AMERICAN SAMOA 

AND THE 

COMMONWEALTH 

OF THE NORTHERN 

MARIANA ISLANDS

Economic Indicators 

Since Minimum Wage 

Increases Began

Report to Congressional Committees

March 2014

GAO-14-381

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-381, a report to 

congressional committees

March 2014

AMERICAN SAMOA AND THE 

COMMONWEALTH OF THE NORTHERN 

MARIANA ISLANDS 

Economic Indicators Since Minimum Wage Increases 

Began

Why GAO Did This Study

In 2007, the United States enacted a 

law incrementally raising the minimum 

wages in American Samoa and the 

CNMI until they equal the U.S. 

minimum wage. American Samoa’s 

minimum wage increased by $.50 per 

hour three times, and the CNMI’s four 

times before legislation delayed the 

increases amid concerns that they 

would have a detrimental effect on the 

American Samoa and CNMI 

economies. The most recent increase 

in American Samoa occurred on May 

25, 2009. The next is scheduled for 

September 30, 2015, with additional 

increases every 3 years thereafter. 

Under current law, the minimum wage 

in American Samoa’s tuna canning 

industry will equal the current U.S. 

minimum wage of $7.25 in 2027. The 

CNMI’s most recent increase occurred 

on September 30, 2012. The next 

increase is scheduled for September 

30, 2014, with additional increases in 

2016 and annually thereafter until it 

reaches the U.S. minimum wage. 

GAO is mandated to report in 2014, 

and every 3 years thereafter, on the 

impact of the minimum wage 

increases. This report updates our 

previous reports and discusses for 

each territory (1) changes in 

employment and earnings and (2) 

changes in key industries since the 

most recent federal minimum wage 

increase and since the increases 

began. GAO reviewed local and 

federal earnings information; collected 

data from employers in key industries 

through a questionnaire and from 

employers and workers through 

discussion groups and interviews 

during visits to each area.

American Samoa’s government said 

GAO captured the consensus to 

postpone a 2015 minimum wage 

increase. CNMI’s government said 

GAO captured the general economic 

condition of the CNMI. 

What GAO Found

American Samoa employment and earnings have decreased since 2007, but 

employment increased slightly from 2011 to 2012. Since 2005, the American 

Samoa economy has had a flat or declining real gross domestic product (GDP).

American Samoa Employment

Employment Change

All sectors, 2011-2012 +1.5%

All sectors, 2007-2012 -11%

Tuna canning hourly workers, 2012-2013 -13%

Tuna canning hourly workers, 2007-2013 -58%

Source: GAO analysis of data from GAO tuna canning industry questionnaire and American Samoa tax office data.

Average inflation-adjusted earnings of those employed fell by 5 percent overall 

from 2007 to 2012 and by 2 percent from 2011 to 2012. 

One of American Samoa’s two tuna canneries closed in 2009. However, a new 

company is renovating the closed cannery and plans to re-open it in 2015. Two 

employers in the tuna canning industry took cost-cutting actions from 2010 to 

2013, including labor-saving strategies and reduced overtime. The employers 

attributed to a moderate or large extent all but one of their actions to minimum 

wage increases, but also to increased utility and material costs. Two of the three 

employers planned more cost-cutting actions and attributed those plans to a 

moderate or large extent to minimum wage increases, but also to other increased 

costs and business factors.

Commonwealth of the Northern Mariana Islands (CNMI) employment and 

earnings have decreased overall since 2006, but earnings increased slightly from 

2011 to 2012. After falling rapidly from 2005 to 2009, CNMI real GDP remained 

relatively stagnant from 2009 to 2012.

CNMI Employment

Employment Change

All sectors, 2011-2012 -6%

All sectors, 2006-2012 -45%

Hotel industry hourly workers, 2012-2013 +3%

Hotel industry hourly workers, 2007-2013 -21%

Source: GAO analysis of data from GAO hotel industry questionnaire and CNMI government tax data.

Average inflation-adjusted earnings of those employed fell by about 2 percent 

overall from 2006 to 2012 but rose by 1 percent from 2011 to 2012.

CNMI hotel occupancy and room rates have risen in recent years, but industry 

representatives we spoke with characterized the recent growth as an opportunity 

to recover and reinvest in their properties. Hotels representing the majority of all 

workers employed by respondents to GAO’s questionnaire attributed past costsaving strategies and price increases to minimum wage increases. Hotels also 

attributed their actions to other increased costs and changes to U.S. immigration 

law, which reduce the number of available permits for foreign workers in the 

CNMI. Hotels representing 90 percent or more of all workers employed by 

questionnaire respondents attributed plans for further cost-cutting to minimum 

wage increases, but also to increasing utility, material, and transportation costs.

View GAO-14-381. For more information, 

contact David Gootnick at (202) 512-3149 or 

gootnickd@gao.gov
Page i GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Letter 1 

American Samoa Earnings, Employment, and Status of Key 

Industries 4

CNMI Earnings, Employment, and Status of Key Industries 9

Concluding Observations 14

Agency Comments and Our Evaluation 14

Appendix I Objectives, Scope, and Methodology 20

Appendix II Minimum Wage Increases in American Samoa and CNMI 30

Appendix III American Samoa 35

Appendix IV Commonwealth of the Northern Mariana Islands 57

Appendix V GAO Questionnaire 80

Appendix VI Comments from the Government of American Samoa 96

Appendix VII Comments from the Government of the CNMI 105

Appendix VIII GAO Contact and Staff Acknowledgments 107

Tables

Table 1: American Samoa Key Findings 8

Table 2: CNMI Key Findings 13

Table 3: Alternative Measures of Employment in American Samoa 26

Contents
Page ii GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Table 4: Past and Scheduled Minimum Wage Increases in 

American Samoa 32

Table 5: Past and Scheduled Minimum Wage Increases in CNMI 33

Table 6: Distribution and Increased Annual Cost Since June 2013 

Per Hourly-wage Worker in the American Samoa Tuna 

Canning Industry Due to Scheduled Minimum Wage 

Increases 51

Table 7: American Samoa Employer Actions from June 2010 to 

June 2013 and Attribution of Those Actions to Minimum 

Wage Increases. 52

Table 8: Attribution of American Samoa Employer Actions from 

June 2010 to June 2013 to Other Factors 53

Table 9: American Samoa Employer Planned Actions and 

Attribution of Those Plans to Minimum Wage Increases 53

Table 10: Attribution of Planned American Samoa Employer 

Actions to Other Factors 54

Table 11: Distribution and Increased Annual Cost since June 2013 

per Hourly-wage CNMI Hotel Worker Due to Scheduled 

Minimum Wage Increases 72

Table 12: Employee-Weighted CNMI Employer Actions from June 

2010 to June 2013 and Attribution of Those Actions to 

Minimum Wage Increases. 73

Table 13: Employee-Weighted Attribution of CNMI Employer 

Actions from June 2010 to June 2013 to Other Factors 74

Table 14: Employee-Weighted CNMI Employer Planned Actions 

and Attribution of Those Plans to Minimum Wage 

Increases 74

Table 15: Employee-Weighted Attribution of Planned CNMI 

Employer Actions to Other Factors 75

Table 16: HANMI Monthly Hotel Occupancy Rates 76

Table 17: HANMI Inflation-Adjusted Monthly Room Rates 2010-

2013 77

Figures

Figure 1: Map of American Samoa 35

Figure 2: Pago Pago Harbor 36

Figure 3: American Samoa Nominal and Real GDP, 2005-2012 39

Figure 4: Population and Citizenship Status of American Samoa, 

1980-2010 40

Figure 5: American Samoa and Foreign Tuna Exports to the 

United States, 1995-2012 41
Page iii GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Figure 6: Star-Kist Cannery, Pago Pago 42

Figure 7: Tri Marine (former Chicken of the Sea) facility in Pago 

Pago 44

Figure 8: American Samoa Employment Based on American 

Samoa Tax Data and GAO Questionnaire Data, 2007 

through 2012 46

Figure 9: American Samoa Nominal Mean Earnings and InflationAdjusted Mean Earnings Based on American Samoa Tax 

Data and GAO Questionnaire Data, 2007 through 2012 48

Figure 10: Map of the CNMI 57

Figure 11: CNMI Nominal and Real GDP 2005-2012 59

Figure 12: CNMI Visitor Arrivals, Fiscal Years 1990-2013 61

Figure 13: Saipan, CNMI, and Multi-lingual Sign at Hotel in Saipan 63

Figure 14: Citizenship Status of CNMI Population, 1980-2010 64

Figure 15: CNMI Employment Based on CNMI Government Tax 

Data, 2006 through 2012 67

Figure 16: CNMI Average Nominal and Inflation-Adjusted 

Earnings Based on CNMI Government Tax Data, 2006 

through 2012 68

Figure 17: Tinian Dynasty Hotel & Casino 71

Figure 18: Plane Preparing for the Saipan to Tinian Flight 78

Figure 19: The Palms Resort Hotel 79
Page iv GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Abbreviations

CBO Congressional Budget Office

CNMI Commonwealth of the Northern Mariana Islands

CPI Consumer Price Index

FICA Federal Insurance Contributions Act

FLSA Fair Labor Standards Act of 1938 

GDP gross domestic product

HANMI Hotel Association of the Northern Mariana Islands 

SSA Social Security Administration

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

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Page 1 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

441 G St. N.W.

Washington, DC 20548

March 31, 2014

Congressional Committees

For decades, American Samoa and the Commonwealth of the Northern 

Mariana Islands (CNMI) have had minimum wages below the statutory 

minimum wage in the United States and in other U.S. territories. In 2007, 

Congress enacted legislation to increase the minimum wages in 

American Samoa and the CNMI in periodic increments until each reaches 

the federal minimum wage, which is currently $7.25 per hour.1 In 2009, 

Congress mandated that GAO report on the impact of these minimum 

wage increases.2 Some incremental minimum wage increases included in 

the 2007 law have occurred in each territory; however, subsequent 

legislation delayed further increases amid concerns about their impact on 

the American Samoa and CNMI economies.3 Both territories experienced 

economic downturns between 2007 and 2009, including the complete 

exodus of the CNMI’s garment industry and the closure of one of two tuna 

canneries in American Samoa—a major source of private sector 

employment. GAO has reported twice in response to this mandate, in 

2010 and 2011.4

This report updates our previous reports and discusses for each territory 

(1) changes in employment and earnings and (2) changes in key 

 

1

U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability 

Appropriations Act, 2007, Pub. L. No. 110–28, § 8103, 121 Stat. 188 (May 25, 2007); 29 

U.S.C. § 206(a).

2

Pub. L. No. 111-5, § 802(a), 123 Stat. 115, 186 (Feb. 17, 2009), as amended by Pub. L. 

No. 111-244, § 2(b), 124 Stat. 2618 (Sep. 30, 2010) and Pub. L. No. 112-149, § 4(b), 126 

Stat. 1145 (July 26, 2012). Under the current law, GAO is required to report by April 1, 

2014, and every 3 years thereafter until the minimum wage in the respective territory 

meets the federal minimum wage.

3

See appendix II for a summary of the minimum wage law and changes to the law for both 

American Samoa and the CNMI.

4

GAO, American Samoa and Commonwealth of the Northern Mariana Islands: Wages, 

Employment, Employer Actions, Earnings, and Worker Views Since Minimum Wage 

Increases Began, GAO-10-333 (Washington, D.C.: Apr. 8, 2010), and American Samoa 

and Commonwealth of the Northern Mariana Islands: Employment, Earnings, and Status 

of Key Industries Since Minimum Wage Increases Began GAO-11-427 (Washington, D.C.: 

June 23, 2011).
 

Page 2 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

industries since the most recent federal minimum wage increase and 

since the increases began.

To identify changes in employment and earnings in American Samoa and 

the CNMI, we reviewed and analyzed prior GAO reporting covering 2006 

through 2009 and information from the American Samoa and CNMI 

governments for 2010 through 2012. We used CNMI tax data to 

determine the number of employees and mean wages in the CNMI. We 

used combined American Samoa tax data and GAO questionnaire data to 

determine the number of employees and mean wages in American 

Samoa and compared these data to Social Security Administration (SSA) 

data on employment and wages. We primarily present the American 

Samoa tax data in our analysis. While the SSA data cover all types of 

workers in American Samoa, three large groups of people in the CNMI 

were not required to report earnings to SSA and thus are excluded from 

the SSA data—CNMI government workers and immigrant workers from 

the Philippines and Korea. In 2012, these three groups represented 

approximately 40 percent of all CNMI workers, according to CNMI 

government tax data. We have chosen not to report the CNMI SSA data 

due to these coverage gaps. Our study does not cover workers in the 

underground economy or identify any workers who may have been 

unlawfully paid below the minimum wage. We relied on consumer price 

index (CPI) data from American Samoa and the CNMI to determine 

inflation-adjusted wages. We reviewed technical documentation and 

compared available data to other sources, among other steps, and 

determined that these data sources were sufficiently reliable for our 

purposes.

To identify changes in key industries, we reviewed prior GAO reporting 

and analyzed data from the U.S. Department of Commerce, tuna industry 

representatives, and tourism organizations in the CNMI. We analyzed the 

results of a questionnaire we sent to employers in the key industries in 

American Samoa (tuna canning) and the CNMI (hotels). Our 

questionnaire requested 2011-2013 information on their number of 

employees and wage rates, as well as past and planned actions in 

response to the minimum wage.5

 

5

GAO’s questionnaire is reproduced in appendix V of this report.

We received completed questionnaires 

from all 3 employers in the tuna canning industry and from 11 out of the 

13 hotels that we sent questionnaires to in the CNMI. Questionnaire 
 

Page 3 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

responses are limited to the American Samoa tuna canning industry and 

the CNMI hotel industry and may not be representative of all workers and 

employers in each area. We also met with or obtained data from 

representatives of the territorial governments, businesses, business 

groups, and workers. In the CNMI, we held discussion groups on the 

impact of minimum wage increases with members of the Hotel 

Association of the Northern Mariana Islands (HANMI) and the Chambers 

of Commerce of Saipan and Tinian islands. We also held discussion 

groups with hotel workers on Saipan and Tinian. In American Samoa, we 

held a discussion group with members of the Chamber of Commerce and 

with workers employed at the Star-Kist cannery. Views expressed in 

discussion groups only represent the views of participants in those groups 

and may not be representative of all workers’ and employers’ views in 

each industry or area. We reviewed technical documentation and 

compared available data with other sources, among other steps, and 

determined that these data sources were sufficiently reliable for our 

purposes.

Although our approach yielded information on trends in employment, 

wages, and earnings in both areas, we were not able to distinguish 

between the effects of minimum wage increases and the effects of other 

factors, including the global economy, fluctuations in energy prices, global 

trade liberalization, and the application of U.S. immigration law to the 

CNMI.

We conducted this performance audit from July 2013 to February 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. See appendix I for further 

details of our methodology.
 

Page 4 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The minimum wage in American Samoa has increased three times since 

2007, most recently on May 25, 2009. Unlike the United States, American 

Samoa has separate minimum wages for 18 separate industries, currently 

ranging from $4.18 to $5.59 per hour. The tuna canning industry, 

American Samoa’s largest source of private sector employment, has a 

current minimum wage of $4.76 per hour and mostly employs foreign 

labor from the neighboring islands of Samoa.6 There is currently one 

operating cannery, Star-Kist, and its associated can manufacturer in 

American Samoa. An additional fish company has begun limited 

operations in American Samoa while renovating and planning to re-open 

the former Chicken of the Sea cannery in 2015. Each minimum wage in 

American Samoa will next be increased by $.50 per hour on September 

30, 2015, with further increases every 3 years. Under current law, the 

minimum wage in the tuna canning industry will reach the U.S. minimum 

of $7.25 per hour in 2027.

• Economy. American Samoa’s real gross domestic product (GDP) and 

population have both declined in recent years. American Samoa’s 

2012 real GDP of $504 million was 4.5 percent below the 2006 real 

GDP, and also slightly lower than the 2009 real GDP. Real GDP per 

capita increased 12.5 percent to $9,164 from 2006 to 2012. American 

Samoa’s population declined from 57,291 in 2000 to 55,519 in 2010.7

• Employment. American Samoa tax combined with GAO questionnaire 

data show that the total number of employees in American Samoa 

increased 1.5 percent from 2011 to 2012 (from 15,552 to 15,790).8

 

6

American Samoa operates both its customs and immigration programs independent of 

the U.S. government. See American Samoa: Performing a Risk Assessment Would Better 

Inform U.S. Agencies of the Risks Related to Acceptance of Certificates of Identity,

However, from 2007 to 2012, employment declined 11 percent (from 

GAO-10-638 (Washington, D.C.: June 11, 2010).

7

The American Samoa government believes the 2010 census to be an undercount. See 

the American Samoa comment letter in Appendix VI of this report for additional detail. 

8

The American Samoa tax data are a count of persons employed during the tax year by 

the employer. The cannery employment figure, from responses to GAO’s questionnaire, is 

a count of employees at the canneries as of a specific pay period in June of the given 

year. See appendix I for a full discussion our methodology.

American Samoa 

Earnings, 

Employment, and 

Status of Key 

Industries

American Samoa 

Employment and Earnings 

Declined from 2007 to 

2012
 

Page 5 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

17,677 to 15,790, with a peak of 19,229 in 2008).9 Questionnaire 

responses from the tuna canning industry show that their employment 

of hourly workers dropped by 13 percent from 2012 to 2013 and by 58 

percent from 2007 to 2013.

• Earnings. Earnings analysis based on American Samoa tax, GAO 

questionnaire, and consumer price data show that, from 2011 to 2012, 

average inflation-adjusted earnings of those employed in American 

Samoa fell by 2 percent. The decrease resulted from average 

earnings increasing by 2 percent while prices increased 4 percent. For 

the overall period from 2007 to 2012, average inflation-adjusted 

earnings fell by about 5 percent; average annual earnings rose about 

27 percent but local prices rose by about 34 percent. Although 

earnings data do not allow for a direct comparison of average and 

minimum wage annual earnings or for tracking the earnings of 

workers who lost their jobs, the hourly wage of minimum wage 

workers who retained their jobs and work hours has not increased by 

more than inflation since 2007. The inflation-adjusted earnings of 

minimum wage cannery workers who retained their jobs and work 

hours fell by about 4 percent from 2011 to 2012 and by about 5 

percent from 2007 to 2012.10

• Employer, government, and worker views. The discussion group of 

private sector employers we met with generally opposed additional 

minimum wage increases, citing American Samoa’s reliance on the 

tuna canning industry and fears about the effect of further increases 

on the industry and the economy.11

 

9

American Samoa tax data from 2013 on total employment are not yet available. If many 

foreign workers left American Samoa, the impact on the unemployment rate would be 

smaller than if those workers remained because the foreign workers would no longer be 

included in the calculation.

