AMERICAN SAMOA GOVERNOR RAPS WAGE INCREASE

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Blames recent hike for loss of job opportunities

PAGO PAGO, American Samoa (The Samoa News, August 28, 2009) - Gov. Togiola Tulafono says the promise of 2,000 jobs created by a call center is now "out the window" due to mandated minimum wage increases, while only about 60 jobs will be available for the more than 2,000 people who will lose their jobs with the COS closure.

Togiola made the statement during Wednesday’s public forum hosted by the U.S. Government Accountability Office conducting a study on the impact of past and future minimum wage increases in American Samoa.

As part of its effort to diversify the economy, the Governor said ASG fought for and landed the undersea fiber optic cable.

When this project was first announced, the promise of other industries followed, among them a call center. But that was before the first escalator clause in the minimum wage was mandated, he said.

The business model for the call center was to provide 2,000 jobs, but since the three mandated wage hikes went into effect with the possibility of more to come until it reaches the federal level of $7.25 per hour, the "model has changed," he said.

"We’re not getting any call center. We’re going to get maybe a very different model that will employ maybe 50 or 60 people," the Governor said. "The 2,000 jobs that were promised at the beginning when minimum wages hadn’t gone up— are now ‘out the window’— gone forever. Those jobs will not be coming back here."

"Who wants to pay $7.25 in American Samoa for labor when they can do the same thing in California [and] Georgia...and save their money...?," he asked.

During the three-hour forum, some people questioned the government’s efforts to diversify the local economy instead of depending on the canneries. One person said: "if the canneries leave, let them go."

Togiola says there is no governor— to his recollection— from the time when governors were appointed in 1951, that has not talked about diversification.

While there were major changes to infrastructure— such as roads in the 1960s, "it didn’t bring new business" except for Chicken of the Sea (formerly Van Camp Seafood ), he said.

At the time, the company was paying 35 cents per hour and it "supported a lot of families, it educated a lot of children, and built a lot of family homes", the same when the wage increased to 50 cents per hour, he said.

However, things changed drastically when the mandatory escalator wage law came into effect and "we are now facing the reality" of the wage hike in which "we have absolutely no input" when enacted, the Governor said.

According to the Governor, the mandated wage hike has resulted in the loss of more than 1,000 jobs and more than 2,000 are scheduled to lose their jobs by the end of September. "They are not going to be able to support their families, school their children and buy food," the Governor said in an emotional tone. "What is going to happen to them?"

"Some people will blame the government for failing to diversify the economy, for failing to answer the call. I don’t think that any governor, ever, felt that they didn’t do a good job. Because every single governor— in my estimation— tried," he said.

"But here is the question I ask: if things are so good and there are businesses out there, that are so profitable and so desirable for American Samoa, where is the business community? Where are the smart ones that know the business, that could come here and establish industry? Why aren’t they here?"

"It’s simple, it’s not an easy place to do business. It’s too far away from everything. The cost of doing business is expensive," he said. "The canneries have been the only mainstay, because they are closer to the fishing grounds."

"Unfortunately, I think it’s a mistake to allow the consideration of canneries to drive what is appropriate for American Samoa by way of minimum wages," he said and noted that every cannery in the world has their breaking points, especially in the areas of labor costs, because when it’s not affordable they move away.

If the minimum wage continues to go up to $7.25 per hour, the rest of the business community and ASG is not going away but will be stuck with this wage, without the canneries, he added.

"What we are fighting for is not just the survival of a few people. We are fighting for survival for the rest of this territory. We are all going to be impacted," he said.

He pointed out for example, the situation with COS, noting because of a few hundred fish cleaners (who are paid minimum wage) all of the rest of the company’s workforce— including those who are paid way above the minimum wage are going to lose their jobs "and it’s not their fault."

"They shouldn’t lose their jobs, because they are not subject to the minimum wage— but they are all losing their jobs. It’s not fair...it’s part of the problem," said To

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