Thursday, April 3, 2008


Reading this article by the president of this company raises a red flag. If this particular business will be so hurt by a $.50 cent raise for the lowest of wage earners, it suggests that the company itself is not stable. This should be a warning to all potential new and continuing customers to beware. This company could fold and go under with a tiny pay raise to its poorest employees. Just read how bad this business will be hurt and the dire straights it is falling into. This is his projection for all businesses..
Here is their story... Read this
The president of Delta Management Corp. reiterated his opposition to the tiered wage hike mandated by H.R. 2066 in his “From the President” section of the Chamber newsletter for the month of April, saying that the CNMI has a unique and fairly closed economy “and it is at a breaking point.” He said there is little money coming in for businesses to allow for wages of the islands' lowest-paid workers to rise from $3.55 to $4.05 an hour starting May 26, 2008.
Arenovski said businesses maybe forced to take the following measures in order to survive the next round of minimum wage hikes:
- Further employee work hour reductions.
- Reduction in workforce.
- Increased prices for good and services.
- Close the business down.
The last and most radical measure Arenovski suggested: “Closing a business means all staff are out of work and vendors get paid late or don't get paid and the government loses tax revenue,” he said. The Chamber president also said that, besides the rise in minimum wage, businesses in the CNMI are also battered by the high cost of electricity, GASOLINE, more GASOLINE, shipping, and imported raw materials.
There were no notable exceptions to this theory, even from gouging gas companies, so I assume it includes all companies including the one mentioned above. So sorry, to bad!
Makes you want to jump up and get here as fast as you possibly can, don't it?
But on the other hand...
This could all be bullshit to fight off the minimum wage increases. This company and all the others probably won't even feel the effect. Could it be a friggin' scare tactic thinking the public will believe his bullshit, and he is only a pawn in the governors game of 'It'll ruin the economy'?
So you it...
A- Bullshit?
B- Everyone ones falling down the hole including his company?
C- Is meant for 'others' only?
D- Simply a scare tactic?
E- All of the above.
This is my opinion only, I'll inform you, you decide.


Anonymous said...

And he manages the price goughing service stations.

Buzz said...

I vote 'E'. I've listened to the Chamber members' whining and am convinced it's just the "poor me, business man" trying to do all you peons a favor crap that has always been.

lil_hammerhead said...

He fails to mention, in his attempt to save profits, that employees to, have GAS, and ELECTRICITY, and FOOD, and HOUSING, and other LIFE expenses they need to survive. Boohoo.. businesses, who've screwed and put the screws to workers for the past 25 years, are going to have to cut those profit margins down, dig a bit deeper. Boohoo.

I say.. Blow it out your ass Arenovski. Sorry for the language.. but this sh@t is getting old. He needs a swift kick in the groin.

Pilgrim said...

Let me give you a basic lesson in business dynamics. Lets say a particular business earns a profit margin of 10% after all expenses and taxes are paid. This would be a lucky business indeed. The business in growing and uses 50% of it's profits to purchase additional capital and expand, and hires more people. The remaining 5% of profits become return on investment to the stockholders, perhaps paid out as dividends, or perhaps saved for contingencies.

Now lets say that the business payroll is 25% of it's gross income. And if there is a pay raise mandated, and all else remaining the same, the business would have an increase of 14% on it's payroll expense as a result of this mandated pay raise. With me so far?

Increasing an expense is the same thing as reducing gross revenues on the effect on the bottom line. If a business has a profit margin of 10% only, reducing gross revenues by 14% or increasing expenses by 14% would wipe out that 10% bottom line. Make it go negative.

Not only do the stockholders earn no return on investment, the business cannot use it's profits to buy more capital equipment and hire more employees.

Solutions are as Arvenoski said. Precisely.

Any questions?

Marianas Pride said...

