$5.67 Minimum Wage Needed For Family Of 6 In American Samoa

Territory currently has '17 different minimum wages, depending on the industry'

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, Dec. 12, 2016) – American Samoa has completed a living-wage study, which identifies a specific minimum wage needed for a family of six to afford to live in the territory, according to information in the US Government Accountability Office (GAO) report released Dec. 2 to Congressional members.

The 110-page report by the investigative arm of the US Congress covers two alternatives for raising minimum wages in American Samoa to keep pace with the cost of living and reach the federal level of $7.25 per hour. 

According to GAO, the American Samoa Department of Commerce in August 2015 completed the “Proposed Minimum Living Wage for American Samoa” study, identifying $5.67 as the minimum wage needed for a family of six to afford to live in the territory. Additionally, the study identified $5.01 as a living wage after taxes.

The GAO report says that workers in some industries in American Samoa currently earn minimum wages that exceed this $5.67 level. However, the proposed living wage of $5.67 exceeds the hourly minimum wage for cannery workers by $0.51, the GAO report said.

(Samoa News should point out that the living-wage study has not been released publicly in American Samoa.)

American Samoa has 17 different minimum wages, depending on the industry — with the lowest at $4.68 for garment manufacturing and the highest at $6.09 for stevedoring, and maritime shipping agency activities.  The cannery minimum wage went up to $5.26 per hour last October with the next 40 cent hike — for all local industries —to happen every three years.

GAO said in its report that in February this year, the American Samoa government announced that the local minimum wage for government workers would rise to $5.00, which is $0.19 higher than the current federally determined minimum wage ($4.81) for workers in this sector.

As previously reported by Samoa News, the Lolo Administration has suggested returning the setting of the minimum wage back to American Samoa, as was previously done before the 2007 federal law — with a commission appointed by the US Department of Labor.

It has also supported the idea of minimum wage hikes to be supported by a federal government subsidy, as well as suggesting that American Samoa establish a ‘living wage’ — rather than be required to follow the established U.S. federal minimum wage.

Meanwhile, the GAO report says that in light of the challenges affecting the tuna industry in American Samoa, the local government is seeking to diversify the economy. According to American Samoa government officials, construction of a multiline food processing plant to produce seafood-based and juice products is scheduled to begin by the end of the year.

“The government has also been involved in efforts to attract a call center to the territory,” GAO informs Congress. And it cites the territory’s proposed plans for economic diversification.

For example, the territory’s economic development plan for fiscal years 2014 to 2017 outlines economic development goals for sectors such as transportation and tourism as well as action items to achieve these goals. The plan outlines the tourism-related goal of increasing the number of passenger air carriers to American Samoa.

According to the development plan, the government hopes to achieve this by addressing federal restrictions on competition in passenger air carrier service to American Samoa with the aim of attracting lower-cost carriers and more visitors, said GAO.

However, the government recognizes constraints to attracting new business, including the cost of labor.

Another example of economic diversification cited by GAO is the territory’s 2016 Workforce Innovation and Opportunity Act Unified Plan, which targets the development of five industries: fisheries and agriculture, telecommunication and information technology, manufacturing, visitors, and handicrafts.

“The plan notes that American Samoa is experiencing emigration of workers to the United States, countered in part by immigration of tuna cannery and fishery workers from neighboring islands to American Samoa,” GAO tells Congress. “The plan cites low wages as a reason that highly skilled members of the labor force leave the territory.”

GAO also says that ASG, the territory’s largest employer, continues to report concerns about the economic impact of the scheduled minimum wage increases. For example in 2014, ASG stted that the territory’s economic base is narrow and fragile, supported primarily by the American Samoa government and the tuna industry, which is subject to global market forces outside the government’s control.

The government also stated that tethering American Samoa’s minimum wage to the federal minimum wage is misguided because median income and per capita GDP are significantly lower in the territory than in the 50 U.S. states.

In 2014, the governor’s office urged against future minimum wage increases, calling the scheduled 2015 increase a “prescription for total economic ruin.”

American Samoa government officials subsequently commented that the reduction in currently scheduled minimum wage increases from $0.50 to $0.40 was helpful but that a more meaningful solution based on local conditions is needed.

GAO notes that ASG’s economic plan for fiscal years 2014 to 2017 states that the application of the federal minimum wage in the territory is “inappropriate and counterproductive to sustainable economic development.”

The Samoa News
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