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40-916 PDF 2008

THE ECONOMIC EFFECTS OF 

THE RECENTLY INCREASED 

MINIMUM WAGE 

OVERSIGHT FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON INSULAR AFFAIRS 

OF THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

Friday, February 22, 2008, in American Samoa 

Serial No. 110-58 

Printed for the use of the Committee on Natural Resources 

( 

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

or 

Committee address: http://resourcescommittee.house.gov 

(II) 

COMMITTEE ON NATURAL RESOURCES 

NICK J. RAHALL, II, West Virginia, Chairman 

DON YOUNG, Alaska, Ranking Republican Member 

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Neil Abercrombie, Hawaii 

Solomon P. Ortiz, Texas 

Frank Pallone, Jr., New Jersey 

Donna M. Christensen, Virgin Islands 

Grace F. Napolitano, California 

Rush D. Holt, New Jersey 

Rau ́l M. Grijalva, Arizona 

Madeleine Z. Bordallo, Guam 

Jim Costa, California 

Dan Boren, Oklahoma 

John P. Sarbanes, Maryland 

George Miller, California 

Edward J. Markey, Massachusetts 

Peter A. DeFazio, Oregon 

Maurice D. Hinchey, New York 

Patrick J. Kennedy, Rhode Island 

Ron Kind, Wisconsin 

Lois Capps, California 

Jay Inslee, Washington 

Mark Udall, Colorado 

Joe Baca, California 

Hilda L. Solis, California 

Stephanie Herseth Sandlin, South Dakota 

Heath Shuler, North Carolina 

Jim Saxton, New Jersey 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Wayne T. Gilchrest, Maryland 

Chris Cannon, Utah 

Thomas G. Tancredo, Colorado 

Jeff Flake, Arizona 

Stevan Pearce, New Mexico 

Henry E. Brown, Jr., South Carolina 

Luis G. Fortun ̃ o, Puerto Rico 

Cathy McMorris Rodgers, Washington 

Bobby Jindal, Louisiana 

Louie Gohmert, Texas 

Tom Cole, Oklahoma 

Rob Bishop, Utah 

Bill Shuster, Pennsylvania 

Dean Heller, Nevada 

Bill Sali, Idaho 

Doug Lamborn, Colorado 

Mary Fallin, Oklahoma 

Kevin McCarthy, California 

James H. Zoia, Chief of Staff 

Rick Healy, Chief Counsel 

Christopher N. Fluhr, Republican Staff Director 

Lisa Pittman, Republican Chief Counsel 

SUBCOMMITTEE ON INSULAR AFFAIRS 

DONNA M. CHRISTENSEN, Virgin Islands, Chairwoman 

LUIS G. FORTUN ̃ O, Puerto Rico, Ranking Republican Member 

Eni F.H. Faleomavaega, American Samoa 

Rau ́l M. Grijalva, Arizona 

Madeleine Z. Bordallo, Guam 

Nick J. Rahall, II, West Virginia, ex officio 

Elton Gallegly, California 

Jeff Flake, Arizona 

Don Young, Alaska, ex officio 

(III) 

CONTENTS 

Page 

Hearing held on February 22, 2008 ....................................................................... 1 

Statement of Members: 

Christensen, Hon. Donna M., a Delegate in Congress from the Virgin 

Islands ............................................................................................................ 1 

Prepared statement of ............................................................................... 2 

Faleomavaega, Hon. Eni F.H., a Delegate in Congress from American 

Samoa ............................................................................................................ 3 

Prepared statement of ............................................................................... 4 

Statement of Witnesses: 

Butler, Brett, General Manager, StarKist Samoa, Del Monte Foods ........... 41 

Prepared statement of ............................................................................... 43 

Faleafine-Nomura, Lydia, American Samoa Field Representative, Office 

of Insular Affairs, U.S. Department of the Interior ................................... 7 

Galea’i, Alfonso ‘‘Pete,’’ Plant Human Resources Manager, Chicken of 

the Sea Samoa Packing Company ............................................................... 44 

Prepared statement of ............................................................................... 46 

Moliga, Hon. Lolo M., President, American Samoa Senate .......................... 13 

Prepared statement of the Legislature of American Samoa .................. 15 

Paopao, Eliu, Director, American Samoa Department of Commerce ........... 28 

Robinson, David, President, Chamber of Commerce ..................................... 38 

Prepared statement of ............................................................................... 40 

Sunia, Hon. Ipulasi, Lt. Governor, American Samoa .................................... 12 

Additional materials supplied: 

Pula, Nikolao I., Acting Deputy Assistant Secretary of the Interior for 

Insular Affairs, U.S. Department of the Interior, Statement submitted 

for the record ................................................................................................. 72 

Tulafono, Hon. Togiola T.A., Governor of American Samoa, Statement 

submitted for the record ............................................................................... 74 

List of documents retained in the Committee’s official files ......................... 77 

(1) 

OVERSIGHT FIELD HEARING ON ‘‘THE 

ECONOMIC EFFECTS OF THE RECENTLY 

INCREASED MINIMUM WAGE.’’ 

Friday, February 22, 2008 

U.S. House of Representatives 

Subcommittee on Insular Affairs 

Committee on Natural Resources 

American Samoa 

The Subcommittee met, pursuant to call, at 1:00 p.m., in the 

Governor H. Rex Lee Auditorium, Pago Pago, American Samoa, 

Hon. Donna M. Christensen [Chairwoman of the Subcommittee] 

presiding. 

Present: Representatives Christensen and Faleomavaega. 

STATEMENT OF THE HON. DONNA M. CHRISTENSEN, A 

DELEGATE IN CONGRESS FROM THE VIRGIN ISLANDS 

Mrs. CHRISTENSEN. Oversight hearing on the increase in minimum wage is now called to order. I want to welcome our Lieutenant Governor and the President of the Senate, Speaker of the 

House, and all of the other members of the legislative bodies here, 

our chiefs that are here with us, and all of you who have taken the 

time to come and either be a panelist for us from the industry; 

from the community; and those who just came to be a part of what 

ends up being really a historic hearing. And I am sure my great 

colleague and distinguished colleague Eni Faleomavaega will point 

out that we’ve not had a hearing here in quite some time. As a 

matter of fact, we’ve not had a Subcommittee hearing on Insular 

Affairs for quite some time, but I am very pleased to be here in 

American Samoa to convene this oversight hearing on Subcommittee on Insular Affairs to look into the impact of the increase 

in minimum wage and the people and the economy of your islands. 

When we reconstituted at the beginning of the 110th Congress 

last year, we pledged to take a subcommittee to the people that it 

serves. As a result, we held hearings last year on the Island of 

Guam, Commonwealth of Northern Mariana Islands, as well as my 

own Virgin Islands. Today we are honoring our pledge to your Congressman Faleomavaega to travel to your beautiful islands to hold 

a hearing as well. And we are truly here because of his leadership 

and work he’s done on behalf of this issue, and his insistence and 

urging that we come to American Samoa. We thank you, Eni, for 

your leadership, not only as the senior member of the Delegates 

2 

from the territories and the Congress, but on your Subcommittee 

on Asia and the Pacific as well as your leadership, in general, on 

the territories and your leadership in the Congress as a whole. 

As you know, when Congress sought to raise the Federal minimum wage for the first time in many years, it was not our intention to also raise the American Samoa minimum wage to the same 

level. While it was true that there was a focus on raising the minimum wage in the Commonwealth of the Northern Mariana Islands 

and while we are able to reduce the initial increase in schedule, 

American Samoa, unfortunately, got caught up in Mainland politics 

which had nothing to do with any underlying factors which would 

have suggested that we need to increase the minimum wage here. 

So we are here today to assess the need for and the impact of the 

increase of the minimum wage of American Samoa which your 

leaders did not seek and which members of my Subcommittee join 

them in seeking to block. In the end, we are only able to come 

away with incremental increases of a smaller size and a requirement that the U.S. Department of Labor report to Congress on the 

findings of a study assessing and projecting the impacts of the increases in the minimum wage. 

The Department of Labor just recently issued their initial report 

that points out that the mandated minimum wage increase in 

American Samoa is unsustainable. One concern that I do have with 

that report, though, is that it does not address any time the standard of living or the quality of life needs of the people of American 

Samoa. These also need to be considered and balance needs to be 

sought on this. So we are here to listen to you, the leaders and the 

people of American Samoa, to hear from you how the well-intended 

attempt at increasing wages to better help American Nationals 

meet the increased cost of living is or is not working in American 

Samoa. While I generally support the opportunity for all workers 

to earn a larger wage, I am informed in this as my training as a 

physician to not do any harm in an attempt to do good. 

Once again I look forward to hearing the testimony of the witnesses here today which will inform us on whether the actions the 

Congress took in raising the American Samoa minimum wage is in 

fact doing more harm than good or vice versa. Those of us who represent the territories know well that when legislation is passed in 

Washington, it is far too often that little thought or any is given 

to the impact such legislation will have on the insular areas. It is 

for this reason that I am pleased to have the opportunity to serve 

as a Chair of the Subcommittee on Insular Affairs to call attention 

to potential negative impacts of well-meaning laws that are passed 

by our Congress. I want to thank everyone once again for being 

here and to again say welcome, and I look forward to hearing from 

our witnesses. 

At this time, I would like to recognize for his opening statement 

your own Congressman Eni Faleomavaega. 

[The prepared statement of Mrs. Christensen follows:] 

Statement of The Honorable Donna M. Christensen, 

Chairwoman, Subcommittee on Insular Affairs 

I am pleased to be here in American Samoa to convene this Oversight hearing 

of the Subcommittee on Insular Affairs to look into the impact of the increase in 

the American Samoa minimum wage on the people and economy of your islands. 

3 

When we reconstituted the Subcommittee at the start of the 110th Congress, we 

pledged to take the subcommittee to the people it serves. As a result, we held hearings last year, on the island of Guam, the Commonwealth of the Northern Mariana 

Islands as well as my own U.S. Virgin Islands. And today, we are honoring our 

pledge to your Congressman, The Honorable Eni Faleomavaega to travel to your 

beautiful islands to hold a hearing as well. 

As you know, when Congress sought to raise the federal minimum wage for the 

first time in many years, we were not looking to raise the American Samoa minimum wage. While it was true that there was focus on raising the minimum wage 

in the Commonwealth of the Northern Mariana Islands, American Samoa got 

caught in mainland politics having nothing to do with the underlying factors that 

would suggest the efficacy of increasing the minimum wage in American Samoa. 

And so here we are to access the impact of an increase in the minimum wage of 

American Samoa which we did not seek and actively sought to block. In the end 

we were only able to come away with incremental increases and a requirement that 

the U.S. Department of Labor report to Congress on the findings of a study assessing and projecting the impacts of the increases in the minimum wage; which in its 

initial reported, which was recently issued, points out that the mandated minimum 

wage increase in American Samoa is ‘‘unsustainable’’. 

So we are here to listen to you the leaders and representatives of the people of 

American Samoa on how our well intended attempt to increase the wages paid to 

American Samoa workers is working or not working if that’s the case. While I support the opportunity for all workers to earn more, I am constrained as a physician, 

by the physician creed to not do any harm. 

And so I look forward to the testimony of the witnesses here today to educate us 

on whether the actions we took is indeed not doing any harm. It is often the case 

when legislation is passed in Washington to cover the fifty states, little thought if 

any is generally given to the impact that such legislation will have on the Insular 

Areas. That is why I am pleased to be here As the Chair of the Subcommittee on 

Insular Affairs to give thought to and assess the impact of this law on American 

Samoa. 

Thank you again for your warn welcome. I look forward to hearing from the witnesses. 

