Congressman Faleomavaega announced today that the U.S. Department of Labor (DOL) has issued its report on the impact of increased minimum wages in American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI).  The report was undertaken at the request of Faleomavaega who asked Chairman George Miller of the House Committee on Education and Labor to include a provision in the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007 requiring the U.S. Department of Labor’s Bureau of Labor Statistics to determine the impact federal minimum wage increases might have on both economies.

As a result of Public Law (P.L.) 110-28, minimum wage was increased in American Samoa and CNMI by fifty cents per hour on July 24 and July 25, 2007, respectively.  P.L. 110-28 also mandated an automatic increase, or escalator clauses, of fifty cents per hour every year thereafter until 2014 for American Samoa, and 2015 for CNMI.  Faleomavaega supported a one-time increase for American Samoa’s cannery workers and lowest-paid government employees making less than $5.15 per hour.  Faleomavaega opposed escalator clauses or automatic increases noting that automatic increases could be harmful to American Samoa’s economy.

“In response to the provisions included in P.L. 110-28 requiring the DOL to undertake a study to determine the impact of minimum wage increases, I am pleased that the report concludes that neither Chicken of the Sea nor StarKist has reduced output or working hours in immediate response to the first fifty-cent increase in the minimum wage.  Although both companies have stated they may do so in the future, I believe we can agree that our tuna cannery and lowest paid government workers deserved an immediate increase of fifty cents per hour after not getting an increase of any worth for the past ten years,” Faleomavaega said. 

“Regarding automatic increases, or escalator clauses, every year thereafter, the report also supports what I have said from the outset.  Our economy cannot afford automatic increases in minimum wage.  Automatic increases could lead to the closing of both canneries.  Given that our economy has not been diversified, we cannot afford for our canneries to pack up and leave.  This is why the Governor, my office, and the Fono have worked together to provide our canneries with the local and federal incentives they need to stay in American Samoa.”

“However, I am disappointed that, despite our best efforts to support our canneries, the DOL reports that when asked how quickly a decision could be implemented to transfer production to tuna canning facilities elsewhere, one industry spokesman replied, ‘Minutes.’”  In my opinion, a response like ‘minutes’ from a cannery spokesman shows a disregard for our people and Territory and suggests that when our canneries go, they will give no notice.”

“StarKist and Chicken of the Sea also reported to the DOL that the tuna market is now focused on sealed foil packages rather than traditional canned tuna.  If this is the case, it stands to reason that if StarKist and Chicken of the Sea were committed to us, they would be shifting production in American Samoa from cans to pouches so that we could grow with the industry.  But, to my knowledge, neither cannery has implemented a large-scale plan that would change our operations.”

“The reason for this is simple.  Pouched tuna is generally hand-packed meaning it is a labor-intensive process.  Labor rates in American Samoa are $3.76 and more per hour.  In Thailand and South America, labor rates are sixty cents and less per hour.  In other words, if StarKist and Chicken of the Sea have told DOL the truth, if the tuna market is moving from cans to pouches, our canneries will not stay with us under any circumstances given these differences in wage rates.” 

“I, for one, do not believe our canneries will stay a minute longer than they have to especially since they testified before our Special Industry Committees that their guiding economic principle is ‘to maximize the return they give to their investors or shareholders.’  Put another way, if the market is going to pouches and if pouches increase their profits, our canneries will go elsewhere, no matter whether or not the minimum wage is increased and no matter whether or not we extend 30A benefits.” 

“According to the DOL, when our canneries go, their closure will have a ripple effect on our economy and could amount to a loss of 7,825 jobs.  This is unacceptable and this is why I will be introducing legislation to end automatic increases, or escalator clauses.  I am also pushing forward to extend 30A tax benefits.  Even though I know our canneries will depart at their convenience despite these incentives, I believe it is important for us to give our tuna canneries every reason to stay until the time comes for them to move elsewhere.  Simply put, we must slow down the departure of our canneries until our economy is diversified.”

“As I said from the outset, and what the DOL report now proves, Congress must act and act now to end automatic increases in minimum wage.  The DOL report clearly shows that automatic increases will be harmful to the economies of CNMI and American Samoa.  Even though the DOL did not have the time it needed to fully assess the impact automatic increases would have on our economies in the years to come, I commend Dr. Ronald Bird, Chief Economist of the U.S. Department of Labor, and his team members for their hard work and the important report they have provided to Congress.”

“I also thank Governor Togiola and his staff for providing the DOL with much needed information.  By way of our mutual cooperation and based on the findings of the DOL study, I am confident that the Governor, Fono, and I will send a unified message to Congress requesting enactment of legislation which will put an end to automatic increases in minimum wage and which will empower the DOL, in consultation with the Secretary of the Interior and the American Samoa Government, to conduct economic assessments every two years to determine when and if our economy can absorb future increases,” Faleomavaega concluded.