The American Samoa 

government, American Samoa’s largest employer, anticipated it would 

have to cut six employees to offset the 2015 minimum wage increase, 

with additional budget impacts resulting from any further increases. 

The Governor of American Samoa has stated that he would pursue 

10Although American Samoa has multiple minimum wages, we use the tuna canning 

industry, American Samoa’s largest private sector industry, as an example throughout this 

report.

11Twenty business representatives participated in the discussion group. Views expressed 

in discussion groups only represent the view of participants in those groups and may not 

be representative of all businesses’ views in American Samoa.
 

Page 6 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

changes in U.S. law to allow American Samoa to take control of its 

minimum wage. Star-Kist workers who participated in our discussion 

group generally opposed further minimum wage increases rather than 

supported future increases.12 Workers expressed concerns that any 

increase would result in lost jobs or a closure of the cannery. Some 

workers we spoke with also expressed concerns that future increases 

in the minimum wage would lead to an increase in prices in American 

Samoa, as they said occurred as a result of previous minimum wage 

increases.

• Tuna canning industry wages. Without a minimum wage increase in 

American Samoa from 2011 through 2013, there was no increase in 

the $4.76 median wage of tuna canning workers in that time. Since 

2007, as a result of previous minimum wage increases, the median 

wage among workers in the tuna canning industry employed by 

questionnaire respondents has risen from $3.30 to $4.76 per hour (44 

percent). Based on questionnaire responses about workers’ wages as 

of June 2013, the future minimum wage increases would affect the 

wages of 92 percent of the current workers in the canning industry by 

2018, when the minimum wage reaches $5.76. Based on the wages 

workers currently earn, minimum wage increases would increase the 

average annual cost per worker in 2018 by an average annual cost of 

$1,723 per worker. By 2027, when the tuna canning minimum wage 

reaches $7.25, 98 percent of current workers in the tuna canning 

industry would be affected, increasing the average annual cost per 

worker by $4,710.13

• Tuna canning employer actions. Two of the three employers in the 

tuna canning industry in American Samoa reported that they had 

taken cost-cutting actions from June 2010 to June 2013 including 

labor- and cost-saving strategies, and reduced overtime. The third 

employer, which was just beginning operations in American Samoa at 

that time, considered the questions not applicable. The two employers 

attributed all but one of their actions to a moderate or large extent to 

 

12Ten Star-Kist workers participated in the discussion group. Views expressed in 

discussion groups only represent the view of participants in those groups and may not be 

representative of all workers’ views in the tuna canning industry. 

13This analysis excluded nonwage labor costs due to the minimum wage increases, such 

as increases in employer payroll tax contributions under the Federal Insurance 

Contributions Act (FICA). 

American Samoa’s Tuna 

Canning Industry Faces 

Challenges from Minimum 

Wage Increases and Other 

Factors.
 

Page 7 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

minimum wage increases. In addition to minimum wage increases, 

these two employers also attributed their actions to a moderate or 

large extent to increased utility and material costs. Two of three 

employers stated that they planned in the next 18 months to introduce 

labor- and cost-saving strategies, delay business expansion, relocate 

business, and reduce overtime hours. The two employers attributed 

all of these plans to a moderate or large extent to the minimum wage 

increases, but also to increased utility and material costs and 

business factors.

• Tuna canning industry analysis. Cannery officials stated that wage 

increases are one of many factors affecting the tuna canning industry 

in American Samoa, but that its labor costs, including the minimum 

wage increases, place American Samoa at a significant cost 

disadvantage in comparison with other canned tuna exporting 

countries. Both canneries cited congressional action to defer the next 

minimum wage increase to 2015 as encouraging their ability to invest 

in American Samoa. Cannery officials said that there is a spectrum of 

possible actions in response to increasing costs. For example, 

canneries could lower the staffing level or close certain production 

lines.

See table 1 for key findings and appendix III for detailed findings and 

tables on American Samoa.
 

Page 8 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Table 1: American Samoa Key Findings

Employment – all sectorsa

Percentage change in number employed, 2011-2012 1.5% increase (from 15,552 to 15,790)

Percentage change in number employed, 2007-2012 11% decrease (from 17,677 to 15,790)

Employment – tuna canning industryb

Percentage change in number of hourly workers employed, 2012-2013 13% decrease (from 2,193 to 1,915)

Percentage change in number of hourly workers employed, 2007-2013 58% decrease (from 4,593 to 1,915)

Inflation-adjusted earnings – all sectorsa

Percentage change in average inflation-adjusted earnings of those 

employed, 2011-2012

2% decrease

Percentage change in average inflation-adjusted earnings of those 

employed, 2007-2012

5% decrease

Tuna canning industry wagesb

Percentage of hourly-wage tuna canning workers employed by 

questionnaire respondents in 2013 with wages affected by a September 

2015 minimum wage increase

79%

Percentage of hourly-wage tuna canning workers employed by 

questionnaire respondents in 2013 who would be affected by minimum 

wage increases through 2027 (when tuna canning minimum wage 

reaches $7.25)

98%

Tuna canning employer actionsb

• Tuna canning industry employers reported using labor- and cost-saving strategies, reducing overtime, freezing hiring, and raising 

prices from 2010 to 2013 and attributed these actions to a moderate or large extent to minimum wage increases.

• Two tuna canning industry respondents reported planning to introduce labor- and cost-saving strategies, delay business 

expansion, relocate business, and reduce overtime hours. All of these planned actions were attributed to a moderate or large 

extent to the minimum wage increases.

Tuna canning worker viewsc

Workers who participated in our discussion group generally opposed further minimum wage increases, expressing concerns that any 

increase would result in lost jobs or a complete closure of Star-Kist. 

Source: GAO analysis of data from GAO tuna canning industry questionnaire, American Samoa Tax office data, American Samoa 

Consumer Price Index, and American Samoa discussion groups.

Notes: Employers responding to GAO’s first questionnaire in 2009 included the two tuna canning 

employers, as well as other employers with 50 or more employees. Questionnaire updates in 2010 

covered the two tuna canning employers and excluded employers in other industries, smaller 

employers, and employers that had closed between 2007 and the date of our questionnaire. The 

2013 questionnaire covered the current three tuna canning industry employers. Based on American 

Samoa tax data, our respondents represented, in 2012, about 14 percent of the total workforce. 

American Samoa questionnaire respondents represented 100 percent of the tuna canning-related 

workforce. Responses are not necessarily representative of all American Samoa workers and 

employers.

a

GAO analysis of American Samoa Tax data and GAO questionnaire.

b

GAO analysis of responses to GAO’s American Samoa tuna canning employer questionnaire.

c

GAO analysis of American Samoa discussion group results.
 

Page 9 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The minimum wage in the CNMI has increased five times since 2007, 

with the most recent increase on September 30, 2012, bringing the 

minimum wage to $5.55 per hour. Under current law, the next minimum 

wage increase will occur on September 30, 2014, and the CNMI will 

reach the current U.S. minimum wage on September 30, 2018. The 

CNMI’s sizeable garment industry has left the territory, leaving tourism as 

its key industry. Tourists are primarily from Japan, Korea, China, and 

Russia. Chinese and Russian tourism has been supported by the 

Secretary of Homeland Security’s decision to exercise parole authority, 

allowing tourists from those countries to enter the CNMI.14 The CNMI 

economy heavily relies on a foreign workforce to support its economy; as 

of the 2010 decennial census, noncitizens comprised 43 percent of the 

CNMI population.15 Since the 2009 assumption of U.S. control over CNMI 

immigration, the Department of Homeland Security has annually reduced 

the number of permits for the CNMI’s foreign workforce in keeping with 

the requirement to bring the number of such permits down to zero by the 

end of 2014.16

• Economy. The CNMI’s population and real GDP have both declined in 

recent years. In real terms, CNMI GDP decreased by approximately 

36 percent overall from 2006 to 2012 though it has remained relatively 

flat since 2009. The CNMI’s real GDP per capita decreased 

approximately 24 percent from 2006 to 2012. The CNMI population 

declined from 69,221 in 2000 to 53,883 in 2010.

• Employment. The total number of people employed fell from 25,229 to 

23,720 (about 6 percent) from 2011 to 2012 according to CNMI 

government tax data. For the entire period from 2006 to 2012, the 

 

14The Guam-CNMI Visa Waiver Program exempts tourism and business visitors from 

certain countries, who are traveling to the CNMI and Guam for up to 45 days, from the 

standard U.S. visa documentation requirements (8 C.F.R. § 212.1(q)).

15During the expansion of the CNMI garment and tourism industries prior to 1995, the 

CNMI economy became dependent on foreign labor, as the CNMI government used its 

authority over its own immigration policy to bring in large numbers of foreign workers and 

investors.

16Under current law, the Secretary of Labor may extend the transition by an additional 5 

years. For additional information, see GAO, Commonwealth of the Northern Mariana 

Islands: Additional DHS Actions Needed on Foreign Worker Permit Program, GAO-12-975 

(Washington, D.C.: Sept. 27, 2012).

CNMI Earnings, 

Employment, and 

Status of Key 

Industries

CNMI Employment and 

Earnings Declined from 

2006 to 2012
 

Page 10 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

number employed has fallen from 43,036 to 23,720 (45 percent), with 

most of the overall decrease occurring from 2006 to 2009.17

Decreases before 2009 reflect closure of the CNMI’s garment 

factories, which employed many foreign workers.

• Earnings. From 2011 to 2012, inflation-adjusted average earnings of 

those employed rose by 1 percent, according to CNMI government tax 

data and consumer price data. The increase in earnings resulted from 

a 3 percent increase in average earnings offset by a 2 percent 

increase in prices. Over the entire period from 2006 to 2012, average 

inflation-adjusted earnings fell by about 2 percent, with an about 29 

percent increase in average earnings offset by an about 31 percent 

increase in prices. Although earnings data do not allow for a direct 

comparison of average and minimum wage annual earnings or for 

tracking the earnings of workers who lost their jobs, the hourly wage 

of minimum wage workers who retained their jobs and work hours has 

increased by more than inflation since 2006. The inflation-adjusted 

earnings of minimum wage workers who retained their jobs and work 

hours rose by about 7 percent from 2011 to 2012 and by about 39 

percent from 2006 to 2012.

• Employer, government, and worker views. CNMI employers we spoke 

with supported the 2013 postponement of minimum wage increases.18

 

17If many foreign workers left the CNMI, the impact on the unemployment rate would be 

smaller than if those workers remained because the foreign workers would no longer be 

included in the calculation.

Participants in our discussion groups stated that businesses, 

particularly small businesses, could not absorb another minimum 

wage increase. However, the minimum wage was not as important a 

concern for discussion group participants as the potential loss of the 

foreign labor force. For hotel representatives we spoke with, providing 

easier access for Russian and Chinese tourists by having the 

Department of Homeland Security continue to parole these individuals 

into the CNMI was a greater concern than the minimum wage. 

According to the CNMI Department of Commerce, the Governor of the 

CNMI supported the 2013 postponement of the minimum wage 

increase. Workers we spoke with on Tinian island saw future 

minimum wage increases as an opportunity to increase the amount 

18A total of 24 business representatives participated in one of four discussion groups. 

Views expressed in discussion groups only represent the views of participants in those 

groups and may not be representative of all businesses’ views in the CNMI.
 

Page 11 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

they could remit to their families living elsewhere. Workers on both 

Saipan and Tinian islands feared that prices would increase along 

with the minimum wage, as they said had occurred at the time of 

previous increases.19

• Hotel industry wages. From June 2011 to 2013, the median wage 

among workers employed by CNMI hotel industry questionnaire 

respondents rose from $5.33 to $5.86 (10 percent). Based on 

questionnaire responses about workers’ wages as of June 2013, the 

future minimum wage increases would affect the wages of 94 percent 

of current workers in the CNMI hotel industry by the time the minimum 

wage reaches the U.S. minimum wage of $7.25 in 2018. Based on the 

wages workers currently earn, minimum wage increases would 

increase the average annual cost per worker in 2018 by $3,051 since 

June 2013.20 For the hotels that responded to our questionnaire, if 

observed trends continue, scheduled minimum wage increases will 

increase the share of hotels’ total operating costs attributable to 

payroll from approximately 26 percent of operating costs in 2012 (with 

minimum wage increases representing about 1 percent of total

operating costs) to 31 percent in 2018 (with minimum wage increases 

representing about 5 percentage points of the 31 percent increase).

• Hotel employer actions. Hotels representing the majority of all workers 

employed by questionnaire respondents took cost-cutting actions and 

raised prices from 2010 to 2013. Although employers attributed a 

number of actions to the minimum wage increases, they also 

attributed them to other factors, such as increased costs and changes 

to U.S. immigration law. Hotels representing 90 percent or more of all 

workers employed by questionnaire respondents stated that they 

planned to introduce labor or cost-saving strategies and raise prices in 

the next 18 months, with hotels representing all or almost all workers 

employed by questionnaire respondents attributing that plan to 

minimum wage increases to a moderate or large extent. As with their 

past actions, employers attributed their future plans to a moderate or 

 

19A total of eight workers participated in one of two discussion groups. Views expressed in 

discussion groups only represent the views of participants in those groups and may not be 

representative of all workers’ views in the CNMI.

20The analysis excluded nonwage labor costs due to the minimum wage increases, such 

as increases in employer payroll tax contributions under the Federal Insurance 

Contributions Act.

Hotel Industry Has 

Rebounded in Recent 

Years; Most Hotel Workers 

Will Be Affected by 

Minimum Wage Increases
 

Page 12 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

large extent to increasing utility, material, and transportation costs in 

addition to minimum wage increases.

• Hotel industry analysis. In 2012 and 2013 hotel occupancy rates 

increased from previous years. After adjusting for inflation, yearly 

average room rates increased by 11 percent between 2010 and 2013. 

In addition, according to the Mariana Visitors Authority, two closed 

hotels may re-open and there are current proposals for the 

construction of two new hotels. While acknowledging the recent 

upturn in tourism, industry representatives characterized the growth 

as an opportunity to recover from several down years and reinvest in 

their properties. They attributed the recent growth in tourism to the 

Chinese and Russian markets and feared the loss of Russian and 

Chinese market if the parole program for these tourists is not 

maintained.

See table 2 for key findings and appendix IV for detailed findings and 

tables on the CNMI.
 

Page 13 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Table 2: CNMI Key Findings

Employment – all sectorsa

Percentage change in numbers employed, 2011-2012 6% decrease (from 25,229 to 23,720)

Percentage change in numbers employed, 2006-2012 45% decrease (from 43,036 to 23,720)

Employment – hotel industryb

Percentage change in number of hourly workers employed by 

questionnaire respondents, 2012-2013

3% increase (from 1,715 to 1,763)

Percentage change in number of hourly workers employed by 

questionnaire respondents, 2007-2013

21% decrease (from 1,590 to 1,252)

Inflation-adjusted earnings– all sectors

d

a

Percentage change in average inflation-adjusted earnings of those 

employed, 2011-2012

1% increase

Percentage change in average inflation-adjusted earnings of those 

employed, 2006-2012

2% decrease

Hotel industry wagesb

Percentage of hourly-wage hotel workers employed by questionnaire 

respondents in 2013 with wages affected by a September 2014 minimum 

wage increase

84%

Percentage of hourly-wage hotel workers employed by questionnaire 

respondents in 2010 who would be affected by minimum wage increases 

through 2018 (when minimum wage reaches $7.25)

94%

Hotel employer actionsb

• Employers representing 30 percent of workers employed by questionnaire respondents laid off hourly-wage workers. Of those, 60 

percent attributed layoffs to the minimum wage to a moderate extent; none attributed layoffs largely to the minimum wage 

increases.

• Employers representing 19 percent of workers employed by private sector questionnaire respondents planned additional layoffs 

of hourly-wage workers. Of those, all attributed their plans to the minimum wage increases.

Hotel worker viewsc

CNMI workers we spoke with said they would like pay increases but were concerned about losing jobs and work hours.

Source: GAO analysis of data from GAO hotel industry questionnaire, CNMI government tax data, CNMI Consumer Price Index, and 

CNMI discussion groups.

Notes: Employers responding to GAO’s first questionnaire in 2009 included hotels and other tourismrelated employers, as well as other employers with 50 or more employees. Questionnaire updates in 

2010 covered hotels and other tourism-related employers and excluded employers in other industries, 

smaller employers, employers that did not respond to the 2009 questionnaire, and employers that had 

closed between 2007 and the date of our questionnaire, including garment factories. The 2013 

questionnaire covered hotels with more than 50 employees. Based on CNMI tax data, respondents 

represented about 7 percent of the total CNMI workforce in 2012. CNMI questionnaire respondents 

provided hourly wage data on a total of 1,249 workers as of June 2013. Responses are not 

necessarily representative of all CNMI workers and employers. Percentages of employers reporting 

actions are weighted by each employer’s total number of workers in 2013. Percentages of employers 

that attributed each action largely to minimum wage increases are weighted to reflect those 

employers’ number of workers relative to all workers employed by respondents that reported the 

action.

a

Based on CNMI tax data.

b

Based on responses to GAO’s CNMI hotel industry questionnaire.

c

Based on discussion group results.
 

Page 14 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

d

The 2007-2013 count differs from the 2012-2013 count because it excludes those hotels that did not 

respond to our survey in 2009 and provide 2007 data.

Both American Samoa and the CNMI have experienced decreases in 

employment and earnings since minimum wage increases began in 2007. 

Although minimum wage increases play a role in each economy, factors 

beyond minimum wage increases will also continue to play a role. Both 

American Samoa and the CNMI have short-term potential to grow their 

primary sectors–American Samoa through the opening of a new cannery 

in 2015 and the CNMI through the opening of new hotels. However, 

according to cannery officials we spoke with, changes in tariffs applicable 

to other countries exporting tuna or competition from low-wage foreign 

competitors could compel the tuna canning industry to leave American 

Samoa. In the CNMI, the projected decrease in the permitted foreign 

labor force remains a concern for CNMI employers. In addition, CNMI 

tourism faces competition from other locations and is susceptible to 

economic trends in its tourist markets and the continuing use of parole to 

support Chinese and Russian tourism.

We provided a draft of this report to officials at the Department of 

Commerce, Department of the Interior, Department of Labor, the Social 

Security Administration, and the governments of American Samoa and 

the CNMI for review and comment. We received written comments from 

the governments of American Samoa and the CNMI, which are reprinted 

in appendixes VI and VII, respectively. We also received technical 

comments from the Departments of the Interior, Commerce and Labor; 

and SSA, which we incorporated as appropriate. We also shared excerpts 

of the draft with several private sector entities and incorporated their 

comments as appropriate.

Following are summaries of the written comments from American Samoa 

and the CNMI, with our responses.