STATEMENT OF THE HON. ENI F.H. FALEOMAVAEGA, A 

DELEGATE IN CONGRESS FROM AMERICAN SAMOA 

Mr. FALEOMAVAEGA. Ia ee ia i ao sina le paia papapa o le 

Atunuu, le mamalu i le tapuaiga i le aiga Sa Levi, o loo fai tatalo 

i ao ma po e sii tapuaiga e fia i luma o le Atua aua lava le sailiga 

o faamanuiaga a le faigamalo a Tutuila ma Manua. Oute faatulou 

atu I le paia ia Sua ma le Vaifanua; Fofo ma Aitulagi; Ituau ma 

Alataua; Saole ma le Launiu Saelua ma Afioga I Maopu. O Paia 

ia te oe le Motu Sa; o le afio o le Laau na amo tasi ia Samoa. Afio 

I Faatui ma tootoo o le Faleula ma upu ia te oe le Manuatele. O 

le Paia o le faiga Malo a Tutuila ma Manua. Afio I lau Afioga I 

le Kovana ma le Sui Kovana ma lona kapineta, lau Afioga le 

Peresetene o le Maota Maualuga, le mamalu o Senatoa, lau Afioga 

le Fofoga Fetalai ma sui o le Maota o Sui o le tatou Fono. Lau 

Afioga le Faamasino Sili ma le vaega o Faamasinoga. Oute faapaI 

malu atu foI I le tapuaiga ma le seusilasila mai o le Malo tu toatasi 

o Samoa, Lau Afioga le ao mamalu o le Malo faapea le mamalu o 

le Fono suitofia; afio foI lau afioga le Palemia ma le kapineta, lau 

afioga I le Fofoga Fetalai ma sui mamalu o le Palemene, lau afioga 

le Faamasino Sili. O paia lava ia I Aiga ma latou tama, tama foi 

ma o latou aiga; Ituau ma Alataua; aiga I le tai ma le vaa o Fonoti, 

tulou, tulou lava. Ae paga lea o manatu le tonu ma faamoemoega 

o le agaga ina ia faaee le tai ma gau le vao, aua ni lelei mo le 

tapuaiga a Tutuila ma Manua. Ae ua lagona le vaivai ma le 

faatauvaa, sei tulou, ma ua oge upu o le gagana e sula ai faagalo 

Tutuila ma Manua. O lau teu faatupu ma lau tapuaiga faatamaaliI 

4 

sa faafaigofie ai mea uma o le tatou galuega ona o le tatou tausoa 

faatasi. Aua o le talitonuga lava lea o le Samoa, e manuia faiva ona 

o tapuaiga. O a foi ni manatu ma taofi eseese I mataupu sa tatou 

iai I nisi o taimi, Tutuila e, ma Manua o feteenaiga lava I luga o 

mataupu I le agaga tau ati ae. Ae oute talitonu lava ma le 

faamaoni o fea lava e tau ai le sousou o le tai, e toe mapu la i le 

lava i toafiamalie. Aua e maua pea le toovae le tofa mamao ma le 

faautaga loloto a le Atunuu. Talu ai o le tulafono a le Malo Tele 

I le siiga o totogi a tatou tagata faigaluega uma lava o lea ua afio 

mai ai lana Afioga ia Donna Christensen, o le taitaI o le soa komiti 

o le Maota o Sui o le Fono o le Malo Tele ma fai malaga mai ina 

ia vaavaai uma I galuega o loo mautu iai le faiga Malo a Tutuila 

ma Manua aemaise lava le mataupu lea ma le mafuaga ua oo mai 

ai nei le faigamalaga o lona finagalo ina ia maua mai ai se manatu 

mai taitaI o le tatou Atunuu poo a nisi fuafuaga a le Fono a le 

Malo Tele I le mataupu lava lea o le siitaga o totogi o tatou tagata 

faigaluega. 

Madam Chair, it is my privilege and honor to again express the 

deepest appreciation for your leadership and your willingness to 

come all the way to American Samoa to conduct this oversight 

hearing. The last time I remember we had a Congressional hearing 

here in American Samoa was in the 1950s when Congressman 

Wayne Aspinall was Chairman of the Committee on Interior and 

Insular Affairs at the time. We had a report on that. So it is a real 

rarity that we have an occasion like this and have Members of 

Congress come and conduct Congressional hearings so that the people and the leaders of American Samoa can witness and also participate in the process—and see how American democracy operates 

and to witness the effort that we are trying to make to seek out 

the will and the wishes of the people and the leaders of American 

Samoa on this very important issue of the minimum wage. 

Madam Chair, I have a prepared statement that is about 100 

pages and I think, for the sake of time, I am just going to submit 

my statement for the record. I ask unanimous consent, Madam 

Chair, if this be done, and I also want to welcome Tony Babauta, 

our staff director; Brian Modeste, the distinguished senior counsel, 

and our good friend and Ranking Republican Member, Don Young, 

Mr. Richard Stanton. Also, Chairman George Miller, who handles 

the Education and Labor Committee, has assigned two senior members of his own staff on the Committee on Education and Labor to 

also join us this afternoon to hear and to listen to the concerns and 

the statements that will be presented in this hearing this afternoon. Again, Madam Chair, I want to thank you for this opportunity. As I said I think I pretty much made known to people here 

where I stand concerning the issue of minimum wage. But I do look 

forward to hearing from our witnesses this afternoon, and I think 

we might want to proceed in that regard. Again, Madam Chair, 

thank you for this opportunity. 

[The prepared statement of Mr. Faleomavaega follows:] 

Statement of The Honorable Eni F.H. Faleomavaega, 

the Delegate to Congress from American Samoa 

Madame Chair: 

I want to thank you for holding this hearing in response to legislation introduced 

by Chairman George Miller of the House Committee on Education and Labor to inVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
5 

crease minimum wage in the U.S. and its territories. As a result of Chairman Miller’s legislation which was passed by the House and Senate and became Public Law 

(P.L.) 110-28, minimum wage was increased by fifty cents per hour in American 

Samoa and the Commonwealth of the Northern Mariana Islands (CNMI) on July 24 

and July 25, 2007, respectively. P.L. 110-28 also automatically increases minimum 

wage by fifty cents per hour every year thereafter until 2014 for American Samoa, 

and 2015 for CNMI. 

At my request, Chairman Miller included language, which became law, requiring 

the U.S. Department of Labor (DOL) to undertake a study to determine the impact 

the imposed minimum wage increases might have on the economies of American 

Samoa and CNMI. The DOL released its findings on January 25, 2008. However, 

given that no hearings were held by the House or Senate prior to passage and enactment of these minimum wage increases, on June 6, 2007 I wrote and asked if 

you would be willing to hold a hearing in your capacity as Chair of the House Resources’ Subcommittee on Insular Affairs which has broad jurisdiction for the welfare of the U.S. territories. You agreed to this request and I especially thank you 

for your leadership and concern regarding this important matter. 

For your information, my position regarding minimum wage is a matter of public 

record. For the past 18 years, I have fought to increase the wages of our tuna cannery workers because for too many years StarKist and Chicken of the Sea have purposely suppressed the wages of workers in American Samoa while increasing the 

wages of their corporate CEOs. For example, in 2004, it was reported that the CEO 

of Del Monte, the parent company of StarKist, was paid $1.7 million in salary, bonuses, and other compensations. With stock options included, he earned almost 

$2.65 million, or over 400 times more per year than the average cannery worker 

in American Samoa. The CEO of Heinz, once the parent company of StarKist, paid 

its top CEO more than $65 million in salaries, stocks, and options. Clearly, to any 

person of conscience, it is difficult to oppose minimum wage increases for the poor 

when companies are rich enough to pay their executives so much. 

I also believe that if StarKist and Chicken of the Sea had done the right thing 

and paid our workers fair wages, we would not be in the predicament we are in 

today with federal law now mandating automatic minimum wage increases. But let 

me briefly share with this committee a bit of our history with the tuna industry 

given that American Samoa is a single-industry economy and that more than 80% 

of our private sector economy is tied, either directly or indirectly, to StarKist and 

Chicken of the Sea. 

On May 8, 1956, Van Camp, which later became Chicken of the Sea, appeared 

before the U.S. Senate Committee on Labor and Public Welfare to urge consideration of legislation for the exemption of American Samoa from the wage and hour 

provisions of the Fair Labor Standards Act of 1938. William D. Moore, Overseas Operations manager for the Van Camp Sea Food Co., commenting on his company’s 

desire to pay Samoan workers 27 cents per hour as opposed to the prevailing minimum wage rate of $1 per hour, said: 

‘‘A minimum wage of $1 per hour, as required under present laws, is unrealistic, unwarranted, and unquestionably will have a deleterious effect upon 

the economic and social structure of the islands.’’ 

As further justification for suppressing wages in American Samoa, Mr. Moore 

said: 

‘‘The Samoans are Polynesians. They are not American citizens.’’ 

Mr. Collins, legal counsel for Van Camp, said it this way: 

‘‘The company has found that it takes from 3 to 5 Samoan workers to perform what 1 continental worker in the United States will do. It is, therefore, felt that this justifies a lower rate for Samoans.’’ 

If Mr. Collins were with us today, he would know that Samoan workers made 

Chicken of the Sea and StarKist the largest tuna canneries in the world, and the 

number one and two brands in America. In other words, at no time was either cannery justified in paying Samoan workers less than what they were worth. But the 

people of American Samoa had no real voice in these matters. 

In 1956, when Van Camp was lobbying Congress to suppress our wages, the islands of American Samoa were administered by the U.S. Department of the Interior. 

It was not until 1977 that American Samoa elected its first Territorial Governor and 

in 1980 we elected our first representative to the U.S. Congress. By that time, the 

tuna industry already had a 20 year jump-start on fixing wage rates in American 

Samoa. 

In fact, as early as 1956, Van Camp was successful in amending the Fair Labor 

Standards Act of 1938 to exempt the tuna industry from paying workers in American Samoa a minimum standard of decent living, and a special industry committee 

was assigned to substitute a sub-minimum wage structure that was supposedly comVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
6 

mensurate with insular economic conditions. The industry committee structure for 

American Samoa was intended to be an interim measure but it remained in effect 

until last year when it was abolished by the enactment of P.L. 110-28. I supported 

its abolishment because special industry committees were a sham and an insult to 

the intelligence of every hourly worker in American Samoa. 

Our history with the tuna industry has also been insulting. Not once in our 50 

year history has StarKist or Chicken of the Sea offered profit-sharing incentives or 

stock options to our workers. Instead, our cannery workers are given a case of 

wahoo at Christmas and a turkey at Thanksgiving and we’re told that our wages 

must remain below the federal minimum wage rate because workers in Thailand 

and the Andean countries are cleaning fish for $0.60 an hour, or because it takes 

5 Samoans to do the work of one white. 

With excuses like these, the tuna industry really has no credibility left when it 

comes to speaking on the subject of minimum wage. StarKist has opposed increasing 

minimum wage for Samoan cannery workers based on what it calls ‘‘guiding economic principles.’’ ‘‘One basic idea guides the actions of all major businesses,’’ 

Starkist says, ‘‘and that is a business has an economic, legal, and moral responsibility to maximize the return it gives to its investors or shareholders.’’ I am of the 

belief that higher laws should guide our actions and that we have a moral responsibility to do unto others as we would have them do unto us. 

This is why, after ten years of StarKist and Chicken of the Sea refusing to increase Samoan wages by anything more than 3 cents an hour, I supported, in the 

newly enacted public law, a one-time increase of fifty cents per hour for American 

Samoa’s cannery workers and lowest-paid government employees making less than 

$5.15 per hour. While both companies threatened to lay off workers due to the increase from $3.26 per hour to $3.76, the DOL report states ‘‘that neither Chicken 

of the Sea nor StarKist has reduced output or working hours in immediate response 

to the first fifty-cent increase in the minimum wage.’’ I am pleased by this outcome. 

On the other hand, I am concerned that further increases could be harmful to our 

economy. This is why I opposed automatic increases, or escalator clauses. Senators 

Inouye, Bingaman, and Akaka also opposed automatic increases but they, too, were 

unsuccessful in removing this language prior to it becoming law. Now that the DOL 

report confirms our position that automatic increases could be harmful to the economies of American Samoa and CNMI, I have introduced H.R. 5154 which would end 

automatic increases and would empower the DOL, in consultation with the Secretary of the Interior and the governments of American Samoa and CNMI, to conduct economic assessments every two years to determine when and if our economies 

can absorb future increases. 

I have made Chairman Miller aware of this legislation and I am hopeful that as 

a result of today’s hearing, he will work with us to find a solution that is fair to 

our workers and good for our economies. 

Given that American Samoa’s economy is not diversified, we cannot afford for our 

canneries to pack up and leave. This is why the Governor, my office, and the Fono 

have worked together to provide our canneries with the local and federal incentives 

they need to stay in American Samoa. However, despite our best efforts to support 

our canneries, the DOL reports that when asked how quickly a decision could be 

implemented to transfer production to tuna canning facilities elsewhere, one industry 

spokesman replied, ‘Minutes.’’’ In my opinion, a response like ‘‘minutes’’ shows a disregard for our people and Territory and suggests that when our canneries go, they 

will give no notice. 

