Gov. Lolo Matalasi Moliga has concerns with the report from the U.S. Government Accountability Office on the impact of minimum wage hikes in American Samoa, saying that findings in the federally required report are “derived from a narrow spectrum of information sources” and does not clearly tell the whole story of what the territory faces.

The governor also says that the next minimum wage hike set for 2015 “is nothing but a prescription for total economic ruin for the territory of American Samoa”.

Lolo’s response, outlined in a Mar. 21 letter to the GAO draft report, is included in the final report released Monday by the GAO, the investigative arm of the U.S. Congress tasked to update Congressional members on the impact of wage hikes in American Samoa and the Commonwealth of the Northern Mariana Islands.

While the report as a whole captures the consensus among key stakeholders in the territory to postpone the next wage hike set for Sept. 30, 2015, Lolo said the report “does so in a fragmented manner which thus diffuses the substance of our position which is statistically and categorically supported.”

POPULATION COUNT

Lolo says there is “significant evidence” that the 2010 Census, used in the GAO data, “grossly undercounted” the territory's population. He pointed out that the local Commerce Department (ASDOC) estimated the mid year 2010 population to be 64,919 while the 2010 Census’ count was 55,519 — which depicts a 14% undercount.

Lolo explained that ASDOC population estimates yield much lower GDP per capital data i.e. $7,925 vs. $9,164 for 2012 —_ a 13.5% differential.

(The GAO report says American Samoa’s real gross domestic product (GDP) and population have both declined in recent years. American Samoa’s 2012 real GDP of $504 million was 4.5% below the 2006 real GDP, and also slightly lower than the 2009 real GDP. Real GDP per capita increased 12.5% to $9,164 from 2006 to 2012.)

While it's understood that the GAO based their report to Congressional committees on official public statistics, Lolo says “it would be a gross oversight of the aforementioned total population undercount.”

Lolo also provided separate data explaining ASG’s reasons for determining the undercount. (One of the interesting pieces of information is that the employment count provided by the ASG Statistical Year Book for 2010, shows total employed for the year at 18,862, while the Census data for 2010 shows 16,6161 employed.)

According to a footnote in the GAO report, ASG believes the 2010 census to be an undercount due to a mismatch between the Census count and American Samoa data on births, deaths, outmigration and other data, as well as the omission of undocumented immigrants who feared deportation.

However, the “employment counts we present are not based on Census data and would not be affected by an underestimate in the 2010 decennial census” GAO said.

Possible population undercount became the subject of three committee hearings in the House in 2011, following a public report by former ASG Statistician, Meleisea V. Filiga who questioned the findings. Meleisea said he found it hard to believe, and difficult to accept, that the territory’s population declined by 3.1% between 2000 and 2010 when the local population is “young and vibrant” and the number of births are above a thousand every year.

Then ASDOC deputy director Lelei Peau told lawmakers at the time, “our conclusion to date is that we see no adequate or convincing basis for serious questions about the 2010... population count of American Samoa.”

A statement issued by ASDOC in August 2011 said that a decline in the employment rate, a decrease in the birth rate and American Samoans moving to the U.S. for better opportunities were some of the factors that may have contributed to the drop in American Samoa’s population over the last decade.

NARROW SPECTRUM

Lolo said said that “we are concerned that your findings are derived from a narrower spectrum of information sources — ASG/Tax Office, tuna canning industry questionnaire and group discussions.”

“Given serious challenges in the collection of validated data in the territory, especially with government agencies, the GAO study could have solicited a wider scope of data” by canvassing information from the U.S. Social Security Administration, U.S. Census County Business Patterns and ASDOC, Lolo said.

Additionally, industry questionnaire and group discussions  should be extended to other industries as well as for the “purpose of multiplier effect”.

According to the governor, the report “yields key misleading statements and findings not supported by available data.”

For example, the ASG employment rate decreased an average of 2.4% to 10% annually from 2007 to 2012. Further, ASDOC estimated that unemployment rate in 2012 to be 18%, up from 12% in 2011. (GAO said new data from ASG corrects the draft report and is incorporated in the final one).

“Hence it is high unlikely employment increased at all in 2012,” said Lolo, referring to GAO’s report, which shows that total employees in American Samoa increased 1.5% from 2011 to 2012— from 15,552 to 15,790.

GAO responded that it reported and evaluated alternative data sources, which included reviewing data and interviewing officials from U.S. departments of Interior, Commerce and Labor as well as the Social Security Administration (SSA).

GAO also said it worked with the ASG Tax Office  to review and verify their data and “[we] believe that the use of its data, in conjunction with cannery employment data from our questionnaire, is appropriate for determining the changes in employment and earnings in American Samoa.”

As to Lolo's contention that the report failed to capture the multiplier effect of employment cutbacks in other industries — in addition to tuna canning — and the significant number of business closures during this period, GAO said each of the data series presented in sections of the report covers employment in all sectors and so would capture employment and earnings throughout the economy.

ECONOMIC RUIN

Lolo also reiterated the government’s opposition to further minimum wage increases and proposed that American Samoa set its own minimum wage schedule. He says the territory’s “economic base is narrow and fragile” supported primarily by two pillars — ASG and the tuna industry.

According to the governor, the tuna industry is a function of the global market forces of supply and demand, as well as U.S. government policies on trade liberalization; while ASG cannot operate without U.S. budget allocations and federal grants.

“Hence the territory is extremely vulnerable to elements of the international and national market place and U.S. international and national budget policies — to which American Samoa has little or no control,” Lolo wrote.

“Any move to tilt the already unsteady balance, such as an increase in the minimum wage, would bare direct circumstances which I strongly believe American Samoa cannot recover from in the foreseeable future,” he said.  “Moreover, tethering American Samoa minimum wage to federal minimum wage by [federal] law in 2007 with the objective of equaling the U.S. minimum wage at some point in the future is flawed and misguided.”

According to the governor, going through this exercise of GAO conducting a study and  providing an update impact report to Congress every two or three years “is meaningless and a waste of resources”. He suggested that a better alternative would be to have American Samoa “develop its own minimum wage schedule with appropriate guidance and oversight provided by” USDOL and DOI.

In closing, Lolo “strongly urged” the GAO “to send a clear and strong message to Congressional Committees to postpone once more the looming minimum increase in 2015.”

Similar to previous GAO reports, the federal agency does not provide any recommendations as to whether or not minimum wage hikes should be postpone or halted.