GAO report doesn't recommend increase or decrease for min wage
Pago Pago, AMRICAN SAMOA — As mandated by federal law, the US Government Accountability Office (GAO released yesterday its latest report on the minimum wage for American Samoa and the report — which doesn’t make recommendations on whether or not to increase or decrease local minimum wage — was transmitted to US congressional members at the same time.
This latest report, the fifth in a series of GAO reviews, examines: economic trends including changes in employment and earnings since the minimum wage increases in American Samoa began in 2007; status of the tuna canning industry, and stakeholder views on the minimum wage increases, according to Emil Friberg, Assistant Director for International Affairs and Trade at GAO.
The current schedule establishes increases of $0.40 every 3 years for all 18 industry categories in American Samoa, with the last minimum wage increase in September 2018 and the next increase scheduled for September 2021.
The report provided a brief summary of GAO finding, saying that “American Samoa’s economy largely contracted during the past decade.” Adjusted for inflation, it points out that, gross domestic product declined by 18.2% from 2007 to 2017, and increased by 2.2% in 2018.
For employment, it varied by year from 2007 to 2018, with workers’ inflation-adjusted earnings generally declined.
As in past reports, GAO found that American Samoa’s economy continues to depend on the territorial government and tuna canning industry as key sectors. And changes in government spending and the tuna canning industry, including cannery closures, have impacted American Samoa’s economy.
“To reduce the territory’s dependence on the government and the tuna canning industry, the American Samoa government continues its efforts to diversify the economy,” according to GAO which notes the “tuna canning industry faces multiple challenges, including increased competition and minimum wage increases, which led to cannery closures from 2007 to 2018.”
(Samoa News notes that the closed canneries are COS Samoa Packing and Samoa Tuna Processors Inc.)
According to the report, the companies that experienced the closures explained that minimum wage increases were a factor in the closures, but not a main factor. With the closures, employment of cannery workers decreased but inflation-adjusted earnings of cannery workers who maintained their jobs increased.
StarKist Co. now operates the single remaining cannery in American Samoa, StarKist Samoa, but faces financial challenges, according to GAO findings.
In addition to increased competition and labor market challenges, the industry faces other challenges, such as lower wages relative to those in American Samoa for cannery workers in other countries.
However, StarKist Samoa officials tell GAO that “American Samoa offers the tuna canning industry advantages relative to the U.S. mainland and other countries, including lower wages compared to those in the U.S. mainland as well as duty-free access to the U.S. canned tuna market.”
The report also states that ASG and the American Samoa Chamber of Commerce view the minimum wage increases as conflicting with sustainable economic development. But GAO said that employers and workers the federal agency interviewed “noted benefits and challenges presented by minimum wage increases.”
The report points out that while ASG supports setting a minimum wage that the economy can support, the Chamber supports delaying minimum wage increases for the cannery.
Furthermore, employers and workers the GAO interviewed noted a potential positive impact on the livelihood of workers but a potential negative impact on the remaining cannery, among other things.
A four-member team from GAO was in the territory last October conducting assessments of the impact of a minimum wage hike on the local economy. The team held an exit conference on Oct. 24, 2019 with Gov. Lolo Matalasi Moliga and other ASG officials.
During a cabinet meeting last November, the governor said he told the GAO team that “I cannot enforce the [next] minimum wage mandated” by Congress.
The governor also shared with the GAO team the American Samoa Minimum Wage Task Force report, which provides three options for consideration to address — and among other things — sustainability and economic feasibility pertaining to the minimum wage.
The options and recommendations from the task force were not covered in the GAO’s latest report. Samoa News will report in Monday’s edition on the governor’s reaction to this issue as well as other ASG related matters from the GAO report.