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US Congressman Eni Faleomavaega. (Photo: House.gov)

Minimum wage hikes hurt local economy: GAO, StarKist

Thursday, June 30, 2011, 22:30 (GMT + 9)

StarKist Co has expressed agreement with the US Government Accountability Office (GAO) regarding American Samoa's diminishing competitive edge due to the federally mandated minimum wage hikes and their harm to the local economy. The territory’s US Congressman Eni Faleomavaega has vowed to make efforts toward delaying future minimum wage increases to avert further job losses until the American Samoa Government can implement a plan to diversify its economy. 

GAO has just released the latest report, mandated by the US Congress, on the effects of a federal law that commands a yearly USD 0.50 cent-increase per hour in the minimum wage in American Samoa until it reaches the US minimum wage level. 

American Samoa’s economy relies on a single industry which is now tremendously competitive on a global basis, said Mary Sestric, spokesperson for StarKist, which owns the local cannery, reports Samoanews.

StarKist "has expressed concerns about the costs of operating in American Samoa," GAO reported.

The agency noted that the tuna canning industry sustained a stable flow of exports to the US, despite foreign competition, until 2008, at which point these exports declined until 2010.

Also, the report clarified that without a minimum wage hike in 2010, the median wage of tuna canning workers of USD 4.76 did not rise. In its April 2010 minimum wage impact report, GAO said that from 2007-10, the median wage among workers in the tuna canning industry jumped by USD 1.46 or 44 per cent.

Future wage increases would impact 99 per cent of existing workers in the tuna canning industry by the time the minimum wage reaches USD 7.25, and pushes the average annual cost per worker in 2016 by USD 4,660 since June last year.

GAO also communicated that the two employers in the territory’s tuna canning industry reported that they had slashed costs between June 2009-June 2010 by laying off workers, cutting overtime hours, freezing hiring, decreasing benefits, temporarily closing and raising prices, among other measures.

Starkist and the other employer have been attributing most of their actions mainly to the minimum wage increases.

Further, GAO said that their analysis “suggests that moving tuna cannery operations […] from American Samoa to another tariff-free country with lower labor costs would significantly reduce cannery operating costs."

Because tuna facilities in American Samoa are among few in the US which can satisfy US Government contract requirements, however, maintaining operations in American Samoa would permit the facility to go on competing for these contracts, it says.

"Despite the advantages of moving some operations to other countries, the remaining cannery's lease obligation through 2013 and the cost of building new facilities elsewhere may pose obstacles to near-term relocation," the report adds. 

Congressman Faleomavaega has requested a hearing on the GAO report and written to the chair of the Natural Resources Committee on Fisheries, Wildlife, Oceans and Insular Affairs, John Fleming, asking for help.

Related articles:

- Starkist lays off 150 employees 
- Hundreds to lose jobs in American Samoa cannery 

By Natalia Real



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