Congress acts, and thousands lose jobs in American Samoa

Hello American Samoa! We’re from the government and we’re here to help you. We’re going to ensure you earn a living wage by forcing employers to pay you a minimum wage equal to workers in the United States. Sounds great right?

Congress could not have been more wrong. In 2007 Congress passed the Fair Minimum Wage Act which reset minimum wage rates in American territories and guaranteed 50 cent increases each year until the rate in the territories – including American Samoa – equaled the federal minimum wage in the United States.

In less than three years, thousands of jobs have been lost on American Samoa. Our friend Professor Walter E. Williams writes about the disaster in Samoa today in his weekly column.

The 2007 legislation mandated 50 cents annual increases in Samoan minimum wages until it reached the U.S. mainland’s hourly minimum of $7.25. In response, Chicken of the Sea International moved its operation from Samoa to a highly automated cannery plant in Lyons, Ga. That resulted in roughly 2,000 jobs lost in Samoa and a gain of 200 jobs in Georgia. Prior to minimum wage increases, Samoan wages were about $3.25 an hour. With the legislated increases, Samoa’s minimum wage is $5.25. So the question is: Which is preferable for the Samoan worker — being employed at $3.25 an hour or being unemployed at $5.25? Which buys more of life’s essentials?

I’m not saying all 2,000 jobs would still exist in Samoa, but the minimum wage demands from a Congress 7,028 miles away certainly did not help one bit.

On May 14th, the governor’s warnings bore distasteful fruit. StarKist, the island’s remaining cannery, announced that between 600 and 800 people will be laid off over the next six months, reducing the company’s Samoan workforce from a high of more than 3,000 in 2008 to less than 1,200 workers. StarKist CEO Don Binotto said it’s difficult to compete when Samoan workers’ wages are nearly 10 times those of its competitors in Thailand and other countries.

So Chicken of the Sea cuts 2,000 jobs and StarKist plans to cut another 800, with certainly more to come. The population of the island – which is only 75 square miles – currently stands at about 65,000. Assuming 60 percent of the population in Samoa is of working age, losing the 2,000 Chicken of the Sea jobs resulted in a 5 percent increase in the unemployment rate over night.

Thank you Congress!

As a reminder, there was that kerfuffle about House Speaker Nancy Pelosi arranging for Samoa to originally be exempt from this legislation since her district included the headquarters of Star-Kist, who has – probably for not too much longer – a large processing plant on Samoa.