According to the DOL, when our canneries go, their closure will have a ripple effect on our economy and could amount to a loss of 7,825 jobs. This is unacceptable 

and this is why I believe it is important for us to give our tuna canneries every reason to stay until the time comes for them to move elsewhere. Simply put, we must 

slow down the departure of our canneries until our economy is diversified. 

Slowing down their departure means ending escalator clauses. Even though the 

DOL did not have the time it needed to fully assess the impact automatic increases 

would have on our economies in the years to come, the DOL report does show that 

the results would not be positive. The DOL report also states that raising the minimum wage in American Samoa to $7.25 an hour would be like raising the minimum wage in the States to $16.25 per hour. An increase like this is not sustainable, and I believe is an unintentional outcome of P.L. 110-28 which I hope will 

soon be corrected. 

Finally, in closing, I want to remind this subcommittee and our people that our 

canneries will go one day regardless of what we do. Both canneries reported to the 

DOL that the tuna market is now focused on sealed foil packages rather than traditional canned tuna. If this is the case, it stands to reason that if StarKist and 

Chicken of the Sea were committed to American Samoa, they would be shifting proVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
7 

duction in American Samoa from cans to pouches so that we could grow with the 

industry. But, to my knowledge, neither cannery has implemented a large-scale plan 

that would change our operations. 

The reason for this is simple. Pouched tuna is generally hand-packed meaning it 

is a labor-intensive process. Labor rates in American Samoa are now $3.76 and 

more per hour. In Thailand and South America, which are American Samoa’s competitors, labor rates are, as I stated earlier, sixty cents and less per hour. If StarKist 

and Chicken of the Sea have told DOL the truth, if the global tuna market is moving from cans to pouches, our canneries will go where labor is cheapest given that 

their guiding economic principle is to maximize the returns they give to their investors, not to their workers. 

While I wish StarKist and Chicken of the Sea would be better corporate partners 

and stay in American Samoa for the long-haul, especially since they have exported 

almost $10 billion dollars worth of tuna from our home and lived off our backs for 

more than 50 years, American Samoa cannot and must not remain dependent on 

a single-industry. At some point, the American Samoa Government must be about 

the business of implementing the findings of the American Samoa Economic Commission. 

But as long as the tuna industry is with us, I will continue to do everything I 

can to encourage them to stay including pushing for extension of 30A tax credits, 

ending escalator clauses, and protecting their interests in any and all future trade 

agreements. 

Madame Chair, I thank you for holding this hearing and I look forward to working with you and Chairman Miller to find a legislative fix that will address the concerns I have raised. 

Given our time constraints, I would like to also ask if, in addition to my testimony 

today, if you would include, as a matter of record, my 2001, 2003, and 2005 statements before the U.S. Department of Labor’s Special Industry Committees No. 24, 

25, and 26, each of which provides an historical accounting of the relationship between minimum wage rates in American Samoa and the U.S. tuna industry, which 

was responsible for suppressing wages in the Territory beginning in 1956. 

In closing, I would also like to express, on behalf of the people of American 

Samoa, our sincere appreciation for your interest in the welfare of our future. 

Mrs. CHRISTENSEN. Thank you, Mr. Faleomavaega. 

We would like to begin with our first panel. We would now recognize Ms. Lydia Faleafine-Nomura, American Samoa Field Representative of the Office of Insular Affairs of the U.S. Department 

of the Interior. I thank you. I understand you are filling in for Acting Deputy Assistant Secretary Nikolao Pula, who could not be 

here, and we appreciate your coming to fill in for him. 

STATEMENT OF LYDIA FALEAFINE-NOMURA, AMERICAN 

SAMOA FIELD REPRESENTATIVE, OFFICE OF INSULAR 

AFFAIRS, U.S. DEPARTMENT OF INTERIOR 

Ms. FALEAFINE-NOMURA. Thank you, Congresswoman 

Christensen. Before I begin, may I just welcome you. I am sure you 

will hear many voices today from our people, and it is nice to see 

you and the staff here in our home and to my Congressman, nice 

to see you again. I hope to see you on the golf course soon. 

Mrs. CHRISTENSEN. Let me also mention that the lights will indicate your time and the time is five minutes. 

Ms. FALEAFINE-NOMURA. Madam Chair and members of the Subcommittee on Insular Affairs, I am Lydia Faleafine-Nomura, Field 

Representative for American Samoa in the Office of Insular Affairs. 

Mr. Nikolao Pula, Acting Deputy Assistant Secretary of the Interior for Insular Affairs planned to attend this meeting but at the 

last minute was unavailable to travel. Mr. Pula’s full statement 

has been submitted for the record. With your permission, I will 

summarize it on the economic effects of the recently increased minVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
8 

imum wage in American Samoa and the Commonwealth of the 

Northern Marianas. Last May, Congress for the first time took direct action to increase the minimum wage for American Samoa and 

the CNMI by 50 cents per hour each year until those rates reach 

the Federal minimum wage rate. The new minimum wage law precipitated a report by the U.S. Department of Labor and proposals 

for amending the law by the Governor of American Samoa and the 

territories’ Congressman. The DOL’s report was published in January 2008. It raises concerns that future increases in the minimum 

wage rate in American Samoa and the CNMI will likely develop 

significant economic financial harm to the territories. These territories face unique challenges in attracting private sector businesses 

because of their geographic isolation location in a part of the world 

where most neighboring economies have much lower minimum 

wages and living standards. 

Regarding American Samoa, the DOL report says at the present 

time the tuna canneries continue in operation, but there is concern 

that they will be closed prior to the escalation of the minimum 

wage to $7.25 per hour in 2014. An input-output model analysis 

commissioned by the Government of American Samoa has estimated that closure of the tuna canneries will cause a total loss of 

8,118 jobs—45.6 percent of the total employment in American 

Samoa. 

The canneries, which have shipped processed tuna to the United 

Stated for more than 50 years, have noted that in the future they 

may leave the territory and take their production to other countries 

where labor costs would be much lower, such as 60 to 70 cents per 

hour in Thailand and the Philippines. The canneries are not the 

only most critical component of the private sector. They also make 

up a significant part of the tax base supporting the American 

Samoa Government operations. Without the canneries as an anchor 

for the private sector tax base, cutbacks in local government operations and services would likely be necessary. The shuttering of industries in American Samoa and the CNMI could cause the respective economies to suffer prolonged and wrenching contractions. 

In light of the risk to the CNMI and American Samoa economies 

that are identified in this statement and in the DOL report, the 

Administration suggests that Congress give strong consideration to 

amending Public Law 110-28 in order to avoid increases in the 

minimum wage that may be determined to result in significant job 

loss and harm the economies of the two territories. We offer some 

suggestions regarding the factors that should be kept in mind in 

evaluating any potential legislative revision. 

First, regarding proposals for determination by the Secretary of 

Labor that would stop the implementation of an increase in the 

minimum wage, we would draw Congress’s attention to the difficulty inherent in making any objective determination about the 

impacts of a proposed minimum wage increase before it goes into 

effect. Broad language that would postpone an increase in minimum wage based on a finding of any adverse impact on the respective economies of American Samoa or the CNMI might have the effect of preventing all progress toward a higher minimum wage. 

Narrower language requiring a determination that the increase 

will not substantially curtail employment allows more flexibility, 

9 

but the difficulties for the Secretary of Labor of obtaining reliable 

information upon which to base any determination will be significant. 

Another model, excuse me, that Congress might consider is a 

special industry committee that sets the minimum wage rates biennially in certain areas of the United States and American Samoa 

for over 60 years. The advantage of the committee structure is that 

it ensures that the people who determine the minimum wage increases share first-hand knowledge of island economies while representing different stakeholders. When compared with proposals to 

vest the decision-making authority in the Secretary of Labor, this 

model offers the advantage of ensuring that local knowledge is fully 

incorporated and that stakeholders in the territorial economies are 

able to play roles. 

Madam Chair, thank you for the opportunity to present a brief 

testimony and for considering the Administration’s view. 

Mrs. CHRISTENSEN. Thank you for your testimony. I now recognize myself for 5 minutes of questions. 

But I know you just recently got called to come to testify, but I 

wanted to say you know that I am really pleased that the Administration recognizes certain risks to the American Samoa economy as 

identified in the Department of Labor report and suggest that Congress give strong consideration to amending the law that enacted 

the minimum wage increase in order to avoid increases that would 

result in significant job loss or harm the economy. But is the Administration prepared to go further, as far as you know, based on 

have you spoken to Mr. Pula or Nick back in Washington, or from 

your own knowledge, do you expect or can we expect that they will 

support legislation along these lines to suspend the minimum wage 

that will take place in May? 

Ms. FALEAFINE-NOMURA. I have not been told that directly but 

I will refer your question to Mr. Pula and have them in writing for 

you. 

Mrs. CHRISTENSEN. And we do have some other questions that 

we probably will submit in writing to the Office of Insular Affairs 

Acting Deputy Assistant Secretary. I will just ask you maybe one 

other question. 

Given the stagnation in the wages over the many years and the 

increase in cost of living just from your own perspective, have you 

seen any lowering of the standard of living, any deterioration in 

the quality of life given the fact that it is costing more to just pay 

for basic services and the minimum wages have not significantly 

increased? 

Ms. FALEAFINE-NOMURA. Personally I think the quality of living 

has improved, and the standard. I have lived here over 40 years, 

and that is my personal opinion. 

Mrs. CHRISTENSEN. Thank you. I now recognize Faleomavaega 

for his questions. 

Mr. FALEOMAVAEGA. Thank you, Madam Chair. 

Ms. Nomura, I know this is a very uncomfortable position that 

you have taken given the fact that you were just told to do this on 

behalf of our Deputy Acting Assistant Secretary Nikolao Pula who 

represents Kempthorne. As you know, the Department of the 

10 

Interior is the lead agency on behalf of American Samoa before the 

Congress and other agencies of the Federal government. 

Ms. Nomura, when Secretary Kempthorne was here, I believe the 

understanding that he was committed and wanted to do everything 

he could to assist American Samoa in looking very carefully at the 

issue of minimum wage. Is that—I believe you weren’t here when 

Secretary Kempthorne was here as well? 

Ms. FALEAFINE-NOMURA. Correct. 

Mr. FALEOMAVAEGA. I take it that the Department of the Interior 

is very supportive of what it can do to make sure that the economic 

situation here in American Samoa doesn’t become drastic? 

Ms. FALEAFINE-NOMURA. Yes. 

Mr. FALEOMAVAEGA. Years ago when the former Secretary of the 

Interior, Bruce Babbitt, in my consultations with him provided 

some $600,000 to establish the American Samoa Economic Study 

Commission, which is the first time ever in the years that the Department of the Interior—first time ever we’ve done this. This economic study took place about two years, and we have former Governor John Waihee from Hawaii as the Chairman. Do you know 

what is happening to that economic study commission’s recommendations? Has the Department of the Interior taken any action on the status of this study commission report that was issued 

about four or five years ago? 

Ms. FALEAFINE-NOMURA. That report, let me go back a little. As 

far as the status of that report, the Office of Insular Affairs has not 

received a formal recommendation from the Government of American Samoa excepting the recommendations in the commission’s report. But I understand and perhaps future witness will correct me 

if I am wrong that the American Samoa Government has used that 

report to move forward in many areas such as agriculture, fisheries, the information technology. So they are using the report, but 

there was no formal acceptance and recognition. 

Mr. FALEOMAVAEGA. So to your knowledge there has never been 

any real formal policy, statement, or endorsement or something 

saying that our Legislature and the Governor are united. They’re 

saying these are the economic priorities we want to recommend to 

the Department of the Interior and then you present it to the Congress in terms of how we can best resolve some of these economic 

needs of the territories. Has this ever taken place? 

Ms. FALEAFINE-NOMURA. We have not received a formal statement from the American Samoa Government. 

Mr. FALEOMAVAEGA. Is it your understanding that this economic 

study commission’s report—has there been any initiative taken by 

the Government of American Samoa as a government? My reason 

for saying this is that the Governor may have his own priorities; 

the Fono may have its own priorities; I might even have some of 

my own ideas; but has there ever been a uniform policy, decision, 

or endorsement, or resolution of any kind to indicate what the economic priorities of this territory are relative to this economic study 

commission that the Department of the Interior had expended 

$600,000 to come through with such a report? Has this ever been 

done? 

