The forgotten workers of Abramoff’s islands

David Cohen Former Deputy Assistant Sec. of the Interior
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Former super-lobbyist Jack Abramoff, recently released from prison, is making the rounds with a new book and a new, contrite perspective on his past activities. Ironically, his book hits the stands in the same month that a crisis is coming to a head in the remote Pacific islands over which Abramoff waged bitter partisan battles many years ago — a crisis that stems directly from those old battles. And although these events are occurring halfway around the world, they offer plenty of lessons for those of us on the U.S. mainland.

For the few Americans who have heard of the U.S. Commonwealth of the Northern Mariana Islands, it is most likely because of the Abramoff scandal. It has been over a decade since Abramoff last lobbied on behalf of the CNMI government, and the intervening years have not been kind to the islands. The CNMI is in the throes of a man-made social and economic disaster that serves as a cautionary tale about the unintended consequences of guest-worker policies and the minimum wage. The guest workers of the CNMI now face a November 27 deadline that may force thousands of them to leave the only home many of them have known for their adult lives — and take their U.S. citizen children with them.

When the Northern Marianas became a U.S. territory in 1978, it was granted important — but revocable — exemptions from federal law. Exempted from federal immigration law, the CNMI could import as many guest workers as it wanted. Another exemption allowed garment factories to employ the guest workers — mostly from China— for well below the U.S. minimum wage. The CNMI’s status as a U.S. territory allowed the factories to ship their garments to the mainland duty-free — with the “Made in the USA” label.

This arrangement seemed too good to be true, especially to congressional Democrats and their Big Labor patrons. During the Clinton administration, Congressman George Miller (D-CA) and others fought to strip the CNMI of its prized exemptions. Several labor abuses in the territory came to light during that period. The CNMI government and the garment industry hired Abramoff to thwart the “federal takeover” of the CNMI’s wage and immigration laws. Abramoff’s allies in the GOP-controlled House successfully defended the exemptions, arguing that the islands’ fragile economy would collapse without them.

The CNMI’s hotels and other businesses were also importing cheap labor from Asia. The CNMI evolved — or devolved — into a two-tier society with low-wage guest workers staffing almost the entire private sector and the locals employed almost exclusively by the CNMI government. The CNMI imported so many guest workers that the aliens eventually came to outnumber the locals.

When the Democrats regained control of Congress in 2006, George Miller became a powerful member of the new House majority. And while Abramoff was long gone from the islands and incapacitated by legal troubles, Miller was determined to exact revenge against Abramoff’s ghost. The Democrats quickly introduced a bill to increase the U.S. minimum wage to $7.25, and included a provision to require the CNMI — which then had a minimum wage of $3.05 — to phase in the new U.S. minimum wage.

The initial legislation did not affect American Samoa, the other U.S. territory exempted from the federal minimum wage. Republicans noted that American Samoa’s largest employer was a tuna cannery owned by a subsidiary of Del Monte, which just so happened to be based in House Majority Leader Nancy Pelosi’s district. Stung by the suggestion of improper favoritism, Pelosi saved face by killing two territorial economies with one stone: the bill was quickly amended to also require American Samoa to phase in the $7.25 minimum wage.

The economies of both territories have been devastated since the minimum wage bill was passed in 2007. Employment in the American Samoa fell almost 20 percent from 2008 to 2009, and employment in its tuna canning industry — which had dominated the economy for years — plunged 55 percent the following year. Employment fell 35 percent in the CNMI from 2006 to 2009. Most of the phased wage increases are still yet to come; additional job losses are inevitable as the march to $7.25 continues. While much of the CNMI job loss resulted from the demise of the garment industry — which ultimately would have occurred anyway because of changes in international trade rules — virtually every other sector of the economy has been devastated as well.

Many Americans would be distressed to learn that we have had, in our territories, third-world economies operating under the U.S. flag. But a third-world economy cannot be turned into a first-world economy simply by passing a law. And to those who depend upon those economies for their livelihoods, a third-world economy is better than no economy.

The Democrats had one more piece of unfinished business with the CNMI: bringing the territory’s immigration under federal control. In that they found an unlikely ally in the Bush administration. I was the point person on territorial issues at the Interior Department, which administers the U.S. relationship with its territories. In 2007, I testified before the Senate on behalf of the administration that the U.S. had no choice but to federalize the CNMI’s immigration system. The cash-strapped local government could not be counted on to continue running it without jeopardizing important U.S. interests. Contrary to suggestions by some that Abramoff enjoyed unbridled influence over the Bush administration, we strongly supported the federalization policy that Abramoff had fought so hard against.

We recognized, however, that the CNMI’s economy could not quickly wean itself from its dependence on foreign labor. We devised a “flexible federalization” policy that would enable foreign workers to stay in the CNMI — especially the many long-term workers who had put down roots.

As implemented by Obama’s Department of Homeland Security, “flexible federalization” has been anything but flexible. The guest workers who fueled the CNMI’s boom now find themselves stranded by its bust. By November 27, each of the CNMI’s remaining 16,000 guest workers — admitted legally under CNMI law — will become illegal unless sponsored by an employer for a federal visa. Many have recently lost their jobs and cannot be sponsored. Thousands of others cobble together a living by working part-time for several employers. Cash-strapped employers, however, are balking at incurring sponsorship costs for part-time workers.

Some say that guest workers who have lost their jobs should just go home. But many of them have devoted their entire adult lives to supplying the skills needed to build the CNMI economy. As their contracts were renewed year after year, the CNMI became their de facto permanent homeland — but one in which they, as perpetually “temporary” workers, could never have political rights. Many of them have minor children — U.S. citizens by birth — who know no other home. It seems cruel to pack these American children off to alien third-world countries to live off of the third-world wages their parents would earn there. If there is no work for these families in the CNMI, why not grant them U.S. permanent residency so they can find opportunities elsewhere in America? As bad as our economy is, surely we can find room for a few thousand workers whose skills and work ethic have proven indispensable to building up a small corner of our country.

Many indigenous islanders in the CNMI oppose granting permanent status to the guest workers. They have legitimate concerns about losing political control of their islands. But with jobs scarce in the CNMI, most guest workers will leave. For those who stay, the old rules — work here, stay here, raise families here, but don’t ever, ever expect to have a say in how your own community is governed — can no longer be defended. Those who favor a guest-worker program for the nation should carefully study the CNMI.

To say that the CNMI offers a “cautionary tale” doesn’t do it justice. It’s more like a cautionary library, well stocked with miscalculations, ironies, unintended consequences and reminders that we should be careful what we wish for. The local islanders originally fought to control their own immigration because they were afraid of being overrun by outsiders. They did end up getting overrun by outsiders — precisely because they were granted control of their own immigration. Most guest workers hailed the federalization of wages and immigration, but many have now lost their jobs — and may soon lose their legal status — as a result.

Some see parallels between the challenges faced by CNMI guest workers and those faced by illegal aliens in the mainland. Congressional staffers say that opposition to amnesty somehow makes it politically impossible to grant CNMI guest workers permanent residence in the U.S. But CNMI guest workers are legal aliens. They cannot afford to wait until Congress figures out how to deal with millions of illegal aliens — and they should not have to.

David Cohen was President George W. Bush’s Special Representative to the Northern Mariana Islands and served as Deputy Assistant Secretary of the Interior from 2002 to 2008.