Cost of the average contract worker for one year, in Saipan vs local/IR hire.
I have seen and read the statement that the local companies in Saipan prefer contract workers because they are cheaper compare to local/IR. That is true to a point, granted if you take two same positions and you had no other choice but to hire a local/IR personnel to fill that position. You more likely in the past have to increase the wage much hire then to a contract worker to fill the same shoe. So people argue increase the minimum wage will help the local/IR work force fill the lower tear work force, which is predominantly contract workers.
Lets look at some numbers….
Minimum wage currently 3.05 x 40 hours a week, 52 weeks (if no holiday time is taken) = $6344.00 yearly wage.
Other cost associated with contract workers but not local/IR workers.
Insurance:
Bonding (Traders Insurance: flat fee): $50.00
Workmen Compensation (International Insurance): this varies to what type of classification for your job title.
Stock/clerk its $30.06/year for a maintenance repairer its $209.66/year
(Did you know that if you get killed or hurt from a terrorist act, your not covered by workmen’s compensation….)
Medical:
Yearly checkup (Mariana Medical Center): 45.00
Medical Insurance: (we opt to pay this expense out of pocket and forgo the yearly insurance) So far our luck has been holding and on the average our medical cost has been under 3k a year. I strongly advice against this policy, this is a risk we are willing to take but not the smartest we have made.
Renew documentation:
Renewal Fee (CNMI government: this is a flat fee) : $275.00
Alien Identification Card Fee (CNMI government: this is a flat fee): $25.00
Job vacancy announcement (Newspaper: Saipan Tribune) : $15.00
So on the average it cost a company an annual cost of $500 to $800 USD per person to renew a contract worker. This is not taking into consideration of the housing, transportation and food allowance some contracts has.
Housing cost per month per person: $150USD
Transportation cost per month per person (includes gas, and cost of payment for vehicle plus depreciation of said vehicle and average maintenance cost for a 05 Ford Ranger pick up) average monthly gas $63.00USD + monthly payment $211.00USD + 23.70 Maintenance fee = $297.70 / 4 people who use this vehicle = $74.425 per month per person.
Food allowance: Not offered by us
Average cost per month for a contract worker addition to normal wage: $224.425/person
So lets recap the cost
For an IR worker, working at current minimum wage of $3.05 USD for 40 hours a week for 52 week is $6344.00. Around $244.00 before taxes every payday.
For a contract worker, working at current minimum wage of $3.05 USD for 40 hours a week for 52 week is $6344.00. Around $244.00 every payday before taxes. But additionally they get the bonus of $2693.10 in benefits in housing and transportation. Additionally the company also covers their medical expenses. So the dollar value for their yearly contract is around $9037.10 ~ $9537.10 USD a year.
Further more the company has to shoulder around 500 to 800 USD a year just to renew that person.
Current minimum wage in US is $5.35 at 40 hours a week for 52 week the amount is $11, 128.00 a year.
So the question at hand is why do we hire more contract worker then local or IR workers. Granted the above data is just from one company, and I am sure they’re companies who skim on the housing and transportation benefits. The end result is that, accounting wise its makes more economical sense to hire local and IR workers over contract. The reality of the situation is, most local and IR workers aren’t worth their weight compare to the contract workers. So increasing the minimum wage isn’t going to help the local unemployment situation at all. Companies will continue to pay more for the contract worker because they are worth more.