Ms. FALEAFINE-NOMURA. Well, to the Governor’s credit, I will say 

he recently established an economic council made up of private and 

11 

public sector members. And I believe the Chamber President Mr. 

David Robinson is the co-chair, and he may be able to answer that 

question better for you whether there is a policy forthcoming and 

whether they’ve acted on the commission’s report. 

Mr. FALEOMAVAEGA. One of the most salient issues that came 

along as a result of the Labor Economic Study Report in January 

was the lack of data and information in terms of them addressing 

seriously the issue of the minimum wage. Now it was in proper 

perspective, generally, they did express concern about the economic 

inability of our territory to take up another 50-cent increase in 

wages but when you go to the data and information, they seem to 

admit that we still need to get more raw data and information to 

make sure we know exactly what our economic situation is. Am I 

correct on this? 

Ms. FALEAFINE-NOMURA. Yes, there is a definite lack of statistical information. 

Mr. FALEOMAVAEGA. I know my time is up, Madam Chair. 

Thank you, Lydia. 

Mrs. CHRISTENSEN. I am going to just reclaim my time for just 

one other question. 

Because one of the recommendations from the Office of Insular 

Affairs is a model that considers using a Special Industry Committee. Again, and based on my reading and what I have heard 

that the minimum wage is set by the Special Industry Committee, 

the increases were rare and inconsistent. How did the Department 

of the Interior participate in the Special Industry Committee? 

Ms. FALEAFINE-NOMURA. The department of the Interior does not 

participate in the Industry Committee other than to testify. I am 

sorry other than to testify before the committee. 

Mrs. CHRISTENSEN. So in the testimony did they advocate for 

wage increases? Do you know? 

Ms. FALEAFINE-NOMURA. They advocated for wage increases that 

did not affect jobs or substantially curtail employment in American 

Samoa. 

Mrs. CHRISTENSEN. So they didn’t recommend a specific level of 

increase? 

Ms. FALEAFINE-NOMURA. No, they did not. 

Mrs. CHRISTENSEN. Since it is being recommended, are there any 

modifications to the Industry Committee that you might want to 

recommend so that the increases, whether they come biennially or 

however often, could be more consistent and really provide some increase to meeting the cost of living? 

Ms. FALEAFINE-NOMURA. The answer to that question would 

probably be more meaningful than I can afford, Madam Chair, at 

this time; so I would like to go back and get a more substantive 

answer for you. 

Mrs. CHRISTENSEN. Thank you. And I will submit questions in 

writing. Thank you for coming this afternoon. 

Do you have any questions? 

Mr. FALEOMAVAEGA. I have 100 more questions. 

Mrs. CHRISTENSEN. We will submit them in writing. Thank you, 

and you are dismissed from the panel. Thank you for your testimony Ms. Faleafine-Nomura. 

12 

Mr. FALEOMAVAEGA. I wonder, Ms. Nomura, in case we might 

have some questions with the Department of the Interior— 

Ms. FALEAFINE-NOMURA. I plan to stay. Thank you. 

Mrs. CHRISTENSEN. The Chair now recognizes the second panel 

to testify. And that panel we would like to call up The Honorable 

Ipulasi Sunia, Lieutenant Governor of American Samoa; and The 

Honorable Lolo Moliga, President of the American Samoa Senate. 

Lieutenant Governor, when you are ready, you may begin. 

STATEMENT OF THE HONORABLE IPULASI SUNIA, 

LIEUTENANT GOVERNOR OF AMERICAN SAMOA 

Lt. Governor SUNIA. Thank you, Madam Chairwoman. Again on 

behalf of the Governor and the People of American Samoa, I welcome you formally here in this hearing in the Territory of American Samoa. And I hope you’ll find time besides your business matter here to enjoy our weather. Talofa and greetings Chairwoman 

Christensen and Honorable Members of the Committee. We greatly 

appreciate this opportunity to appear before the committee on the 

urgent need for remedial legislation addressing the minimum wage 

increases that Congress had mandated for American Samoa. 

I had submitted the written position of the Governor and the Executive Branch of the Government of American Samoa. So I would 

very briefly state that my remarks here this afternoon would be in 

addition to the written statement that we’ve submitted. 

Mrs. CHRISTENSEN. Without objection, we’ll accept your statement for the record. 

Lt. Governor SUNIA. Thank you. 

Lt. Governor SUNIA. I wish to just point out that—an observation 

on my part—something that saddened me in the news that we hear 

and we watch on television about the huge number of American 

jobs that have been lost to foreign countries as a direct result of 

the American free enterprise way of life. The shift of jobs overseas 

may involve a direct Congressional act; maybe indirectly as a result 

of foreign trade agreements. But if direct congressional act will be 

responsible when American Samoa’s jobs join all those American 

jobs already lost to other countries? So you might ask, ‘‘So American Samoa, what do you want us to do?’’ My simple and brief answer is to enact legislation that is fair and just for the Territory 

of American Samoa. 

On my way over to the hearing, I try to make some sense out 

of all this in my mind as I again and again how the lower wages 

we are asking can be justified and be considered fair when compared to the higher minimum wages made in the United States 

and other territories. Then I thought of a scenario. Suppose we all 

woke up tomorrow and found that the U.S. Government and Congress had moved to American Samoa and now Congress wants the 

American Samoa minimum wage to be the standard of the wages 

and, accordingly, enacted the law to lower the wages in the United 

States and other territories to equal that of American Samoa? 

Madam Chairwoman, the Committee is duly sensitive to the economic situation in American Samoa and has been very supportive. 

In particular, you and the Delegates sought to modify the 2007 

minimum wage legislation to reflect actual economic conditions in 

the territory. On behalf of the People of American Samoa, I wish 

13 

to publicly express appreciation for your attempt to ward off this 

well-meaning but disastrous legislation mandate. Now that the Department of Labor has documented the dire impact of the 2007 legislative change on American Samoa, I urgently request this committee and Congress to enact timely remedial legislation. Committee support for the pursuit and enactment of tax and appropriations measures to correct the unintended but very real consequences of past actions—that is also needed and would be greatly 

appreciated. 

We in American Samoa are proud to be Americans, and we have 

served our country with valor and devotion. Remedial legislation 

will help us to develop our economy so that we can stand with the 

other territories and the 50 states as one nation. Thank you. 

Mrs. CHRISTENSEN. Thank you. The Chair now recognizes Senate 

President Moliga for your testimony. 

STATEMENT OF THE HONORABLE LOLO MOLIGA, 

PRESIDENT, AMERICAN SAMOA SENATE 

Mr. MOLIGA. Thank you very much, Madam Chair. Being a High 

Talking Chief from Manua, it is really hard for me to go on and 

speak a second language and it is very much inappropriate for me 

not to say something in Samoan because it is my duty as a High 

Talking Chief to properly address this gathering this morning. 

Therefore, I would like to take a minute or two to address that concern. 

O le paia o le tatou Atunuu ua mafai ona potopoto mai I lenei 

taeao, o le afio atu o le Afioga i le Lutena Kovana o le paia lava 

lena o le tatou faigamalo. O le paia o tupu ma ee ole Falesefulu 

ma le Manuatele aemaise o le mamalu o le malo, oute faatulou atu. 

Oute faatulou atu foi i le paia o le malaga mai i afioga i alii faipule 

mai Uosigitone, le tamaitai taitai komiti i mea tau atumotu 

aemaise le tatou sui aoao I Uosigitone, oute faatulou atu I o outou 

paia. Ia taalolo laia paia o lau faigamalo Tutuila ma Manua, 

mamalu o le Atunuu aemaise le maimoa tapuaI mai o tatou uso I 

Sisifo, ia oute faatulou atu I le paia ma le mamalu o lenei taeao. 

O le a taumafai sina molimau e fai ai au ma sui o le Fono 

faitulafono e avatu se molimau aua mataupu i totogi maualalo e 

pei ona Malaga mai ai le faigamalaga mai Uosigitone. 

At the outset, we wish to publicly acknowledge with much appreciation legislation introduced by our Congressman Faleomavaega 

calling for elimination of the escalator clause. This imposes a series 

of events leading to 50-cent hikes until the Federal minimum wage 

is reached. The concurrent resolution passed by the Legislature 

supporting this higher wage had been officially transmitted to the 

Honorable Chair this morning. Moreover, the joint position of the 

Legislature of American Samoa has been placed in your capable 

hands this morning with the same aspirations for the inclusion of 

this document as part of the record for this hearing. It is necessary 

to first correct the false impression that is being purposely spread 

by individuals with political aspirations or political advancement 

claiming that the current local leaders of American Samoa are dead 

against raising the minimum wage for the people of the territory. 

The primary concern of the local leaders is to ensure and to guarVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
14 

antee that the people will not lose their jobs in our attempt to raise 

the minimum wage in American Samoa. 

If the United States Department of Labor guarantees to us that 

no jobs will be lost when we raise the minimum wage, by all means 

we accept this increase in minimum wage. Unfortunately, we are 

certain that the U.S. Department of Labor cannot and will not 

make such declarations today. What the U.S. Department of Labor 

stated in his report that it has not seen any evidence that a substantial job loss is due to the imposition of the first 50 cents in 

American Samoa’s minimum wage. We only wish that is simple. 

Blatantly, we hear differently. We are beginning to witness some 

severe contraction in our economic system. Based on this observation and insight, we are convinced that the substantial job curtailment will result if the next 50 cents is imposed to our minimum 

wage. As local leaders, we cannot and we must not allow political 

agendas to stop us from doing what is best for our people and to 

do so would be politically irresponsible and immoral. The prepared 

statement of the Legislature of American Samoa provides data supporting the impracticality of adding another 50 cents to our local 

minimum wage. 

It is greatly unfortunate that our present economic pace continues to be dominated by the one industry that competes with the 

global market and its survival is dependent upon this competitive 

advantage in the world market. It is important to note and to point 

out that the Federal government has contributed to the gradual 

loss of this competitive edge through engaging in bilateral agreement with tuna canneries offering direct competition to the two 

tuna canneries that do business in American Samoa in addition to 

forcing her to continue escalation in the American Samoa minimum 

wage without self-sustaining economic capacity. Economic activity 

has slowed dramatically since the imposition of the first 50 cents. 

Imports have declined substantially since 2006. Excess revenues 

have assumed a downward slide since 2005. The continuing upward spiral of fuel prices has worsened the situation. Events climb 

proportionally to population growth thus arising the need for more 

money not only to maintain the current level of service but also to 

address the additional needs for the people of American Samoa. 

The United States is struggling with its own economic development challenges that directly affect our local economies. This worry 

necessitates caution against adding the next 50 cents to our economic minimum wage. This will no doubt trigger an economic devastation for American Samoa. It is better to preserve the jobs that 

we have today instead of gambling for low employment curtailment 

after the imposition of the next 50 cents. 

In conclusion, we must recognize that the external solution sometimes cannot endure the challenges which are culturally and geographically placed. Our geographic investment and size provides 

limitation to our economic endeavors. It shrinks the scope of economic development potentials available for capitalization. It forces 

the fashioning of an effective economic incentive that will force the 

establishment. It compels our dependence on Federal government 

for physical support. 

American Samoa’s economic system cannot be assumed to have 

the economic capacity similar to the economic system in the world. 

15 

We must compete with our own island neighbors for investment. 

Incredibly, this test is made impossible because of the high cost of 

doing business in American Samoa. One major reason are the 

wages which are already five to seven times higher than that of our 

neighboring islands. Our current economic structure cannot absorb 

any external manipulation or contribution of economic factors without catastrophic results. We are working to reconfigure our economic structure so that minimum wage cannot be a controlling factor. Some economic transformations will need time. Therefore, we 

ask that you give us the ability to engage in this process and to 

ensure that the minimum economic pay is found. 

Thank you very much, Madam Chair, for the opportunity to testify and offer testimony on behalf of the Legislature of American 

Samoa. You have a nice trip back and thank you. 

