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Wage and Hour Division
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Wage and Hour Division (WHD)

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Table of Contents   List of Figures and Tables   Appendices



I. Introduction

Purpose

This Economic Report was prepared for the use of American Samoa Industry Committee No. 26, to provide objective economic data useful to the Committee in its task of determining minimum wages in American Samoa. A new Committee is appointed by the Secretary to recommend these minimums every two years, and the recommendations are binding.

Industry Committees were used in the U.S. mainland after enactment of the 1938 Fair Labor Standards Act (FLSA) to phase low-wage industries into the minimum statutory wage. But after World War II, only Puerto Rico, the U.S. Virgin Islands, and American Samoa still used the committee system to set separate industry wage minimums. Today, such a system of wage setting is restricted to American Samoa.

Congress believed that application to these territorial island industries of "the inflexible [i.e., high] minimum wage rates prescribed by the Act will cause serious dislocation in some insular industries and curtail employment opportunities." On the other hand, Congress wanted industries in these areas to move toward the mainland minimum wage to avoid putting U.S. employers at a competitive disadvantage and to discourage migration of business from the United States.

To assist the Industry Committee in balancing these goals and in determining different wage minimums for different industries based on their unique characteristics, the Wage and Hour Division (WHD) of the U.S. Department of Labor prepares this Economic Report and sends it to Committee members prior to the biennial public hearing held by each successive industrial committee. The report includes pertinent data for use by the Committee in deciding the extent to which each industry's minimum wage could be raised.

Federal regulations state that a wide spectrum of data and analyses in the report may be pertinent to determining wage minimums, including wages, hours, productivity, market conditions, comparative production costs of foreign competitors, profits and losses, and other data, including those bearing on proper industry classification (See 29 CFR 511.11).


Chapter Content

Chapter II of this report contains background material on American Samoa-s geography, history, culture, government, and economics.

Chapter III describes the development, production methods and recent economic developments of the tuna processing industry, by far the largest private sector employer in American Samoa.

Chapter IV of this report analyzes the current wage and employment structure for American Samoa employers covered by the FLSA, and for each industry, by wage intervals. This analysis is based on the results of a biennial employment and wage survey conducted for WHD in November 2004. It also provides estimates of the impact of increases in wage minimums on workers- earnings.

Chapter V describes the three policy goals and requirements of the Fair Labor Standards Act, with respect to American Samoa. These include: 1) meeting minimum living standards by gradually reaching the Federal minimum wage, now at $5.15 per hour, 2) avoiding use of low wages to gain competitive advantage over other U.S. producers, and 3) not substantially curtailing employment in American Samoa industries1. This chapter provides data to facilitate evaluations of the extent to which those goals and requirements have been met in recent years. A number of bar charts and graphs are included in the chapter text.

Chapter VI discusses factors to be considered that may favor minimum wage increases, such as low labor costs for the tuna industry as a percent of total costs. Other factors include generous tax and tariff exemptions, which would be lost by relocation to another country, and steady increases in productivity, output, and employment in the American Samoa tuna industry.

Chapter VII provides factors to be considered that may weigh against minimum wage increases, with an emphasis on the tuna processing industry. Such factors include competition with Thailand and other exporters, which have the advantage of low labor costs, and weaker safety and environmental laws. Other factors include weak U.S. market growth, low retail canned tuna prices, relatively ineffective tariffs, and general economic uncertainty. Freer trade via the General Agreement on Tariff and Trade (GATT) and the North American Free Trade Agreement (NAFTA) may also lessen such competitors- tariff barriers to the U.S.


Appendix Content

Appendix A contains data on the number of covered employees in the American Samoa private sector based on survey data.

Appendix B contains minimum wage impact tables for American Samoa by industry classification. These impact tables illustrate alternative minimum wage levels in increments of five percent. It also presents current average hourly wages and average hourly wages for different alternate minimums.

Appendix C contains data on which the figures and graphs in Chapter V are based.

Appendix D provides a more detailed impact of alternate increased minimums by industry than that provided in Appendix B. It provides wage data from lowest to highest paid employees, by incremental hourly wage intervals, and the increase in their hourly income under the current minimum and three alternate minimums.

Appendix E provides the minimum wage rates by industry recommended by recent Industry Committees.

See Fair Labor Standards Act, Sections 2, 6, and 8 (29 U.S.C. Sections 202, 206 and 208). Section 8c specifies the criteria for establishment of industry classifications, including competitive conditions, wages for comparable work established by collective bargaining agreements, or voluntary employer wage standards.