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Guam Managing New Diverse Labor Force Research Paper


After decades of stagnation, the events in the past few years indicate that the economy of Guam is likely to convalesce and augment in the prospective years. In comparison, 2012 recorded impressive growth in the economic growth rate than the preceding years, excluding 2010. In essence, although there are several challenges for Guam’s economy, the future appears promising. One of the major issues concerning Guam’s economy revolves around the labor market. Being a huge tourism destination coupled with an insufficient population, it is compelled to seek foreign labor and bilingual employees. Importing labor comes with various challenges in connection to the acquisition of visas and the lack of employee motivation. In consideration of such imminent problems in Guam, the discussion in this paper will underpin how the country manages its new labor force by examining the relationship amongst the diversity of race, immigration, and employee motivation.

Guam’s Economic Overview

Guam is located at the westernmost periphery of the United States as well as the initial Pacific island to be invented in the Western globe. The population growth rate is gradual and dwindled when compared to the population between 1990 and 2000, which had grown by an impressive 16.3 percent. By 2000 Guam’s population estimation, the median age was 27.4, a figure lower than that of the U.S., which was at 35.3 (U.S. Census Bureau, 2008).

Guam underwent an extensive era of investment-oriented development from the early 1980s to the 1990s. It is amazing to note that in this era, the private sector played a more significant role in the economy than the public sector. The labor market, as well as output, declined substantially in the late 1990s and have even persisted in the 21st century (Schumann, 2008). Employment is a key factor of deliberation in Guam. According to the latest statistics from the Department of Labor of Guam of 2011, the level of unemployment is at 13.3 percent, while the total population in the labor market is 61,930. Unfortunately, the latter is a minute decline of the preceding labor market in 2010, which stood at 62,200 people. More disheartening is the fact that the unemployment rate in Guam is twice that of Hawaii and superior to the United States’ rate of joblessness (U.S. Census Bureau, 2008).

However, in research done by Dr. Maria Claret, a Resident Development Economist at the University of Guam-Pacific Center, the growth changes witnessed in the labor market between 2012 and 2013 are favorable as well as promising. Claret acknowledges that the rate of joblessness in Guam had reduced by 2.37 percent from June 2011 to June 2012. Nonetheless, according to the Bureau of Labor Statistics’ latest reports in employment, although the provision jobs by the public sector, it was insufficient to offset the 3.86 reductions of jobs available in the private sector, which is the driving force in Guam economy (Talmadge, 2012).

Going back to history, the highest level of unemployment was witnessed in 2000 when 15.3 percent of persons in the labor market were unemployed. Afterward, the growth of industries in the private and public sectors increased job opportunities and eventually reduced the unemployment rate to 6.9 percent in 2006. However, the unemployment situation began exacerbating again, and by 2009, the unemployment rate had risen to 9.3 percent (Schumann, 2008). This rising tendency had an impact on the economy, making it stagnant and eventually having a substantial impact on the main investors and tourists of Guam. In comparison to Hawaii and other states in the Pacific, the level of joblessness in Guam by 2009 had superseded that of Hawaii. It was about to surpass the average rate of unemployment in the U.S., which was at 9.8 percent. As the year progresses, the rate of unemployment has been devastating. According to the statics collected in the Bureau of Labor in 2011, it clear that while the rate of unemployment is decreasing in the United States is decreasing (8.8 percent), it is augmenting in Guam (13.3 percent) (Talmadge, 2012).

A very contemporary portrayal of Guam’s human resource shows a gradual reduction in the job opportunities available on the island, unlike the previous year. The employed persons reduced from 61,930 in 2010 to 62,200 in 2011. Some of the sectors that accounted for a high number of employees included the hotel industry, retail sector, transport, as well as public services. Sectors such as finance, insurance, real estate, and wholesale trade only provided only meager job opportunities for Guam’s constituents. The private sector provided over 74.42 percent of the jobs, while Guam’s government issued 19.22 percent of jobs, and federal authorities contributed only 6.36 percent. From the statistics, one could easily conclude that the private sector plays a crucial role, especially when it comes to the provision of employment (Guam Bureau of Labor Statistics, 2012).

