American Samoa Director Of Commerce: Another Wage Hike Will Be 'Final Nail In The Coffin'

Federally mandated minimum wage increase would seriously hurt economy: Lafaele

By Fili Sagapolutele

PAGO PAGO, American Samoa (The Samoa News, June 22, 2017) – Another federally mandated minimum wage hike following last year’s closure of Samoa Tuna Processors (STP) Inc., would be a devastating blow to American Samoa’s economy and a “final nail in the coffin,” says Commerce Department director Keniseli Lafaele.

Congresswoman Aumua Amata introduced Tuesday in the US House federal legislation, “Fair Minimum Wage Act of 2007”, which Aumua explained in a news release would  restore the system in place prior to 2007, when minimum wages were set by a Special Industry Committee, appointed by the US Secretary of Labor.

Congressional online records show that the legislation has been referred to the US House Committee on Education and the Workforce. While the actual language of the bill is not yet available online, it does provide the heading of the legislation, which seeks to amend the 2007 act to stop a scheduled increase in minimum wage applicable to American Samoa and to provide that any future increases in such minimum wage shall be determined by the Secretary of Labor.

The Fair Minimum Wage Act of 2007 hiked the minimum wage by 50-cents per hour every year, until the federal minimum wage of $7.25 per hour is reached, but there were later amendments that delayed the mandatory wage increase for a certain period time following the 2009 closure of the Chicken of the Sea cannery.

In 2015, another amendment, through federal legislation, increased the minimum wage but by 40-cents instead of 50-cents. That measure, which went into effect on Sept. 30, 2015, calls for the 40-cent hike every three years and therefore the next minimum wage increase would be on Sept. 30, 2018.

Samoa News notes that the Fair Minimum Wage Act of 2007 also included the US territory of the Northern Mariana Islands, while Congresswoman Aumua’s bill targets only American Samoa.

Responding to Samoa News inquiries and request for comments on Aumua’s legislation, Lafaele noted that this is one issue ASG leaders and Aumua “all agreed on — no automatic increase in the minimum wage without careful review of local conditions — our economy.”

He explained that American Samoa’s economy is being sustained — and has been for many years — by the two pillars —the government and the fishing industry, “thus it’s extremely vulnerable.”

“An increase in the minimum wage now, after the closure of STP in December 2016, would be a devastating blow — perhaps the proverbial final nail in the coffin,” Lafaele told Samoa News on Tuesday evening.

“Our fishing industry lost significant fishing grounds to marine monuments and sanctuaries, faces federal restrictions in fishing on the high seas and use of fishing aggregating devices (FADs), increasing operating costs, and heavy price competition especially from imports,” he said. “We simply cannot afford an increase in the minimum wage.”

Gov. Lolo Matalasi Moliga has publicly advocated over the past four years for local minimum wages to be set by the special industry committee, whose membership — both local and off island — is appointed by the US Secretary of Labor. The committee’s decisions would be based on local economic conditions; and is basically a return to the old way of determining local minimum wages, prior to the current method, which is by federal statute.

In a Nov. 4, 2016 letter to the US Government Accountability Office (GAO), the governor recommended the creation of a US Department of Labor-constituted committee to set minimum wages appropriate for American Samoa, based on prevailing economic conditions, which also takes into account local cultural practices.

The governor’s letter was included in the GAO required report  to the US Congress regarding the impact of the federally mandated wages on American Samoa. The GAO report, released last December, suggested to the US Congress “two basic approaches” for increasing American Samoa’s minimum wages to keep pace with the cost of living in the territory and eventually equal the federal minimum wage.

According to the GAO, the first approach relies on adjustments indexed to changes in the cost of living, and the second relies on a schedule of adjustments within a specified timeframe. (See Samoa News edition Dec. 6 and 7, 2016 for  more information on GAO report.)

The GAO report is expected to be part of the Congressional review, when discussing Aumua’s legislation.

American Samoa has 17 different minimum wages, depending on the industry — with the lowest at $4.58 for garment manufacturing and the highest at $5.99 for stevedoring, and maritime shipping agency activities.

For the canneries, which includes the can manufacturing plant at Satala, the current minimum wage is $5.16 per hour, while for government employees it’s $4.81.

The Samoa News
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