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Samoa Minimum Wage Issue: “COS Looking To Re-locate Production To Thailand”

Faleomavaega, Govs of Am Samoa and CNMI work together to address min wage issues with Interior Secretary Salazar

President Barack Obama’s administration has been requested to support the re-establishment of a federal committee to determine the minimum wages for American Samoa and the Commonwealth of the Northern Mariana Islands until the U.S. Government Accountability Office (GAO) completes study on the impact of the minimum wage increases on the two territories.

The request was outlined in a Feb. 24 letter to Interior Secretary Ken Salazar and signed by Gov. Togiola Tulafono, CNMI Gov. Benigno R. Fitial and Congressman Faleomavaega Eni, who called for an “emergency meeting” between himself and the two governors which was held Monday in Washington D.C.

“Given the urgency and seriousness of the situation, the Governors and I agreed at our emergency meeting that it was important to present Secretary Salazar with a unified message when it comes to resolving minimum wage in American Samoa and CNMI,” Faleomavaega said in a statement yesterday.

“This is why we spent time drafting, reviewing, and putting a plan in place to present to Secretary Salazar in hopes that he will seriously consider what we have to say,” he said.

“We are writing to request the Administration’s support in reestablishing a Special Industry Committees to determine federal minimum wage increases” in American Samoa and CNMI until such time GAO “can assess the impact of past and future increases and report back to Congress no later than April 15, 2010, as mandated by the American Recovery and Reinvestment Act,” the letter says.

Salazar was provided with background information on the 50 cent per hour wage increases. Additionally, Salazar was informed about the Jan. 2008 report by the U.S. Labor Department (DOL), which found that the economies of the two territories could not sustain these annual increases.

Despite these findings, the congressional committees that oversees issues dealing with labor and wages were not satisfied with the study “and, therefore, would not support deferments or rollbacks” of the wage increases, the letter says.

The letter went on to say that providing the GAO with more time to complete the new study “will yield a report that is more thorough, and we support this outcome”.

Original language of provision in the stimulus bill dealing with the minimum wage for American Samoa and CNMI required GAO to provide the first report no later than Apr. 15, 2009; but a change was made and the final language of the bill now requires the first report due no later than Apr.15, 2010.

Salazar was also informed the territorial leaders have written to U.S. Sen. Daniel K. Inouye, chair of the Senate Appropriations Committee; U.S. Rep. George Miller, chair of the House Education and Labor Committee; and U.S. Sen. Jeff Bingaman, chair of the Senate Committee on Energy and Natural Resources “to request their further help and assistance in offering an amendment to the FY09 Omnibus appropriations bill that will reestablish Special Industry Committees until Congress can be provided with the information it needs to make a responsible decision about both economies.”

“To date, it is our understanding that Congress will not defer minimum wage until it has more reliable data,” according to the letter sent to Salazar.

“The irony of this situation is that, on the one hand, Congress is insisting that it cannot defer minimum wage because it has no data,” territories’ leaders wrote to Salazar. “On the other hand, Congress is automatically increasing minimum wage year after year with no data to justify its actions.”

In fact, no Congressional hearings were held prior to federal law imposing the wage hike for the two territories, on the impact automatic increases might have on the economies of American Samoa or CNMI, the letter said.  

“After the fact, a field hearing was held, at our request,” it says.

Salazar was also given a briefing about the previous process in which a special industry committee, appointed by the Labor Secretary, to review American Samoa’s minimum wage for its various industry sectors.

“While we agree that there were problems associated with the Special Industry process, reforming the process makes more sense than automatically increasing rates as now mandated by federal law,” the letter says.

The leaders also pointed out that the economies of American Samoa and CNMI are very different than the economies of the States.  For example, more than 80% of American Samoa’s private sector economy hinges on two tuna canneries, StarKist and Chicken of the Sea (Samoa Packing), which employ more than 74 percent of the local workforce.

The letter notes a decrease in production or departure of one or both of these canneries will devastate the local economy “causing widespread lay-offs and insurmountable financial difficulties.”

“It is also rumored that Chicken of the Sea is looking to relocate to Thailand, home of its parent company, Thai Union,” the letter continues.

The leaders also went to bat for CNMI pointing out the problems this territory is faced with the downturn in its garment and tourism industries.

“Given the seriousness of both situations [in the two territories], we are hopeful that the Administration will support efforts to put in place a modified version of Special Industry Committees which will empower the U.S. Secretary of Labor to determine future increases until more data can be collected, especially since workers in American Samoa and CNMI have finally received a long overdue increase of $1.00 per hour” since 2007, the letter says.

“But, given the uncertainty as to whether or not the second increase is sustainable over time, we are convinced that further increases in minimum wage must proceed cautiously and be preceded by further study,” it says.

According to the letter it was not a Democratic initiative but Republican politics that led to American Samoa’s inclusion in this federal law and recalled some of the events that occurred two years ago.

“Contrary to the ignorance that was perpetuated during these debates, American Samoa and CNMI, as well as the other U.S. Territories, continue to have different relationships with the federal government, than do States,” the letter says.

“To move forward with further increases without sufficient data to justify this course of action would be to play Russian roulette with the lives of our people, and we are confident that this is not what Congress intended when it passed legislation to increase minimum wage rates in American Samoa and CNMI,” the leaders noted.

“Without the Administration’s support, American Samoa and CNMI could become welfare wardens of the federal government,” the letter notes and urges the Obama Administration support of a special industry committee proposal.