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Congressman Faleomavaega announced today that as mandated by Congress the GAO has released its report on Employment, Earnings, and Status of Key Industries Since Minimum Wage Increases Began in American Samoa and the Commonwealth of the Northern Mariana Islands.
“The GAO openly admits that ‘it is difficult to distinguish between the effects of minimum wage increases and the effects of other factors, including the global recession beginning in 2009, fluctuations in energy prices, global trade liberalization, and the application of U.S. immigration law to the CNMI,” Faleomavaega said.
“However, the GAO did find that in American Samoa the ‘average earnings of workers who maintained employment rose from 2006 to 2009, but available data show that the increase was not sufficient to overcome the increases in prices.’ In other words, our workers aren’t earning enough to live, and I am concerned by this outcome and also by the reiteration that ‘American Samoa had lower income and higher poverty rates than the mainland US.”
“While I expected Chicken of the Sea to hide behind minimum wage increases as one of its reasons for outsourcing our jobs to Thailand where fish cleaners are paid $0.75 cents and less per hour, I am disappointed that Chicken of the Sea then turned around and downsized in Lyons, Georgia where they paid workers some $7.25 per hour. I understand that increased utility costs also played into Chicken of the Sea’s decision to leave American Samoa as did changes in business taxes and fees but it is shameful that Chicken of the Sea never paid Samoan workers enough to live.”
“Undoubtedly, we have come to terms with the fact that many of our tuna cannery workers no longer have jobs due to Chicken of the Sea’s closure in 2009 and subsequent layoffs by StarKist due, in part, to minimum wage increases. Even so, the GAO points out that American Samoa competitive advantage is also ‘dwindling’ because ‘current operations in American Samoa were not competitive with other models. Analysis of alternate models available to the industry suggests that moving tuna canning operations – including unloading, loining (cleaning, cooking, and cutting), and canning fish – from American Samoa to another tariff-free country with lower labor costs would significantly reduce cannery operating costs.’”
“As we all know, American Samoa cannot indefinitely compete against companies like Bumble Bee and Chicken of the Sea which outsource American jobs and exploit cheap labor in foreign countries to clean and cook their fish. But, as I have said before, we do have an advantage when it comes to U.S. government contracts which require tuna to be processed in the U.S.”
“Because StarKist cooks and cleans the bulks of its fish in American Samoa, it qualifies for U.S. government contracting. Bumble Bee and Chicken of the Sea do not qualify because their canned tuna is not American made. However, at some point, this advantage in U.S. government contracting will not be enough. This is why I am pleased that the U.S. Department of Labor provided a disaster National Emergency Grant (NEG) of $24 million that could be expanded to include job re-training for our tuna cannery workers. I continue to be supportive of our tuna cannery workers being re-trained to become nurses, teachers, or whatever other careers they might wish to pursue.”
“Although it was our tuna cannery workers who were largely impacted by minimum wage increases, ASG remained largely unaffected because most of its employees earned more than $1.50 above the local minimum wage set for government workers in 2007, the GAO stated.”
“As ASG projected local shortfalls, the GAO reported that ‘local government spending exceeded revenues each year from 2005 to 2009.’ The GAO also showed that more than $240.8 million has been made available for ASG by Congress through the American Recovery and Reinvestment Act and that $61.6 million had been disbursed at the time of the report. The GAO also noted that American Samoa has been designated as a ‘high-risk’grantee by the U.S. Department of the Interior as recommended by the Department’s Inspector General and GAO. The GAO further noted that ‘the office will remove this high-risk designation once the American Samoa Government demonstrates its compliance with certain fiscal and internal accounting requirements.’”
“In private discussion groups, the GAO said ‘private sector employees said they were concerned about the fiscal status of the local government and the possibility of harmful tax increases.’ Private sector employees also ‘generally opposed additional minimum wage increases but said that a number of other factors made it difficult to do business in American Samoa. For example, they said increased in prices of utilities, shipping, and raw materials; an outdated tax structure; low levels of investment; and business licensing problems also make it difficult to establish and do business in American Samoa.’”
“Clearly, the issues facing American Samoa’s economy are complex and, although minimum wage is not the single cause of all the troubles ASG faces, I will stand by my promise to do what I can to put future minimum wage increases on hold until such time as ASG can put a plan in place to diversify its economy and I remain hopeful that ASG will consider the findings of the American Samoa Economic Development Commission which issued its report almost a decade ago.”
“I also thank Tri-Marine for investing in American Samoa and StarKist for staying. I assure both canneries that at the federal level I will do all I can to help them, and I will call for an oversight hearing to review the matter in further in detail,” Faleomavaega concluded.
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