A study conducted in 2009 to examine the nature of business establishments in Guam revealed that there was a steady reduction in the number of jobs, which emerged from 1995 and has been progressing throughout the subsequent years. The researchers asserted that one of the issues causing this job decline was the decline in job establishments. According to the Annual Census on Business Establishments, in a span of a decade, business establishments had reduced by 13.26 percent (Guam Bureau of Labor Statistics, 2012).

As suggested earlier, the major contributors to the Guam economy include tourism and the military. Although the tourism industry has faced several challenges in past decades, reports of 2012-13 have shown a notable rebound by the industry. From January to August 2012, the tourists visiting Guam had risen by 13.16 percent, which is higher as compared to the preceding year when Japan suffered from a massive tsunami and discouraged visitors. At the onset of 2011, everything seemed rosy in the tourism industry thanks to the hefty gains. However, the returns started decreasing in March following an earthquake that happened in Japan, but soon after, the industry rebounded. By the end of 2012, the returns had increased by 3 percent. Currently, the state is receiving more guests from Russia, Taiwan, and China (Talmadge, 2012). Although visitors from Hawaii and other Pacific islands have reduced in number, tourists from Russia have increased following the introduction of a visa waiver. The future of tourism in Guam is also favorable, leveraging the inclusion of China and Taiwan, among other main visitors of Guam in the Visa Waiver project initiated by the U.S Department of Homeland Security.

Other industries that serve the tourism sector have also indicated an improving trend. The number of hotel occupants in 2012 increased by 9 percent higher than the figures in 2011. Revenues collected from the hotel industry in 2012 were 13.36 percent higher than the preceding year. The latest economic growth of Japan, Korea, Taiwan, and Hong Kong is a good indication that the future of tourism is favorable (Bureau of Economic Analysis, 2011). In the case of military deployment, which initially started in 2006, economic uncertainty was worse. Most Guam constituents considered the deployment as a factor that could create local jobs, raise income, as well as tax revenues. However, this high sanguinity gradually became a presumptuous game, of the absence of definite policies of their mission (Talmadge, 2012). By the time the military deployment was anticipated to progress, Guam’s economy had transformed substantially, and the cost of the build-up had become more expensive than the previous anticipation, thus making it difficult for the U.S and Japan to implement their tight budget. Furthermore, the leaders of the U.S. and Japan were compelled to refocus their attention on the ongoing issues in their own countries. For instance, the Japanese government had to relocate victims of the tsunami and earthquake.

The last data disclosed by the U.S. Department of Commerce – Bureau of Economic Analysis (BEA) in 2012 showed remarkable growth in Guam’s Gross Island Product (GIP). BEA showed that the economy was $4.052, with the per annum income of each constituent being estimated at $ 25, 4520. According to BEA, the main contributors to Guam’s economic growth were personal consumption, business investments, public expenditure, and ventures. If Guam and federal governments’ contributions to Guam’s GIP are merged, they add up to 63 percent, a percentage higher than the total contribution of personal consumption. This percentage shows how the government had a huge influence in Guam’s economy and the burden it has in equating the gains as well as expenses of such colossal contribution. Moreover, BEA statistics also indicated how Guam largely depended on imports. Imports contributed over 42.87 percent of the GIP by 2010, which in turn minimized the local expenditure multiplier, which restraints the domestic in the forms of jobs and revenues (Bureau of Economic Analysis, 2011).

After decades of a stagnant economy, the Commonwealth of the Northern Marians Islands (CNMI), which also includes Guam, has shown signs of economic enhancement in the prospective years. However, economists still feel that Federation Law on Guam is likely to deter this growth. Moreover, the issue of the population, especially foreign workers, has played a key role in the reduction of GIP due to the emigration of foreign workers and native citizens who felt that the state had an unfriendly working environment (Huntington, 2004). Following the implementation of the Federalization Law, Guam has raised its minimum wages. The minimum wages have risen from $3.05 in 2007 to $5.55 in 2011.

Nonetheless, the United States General Accountability Office observed that the augmentation of minimum wages had an unfavorable impact on both domestic workers and their employers. Due to the increased minimum wage, the employers were planning to sack works or minimize their working hours. In the case of the government institution, it will be compelled to raise the salaries of its employees despite limited budget assets. The Federalization Law has generated an alarm on its impact on the CW visa program that most organizations in Guam use for hiring H-2B workers (Bean & Stevens, 2003). The policy predicts the absence of alien laborers in Guam and various Pacific island states after five years. This action was followed by a series of petitions against CW by foreign workers who considered this move punitive (U.S. Citizenship and Immigration Services, 2012).

