Gov reiterates, Special Industry Committee needs to determine min wage
Pago Pago, AMERICAN SAMOA — Gov. Lolo Matalasi Moliga has, again, informed the US Government Accountability Office (GAO) that the territorial government prefers to establish a private-public sector committee, with federal participation, to analyze and determine the territory’s minimum wage level, while ASG predicts that the local economy would take years to recover if StarKist Co., ceased local operations.
StarKist, itself, continues to face many challenges including on the financial side due to legal issues, such as the $100 million fine imposed by a federal court for the cannery’s participation in the canned tuna price fixing scheme.
The governor’s May 5th comment letter was included in the GAO’s final report released last Thursday on American Samoa’s economic trends, status of the tuna canning and stakeholders’ view on minimum wage increases. (See first story in last Friday’s Samoa News edition.)
Lolo’s letter was in answer to the draft report GAO provided to the governor for comments before it was made final and submitted to US congressional members, as mandated by federal law for a review of the territory’s minimum wage, with the next 40 cent wage hike scheduled for September 2021.
In his comment letter, the governor notes that the draft report does not reference findings and recommendations by his appointed American Samoa Minimum Wage Task Force. (The task force recommendations and options for consideration for local minimum wages were presented to a GAO team that was in the territory last October.)
Given the GAO findings and data analysis, the governor said it’s important to note that ASG prefers to establish a Special Industry Committee (SIC), composed of both local — public and private sector stakeholders — and relevant federal partners such as the US Department of Labor and the US Interior Department — “to further research and determine a feasible minimum wage rate that can withstand the territory’s economic condition.”
“A combination of a moratorium option to allow ample time for such SIC group to be established is preferred,” the governor wrote.
“While American Samoa acknowledges the importance of improving the quality of life of its people through minimum wage,” Lolo points out, “the territory’s economic well-being is deemed vulnerable to significant changes, including that of a federal minimum wage increase.”
Furthermore, “any possibility of the only remaining tuna cannery on island to shut down or relocate elsewhere will have devastating impacts on our local economy,” he informed GAO.
A brief summary of the task force findings and recommendations is mentioned in the GAO report. The task force — among other things — identified various policy options and recommended that a combination of a moratorium on minimum wage increases and special industry classification or a special industry committee would increase and maximize the opportunity for local stakeholder participation.
GAO noted that these have been long-standing positions of ASG. (Samoa News provided extensive coverage of the task force report last October and early November.)
GAO informed Congress that ASG and the American Samoa Chamber of Commerce provide conflicting views on minimum wage increases pertaining to sustainable economic development.
However, GAO said both expressed concerns about the reliance of American Samoa’s economy on the canned tuna industry and the potential negative impact of minimum wage increases on the remaining cannery in the territory — StarKist Samoa.
ASG tells GAO that the impact of upcoming minimum wage increases on StarKist Co. “would be extensive” and the territorial government “predicts that it would take years for the economy to recover if StarKist Co. should cease operations in American Samoa, and suggested that the burden of any economic impact would be on the federal government.”
ASG specifies challenges that it believes StarKist currently faces, including recent federal fines, decreasing supply of tuna, higher infrastructure costs in American Samoa compared to those of other countries, and increased regulation costs imposed by the federal agencies.
Other challenges faced by the cannery are federal prohibition of fishing in certain areas and the need to purchase fish caught in the Pacific region from China because of China’s escalating dominance in the fishing industry.
For the Chamber of Commerce, the organization tells GAO that its employers support fair minimum wages for their workers, but also supports any delay in minimum wage increases for the cannery until another economic option is feasible and until the economy is diversified and not as reliant on the tuna canning industry.
While data shows a shift in employment away from the cannery, the Chamber explained that StarKist Samoa still provides significant financial benefits to American Samoa in the form of decreasing fuel and shipping costs.
ASG officials have also shared with GAO that the cannery’s large demand for shipping, transportation, and energy may reduce the cost of these services for the entire territory.
The Chamber “predicts that any increase in minimum wage could force the closure of StarKist Samoa and drive American Samoa into a recession,” GAO said.
STARKIST FINANCIAL CHALLENGES
GAO gave a brief summary of continued “financial challenges” faced by StarKist Co., because of “legal issues”. For example, last year, StarKist Co. was sentenced to pay a criminal fine of $100 million, for its role in a conspiracy to fix prices for canned tuna sold in the U.S.
“This fine amounts to almost three times StarKist Samoa’s cost of labor in 2018,” said GAO. “According to StarKist Co.’s General Counsel, the company will potentially have to close the cannery in American Samoa and move operations to a foreign country to afford to pay the fine for price-fixing.”
And for its role in price-fixing, StarKist Co. has faced—and may continue to face— lawsuits from wholesalers, food service companies and retailers, and customers.
For example, in January 2019, StarKist Co. announced that its portion of a settlement with Walmart was $20.5 million, based on a combination of cash payments and certain commercial terms.
Another legal issue, goes back to 2017 when StarKist Co. agreed to pay a $6.3 million penalty resulting from violations of federal environmental laws in territorial waters.