Minimum Wage Task force shares 3 options for local wage hikes
Pago Pago, AMERICAN SAMOA — The governor’s appointed Minimum Wage Task Force shared three options for consideration to address — and among other things — sustainability and economic feasibility pertaining to the federally mandated minimum wage hikes for American Samoa.
The Oct. 23rd, 18-page report was presented to Gov. Lolo Matalasi Moliga, who shared it with the US Government Accountability Office team that was in the territory for about a week last month assessing the impact of the minimum wage on American Samoa.
“To determine the most promising option that would mitigate the significant problem with another federal minimum wage increase, it is to the best interest of the Task Force to understand the projected outcomes for a best option that addresses sustainability/economic feasibility, affordability, fairness/equality, and self-determination,” the report states.
OPTION 1 - STATUS QUO
This options looks at proceeding with the 40-cents per hour minimum wage hike every three years as mandated by federal law.
According to the task force, maintaining the status quo will allow for the continuation of minimum wage increases “irrespective of local stakeholder participation and analysis into adverse economic impacts.”
Additionally, the federal minimum wage increase schedule is one of many U.S. federal regulations that, “when prescribed dispassionately, are likely to lead to an economic event that would cause a deep and systemic recession, from which it may take decades for the territory to fully recover.”
The task force points out mandated minimum wage for American Samoa gave “little consideration on the adverse impacts and unintended consequences on its limited economy.”
Further, within the past decade American Samoa’s single-industry economy (the canneries) has endured various economic hardships further contributing to its stagnation.
“Data and projections on previous and continued minimum wage increases have pointed to potential reductions in both public and private workforces,” it says noting that the current remaining cannery, the largest private employer, “has long threatened to relocate.”
It also notes that previous canneries, COS Samoa Packing and Samoa Tuna Processors have also attributed their closures to the impacts of federal mandated minimum wage increases.
OPTION 2 - Moratorium
The task force noted that American Samoa may seek Congressional approval to temporarily suspend the next minimum wage increase while a comprehensive analysis of its local economy is conducted collaboratively between the federal government and a local Specialized Industry Committee to determine an economically feasible rate and schedule for the territory.
It says that a temporary moratorium on future minimum wage increases until such a time that both the public and private sector can determine a feasible living or minimum wage without impacting the workforce may allow room for potential expansions or to at least maintain current employment in the private sector and/or the government workforce.
“With a new [local] political administration transition on the horizon in 2021, a moratorium will allow ample time for new leadership to address the issue with a clear path forward,” it says.
OPTION 3- SPECIAL INDUSTRY CLASSIFICATION
The task force suggests that ASG may opt to establish a local version of a Specialized Industry Committee (SIC) to determine its most reasonable minimum wage rates. Additionally, the SIC can do periodic reviews and recommendations based on defined analytical parameters. Furthermore, ASG may reach out to the US Department of the Interior for federal funding assistance to implement such efforts.
“Should Congress decide on the next federal minimum wage increase for the Territory, at least American Samoa has made an effort to determine a minimum wage that is economically feasible,” the task force points out.
The panel also reports that the SIC would be authorized by local law to determine a ‘Special Protected Industry’ classification to prevent key industries from leaving the Territory.
“This option may also give American Samoa a proactive role in the decision-making process for its minimum wage,” it says, noting that creating a special industry classification or SIC will promote local stakeholder participation from specific industries and sectors of the community in the determination of a feasible minimum wage.
“ … critical data gaps between the public and private sectors have long prevented such an opportunity to occur,” the task force says.
Samoa News will report later this week on other issues connected with the three options.