the reputation often tagged on local workers that they are no good or lazy, I disagree. There are many good hardworking local employees eager to learn and improve themselves. However, over the years because of our policies we have done them a disservice by neglecting them.

As soon as they are employed, we spend time with them to make sure that the nonresident and the resident workers cooperate and show no discrimination to one another. One of the nice side affects is that our customers also enjoy seeing the local workers, whether delivering water, working on the boats, or delivering shrimp.

This same attitude of hiring more local workers is being felt by the students of the Northern Marianas Trades Institute as well. NMTI is finding it easier and easier to place its students in various companies that before were closed to hiring local workers. And the new workers are becoming a value source for employers because they bring with them an urgency to learn a skill.

Over the past two months we have placed many students in construction companies to replace nonresident workers. The owners seem pleased with the new students. There definitely is a change in attitude. This is why I am constantly mentioning that we must train our local workforce. There are jobs out there, and when a local prospective employee walks in to apply for it, he will be hired.

Some of us are worried that they will not work for the minimum wage. Let’s look at this. An unskilled employee, whether local or nonresident, is worth only the minimum wage. But as his skills are honed, he should receive a higher salary.

When a man is paid $4.05 an hour, he must realize that it is only an entry level pay. As he demonstrates his skills and determination, his pay will be raised. If he does not improve his job skills, the pay will stay the same. Why? Usually a worker receiving a minimum wage, whether resident or nonresident, will work at a specific pace. However should the same man receive a higher wage, he will work faster and more efficiently. Also if a person is qualified, why should he earn only the minimum wage? Pay a person what he is worth.

Actually paying a higher wage is more cost effective. For example, two men each receiving $4.05 and hour adds up to $8.10 an hour. However if the job can be done by one man, instead of two, at say $6 an hour, the saving is $2.10 per hour. Also by training the employee to use more sophisticated tools or work methods, fewer employees should be needed. One motivated employee is worth more than three or four unmotivated ones.

An employer should also consider these additional costs. Round-trip tickets to and from point of origin. Hiring uninterviewed employees and then being stuck with whoever is hired. Labor fee of $350. Guaranteed medical expenses. Guaranteed housing. Weeks, often months, of waiting. Difficulty of dismissing. And other expenses and headaches. If an employer calculates carefully all these additional costs, he may wonder where the cheap labor force is.

The above statement has been tested in my companies. For example, our deliverymen receive better than minimum wage and as a result their production is higher then when we had more deliverymen.

It is unfortunate that the federalization act will also affect the residency status of many people in the CNMI. That is one portion that I do not like. Many of them have the right to stay here. But that is a different issue from working.

In my previous articles we have discussed that with planning and training, we can have over 12,000 to 14,000 local workforce. I am not against nonresident workers. They have been productive and helped build our community. However, I am sad when so many of our local people have been neglected and not motivated to become skilled.

An example comes to mind. How many local trained bookkeepers and accountants do we have ready to move into all the companies soon to need one? Though we have schools and a college to train them, yet how many are actually working in the private sector? Who will replace the nonresident bookkeepers when they have to leave?

Also it is time that our people become entrepreneurs on our islands wherever and whenever possible. I would love to go into a grocery store or take my car to be repaired or see women get hair treatments in shops owned and operated by local business persons. I would love to see local persons actually do the hands-on work by themselves. I would love to be greeted in the vernacular.

As stated at the beginning, federalization will force us to examine our islands’ workforce and motivate them to enter the workforce as trained and skilled workers. Though there will be side problems that will disrupt our current comfortable reliance on nonresident workers, I feel that in the long run the benefits will overwhelm the initial confusion. Need I remind us that unless a nation builds up its own skilled labor force it will never become prosperous? Please read the sad history of the island nation of Nauru if you need reminding of this fact. On the other hand, read the success story of Singapore that pulled itself from utter poverty to become one of the world’s most successful nations today.

Yes, major changes do wrench the hearts and minds of all of us. Change also brings confusion and uncertainty to many of us. However the only constant thing we really have in life is change—endless change. The more we resist change or do not accept it, the more problems we create.

At first federalization will cause a lot of confusion and problems to us, but to rankle against it will cause only more confusion. Most of all, it will prevent preparation and adaptation so that when it finally is implemented, we may end up being unprepared.

In closing, let’s adapt to the new change and prepare for it. Cheap nonresident labor is a memory. This is a new age and requires new techniques and fresh devoted local employees who work not only to earn a decent wage but also to have personal pride in building and operating their own country. Maybe federalization may be not too bad if it wakes up us and drags us into the 21st century. Think about it!