Friday, July 27, 2007

Economic Realities

Food For Thought 7-20-07

Hi friends, this is Harry Blalock; General Manager for radio stations KZMI & KCNM. It’s that time once again to take a look at the issues of the week, and to offer some Food For Thought.

This past week has been a tough one for me, for a lot of reasons. The biggest one is that I had to let half of my staff go last week. I knew it was going to be coming, the call from the owner saying that we had to further cut our expenses. When your revenues continue to plummet and yet your costs (electricity) continue to skyrocket, you have to do something. At that point if you have a huge bank account, you can subsidize the cost of doing business by pumping in money to keep the operation afloat. Or you can look into taking out loans to continue operating at your current level, hoping that things will turn around soon and you’ll recoup the money you kept pumping in when it couldn’t be justified. Or there’s option #3, not a very popular one among most politicians and government workers. That’s when you cut your expenses so that you live within your means. In other words, if you’re only taking in $20,000 a month, you don’t keep spending $30,000 a month. You cut everywhere you can, and get rid of all the things that aren’t an absolute necessity.

We’ve already done all that, we’ve cut out extra phone lines, cancelled newspaper subscriptions, turned off one of the stations, and about the only thing left to cut was staff. I got the call late last week that we needed to cut all the part time announcers we had on staff, that meant my staff shrank from 8 to 4 overnight. We had previously already cut our staff size from 12 down to 8, but now more was required. It’s quite a challenge to try running and operating a radio station with 4 people, when that includes you as the General Manager. Needless to say, you are in a fight for survival, and you do whatever it takes.

Of course we still wanted to keep both of our main stations on the air, 103.9 FM – KZMI, and 101.1 FM – KCNM. We also wanted to keep a live presence on both stations without having to totally automate either one. That meant that I had to start doing an air shift again, so now I’m doing 6-10 am on KZMI, while Lewie Tenorio shifted over and is doing the morning shift on KCNM. It broke my heart that we had to let some great long term employees go, but there was simply no other option; everything else had already been done.

I realize the rumor mill is in overdrive right now, and I’m sure our competitors are helping to fuel those fires, but no, we are not going off the air and closing our doors at this point in time. We are struggling, yes, as is every other business that I know of on island. Our economy is in total shambles, the politicians have no clue how to improve the situation, and in their infinite wisdom may actually make things much worse very soon. And most other businesses that are looking at investing in the CNMI are afraid to do so right now for a number of reasons. Many are looking at the federal immigration take-over legislation that has been introduced in both the U.S. House and Senate now, they want to know what it will mean for our workforce and our tourism markets. And until those answers are cleared up and we know what the new rules are going to be, many people are afraid to move. I believe that our economy desperately needs these issues to be finally ironed out once and for all, we need answers not impending question marks and uncertainty.

Can the U.S. take over our immigration system and confer permanent residency status to our long-term contract workers? Yes, they have that right. We can fight, argue, complain, drag our heels, and anything else we can think of, but I believe the truth of the matter is, it’s not really going to make any difference in the end. I think the politicians in Washington pretty much have their minds made up, I think some of them had their minds made up 15 years ago, and are just now getting the chance to get their way.

If the U.S. does take over our immigration, will it be good or bad for us? You can find some very well meaning people on both sides of this debate. A lot of people have some very real concerns about the impact this could possibly have on our tourism markets and on our ability to get the workers we need. They don’t exactly trust the U.S. government to work out all the details later and make sure that they take our interests and concerns into account. Then there are those who would say that this is long overdue, and the U.S. should have done this years ago. They believe that our system hasn’t operated properly for a long time, and that it has been riddled with corruption. There have certainly been examples in the past that would justify that view, but are they still the same today? And will the federal government necessarily do any better a job at protecting our borders and making sure we don’t have a problem with illegal aliens staying here? A very good case could be made that they haven’t exactly done a very good job with their own situation, so what is to make us believe they will do any better here? But again, the bottom line here is that the U.S. does have every right to take over control of our immigration, and they will most likely do as they please, regardless of what we say or think.

Then there is also the whole issue of the U.S. granting the long-term contract workers permanent residency, or F.A.S. status. Does the U.S. have the right to do that? Yes, they absolutely do. Was it in the Covenant, or was it ever part of the discussions between the islands and the U.S. government when the Commonwealth was being formed? No it wasn’t, but again, that doesn’t mean that the U.S. can’t do as they please now. And all indications are they will do as they please, and again, I don’t really think it makes much difference what any of us say or feel about the issue.

I do believe there are a few issues that are worth considering if they go ahead with this. The first would be that this means these workers would no longer be considered contract workers, but would now be considered local workers. That means they are no longer entitled to the same benefits as a contract worker. The employer would no longer be required to cover all their medical expenses, or to give them any medical coverage at all for that matter. Is the U.S. prepared to give us “impact” money for the additional costs at C.H.C.? You have to believe that having that many more “local” workers without adequate insurance or medical coverage would mean that there will be a lot more unpaid bills at C.H.C.
Then you also have to consider the influx of students in the schools if these new “local” workers are allowed to start bringing their families from their country of origin. Our schools are already overcrowded and under funded, what will that kind of influx of students mean to the quality of education for all students? Is the U.S. prepared to give us money to help out with the additional cost of education for the influx of new students as a result of these workers they have now given permanent resident status? If the U.S. doesn’t plan on giving us any money to help offset these additional costs, it means we will have no choice but to either cut the rebates or raise taxes substantially. Cutting the rebates is raising taxes just for the record.

These are all factors that need to be considered and planned for. If we just allow them to happen to us and we don’t have a plan of what we are going to do, or how we are going to deal with it, things will continue the downward spiral economically. I personally am not opposed to the U.S. granting permanent residency, citizenship or anything else they think is appropriate to the long-term contract workers. But there will be economic consequences that need to be planned for and taken into account if that happens. Right now I don’t hear either the U.S. government or our government talking about how to deal with those issues, or what they will do about them. Failure to plan in this case means you are planning to fail.

Now we have a multitude of contract workers and others who have joined their cause threatening to boycott businesses affiliated with the Chamber because of the Chamber’s testimony in front of the U.S. Senate. That is certainly their right, but there are a couple things they need to keep in mind before they take this too far. Just because you belong to the Chamber doesn’t necessarily mean you agree with all stands taken by the Chamber. The Chamber is made up of many different businesses, all with their own opinions and points of view. Its diversity is one of its greatest strengths. But on a small island like this, when you boycott one business you affect all other businesses. When one business sneezes, a dozen others catch a cold. When one has to make cuts as a result of a loss of sales or a downturn in the economy, it means that other businesses that do business with them will also have to make cuts, or raise prices as a result. It’s extremely difficult to raise prices too much in this economy to make up for your losses or increased cost of doing business, so what many businesses will wind up doing is cutting their expenses and their staff. Boycotting one business or a few different businesses will not just affect them, but will have a domino effect that will affect many other businesses as well. This will most likely result in lost jobs, with some of the contract workers who were hoping for permanent residency actually finding themselves without a job, and on their way back to the Philippines with the only permanent residency in their future back in the P.I. For every action, there is always a reaction. Yes, you may have the power, but are you prepared to pay the costs for the reactions when they come?

I’m Harry Blalock, thanking you once again for giving me a generous slice of your valuable time, and allowing me to share my Food For Thought.

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My commentary that airs on radio stations KZMI - 103.9 FM & KCNM - 101.1 FM