Glen, I ranted and had to go over and delete all four letter words in a previous post. Here is my two cents, minus the foul language:

Hi Pilgrim, thanks for educating us about business dynamics. We are all a bunch of uneducated fools who don't know how to tie our shoes! Duuuuuuhhhhhh... PLEASE SPARE ME AND ALLOW ME TO VOMIT PROFUSELY FROM MY ANUS.

Pilgrim, can you support your family making $3.55 an hour? Can you? Do you make that?

If businesses shut down because of this, fine! If the CNMI goes bankrupt, let it! Wait, it already is!

Here is some basic economics for you pilgrim. If minimum wage increases, more locals will be attracted to the private sector. The old argument that locals will not work in certain jobs is a bunch of crap. Dozens upon dozens of locals applied for a job at American Memorial Park to be a groundskeeper because it paid triple the minimum wage! Locals are willing to work hard, but not at $3.55! Why? BECAUSE THEY KNOW THEY CANNOT SUPPORT A FAMILY ON IT!

I am sick and tired of slavenomics. Pilgrim, I am sure you would pay your employees $1 per hour if you had your way. Your greedy justification? We need to make sure our investors make a profit! Your arguments hold as much water as Adolf Hitler's arguments on freeing the world from the "evil" Jews. Yes, I said it. It is out there, and I am not taking it back. Shame on you.

What the CNMI needs is honest and bold leaders who know what the hell they are doing instead of the same old rhetoric. We need real leader who are honest and apply common sense.

Pilgrim, let me guess. You live in a two-story house and drive a fancy car and make $80,000 a year, and you have two housekeepers working for you. Your employees make $3.55 an hour and live in an over-crowded tin shack (AKA barracks) and fish and farm on the side just to feed their family.


Sorry Glen, I had to rant here. I am just sick sick sick of these business experts and economists who want the rich to get richer and the poor to get poorer. This is exactly what is wrong with our island today.


(G-Rated Version applied)...

glend558 said...

A slap on the back Ed, I couldn't have said it better myself!
So it's "ditto" from me.
Pilgrin, have you seen the insane amounts, in billions af dollars the oil companies make in profits? It's not 10% as you suggest in your reference.
I do however appreciate your comments and thoughts. Keep on reading and contributing.

Anonymous said...

I may be wrong here, but doesn't Arenovski have businesses in Guam? Doesn't Guam already meet the US minimum wage?

With all that "horrendous" labor expense, using his logic, why wouldn't he bail on Guam and reinvest back here in Saipan to make a few extra scraps of profit? After all, retail prices are even LOWER in Guam!!!

I guess I too am too dumb to understand Pilgim's lesson in business dynamics. Now follow me here.... if payroll increases 50 cents, and that is a 14% increase, that still is only 14% of the 25% of expenses. My math shows that as a 3-1/2% increase in total expenses..... but then I don't have a fat resume to sit on.

lil_hammerhead said...

:) Funny Ed.

Pilgrim said...

Anonymous... I stand corrected. Your % effect on the bottom line is correct. In my haste to present some numbers, I failed to consider that it's a 14% increase on the wages portion of the expenses, not the entire expenses.

Mariana's pride needs to take a pill and look at things more analytically.

I wasn't arguing for or against a raise in the minimum wage. I'm all for it actually. Businesses are created and operated for the benefit of the employees. Any benefit employees receive are incidental to the competition for labor in the current labor market. Businesses operate for the benefit of the shareholders to provide them with a return in investment and incentive to invest in the first place.

Minimum wage is also not intended to be a wage which supports a family or otherwise be a living wage. I that were the case, you would need $10-15 an hour on Saipan to pay the bills without receiving welfare or other public assistance. And heaven forbid if you have a medical emergency.

The problem with our system is not the minimum wage, but the abundance of workers who are willing to work for small money. Reduce the number of contract workers and pay will naturally increase because businesses will have to compete for qualified personnel and pay them adequate compensation in order to keep them. If there is an unlimited source of cheap labor (ie. illegal mexicans picking corn), wages for those jobs will never increase. Supply and demand.