[The prepared statement of Mr. Moliga follows:] 

Legislature of American Samoa’s 

Joint Position 

MINIMUM WAGE HEARING 

Honorable Chairwoman Donna Christensen, Honorable Faleomavaega Eni 

Hunkin, and Members of the Committee, and staff; Allow us, on behalf of the Legislature of American Samoa, to add our warm welcome to those already extended by 

our Acting Governor, along with our deep sense of appreciation to the convening authorities, and to all of you who made this arduous trip to ascertain first hand testimonies from government, business, traditional leaders, and the general public on 

the minimum wage issue. Your physical presence in the Territory exudes a sense 

of reassurance that maybe we do have some say on this critical issue which affects 

the lives of Samoan Americans inhabiting the remotest piece of United States real 

estate south of the equator. We hope that you will have the chance to see and experience the very essence of our cultural values. 

Last year, when American Samoa’s minimum wage issue gained Congressional attention because of bipartisan political maneuvering and the speed with which the 

minimum wage legislation was approved without granting American Samoa time to 

offer testimony, our Governor dispatched a passionate plea, urging the elimination 

of the automatic $0.50 annual increase to the Territory of American Samoa’s minimum wage, until it reaches the prevailing Federal minimum wage rate. It was our 

collective belief that this legislation will, without a doubt, trigger an economic tsunami that will absolutely wipe out the Territory of American Samoa’s economic system; thereby causing catastrophic social chaos, with sufficient effects, which will 

clearly be felt by the 50 states of the Union and the Congress of the United States. 

Legislative resolutions were sent, attempting to clearly state fierce concerns over 

the effort to legislate the minimum wage without analyzing the capacity of American Samoa’s economic system to financially accommodate the annual rise in the 

Territory’s minimum wage. The Legislature is again submitting a Concurrent Resolution opposing the automatic 50 cents addition to American Samoa’s minimum 

wage until the federal minimum is reached. 

As leaders and residents of the territory, we want our people to earn more and 

to have the additional disposal income, to improve their quality of lives. While short 

time economic benefits will be realized, unfortunately, this short lived Utopian state 

will be followed by a period of drastic economic devastation. This is not a prognosis. 

It will be American Samoa’s reality. The Governor and the leaders of the Legislature are fighting to ensure and to preserve our people’s long-term economic future. 

For a very long time, and now culminating with the introduction of this legislation, 

some have held and harbored beliefs that the two tuna fish canneries have done little to advance the Territory of American Samoa’s economy. We contend that the two 

tuna fish canneries have been profitable, otherwise they would have left the Territory. This is the nature of business. No person or company enters business with the 

intention to lose money. The question that has been asked many times by us, who 

permanently live in American Samoa, is, if the canneries leave, what is going to 

happen to the people of American Samoa? 

If American Samoa’s economic system was sufficiently diversified, the adverse economic impact will not be as destructive, if the canneries were to leave. UnfortuVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
16 

nately, the two tuna fish canneries are the only economic game in town. The canneries departure will immediately curtail 29% or 5,000 jobs over night. Within six 

(6) months, 37% or 6,501 more jobs will be abridged. Within six (6) to twelve (12) 

months 2,875 or 16.5% of government jobs will be lost. Clearly, substantial amount 

of purchasing power will no longer be available in the Territory’s economy. The economic and social destruction will be pervasive and unrelenting. Some have held the 

notion that the canneries will never leave American Samoa because there is so 

much money to be made. This is a very naı ̈ve perception and it does not merit any 

discussion for the mere fact that the economics of the industry continually change, 

but more adversely against the two canneries located in American Samoa. Wages 

paid represent one of the major costs of production. The wage rates paid by the two 

canneries in American Samoa is about five (5) times higher than the other tuna fish 

processing countries of the world. By this measure alone, the local canneries are already competitively disadvantaged. 

The speculation that the canneries will relocate its facilities to other locations 

where their competitive advantages will improve has long been dreaded by the territory because its economic system is driven by these giant conglomerates. Perspectives on the degree of importance of the canneries on the economy of American 

Samoa varies depending on the source, however, the common response will always 

be ‘‘critically important’’. While we all acknowledge the importance of the canneries 

to the territory’s economy, very little financial data is available to quantify this perceived critical relationship with the two tuna fish canning companies. 

In recognizing the value of the canneries to the territory, the American Samoa 

Government has aggressively and vociferously expressed its position against any 

legislative action which may cause the canneries to relocate facilities elsewhere. The 

extension of IRS Section 936 for an additional ten (10) years sought last year did 

not yield any positive response. This federal incentive expired December 31, 2007. 

The salient thought was the preservation of the canneries’ competitive advantage 

to ensure their continued presence in the Territory. Additional efforts are being explored for the purpose of maintaining the canneries’ competitive advantage. The 

$0.50 annual increase in the minimum wage for American Samoa contradicts the 

collective efforts of the American Samoa Leaders to preserve economic opportunities 

for American Samoa. 

One might wonder what the canneries are doing to support local efforts. There 

is no doubt that the canneries are doing everything in their powers to assure their 

stay in American Samoa. However, it can be safely assumed that astute business 

management dictates that the canneries have already formulated and implementing 

their alternative operating strategies the moment the first 50 cents was effective 

last year. This may appear callous but it is just good business. Del Monte and COS 

Samoa Packing did not gain conglomerate status by being negligent. Business existence is driven by profits and returns on investments. The current economic climate 

for the American Samoa canneries and for the industry as a whole is not very conducive. The mercury content proliferation threatens global sales of fish products. 

Spiraling fuel prices, wage rates, environmental regulations, OSHA regulations, 

emission control regulations, fishing grounds proximity, loss of federal incentives, 

and geographical location are some of the delimiting factors to the profitability of 

the local canneries. It would not be unreasonable to say that the approval of the 

next $0.50 to the minimum wage will represent the straw that will break the camel’s back. 

What happens to the 66,500 residents of American Samoa when the minimum 

wage is increased? This is the question that the leaders are frantically trying to determine. It appears that the American Samoa Government is not prepared nor 

might fully understand the magnitude of the economic, social, and political devastation that will materialize if the minimum wage is increased by $0.50 increments. 

In the mid-seventies to the early eighties, when American Samoa suffered an economic recession, a mass exodus of local residents to the United States was evident. 

This trend will certainly be repeated as soon as the operations of the canneries are 

downsized or completely closed. The dislocated American Samoan workers will become the social problems for the U.S. mainland cities and states targeted by the 

American Samoa immigrants. 

In the 1899 Washington Convention, the United States gained control of all the 

eastern islands of the Samoa archipelago from Germany and Great Britain. The 

United State’s interests in American Samoa were compelled by its obvious desire to 

secure the Pago Pago harbor to accommodate its coaling station. Pago Harbor was 

also considered to have strategic value as a staging area for troops and to launch 

military offenses in the Pacific Region. Obviously, these interests have ceased but 

recently, questions have been raised over the extent of the United States obligations 

to the people of American Samoa. The United States sought to gain control over 

17 

American Samoa because it needed the harbor and the leaders quietly acquiesced. 

Unlike other insular territories, American Samoa was never annexed by the United 

States, as a result of war or conquest. In the years 1900 and 1904 the traditional 

chiefs of the islands of Tutuila, Aunu’u, and Manu’a, by means of executing two separate treaties of cession, freely ceded their islands to the United States of America. 

The two treaties of cessions still stand as the foundation or basis upon which American Samoa can claim a political relationship with the United States. 

The economic, social, and political devastation that will result with the addition 

of the next 50 cents to the minimum wage levels points to the United States’ failure 

to adequately prepare its protectorate to attain economic, social, and political selfsufficiency and self-reliance: the Federal Government’s goal for American Samoa. An 

argument can be made in favor of the United States for the millions of dollars 

poured into the territory since 1900. Unfortunately, these millions of dollars came 

with strong strings attached, thus precluding the allocation of funds to activities 

that would build the territory’s economic system. American Samoa’s economic infrastructure system remains ineffective and incapable of supporting any sustained economic development strategy. 

The cost and reliability of the air and surface transportation systems undermine 

efforts to advance American Samoa’s economic goals. The steady rise in the overall 

cost of doing business in the territory precipitated in part by the application of federal rules and regulations discourages investment and further erodes its competitive 

posture. Ironically, trade treaties executed by the United States to increase its influence with foreign countries represent the very instruments that are destroying the 

territory’s economic development capacity. One thing that the United States Government has successfully accomplished is the transformation of American Samoa into 

a totally dependent country. 

The Legislature of American Samoa attempted to comprehensively quantify, to 

the maximum extent possible, the economic impact if the canneries were to leave 

the Territory. Much has been said about the economic, social, and political desolation that will be caused by the departure of the canneries however, quantification 

of these beliefs has not been thoroughly addressed. The following attempts to place 

in proper perspective the importance of the canneries to American Samoa and resulting consequences should their presence is abated. 

Canneries’ Direct Contributions to American Samoa’s Economic System 

There are two tuna canneries operating in American Samoa, StarKist Samoa 

(owned by Del Monte Inc.) and Chicken of the Sea (COS) Samoa Packing Company. 

StarKist Samoa is the largest tuna cannery in the world, processing and canning 

about 650 tons of tuna per day and employing about 2,600 workers. Samoa 

Packing’s production is about 450 tons per day with about 2,400 employees. Both 

canneries export their products duty-free to the U.S. market under the U.S. Head 

note 3(a) tariff incentive scheme for U.S. Insular Areas. The canneries are still receiving preferential tax treatment over income and profits earned in American 

Samoa under the IRS Section 936 for a few more years. 

The two tuna fish canning operations (StarKist and Samoa Packing) represent the 

only primary industry in American Samoa. Every business in the territory, including the public sector, is dependent on the canneries for their livelihood. The direct 

financial contributions of these two companies are itemized in the schedule provided 

below. It is our belief that the figures are understated because they do not include 

the amount of funds spent to purchase raw fish for production. While current figures are not available, the existing numbers provide some insights to the impact of 

the canneries on the Territory of American Samoa. 

18 

The canneries employ over 33% of the territory’s workforce. Together with the 

American Samoa Government they provide 70% of total jobs and produce a predominantly service oriented private sector, which supplies employment for the remaining 

30% of American Samoa’s total employed workforce. The canneries individual income taxes contributions provide about $3 million to $5 million annually. Based on 

the figures itemized in the schedule above, the canneries directly generated economic stimulation valued at approximately $223.8 million in 2005. The extent of the 

canneries economic reach is very deep in American Samoa’s society. The fisherman 

and the farmer depend on the canneries for their livelihood. Small entrepreneurs 

owe business existence to the canneries in some form or fashion. Small civic organizations benefit from donations provided by the canneries. The influence of the canneries over the territory’s economic and social systems is pervasive and irrefutable. 

The departure of the canneries will wreak havoc in these two systems. 

Canneries’ Influence over the Territory’s Future Economic Perspective 

Since assuming oversight responsibilities over the Territory of American Samoa 

by the Department of the Interior in 1950, the canneries have been the only two 

investment success stories. Watch manufacturing, clothing manufacturing, textile 

manufacturing, corned beef processing, and others have come and gone. The economics were never right for these ventures. The American Samoa Government is 

aggressively seeking outside investments. But these efforts are being hampered by 

logistical and operating impairments. Logistical impediments include the cost and 

frequency of surface transportation to markets for final products and ascertainment 

of raw materials. Operating hurdles include the high cost of labor, infrastructure, 

escalating fuel prices, and government red tape. These economic development stumbling blocks have been dwarfed by the existence of incentive schemes such as the 

IRS Section 936 and the Headnote 3(a). These federal incentive schemes are supplemented by the 10 years of income tax moratorium offered by the American Samoa 

Government. Unfortunately, some of the federal incentive schemes, which raised 

American Samoa’s competitive advantage, have been neutralized by other national 

trade agreements executed by the United States with foreign countries. The termination of IRC Section 936 severely undermines American Samoa’s economic competitive advantage. The United States has entered into friendly relations agreements with many countries. Most of these countries, including our neighbor to the 

east, have far superior incentive packages than those offered by American Samoa. 

The net effect of American Samoa’s efforts to entice investment would be zero. 

The presence of the canneries provides the stabilizing effect to prospective investors. It is a positive testament to American Samoa being the haven for investors. 

It supplies investment confidence to the investor from the perspective that high investment yields can be achieved and the investment is secured. It is also an authentication that the Territory of American Samoa has the best investment climate. The 

American Samoa Government cannot verbally try to instill these characteristics in 

any literature that it prepares to attract investment. The presence of the canneries 

in American Samoa for over fifty years is positive evidence and a most effective promotional tool to attract new investments. The departure of the canneries from 

American Samoa will send a very negative investment message to any prospective 

investor. Based on the multitude of economic barriers, coupled with lingering quesVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY

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19 

tions on the departure of the canneries, American Samoa’s future economic perspectives are very bleak indeed. 

