NCPA - National Center for Policy Analysis

Billion Dollar Lawsuit Seeks U.S. Pay Rates For Saipan Workers

February 23, 1999

American lawyers have filed a class-action suit seeking $1 billion from garment makers and retailers for systematically underpaying and mistreating workers who have come to the island of Saipan from nearby China. Saipan is the capital of the Commonwealth of the Northern Marianas -- a U.S. posession where most, but not all, American labor laws apply.

The problem is that the Chinese workers say they work in orderly factories, sleep in clean dormitories and save thousands of dollars to take home with them. And they make about five times as much as they could make in China.

Nevertheless, the lawyers contend that workers are forced to work inhuman hours and live in overcrowded and vermin-infested conditions, even though neutral observers disagree. Referring to the lawyers, one Chinese woman asks, "How could they be doing it for us?" She adds, "They must be doing it for their own reasons."

  • Saipan's garment industry has vaulted from sales of $5.4 million in 1985 to nearly $1 billion in 1998.
  • There are 15,000 Chinese workers now employed in 36 garment factories.
  • Saipan enjoys special exemptions from American immigration and labor laws, allowing workers to earn a minimum wage of $3.05 an hour -- enough to permit most to save $6,000 to $10,000 in two years before heading back to China.
  • Standard labor costs in China amount to about $110 a month -- equal to about one week's wages in Saipan.

Many workers reportedly clamor for overtime, at which they make $4.50 an hour.

As if the lawsuit were not enough of a threat to the Chinese workers, officials of the U.S Labor and Interior Departments are now talking of lifting Saipan's special exemptions from minimum- wage and immigration laws. The workers are reportedly fearful and perplexed.

Source: Seth Faison, "Stretching Federal Labor Law Far Into South Pacific," New York Times, February 20, 1999.


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