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Min. wage hikes proposed by President Obama highlight need for serious local review says EAC co-chair

The Governor’s Economic Advisory Council (EAC) co-chair David Robinson says serious discussions by the local government, especially the new administration and the business community need to take place to address U.S. President Barack Obama’s proposal to hike the federal minimum wage, which will affect American Samoa.


Obama’s verbal proposal was made during his State of the Union Address last month before the U.S. Congress. The President is seeking a hike from the current $7.25 per hour to $9 per hour, to be adjusted according to inflation. The proposal has already attracted opposition from the private sector across the U.S.


As a business operator, Robinson told Samoa News that “like many businesses, the company wage bill is the highest item of all the costs on the Profit and Loss schedule and mine is no different.”


“And as a business owner, if wages continue to escalate I shall have to review our staff level and make adjustments downwards and probably reduce some of the services that we currently offer to our customers in order to keep our overhead in check,” he said.


Asked for his reaction as co-chair of the EAC, Robinson says the minimum wage and potential further hikes “needs some serious debate and discussion” by Gov. Lolo Matalasi Moliga, Congressman Faleomavaega Eni and the private sector.


“Otherwise we shall be caught out again as we were in 2007 by the Federal Government imposing wage increases and an escalation clause without consultation with anyone here in the territory.” he said in a media statement.


Robinson also pointed out the next wage hike— which has been delayed since 2009— goes into effect in 2015. He said time goes by quickly and the Lolo Administration needs to be fully armed with facts and figures regarding the state of the local economy, unemployment rates and inflation.


“It should then present a strong case for doing away with the present system and getting back to a system whereby government and the private sector meets every two years and discusses potential wage increases on the basis of the state of our economy at the time and deciding what level of increase is sustainable,” he said.


Prior to the 2007 federal law mandate minimum wage hikes for American Samoa, a federal industry committee appointed by the U.S. Secretary of Labor would review local wages based on local economic conditions and make proper recommendations to the Secretary.


Robinson said the administration also needs to look at the possibility of revising the present minimum wage rates which cover 18 different industry sectors.


“The uncertainty caused by the prospect of future wage increases is a deterrent for much needed potential investment into the territory,” he said.


Congressman Faleomavaega Eni had told Samoa News last month that the President’s proposal “should serve as a reminder to our leaders in the territory that this issue is not to be taken lightly for discussion and serious debate and it needs to be addressed now by our territorial leaders.”


Like Robinson, the congressman has suggested that the different minimum wage levels of 18 local industry sectors should also be thoroughly reviewed.


Lolo recently wrote to the U.S. Department of Interior’s Office of Insular Affairs dealing with the automatic minimum wage hikes.


“American Samoa needs assistance and support on its plea for reconsideration on the abetment of the application of the federal minimum wage and to revert back to the traditional way our local minimum wage was determined,” said Lolo.


Lolo went on to say that merits of the federal wage application are "indisputable, however, it has been demonstrated that our local economy cannot sustain the adverse financial impact” of the federally mandated wage increases.


Wages were among the issues that Lolo raised during meetings in Washington D.C. this week. No new information is available yet on the governor’s presentation on the wage hike impact on American Samoa.