The American Samoa Government is aggressively launching its tourism development campaign. The famed Rainmaker Hotel has been gutted with one half of the 

facility being leased to Dateline Inc. The Tradewinds Hotel that provides 100 luxurious rooms is in place, buttressed by individual owned motels. These efforts will 

be exercises in futility if the canneries were to depart the territory. 

The proposed agricultural development thrust is on maximizing the production of 

agricultural products to contain imports and to create economic surplus through satisfying the needs of the fishing fleet and the community. The canneries’ existence 

expands the market for vegetables and locally grown produce. Since the inception 

of the canneries, this market has never been fully satisfied because of the dwindling 

number of farmers or lack of technical knowledge to successfully raise vegetables 

on a commercial scale. One of the canneries’ products is fishmeal. Much talk ensued 

in the past on the possible use of fishmeal to make livestock and poultry feed. No 

actual step was pursued to determine the feasibility of this economic alternative. 

Late last year a U.S. company engaged in talks with the canneries for the conversion of sludge into bio-diesel. Over the weekend another U.S. Company engaged in 

discussion with the canneries for the conversion of sludge to high priced protein supplements. These possibilities will no longer be available in the event the canneries 

depart. 

Since the establishment of the canneries, the American Samoa Government struggled to engage in the business of supplying raw fish to the canneries: a feat now 

achieved by Western Samoan fishermen. The goal of the endeavor is obvious; to capture the money paid by the canneries to foreign fishermen for raw fish. It appears 

that Samoans can be acclimated to the life of a fisherman as demonstrated by our 

neighbors to the east. Some of the local residents own fishing vessels facilitating redirection of funds to the local economy. As a parallel development, efforts were energized to seek maximum benefits from miscellaneous fish brought in by the fishing 

vessels. Some of these initiatives included the introduction of a miscellaneous fish 

tax. The other initiative that is still being pursued is vacuum packing fish fillets 

from the miscellaneous fish destined for the United States Market. One local company is in the process of completing its physical plant. The other local company is 

in the process of completing its physical plant. These potential economic alternatives 

will disappear with the departure of the canneries from American Samoa. 

Canneries’ Impact over Surface and Air Transportation Systems 

Surface and air transportation links to markets for final products and the obtainment of raw materials is the centerpiece for any economic development strategy. Its 

cost impacts the feasibility of any economic development project. Surface and air 

transportation links to the outside are considered to be inadequate: in frequency and 

freight rates. Despite these claims, American Samoa is fortunate to have the present 

surface and air transportation systems even with the presently identified deficiencies. This realization stems from the understanding that current economic conditions can only support the level of service being received. Surface and air services 

depend on economic need. Economic need is defined by profit yields that could be 

achieved. With the spiraling price of fuel the economic yields are reduced without 

a comparable rise in rates to reflect the changes in fuel prices. Maximum profit 

yield is attained when the ship or airplane carries maximum income generated load. 

Profit margin levels, determined by the break-even point up to the maximum peak 

of market tolerance, determine the frequency and cost of freight rates. Without the 

back-haul of canned fish products and fertilizers, the current frequency of trips and 

the present freight rates to American Samoa, would not be sustained. It is entirely 

possible that the number of cargo vessel trips to American Samoa could easily be 

reduced in half with the freight rates soaring beyond economical levels. 

The above scenario would further destroy American Samoa’s capacity to forge any 

level of economic development program. Importing raw materials for producing or 

fabrication in American Samoa would no longer be economically viable. American 

Samoa’s competitive advantage will be annihilated. 

Products imported to sustain the resident’s livelihood will become cost prohibited, 

thus causing more families to live in poverty. It has been estimated that over 95% 

of American Samoa’s consumables are imported, thus causing absolute reliance on 

air and surface transportation. It is the lifeblood of American Samoa’s economic system. Without it American Samoa will experience social and economic devastation. 

Transportation costs affect the financial ability of every resident and it will cause 

some to live in poverty. This state of affairs can exacerbate the already strained financial abilities of many residents to meet the rising cost of living. 

20 

Canneries’ Impact over the Territory’s Infrastructure System 

Air and surface transportation system, which is one of the vital components of the 

economic infrastructure system, is covered in the above discussion. It is stated 

therein that the impact of air and surface transportation link with the outside is 

pervasive because it affects every life on the island. The same scenario applies to 

the production of electricity, water, wastewater, solid waste, roads, ports, airports, 

education, health, public safety, and communication. The presence of the canneries 

on island has helped reduce the rates charged for the present infrastructure system. 

To illustrate the point, electricity will be discussed to highlight the impact of the 

canneries over the rates charged by the American Samoa Power Authority. The figures provided in the schedule show the distribution of electricity payers. 

Of the total 9,052 customers, 75% or 6,752 pay less than $100 of electricity on 

a monthly basis. Total revenue generation for the American Samoa Power Authority 

for the first two layers of customers would be $ 332,280 ($152,355 + $179,925) 

monthly or $3,987,360 yearly. The American Samoa Power Authority reported net 

sales for electricity of $34,203,204 for Fiscal Year 2004. Compared to the $3,987,360 

of revenues generated from 75% of residential customers, it only represents 11.7% 

of ASPA’s total revenues. The total cost of electrical production is 92.7% of sales. 

It is quite clear from this discussion that the people of American Samoa would have 

had to shoulder the burden of higher electricity rates if the canneries were not customers. The American Samoa Power Authority is able to attain an electrical production system with the proper built-in economies of scale because it has a more expansive clientele base that is supported by the two canneries. 

The departure of the canneries from the territory creates a consumption void, 

which will have to be met by increased rates, and reduced production. Both actions 

increase the cost of electricity. The same reasoning can be applied to the other elements of American Samoa’s infrastructure system. 

Canneries’ Impact on Fuel Imports 

Fishing vessels offloading raw fish to support the canneries’ operations purchase 

fuel in addition to the procurement of supplies for the next fishing trip. High volume 

of fuel consumption establishes an economic need for the local fuel suppliers to increase the frequency of tankers bringing in fuel. The fuel needs of the canneries, 

the fishing vessels, the government and the private sector have supported the 

present frequency and volume of fuel being imported in the Territory. The Government receives revenues estimated in the amount of $5,196,800 annually through the 

application of an excise tax rate of $0.1792 per gallon of imported fuel. Like any 

other world commodity the price is influenced by the purchased volume. The fuel 

needs of the canneries, coupled with the support fishing fleet, help the territory with 

the price at which its fuel is purchased from Singapore. If the canneries’ and fishing 

fleet’s fuel consumption is factored out, the frequency of tankers bringing fuel to the 

territory will be noticeably reduced and the price will rise. The stability of American 

Samoa will be placed in a very delicate balance because electricity rates will rise, 

air fares will climb, gas prices will spiral out of control, the cost of riding the bus 

or a taxi ascends, and the general cost of living will rise to levels that would force 

more residents of American Samoa to live in poverty. Further, the economic development process for American Samoa will be severely stifled. The land transportation 

industry will be summarily contracted, as some bus and taxi owners will find the 

level of profit margin too confining to make the effort economically viable. The same 

could be said about the small local fresh fish industry. The cost of fuel may render 

their operations unprofitable because the cost of imported fish would be cheaper. 


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21 

Canneries’ Impact on the Private Sector 

The pervasive impact the canneries have on every facet of life in the Territory 

of American Samoa should now be more evident. The all-encompassing influence of 

the canneries on air and surface transportation, basic infrastructure, and fuel imports, and direct financial infusion into the territory’s economic system automatically affect every business that makes up the private sector. The private sector is 

supported by the $233,486,122 million (2005 estimate) that the canneries inject annually into the economy. The canneries indirectly support every mom and pop store 

in all the villages, thus discounting the effect on the cost of key economic elements 

and directly supported by cannery workers who buy goods from their stores. 

The Ronald Reagan Marine Railway ship repair yard predominantly depends on 

the fishing vessels supplying raw fish to the canneries for its survival. There is insufficient government or private work to sustain this facility. Consequently, if the 

canneries move, the fishing fleet will move with it and the demise of the Ronald 

Reagan Shipyard is abundantly evident. Closure of this facility will alter negatively 

the status of the government’s revenue portfolio. 

Independent machine shops have been established strictly to address the needs 

of the fishing vessels and the canneries. Like the Ronald Reagan Repair Shipyard, 

without this market, their continued survival is curtailed. The government is also 

the looser as tax revenues will be lost when these operations are closed. 

The construction industry is sustained by the canneries through its capital improvement projects that are implemented annually. These projects do not include 

small and mid-size repair work that it executes intermittently. These construction 

projects trigger increased sales in the building material outlets. The potential for 

increased revenues for the government through higher taxes is enhanced. 

The wholesale and retail industry is directly supported by the canneries through the payment of $45.7 million (2005 estimate) in payroll. The 4,664 employees of the 

canneries spend their wages to purchase food, clothing, cleaning supplies, toiletries, 

and other basic necessities of life from the wholesale and retail industry. The 

canneries’ payroll yields about $3 million to $5 million in individual income tax revenues to the American Samoa Government. 

The service industry exists because of opportunities created by the affluent sector 

of the population driven by the desire to purchase convenience, security, and social 

amenities. For example, people are more apt to dine out in restaurants than eating 

at home. The number of residents earning $50,000 and more is rising at the rate 

of 12.2% annually. The management workers of the canneries are among those who 

fall within this salary threshold. At the lower end of the scale, the cannery workers 

use their income to purchase traditional basic foods and fresh fish from the market 

or along the roadside. 

The impact of the canneries over the petroleum companies doing business in 

American Samoa is already documented in the earlier section. This influence is significant and very controlling. American Samoa has already experienced the impact 

of fuel shortages and its harmful consequences are instantly felt in the people’s 

lives. 

Canneries’ Impact over the American Samoa Government 

Throughout this discussion the canneries’ direct financial contributions to the 

American Samoa Government have been identified and documented. Through their 

respective payrolls approximately $3 to $5 million worth of individual income taxes 

are paid to the American Samoa Government. Their existence allows the American 

Samoa Government to achieve proper economies of scales for its utility operations 

in addition to direct financial contribution ($7,250,400) through the payment of utility charges and fees. Fuel imports, transportation systems, economic stimulation, internal land transportation system, and others have been positively impacted by the 

presence of the canneries and certainly aiding the efforts of the government to forge 

a sustained economic development program. 

The moment the canneries depart, the American Samoa Government will face an 

unemployment rate of at least 70%. At an average salary of $15,935 for both the 

private and public sector, total amount of income taken out of the economy is approximately $156,000,000 or 9,800 jobs lost. The wholesale and retail outlets will 

be left with large unsold inventory, which will force business closure for many. Restaurants, fast food operations, service station owners, beauty salons, clothing outlets, bus owners, taxi owners, local airline owners, and other business activities will 

face bankruptcies. The local banks have revealed that the majority of American Samoa’s population is in debt. Abrupt termination of employment opportunities precipitated by the closure of the canneries will severely impact the commercial banks 

loan portfolios. The federal government will have to bear the financial burden of 

losses incurred by the financial institutions. The American Samoa Government will 

22 

have to bailout the American Samoa Development Bank for all defaulted home and 

business loans. With the loss of the canneries, the American Samoa Government 

will not have the financial capacity to reimburse the American Samoa Development 

Bank for its losses. 

The canneries’ impact on the government’s ability to advance its economic development goals has been addressed in the earlier section. The departure of the canneries is the net result of the shrinking impact of federal incentive schemes that 

were available to improve economic viability. For American Samoa, the departure 

of the canneries invariably destroys any government capacity to push its economic, 

social, and political goals. 

Will the Canneries Leave if the Minimum Wage is Incrementally Increased? 

The economic advantages supporting the existence of the canneries in American 

Samoa include duty-free entry of canned tuna into the U.S. market, soon to lapse 

IRC Section 936, local government ten (10) years of tax moratorium, proximity to 

fishing grounds, direct delivery of raw tuna from U.S. and foreign fishing fleets, relatively cheaper wage rates than other United States insular possessions, the absence of risk from being nationalized, and the threat from foreign currency fluctuations. 

