A U.S government report says the increase in the minimum wage in American Samoa has caused job losses and economic decline.
Since 2007, the United States has imposed a minimum wage structure on the territory, substantially increasing wages in American Samoa.
A compulsory 50 cents an hour increase each year in minimum wage will bring the territories in line with the federal minimum wage of $7.25 an hour.
The U.S. General Accountability Office report says that as a result American Samoa’s employment has fallen and there are concerns that budget shortfalls could threaten future development.
American Samoa Gov. Togiolo Tulafono wants the wage hikes dropped immediately.
He said the impact on the economy has been devastating.
“We’re recovering a bit with the programs we’ve put in place for the families, but it’s still an uncertain future because the wages are scheduled to increase again in 2012,” he said.
Tulafono said over 4,000 jobs have been lost, a result of the wage hike and the September 2009 tsunami.
He said the job losses after the closure of the Chicken of the Sea tuna processing factory has had the greatest impact.
“When the cannery closed, a lot of businesses that are also dependent on the existence of that cannery closed as well. Immediately after the cannery was closed, over 2,000 jobs were lost,” he said.
Another tuna cannery operator, StarKist, has expressed concern about the cost of operating in American Samoa, including the extra costs incurred by the compulsory wage hike.
The GAO report has noted that since the minimum wage implementation began, the cannery’s exports have declined.
Tulafono said some of the former Chicken of the Sea factory workers are still unemployed, but many have benefited from re-training.
“We’ve received some generous funding from the United States to retrain them, but the problem we have there is we don’t have any other industries,” he said.
“There’s only so many jobs available, and so many kinds of jobs available, that even if we retrain them in new areas, new trades, that the jobs are still lacking,” he added.
“So we’re training them in the hope that we can find jobs for them outside of American Samoa and hopefully we’ll soften the blow on our families,” he said.
