Private sector chimes in on impact of minimum wage increase
Pago Pago, AMERICAN SAMOA — Besides GHC Reid & Co. Ltd., four other local companies submitted written comments to the American Samoa Chamber of Commerce regarding the impact of minimum wage hikes in American Samoa. The comments were submitted by the Chamber to the US Government Accountability Office (GAO).
Samoa News — again — points out that there are 17 different minimum wages for American Samoa, depending on the industry.
NEIL’S ACE HOME CENTER
Neil’s ACE Home Center president and CEO, Ngaire Ho Ching explained that the company has been doing business in the territory for 35 years and has a workforce of 105. But despite the fact that approximately 95% of its employees are paid above the current minimum wage, “we feel that any increase to our minimum wages would have a detrimental effect on our vulnerable economy.”
She said the “local economy has been shrinking” over the past several years, with the exception of federal aid following natural disasters, and other similar short term assistance.
According to her, the private sector has been “forced to pay for the brunt of income losses to the government” in the form of high income taxation at corporate and individual levels, and increased fees such as excise duties, scan fees, business licensing, and so forth.
“As a locally owned business, we are directly affected by all of these increased costs,” she said, adding that it “impacts the number of jobs we can provide, the ability to reinvest, maintain and grow our business.”
Additionally, it creates a climate in which new businesses are deterred from entering the market because of high overheads and low profitability. “There is no new industry in sight to provide a sustainable boost to our economy,” she wrote, and pointed out that if the cannery’s profits continue to shrink “we feel they will have no choice but seek to do business with off shore countries that provide more incentives and lower costs of doing business.”
The ripple effect of the cannery closing will impact shipping rates significantly, as their shipping consists of 20% of all imports and 80% of all exports. Moreover, 90% of what “we use on a daily basis is imported to the island.”
And if exports decreased by 80% then shipping costs will likely increase by 100% which will cause inflation to skyrocket. In turn, “American Samoa’s unemployment rate will most likely double, which will be catastrophic to our already vulnerable state,” she said. “It is clear that we are in a depressed economy and there is no case to be made for forcing increased minimum wages. These types of increases need to happen naturally, as they do in a healthy and growing economy,” she concluded.
TOOL SHOP INC.
Tool Shop Inc., president Peter Crispin said “we should do away with various industry categories, except for the canneries” when it comes to setting up minimum wage.
According to him, the canneries and the spin-off industries “are the only industry driving our economy. We cannot afford [for them to leave] or we will have no economy.” He noted that the vast majority of hourly workers at the cannery and in local business are from other Pacific nations and the current “hourly rate is way in excess of what they can earn in their country.”
Crispin said he has about 90 workers; and all except new employees during their probationary period, earn above minimum wage. “My observations show that most of my employees have the same amount of money in their pocket regardless of how much they earn,” he continued, noting that paychecks go to the family and the average employee sees very little of it.
Crispin has found other ways of retaining good employees — “with time off, knowing they have family commitments and their ability to receive a no interest loan when needed for family obligations.”
“This is far more important to the individual,” he said, and added that the average employee doesn’t have control over their finances or make their own financial decisions until they are in their late 30s and 40s and then it can be very limited.
He said, it “may be noted that we do not have a homeless problem” and asked, “Has anybody from the federal government questioned why?” Crispin said the majority of the workforce has very limited skill sets and education, and this explains the large migration workforce.
He said American Samoa’s minimum wage “should be set based on our cost of living, our skill sets, our job opportunities and way of life, not a set of values that do not apply.”
“We are still a one industry economy, wages should be based on our economy not the US. We have no unemployment umbrella for people in need when laid off but it could easily be forced upon us,” he concluded.
MORRIS SCANLAN GAS STATION
“We cannot expect our minimum wage to match the [US] mainland,” wrote Morris Scanlan general manager Toaalii Scanlan. “We do not get enough volume of sales from our small population to be able to handle a spike like that.”
“Without any real major economic developments taking place to induce a rise in money fluctuation,” Scanlan continued, “the minimum wage increase will have more of a negative impact.” He pointed out that startup companies will not be able to survive, small companies will fall to the bigger companies, and less jobs will be available.”
“Despite all that, this might create a shock to the system and wake everyone up to the real problems affecting our economy and community,”he added. And if more data will help find solutions, Scanlan suggests that “we look into how much money our companies loan to our employees for fa’alavelaves.”
“If a quarter of each of their paychecks are going towards ‘cultural needs’ each week, that is a major factor that should be included into the cost of living,” Scanlan emphasized. “We should try to handle the problems we can fix on our own without addressing Congress.”
“If we keep pushing for changes and more money with little to no results to show for it, the US will eventually give up on us,” he concluded.
SADIE’S BY THE SEA HOTEL
Sadie’s by the Sea president Tom Drabble said he strongly supports “a single minimum wage, not a minimum wage by industry or vocation.”
He said, “I am not aware of any jurisdiction that has multiple minimum wage rates.”
(See Samoa News Oct. 11, 2019 edition “Letter to the Editor from Mr. Drabble” on minimum wage. See last Friday’s edition on GHC Reid’s position on the issue).