Employers Cut Benefits

June 5, 2008

Some CNMI employers have followed the pattern set last year when the first federal increase of the minimum wage went into effect. They have cut employee's benefits. According to the Saipan Tribune:

Proponents of the increased wages, set to rise again by 50 cents each year until they meet the federal level, have long said the hike is needed to ensure workers are fairly paid compared to their counterparts on the U.S. mainland. Yet the mandate for higher pay has left some local employers-who are also facing skyrocketing utility costs and decreasing revenues-with little choice but to cut benefits like housing, health care, transportation, meals and other amenities.

Remember that the businesses that make under $500,000 a year are exempt from the wage increase. It certainly seems that businesses that make over $500,000 annually should be able to absorb the increase.

Lynn Knight President of the Hotel Association of the Northern Marianas Islands (HAMNI) said:

Recent figures from the Hotel Association of the Northern Marianas Islands, chaired by Lynn Knight, show the increase has prompted some hotels on the island to take steps like diminishing the number of work hours available for staff, eliminating overtime and reducing the number of employees. Other hotels have increased the fee charged to workers for housing or ended their staff's health insurance, food and housing benefits.

The wage hike is “too large for the economic reality” in the Commonwealth, Knight said, and it is possible that many businesses will have to cut staff and benefits to stay in operation. “I'm worried about how this will impact younger and inexperienced workers” who could be the first laid off due to wage increases. “People need to realize that the money to pay higher wages needs to come from somewhere,” she added.

The profits, and not just the expenses of the hotels would have to be studied to truly understand if cutting of employees' benefits is greed on the part of the hotel owners, or is actually needed to survive financially. The large CNMI hotels have been raking in huge profits for years at the expense of the poorly paid workers.

Another Tribune story states that the hotel occupancy rate increased in April. Maybe the increase in profits will balance the increase in wages. The story said:

"Statistics from the Hotel Association of the Northern Marianas Islands show hotel occupancy rates rose to 55.34 percent, a jump of about 6 percentage points over the same month last year. The rise appears largely due to an influx of Asian tourists, yet it is not enough to revive the island's hotel industry, according to the association...

Asian tourism has increased at a significant rate this year, she [Lynn Knight] added, pointing to Marianas Visitors Authority figures showing a 41-percent spike in Korean tourists during April compared to last year and a 9-percent jump among Japanese visitors. Saipan also saw a 127 percent increase in American tourists over last year, which may be attributed to military staff visiting or the recent Flame Tree Festival, Knight said."

Employers are still responsible for an employee's health care expenses, and for paying overtime when an employee works over 40 hours per week.