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GAO polls public, private sectors on cultural impact on minimum wage

GAO office
Gov’t taxes, fees more of a challenge than min wage increases
fili@samoanews.com

Pago Pago, AMERICAN SAMOA — Taking into consideration the Samoan culture when setting the federally mandated minimum wages for American Samoa was one of the topics on which local employers and employees shared their views, when interviewed by a US Government Accountability Office (GAO) team that conducted an assessment of the impact of the minimum wage hikes on American Samoa for a 2020 report.

The effect of cultural and church obligations has been raised over the years by workers, as well as the government, pointing out that these are some of the important daily-lives issues in American Samoa that many workers cannot escape and should be taken into consideration at all times — including when considering the minimum wage.  

According to the report, released June 11 to the US Congress, GAO met with and interviewed public employer — ASG, including some of the semi autonomous and private sector employers, as well as employees from both the public and private sector.

CULTURAL CONSIDERATIONS

GAO said multiple employers and workers cited the importance of considering American Samoa’s “unique culture” when setting minimum wage increases.

“While some workers and an employer noted that the cost of living in American Samoa is unique in that communal land and living off the land through fishing and gardening could minimize housing and food costs, others noted that community and church financial obligations are significant costs,” the report states.

GAO noted one employer saying that these costs could amount to up to a quarter of a worker’s paycheck. A worker tells GAO that “non-residents, like many of the cannery workers, pay much higher medical costs” while an employer said, “foreign workers pay much higher housing costs.”

MINIMUM WAGE LEVELS

Regarding minimum wage levels, the GAO said cannery workers interviewed “generally agreed that the current minimum wage was sufficient” while, other workers, as well as some employers, said current minimum wage and the scheduled minimum wage increases “were insufficient.”

While cannery workers were “generally happy” to have the previous minimum wage increases, “they were fearful that future increases could lead to a loss of hours or complete job loss should the cannery close.

However, other workers disagreed, said GAO and cited for example, one worker who explained that minimum wage increases did not keep pace with the cost of living — while another worker stated that the 40 cents increase every 3 years is only about 13 cents per year, which the worker considered insufficient.

“Some employers and workers became emotional when speaking about their own financial situations or those of their workers, relatives, or fellow American Samoans,” GAO points out.

PROPOSED ALTERNATIVES

Employers and workers suggested to GAO alternative ways of increasing minimum wages. For example, an employer stated that minimum wages should be set based on the actual conditions in American Samoa rather than on what it believed to be an arbitrary federal schedule and a worker stated that the U.S. Department of Labor reviewing the minimum wage and making changes “is preferred to scheduled changes.”

VARYING DEGREES OF IMPACT

While public employers generally stated that the impact of the minimum wage increases on their workers was minimal, GAO said private employers noted varying degrees of impact on their workers.

Some public employers stated that the majority of ASG workers are paid above the minimum wage, and noted that the minimal impact was a result of the local government raising the minimum wage to $5 ahead of the 2018 minimum wage increase to $5.21.

IMPACT ON REMAINING CANNERY

Both employers and employees also gave comments on the potentiallly positive impact on the economy if the remaining cannery — StarKist Samoa — closes. GAO said sone private employers say there could be a positive impact on the economy if the remaining cannery closes.

For example, a private employer stated that the American Samoa “economy is so used to having the cannery as its pillar that it has not truly tried to diversify the economy.” This employer told GAO that American Samoa “needed to continue shifting away from the cannery and toward the rest of the private sector.”

Another private employer told GAO that the local economy “is better off without the remaining cannery and that an economist’s analysis of the cannery’s true impact on the rest of the economy is needed.”

COST OF LIVING

GAO said that multiple workers, as well as some employers, were concerned that minimum wage increases could lead to increases in the cost of living, with some noting that the cost of living in American Samoa is already high because living on a remote island requires a high amount of imported goods.

While a public employer stated that business owners pass the cost of minimum wage increases to customers, a private employer informed GAO that business owners are unable to do so because of competition.

Another employer raised concerns about inflation, stating that minimum wage increases might drive up prices and rent.

OTHER ECONOMIC CHALLENGES

Multiple public and private employers and workers cited an array of economic challenges other than minimum wage increases, including the high cost of living on the island and increased taxes and fees. For example, one employer stated that ASG “taxes and fee increases are more of a challenge than minimum wage increases.”