Dionisia Tabureguci




If there is a bitter lesson that the American Samoan administration has learnt, it has to be the one about the rise in minimum wages.
That it does not necessarily lead to improved living conditions, happy workers or a reduction in poverty level.
In fact, it can translate to shooting yourself in the foot, when companies operating in your economy can no longer afford to pay their workers and instead send them home en masse.
This is a reality that American Samoa is currently grappling with, following the closure last year of two tuna factories— Chicken of the Sea and Bumble Bee—as a result of mandatory wage rise among other factors.
The minimum wage bill was pushed through in the US Congress in 2007, supported by the Democrats and workers union.
Protests by the American Samoan administration that including the island country in its implementation may cause job losses had failed.
The legislation mandated US$0.50 cents annual increase in American Samoa’s minimum wage until it reached the US hourly rate of $7.25.
As a result, the minimum wage for low-skilled Samoan workers was increased from US$3.60 an hour to US$5.25 today, and by 2015, it is expected to match the current U.S minimum of US$7.25.
Now time is revealing just how damaging this decision has become for the American Samoan economy. Thousands are now jobless following the closure of Chicken of the Sea and Bumble Bee canneries, and because they were major employers and exporters, the development has thrown the local economy into a major lurch.
Chicken of the Sea completely uprooted its operation and left some 2000 workers jobless.
The third cannery StarKist is also reported to be ready to downsize its operations in order to keep its head above water.
Its workforce had dwindled from the over 3000 workers before the wage increase to a planned 1,200 by 2011, according to local media reports.
The situation has been a subject of much criticism at home and in the US mainland, as the US government now has to dole out a grant of US$18 million to the island country in order to contain the fallout.
This measure—instead of a tax credit for companies, useless in this case as the canneries had been operating at a loss—has been the brunt of cutting criticisms across the US media.
Fleshing out taxpayers money this way could have been avoided, said one opinion piece, if the federal government had exempted American Samoa from implementing the minimum wage legislation in the first place.
 “The Government Accountability Office (GAO) recently surveyed businesses and workers in the territory and found that many firms ‘will be leaving American Samoa or closing by the end of 2010,’” wrote the Wall Street Journal. 
“Because of the job losses, real incomes declined by six percent from 2006 to 2008 in the territory. As the jobs disappear, GAO also found that worker support for the minimum wage had ‘dwindled’.  Samoan workers apparently would rather have a secure job at $3 or $4 an hour than no job at $7.25 an hour.”
Although Samoa’s tuna canneries were facing difficulties before the mandatory wage rise in 2007—StarKist and Bumble Bee were operating at a loss, according to Congressman Faleomavaega Eni, American Samoa’s representative in the US Congress—the wage increase could have been the nail in the coffin that forced the two operators to re-locate.
“In 2006, before minimum wages were ever increased in American Samoa, both StarKist and Chicken of the Sea were already operating at a loss of $7.5 million per year when compared to Thailand, as the new GAO report verifies. 
In part, this is because Thailand pays its fish cleaners at about $0.75 cents and less per hour, which makes Thailand better able to offer its private label tuna to the American consumer at a lower cost than StarKist, Chicken of the Sea, or Bumble Bee,” said Faleomavaega in May.
Faleomavaega is now seeking support in the US Congress for the modification of the federal minimum wage law in American Samoa—including a delay in the next wage increase.
The situation is described as being so urgent that Faleomavaega has also lobbied for support from the chair of StarKist’s South Korean proprietor Dongwon Industries Co. Ltd to keep StarKist operating in American Samoa.
“Given the seriousness of the situation, Chairman Kim and I met again to discuss the current status of our ongoing efforts to keep StarKist in American Samoa. We both agree that the entire US tuna industry has undergone a tremendous transformation and, as a result, American Samoa is now facing one of its most difficult challenges,” Faleomavaega said of the meeting.
“For years, three major brands of canned tuna—StarKist, Chicken of the Sea and Bumble Bee—have dominated the US market. Together, they have supplied more than 80 percent of all canned tuna consumed in the US and most of that tuna was cleaned and canned in American Samoa.”
“However, Thailand is changing the tuna industry as we know it. As of today, Thailand is the number one producer of canned tuna in the world and its private label canned tuna business is now competing for a share of US market. In fact, the competition from Thailand is so strong that Thailand’s private label business has taken over about 30 percent of the US market,” said Faleomavaega.
In May, the US Senate considered and voted in favour of Faleomavaega’s request for the US$18 million to be given to the American Samoan Government.
The money will be used by American Samoa to help keep whatever is left of StarKist alive in the local economy.
“Without help, StarKist will be forced to close its operations in American Samoa and, if this happens, the territory’s economy, which is barely hanging by a thread, will collapse,” said Faleomavaega.