Role of Alien Workers in CNMI Economy (Guam)

Before 2009, Guam used its immigration policies to import alien workers who were given interim renewable contracts to enable them to work as foreigners accompanied by their families. The increased population of foreign workers from 1980 and 2000, made Guam and the Pacific Islands depend largely on alien workers for their economic growth. A huge population of aliens worked in the garment as well as tourism industries, which provided the highest number of job opportunities on the island before the end of 1995. Nonetheless, years after 1995, the gains got from tourism started to reduce drastically as tourists reduced by close to 50 percent. Despite being one of the industries with the highest job opportunities, by the end of 2009, there was no operating garment company in CNMI (U.S. Citizenship and Immigration Services, 2012). The poor performance in the tourism and garment industry led to increased unemployment and emigration of alien workers and some native constituents of Guam.

By 2011, the CNMI Department of Finance reported that the immigration of foreign workers reduced by 60 percent. However, alien workers still outnumbered native employees in various industries except for government institutions as monetary firms. The decline of foreign workers had a direct impact on the island’s GIP, which reduced by 49 percent in a span of 8 years (2002-09). The labor budget was augmented after the minimum wage policy began to be executed in 2007. This increase is also expected to advance following the introduction of the Federal Insurance Contribution Act (FICA), whereby workers will be compelled to pay certain taxes to the government.

Impact of Consolidated Natural Resources Act (CNRA) on Guam’s Labor Force

The aim of the CNRA that was ratified concerning federal immigration policies was to reduce any probable negative economic and financial impacts that might be caused by alien workers and increase economic development in CNMI. In a bid to achieve this goal, the law ensures that there are opportunities that can permit persons to operate in the U.S. and encourages the creation of channels that can help in retaining foreign workers to assist the local workforce in building the economy (Cornelius, 2005). The act mandates the Secretary of Homeland Security to come up with a temporary work license that alien workers and businesspersons will use during the five-year transition era. It also calls for the Secretary to create a yearly minimization of license given to foreigners in such a way that by the end of the transition, no permits are issued to aliens. Moreover, it states that the Secretary shall collect an annual fee of $ 150 from a foreign worker (U.S. Government Accountability Office, 2010).

To maintain a pertinent number of persons in the labor market, the law requires the leaders of CNMI to collaborate with the Secretary of Homeland Security to determine the labor requirements for the states and the adequate time that it will take to get enough workers for the industries. In determining these figures, the leaders must consider the levels of unemployment, steps needed to educate U.S. native citizens, and several foreigners who are part of the labor market but have no jobs. Relevant technical help should also be introduced to boost the creation of economic opportunities, as well as entrepreneurship skills (U.S. Government Accountability Office, 2008).

In 2011, an ultimate verdict was issued to help in the execution of CNMI interim operation as stipulated by the CNRA in connection to alien workers who were catered for under the federal law. In this ultimate decree, further categorization of CW-1 status for aliens laborers, as well as CW-2 status for individuals who relied on foreign workers. Before officially launching the decree, they received several public opinions, which compelled them to make various amendments in line with those opinions. From the onset of its application, the Department of Homeland Security (DHS) had handled close to 50 percent of the petition, whereby it accepted over 45 percent of the petitions and disapproving about percent of the remaining petitions. The DHS had reported that it was planning to handle all the pending petitions by the end of 2012. Furthermore, employers that were waiting for their petitions to be handled were authorized to continue hiring laborers who had a legitimate permit to work in Guam by the time of filing the petition (U.S. Government Accountability Office, 2010).

DHS Information and Methodology for Determining the Provision of Permits

The Secretary has explained the solitary source information that the authorities would utilize to execute the demands of CNRA, which also incorporates the yearly provision of the license. The department intends to use the information collected by the U.S. Census Bureau’s County Business Patterns about the sum of members of the labor force with jobs, businesses, or government industries in CNMI. Unfortunately, data collected from the latter institution does not show how the population of alien workers is distributed among the industries in Guam, thus making it difficult for one to predict the prospective need for foreign workers. If the DHS fails to determine the imported labor that CNMI requires, it will deter proper economic analysis and eventually make it intricate for the Secretary. The leaders of CNMI to execute the ultimate rule of CNRA successfully. Some of the sources that are likely to be used for determining permit allocation as well as extension period include the CNMI tax records issued by the CNMI Department of Finance and the U.S. Census data that contains the social and geographical information about age, sex, and socio-economic status (U.S. Government Accountability Office, 2010).