The government of American Samoa noted that our draft report captured 

the consensus among American Samoan stakeholders to postpone the 

2015 minimum wage increase, but expressed a number of concerns 

about the information sources we used. The government stated that there 

is significant evidence that the 2010 U.S. census grossly undercounted 

the American Samoa population. We have edited the footnote in the 

report to further describe American Samoa’s concerns and have reprinted 

their assertions in the Appendix VI of the report, but the employment 

Concluding 

Observations

Agency Comments 

and Our Evaluation
 

Page 15 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

counts we present are not based on Census data and would not be 

affected by an underestimate in the 2010 decennial census.

The government next expressed concern that, given the challenges to 

collecting validated data in American Samoa, the data presented in our 

report did not include a wide enough scope of data from other sources 

and, as a result, yielded misleading statements and findings. In Appendix 

I of our report, we reported and evaluated alternative data sources. We 

have worked with the American Samoa Office of Taxation to review and 

verify their data and believe that the use of its data, in conjunction with 

cannery employment data from our questionnaire, is appropriate for 

determining the changes in employment and earnings in American 

Samoa.

The government additionally stated that our report failed to capture the 

multiplier effect of employment cutbacks in other industries in addition to 

tuna canning and the significant number of business closures during this 

period. However, each of the data series we present in Appendix I covers 

employment in all sectors and so would capture employment and 

earnings throughout the economy.

The government of American Samoa also restated its opposition to 

further minimum wage increases and proposed that American Samoa set 

its own minimum wage schedule. In expressing its opposition, the 

government cited American Samoa’s vulnerability to elements of the 

international and national market place and U.S. international trade and 

national budget policies. The government additionally stated that tethering 

the American Samoa minimum wage to that of the United States is 

misguided; because of the differences between the U.S. and American 

Samoa economies, American Samoa can never attain equality with the 

U.S. minimum wage. The government proposed instead that American 

Samoa be allowed to develop its own minimum wage schedule with 

appropriate guidance and oversight provided by the U.S. Department of 

Labor and U.S. Department of the Interior. See the full text of American 

Samoa’s comment in Appendix VI.

The government of American Samoa also provided us with technical 

comments that included updated CPI data correcting calculation errors 

made by their staff. Correcting these errors slightly changed the reported 

CPI. For example, the CPI for the 4th quarter of 2012 increased from 

130.5 to 131.1. We have recalculated the inflation-adjusted wages 

accordingly in this report. Additionally, during the comment period, data 

reviews by American Samoa Office of Taxation and GAO resulted in 
 

Page 16 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

corrections to American Samoa employment and wage data for 2007-

2009. We have incorporated this corrected data.

Comments from the Department of Commerce of the CNMI stated that 

the indicators provided an objective overview of CNMI economic 

conditions and the report captured the general condition of what is 

happening in the CNMI. The CNMI comment letter additionally reiterated 

challenges faced by the CNMI from uncertainty regarding the phase-out 

of foreign worker permits, the cost of fuel and utilities, and increases in 

health care costs. The Secretary of Commerce additionally stated that he 

hoped the report will elevate the CNMI’s discussion with federal agency 

partners regarding baseline assessments and data, and how a wage 

increase may affect enrollment and eligibility for public assistance 

programs, such as Medicaid. 

We are sending copies of this report to interested congressional 

committees. We also will provide copies of this report to the U.S. 

Secretaries of Commerce, the Interior, Labor, to the Commissioner of 

Social Security, and to the Governors of American Samoa and the CNMI. 

In addition, the report will be available at no charge on the GAO website 

at http://www.gao.gov.

If you or your staffs have questions about this report, please contact 

David Gootnick at (202) 512-3149 or gootnickd@gao.gov. Contact points 

for our Offices of Congressional Relations and Public Affairs may be 

found on the last page of this report. GAO staff who made key 

contributions to this report are listed in appendix VIII. 

David Gootnick

Director, International Affairs and Trade
 

Page 17 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

List of Committees

The Honorable Mary Landrieu

Chairwoman

The Honorable Lisa Murkowski

Ranking Member

Committee on Energy and Natural Resources

United States Senate

The Honorable Tom Harkin

Chairman

The Honorable Lamar Alexander

Ranking Member

Committee on Health, Education, Labor, and Pensions

United States Senate

The Honorable John Kline

Chairman

The Honorable George Miller

Ranking Member

Committee on Education and the Workforce

House of Representatives

The Honorable Barbara Mikulski

Chairwoman

The Honorable Richard Shelby

Ranking Member

Subcommittee on Commerce, Justice, Science, 

 and Related Agencies

Committee on Appropriations

United States Senate

The Honorable Jack Reed

Chairman

The Honorable Lisa Murkowski

Ranking Member

Subcommittee on Interior, Environment, 

 and Related Agencies

Committee on Appropriations

United States Senate
 

Page 18 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The Honorable Tom Harkin

Chairman| 

The Honorable Jerry Moran

Ranking Member

Subcommittee on Labor, Health and Human Services, 

 Education, and Related Agencies

Committee on Appropriations

United States Senate

The Honorable Frank Wolf

Chairman

The Honorable Chaka Fattah

Ranking Member

Subcommittee on Commerce, Justice, Science, 

 and Related Agencies

Committee on Appropriations

House of Representatives

The Honorable Ken Calvert

Chairman

The Honorable Jim Moran

Ranking Member

Subcommittee on Interior, Environment, 

 and Related Agencies

Committee on Appropriations

House of Representatives

The Honorable Jack Kingston

Chairman

The Honorable Rosa DeLauro

Ranking Member

Subcommittee on Labor, Health and Human Services, 

 Education, and Related Agencies

Committee on Appropriations

House of Representatives
 

Page 19 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The Honorable John Fleming

Chairman

The Honorable Gregorio Kilili Camacho Sablan

Ranking Member

Subcommittee on Fisheries, Wildlife, Oceans 

 and Insular Affairs

Committee on Natural Resources

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 20 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

This report updates our previous reports on the impact of minimum wage 

increases in American Samoa and the Commonwealth of the Northern 

Mariana Islands (CNMI) and discusses for each territory (1) changes in 

employment and earnings and (2) changes in key industries since the 

most recent federal minimum wage increase and since the increases 

began.1

To describe employment and earnings, we analyzed tax data from the 

American Samoa and CNMI governments and earnings data from the 

U.S. Social Security Administration (SSA) through 2012. We adjusted the 

earnings data using Consumer Price Index (CPI) data for each area. We 

also analyzed responses from GAO’s questionnaire of large employers in 

the American Samoa tuna canning and CNMI hotel industries. To 

describe the status of key industries, we collected responses through the 

industry questionnaire. For both objectives, we conducted discussion 

groups with employers and workers and interviews with public officials. 

We provide additional information on each data source below.

In preparing this report, we reviewed data and interviewed officials from 

the U.S. Departments of the Interior, Commerce, and Labor, as well as 

from SSA. During visits to American Samoa and the CNMI in November 

2013, we conducted interviews and discussion groups with government 

officials, employers, other private sector representatives, and workers to 

obtain views and information on the minimum wage increases. We also 

reviewed U.S. minimum wage laws and other relevant laws and 

regulations. We did not review the extent to which laws were properly 

enforced or implemented. The scope of our study also does not include 

workers in the underground economy, which would include any 

employers that may not comply with laws, including tax, minimum wage, 

immigration, and other laws. We did not review compliance with laws as 

part of this study.

The federal sources generally used to generate data on wages, 

occupations, and employment status for the United States, including the 

 

1

GAO, American Samoa and Commonwealth of the Northern Mariana Islands: Wages, 

Employment, Employer Actions, Earnings, and Worker Views Since Minimum Wage 

Increases Began, GAO-10-333 (Washington, D.C.: Apr. 8, 2010), and American Samoa 

and Commonwealth of the Northern Mariana Islands: Employment, Earnings, and Status 

of Key Industries Since Minimum Wage Increases Began GAO-11-427 (Washington, D.C.: 

June 23, 2011).

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 21 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Current Population Survey and the Current Employment Statistics 

program, do not cover American Samoa or the CNMI. Because these 

data sources were unavailable, we collected our own data in each area.

In American Samoa and the CNMI in 2013, we collected updated data on 

employment, wage structure, and past and planned employer actions 

covering 2010 through 2013 from the CNMI’s hotels and the American 

Samoa tuna canning industry.

For our 2013 questionnaire, we defined a large hotel as one that 

employed 50 or more workers in recent years. We sent the questionnaire 

only to hotels with 50 or more workers because we could contact only a 

limited number of hotels in each area, given available resources. We 

confirmed our list of hotels with the Saipan Chamber of Commerce and 

the Hotel Association of the Northern Mariana Islands. We initially sent 

the questionnaire to 15 hotels. Two who responded had less than 50 

employees and were not included in our analysis, bringing the total 

number of hotels in our survey to 13. All but 2 hotels responded.

In accordance with other federal employment surveys and with our 2009 

and 2010 questionnaires, our 2013 employer questionnaire asked for 

wage data for the pay period containing June 12 of 2011, 2012, and 

2013. The questionnaire asked separately for data regarding workers 

paid an hourly wage and workers paid an annual salary. The 

questionnaire also included detailed questions about employers’ past and 

possible future actions, and about the extent to which employers 

attributed these actions to past and future minimum wage increases. (The 

questionnaire is reproduced in app. V.)

Before sending the 2009 questionnaire to employers in 2009, we 

pretested it over the phone with three employers in the CNMI and two in 

American Samoa to make sure that the questions were clear and 

comprehensive, the data were readily obtainable, and the questionnaire 

did not place an undue burden on employers. While we eliminated some 

questions in our 2010 and 2013 questionnaires, revisions to remaining 

questions were minor and did not require additional pretesting.

We administered the questionnaire between September 2013 and 

December 2013. Employers received the questionnaire by e-mail in an 

attached form that they could return electronically after marking 

checkboxes or entering responses in open-answer boxes. We conducted 

nonresponse follow-up while in the CNMI. We also contacted 

Employer Questionnaire
Appendix I: Objectives, Scope, and 

Methodology

Page 22 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

nonrespondents by e-mail and phone. In addition, we contacted 

respondents to clarify responses and request any missing data.

Because of the lack of data on the entire workforce, it is difficult to 

precisely state the percentage of the workforce that our questionnaire 

represents. In 2013, all three of the American Samoa employers that 

received our questionnaire provided responses, resulting in a response 

rate of 100 percent. Based on American Samoa tax data, our 

respondents represented, in 2012, about 14 percent of the total 

workforce. Based on CNMI tax data, our respondents represented, in 

2012, about 7 percent of the total workforce.

In reporting the percentages for questionnaire responses in the CNMI, we 

weighted each percentage to reflect the proportion of workers employed 

by the responding employers relative to all workers employed by all 

questionnaire respondents. As a result, the responses of larger 

employers affect our findings more than those of smaller employers. In 

addition to asking a direct question about number of employees, the 

questionnaire asked respondents to complete a separate table listing the 

number of employees at each wage or salary level. Separate tables were 

required for hourly wage and salaried workers. To apply the weights, we 

multiplied the number of employees by the employer response, then 

divided that number by the total number of employees in the sample. For

example, if three of five employers attributed an action to the minimum 

wage to a moderate extent, the unweighted response would be 60 

percent. However, if those three employers represented 300 of 400 

employees, the weighted response that we report would be 75 percent. 

Among CNMI employer responses, two hotels accounted for almost half 

of workers employed by questionnaire respondents, so those hotels’ 

responses substantially affected our questionnaire results.

For our analyses of the effect of minimum wage increases, we obtained 

information from our questionnaire on employment and earnings for both 

hourly wage and salaried workers during the pay periods that included 

June 12, 2011, 2012, and 2013. We analyzed these responses in 

conjunction with data we collected from the same employers for previous 

reports regarding the pay periods that included June 12, 2007, 2008, 

2009, and 2010. For hourly wage workers, respondents were asked to 

provide the number of employees paid at each wage rate. For salaried 

workers, respondents were asked the number of full-time and part-time 

workers paid at each salary level. Hourly wage workers represented 

about 98 percent of American Samoan cannery workers and 90 percent 

of CNMI hotel workers. To determine the number of workers affected by 
Appendix I: Objectives, Scope, and 

Methodology

Page 23 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

each minimum wage increase, we assumed that all workers employed by 

questionnaire respondents were legally required to receive the minimum 

wage. If some are not covered or are exempt, the minimum wage 

increases would affect fewer workers. We did not independently verify 

that the wage and other information provided to us were correct. After 

recording the questionnaire data, we verified all keypunched records by 

comparing them with the corresponding questionnaires and corrected the 

errors we found.

The questionnaire responses cannot be used to make inferences about 

all employers and workers in the CNMI and American Samoa, or about all 

employers and workers in the CNMI hotel industry. First, because the lists 

of employers that received the questionnaire included only those in the 

American Samoa tuna canning and CNMI hotel industries (with more than 

50 employees), the lists were not representative of all employers or of all 

employers in the CNMI hotel industry. Second, some nonresponse bias 

may exist in some of the questionnaire responses, since characteristics of 

questionnaire respondents may differ from those of nonrespondents and 

nonrecipients in ways that affect the responses (e.g., if those that employ 

a larger number of workers would have provided different responses than 

those that employ a smaller number). Last, it is possible that some 

employers’ views of the minimum wage increases may have influenced 

their responses.

To study CNMI hotel minimum wage and payroll costs in relation to 

operating costs, we analyzed data provided by CNMI hotel questionnaire 

respondents on 2012 annual payroll before deductions for taxes and 

benefits, Social Security and Medicare contributions under the Federal 

Insurance Contributions Act (FICA), payments for employee benefits, and 

other operating expenses. For this and other analyses in this report, we 

excluded nonwage labor costs due to the minimum wage increases, such 

as increases in employer payroll tax contributions under FICA. In 2011, 

for example, employers contributed the equivalent of 6.2 percent of 

employee wages to Social Security and 1.45 percent to Medicare, up to 

$106,800 in employee wages.

To report on overall employment and earnings, we relied on local 

government data. The CNMI Department of Finance provided tax data for 

2006 to 2012 with counts of the number of individuals in different ranges 

of earnings for both public and private sector workers and for both 

citizens and noncitizens. For the CNMI, this data source and use is the 

same as in the two prior GAO reviews of minimum wage changes. To 

Employment and Earnings 

Data
Appendix I: Objectives, Scope, and 

Methodology

Page 24 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

calculate mean wages in the CNMI, we divided the total sum of earnings 

by the number of workers with non-zero wages.

In the case of American Samoa, we used a combination of local 

government data and business responses to GAO’s questionnaire to 

report on employment and earnings. The American Samoa Office of 

Taxation provided tax data with the number of workers employed by each 

employer from 2007 to 2012, and the total sum of earnings over the year. 

However, the American Samoa tax data excluded cannery employees in 

some years. To address this gap, we added counts of cannery workers 

from our questionnaire. The American Samoa tax data has a count of 

persons employed during the tax year by the employer. The cannery 

employment figure, from GAO’s questionnaire, is a count of employees at 

the canneries as of a specific pay period in June of the given year. To 

calculate mean wages for the American Samoa tax data, we divided the 

total sum of earnings by the number of workers across all employers. To 

calculate the mean wages for cannery workers, we assumed that all 

cannery workers earned the minimum wage and worked full-time over the 

year. To calculate the overall mean wage for American Samoa, we 

averaged these estimates, weighting by the number of workers in each 

category.

The initial data provided by the Office of Taxation had a number of gaps, 

such as missing numbers of employees or wages for several employers. 

At our request, the Office of Taxation researched and provided updated 

data that was far more complete, but lacked employee counts for some 

employers in 2007 and 2010. We used the reported number of employees 

in the adjacent year or years to estimate these missing values. In 2007, 

the American Samoa tax data were missing the number of employees for 

39 of the 408 employers. We were able to estimate the number of 

employees in 2007 for 34 of these 39 by using their reported number of 

employees in other years. This estimation added 391 employees to the 

2007 total. Similarly, in 2010, we added 499 employees to the total by 

interpolating the 2010 number of employees for the American Samoa 

Community College from the reported number of employees in 2009 and 

2011. The data in 2008, 2009, 2011, and 2012 did not require estimation 

of such missing values.

In addition to the tax data, we obtained SSA data (as of November 15, 

2013) on the employment and earnings of individual taxpayers in 

American Samoa to update our analysis of data for the previous report. 

While the SSA data cover all types of workers in American Samoa, three 

large groups of people in the CNMI were not required to report earnings 
Appendix I: Objectives, Scope, and 

Methodology

Page 25 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

to SSA and thus were excluded from the SSA data—CNMI government 

workers and immigrant workers from the Philippines and Korea. In 2012, 

these three groups represented approximately 40 percent of all CNMI 

workers, according to CNMI government tax data. We have chosen not to 

report the CNMI SSA data due to these coverage gaps.

To perform the analysis of SSA data, we first identified American Samoa 

workers by using the recorded territory or state code for the worker. 

However, we determined that, in 2011 and 2012, this method resulted in 

implausibly large counts. After consultation with SSA officials, we found 

that data entry issues had resulted in a number of extra entries with the 

American Samoa state code of “AS.” For example, some entries for 

addresses in Texas had entered the last two letters of the state, “AS” in 

the state field. Consequently, we additionally checked the American 

Samoa data to exclude those entries that, though they had an American 

Samoa state code, had a city or zip code that did not match American 

Samoa. We performed an additional inspection of the records that had 

blank city and zip code fields and concluded that the vast majority of 

persons with an “AS” state code but missing city and zip code entries had 

characteristically Samoan names. We therefore also included those 

records that had an “AS” state code and a blank city and zip code field. 

These additional checks reduced the count for 2011 and 2012 and also 

slightly reduced the reported count based on SSA data in earlier years. 

SSA officials attributed these data errors in 2011 and 2012 to intermittent 

data entry errors by employers and data submitters. 

We compared our counts of employees based on American Samoa tax 

data and GAO questionnaire responses to employment counts based on 

SSA data. In addition, we compared these series to employment counts 

in the American Samoa Statistical Yearbook (based on a combination of 

government sources for public sector employers and business license 

applications for private sector employers). There are some differences 

between the data. For example, a person (as counted in the Social 

Security data) could have multiple positions (as counted in the other 

sources). As table 3 shows, all three employment counts fell from 2007 to 

2012 and also had roughly comparable changes from 2007 to 2009—

years covered by our previous report on the minimum wage in American 

Samoa. However, the trend in the Social Security data was much larger in 

magnitude overall from 2007 to 2012. Specifically, the drop in 

employment from 2007 to 2012 was approximately 41 percent based on 
Appendix I: Objectives, Scope, and 

Methodology

Page 26 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

SSA data but about 11 percent based on combined American Samoa tax 

and GAO questionnaire data and 13 percent in the Statistical Yearbook.2

Table 3: Alternative Measures of Employment in American Samoa

The smaller drop was more in keeping with the Bureau of Economic 

Analysis’s calculation of a flat or slightly declining real GDP in those 

years.

