Congressman Faleomavaega announced today that he and Governor Benigno Fitial are working together to resolve the minimum wage issue for American Samoa and CNMI. 

“On March 14, 2008, Chairman George Miller and Senator Ted Kennedy informed U.S. Secretary of Labor Elaine Chao and my office that they were disappointed in the Department of Labor’s (DOL) report undertaken to assess the impact of minimum wage increases in American Samoa and CNMI,” Faleomavaega said. 

“In the case of American Samoa, Chairmen Miller and Kennedy stated that the DOL failed to scrutinize contradictory statements made by the canneries about whether or not they could afford further increases.  Regrettably, our canneries failed to provide, and the DOL failed to request, appropriate data about our canneries’ profitability which was needed to determine if further increases would lead to closures or layoffs.”

“As a result of our canneries’ failure to be more forthcoming and, given other  considerations and concerns in CNMI, Chairman Miller and Chairman Kennedy determined that they cannot hold off further minimum wage increases at this time.  The Chairmen emphatically stated that the DOL report ‘did not provide sufficient information to compel the Congress to adjust the current minimum wage schedule for either territory.’” 

“Given this outcome, Senators Inouye, Bingaman, Akaka and I sent a joint letter to the Senate appropriators asking them to include an amendment in the Emergency Supplemental which was based on H.R. 5154, a bill I introduced to delay minimum wage increases in American Samoa and CNMI, and to make increases contingent on a determination by the Secretary of Labor that the increase would not substantially curtail employment,” Faleomavaega said. 

“While we were hopeful that the appropriators would agree to this amendment, they are unable to accept this proposal without the support of Chairmen Kennedy and Miller who, at this time, stand by their decision that the canneries and DOL and other employers in both territories failed to provide Congress with the compelling evidence it needs to hold off further increases in minimum wage.”

“Considering these developments, Governor Fitial and I have been working directly with House Majority Leader Steny Hoyer, Chairman Miller, Chairman Kennedy, Senator Inouye, Senator Akaka and Senator Bingaman to gain support for an alternative amendment that would provide up to $15 million for each territory to offset the increases in minimum wage that will go into effect May 25, 2008.”

“During Flag Day, Senate Majority Leader Harry Reid also personally called me in response to my confidential letter of April 18.  He is very concerned about the situation, and his staff is working with my office in hopes that we can find a resolution that will be fair to our employers and employees.”

“In my heart,” Faleomavaega said, “I continue to believe our workers deserve decent wages.  For more than 40 years, our tuna canneries have exported tens of billions of dollars of canned tuna from American Samoa while at the same time keeping our local wages way below national minimum wage standards.  While their corporate executives were making millions, our people got one increase of 3 cents per hour in the past ten years.”

“Today, Congress is asking our canneries to do better and be better.  The first increase of fifty-cents per hour is little more than if our canneries had given our workers a nickel an hour increase for the past ten years.  A second increase in minimum wage would be the same as if our canneries had given our workers an extra ten cents per hour for the past ten years.”

“Had our canneries made incremental increases, they would not be in the position they are in today having to pay up what they should have paid out long ago.  Despite the failure of our canneries, I am convinced they now need help.  It is my understanding that StarKist is up for sale, and this adds new complications since it is difficult to help when we don’t know the new owners or management or whether or not they have a long-term commitment to American Samoa.  If our canneries have no commitment to us, Congress has little incentive to help.”

“Governor Fitial is faced with similar problems, and I commend him for his leadership on behalf of the people of CNMI.  Prior to Governor Fitial’s administration, industries in CNMI, like American Samoa, had a long history of suppressing wages, and Governor Fitial is left to clean up what the industries have reaped with the passage of P.L. 110-28 which mandates incremental increases of fifty-cents per hour every year until 2014 for American Samoa, and 2015 for CNMI for workers making less than $5.15 per hour.  Employers in the 50 States are also required to increase their wages by seventy-cents an hour until they reach a minimum wage of $7.25 per hour in 2009.”

“While I agree with the spirit and intent of P.L. 110-28, I believe further studies must be undertaken to determine whether or not the economies of American Samoa and CNMI can absorb yearly increases.  To move forward without knowing the outcome is a risk we cannot take,” Faleomavaega said.  “This is why Governor Fitial and I have joined together in sending letters to Senators Kennedy, Inouye, Akaka, Bingaman, Chairman Miller, and House Majority Leader Steny Hoyer.  The text of our letters dated April 22 and April 24 is the same and is included below:”

 Dear Senators/Majority Leader Hoyer:

We are writing to express our continuing concerns regarding the impact of the minimum wage increase mandated by P.L. 110-28.  We hope that you will be inclined to help us postpone the next increase scheduled for May 25, 2008.

Simply put, the fragile private sectors of American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI) cannot support additional costs when we are already in economic decline.  The U.S. Department of Labor (DOL) study, mandated by P.L. 110-28, supports our position. 

While lacking in long-term benchmarking studies, the January 2008 report by the U.S. Department of Labor underscored our fears that automatic minimum wage increases within a short period of time are not economically sustainable.  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 canneries, which employ more than 74% of the workforce.

• With the loss of the canneries, American Samoa has been informed that it will 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.

We are convinced that further increases in the minimum wage must proceed cautiously and be preceded by further study.  At the same time, recognizing that the scheduled increase is only one month away, we are compelled to find alternatives to help save these island communities from economic collapse.  Because the potential hardships are simply too great these local communities, Congress must work quickly to help the local governments build a “safety net”.  Our islands need help to provide a bridge to sustainability. 

We are appreciative of the support offered in a letter (attached) dated March 14, 2008, which was submitted to Chairman Robert C. Byrd and The Honorable Thad Cochran of the Appropriations Committee, and included an amendment, based on H.R. 5154, which would delay minimum wage increases in American Samoa and CNMI from every year to every two years and would make increases contingent on a determination by the Secretary of Labor that the increase would not substantially curtail employment.

We are hopeful that the appropriators will accept this amendment and include it in the Emergency Supplemental.  However, if the amendment of March 14, 2008 being offered on our behalf is not accepted by the appropriators, we are asking that you include the enclosed language in which we are seeking financial support of $30M to be shared by the two jurisdictions for investments in critical areas that have the potential to bring multiplying economic benefits.  These include transportation projects, measures to bring down the cost of fuel and stabilize shipping, job retraining, emergency financial relief to affected employers, efficiency studies for local governments, and funding for essential public services.  To help quickly bring new money into the islands, the CNMI also needs temporary visitor industry support.

Inclusion of this language in the Emergency Supplemental this year and every year thereafter will give American Samoa and the CNMI an opportunity to provide an essential bridge to sustainability that our communities need in the coming years until such time as Congress reviews the economic impact of further increases in minimum wage.  Senate Majority Leader Reid is aware of our request, and we are hopeful that he will support either the amendment of March 14, 2008 or the report language which we have included below.  We are also continuing discussions with Chairman George Miller. 

Faleomavaega and Governor Fitial concluded their letter by stating, “We thank you for your consideration and welcome you to contact us directly with any questions or concerns you may have.”