More Layoffs In American Samoa A Result Of Congress’ Minimum Wage

Wage Mandates Hurting Samoan Workforce
  • Publication Date: May 2010

  • Topics: Minimum Wage

WASHINGTON – Yesterday, StarKist Tuna announced plans to layoff 600 to 800 employees at its cannery in American Samoa. This follows fellow tuna producer Chicken of the Sea’s decision to close its own cannery in September. Both companies have cited Congress’ minimum wage as a barrier to doing business in American Samoa.

Michael Saltsman, research fellow at the Employment Policies Institute, responded:

The United States Congress increased the minimum wage for tuna canners in American Samoa by 46 percent between June 2007 and June 2009, and have scheduled another increase later this year. Though this was done with the intention of giving the country’s workers a raise this wage hike has ensured Samoan workers aren’t getting work, period.

A report on American Samoa’s wage crisis, issued last month from the Government Accountability Office, confirmed what economists have already been saying for years: if you raise the cost to hire and train less-experienced workers, fewer will get jobs.

This is especially true when employers are free to take their business elsewhere. Congress’ minimum wage isn’t binding outside American Samoa, giving tuna companies an incentive to move where labor is less expensive.

Companies like StarKist are in a bind – they don’t want to leave American Samoa, but they also can’t raise their prices to offset the higher wages. If they do, consumers will buy the same product cheaper from another company. Congress’ wage mandate leaves StarKist with no alternative but to lay off employees.

Samoans want to work – the question is, will Congress let them?