On the same hand, if cost of labor increases, all of Arvenoski's points are true. Business must raise prices or do other things in order to continue to provide a return on investment to the shareholders. Otherwise they will shut down. Some businesses have some wiggle room and can reduce expenses but costs are going up, not down. Business needs to pay for power,shipping, etc. just like individuals do. Typically a reduction in force is what is normally done in these cases, with the hopes that the remaining crew can handle the workload.

Don't expect business to be the salvation of society. What people do in the USA and the world throughout history is when they are in a place where jobs are scarce, or wages are low, they go to where the jobs are. My brother could have stayed in Portland Oregon on the beautiful columbia river and earned $7.50 an hour at any number of jobs.. but realizing that he could not survive on that, went to Seattle to work for Boeing Aircraft and makes $75 grand a year. Of course he would rather be fishing on the Columbia River.

So sure, everyone would like to live in a paradise, but if there is no work, then go to where there is work. Return to paradise when you retire and for vacations. That's life.

And M. Pride.. in case you really are wondering...

two story house- true

fancy car- toyota minivan

$80K a year- a little more than that. But I earn it. I am responsible for 50 employees and their families-- who depend on me to do my job good enough so they can have a job.

2 Housekepers- 1 part time.

Tin shack Barracks- nice apartments with private airconditioned rooms. Most employees have their own pad.

3.55 Wages- no not at all. Average hourly salary of my crew is $8.25.

See how stereotypes can be so wrong? There is such a thing as responsible businesses who care for their workers, who are considered part of the family. And oh- by the way.. we have about 60% local employment.

Pilgrim said...


3rd. paragraph

Businesses are NOT created and operated for the benefit....

glend558 said...

Pilgrim, I want you to know the reason I ask you to keep on commenting was because I thought you were smart. And you are. The most important reasons is that you are thinking. You are a smart guy.
No one has all the answers, TTT is not the redeeming answer, but they have their rights and thoughts, you are not always correct, neither am I, it's all together that will make the CNMI a success.
Guess what, "I'm on your side"!!!
As long as you are thinking and trying to help the CNMI! We all want this place to be what it really is, an Island Paradise!
We just have to get rid of all the dumb ass government officials..

Marianas Pride said...

Pills taken...aaaaaah, serenity now!

Pilgrim said...

Glen- Couldn't agree more. The politicians can be blamed for everything-- but the reality is that it's the people who put them there, expecting political patronage in return.

So who is to blame for our situation? We the voters. Where is the outrage at all of the known cases of stolen public funds and other illegal activities, that has gone unpunished and ignored? Why isn't there pickets and protests when a Politico gets caught with his hand in the cookie jar, demanding his prosecution?

You can say that it's because of close family ties.. but that's not true. For every family member who would not object, there certainly would be hundreds of non-family member (ok maybe dozens) but that is not an excuse in my book.

We could start on the path to recovery if we put all the crooks in jail-- including white collar crooks.

Pride- could I have the name of that pill? We all need one from time to time.

glend558 said...

Pilgrim, I used to blame the voters for electing re-runs and otherwise undedirables, until I realized (while voting)it wasn't only the choices on the ballot but how they got there. I have never voted a full slate yet due to the fact there weren't decent selections available. The problems arises before the voters get to choose, it is who gets on the ballot in the first place.

Pilgrim said...

The voters are the base of the political parties who offer up the candidates. No single person can make a difference. The masses need to rise up against the status quo and force the parties to offer up new fresh blood-- such as Tina.

Throw out the party leaders along with their candidates. Mandate open primaries before each election with write-in's allowed. Don't let the party leadership decide if there will be a primary or not. Or form a new party called the no-party party. The time is now for everyone to rise up and protest this debacle called the CNMI Government.

glend558 said...

P,you are so right!