As one of the states in CNMI, the economy of Guam is still highly dependent on imported labor. Economic analysts have indicated that more than 13,200 foreigners are still working for various companies across CNMI going by the 2012 analysis. Removing these foreign workers without an equivalent replacement will have a detrimental impact on the island’s economy. Analysts believe that the citizens of Guam and other members of CNMI that are still in high school will move to other states in the U.S. or other countries in search of university degrees and eventually seek employment in those states (Joppke & Morawska, 2003).

Joblessness, as well as an inflated cost of living in CNMI coupled with increased minimum wage elsewhere, some citizens may opt to go to states where they feel that life is more bearable than in Guam. Some employees have made efforts to work as native citizens. Still, the effort has been unsuccessful because most of them have low qualifications or entry-level, and those that are qualified are reluctant to migrate to CNMI. More businesses are becoming pessimistic that they will not be in a position to get hardworking individuals to replace the foreign workers who are currently living (U.S. Government Accountability Office, 2010). The insecurity of the foreign workers is also affecting the spirit of investors who are gradually but steadily limiting their business investment in the region.

Economic writings regarding the impact of constraint indicate that rules and regulations introduced by a state can cause uncertainty. When investors realize that there is uncertainty, they begin to hold up the investments that they consider irrecoverable, for instance, funds used to build or renovate a restaurant. By this holdup, it is difficult to predict their next move until the uncertainty ends. For instance, if a hotel in Guam intended to launch a new branch, it would withhold the idea as it tries to evaluate how it will get laborers after the foreign workers have left (Gootnick & McCool, 2008). In 2010, hotels in Guam used close to a third of their operating budget to cover labor costs. If there were no alien workers, then the hotel may be compelled to raise its minimum wage rate in the attempt to lure the U.S. workers with relevant qualifications, including the skill to construe a foreign language. Considering this risen expenses about labor, the hotel entrepreneur may opt to withhold his or her investment until there is clear information regarding the security of alien workers. In line with the economic writings, many economic analysts in Guam have concurred that decisions of the federal government concerning foreign workers may hamper the accessibility of foreign labor by businesses and eventually limit their investments in the island (U.S. Government Accountability Office, 2010). The analysts have affirmed that the uncertainty has already reduced plans for prospective ventures by investors.

Challenges of CW Program and Possible Remedies

The federal foreign labor problems have caused serious problems to workers, companies, as well as the economy. Progressing with its present effect is similar to advancing its impediments to an additional five years. Alien workers are residing in Guam with fright and indifference. Even after six months of applications, some foreigners are still waiting for their CW visas to be confirmed. The complex processing of the visas, stringent travel rules and regulations, and the lack of proper communication between the U.S Embassies and federal guest worker initiative has resulted in various problems, including monetary hardship. The CW program had done little to enhance the economy of Guam; in fact, it is becoming a menace. The United States Citizenship and Immigration Services (USCIS) have not processed several applications. At the same time, some foreigners want to renew their licenses, yet CNRA regulations require guest workers to be only authorized to work if they have renewed licenses (U.S. Citizenship and Immigration Services, 2012).

As USCIS continues to have a backlog of petitions, employees have been forced to employ unskilled laborers from human resource agencies, thus placing their companies under threat. On the other hand, their energetic and loyal alien workers are resting at their homes, hoping that their permits will be processed in due time. One wonders how such loyal workers and foreign workers can take care of their lives and pay for their daily expenses. The timelines that the USCIS are following in processing the visa extensions are wanting and horrendous. Moreover, alien workers who go back find it difficult to revisit Guam and other Pacific islands because of miscommunication between the U.S. Embassies and USCIS (Eugenio, 2012). Considering the above challenges, one can conclude that DHS, USCIS, and the leaders of CNMI are finding it difficult to manage their labor force using the CNRA regulations. Hence, it is important to address the three main challenges facing the labor market in CNMI and possible remedies. The three main challenges include “foreign travel crisis, illogical Request for Evidence (RFEs), and problems in getting CW visas at foreign consulates” (Krikorian, 2007, p.22).

