Minimum wage hikes hurt economies in American Samoa, CNMI

The minimum wage hike that Congress imposed on two U.S. territories in 2007 has harmed their economies, according to a government audit released this week that shows more money for workers is more than canceled out by inflation and job losses.The economic fallout has been so severe that the governors of both islands are urging lawmakers in Washington, who are considering a nationwide minimum wage hike, to forgo further increases in their territories.Congress acted seven years ago in the wake of the Jack Abramoff lobbying scandal, which cast an unfavorable light on working conditions in the Commonwealth of the Northern Mariana Islands. Under political pressure, Democrats also included American Samoa in the wage hike, which was designed to gradually raise the territories’ rates until they reached parity with the states.Three years later, with both territories’ economies flailing, Congress halted the hikes for American Samoa and delayed them for the Northern Mariana Islands.According to a Government Accountability Office report this week, the economic situation remains bleak for Samoans and is only slightly better for the Mariana Islands.Jack Abramoff, who lobbied against increasing the minimum wage in the Northern Marianas, told The Washington Times on Tuesday that the GAO audit bears out his predictions.(Samoa News notes that Abramoff was at the center of an extensive corruption investigation that led to his conviction and to 21 persons either pleading guilty or being found guilty, including White House officials J. Steven Griles and David Safavian, U.S. Representative Bob Ney, and nine other lobbyists and Congressional aides.)“Our main argument was that, if they did this to the CNMI, the economy would tank. This is exactly what happened. We successfully held them off for 10 years, but when my career ended, and the Democrats assumed control of Congress, they socked it to the CNMI and the results are as disastrous as we predicted,” he said.Senate Democrats are preparing to debate a broader national minimum wage increase from $7.25 an hour to $10.10, despite a Congressional Budget Office report that said such a hike could cost 500,000 jobs by 2017.A key Republican lawmaker said the GAO report should be a wake-up call.“This GAO report should be required reading for the Obama administration,” said Rep. John Fleming, a Louisiana Republican who chairs an influential subcommittee on the House Natural Resources Committee. “It describes businesses that cannot absorb the costs of another minimum wage increase, and workers who fear that another increase will lead to higher prices and lost jobs.”

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