Congress freezes minimum wage in American Samoa

The U.S. territory’s minimum pay was set to increase by 50 cents in September, but that now stands to be delayed until 2015.

The Fair Minimum Wage Act of 2007 provided for annual 50-cents per hour increases until the rate matched the rest of the United States, where the minimum pay is $7.25 per hour. Increases for 2010 and 2011 were previously delayed by another federal law. The last increase went into effect in 2009, the day after a tsunami killed 34 people in the territory and the same day a tuna cannery shut down.

Minimum wage in American Samoa varies from $4.18 to $5.59 per hour, depending on the industry. The lowest wage is for garment workers and the highest is for those in the stevedoring and maritime shipping industry. Tuna canneries make up the largest private employer, where the rate is $4.76.

The territory’s communal land system allows for many people to live rent-free with their families. A majority of American Samoa land is communally owned by families. But everyday household items need to be shipped to the island, making them much more expensive than in most parts of the U.S.

A report last year by the U.S. Government Accountability Office said employment in American Samoa has declined because of the minimum wage increases that began in 2007. The 142-page report said the decrease in employment was a result of losing a tuna cannery in American Samoa. Employers blamed the minimum wage increase for layoffs, work hour reductions and hiring freezes.

America Samoa’s nonvoting delegate in the U.S. House of Representatives, Eni H. Faleomavaega, said the Senate bill was overwhelmingly approved Tuesday, 378-11. While he supported it, "I take no happiness in the successful passage of this bill because I still stand for fair wages for American Samoa’s workers," he said. "So between now and 2015, it will be up to the American Samoa government and our corporate partners, including StarKist and Tri-Marine, to find new ways of succeeding without further compromising the wages of our fish cleaners because I cannot promise that I will support any more delays after this."

The measure now goes to the president, who is expected to sign it.

Three years ago, StarKist Co. announced the reduction of some 800 positions at StarKist Samoa, citing a competitive industry and higher labor costs. Spokeswoman Mary Sestric said the company is hopeful Congress will again delay the next scheduled increase.

StarKist workers on a morning shift Wednesday declined to comment on the delay.

American Samoa Gov. Togiola Tulafono has said the 2009 cannery closure led to unemployment reaching nearly 20 percent by 2010.

“Congress is to be thanked for preventing further economic calamity in American Samoa and preventing continual increases to the minimum wage which would have led to additional layoffs in our fragile economy,” said local Chamber of Commerce Chairman David Robinson.

Fed report recommends minimum wage cut in Puerto Rico

A recent Federal Reserve Bank of New York report on Puerto Rico’s economic competitiveness included a recommendation that policymakers on the Caribbean island consider lowering the minimum wage as a first step toward improving the island’s dismal jobs scene.

Puerto Rico’s economy has been underperforming for decades and has yet to show concrete signs that it is pulling out of a long and deep downturn that stretches back some six years, the Federal Reserve Bank of New York said in the report issued at the Puerto Rico Chamber of Commerce Convention earlier this month.

The “Report on the Competitiveness of Puerto Rico’s Economy” highlights the challenges facing Puerto Rico’s economy and offers five policy recommendations to make the island more competitive.

The report’s first recommendation is to reduce barriers to job creation and labor participation. New York Fed President William Dudley flagged high unemployment and low labor participation as perhaps the biggest challenges to the Puerto Rico economy.

“Creating jobs and encouraging active participation in the labor market should be a top priority for policymakers,” the report said.

The Fed noted that opportunities for the young and less educated in Puerto Rico are particularly limited, and these workers are in danger of becoming disconnected from the labor market.

“We recommend focusing on policies that spur the creation of job opportunities and improve incentives to work,” the Fed said.

One possible first step would be to consider a young-worker subminimum wage that targets workers under the age of 25. The minimum could be stepped up at regular intervals as the worker continues employment and builds skills with a given firm, so that the worker’s wage would match the federal minimum over a number of years.

The Fed report said a wider reexamination of the application of the federal minimum wage and the design of entitlement programs may also be warranted in order to improve incentives to seek employment and increase the number of jobs available for workers on the island.