Foreign Travel Crisis

Frequently, foreign workers are compelled to ask for foreign emergency travel due to unavoidable circumstances such as medical problems, business meetings, or purchasing inventories for firms. However, the rules governing foreign laborers are a hindrance to this request. If one has any “pending CW visa application or parole, he or she is forced to get another visa before he or she is allowed to go outside CNMI and return” (Krikorian, 2007, p. 23). One cannot revisit the country except if s/he has a legitimate visa. These documents are often obtained at USCIS office in Guam, which unfortunately lacks enough resources, and thus, takes long before processing the applications. The processing takes about a month, which cannot help if one had an urgent issue to attend to, as described earlier (Kara & Mailman, 2012).

In a bid to avoid such saddening situations, one can use various approaches. For example, one can apply for parole before exiting. It is not obligatory for one to have an advance before traveling outside the United States. One can also decide to request the advance parole and remain within CNMI. However, to speed up the process, he or she should trail the process, and if the reasons for emergency travel are valid, then it may be hastened. In the case of revisiting trips, if one had gone with a pending CW visa, s/he is encouraged to seek assistance in their pertinent U.S consulate concerning his or her visa (Kara & Mailman, 2012).

Illogical Request for Evidence (REFs)

REFs are requested by USCIS if one is required to issue more evidence to support his or her application. Most often, RFEs are issued on job-oriented applications. However, since the introduction of CW, programs have been issuing RFEs that could be deemed unreasonable. This problem has arisen because most people fail to understand the link between CNMI and U.S. immigration policies. Some of the illogical RFEs include providing evidence that an employer is running a legal business (Kara & Mailman, 2012). Though this question may appear reasonable, it becomes illegal when the CW program begins to question some of the largest private firms in CNMI. Several CW applicants have been asked to prove the legitimacy of their companies even in cases of multinational companies. This element in itself is time-consuming and unfair because some applicants are asked to produce such RFEs. Another illogical request is that of producing federal income tax records. These details are unavailable for people operating businesses in Guam in consideration of the legal framework of CNMI and its connection with the U.S. These types of illogical REFs that USCIS use in processing CW applications discourage foreign laborers from coming to share their skills with Guam, which ultimately affects the economy (Kara & Mailman, 2012).

Problems of Getting CW Visas at Foreign Consulates

Even as USCIS begins to approve some petitions filed by foreign workers, the conduct of some foreign U.S. consulate would make one conclude that they are oblivious to the requirements. According to the CNRA provisions, if USIS and the CW confirm an application that the applicant is abroad, then he or she ought to visit the U.S. consulate in his or her native home to pick his or her visa. Once in the consulate, the applicant pays $150 as he/she is given his/her visa. However, there have been reports that some consulates have been demanding other documents such as a duplicate of the petition presented to the DHS and documents of the Labor Condition Applications (Kara & Mailman, 2012). These demands are entirely misplaced. By confirming the CW petitions, the action is viewed as a prima facie proof that all the immigration requirements have been provided, and thus the applicant if free to get a visa. Therefore, if the consulate lacks tangible proof that was not introduced at the DHS prior to the confirmation of the petition, then he or she has no option but to give the applicant the visa after paying the fee (U.S. Citizenship and Immigration Services, 2012).

Considering the importance of foreign labor in the economy of Guam, it would be important for leaders of CNMI to map out an urgent solution to the ongoing muddle. One of those immediate solutions that would be the most effective is to offer the U.S permanent residency status to alien workers who legitimately have a long-term working contract. There is no assurance that amending immigration policies will be effective in granting residency for foreign laborers in Guam (Foner, 2005). Hence, it is logical to extend the time that foreign workers have on the island of watching several foreign workers and investors leave the island, especially in the private sector. Nonetheless, leaders of CMMI should plead for the amendment of the CW program to incorporate a provision that allows for the issuance of permanent residency status to guest workers as well as non-residents who consider Guam as their home. Furthermore, the law ought to be revised to cater for prospective guest workers who plan to reside and work in Guam for over five years.

