U.S.–CNMI Relations

Error! Changes in the Application of Federal Immigration Laws

The Consolidated Natural Resources Act of 2008 amended the U.S.– CNMI Covenant to apply federal immigration law to the CNMI, following a  transition period. 2). Eliminating CW-1 Permits Would Negatively Affect the Economy; Current and Planned Demand for Labor Exceeds Supply of U.S. Workers

		Preliminary Results of Our Economic Analysis and Recent Data Show That Ending the CW Program Could Have a Large Negative Effect on the Economy

If all CW-1 workers, or 45 percent of the total workers in 2015, were  removed from the CNMI’s labor market, our preliminary economic  analysis projects a 26 to 62 percent reduction in the CNMI’s 2015 GDP,  depending on the assumptions made. To estimate the possible effect of  a reduction in the number of workers with CW-1 permits in the CNMI to  zero—through the scheduled end of the CW program in 2019—we  employed an economic method that enabled us to simulate the effect of a  reduction under a number of different assumptions. Our Preliminary Analysis Shows That Recent and Planned Demand for Labor Exceeds Existing CW-1 Permits and the Supply of Local Workers

			Recent Labor Demand

The CNMI economy currently is experiencing growing demand for  workers, particularly among occupations in construction and hospitality. Legend: – = Not applicable; CNMI = Commonwealth of the Northern Mariana Islands; CW-1 = CNMI- Only transitional worker; DHS = U.S. Department of Homeland Security. Construction workers. New businesses. See figure 4 for photos showing the initial gaming facility’s development  site in Saipan both before and during construction. Twenty-two new development  projects, including six new hotels or casinos in Saipan and two new hotels  or casinos in Tinian, are planned for construction or renovation by 2019. show that the unemployed domestic workforce, estimated at 2,386  in 2016, will be well below the number of workers needed to replace  currently employed CW-1 workers in nonconstruction-related  occupations. of Palau). For example, in 2003, 1,909 freely associated state workers  were employed in the CNMI as compared with 677 of these workers in  2015, according to CNMI tax data. Federal and CNMI Efforts to Address Labor Force Challenges Include Job Training Programs and a Consultative Process

The federal and CNMI governments support programs seeking to address  the CNMI’s labor force challenges. Fees Collected by CW Program Support Job Training

DHS collects the $150 vocational education fee assessed for each foreign  worker on a CW-1 petition and typically transfers the fees to the CNMI  government each month. Results of our ongoing work indicate that to  support vocational education curricula and program development in fiscal  years 2012 through 2016, DHS transferred to the CNMI Treasury about  $9.1 million in CW-1 fees. In fiscal years 2012 through 2016, the CNMI  government allocated about $5.8 million of the $9.1 million in CW-1  vocational education fees to three educational institutions (see fig. At  present, the CW-1 fees support job training programs at Northern  Marianas College and Northern Marianas Trades Institute and in recent  years also funded job training provided by CNMI’s Public School System. CNMI’s Public School System. Recently Completed 902 Consultative Process Resulted in Recommendations to Congress and DHS

In December 2016, after 8 months of official 902 Consultations, informal  discussions, and site visits to locations in the CNMI, the Special  Representatives of the United States and the CNMI transmitted a report  to the President that included six recommendations agreed to by the  Special Representatives on immigration and labor matters:  1. 2. Extending eligibility to the CNMI for additional federal workforce  development programs. Establishing a cooperative working relationship between DHS and the  CNMI. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
Why GAO Did This Study

In 2008, Public Law 110-229 established federal control of CNMI immigration. It required DHS to create a transitional work permit program for foreign workers in the CNMI and to decrease the number of permits issued annually; it presently requires that DHS reduce them to zero by December 31, 2019. To implement this aspect of the law, in 2011, DHS created a CW-1 permit program for foreign workers. In 2015, foreign workers totaled 12,784, making up more than half of the CNMI workforce.
GAO was asked to review the implementation of federal immigration laws in the CNMI. This testimony discusses GAO's preliminary observations from its ongoing work on (1) the potential economic impact of reducing the number of CNMI foreign workers to zero and (2) federal and CNMI efforts to address labor force challenges.
GAO reviewed U.S. laws and regulations; analyzed government data, including CNMI tax records since 2001; and conducted fieldwork in Saipan, Tinian, and Rota, CNMI. During fieldwork, GAO conducted semistructured interviews and discussion groups with businesses, CW-1 workers, U.S. workers, and current and former job training participants. GAO also interviewed officials from the CNMI government, DHS, and the U.S. Departments of Commerce, the Interior, and Labor.

What GAO Found

If all foreign workers in the Commonwealth of the Northern Mariana Islands (CNMI) with CNMI-Only transitional worker (CW-1) permits, or 45 percent of total workers in 2015, were removed from the CNMI's labor market, GAO's preliminary economic analysis projects a 26 to 62 percent reduction in CNMI's 2015 gross domestic product (GDP)—the most recent GDP available. In addition, demand for foreign workers in the CNMI exceeded the available number of CW-1 permits in 2016—many approved for workers from China and workers in construction occupations. The construction of a new casino in Saipan is a key factor in this demand (see photos taken both before and during construction in 2016). Meanwhile, by 2019, plans for additional hotels, casinos, and other projects estimate needing thousands of new employees. When the CW-1 permit program ends in 2019, GAO's preliminary analysis of available data shows that the unemployed domestic workforce, estimated at 2,386 in 2016, will be well below the CNMI's expected demand for labor. To meet this demand, CNMI employers may need to recruit U.S.-eligible workers from the U.S. states, U.S. territories, and the freely associated states (the Federated States of Micronesia, Republic of the Marshall Islands, and Republic of Palau).
Federal and CNMI efforts to address labor force challenges include (1) job training programs and (2) employment assistance funded by the U.S. Department of Labor and implemented by the CNMI's Department of Labor. The Department of Homeland Security (DHS) collects the $150 vocational education fee assessed for each foreign worker on a CW-1 petition and transfers the fees to the CNMI government. Results of GAO's ongoing work indicate that to support vocational education curricula and program development in fiscal years 2012 through 2016, DHS transferred to the CNMI Treasury about $9.1 million in CW-1 fees. During this period, GAO's preliminary analysis shows that the CNMI government allocated about $5.8 million of the $9.1 million to three educational institutions: Northern Marianas College, Northern Marianas Trades Institute, and the CNMI's Public School System. In 2016, a U.S.–CNMI consultative process resulted in a report to Congress with six recommendations related to the CNMI economy, including one to raise the cap on CW-1 foreign worker permits and extend the permit program beyond 2019.

What GAO Recommends

GAO is not making any recommendations at this time. GAO plans to issue a final report in May 2017.