American Samoa tax and 

GAO questionnaire data

American Samoa 

Statistical Yearbook

Social Security 

Administration

2007 17,677 17,047 18,438

2008 19,229 16,990 19,034

2009 16,897 14,108 15,316

2010 17,211 18,862 11,728

2011 15,552 18,028 13,006

2012 15,790 14,806 10,904

Source: GAO analysis of Social Security Administration Data, American Samoa tax data, GAO questionnaire responses, and American 

Samoa Statistical Yearbook.

We could not determine an explanation for the divergence among the 

data sources. Because the drop was larger when persons were counted, 

some of the difference could reflect the loss of cannery workers, who may 

have been less likely than other workers to hold multiple positions. 

However, there were also cases where the year-to-year changes differed. 

For example, from 2011-2012, both the Social Security and the Statistical 

yearbook show decreases of about 16 percent and 18 percent, 

respectively, but the figure based on American Samoa tax and GAO 

questionnaire data remained largely unchanged. We determined that the 

data from the American Samoa Office of Taxation were more reliable than 

SSA data for our purpose of describing employment and earning trends in 

more recent years.

Because the U.S. Bureau of Labor Statistics collects CPI data on the U.S. 

50 states but not on American Samoa or the CNMI, we relied on other 

sources of data to compare changes in earnings or wage rates to 

changes in prices. We obtained historical data on the CPI from both areas 

 

2

As with the count of employment, the drop in inflation adjusted earnings based on SSA 

data was larger than the drop based on American Samoa tax data. Specifically, inflationadjusted mean wages in American Samoa based on SSA data showed an 11 percent 

decrease and based on American Samoa tax and GAO questionnaire data showed a 3.7 

percent decrease.
Appendix I: Objectives, Scope, and 

Methodology

Page 27 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

to estimate inflation-adjusted earnings.3 For both American Samoa and 

the CNMI, we used quarterly CPI data from the first quarter of 2006 to the 

fourth quarter of 2012. To produce an annual CPI series, we averaged 

the four quarters in each year. In addition, for American Samoa, because 

the CPI was rebased in the fourth quarter of 2007, we recalculated the 

quarterly index series from the fourth quarter of 2008 back to the fourth 

quarter of 2007 by finding a rebasing factor such that the old and new 

indexes in the fourth quarter of 2007 were identical. For both CNMI and 

American Samoa, we interviewed agency officials responsible for 

producing the quarterly CPI estimates.

We conducted structured discussion groups with Chamber of Commerce 

members in American Samoa and the CNMI to collect information on the 

impact of the minimum wage increases on employers. For each 

discussion group, the Chamber of Commerce invited members to 

participate. In the CNMI, we also held a discussion group with members 

of the Hotel Association of the Northern Mariana Islands and interviewed 

hotel human resource managers. The number of participants in each 

group ranged from 4 to 20 business owners and representatives.

To collect information on workers’ views of the minimum wage increases, 

we conducted structured discussion groups with worker groups in the 

CNMI and American Samoa. In American Samoa, we arranged, in 

cooperation with Star-Kist, a worker discussion group at the Star-Kist 

cannery. In the CNMI, we conducted one discussion group with 

employees of hotels in Saipan, arranged by Hotel Association of the 

Northern Mariana Islands and another with employees of the Tinian 

Dynasty, arranged through that hotel. The number of participants in each 

group ranged from 3 to 10.

All discussion groups were moderated by a GAO employee following a 

structured guide with open-ended questions about the minimum wage 

increases and related topics. Discussion groups are generally designed to 

obtain in-depth information about specific issues that cannot be easily 

 

3

For further information on the CPI, see CNMI quarterly reports on the CNMI Department 

of Commerce website. http://commerce.gov.mp/divisions/central-statistics/, accessed 

February 24, 2014. For American Samoa quarterly reports, see the American Samoa 

Department of Commerce website. http://americansamoa.gov/index.php/2012-04-25-19-

44-32/2012-04-25-19-52-04/departments/commerce, accessed February 24, 2014.

Discussion Groups
Appendix I: Objectives, Scope, and 

Methodology

Page 28 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

obtained from single interviews. Methodologically, they are not designed 

to provide results generalizable to a larger population or provide 

statistically representative samples or quantitative estimates. The views 

represented are those only of the participants in our groups and may or 

may not be representative of the population of employers and workers in 

the CNMI and American Samoa. Therefore, the experiences of other 

employers and workers may be different from those who participated in 

our discussion groups. In addition, the groups and participants in the 

groups were not random samples of employers and workers.

We also analyzed industry data. For example, to determine hotel room 

prices and hotel occupancy rates in the CNMI, we collected data from the 

Hotel Association of the Northern Mariana Islands and conducted related 

follow-up. In addition, the Marianas Visitors Authority provided data on 

arrivals by country of residence. We found the data used to be reliable 

and relevant for the purposes of our report.

In general, to establish the reliability of the data that we used for reporting 

trends and statistics for both American Samoa and the CNMI, we 

systematically obtained information about the way in which data were 

collected and tabulated. When possible, we checked for consistency 

across data sources. While the data had some limitations, we determined 

that the available data were adequate and sufficiently reliable for the 

purposes of our review.

Our review had certain limitations in addition to those already noted. In 

particular, although our approach yielded information on trends in 

employment, wages, and earnings in both areas, we were not able to 

distinguish between the effects of minimum wage increases and the 

effects of other factors, including the global recession beginning in 2009, 

fluctuations in energy prices, global trade liberalization, and the 

application of U.S. immigration law to the CNMI. In addition, our review of 

minimum wage increases is limited to American Samoa and the CNMI, 

and we did not study minimum wage increases in the U.S. economy more 

broadly.

We conducted this performance audit from July 2013 to February 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

Other Local Data

Data Reliability and 

Limitations
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Minimum Wage Increases in 

American Samoa and CNMI

Page 30 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The federal minimum wage was first enacted as part of the Fair Labor 

Standards Act of 1938 (FLSA). It had repercussions in the U.S. Virgin 

Islands and Puerto Rico that led the United States, in 1940, to revise the 

application of the law in those territories; the overarching goal of the 

FLSA continued to be pursued there, but at a slower pace than in the 50 

U.S. states.

As of July 2009, the federal minimum wage was set at $7.25 per hour.1

Federal minimum wage laws apply generally to any employee engaged in 

commerce who meets certain conditions, with limited exemptions.2

Certain employees who would otherwise be covered under certain 

requirements of the FLSA may be exempt. For example, individuals 

engaged in agriculture, if their employer is an immediate family member, 

or those catching seafood at sea are exempt from FLSA minimum wage 

and overtime requirements.3

In 2007, the United States enacted legislation that incrementally applies 

the U.S. minimum wage to American Samoa and the CNMI.4

 

1

29 U.S.C. § 206(a)(1)(C).

The 

legislation raised the federal minimum wage in the 50 U.S. states from 

$5.15 to $7.25 per hour over 3 years and, for the first time, also mandated 

a series of $.50 per hour increases beginning in July 2007 to the 

2

The federal minimum wage laws apply to employees engaged in commerce or the 

production of goods for commerce and to employees who work for enterprises engaged in 

commerce or the production of goods for commerce (29 U.S.C. § 206(a)). An enterprise is 

deemed to be engaged in commerce or the production of goods for commerce only if it is 

an activity of a public agency, if its annual gross volume of business is at least $500,000, 

or if it is engaged in the operation of a hospital, health facility, or school (29 U.S.C. § 

203(s)). Businesses in which the only regular employees are immediate family members 

of the owner are not considered to be enterprises engaged in commerce.

3

29 U.S.C. § 213(a)(5)-(6). The seafood exemption only applies to these activities when 

performed at sea, so employees engaged in these activities on shore would not qualify for 

the exemption. See 29 C.F.R. § 784.130 for definition of “at sea.” 

4

Pub. L. No. 110-28, § 8103, 121 Stat. 112, 188 (May 25, 2007).

Appendix II: Minimum Wage Increases in 

American Samoa and CNMI

Application of Federal 

Minimum Wage Law to 

American Samoa and 

CNMI
Appendix II: Minimum Wage Increases in 

American Samoa and CNMI

Page 31 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

minimum wages in both American Samoa and CNMI that would 

eventually bring them to parity with the federal minimum wage.5

The 2007 legislation changed decades of federal law that had allowed 

both American Samoa and the CNMI to apply minimum wage rates 

significantly lower than the minimum wage for the 50 U.S. states. Prior to 

the 2007 law, American Samoa’s minimum wages were set for each of 18 

industries through biennial reviews by special industry committees 

established by the U.S. Department of Labor. American Samoa’s 

minimum wages in 2006 ranged from $2.68 to $4.09. Under the 2007 law, 

American Samoa retained its separate minimum wages by industry, with 

each to be increased by $.50 per hour until it reaches the U.S. minimum 

wage. The CNMI had authority to set its own minimum wage under its 

1976 Covenant with the United States; its minimum wage in 2006 was 

$3.05.6

Since 2007, the minimum wages in American Samoa have increased by 

$.50 three times, with the minimum wage of the lowest paid workers now 

set at $4.18 and the minimum wage of workers in the tuna canning 

industry set at $4.76. The most recent minimum wage increase in 

American Samoa was on May 25, 2009. In 2010, the U.S. enacted a law 

delaying the scheduled American Samoa minimum wage increases for 2 

years, providing for no increase in 2010 or 2011.7 Further changes to the 

law in 2012 provided for no increases in 2012, 2013, and 2014 and 

changed the interval of the increases from every year to every 3 years.8

 

5

In addition to the mandated GAO reports on the minimum wage in American Samoa and 

CNMI, the federal government has conducted or funded several reports on minimum wage 

increases in American Samoa and the CNMI in recent years. For a summary of previous 

federal reports, see appendix II of 

Under current law, therefore, the next minimum wage increase will occur 

on September 30, 2015, and the minimum wage in the American Samoa 

tuna canning industry will reach the current U.S. minimum wage of $7.25 

on September 30, 2027. Under current law, the minimum wage for 

GAO-11-427. The Departments of Commerce, Labor, 

and Interior have not conducted any additional studies of the minimum wage since our 

previous report. 

6

Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political 

Union with the United States of America, §503(b). See 48 U.S.C. §1801 note.

7

Pub. L. No. 111-244, § 2,124 Stat. 2618 (Sept. 30, 2010).

8

Pub. L. No. 112-149, § 4,126 Stat. 1145 (July 26, 2012).

Minimum Wage Law in 

American Samoa
Appendix II: Minimum Wage Increases in 

American Samoa and CNMI

Page 32 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

American Samoa’s lowest-paid workers will reach the U.S. minimum 

wage on September 30, 2033 (see table 4). If the original 2007 law 

increasing the minimum wage had not been subsequently amended, the 

minimum wage in the tuna canning industry would have reached the U.S. 

minimum wage in May 2014.

Table 4: Past and Scheduled Minimum Wage Increases in American Samoa

Date

Minimum wage (tuna 

canning industry)

Lowest minimum wage 

(garment manufacturing)

Before July 25, 2007 $3.26 $2.68

July 25, 2007 $3.76 $3.18

May 25, 2008 $4.26 $3.68

May 25, 2009 $4.76 $4.18

September 30, 2015 $5.26 $4.68

September 30, 2018 $5.76 $5.18

September 30, 2021 $6.26 $5.68

September 30, 2024 $6.76 $6.18

September 30, 2027 $7.25 $6.68

September 30, 2030 $7.25 $7.18

September 30, 2033 $7.25 $7.25

Source: GAO analysis of American Samoa Industry Committee wage categories, 29 C.F.R. § 697.2, Pub. L. No. 110-28, Pub. L. No. 

111-244, and Pub. L. No. 112-149.

Congress raised the CNMI minimum wage from $3.05 to $3.55 per hour 

in July 2007 and required a $.50 increase every year thereafter until the 

CNMI minimum wage equals the full federal minimum wage.9 In 2010, the 

U.S. enacted a law delaying the scheduled minimum wage increase for 1 

year, providing for no increase in 2011.10 On September 30, 2012, the 

scheduled annual increase raised the CNMI minimum wage to the current 

$5.55 per hour. In September 2013, additional legislation cancelled the 

scheduled 2013 and 2015 annual increases.11

 

9

Pub. L. No. 110-28, § 8103(b)(1), 121 Stat. 112, 188 (May 25, 2007).

Under current law, 

therefore, the next minimum wage increase will occur on September 30, 

2014, and the CNMI will reach the current U.S. minimum wage on 

September 30, 2018 (see table 5). If the original 2007 law increasing the 

10Pub. L. No. 111-244, § 2, 124 Stat. 2618 (Sept. 30, 2010).

11Pub. L. No. 113-34, § 2, 127 Stat. 518 (Sept. 18, 2013).

Minimum Wage Law in CNMI
Appendix II: Minimum Wage Increases in 

American Samoa and CNMI

Page 33 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

minimum wage had not been subsequently amended, the minimum wage 

in the CNMI would have reached the U.S. minimum wage in May 2015.

Table 5: Past and Scheduled Minimum Wage Increases in CNMI

Date Minimum wage

Before July 25, 2007 $3.05

July 25, 2007 $3.55

May 25, 2008 $4.05

May 25, 2009 $4.55

September 30, 2010 $5.05

September 30, 2012 $5.55

September 30, 2014 $6.05

September 30, 2016 $6.55

September 30, 2017 $7.05

September 30, 2018 $7.25

Source: GAO analysis of Pub. L. No. 110-28, Pub. L. No. 111-244, and Pub. L. No. 113-34.

In February 2014, the Congressional Budget Office (CBO) issued a study 

of two options for raising the federal minimum wage.12 The first option 

would raise the minimum wage to $10.10 per hour and the second would 

raise it to $9.00 per hour.13

 

12Congressional Budget Office, The Effects of a Minimum-Wage Increase on Employment 

and Family Income, (Washington, D.C.: Feb. 2014).

To perform its study, CBO identified the 

number of workers who would be affected by these options from Census 

data. CBO then reviewed existing research findings on the elasticity of 

employment and minimum wage increases—that is, the percentage 

change in employment induced by a percentage change in the minimum 

wage—and estimated the effect of each option on employment, income, 

and poverty. CBO chose the value of the elasticity for each option based 

13The $10.10 option would increase the U.S. minimum wage in three steps: to $8.20 on 

July 1, 2014; to $9.15 one year after that; and to $10.10 after another year. After reaching 

$10.10 in 2016, the minimum wage would be adjusted annually for inflation as measured 

by the consumer price index. The $9.00 option would increase the U.S. minimum wage 

from $7.25 per hour to $8.10 on July 1, 2015, and to $9.00 on July 1, 2016. After reaching 

$9.00 in 2016, the minimum wage would not be subsequently adjusted for inflation.

CBO Study of Options to 

Increase the Minimum 

Wage in the United States
Appendix II: Minimum Wage Increases in 

American Samoa and CNMI

Page 34 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

on estimates of this elasticity from previous research.14 However, 

because there is considerable uncertainty about the effect of minimum 

wage increases, CBO developed a range of estimates.15

The two options of the CBO study each assumed increases in the 

minimum wage that are smaller in size than those that occurred from 

2007 to 2009 in American Samoa and the CNMI.16 CBO also found that 

the two options would affect a much smaller percentage of U.S. workers 

than we found would be affected by future minimum wage increases for 

workers in the key industries of American Samoa and the CNMI.17

 

14We similarly noted in a previous report on the CNMI in August 2008 that, based on a 

review of economic literature, there may have been consensus that the overall effect of 

minimum wage increases on employment is negative, but there was no consensus on the 

size of the effect. See GAO-08-791. 

15At the midpoint of its range of estimates, CBO found that the $10.10 option would 

decrease total U.S. employment by about 500,000 workers, but would increase the 

earnings of about 16.5 million workers and raise 900,000 people above the poverty level. 

CBO estimated that the $9.00 option would decrease total U.S. employment by about 

100,000 workers, but would increase the earnings of about 7.6 million workers and raise 

300,000 people above the poverty level.

16Under the $10.10 option the U.S. minimum wage would increase 39 percent in 2 years; 

under the $9 option, it would increase 24 percent in one year. Minimum wages in 

American Samoa for tuna canning workers increased 46 percent in 22 months (between 

July 24, 2007 and May 25, 2009); there have been no increases since 2009. The CNMI 

minimum wage increased 49 percent in the same time period and 82 percent from July 24, 

2007 to September 30, 2012; there have been no increases since 2012.

17CBO found that the next increase under the $10.10 option would affect about 6 percent 

of U.S. workers in 2014 and the 2016 increase would affect 14 percent of workers. Under 

the $9.00 option, the 2015 increase would affect about 4 percent of U.S. workers and the 

2016 increase would affect 8 percent. In contrast, the next 50 cent per hour increase in 

American Samoa in 2015 would affect 79 percent of current hourly tuna canning workers. 

All minimum wage increases through 2027, when the American Samoa tuna canning 

minimum wage reaches $7.25, would affect 98 percent of current hourly tuna canning 

workers. See GAO’s analysis in Appendix III. The next 50 cent increase in the CNMI, in 

2014, would affect 84 percent of current hourly hotel workers. Minimum wage increases 

through 2018, when the CNMI minimum wage reaches $7.25, would affect 94 percent of 

current hourly hotel workers. See GAO’s analysis in Appendix IV.
Appendix III: American Samoa

Page 35 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

American Samoa comprises five volcanic islands and two coral atolls with 

a combined land area of 76 square miles—slightly larger than 

Washington, D.C.—located about 2,600 miles southwest of Hawaii (see 

fig. 1).

Figure 1: Map of American Samoa

Appendix III: American Samoa

Background
Appendix III: American Samoa

Page 36 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The 2010 decennial census found American Samoa’s population to be 

55,519, a decrease of 2.5 percent from its 2000 population.1

Figure 2: Pago Pago Harbor

Approximately 98 percent of the population lives on the main island of 

Tutuila, and most economic activity and government operations take 

place in and around the harbor of the capital of Pago Pago. Most of 

Tutuila, however, consists of rugged terrain, with relatively little level land 

(see fig. 2).

From 1900 through 1904, the U.S. government negotiated control over 

American Samoa,2

 

1

The American Samoa government has stated that it believes the 2010 census to be an 

undercount due to a mismatch between the Census count and American Samoa data on 

births, deaths, outmigration and other data, as well as the omission of undocumented 

immigrants who feared deportation. See the American Samoa comment letter in Appendix 

VI of this report for additional detail.

and the U.S. Navy subsequently took responsibility for 

federal governance of the territory. In 1951, governance was transferred 

2

Two deeds of cession were initially completed between Samoan chiefs, or matai, and the 

United States in 1900 and 1904 and were ratified by the federal government in 1929. In 

these deeds, the United States pledged to promote peace and welfare, establish a good 

and sound government, and preserve the rights and property of the people. See 45 Stat. 