The need for Employee Motivation

Economic literature has consistently confirmed the importance of employee motivation in companies. Some of the benefits of employee motivation include employees’ increased productivity, reduced absenteeism, and quality improvement in teamwork among virtues needed in a firm. An inspired and happy employee who does not work under compulsion but desire is likely to surpass even his or her productivity levels. Moreover, if an employer gain has confidence in where he or she is working, it helps a company to retain workers and thereby relieving the company the cost of hiring new employees. In the case of absenteeism, while less motivated employees feel discouraged to go work, motivated employees look forward to doing their jobs daily. This positive attitude of workers helps in the exploitation of resources, minimization of work problems, and improvement of the company. The benefits of employee motivation are paramount for the success of any company/industry/country (Reyes, 2011).

The federal government and leaders of Guam have recognized the power of employee motivation and have made efforts to encourage their workforce. For instance, in 2011, a sum of $1 million was set for technical help. Out of the latter amount, CNMI used $700, 000 to help in the creation and extension of employee training programs in the labor market. It was anticipated that by the end of the program, the candidates would be employable. Moreover, “as of July 2012, DHS had transferred to the CNMI Treasury about $1.8 million” (U.S. Government Accountability Office, 2009, p.41), for the creation of vocational curricula as stipulated CNRA. However, considering the mass exodus of guest workers following the introduction of the CW program and economic uncertainty in Guam, one can surmise that the employee motivation has failed.


Since the introduction of CNRA in 2009, Guam’s economy still largely relies on foreign labor for its populace is decreasing. The immigration law intends to reduce the population of guest workers in Guam to zero by the end of 2014 if the DHS provides no extension. Unfortunately, it does not provide a proper framework for replacing this widening gap in the labor market. Rather, the program has received massive criticisms, with most people seeing it as a program that treats workers as disposable or replaceable. People argue that since the CW initiative has no status stipulation, it contradicts the UN Declaration of Human Rights together with the values of the U.S., and thus morally intolerable. Even as the United States and leaders of CNMI struggle to manage their new labor force, the future of Guam’s economy remains uncertain.

Reference List

Bean, D., & Stevens, G. (2003). America’s Newcomers and the Dynamics of Diversity. New York, NY: Russell Sage Foundation.

Bureau of Economic Analysis. 2011. The Bureau of Economic Analysis (BEA) Releases Estimates of the Major Components of Gross Domestic Product for Guam. Web.

Cornelius, W. (2005). “Controlling ‘Unwanted’ Immigration: Lessons from the United States, 1993-2004.” Journal of Ethnic and Migration Studies, 31, 775-794.

Eugenio, H V. (2012). GAO: More DHS actions needed on CW program. Web.

Foner, N. (2005). In a New Land: A Comparative View of Immigration. New York, NY: New York University Press.

Gootnick, D., & McCool, T. (2008). Commonwealth of the Northern Mariana Islands: Managing Potential Economic Impact of Applying U.S. Immigration Law Requires Coordinated Federal Decisions and Additional Data. GAO Reports, 1 -133.

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Huntington, S. (2004). Who Are We? The Challenges to America’s National Identity. New York, NY: Simon and Schuster.

Joppke, C., & Morawska, E. (2003). Toward Assimilation and Citizenship: Immigrants in Liberal Nation States. New York, NY: Palgrave.

Kara, M., & Mailman, B. (2012). Issues and Problems with CW. Web.

Krikorian, M. (2007). Back in the CNMI. National Review, 57(24), 22-23.

Reyes, M. (2011). Employee motivation: Do incentives and/or threats really help to motivate employees. Munich, Germany: GRIN Verlag.

Schumann, R. (2008). Private and Public Sector Collaboration in Guam’s Tourism Industry: Is Guam Prepared for the Future? Florida, FL: Universal-Publishers.

Talmadge, E. (2012). Transforming Guam is ambitious, difficult task. The New York Times, p. 36.

U.S. Census Bureau. (2008). Economic Census of Guam. Web.

U.S. Citizenship and Immigration Services. (2012). E-2 CNMI Nonimmigrant Investor Status for Foreign Nationals with Long-Term Investor Status. Web.

U.S. Government Accountability Office. (2009). Coordinated federal decisions and additional data are needed to manage potential economic impact of applying U.S. Immigration Law. Web.

U.S. Government Accountability Office. (2010). DHS should conclude negotiations and Finalize Regulations to Implement Federal Immigration Law. Web.

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