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Congressman Faleomavaega announced today that he has requested a hearing on the GAO’s recently released report entitled ‘Employment, Earnings, and Status of Key Industries Since Minimum Wage Increases Began in American Samoa and the Commonwealth of the Northern Mariana Islands.’
The complete text of Faleomavaega’s letter of June 27, 2011 to Chairman John Fleming of the Natural Resources’ Subcommittee on Fisheries, Wildlife, Oceans and Insular Affairs, which was also copied to Ranking Member Gregorio Kilili Sablan Camacho Sablan, is included below.
Dear Mr. Chairman:
I am writing to request your support in holding a hearing on the GAO’s recently released report entitled ‘Employment, Earnings, and Status of Key Industries Since Minimum Wage Increases Began in American Samoa and the Commonwealth of the Northern Mariana Islands.’
The report was issued as mandated by Congress in response to a federal law in 2007 which raised minimum wages in American and the CNMI by $0.50 cents per hour each year until we equal the U.S. minimum wage. Although I supported a one-time increase of $0.50 per hour for American Samoa’s workers, I opposed automatic escalator clauses that did not take into account American Samoa’s fragile, island economy which has hinged for more than 50-years on a single- industry, namely the presence of two major tuna canneries – StarKist and Chicken of the Sea – that employed more than 74% of our private-sector workforce.
In 2009, one day after American Samoa was hit by a powerful earthquake that set off a massive tsunami from which the Territory has not fully recovered, Chicken of the Sea closed its operations in American Samoa and outsourced some 2,000 jobs to its parent company in Thailand where fish cleaners are paid less than $0.75 cents per hour. In order to take advantage of U.S. duty-free laws, Chicken of the Sea then hired a skeletal crew of about 200 workers in Lyons, Georgia to can the pre-cleaned fish they get from Thailand.
This new model of exploiting cheap labor in foreign countries has impacted StarKist’s ability to stay competitive given that StarKist is the only major brand of canned tuna that continues to cook and clean fish in the U.S. In fact, in the GAO’s 2010 report, it was determined that canneries like Bumble Bee and Chicken of the Sea which outsource fish cleaning jobs to our foreign competitors compete at about a $7.5 million per year advantage over StarKist which cooks and cleans its fish in American Samoa.
As a result of StarKist’s disadvantage in the U.S. marketplace, the company has been forced to lay off workers in American Samoa. Coupled with Chicken of the Sea’s closure, American Samoa’s economy has not been able to absorb the rapid minimum wage increases mandated by federal law. Also, due to American Samoa’s remote location, limited land, and infrequent air and shipping services, it has been difficult to diversify American Samoa’s economy but I have pledged to do what I can to halt further minimum wage increases in order to provide the American Samoa Government (ASG) with the time it needs to put an action plan in place, although I do not believe minimum wage is the sole cause of ASG’s problems.
In fact, 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, [and] global trade liberalization.” The GAO also points out local factors that have worsened ASG’s position.
Also of note, Tri-Marine, one of the world’s largest tuna supply companies, purchased the Chicken of the Sea facility and intends to open up a fully operational cannery in American Samoa, despite three minimum wage increases thus far. However, like StarKist, Tri-Marine will not be able to absorb further increases in the face of local and global challenges.
Considering these factors and other complexities, I hope you will work with us to halt further increases and I hope you will begin this process by holding a hearing on the GAO’s recently released report.
The Congressman concluded his letter by stating, “I thank you for your consideration, and look forward to working with you.”
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