1253, c. 281 (Feb. 20, 1929), codified at 48 U.S.C. §1661.

American Samoa–U.S. 

Relations
Appendix III: American Samoa

Page 37 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

to the Secretary of the Interior.3 In 1960, American Samoa residents 

adopted their own constitution. Amendments to the constitution of 

American Samoa can only be made by the U.S. Congress.4 Persons born 

in American Samoa are U.S. nationals but may apply to become 

naturalized U.S. citizens.5 U.S. noncitizen nationals from American 

Samoa have the right to travel freely, live, and work throughout the United 

States.6 American Samoa exercises authority over its immigration system 

and customs through locally adopted laws.7

Additionally, the U.S. government has supported American Samoa’s 

economy through trade policies that have provided tariff-free access to 

the United States for canned tuna and tax policies that have reduced 

federal taxes on income earned by qualifying U.S. corporations investing 

in American Samoa. Changes to various free trade agreements within the 

last decade, however, have lowered U.S. tariffs on tuna exported from 

several other countries, reducing the American Samoa canneries’ 

 

3

Transfer of Administration of American Samoa, Exec. Order No. 10,264, 16 Fed. Reg. 

6419 (1951). The Secretary exercised broad powers with regard to American Samoa, 

including “all civil, judicial, and military powers” of government in American Samoa. 48 

U.S.C. § 1661(c).

4

48 U.S.C. § 1662a.

5

American Samoa residents have many of the rights of citizens of the 50 states but cannot 

vote in U.S. national elections and do not have voting representation in the final approval 

of legislation by the full Congress. The congressional delegate from American Samoa has 

many of the same congressional privileges as other representatives, including a vote in 

committee, but cannot vote in the House of Representatives.

6

22 C.F.R. § 53.2, § 41.0. Noncitizen nationals do not have the same preferences as U.S. 

citizens for sponsoring immediate family members for family-based immigration visas. To 

qualify for the same preference categories as citizens, noncitizen nationals must become 

naturalized citizens of the United States, which includes a requirement to reside in the 

United States for 3 months (8 C.F.R. §325.2). Additionally, individuals who are residents 

of the U.S. insular areas pay no federal income tax on income from sources within the 

insular areas; however, their wages are subject to Social Security and Medicare taxes.

7

American Samoa is the only insular area that operates both its own customs and 

immigration programs. The U.S. government operates the immigration functions in other 

insular areas, such as Guam, the CNMI, and the U.S. Virgin Islands; however, each of 

these insular areas operates under its own customs laws. 
Appendix III: American Samoa

Page 38 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

competitive advantage.8 In addition, the potential Trans-Pacific 

Partnership includes one tuna producing country, Vietnam, which could 

pose additional competition if granted tariff-free access to the U.S. 

market.9 Under the Internal Revenue Code, qualifying American Samoa 

tuna canneries have received a tax credit for U.S. corporate income 

taxes.10 Canneries in American Samoa have also benefited from 

exemptions from local taxes.11

The U.S. Department of Commerce’s Bureau of Economic Analysis 

estimated American Samoa’s 2012 gross domestic product (GDP) at 

$725 million. In 2005 dollars, the real 2012 GDP was $504 million, 4.5 

percent below the real GDP of 2006, the last full year prior to minimum 

wage increases and also slightly lower than the 2009 real GDP (see fig. 

3). Real GDP per capita has increased, however, as the American Samoa 

population has declined. American Samoa’s 2012 real GDP per capita of 

 

8

In August 2002, tariffs decreased on pouched tuna exported from countries covered by 

the Andean Trade Preference Act. The authority to extend duty-free treatment to the 

remaining eligible Andean Trade Preference Act beneficiary countries expired on July 31, 

2013, and has not been renewed. In January 2008, provisions of the North American Free 

Trade Agreement lifted tariffs imposed on canned tuna and other tuna products exported 

from Canada and Mexico. Nevertheless, some of American Samoa’s foreign competitors 

still did not qualify for tariff-free access to the U.S. market.

9

The Trans-Pacific Partnership is a free trade agreement currently being negotiated 

among 12 countries that aims to liberalize trade in goods and services and remove 

barriers to foreign investment. Participating countries as of December 2013 are Australia, 

Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, 

Vietnam, and the United States.

10The tax credits under section 936 of the Internal Revenue Code expired for taxable 

years beginning after December 31, 2005. Section 30A of the Internal Revenue Code 

extended the Section 936 credits for American Samoa until January 1, 2012, subject to 

certain limitations. Corporations that were actively conducting business in American 

Samoa by 1995 who elected Section 936 status in the last taxable year before January 1, 

2006, can claim a section 30A tax credit for taxable years that begin before January 1, 

2012. See 26 U.S.C. §30A note, as amended by Pub. L. No. 111-312, §756, 124 Stat. 

3296, 3322 (Dec. 17, 2010). For tax years beginning January 1, 2012, or later, there are 

new requirements, including that corporations must meet a “qualified production activities 

income” requirement.

11On December 20, 2012, the American Samoa government agreed to a new local tax 

exemption for Star-Kist covering the period from January 1, 2013, to December 31, 2022. 

On October 5, 2010, Tri Marine received exemption from any taxes from the American 

Samoa government for 10 years on the condition that it meets minimum requirements for 

capital investment and employment after 5 years. 

American Samoa Economy
Appendix III: American Samoa

Page 39 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

$9,164 was a 12.5 percent increase over the 2006 real GDP per capita of 

$8,148.

Figure 3: American Samoa Nominal and Real GDP, 2005-2012

The 2010 decennial census reported that American Samoa’s median 

household income remained well below that of the United States, and its 

poverty rate well above. American Samoa’s 2009 median household 

income of $23,892 was 47 percent of that of the United States, a decline 

from 2004 when it was about 52 percent of that of the United States.12

American Samoa’s 2009 poverty rate of 57.8 percent far exceeded the 

U.S. rate of 15.1 percent.13

 

12Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, U.S. Census 

Bureau, Current Population Reports, Income, Poverty, and Health Insurance Coverage in 

the United States: 2010 (Washington, D.C.: U.S. Government Printing Office, 2011). For 

2004 figures, see American Samoa Government, Department of Commerce, Statistics 

Division, Report on the 2005 American Samoa HIES (draft) and Carmen DeNavas-Walt, 

Bernadette D. Proctor, and Jessica C. Smith, U.S. Census Bureau, Current Population 

Reports, Income, Poverty, and Health Insurance Coverage in the United States: 2009

(Washington, D.C.: U.S. Government Printing Office, 2010).

Based on the 2010 decennial census, 

American Samoa’s unemployment rate was 9.2 percent in April 2010. 

13DeNavas-Walt, Proctor, and Smith, 2011.

Personal Income, Poverty, and 

Unemployment Rates
Appendix III: American Samoa

Page 40 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

According to the Bureau of Labor Statistics’ Current Population Survey, 

the U.S. unemployment rate was 9.9 percent at that time.

The tuna canning industry and the government sector have historically 

employed the most workers in American Samoa. In 2012, about 36 

percent of American Samoa’s workforce worked in the government sector 

and about 12 percent worked for the canneries.14

Figure 4: Population and Citizenship Status of American Samoa, 1980-2010

Noncitizens, mostly 

from the independent state of Samoa, comprised approximately 36 

percent of American Samoa’s 2010 population (see fig. 4) and, according 

to Star-Kist, approximately 85 percent of their labor force. Many citizens 

of the independent state of Samoa reside in American Samoa on a longterm basis, including spouses and relatives of American Samoans.

Note: For 1980, the definition of U.S. citizen includes people born in the United States, the CNMI, 

Guam, and American Samoa. Persons with places of birth not reported are classified as not U.S. 

citizens.

 

14Department of Commerce, Statistics Division, American Samoa Statistical Yearbook, 

2012. 

Key Industries
Appendix III: American Samoa

Page 41 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Despite recent declines, in 2012 tuna exports represented more than 99 

percent of American Samoa’s approximately $416 million in commodity 

exports to the United States. However, the tuna canning industry faces 

competition from other countries. From 1995 to 2003, the value of canned 

tuna imported into the United States from American Samoa exceeded 

that of tuna imported from all other countries combined. Since 2003, 

however, foreign imports have exceeded those from American Samoa. In 

addition, U.S. per capita consumption of canned tuna fell by 23 percent 

from 2003 to 2011. From 2008 to 2011, tuna exports from American 

Samoa to the United States declined, rebounding somewhat in 2012 (see 

fig. 5).

Figure 5: American Samoa and Foreign Tuna Exports to the United States, 1995-2012

Chicken of the Sea International, which operated one of the two 

canneries in American Samoa, closed its cannery operations in the 

territory at the end of September 2009, contributing to the decline of tuna 

exports that began that year. Chicken of the Sea relocated canning 

facilities to the U.S. state of Georgia while outsourcing the more laborintensive processes, including cleaning and cooking the tuna loins (a lowtariff U.S. import), to countries with lower labor costs. While the Star-Kist 

cannery has been in American Samoa for more than 50 years, it also has 
Appendix III: American Samoa

Page 42 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

production facilities in place or in process in Ecuador, Senegal, Thailand, 

and Papua New Guinea (see fig. 6). 15

Figure 6: Star-Kist Cannery, Pago Pago

In addition to the closure of Chicken of the Sea in 2009, American Samoa 

suffered another blow on September 29 of that year when a tsunami 

following a strong earthquake left 34 people dead. Although the two tuna 

canneries were mostly spared, the tsunami caused severe damage. The 

federal government issued a disaster declaration and assisted with 

tsunami recovery efforts, including providing direct cash assistance to 

those affected and temporary employment in support of recovery efforts. 

In 2009 and 2010, other temporary jobs included Census Bureau 

enumerators and managers assisting with collection of 2010 decennial 

census data, and workers on infrastructure projects and in other fields 

 

15Star-Kist Co. is a subsidiary of the South Korean-based Dongwon Group. Dongwon 

acquired Star-Kist in 2008 from Del Monte Foods, which had acquired Star-Kist from the 

H.J. Heinz Company in 2002.
Appendix III: American Samoa

Page 43 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

supported by funds made available in the American Recovery and 

Reinvestment Act of 2009.

16

On October 5, 2010, Tri Marine International acquired the former Chicken 

of the Sea facility in American Samoa, located adjacent to the Star-Kist 

cannery (see fig. 7).17

 

16Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009). The great majority of those were 

disaster recovery positions related to the tsunami. In a previous report we estimated that 

there were from 2,000 to 3,000 temporary jobs funded by the U.S. Census Bureau, the 

Recovery Act, and tsunami recovery efforts (

As of November 2013, Tri Marine had completed 

construction of a new cold-storage facility on the site and is actively 

constructing other facilities for expanded operations. According to Tri 

Marine officials, the company plans to begin processing sashimi-grade 

tuna in early 2014 and to re-open the tuna cannery in 2015. When the 

cannery becomes operational, Tri Marine expects to employ 1,200 

people.

GAO-11-427). As a result, counts of the total 

number employed during this period are higher than the number of long-term positions. 

17Samoa Tuna Processors, Inc., is part of Tri Marine, a privately owned group of 

companies primarily engaged in fishing, procurement, processing, and trading of tuna and 

other seafood products, and in supplying tuna and tuna products to various brands. 
Appendix III: American Samoa

Page 44 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Figure 7: Tri Marine (former Chicken of the Sea) facility in Pago Pago
Appendix III: American Samoa

Page 45 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Overall American Samoa employment declined from 2007 to 2012; 

however, employment increased in some years. As shown in figure 8, 

employment grew from 2007 to 2008 but by 2012 had fallen to a level 

lower than in 2007. Specifically, the total number of employees in 

American Samoa increased by 1.5 percent from 2011 to 2012 (from 

15,552 to 15,790) but fell over the entire period from 2007 to 2012 by 11 

percent (from 17,677 to 15,790, with a peak of 19,229 in 2008).18

 

18Employees at the Chicken of the Sea cannery, which closed September 30, 2009, are 

included in the 2009 employee count. 

Because American Samoa tax data are not yet available for 2013, we are 

unable to report on the overall level of employment for that year. 

However, based on our survey of cannery employers, the number of 

hourly workers at the canneries fell by about 13 percent from 2012 to 

2013 (from 2,193 to 1,915) and 58 percent overall from 2007-2013.

American Samoa 

Employment and 

Average InflationAdjusted Earnings in 

2012 Were Lower 

Than in 2007

Employment Declined 

Overall from 2007 to 2012, 

but Increased in Some 

Years
Appendix III: American Samoa

Page 46 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Figure 8: American Samoa Employment Based on American Samoa Tax Data and

GAO Questionnaire Data, 2007 through 2012

Employment figures are based on our analysis of combined employee 

data from the American Samoa Department of Treasury, Office of 

Taxation, and responses from tuna canning industry employers to our 

questionnaire. The American Samoa tax data are a count of persons 

employed at any point during the tax year by the employer. The cannery 

employment figure, from GAO’s questionnaire, is a count of hourly 

employees at the canneries as of a specific pay period in June of the 

given year.19 See appendix I for a full discussion our methodology.

 

19We also calculated trends in employment in American Samoa using data from the Social 

Security Administration and the American Samoa Statistical Yearbook. The series were 

not directly comparable, since a person (as counted in the Social Security data) could 

have multiple positions (as counted in the other sources). While all of the series showed

negative trends, the trend in the Social Security data was much larger in magnitude. See 

appendix I for additional detail on our methodology.
Appendix III: American Samoa

Page 47 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Average earnings of workers who maintained employment rose from 

2007 to 2012, but the increase was not sufficient to overcome the 

increase in prices.20 As shown in figure 9, based on American Samoa tax 

and GAO questionnaire data, and consumer price data, from 2011 to 

2012, average inflation-adjusted earnings fell by 2 percent. This decline 

resulted from an increase in average earnings of 2 percent and an 

increase in prices of 4 percent. For the overall period from 2007 to 2012, 

average inflation-adjusted earnings fell by about 5 percent due to an 

increase in average annual earnings of about 27 percent and a 34 

percent increase in prices.21

 

20The American Samoa Consumer Price Index increased 4 percent from to 2006 to 2007, 

10 percent from 2007 to 2008, 3 percent from to 2008 to 2009, 7 percent from 2009 to 

2010, 6 percent from 2010 to 2011 and 4 percent from 2011 to 2012. In comparison, the 

U.S. Consumer Price Index increased 2.8 percent from 2006 to 2007 and 3.8 percent from 

2007 to 2008, but declined 0.4 percent from 2008 to 2009. The U.S. Consumer Price 

Index then increased by 1.6 percent from 2009 to 2010, by 3.2 percent from 2010 to 2011, 

and by 2.1 percent from 2011 to 2012.

21As with data on total employment, the trend in inflation-adjusted earnings as measured 

by Social Security data was also negative but larger in magnitude. See appendix I for 

additional detail.

Average Inflation-Adjusted 

Earnings of Those 

Employed Have Fallen 

Since 2007
Appendix III: American Samoa

Page 48 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Figure 9: American Samoa Nominal Mean Earnings and Inflation-Adjusted Mean 

Earnings Based on American Samoa Tax Data and GAO Questionnaire Data, 2007 

through 2012

Although earnings data do not allow for a direct comparison of average 

and minimum wage annual earnings or for tracking the earnings of 

workers who lost their jobs, the hourly wage of minimum wage workers 

who retained their jobs and work hours has not increased by more than 

inflation since 2007. The inflation-adjusted earnings of minimum wage 

cannery workers who retained their jobs and work hours fell by about 4 

percent from 2011 to 2012 (a period that did not include a minimum wage 

increase) and also decreased by about 5 percent overall from 2007 to 

2012.
Appendix III: American Samoa

Page 49 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The discussion group of private sector employers we met with generally 

opposed additional minimum wage increases and stated that previous 

minimum wage increases had been harmful to the economy.22

The American Samoan government, American Samoa’s largest employer, 

continues to report that any increases in the minimum wage will result in 

reduced government employment. The government anticipates that it will 

reduce staff or hours as part of its response to any future increases. It 

further stated that the scheduled 2015 increase would raise its wage bill 

by approximately $140,000. The government anticipated it would have to 

cut six employees to offset this increase. Future increases beyond 2015, 

it stated, would have a drastic budget impact and contribute to the 

government’s already critical cash flow problem. In his January 2014 

State of the Territory address, the Governor of American Samoa stated 

that he had instructed the American Samoa Department of Commerce to 

prepare and justify a request to Congress to permanently remove 

American Samoa from the application of the federal minimum wage. 

According to the Governor, the justification will include a presentation of a 

locally developed “living wage” to address what it described as 

congressional fears that the American Samoa minimum wage does not 

provide for basic living needs in American Samoa.

These 

employers called the minimum wage the most important issue impacting 

businesses and cited American Samoa’s reliance on the tuna canning 

industry and fears about the effect of further increases on the industry 

and the American Samoa economy. In addition, these employers said 

that federal tsunami recovery assistance had cushioned the impact of the 

2009 closure of the Chicken of the Sea cannery, so its full impact had not 

yet been felt. Finally, the business representatives we spoke with 

expressed frustration with American Samoa’s lack of success in attracting 

alternative businesses to the territory. Business representatives we spoke 

with said that the American Samoan government had not fostered 

economic development and that its tax policies had created a poor 

business environment.

Star-Kist workers who participated in our discussion group generally 

opposed further minimum wage increases rather than supported future 

 

22A total of 20 business representatives representing 18 American Samoa businesses, 

including two of the three cannery industry employers, participated in the discussion 

group. Views expressed in discussion groups only represent the views of participants in 

those groups and may not be representative of all businesses’ views in American Samoa.

Employers, the 

American Samoa 

Government, and 

Workers Generally 

Oppose Minimum 

Wage Increases
Appendix III: American Samoa

Page 50 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

increases.23 Workers expressed concerns that any increase would result 

in lost jobs or a complete closure of Star-Kist. Workers we spoke with 

said that hours and opportunities for overtime have been reduced at the 

cannery. In addition, workers we spoke with said that prices for essentials 

such as rent, food, and utilities are high and difficult for them to afford. 

Some workers we spoke with expressed concerns that future increases in 

the minimum wage would lead to an increase in prices in American 

Samoa, which they said had occurred as a result of previous minimum 

wage increases.

From 2011 to 2013, there was no increase in the median wage of workers 

in the tuna canning industry—in all years, the median hourly wage for 

tuna canning workers was $4.76. During this period, the minimum wage 

for canning workers also remained unchanged at $4.76. Since 2007, as a 

result of previous minimum wage increases, the median wage among 

workers in the tuna canning industry employed by questionnaire 

respondents has risen from $3.30 to $4.76 per hour (44 percent).