The disadvantages to the canneries attributed to being located in American 

Samoa include but are not limited to the delimiting impact of federal regulations, 

vast distances to the markets for canned tuna products, high infrastructure cost, 

continued neutralization of the Headnote 3(a) tariff scheme benefits, and very stiff 

competition from the canned tuna processing operations located in South East Asia, 

Europe, South Africa, Andean countries, and Caribbean countries. The prevailing 

minimum wage rates in American Samoa far exceed those paid by the canneries’ 

competitors. 

While the United States advances its national policy of seamless trade barriers, 

its insular possessions like American Samoa, are desperately fighting for their economic, social, and political survival, made possible only through the granting of special trade protection for the only industry that props its economic system. The U.S. 

tariffs for tuna imports from Mexico, Costa Rica and the Dominican Republic under 

the North American Free Trade Act (NAFTA) and the Caribbean Basin Trade Partnership Act are being phased down to zero by the end 2007. Similarly countries like 

Samoa under the Generalized System of Preferences, and Ghana, Mauritius, 

Seychelles, Namibia and South Africa under the African Growth and Opportunity 

Act presently enjoy duty-free status for canned tuna imports into in the U.S. market. Congress approved the Andean treaty providing preferential treatment of 

canned tuna processed nearby South American countries including Ecuador, Columbia, Bolivia and Peru. It is increasingly difficult for the canneries to remain competitive with low-cost foreign tuna processors. The advantages of duty-free entry of 

American Samoa canneries’ tuna products into the U.S. is vitally important in helping offset the increasing competition from low-cost processors, i.e. Thailand, Indonesia, the Philippines, Mexico, Ecuador, etc. Despite the significant additional cost 

of U.S. duty, foreign imports of canned tuna and frozen loins have grown from less 

than 30% to over 53% of the total canned tuna sold in the U.S. in the last 12 years. 

Even greater competition and market penetration by foreign imports will likely result from new tariff concessions being granted by the U.S. to these and other countries with low-cost tuna processors. 

Duty-free status and tariff phase down for these countries will severely erode 

American Samoa canneries’ competitiveness and improves the advantage of much 

lower cost structures aided by much lower wages. The savings to the canneries due 

to U.S. tariffs waiver were estimated to be $66.6 million dollars in 1999. Obviously, 

the American Samoa canneries will be severely hard pressed to recoup this huge 

loss of cost advantage and still be able to compete with now duty-free, low cost tuna 

processors. The $66.6 million lost in government revenues dwarfs the value of the 

canneries’ contributions to the American Samoa economic system. 

Another comparative disadvantage for the American Samoa canneries, compared 

to the low cost foreign tuna processors, is the requirement that virtually all of supplies required for production must be shipped in from afar. Cartons, cans and ends, 

labels, vegetable oil, pallets, equipment and machinery, etc. must be logistically 

scheduled and shipped in at substantial additional cost. This is not the case in Thailand, Ecuador and other low cost foreign processor countries where most of the supplies are provided in-country or delivered from nearby, less costly sources. Being on 

major shipping routes, these countries also have the advantage of lower shipping 

costs to the U.S. and other markets. 

Such national trade agreements such as those listed earlier are examples of actions taken by the Federal Government without regard to reciprocal social and ecoVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
23 

nomic damages inflicted on American Samoa. These trade instruments erode the 

competitive advantage of American Samoa’s canneries. The other forces continuing 

to be at place include the fishing grounds that are now closer to these other tuna 

fish canning locales; adding to the deteriorating competitive ability of the canneries. 

Every two years the United States Department of Labor convenes a Minimum 

Wage Industry Committee to review the minimum wages for American Samoa. It 

is the mandate of the Department of labor to raise American Samoa’s minimum 

wage as expeditiously as possible to the U.S. minimum wage, which is exceeding 

$6 per hour. American Samoa imports its fuel from Singapore. The tuna canning 

operations located in South East Asia does not pay the same amount of freight rates 

for their fuel. Shipping to these areas is more frequent and more reliable based on 

the amount of cargo entering and leaving these canned tuna fish producing Asian 

countries. The canneries are subjected to any new environmental regulations, which 

at times have artificially raised operating costs to the installation of new equipment 

to reduce physical and airborne contaminants. These federal regulations are not enforceable in the independent countries with canned tuna fish productions facilities. 

The elasticity of demand for tuna fish products in the United States is very sensitive and the rising concern for mercury content in the fish threatens to global market for fish products and could shift consumption patterns to meat and fowl products. 

As summarized earlier, the canneries represent American Samoa’s sole primary 

industry. The canneries and the American Samoa Government are the basic sectors 

of the Territory’s economy. Although there is limited and underdeveloped potential 

for tourism, garment assembly and limited light industry, import-substituting agriculture and fisheries, the economic well being of American Samoa is intrinsically dependent on the canneries. The canneries generate a minimum of $100 million in 

personal income if the multiplier effect is 3. It is unlikely therefore, that the limited 

opportunities for economic diversification either singularly or collectively will have 

the capacity to replicate the canneries economic significance to the Territory in the 

foreseeable future. 

An area of immediate and significant prospect is the development of local albacore 

fisheries to supply the canneries and local demand. Due to limited worldwide supply, both canneries are increasingly relying on the increasing amount of albacore 

tuna that is being supplied mostly from (Western) Samoa. Samoa Packing alone 

purchased almost $7.0 million of albacore from American and (Western) Samoan 

fishing interests in 2000 and look to purchase much more as can be supplied. Although both canneries frequently work with both local and Samoa fishermen to advise and train on maintaining acceptable fish handling, icing and quality standards, 

fishermen in (Western) Samoa deliver the great majority of albacore supply due 

largely to the (Western) Samoan Government’s program to encourage and develop 

this important export industry. Similarly, ASG should target these fisheries for development by local fishermen including, the provision of soft-term financing and 

technical assistance. 

Businesses exist primarily to realize a predetermined rate of return on investment. Companies do have a social conscience but it is limited to the amount that 

exceeds the predetermined rate of return on investment. The canneries have demonstrated their community mindedness over the years and there is a genuine interest to remain in American Samoa in perpetuity. 

The question that is being asked is ‘‘will the canneries leave the territory if the 

propose minimum wage hike is approved’’? 

We contend that the canneries will, within five years from the imposition of the 

first $0.50 minimum wage hikes, have fully transplanted their operations in more 

economically conducive locales or fully convert local operations to loining. This is understandable as this represents a sound business decision. The rise in the minimum 

wage will significantly alter the rate of return on investment. An argument will be 

made, stating that the canneries cannot afford to close operation because of their 

existing investments. It is a logical argument however conglomerates such as the 

two canneries forecast and project income earnings far into the future. If the projected rate of return is not possible due to an uncontrollable factor, an economically 

feasible decision might be to cut loses by curtailing the present operation, irrespective of the amount of investment already made. 

This type of decision-making has already been demonstrated by one of the canneries. For example, an investment of approximately $10 to $15 million was implemented culminating with an operational can manufacturing plant. This can plant 

did not produce one can before it was closed down. Based on this demonstrated decision mode practiced by these huge companies, it supports firmly the contention that 

the canneries will not hesitate to close shop if the economics are no longer favorable, 

measured by the achievement of predetermined rate of return on investment. 

24 

As much as American Samoa will do everything at its disposal to keep the canneries from relocating their facilities, externally imposed decisions as the legislated 

minimum wage increase for American Samoa, will transform the operations of the 

canneries in American Samoa. The resulting mutation will certainly not be in the 

favor of the people of American Samoa. 

Mass out migration will be observed as residents seek their future elsewhere in 

the United States. The United States will bear the consequences of its actions as 

the Samoan immigrants seeking enrollment on welfare programs. Samoans who 

cannot make the adjustment to life in the United States will end up in over populated correctional facilities straining limited financial resources of law enforcement 

system. Children leaving the territory for educational advancement will become 

major deterrents to the public education system of the state chosen to be their new 

home. American Samoans who have poor health will relocate to the States to facilitate ready access to healthcare services. These immigrants do not have insurance 

or the financial wherewithal to defray their healthcare costs. Most likely, these immigrants will be on welfare seeking qualification under the State’s Medicaid programs. American Samoa’s technically skilled human resources will be among the immigrants seeking new lives in the United States. While they may be welcomed overseas and may be able to transition seamlessly into the workforce, their departure 

leaves a great void in the human resource capacity of American Samoa to spearhead 

its recovery programs. 

Air and surface transportation will be scaled back to the 1960 era. Lack of income 

to purchase food and other necessities of life reduces the amount of inventory kept 

by businesses and thus reduce the frequency of cargo vessels calling into Pago Pago. 

With the absence of backhaul cargo, the fright rates charges will be much higher 

thus raising the cost of goods beyond the economic capacity of many of the remaining residents of American Samoa. Air transportation will also experience drastic cutback, because the residents lack the finances to pay the airfare to visit the United 

States. Conversely, lack of tourism development will negate the need to travel to 

American Samoa. Consequently, the airline will find it economically infeasible to 

make frequent trips to American Samoa. 

We were utterly demoralized and filled with questions over the equity of the decision to raise the minimum wage for American Samoa without being afforded the opportunity to submit testimony hoping to sway the execution of such a devastating 

decision on our economic system. We wondered why this same type of opportunity 

was not accorded when merits of raising the minimum wage were being deliberated 

on last year. We are afraid that it takes much more effort to undo something that 

is already in the books irrespective of the prevailing adverse impacts. This opportunity is acknowledged with much gratitude. At least it gives us a sense of control 

over our own destiny even though this is just a dream or an illusion. 

Let me say without equivocation that no one opposes the raising of the minimum 

wage if the prevailing economic system can support the increase. It should be made 

crystal clear that the government, canneries, and the private sector do provide wage 

and salary increases periodically to their employees based on the economic carrying 

capacity of their respective operations. It is also important to note that the United 

States’ prevailing minimum wage is the refection of its economic capacity. It defies 

economic logic, therefore, to force the application of the Federal minimum wage level 

in American Samoa when the latter’s economy is infinitesimally small compared to 

the most robust and biggest economic system in the world. Sufficient documented 

evidence exists to validate American Samoa’s fear that huge employment curtailment will materialize when the federal minimum wage is imposed. 

In spite of our desperate attempt last year, and every two years the United States 

Department of Labor minimum wage hearings are conducted, to bring attention to 

the economic devastation that will result if the canneries leave or reduce its presence in American Samoa because of its reduced competitive advantage in the global 

market, Congress went ahead and approved the measure anyway. Instead of the 

regular two year review, we are once again frantically struggling to bring attention 

to the fact that what we have been saying all along is becoming our current realities. The U.S. Department of Labor Report will probably state that no evidence of 

employment curtailment is noted although we were not privy to a copy. We will presume that the McPhee Report, since the Legislature was not afforded a copy, will 

state the opposite view point and in support of the concerns vocalized and documented last year and every year the U.S. Department of Labor minimum wage 

hearings are held. Every Industry Committee, commissioned by the U.S. Department of Labor to review the minimum wage, incorporated in their recommendations 

the suggestion to grant American Samoa the authority to determine its own minimum wage based on the prevailing economy. Nothing eventuated. 

25 

Madame Chairwoman Christensen, we are beginning to have grave doubts if this 

is not another exercise in futility because the same passionate pleas made last year 

did not change the outcome. Please know how appreciative we are, and we are sure, 

all of us present here today, that you made this arduous journey, demonstrating 

your genuine concern for our welfare. But we also knew that our fate was sealed 

last year because our minimum wage became a national issue that triggered bipartisan politics. Even the last minute intervention by our very influential patriarchs, 

Honorable Senator Dan Inouye, Senator Daniel Akaka and their Senate colleagues 

did not alter our fate. What dynamics have changed in our Nation’s Capital to give 

us hope that our plea for suspension of the imposition of the next 50 cents hike to 

our minimum wage will be averted? 

The dynamics here in American Samoa have changed for the worst. The Chamber 

of Commerce will testify that business activities are on the decline. The Executive 

Agencies of the American Samoa Government will testify that employment curtailment will eventuate if the canneries relocate their facilities or alter the configuration of their operations, opting for mechanization to reduce the financial impact of 

continually increasing minimum wages on their profitability and expected return on 

investments. It is my hope that the canneries will testify to give you first hand information on their plans to cope with the imposition of legislated periodic escalating 

minimum wage levels until the federal minimum is reached. The canneries have 

been silent except for the encouraging announcement by Del Monte Star Kist Samoa 

that it will proceed with the production of tuna pouch. This welcome news is underscored by information to the effect that it is a scaled down version of its original 

plans. We have not received information on the canneries plans regarding operational conversion to fish loins. This operating configuration will drastically reduce 

the canneries’ workforce. The imposition of the next 50 cents could very well confirm 

the conversion decision. 

