A study on a way forward for American Samoa’s minimum wage conducted by the General Accountability Office has identified two basic approaches to raising American Samoa’s minimum wages to keep up with the cost of living and reach the federal level.
The two approaches identified in a GAO report released today are 1) indexing minimum wages to the cost of living and 2 ) raising minimum wages according to a schedule,
GAO said aspects of the two approaches could be combined, as needed, with respect to the amount and timing of future increases to the territory’s minimum wages.
The report fulfills the provision of a law passed by Congress in 2009 freezing the local minimum wages required the GAO to report periodically on the economic impact of minimum wage increases in the territory. .
The federal minimum wage has not been applied in American Samoa for many years.
In 2007, Congress passed legislation to raise the territory’s minimum wages, but subsequent legislation delayed or reduced these increases.
The current schedule would raise all of the territory’s minimum wages to the current federal level by 2036—although any increase to the federal minimum wage will delay this schedule.
According to the report, from 2007 to 2014 overall employment fell by 4 percent, and workers’ average inflation-adjusted earnings fell by about 11 percent.
During the same period, cannery employment decreased by 50 percent, and the minimum wage for cannery workers rose.
Cannery officials reported labor costs and fisheries access among the challenges of operating in the territory, and one of the two canneries announced plans to suspend operations indefinitely in December 2016.
GAO said the American Samoa government has expressed concern that continued minimum wage increases are at odds with sustainable economic development.
Given concerns about potential negative effects of increasing American Samoa’s minimum wage on the territory’s economy, other design options could be incorporated to safeguard against such effects.
For example, minimum wage increases could be reduced or suspended based on economic indicators that reflect the general health of the American Samoa economy or critical sectors.
Commenting on a draft of the GAO report, the Department of the Interior suggested further study and the American Samoa government suggested creating a committee to set minimum wages in the territory.