As the minimum wage increases continue, they will affect a growing 

percentage of workers in American Samoa’s tuna canning industry. 

Based on questionnaire responses about workers’ wages as of June 

2013, 79 percent of canning industry hourly workers would be affected by 

the scheduled increase of the minimum wage to $5.26 in September 

2015. Future minimum wage increases would affect the wages of 92 

percent of current cannery hourly workers when the minimum wage 

reaches $5.76 in September 2018, and 98 percent of current canning 

industry hourly workers when the minimum wage reaches $7.25 in 2027. 

By 2027, the extra annual cost added by minimum wage increases after 

June 2013 would be $4,710 per worker (see table 6). We identified the 

additional cost by calculating the difference between the cost per worker 

in June 2013 and the cost per hourly worker through 2027, based on the 

scheduled minimum wage increases and averaged across all workers.

 

23Ten Star-Kist workers participated in the discussion group. Views expressed in 

discussion groups only represent the views of participants in those groups and may not be 

representative of all workers’ views in the tuna canning industry.

Minimum Wage 

Increases through 

2018 Would Affect 

Wages of Almost All 

Workers Employed in 

American Samoa’s 

Tuna Canning 

Industry in 2013
Appendix III: American Samoa

Page 51 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Table 6: Distribution and Increased Annual Cost Since June 2013 Per Hourly-wage Worker in the American Samoa Tuna 

Canning Industry Due to Scheduled Minimum Wage Increases 

Date of scheduled minimum 

wage increase

Percentage of hourly-wage 

workers in June 2013 at or 

below the new minimum 

wage a

Minimum wage 

of cannery 

workers

Increased average 

hourly cost since 

June 2013 per hourlywage worker 

Increased average 

annual cost since 

June 2013 per hourlywage worker

September 30, 2015 (next 

increase)

b

79% $5.26 $.37 $779

September 30, 2018 (second 

increase)

92% $5.76 $.83 $1,723

September 30, 2027 (fifth 

increase)

98% $7.25 $2.26 $4,710

Source: GAO analysis of June 12, 2013, wage data provided in American Samoa tuna canning industry questionnaire.

Note: To estimate the annual cost of future minimum wage increases, we first calculated the 

difference between the hourly wage for each worker in June 2013 (reflecting the minimum wage of 

$4.76) and all scheduled minimum wage increases through 2027. We multiplied that value by 2,080 

(annual hours worked per full-time worker) to obtain an annual estimate for each worker. Finally, we 

reported the average of that value. For workers in June 2013 paid above a scheduled minimum wage, 

we assumed that the cost of that minimum wage for those workers would be zero (that they would 

receive no increase in pay). The average wage of canning industry workers in June 2013 was $5.00. 

We calculated the average cost for all workers, not only workers affected by the minimum wage.

a

The third and fourth minimum wage increases will occur in 2021 and 2024.

b

The analysis excluded nonwage labor costs due to the minimum wage increases, such as increases 

in employer payroll tax contributions under the Federal Insurance Contributions Act.

Two employers in the tuna canning industry in American Samoa reported 

in our questionnaire that they had taken cost-cutting actions from June 

2010 to June 2013 including labor- and cost-saving strategies and 

reduced overtime.24 All but one of the employer actions were attributed to 

a moderate or large extent to minimum wage increases by one or both 

respondents (see table 7).

 

24The response of the third employer, Tri Marine, to the question was “not applicable” 

because the company was just beginning operations in American Samoa during that time 

period.

Tuna Canning 

Employers Cut Costs 

Due to Minimum 

Wage Increases and 

Other Factors
Appendix III: American Samoa

Page 52 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Table 7: American Samoa Employer Actions from June 2010 to June 2013 and Attribution of Those Actions to Minimum Wage 

Increases.

Action Took action

Attributed action to 

minimum wage 

increases to a 

moderate extent a

Attributed action to 

minimum wage 

increases to a large 

extent

Total attributing 

action to either a 

moderate or large 

extent

Introduced labor-saving strategies or technology 

a

2 1 1 2 

Introduced other cost-saving strategies (e.g., 

energy-saving technologies) 

2 0 2 2 

Reduced operating capacity or services offered 1 0 0 0 

Delayed expansion of business 1 1 0 1 

Relocated business outside of territory 0 Not applicable Not applicable Not applicable

Closed establishment temporarily 0 Not applicable Not applicable Not applicable

Laid off salaried employees 1 1 0 1 

Laid off employees who are paid an hourly wage 1 1 0 1 

Reduced regular work hours for employees paid 

an hourly wage 

0 Not applicable Not applicable Not applicable

Reduced overtime work hours for employees 

paid an hourly wage 

2 2 0 2 

Decreased level of benefits for salaried 

employees

1 1 0 1 

Decreased level of benefits for employees paid 

an hourly wage

0 Not applicable Not applicable Not applicable

Implemented a hiring freeze 2 2 0 2 

Raised prices of goods or services 2 2 0 2 

Source: GAO analysis of American Samoa tuna canning industry questionnaire responses.

Note: Attribution response choices for questionnaire recipients included “not at all,” “to a small 

extent,” and “don’t know.” See appendix V for a copy of the GAO questionnaire.

a

In addition to minimum wage increases, both respondents from the tuna 

canning industry who took cost-cutting actions attributed their actions to a 

moderate or large extent to increased utility and material costs (see 

table 8).

Tri Marine responded “not applicable” to the question because the company was just beginning 

operations in American Samoa during that time period.
Appendix III: American Samoa

Page 53 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Table 8: Attribution of American Samoa Employer Actions from June 2010 to June 2013 to Other Factors

Factor

Factor contributed to a 

moderate extent

Factor contributed

to a large extent

Total where factor 

contributed to either a 

moderate or large extent

Increased utility costs

a

1 1 2 

Increased costs of materials 0 2 2 

Increased transportation/shipping costs 1 0 1 

Increased maintenance costs 0 0 0 

Decreased numbers of customers 0 1 1 

Changes to U.S. immigration law 0 0 0 

Changes in business taxes or fees 0 0 0 

Source: GAO analysis of American Samoa tuna canning industry questionnaire responses.

Note: Attribution response choices for questionnaire recipients included “not at all,” “to a small 

extent,” and “don’t know.” See appendix V for a copy of the GAO questionnaire.

a

When asked about future planned actions, two of the three tuna canning 

industry respondents stated that they planned to take future actions to 

introduce labor- and cost-saving strategies, delay business expansion, 

and reduce overtime hours. One of the three respondents did not plan to 

take any of these actions. Both respondents who planned to take these 

actions attributed them to a moderate or large extent to the minimum 

wage increases (see table 9).

Tri Marine responded “not applicable” to the question because the company was just beginning 

operations in American Samoa during that time period.

Table 9: American Samoa Employer Planned Actions and Attribution of Those Plans to Minimum Wage Increases

Future Action

Plan to take 

action

Attributed planned 

action to minimum 

wage increases to 

a moderate extent a

Attributed planned 

action to minimum 

wage increases to 

a large extent

Total attributing 

action to either a 

moderate or large 

extent

Introduce labor-saving strategies or technology

a

2 0 2 2 

Introduce other cost-saving strategies (e.g., 

energy-saving technologies) 

2 0 2 2 

Reduce operating capacity or services offered 0 not applicable not applicable not applicable

Delay expansion of business 2 2 0 2 

Relocate business outside of territory 1 0 1 1 

Close establishment temporarily 0 not applicable not applicable not applicable

Lay off salaried employees 0 not applicable not applicable not applicable

Lay off employees who are paid an hourly wage 0 not applicable not applicable not applicable

Reduce regular work hours for employees paid 

an hourly wage

0 not applicable not applicable not applicable
Appendix III: American Samoa

Page 54 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Future Action

Plan to take 

action

Attributed planned 

action to minimum 

wage increases to 

a moderate extent a

Attributed planned 

action to minimum 

wage increases to 

a large extent

Total attributing 

action to either a 

moderate or large 

extent

Reduce overtime work hours for employees paid 

an hourly wage

a

2 0 2 2 

Decrease level of benefits for salaried employees 0 not applicable not applicable not applicable

Decrease level of benefits for employees paid an 

hourly wage

0 not applicable not applicable not applicable

Implement a hiring freeze 0 not applicable not applicable not applicable

Raise prices of goods or services 0 not applicable not applicable not applicable

Close establishment permanently 0 not applicable not applicable not applicable

Source: GAO analysis of American Samoa tuna canning industry questionnaire responses.

Note: The questionnaire asked about planned actions in the next 18 months, which would be by 

March 2015. Attribution response choices for questionnaire recipients included “not at all,” “to a small 

extent,” and “don’t know.” See appendix V for a copy of the GAO questionnaire.

a

In addition to the minimum wage increases, the two respondents to the 

tuna canning industry questionnaire who planned to take future costcutting actions attributed their plans to a moderate or large extent to other 

increased costs and business factors (see table 10).

One of the three respondents did not plan to take any of these actions.

Table 10: Attribution of Planned American Samoa Employer Actions to Other Factors

Factor

Factor contributed to a 

moderate extent

Factor contributed

to a large extent

Total where factor 

contributed to either a 

moderate or large extent

Increased utility costs

a

1 1 2 

Increased costs of materials 0 2 2 

Increased transportation/shipping costs 1 0 1 

Increased maintenance costs 0 0 0 

Decreased numbers of customers 1 1 2 

Changes to U.S. immigration law 0 0 0 

Changes in business taxes or fees 2 0 2 

Source: GAO analysis of American Samoa tuna canning industry questionnaire responses.

Note: Attribution response choices for questionnaire recipients included “not at all,” “to a small 

extent,” and “don’t know.” See appendix V for a copy of the GAO questionnaire.

a

One of the three respondents did not plan to take any of these actions.
Appendix III: American Samoa

Page 55 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Cannery officials stated that wage increases are one of many factors 

affecting the tuna canning industry in American Samoa.25 Both Star-Kist 

and Tri Marine cited American Samoa’s proximity to Pacific fisheries as a 

key advantage for the American Samoa tuna canning industry, as well as 

tariff-free access to the U.S. market. Star-Kist also cited Pago Pago’s 

protected deep-water harbor. However, cannery company officials we 

interviewed indicated that labor costs, including the minimum wage 

increases, continued to place American Samoa at a significant cost 

disadvantage compared with other canned tuna exporting countries. In 

June 2011, we concluded that the three minimum wage increases to date 

had further widened the gap between American Samoa and production 

sites with lower labor costs, such as Thailand.26

Both canneries cited congressional action to defer the next minimum 

wage increase to 2015 as encouraging their ability to invest in American 

Samoa. According to Star-Kist officials, deferring the next minimum wage 

increase helped the company to better plan for future activity at the 

cannery (to better train its workforce, plan procurement, negotiate supply 

contracts, and compete for business that requires pricing guarantees for 

multiple years). Tri Marine stated that it carefully considered all of its 

current and projected costs before deciding to invest in American Samoa 

and that its decision to move forward came only after the deferral of 

increases in the minimum wage.

Star-Kist estimated the 

total differential in the annual wage bill between American Samoa and an 

equivalent number of employees in Thailand at approximately $17.4 

million. In addition, Star-Kist also cited disadvantages for American 

Samoa from U.S. regulations, high fuel and re-provisioning (net repairs, 

ship maintenance, crew provisions, and fishing bait) costs, an outdated 

shipyard, and the lack of sufficient dock space.

In our June 2011 report on the minimum wage in American Samoa, we 

modeled four alternative scenarios for the American Samoa tuna 

 

25Our tuna industry questionnaire asked respondents about the extent to which they 

attributed each action they took or planned to take to the minimum wage increases, 

regardless of whether other factors also contributed. In interviews, officials provided more 

information about contributing factors.

26GAO-11-427. 

Tuna Canning 

Industry Faces 

Challenges; 

Relocation Could 

Reduce Business 

Costs
Appendix III: American Samoa

Page 56 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

industry.27

 

27GAO’s model considered only labor costs and tariffs to show the effect of variation in 

different countries. The models were (A) maintaining loining (the labor-intensive cleaning, 

cooking, and cutting of the fish) and canning in American Samoa, (B) relocating loining to 

a lower-wage country and canning to the United States, (C) relocating all loining and 

canning to a tariff-free country, and (D) a hybrid model with one half of production, 

including for U.S. government contracts, located in American Samoa and the other half 

relocated to a tariff-free country. Model A had higher costs than the other alternatives. 

Model C, relocating operations to a tariff-free country, had the greatest cost savings, but 

operations under this model may lose eligibility for some U.S. government contracts for 

canned tuna. In addition, savings from moving the loining operations to a lower-wage 

country (Model B) also would be partially offset by the loss of U.S. government contracts. 

Model D would retain eligibility for these contracts. See appendix III of 

We did not re-run the four models for our current report; 

however, we discussed them with Star-Kist officials, and Star-Kist and Tri 

Marine each provided additional written comments on the options 

available to the tuna industry. Star-Kist officials said that the four options 

are all still possible, but that there is a spectrum of possible actions in 

response to increasing costs. For example, Star-Kist could lower the 

staffing level or close certain production lines. Star-Kist reiterated its 

position that the cost savings between a fully U.S. manufacturing process 

and an outsourced manufacturing process is substantial and places 

American Samoa at a disadvantage. Tri Marine stated that any increase 

in direct costs, related to wages or not, will erode the competitiveness of 

American Samoa with a number of low-cost sources, including Thailand, 

Vietnam, Indonesia, and the Philippines, as a source of canned tuna for 

the U.S. market.

GAO-11-427 for a 

full discussion of these alternatives.
Appendix IV: Commonwealth of the Northern 

Mariana Islands

Page 57 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Part of the Mariana Islands Archipelago, the CNMI is a chain of 14 islands 

in the western Pacific Ocean—just north of Guam and about 3,200 miles 

west of Hawaii (see fig. 10). Most of the CNMI population resides on the 

island of Saipan, with additional residents on the islands of Tinian and 

Rota.

Figure 10: Map of the CNMI

Appendix IV: Commonwealth of the Northern 

Mariana Islands

Background
Appendix IV: Commonwealth of the Northern 

Mariana Islands

Page 58 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The United States took control of the Northern Mariana Islands from 

Japan during the latter part of World War II and, after the war, the U.S. 

Congress approved the Trusteeship Agreement making the United States 

responsible to the United Nations for the administration of the islands.1 In 

1976, the District of the Mariana Islands entered into a covenant with the 

United States establishing the island territory’s status as a self-governing 

commonwealth in political union with the United States.2 This covenant 

grants the CNMI the right of self-governance over internal affairs and 

grants the United States complete responsibility and authority for matters 

relating to foreign affairs and defense affecting the CNMI.3 The covenant 

initially made many federal laws applicable to the CNMI, including laws 

that provide federal services and financial assistance programs. However, 

the covenant preserved the CNMI’s exemption from certain federal laws 

that had previously been inapplicable to the Trust Territory of the Pacific 

Islands, including federal immigration laws, with certain limited 

exceptions,4

 

1

In 1947, the United Nations gave the United States authority to administer the Trust 

Territory of the Pacific Islands, which included the Northern Mariana Islands. The 

trusteeship over the Northern Mariana Islands was formally dissolved in 1986.

and certain federal minimum wage provisions. However, 

under the terms of the covenant, the federal government has the right to 

2

Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political 

Union with the United States of America, Pub. L. No. 94-241, § 1, 90 Stat. 263 (Mar. 24, 

1976), 48 U.S.C. § 1801 note. See also Howard P. Willens and Deanne C. Siemer, An 

Honorable Accord: The Covenant between the Northern Mariana Islands and the United 

States (Honolulu, Hawaii: University of Hawaii Press, 2002). 

3

Under the covenant, the U.S. government may enact legislation in accordance with its 

constitutional processes that will be applicable to the CNMI. To respect the CNMI’s right of 

self-government under the covenant, certain provisions of the covenant may be modified 

only with the consent of both the federal government and the CNMI government. These 

provisions include those relating to the political relationship between the United States and 

the CNMI; the CNMI constitution, citizenship, and nationality; the application of the U.S. 

constitution to the CNMI; and the land ownership rights of CNMI citizens. Most other 

provisions of the CNMI covenant may be modified by the federal government without the 

consent of the CNMI government, and local CNMI laws that were not inconsistent with 

federal laws or treaties of the United States when the covenant was enacted remained in 

effect. In addition, international treaty obligations between the United States and other 

countries apply to the CNMI through the covenant.

4

Prior to November 2009, Section 506 of the covenant applied to the CNMI certain 

provisions of the Immigration and Nationality Act of 1952 (INA) relating to citizenship and 

family-based permanent immigration. Certain other nonimmigrant provisions of the act, 

related to victims of human trafficking and other crimes, also applied to the CNMI. See 8 

U.S.C. § 1101(a)(15)(T)-(U). In addition, the covenant provided U.S. citizenship to legally 

qualified CNMI residents. 

CNMI–U.S. Relations
Appendix IV: Commonwealth of the Northern 

Mariana Islands

Page 59 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

apply federal law in these exempted areas without the consent of the 

CNMI government.5

The U.S. Department of Commerce’s Bureau of Economic Analysis 

estimated CNMI’s GDP in 2012 at $701 million. However, in real terms, 

GDP decreased by approximately 36 percent from 2006 to 2012. After 4 

years of consistent decline, the CNMI real GDP has remained relatively 

flat since 2009 (see fig. 11). The CNMI’s 2012 real GDP per capita of 

$11,537 was an approximately 24 percent decrease from the 2006 real 

GDP per capita of $15,157.

Figure 11: CNMI Nominal and Real GDP 2005-2012

The 2010 decennial census reported that CNMI’s median household 

income remained well below that of the United States, and its poverty rate 

well above. CNMI’s 2009 median household income of $19,958 was 39 

percent of that of the United States, approximately the same percentage 

 

5

The Consolidated Natural Resources Act of 2008 created a nonvoting delegate seat in 

the U.S. House of Representatives for the CNMI (48 U.S.C. § 1751). In January 2009, the 

CNMI elected its first representative to the United States Congress. The Delegate from the 

CNMI has many of the same congressional privileges as other representatives, including a 

vote in committee, but cannot vote in the House of Representatives.

CNMI Economy

Personal Income, Poverty, and 

Unemployment Rates
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as in 2004.6 CNMI’s 2009 poverty rate of 52.3 percent far exceeded the 

U.S. rate of 15.1 percent.7

For years, the garment and tourism industries were the mainstay of the 

CNMI’s economy. In 1999, these two industries accounted for about 85 

percent of the CNMI’s total economic activity and 96 percent of its 

exports.

Based on the 2010 decennial census, CNMI’s 

unemployment rate was 11.2 percent in April 2010. According to the 

Bureau of Labor Statistics’ Current Population Survey, the U.S. 

unemployment rate was 9.9 percent at that time.

