Congressman Faleomavaega announced today that in a letter dated April 30, 2010 he thanked Chairman Miller for his willingness to support modifications to minimum wage law in American Samoa. Faleomavaega’s letter is a follow-up to ongoing discussions he has had with the House Committee on Education and Labor since the release of the GAO report on the impact of minimum wage in American Samoa and CNMI.
The full text of Faleomavaega’s letter, which was copied to U.S. Senator Daniel K. Inouye, Chairman Rahall of the House Committee on Natural Resources, U.S. Secretary of the Interior Ken Salazar, Governor Togiola, the Lieutenant Governor, the President of the Senate and Senators, and the Speaker of the House and Representatives, is included below.
Dear Mr. Chairman:
Since the GAO released its report on the impact of minimum wage increases in American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI), my office has had ongoing discussions with your Committee regarding your willingness to support modifications to the law, including a delay in the next minimum wage increase.
In accordance with current law, employees in American Samoa are scheduled to reach the federal minimum wage by 2016 while those in CNMI will reach it by 2015. However, as discussed with your Committee, the GAO report illustrates just how limited American Samoa's economic options are given the Territory’s overreliance on the tuna fishing and processing industries.
For more than 50-years, two tuna canneries, StarKist and Chicken of the Sea, served as the backbone of American Samoa’s economy. But, in 2006, Chicken of the Sea and StarKist began operating at a $7.5 million loss per year in American Samoa due to a transformational shift in the way the U.S. tuna industry is doing business, as the GAO report makes clear. In other words, American Samoa’s economy is not collapsing because of minimum wage. Minimum wage is simply exacerbating a problem that already existed.
Of the three major brands of canned tuna, two -- Bumble Bee and Chicken of the Sea -- have adopted a new business model of outsourcing the cleaning of fish to low-wage countries like Thailand, Fiji and Papua New Guinea. Because 90% of labor costs and employment come in the cleaning of the fish, the outsourcing business model maximizes profits and decreases employment in America, while increasing employment in low-wage rate countries.
This is why both Chicken of the Sea and Bumble Bee employ more workers outside of the U.S. than in the U.S. On September 29, 2009, one day after American Samoa was struck by a devastating tsunami, Chicken of the Sea, for example, closed its operations in the Territory and outsourced over 2,000 jobs to Thailand where fish cleaners are paid $0.75 cents and less per hour while employing a skeletal crew of about 200 workers in Lyons, Georgia.
While Chicken of the Sea and Bumble Bee have opted to outsource their fish cleaning jobs to low-wage rate countries, StarKist has chosen to clean whole fish in American Samoa and thereby create jobs for the Territory’s workers. But this has put StarKist at a competitive disadvantage and StarKist cannot hold out much longer in American Samoa, given the unfair trade advantages of Chicken of the Sea and Bumble Bee,
Unfortunately, the GAO report makes no recommendations about what can be done to help StarKist nor does it offer solutions to make sure that workers in both American Samoa and CNMI receive fair wages to compensate for increases in cost of living. But the GAO report does reaffirm the real need for minimum wage to be modified until such time as American Samoa can stabilize its economy and a plan of action can be put in place.
While an American Samoa Economic Advisory Commission established by the U.S. Department of the Interior issued an historic report in 2002 with recommendations on how American Samoa could diversify its economy, no recommendations have been implemented yet. However, I thank you for your willingness to support modifications to the law, including a delay in the next minimum wage increase so as to give the American Samoa Government (ASG) the time it needs to put forward a plan of action based on the findings of the American Samoa Economic Advisory Commission which issued its report in 2002.
Any modifications we make to the law should also call for a thorough review of the some 18 different minimum wage rates in American Samoa which are based on economic development in different sectors. These varying minimum wage rates for different industry sectors (attached) are a relic of Special Industry Committees which are now antiquated and discriminatory. Like every other State or Territory, one federal minimum wage rate needs to be established for American Samoa, and I am hopeful that we will collectively work together towards this end.
I appreciate that your Committee is working with my office to draft the language which we will need to modify the current minimum wage law as it pertains to American Samoa and to find an appropriate legislative vehicle to move it forward prior to September. Given the urgency of this request, I have copied Senator Inouye so that he can be fully informed of our efforts in the House and better positioned to assist us in inserting language on the Senate side, if necessary. By way of separate letter, I will formalize my request for his assistance.