Congressman Faleomavaega announced today that, at his request, thirteen (13) Members of Congress joined him in signing a letter urging the House and Senate Leadership to support emergency aid for American Samoa and CNMI if Congress is unwilling to adjust the minimum wage schedule as mandated by P.L. 110-28.
“While it is too soon to know if we will be successful in our efforts, I am pleased that Congressman Mike Honda, Chair of the Congressional Asia Pacific American Caucus (CAPAC), agreed to sign the letter and encouraged other CAPAC members to support this initiative,” Faleomavaega said. “I appreciate the support of other concerned Members of Congress who also signed.”
The letter, which was drafted by Faleomavaega’s office and CNMI, was sent to U.S. Senate Majority Leader Harry Reid, Speaker Nancy Pelosi, House Majority Leader Steny Hoyer, Chairman Dave Obey of the Committee on Appropriations, Chairman Norm Dicks of the Appropriations Subcommittee on the Interior, Chairman George Miller of the Committee on Education and Labor, Chairman Edward Kennedy of the Senate Health, Education, Labor, and Pensions Committee, Senator Daniel Inouye, Senator Daniel Akaka, and Senator Jeff Bingaman. The complete text of the letter is included below.
As members of the Congressional Asian and Pacific American Caucus (CAPAC) and concerned Members of Congress, we strongly support inclusion of funding and language in the FY 08 Emergency Supplemental Appropriation bill that will provide immediate economic assistance to American Samoa and the Commonwealth of the Northern Mariana Islands (attached) until such time as the escalating minimum wage rate is amended.
These remote American territories are experiencing the effects of the U.S. economic slowdown that is further magnified by their distance and isolation. The increased cost of fuel has added to the shipping costs of food and goods, and the availability of basic energy supplies. The main industries of tourism, food production, and garment manufacturing have experienced sharp declines. Adding to the economic challenges facing these islands will be the scheduled increase in the minimum wage later this month.
Last year, P.L. 110-28 mandated an automatic increase of fifty cents per hour effective July 2007 and every year thereafter until 2014 for American Samoa, and 2015 for CNMI. P.L. 110-28 also mandated that the U.S. Department of Labor (DOL) undertake a study to determine what impact these increases might have on both economies.
On January 25, 2008, DOL released its findings. The findings show that neither economy can sustain these increases. The DOL also reported that “by comparison, if U.S. minimum wages were increased to the level of the 75th percentile of hourly-paid U.S. workers, that the adjusted wage rate would be $16.50 per hour.”
While we understand that there may be some disagreements about the report, for now it is the only report Congress has and, until such time as Congress is willing to direct the DOL to conduct another study, we believe Congress should be obliged to respect the DOL findings and hold off, or offset, further minimum wage increases as recommended.
Please consider the following compelling concerns:
• In American Samoa, further escalations of the minimum wage could lead to the loss of its only industry, as tuna cannery operations will move to foreign jurisdictions where labor costs less. Presently, more than 80% of the private sector economy is dependent on two tuna canneries, which employ more than 74% of the workforce, or about 5,000 workers. A decrease in production or departure of one or both of the two canneries in American Samoa could devastate the local economy resulting in massive layoffs and insurmountable financial difficulties.
• On April 28, 2008, StarKist Seafood announced that it would reduce production by half and lay off more than 1,000 workers if the American Samoa Government (ASG) cannot provide offsets.
• According to the DOL, when American Samoa’s canneries go, their closure will have a ripple effect on the economy and could amount to a loss of 7,825 jobs.
• With the loss of the canneries, American Samoa has been informed that it will also lose substantial shipping schedules. With no alternative industries to support shipping service, this will result in higher costs of goods for all residents in the islands. Given that American Samoa lies 2,300 miles southwest of Hawaii, covers a land area of 76 square miles, and has a per capita income of $4,300 per year, it would be wrong of the U.S. Congress to risk the well-being of more than 70,000 residents, including men, women, and children, who stand in real need of the food, fuel, etc., that shipping services provide.
• In CNMI, the local government is reeling from a devastating loss of 35% of its revenue over the last two years, as the garment industry has rapidly shut down due to a lack of competitiveness with foreign countries where labor is cheap and abundant. Out of 34 factories, only 7 remain and most will close after the next minimum wage increase.
• In tourism, the only other major industry, the CNMI suffers from a lack of air service from Japan following the 2005 pull out of Japan Airlines due to its own financial instability amid rising costs of fuel. As a result, the tourism is in about a 25% decline.
• At the same time, costs of power in the CNMI have increased over 100% – a scenario that has caused the exodus of many citizens and businesses.
• As a result of these serious trends and an estimated loss of as many as 25,000 people from its population, the CNMI government now faces the need for a rapid down-sizing in the coming months. However, there may not be jobs waiting in the private sector with the minimum wage increase and rising costs of doing business.
While we support the intent of federal minimum wage law and stand with America’s workers, we are convinced that further increases in American Samoa and CNMI must proceed cautiously. Like Senators Inouye, Akaka, and Bingaman, who offered an amendment based on H.R. 5154, we prefer to delay minimum wage increases in American Samoa and CNMI from every year to every two years and make increases contingent on a determination by the Secretary of Labor that the increase would not substantially curtail employment. However, the Senate HELP Committee, and the House Committee on Education and Labor prefer that the increases move forward as scheduled.
Recognizing that the next scheduled increase is to take place on May 25, 2008, we urge you to include funds in the FY 08 Emergency Supplemental that will serve as a fiscal bridge to a sustainable future for American Samoa and CNMI, and that will save both economies from economic collapse. We are requesting $15 million for each territory to use in assisting employers and employees, citizens and guest workers, and the local governments during this difficult and challenging period. These funds will maintain economic stability for the next year until such time as Congress reviews the economic impact of further increases in minimum wage.