8 However, several developments in international trade caused 

the CNMI’s garment industry to decline dramatically. In January 2005, in 

accordance with a World Trade Organization 10-year phaseout 

agreement, the United States eliminated quotas on textile and apparel 

imports from other textile-producing countries, exposing the CNMI 

apparel industry’s shipments to the United States to greater competition. 

Subsequently, the value of CNMI textile exports to the United States 

dropped from a peak of $1.1 billion in 1998 to $677 million in 2005 to 

close to zero in 2010.9

After years of decline, fiscal years 2012 and 2013 showed an increase in 

visitor arrivals. However, total visitor arrivals to the CNMI have dropped 

from a peak of 726,690 in fiscal year 1997 to 433,925 in fiscal year 2013, 

a decline of 40 percent, as shown in figure 12.

 

6

Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, U.S. Census 

Bureau, Current Population Reports, Income, Poverty, and Health Insurance Coverage in

the United States: 2010 (Washington, D.C.: U.S. Government Printing Office, 2011). For 

2004 figures, see Commonwealth of the Northern Mariana Islands, Department of 

Commerce, Central Statistics Division, Report on the 2005 CNMI HIES (Apr, 1, 2008) and 

Carmen DeNavas-Walt, Bernadette D. Proctor, and Jessica C. Smith, U.S. Census 

Bureau, Current Population Reports, Income, Poverty, and Health Insurance Coverage in 

the United States: 2009 (Washington, D.C.: U.S. Government Printing Office, 2010).

7

DeNavas-Walt, Proctor, and Smith, 2011.

8

Northern Marianas College, Business Development Center, An Economic Study for the 

Commonwealth of the Northern Mariana Islands, with funding provided by the U.S. 

Department of the Interior, Office of Insular Affairs (Saipan, Commonwealth of the 

Northern Mariana Islands: October 1999). See also GAO-08-791. 

9

U.S. Department of Commerce, Economic and Statistics Administration, Foreign Trade 

Division, U.S. Trade with Puerto Rico and U.S. Possessions 2011 (Washington, D.C.: 

2012).

Key Industries
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Figure 12: CNMI Visitor Arrivals, Fiscal Years 1990-2013

Japan, Korea, China, and Russia are the CNMI’s primary visitor markets, 

with Japan representing the largest share of any country and China and 

Russia representing emerging markets. In fiscal year 2013, 34 percent of 

visitors were from Japan, 31 percent from South Korea, 26 percent from 

China, and 3 percent from Russia (see fig. 13). The Department of 

Homeland Security has exercised parole authority to allow, on a case-bycase basis, eligible nationals of China and Russia to enter the CNMI 

temporarily as tourists where there is significant public benefit.10

 

10Russian and Chinese tourists must (1) be solely entering and staying in the CNMI for a 

period not to exceed 45 days; (2) be in possession of a round-trip ticket that is 

nonrefundable and nontransferable and bears a confirmed departure date not exceeding 

45 days from the date of entry to the CNMI; (3) be in possession of a completed and 

signed Guam-CNMI Visa Waiver Information form; (4) be in possession of a completed I94, Arrival-Departure Record; and (5) be in possession of a valid unexpired, machinereadable passport.

The 
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Consolidated Natural Resources Act of 2008 required the establishment 

of a joint visa waiver program for the CNMI and Guam by amending the 

authority for an existing visa waiver program for Guam visitors. The 

Guam-CNMI Visa Waiver Program exempts tourism and business visitors 

from certain countries who are traveling to the CNMI and Guam for up to 

45 days from the standard U.S. visa documentation requirements.11

 

118 C.F.R. § 212.1(q).
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Figure 13: Saipan, CNMI, and Multi-lingual Sign at Hotel in Saipan
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During the expansion of the CNMI garment and tourism industries prior to 

1995, the CNMI economy became dependent on foreign labor, as the 

CNMI government used its authority over its own immigration policy to 

bring in large numbers of foreign workers and investors. The number and 

percentage of noncitizens in the CNMI population have decreased since 

2000, when they were 57 percent of the population, to approximately 43 

percent as of the 2010 decennial census (see fig. 14).

Figure 14: Citizenship Status of CNMI Population, 1980-2010

Note:

a

For 1980, the definition of U.S. citizen includes people born in the United States, CNMI, Guam, and 

American Samoa. Persons with place of birth not reported are classified as not a U.S. citizen.
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In 2008, federal legislation amended the U.S.-CNMI Covenant to 

establish federal control of CNMI immigration.12 The law includes several 

provisions affecting access to the CNMI by foreign workers (using permits 

referred to as conditional worker, or CW-1, permits), tourists, and foreign 

investors that were implemented beginning in November 2009.13 The law 

mandated an annual reduction in the number of CW-1 permits that results 

in zero permits by the end of a transition period, but the law did not 

mandate specific reductions. The current CW-1 transition period expires

December 31, 2014; however, the Secretary of Labor is authorized to 

extend the program for up to 5 years.14

The Department of Homeland Security annually determines the numerical 

limitation, terms, and conditions of the CW-1 permits. The department set 

the numerical limitation at 22,417 for fiscal year 2011; 22,416 for 2012; 

15,000 for 2013, and 14,000 for fiscal year 2014.

The Secretary’s decision to 

extend the program beyond 2014 must be made no later than July 4, 

2014.

15 As we concluded in 

August 2008, although modest reductions in CNMI-only permits for 

foreign workers would cause minimal impact, any substantial and rapid 

decline in the availability of work permits for needed workers would have 

a negative effect on the economy, given foreign workers’ prominence in 

key CNMI industries.16

 

12Consolidated Natural Resources Act of 2008, Pub. L. No. 110-229, Title VII, 122 Stat. 

754, 853 (May 8, 2008). The legislation’s stated intent is to ensure effective border control 

procedures and to protect national and homeland security, while minimizing the potential 

adverse economic and fiscal effects of phasing out the CNMI’s foreign worker permit 

program and while maximizing the CNMI’s potential for economic and business growth. 

CNMI immigration law was in effect until the start of the transition period under the federal 

legislation; however, federal restrictions on the total number of foreign workers in the 

CNMI applied immediately.

As of August 13, 2013, employers in the CNMI 

13Under the regulations issued by DHS in December 2010, previous long-term business 

investors with a minimum of $50,000 in investments; foreign investors with a minimum of 

$100,000 in an aggregate approved investment in excess of $2,000,000, or a minimum of 

$250,000 in a single approved investment; and certain retiree investors can remain in the 

CNMI through the transition period that is scheduled to end in 2014. See 8 C.F.R. § 

214.2(e)(23)(iii).

1448 U.S.C. § 1806(d)(5)(A). For additional information, see GAO-12-975. 

15See Commonwealth of Northern Mariana Islands (CNMI)-Only Transitional Worker 

Numerical Limitation for Fiscal Year 2014, 78 Fed. Reg. 58867 (Sept. 25, 2013).

16GAO, Commonwealth of the Northern Mariana Islands: Managing Potential Economic 

Impact of Applying U.S. Immigration Law Requires Coordinated Federal Decisions and 

Additional Data, GAO-08-791 (Washington, D.C.: Aug. 4, 2008).
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had requested a total of 7,323 nonimmigrant transitional worker permits 

during fiscal year 2013.

In addition, the CNMI’s economy may be affected in the future by the 

planned build-up of the U.S. military in neighboring Guam; however, 

those impacts will likely be smaller than originally anticipated. Under 

original plans, the Department of Defense intended to relocate 

approximately 8,000 Marines and their 9,000 dependents from Okinawa,

Japan, to Guam by 2014. Current plans are to relocate approximately 

5,000 personnel and 1,300 dependents. DOD is in the process of 

determining what military and public infrastructure facilities and live-fire 

training ranges are necessary to support the proposed reduced 

realignment plan on Guam, as well as Tinian Island in the CNMI.17

Overall CNMI employment dropped every year from 2006 to 2012, 

according to CNMI tax data. As shown in figure 15, from 2011 through 

2012 the total number of employed fell by about 6 percent (from 25,229 to 

23,720). For the entire period from 2006 through 2012, the number 

employed fell 45 percent (from 43,036 to 23,720). A large part of this 

decline, especially early in this period, is likely attributable to the closure 

of the CNMI’s last remaining garment factories, which employed many 

 

17GAO, Defense Management: Further Analysis Needed to Identify Guam’s Public 

Infrastructure Requirements and Costs for DOD’s Realignment Plan, GAO-14-82 

(Washington, D.C.: Dec. 17, 2013).

CNMI Employment 

Fell from 2011 to 

2012 and Has 

Decreased 

Substantially Since 

2006; Average 

Inflation-Adjusted 

Earnings Have 

Declined

CNMI Employment 

Decreased Substantially 

from 2006-2012
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foreign workers. CNMI tax data show that U.S. citizen (combining those 

that the CNMI tax office labels as “U.S.” or “CNMI”) employment fell by 

less than 1 percent from 2011 to 2012 (10,006 to 9,934), and by almost 9 

percent from 2006 to 2012 (10,882 to 9,934).

Figure 15: CNMI Employment Based on CNMI Government Tax Data, 2006 through 

2012

Because CNMI tax data are not available for 2013, we are unable to 

report on the overall level of employment for the year. Data from the 

respondents to our 2013 hotel questionnaire show that hourly 

employment in the responding hotels rose by 3 percent from 2012 to 

2013 (from 1,715 to 1,763). Overall hourly employment at hotels that 

responded to both our first survey in 2009 and our most recent survey in 

2013 fell by 21 percent over the period from 2007 to 2013 (from 1,590 to 

1,252).18

 

18This count differs from the 2012-2013 count because it excludes those hotels that did 

not respond to our first survey and provide 2007 data.

This count excludes those hotels that responded to our most 

recent survey but did not respond to our first survey.
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Average earnings for those who maintained employment rose from 2006 

to 2012, but prices increased by a similar amount. As shown in figure 16, 

based on CNMI tax and consumer price data, average inflation-adjusted 

earnings rose by 1 percent from 2011 to 2012. This increase resulted 

from an increase in average earnings of 3 percent and an increase in 

prices of 2 percent. For the period from 2006 to 2012, average inflationadjusted earnings dropped about 2 percent due to a rise in average 

annual earnings of about 29 percent and a 31 percent increase in 

prices.19

Figure 16: CNMI Average Nominal and Inflation-Adjusted Earnings Based on CNMI 

Government Tax Data, 2006 through 2012

 

19The CNMI Consumer Price Index increased 8.1 percent from 2006 to 2007, 6.8 percent 

from 2007 to 2008, 1.5 percent from 2008 to 2009, 5.28 percent from 2009 to 2010, 4 

percent from 2010 to 2011 and 2 percent from 2011 to 2012. In comparison, the U.S. 

Consumer Price Index increased 2.8 percent from 2006 to 2007 and 3.8 percent from 

2007 to 2008, but declined 0.3 percent from 2008 to 2009. The U.S. Consumer Price 

Index then increased by 1.6 percent from 2009 to 2010, by 3.2 percent from 2010 to 2011, 

and by 2.1 percent from 2011 to 2012.

CNMI Average InflationAdjusted Earnings of 

Those Employed Have 

Fallen Since 2006
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Although CNMI tax data do not allow for a direct comparison of average 

and minimum-wage annual earnings or for tracking the earnings of 

workers who lost their jobs, the hourly wage of minimum wage workers 

increased by more than inflation. The inflation-adjusted earnings of 

minimum wage workers who retained their jobs and work hours rose by 

about 7 percent from 2011 to 2012 and by about 39 percent for the entire 

period from 2006 to 2012.

CNMI employers we spoke with supported the 2013 deferral of minimum 

wage increases.20

According to CNMI government payroll data we reviewed, about 177 

government workers in the three branches of government and the 

Commonwealth HealthCare Corporation would have been affected by the 

postponed 2013 minimum wage increase.

While participants in our discussion groups stated that 

businesses in general could not absorb another minimum wage increase, 

they in particular cited the effect of the increases on smaller businesses 

rather than the effect on hotels. However, employer discussion group 

participants also identified minimum wage increases as only one of 

multiple factors affecting the CNMI economy. The minimum wage was not 

as important a factor for discussion group participants as the potential 

loss of the foreign labor force if the conditional worker permit program is 

not extended. For hotel business representatives we spoke with, the U.S. 

Department of Homeland Security’s continued use of parole to permit 

access for Russian and Chinese tourists to the CNMI was a greater 

concern than minimum wage increases. Participants asserted that the 

CNMI economy is still weak and cited a general uncertainty about future 

conditions in the CNMI that has caused some businesses to withhold 

investment. Participants also cited the high costs of utilities, imported 

goods, and shipping, as well as restrictions on foreign ownership of land, 

among other factors in expressing their outlook on the CNMI economy.

21

 

20A total of 24 business representatives participated in one of four discussion groups. 

Views expressed in discussion groups only represent the views of participants in those 

groups and may not be representative of all businesses’ views in the CNMI.

This figure, however, does 

not include other autonomous or semi-autonomous agencies of the 

government. According to the CNMI Department of Commerce, the CNMI 

Governor supported the 2013 postponement of the minimum wage 

21The 177 workers were 7.4 percent of the 2,389 workers included in the review.

Employers and the 

CNMI Government 

Supported the 2013 

Postponement of the 

Minimum Wage 

Increase; Workers 

Had Mixed Views
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increase. However, the CNMI Commerce Secretary noted that there 

could be additional challenges to the CNMI economy from increases in 

health insurance costs, which could make absorbing future minimum 

wage increases more difficult for the CNMI.

Workers participating in our CNMI discussion groups expressed mixed 

views regarding the minimum wage increases.22 Workers we spoke with 

said they were helped by previous minimum wage increases, but some 

were concerned about losing jobs and work hours due to future 

increases, as they had in the past. Workers we spoke with stated that 

prices for staples in the CNMI were high, citing in particular high costs for 

electricity and gasoline.23 Workers we spoke with reported regularly 

turning off air conditioning in the CNMI’s tropical climate and foregoing 

the use of electric stoves because of the high cost of electricity. There is 

minimal public bus transportation in Saipan. In Tinian, some workers at 

the Tinian Dynasty (see fig. 17) we spoke with lived in staff housing, and 

one saw future minimum wage increases as an opportunity to increase 

the amount remitted to family living elsewhere. Workers we spoke with in 

both Saipan and Tinian expressed fear that prices would increase along 

with the minimum wage, which they said had occurred at the time of 

previous increases.24

 

22A total of eight workers participated in one of two discussion groups. Views expressed in 

discussion groups only represent the views of participants in those groups and may not be 

representative of all workers’ views in the CNMI.

23At the time of our site visit, we observed regular gasoline prices in Saipan of $4.85 or 

$4.86 per gallon. The American Automobile Association reported an average U.S. price 

per gallon of $3.19 per gallon on November 11, 2013.

24Our discussion groups had eight participants, who were not randomly selected. The 

views expressed are not generalizable.
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Figure 17: Tinian Dynasty Hotel & Casino

From June 2011 to June 2013, the median hourly wage in the CNMI hotel 

industry rose from $5.33 to $5.86, a 10 percent increase, according to our 

questionnaire responses. During this period, the minimum wage 

increased from $5.05 to $5.55, also an increase of 10 percent.

As the minimum wage increases continue, they will affect a growing 

percentage of hourly workers in the CNMI’s hotel industry. Based on 

questionnaire responses about hotel workers’ wages as of June 2013, at 

the current distribution of wages, the future minimum wage increases 

would affect the wages of 84 percent of current hourly wage workers 

when the minimum wage reaches $6.05 in September 2014, and 94 

percent by the time it reaches $7.25 in 2018. By 2018, the extra annual 

cost added by minimum wage increases after June 2013 would be 

approximately $3,051 per worker (see table 11).

The 2012 Minimum 

Wage Increase 

Increased Median 

Wage for Hotel 

Workers; Further 

Increases Would 

Affect Wages of 

Almost All Hotel 

Workers
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Table 11: Distribution and Increased Annual Cost since June 2013 per Hourly-wage CNMI Hotel Worker Due to Scheduled 

Minimum Wage Increases

Date of scheduled minimum wage 

increase

Percentage of hourlywage workers in June 

2013 at or below the new 

minimum wage a Minimum 

wage 

Increased average 

hourly cost since 

June 2013 per 

hourly-wage worker

Increased average 

annual cost since 

June 2013 per hourlywage worker

September 30, 2014 (next increase)

b

84% $6.05 $0.38 $795

September 30, 2018 (fourth increase) 94% $7.25 $1.46 $3,051

Source: GAO analysis of June 12, 2013, wage data provided in CNMI hotel industry questionnaire.

Notes: To estimate the annual cost of future minimum wage increases, we first calculated the 

difference between the hourly wage for each worker in June 2013 (reflecting the 2013 minimum wage 

of $5.55) and all scheduled minimum wage increases through 2018. We multiplied that value by 

2,080 (annual hours worked per full-time worker) to obtain an annual estimate for each worker. 

Finally, we reported the average of that value. For workers in June 2013 paid above a scheduled 

future minimum wage, we assumed that the cost of that minimum wage for those workers would be 

zero (that they would receive no increase in pay). The average wage of hotel workers in June 2013 

was $5.86. We calculated the average cost for all workers, not only workers affected by the minimum 

wage.

a

The second and third and minimum wage increases will occur in 2016 and 2017.

b

If other costs remain stable, payroll will represent an increasing share of 

total operating costs for hotels in the CNMI, due to the minimum wage 

increases. We estimate that, for the hotels that responded to our 

questionnaire, the minimum wage increases from 2013 through 2018 will 

raise average annual payroll costs by approximately $527,823 at the 

average hotel of 173 employees. As a result, payroll costs as a 

percentage of total operating costs will increase from approximately 26 

percent in 2012 to 31 percent in 2018 (with minimum wage increases 

representing about 5 percentage points of the 31 percent).

The analysis excluded nonwage labor costs due to the minimum wage increases, such as increases 

in employer payroll tax contributions under the Federal Insurance Contributions Act (FICA).

Hotels representing the majority of all workers employed by questionnaire 

respondents reported in our questionnaire that they had taken costcutting actions and raised prices from 2010 to 2013. Hotels representing 

nearly all workers employed by questionnaire respondents stated that 

they used cost-saving strategies (99 percent) or raised prices (95 

percent) and attributed that action to a moderate or large extent to the 

minimum wage increases. While hotels representing a smaller proportion 

of workers employed by questionnaire respondents introduced laborsaving measures (76 percent), decreased regular hours for hourly 

workers (36 percent), or decreased hourly employee benefits (18 

percent), all or nearly all hotels attributed those actions to a moderate or 

large extent to the minimum wage increases (see table 12).

Hotels Cut Costs and 

Raised Prices Due to 

Minimum Wage 

Increases and Other 

Factors
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Table 12: Employee-Weighted CNMI Employer Actions from June 2010 to June 2013 and Attribution of Those Actions to 

Minimum Wage Increases.

Action

Pecentage 

taking 

action

Attributed action to 

minimum wage 

increases to a moderate 

extent (percentage)

Attributed action to 

minimum wage 

increases to a large 

extent (percentage)

Percentage 

attributing action to 

either a moderate or 

large extent

Introduced labor-saving strategies or 

technology

a

76 67 33 100

Introduced other cost-saving strategies 

(e.g., energy-saving technologies)

99 56 37 93

Reduced operating capacity or services 

offered

54 66 0 66

Delayed expansion of business 21 34 0 34

Relocated business outside of territory 0 not applicable not applicable not applicable

Closed establishment temporarily 0 not applicable not applicable not applicable

Laid off salaried employees 23 0 0 0 

Laid off employees who are paid an hourly 

wage

30 60 0 60

Reduced regular work hours for employees 

paid an hourly wage

36 78 20 98

Reduced overtime work hours for 

employees paid an hourly wage

86 39 29 68

Decreased level of benefits for salaried 

employees

25 0 0 0 

Decreased level of benefits for employees 

paid an hourly wage

18 100 0 100

Implemented a hiring freeze 58 21 31 52

Raised prices of goods or services 95 73 27 99

Source: GAO analysis of CNMI hotel questionnaire responses.

Notes: Percentages are weighted by the respondent’s number of employees. Response choices for 

questionnaire recipients included “not at all,” “to a small extent,” and “don’t know.” See appendix V for 

a copy of the GAO questionnaire.

a

Though hotels attributed a number of cost-cutting actions to the minimum 

wage increases, they also attributed their actions to a number of other 

factors. Hotels representing nearly all workers employed by questionnaire 

respondents also attributed their cost-cutting actions to a moderate or

large extent to increased utility, material, and transportation costs. 

Employers representing 60 percent or more of workers employed by 

questionnaire respondents cited other factors, including changes to U.S. 

immigration law, as contributing to their actions to a moderate or large 

extent (see table 13).

Totals may not add due to rounding.
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Table 13: Employee-Weighted Attribution of CNMI Employer Actions from June 2010 to June 2013 to Other Factors

Factor

Factor contributed to a 

moderate extent 

(percentage)

Factor contributed to a 

large extent

(percentage)

Percentage where factor 

contributed to either a 

moderate or large extenta

Increased utility costs 11 89 99

Increased costs of materials 35 64 99

Increased transportation/shipping costs 39 60 99

Increased maintenance costs 21 64 86

Decreased numbers of customers 6 57 63

Changes to U.S. immigration law 83 4 87

Changes in business taxes or fees 38 22 60

Source: GAO analysis of CNMI hotel questionnaire responses.

Notes: Percentages are weighted by the respondent’s number of employees. Response choices for 

questionnaire recipients included “not at all,” “to a small extent,” and “don’t know.” See appendix V for 

a copy of the GAO questionnaire.

a

Looking to the future, hotels representing 90 percent or more of workers 

employed by questionnaire respondents stated that they planned to take 

further actions to introduce labor- or cost-saving strategies and to raise 

prices, with nearly all of these hotels attributing that plan to minimum 

wage increases (see table 14). Hotels representing smaller than 90 

percent of workers employed by questionnaire respondents planned to 

reduce operations, delay expansion, lay off hourly employees, reduce 

hours, or reduce overtime. However, 100 percent of hotels that planned to 

take these actions attributed that plan to minimum wage increases to a 

moderate or large extent.

Totals may not add due to rounding.

Table 14: Employee-Weighted CNMI Employer Planned Actions and Attribution of Those Plans to Minimum Wage Increases

Action

Percentage 

planning to take 

action

Attributed planned 

action to minimum 

wage increases to a 

moderate extent 

(percentage)

Attributed planned 

action to minimum 

wage increases to a 

large extent 

(percentage)

Percentage 

attributing action 

to either a 

moderate or 

large extent

Introduce labor-saving strategies or 

technology

a

92 55 45 100

Introduce other cost-saving strategies (e.g., 

energy-saving technologies) 

92 55 45 100

Reduce operating capacity or services 

offered

14 100 0 100

Delay expansion of business 14 100 0 100

Relocate business outside of territory 0 not applicable not applicable not applicable
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Action

Percentage 

planning to take 

action

Attributed planned 

action to minimum 

wage increases to a 

moderate extent 

(percentage)

Attributed planned 

action to minimum 

wage increases to a 

large extent 

(percentage)

Percentage 

attributing action 

to either a 

moderate or 

large extent

Close establishment temporarily

a

0 not applicable not applicable not applicable

Lay off salaried employees 19 0 0 0 

Lay off employees who are paid an hourly 

wage

19 0 100 100

Reduce regular work hours for employees 

paid an hourly wage

58 54 46 100

Reduce overtime work hours for employees 

paid an hourly wage

60 27 73 100

Decrease level of benefits for salaried 

employees

37 37 14 51

Decrease level of benefits for employees 

paid an hourly wage

37 37 14 51

Implement a hiring freeze 38 2 62 64

Raise prices of goods or services 95 68 20 87

Close establishment permanently 0 not applicable not applicable not applicable

Source: GAO analysis of CNMI hotel questionnaire responses.

Notes: The questionnaire asked about planned actions in the next 18 months, which would be by 

March 2015. Percentages are weighted by the respondent’s number of employees. Response 

choices for questionnaire recipients included “not at all,” “to a small extent,” and “don’t know.” See 

appendix V for a copy of the GAO questionnaire.

a

As with past actions, employers attributed their future planned actions to 

a moderate or large extent to factors other than minimum wage 

increases. All respondent hotels attributed their plans to a moderate or 

large extent to other increasing costs. Other factors also contributed to 

the plans of hotels representing 75 percent or more of workers employed 

by questionnaire respondents to a moderate or large extent (see table 

15).

Totals may not add due to rounding.

Table 15: Employee-Weighted Attribution of Planned CNMI Employer Actions to Other Factors

Factor

Factor contributed to a 

moderate extent 

(percentage)

Factor contributed to a 

large extent 

(percentage)

Percentage where factor 

contributed to either a 

moderate or large extent

Increased utility costs

a

10 90 100

Increased costs of materials 35 65 100

Increased transportation/shipping costs 35 65 100

Increased maintenance costs 35 65 100
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Factor

Factor contributed to a 

moderate extent 

(percentage)

Factor contributed to a 

large extent 

(percentage)

Percentage where factor 

contributed to either a 

moderate or large extent

Decreased numbers of customers

a

24 51 75

Changes to U.S. immigration laws 61 32 93

Changes in business taxes or fees 52 22 75

Source: GAO analysis of CNMI hotel questionnaire responses.

Notes: Percentages are weighted by the respondent’s number of employees. Response choices for 

questionnaire recipients included “not at all,” “to a small extent,” and “don’t know.” See appendix V for 

a copy of the GAO questionnaire.

a

Totals may not add due to rounding.

Data from the Hotel Association of the Northern Mariana Islands 

(HANMI), which, prior to November 2013, covered 12 CNMI hotels, show 

that in 2012 and 2013 occupancy rates for its member hotels have 

increased over average rates between 2006 and 2011. Occupancy rates 

in the January to March peak season topped 90 percent in 2013 (see 

table 16).

Table 16: HANMI Monthly Hotel Occupancy Rates

Percentages 2006 2007 2008 2009 2010 2011 a 2012 2013

January

a

70 72 77 80 74 81 85 91

February 73 74 76 80 83 86 87 94

March 60 63 58 59 71 71 80 93

April 56 49 55 54 51 47 68 76

May 65 52 57 49 50 53 60 73

June 66 55 58 47 57 55 64 78

July 64 57 62 55 62 57 66 83

August 66 65 60 66 69 70 83 94

September 63 49 55 63 60 60 67 75

October 59 49 59 39 54 52 59 72

November 59 59 61 48 62 64 75 81

December

a

61 61 62 57 68 68 a 85 Not available

12-month average 64 59 62 58 63 64 73 85 through 

November 

2013

Source: GAO analysis of HANMI data.

Note: December 2013 statistics were not yet available at the time of our report.

a

CNMI Hotel 

Occupancy and 

Room Rates Have 

Increased in Recent 

Years

One hotel did not report statistics to HANMI in December 2010 and November 2013.
Appendix IV: Commonwealth of the Northern 

Mariana Islands

Page 77 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

As occupancy has increased in recent years, room rates have also risen. 

After adjusting for inflation, yearly average room rates increased by 11 

percent between 2010 and 2013 (see table 17).

Table 17: HANMI Inflation-Adjusted Monthly Room Rates 2010-2013

2010 2011 2012 2013

January $102.65 $103.83 $108.62 $113.09 

February $89.74 $90.74 $92.44 $103.77 

March $83.01 $79.92 $82.96 $88.35 

April $81.42 $83.58 $81.76 $90.69 

May $87.07 $81.44 $85.30 $92.51 

June $80.20 $76.49 $81.02 $90.34 

July $90.05 $92.03 $94.36 $105.64 

August $104.03 $106.14 $108.41 $115.55 

September $81.29 $81.55 $81.47 $94.25 

October $82.81 $80.28 $82.49 $94.05 

November $80.98 $79.06 $81.59 $93.18 

December $96.22 $91.48 $99.15 not available 

12-month average $88.29 $87.21 $89.96 $98.31

Source: GAO analysis of HANMI data and CNMI CPI data.

a

Note: Data cover HANMI members only.

a

According to the Marianas Visitors Authority, CNMI tourism is dependent 

on the availability of air service and hotel accommodations. According to 

the Marianas Visitors Authority (citing 2013 data), there is at present a 

good balance between the number of flight seats and the number of 

resort hotel rooms in the CNMI. In 2011 Saipan began receiving twiceweekly direct flights from Beijing, China.

December 2013 data were not yet available at the time of our report; therefore, the 2013 yearly 

average is for 11 months.

25

 

25In the past, flights have been dropped. For example, in September 2005, Japan Airlines 

discontinued service to the CNMI. Northwest Airlines added routes from Narita and 

Osaka, Japan, to the CNMI in 2005, but the Osaka flight was suspended the next year. 

According to tourism industry 

representatives, there is currently no international jet service to Tinian, 

making Tinian visitors and residents dependent on “air taxis” that run 

several daily flights from Saipan, as well as charter flights (see fig. 18). 

There is no ferryboat service between the two islands. Similarly, 
Appendix IV: Commonwealth of the Northern 

Mariana Islands

Page 78 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

according to the Marianas Visitors Authority, the island of Rota receives 

only charter flights from Japan at the end of the calendar year.

Figure 18: Plane Preparing for the Saipan to Tinian Flight

According to the Marianas Visitors Authority, there are approximately 667 

daily hotel rooms in the CNMI that are currently off-line or closed, which 

could support an additional 133,400 visitors.26

 

26The Marianas Visitors Authority’s calculations assume that each room would support 

approximately 200 additional visitors per year.

The Authority is hopeful 

that the currently closed Palms (see fig. 19) and Riviera Resort Hotels will 

soon re-open. In addition, there are requests for proposals for 

development of two tracts of land on Saipan that could, according to the 

Authority, add 800 to 1,000 daily rooms, accommodating an additional 

160,000 to 200,000 annual visitors.
Appendix IV: Commonwealth of the Northern 

Mariana Islands

Page 79 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Figure 19: The Palms Resort Hotel

While discussing the recent upturn in tourism, industry representatives 

characterized the growth as an opportunity to recover from several down 

years and to reinvest in their properties. In addition, they attributed the 

recent growth in tourism to the Chinese and Russian markets, whose 

access to the CNMI is aided by the U.S. Department of Homeland 

Security’s current practice of paroling tourists from Russia and China into 

the CNMI. This makes the CNMI an attractive destination for tourists from 

China and Russia, which are relatively close to the CNMI. Tourism 

industry representatives fear that loss of the Russian and Chinese market 

would be devastating.
Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire
Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix V: GAO Questionnaire

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Appendix VI: Comments from the Government 

of American Samoa

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Appendix VI: Comments from the 

Government of American Samoa

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix.

See comment 2.

See comment 1.
Appendix VI: Comments from the Government 

of American Samoa

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See comment 4.

See comment 3.
Appendix VI: Comments from the Government 

of American Samoa

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Appendix VI: Comments from the Government 

of American Samoa

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Appendix VI: Comments from the Government 

of American Samoa

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Appendix VI: Comments from the Government 

of American Samoa

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See comment 7.

See comment 6.

See comment 5.
Appendix VI: Comments from 

the Government of American 

Samoa

Page 102 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

The following are GAO’s responses to comments from the American 

Samoa Government dated March 21, 2014.

1. The government of American Samoa stated that there is significant 

evidence that the 2010 U.S. Census grossly undercounted the 

American Samoa population. We have edited the note in the report to 

expand on the American Samoa government’s concern about a 

population undercount in the census. However, an undercount of the 

American Samoa population by the Census would not affect the 

employment counts we include in our report. Our employment counts 

are not based on Census data but on data from the American Samoa 

Office of Taxation and from responses to the questionnaire we 

submitted to tuna canning industry employers.

2. The government of American Samoa stated that it is very concerned 

that GAO’s findings are derived from a narrow spectrum of information 

sources and, as a result, yield misleading statements and findings not 

supported by available data. As noted in the report, U.S. territories are 

not included in some federal data collection that is routinely done for 

the 50 U.S. states. We have carefully reviewed the available data 

from the American Samoa Office of Taxation and have worked with 

the office to review and verify its data. As a result of our review, the 

office has also reviewed its data for completeness and accuracy. We 

believe that the use of these data is appropriate for determining the 

changes in employment and earnings in American Samoa over time. 

We recognize that different data series can provide different specific 

numbers because of their varied methodologies or coverage; 

therefore we have reported other data series to provide full disclosure, 

and have included a discussion of potential reasons for the 

differences. Because we reviewed and discussed the alternate data 

sources, and included our analysis of the GAO questionnaire and 

interviews with multiple stakeholders in American Samoa, we do not 

believe that we are presenting a misleading picture of the impact of 

minimum wage increases in American Samoa.

With the exception of the County Business Patterns data, each of the 

data sources included in Attachment C of the American Samoa letter 

was included in our report’s Appendix I as part of our discussion of the 

different data sources and was included in the draft report. County 

Business Patterns data have limitations in their coverage for American 

Samoa. For example, County Business Patterns data do not include 

most government employees. Government employees were 

approximately 29 percent of total employment in American Samoa in 

2012 according to the data from the American Samoa Office of 

GAO Comments
Appendix VI: Comments from 

the Government of American 

Samoa

Page 103 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

Taxation. In addition, the County Business Patterns data are currently 

available for only 2008 to 2011 and are not available for 2007 or 2012. 

The other series we report are available for 2007 through 2012. The 

American Samoa government has used the 2007 Economic Census 

to substitute for the missing County Business Patterns data for 2007, 

but these data have a different basis. For example, according to 

Census Bureau officials, the Economic Census includes FICA and 

non-FICA workers, while County Business Patterns data include only 

FICA workers. In addition, the 2012 data the American Samoa 

government presents assume that there was no change in private 

sector employment from 2011 to 2012.

3. The American Samoa government stated that our report does not 

capture the severity of employment decreases since 2007 and the 

government presents an estimation of the 2012 unemployment rate by 

the American Samoa Department of Commerce stating that the 

unemployment rate in 2012 was 18 percent, up from 12 percent in 

2011. We have added unemployment rates to the report that were 

calculated based on the 2010 decennial census to the report, for 

reference. The 2012 unemployment rates calculated by American 

Samoa are based on an extrapolation of 2000 and 2010 census data, 

and American Samoa Statistical Yearbook data, and therefore do not 

include actual data from 2012. Therefore, the American Samoa 

government’s 2012 unemployment calculation may not capture 

changes in the actual labor force during this period, which would 

affect the unemployment rate. For example, in their responses to our 

questionnaire, cannery employers reported a 6 percent increase in 

hourly employment from 2011 to 2012. Additionally, if some portion of 

the unemployed individuals leaves American Samoa, the 

unemployment rate would be less than that estimated by the 

American Samoa government.

4. The American Samoa government comments that more emphasis 

should be placed on the multiplier effect of percentage changes in 

GOP, however small, to employment. Each of the three data series 

we present in Appendix I covers employment in all sectors, therefore 

any change in employment and wages that occurred as a result of the 

2009 cannery closure would also be captured in data we present. We 

agree that it is likely that a major closure such as that of the cannery 

in 2009 will have larger effects on the economy. 

5. The American Samoa government presents employment data labeled 

as from the American Samoa Government Office of Taxation. The 

Office of Taxation data presented by the American Samoa 

government are from our draft report and are a combination of data 
Appendix VI: Comments from 

the Government of American 

Samoa

Page 104 GAO-14-381 Economic Indicators Since Minimum Wage Increases Began

from that office and from our questionnaire of cannery employers. As 

a result of data reviews by the American Samoa Office of Taxation 

and GAO during the report comment period, we made corrections to 

American Samoa employment and wage data for 2007-2009 that 

revised these employment data slightly downward for those years in 

the final report.

6. The American Samoa government presents employment data from 

the SSA. We prepared these data as part of an analysis of SSA data 

undertaken specifically for this report. As Appendix I of our report 

notes, the SSA data had data entry errors for 2011 and 2012 that 

resulted in implausibly large counts. While we took steps to account 

for these errors, we determined that the data from the American 

Samoa Office of Taxation were more reliable than SSA data for our 

purpose of describing employment and earning trends in those years.

7. The American Samoa government presents employment data labeled 

as being from the U.S. Department of Commerce County Business 

Patterns. However, the County Business Patterns data from 2007 are 

U.S. Economic Census data, which have a different basis for the 

count than the County Business Patterns data. In addition, the 2012 

data presented by the American Samoa government assume no 

change in private sector employment between 2011 and 2012. 

However, there is likely to have been a change in total employment 

between those years. For example, in their responses to our 

questionnaire, cannery employers reported a 6 percent increase in 

hourly employment from 2011 to 2012.
Appendix VII: Comments from the Government 

of the CNMI

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Appendix VII: Comments from the 

Government of the CNMI
Appendix VII: Comments from the Government 

of the CNMI

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Appendix VIII: GAO Contact and Staff 

Acknowledgments

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David Gootnick, (202) 512-3149 or gootnickd@gao.gov. 

In addition to the contacts named above, Emil Friberg, Assistant Director; 

Ashley Alley; Benjamin Bolitzer; Karen Deans; Jon Fremont; Jill Lacey; 

Michael Simon; Vanessa Taylor; and Eddie Uyekawa made key 

contributions to this report. Technical assistance was provided by Lynn 

Cothern and C. Etana Finkler.

Appendix VIII: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(320989)
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