The Legislature depends on the Executive Agencies of the American Samoa Government, the canneries, and the private sector to supply empirical data to support 

our claim for economic devastation perpetrated by the rise in our minimum wages. 

We can only provide anecdotal information based on statements received from the 

community by the Legislators decrying their current status. The common cry heard 

from the people who visited their Senators and Representatives is that daily living 

challenges are becoming difficult to accommodate. This disclosure is confirmed by 

the increased frequency with which financial assistance is being solicited from us 

Legislators. Moreover, we are witnessing the emergence of small privately owned 

loan businesses competing with the commercial banks for small short-term loans. 

We have observed the rise in the number of family based businesses selling food 

plates and other food items of traditional appeal to make ends meet. The number 

of individuals seen selling flower leis and other products is on the rise. Unfortunately, the continually spiraling energy prices has exacerbated the situation and 

forced the redistribution of disposal income away from the purchase of life sustaining goods. 

We firmly believe that the minimum wage is just one of the factors that triggered 

the economic downturn for American Samoa. Our failure to secure replacement incentives for the demised IRC Section 936 forced the canneries to reassess its continued presence in the Territory which reflected in the volume and value of its imports 

into American Samoa in 2006. The minimum wage however, reaffirmed whatever 

strategies formulated by the canneries relative to its presence in American Samoa. 

Bilateral agreements entered into with other tuna producing countries reduced the 

inherent competitive advantage American Samoa used to have which gave economic 

reason to the canneries to remain on island. 

Let us provide for your information government revenues generated from the imposition of excise taxes on imports. In Fiscal Year 2004 total revenue collections 

was $24,632,820; Fiscal Year 2005 total revenue collections was $23,740,032; Fiscal 

Year 2006 total revenue collections was $22,457,085; and finally in Fiscal 

Year 2007 total revenue collections was $20,738,343. Between Fiscal Years 2004 

and 2007, total revenue collections from excise taxes plummeted by 18.8% or 4.7% 

annually. The above figures are from the reports prepared by our Department of 

Treasury. There has been a steady decline in the total revenues collected from excise taxes meaning that consumption, reflected by imports, has methodically declined over the period of four years. This information should provide proof that 

American Samoa’s economy is worsening and it will not stand the adverse impact 

of adding an additional 50 cents to the Territory’s minimum wage. It also supports 

the claim from the private sector that business activity is declining. 

You will hear testimonies from some of our people stating that the additional $50 

cents will go far in making their lives more tolerable. We do hear their plea for help 

however we are more concerned about their long-term survival because if the addiVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
26 

tional 50 cents forces the mass curtailment of jobs, he or she might end up, without 

a job totally; then they will be worst off than their current predicament. Artificially 

raising the minimum wage without the economy to absorb its impact is morally irresponsible. 

We know what needs to be done to alter our current economic dilemma. However, 

it takes the support and commitment of the Congress to assist us put to work strategies to bolster economic growth. We need federal incentive schemes to entice investment into the territory. We need special treatment under the cabotage rule because of our remoteness and the associated cost to travel to American Samoa; factors which retard our ability to advance our tourism industry. We need federal 

agencies to amend their program policies creating impediments or preempting full 

application of their programs in American Samoa. We need a venture capital pool 

to be made available through loans to American Samoans so they can participate 

fully and become beneficiaries of their our country’s economic development successes. 

The preponderance of the evidence against the imposition of the next 50 cents to 

the minimum wage is overwhelming. This sentiment is also reflected in the legislation being proposed by our Congressman Faleomavaega to abort the minimum wage 

escalation clause and to base future minimum wage adjustments on the capacity of 

our economic system. In conclusion, we want to extend once again my thanks to you 

and your committee for this opportunity to share with you our aspirations. We hope 

you will remember us with fond memories when you return back to our nation’s capital. We also take this chance to thank our Congressman Faleomavaega for the introduction of legislation to abate this nemesis. May the good Lord keep you safe as 

you attend to the business of our people. 

Lolo M. Moliga 

President of the Senate 

Savali Talavou Ale 

Speaker of the House of Representatives 

Mrs. CHRISTENSEN. Thank you, Lolo. 

I understand Mr. Eliu Paopao, Director of the Department of 

Commerce, is here, and we would like to invite him to sit at this 

panel to answer any questions that may arise or that the Lieutenant Governor might want him to answer. 

As I said earlier, I am recognizing myself for my 5 minutes of 

questions, and I just wanted to say what I said this morning when 

I met with the Senators and the House Members that your situation here reminds me in many ways of what I face in the Virgin 

Islands and what we faced over the years. Anytime we propose any 

new increased fees or rates, we meet with resistance. And I can 

give one with the cruise ship industry—they threaten not to come 

if you raise the passenger fee. Or our oil refinery threatened to 

move when we were also renegotiating their contract with the Virgin Islands and increase fees. So I came out of a similar experience, 

and I said that at the time—the oil refinery and the cruise ships, 

you know, maybe we increased it—one case cruise ships—but 

sometimes these are just ways of pressuring communities. And so 

I don’t take I understand your concern and major concerns that you 

would have because you cannot afford to lose the jobs of the community. But I think it is really important that we make decisions 

based on data and facts and not just the word of industry sometimes. But trust me, I understand the pressure that the community 

is under and the need for you and a fragile economy like this to 

ensure that jobs stay here. 

And I heard very clearly the concerns from the Members of the 

House and Senate this morning. I would ask both the Lieutenant 

Governor and the Senate President, you heard the testimony on behalf of the Department of the Interior. Are you encouraged that the 

current Administration recommended that Congress give strong 

27 

consideration to limiting the increase in the minimum wage? Does 

that give you some encouragement? 

Mr. MOLIGA. It is very encouraging. The next time we went to 

Washington and asked the Department of the Interior about the 

approach that they are taking. It seemed like they were not in any 

position to support this effort. And then we understood why— 

because the Administration’s global views on this issue are why 

they didn’t issue an opinion at the time. But I would like to make 

one thing clear. The fact you know we are putting out statements 

in regards to the minimum wage. As leaders of this island, we are 

not opposing the raise in minimum wage. What we are asking is 

that any raise should be based on our own economic conditions 

here in American Samoa instead of forcing us to follow the $7.25 

that the Federal government is requiring. That is why we tend to 

support the previous approach where the Department of Labor 

sends out an Industry Committee to review which field is more realistic and honest in terms of what the increase should be instead 

of us riding along with the Federal government which we cannot 

afford. 

But, by all means, if the Federal government will give us the 

money, we’ll accept any raise of any kind. But it is nice to hear 

that the wages are recommending to be increased but the problem 

we don’t have the resources to do that. And that is with the Governor to add to the President at this time. It is different. 

Mrs. CHRISTENSEN. It is my time. You are free to answer. 

Lt. Governor SUNIA. I sense there is also concern in the Department of the Interior that they may end up at the end of the day 

being the one to ask if we are responsible to make up you know 

any deficiencies that are caused by this law, and it is not in their 

budget and they are going to have to look to Congress to give them 

the money to give to us to make this up. I guess the same thing 

the President is saying. I don’t—from talking to some of the officials up there—the message, I gather, that it is all nice but then 

resources we can help the territory accommodate your desire in 

Congress. 

Mrs. CHRISTENSEN. Well, there are times when the Office of Insular Affairs and the Department of Labor does not take that position. At least in this case, they’ve taken a position based on the 

labor report that would go against having that increase in May. We 

just need to ascertain that they are also going to support us when 

we move forward with the legislation that your Congressman introduced. We’ll go back, and we’ll be meeting with them on Tuesday, 

as a matter of fact, so we’ll ascertain that. But I think that should 

be some encouragement that they take. 

I now recognize Mr. Faleomavaega. 

Mr. FALEOMAVAEGA. Madam Chair, if I may, I would also like to 

ask Director of the Department of Commerce to make a comment 

or maybe has a statement he may want to submit to make part of 

the record? 

Mrs. CHRISTENSEN. Any objection? 

28 

STATEMENT OF ELIU PAOPAO, DIRECTOR, 

AMERICAN SAMOA DEPARTMENT OF COMMERCE 

Mr. PAOPAO. Thank you very much, Congressman Faleomavaega, 

and good afternoon Honorable Madam Chair Christensen and the 

Honorable Members of the Committee on Natural Resources and 

Insular Affairs. I have submitted the entire full text on my testimony to the committee, and I am also prepared to summarize that 

testimony for the benefit of time. And then I will submit a copy of 

it after the hearing this afternoon. And at this time I would like 

on behalf of the Government of American Samoa, I would like to 

say thank you very much for giving me the opportunity to offer this 

statement and highlight some of the essential points regarding the 

anticipated effects of Public Law 110-28 on American Samoa’s economy. 

The recent new Department of Labor study incorporated and estimates economic effect of cannery closure from a final report of our 

own which is due to be released at the end of this month. While 

the Department of Labor report made no recommendation, it did 

describe in quite shocking terms what the continuation of the minimum wage increase would lead to in American Samoa. I suggest 

the following summary of the Department of Labor findings the 

long and short of which are that continuation escalation of minimum wage in American Samoa could eventually lead to economic 

disaster for American Samoa. First the canneries are the largest 

private sectors in American Samoa, and today majority of the cannery workers earn the minimum wage. 

Second, the loss of the canneries would mean the loss of one half 

of American Samoa’s total job force. Third, the American Samoa 

Government will suffer greatly which means that paying the minimum wage increases may force American Samoa Government to 

make difficult choices between reducing government payrolls, reduce available hours of paid work week, raising taxes, or cutting 

non-wage expenditures. 

Fourth, the rest of the American Samoa private sector based on 

our research will not be able to absorb the full minimum wage increases. Raising the average hourly wage by merely $2.00 per hour 

for the 10,000 covered workers would result in a wage field increase of $40 million per year across all American Samoa interest 

sectors. Fifth, minimum wage increases would lead to the closing 

of both canneries in American Samoa, and this will allow them to 

move away from American Samoa to other areas where labor costs 

is low. 

Madam Chair and Members of the Committee, these are staggering findings but they are numbers. The human impact over several periods could be devastated and let me try to visualize for you 

what this could mean in human terms. First, we could be faced 

with a long period of economic and social dislocation. It is not easy 

to behold the loss of one half of a community’s jobs. There is a 

strong possibility that the economy’s distress could remain very 

high in American Samoa for many years in the form of very high 

rate of unemployment, business closures, or cutbacks, or declines 

in local ASG revenues. This condition could have a variety of adverse effects to the community: (a) increased family and social distress which sometimes translate into criminal behavior including 

29 

domestic violence; b) declining economic opportunities for those entering the workforce; c) declining local revenue for health, education, and general public welfare as well as investments in capital 

projects and maintenance; d) raising economic dependency on the 

Federal government; e) fuel resources to preserve Samoa culture 

and the physical environment. 

Second, American Samoa is still in the early stages of the development compared with the United States. Our income is per capita 

only one-fifth of the United States average. The average American 

Samoan makes $1 for every $5 made by the average U.S. citizen. 

In fact, American Samoa has the lowest per capita income in the 

entire United States system. 

Third, we must also consider how conditions came to this and 

made to do the work the economic impact allows us, which we 

share with the Department of Labor. This study will deal with 

other economic recovery matters which can be recommended if canneries depart. 

The last one is we will recommend that a formal Federal low territory economic development be established. This is essential in 

view of the massive influence of the Federal government of American Samoa economic development. This has been recommended 

over the years by the United States General Accountability Office, 

the American Samoa Economic Advisory Commission and others. 

As it now stands, we have been fighting for our economic lives to 

head off future automatic minimum wage increases that might 

have been avoided with a form of territory cooperation we recommended. Furthermore, in my testimony to the Committee, which 

has the report, I have provided three sets of tables which will assist the Committee in your deliberations on the impact of the continued escalation clause of the minimum wage increase that will 

eventually lead to economic disaster in American Samoa. 

Thank you again for the opportunity to speak before you this 

afternoon. 

Mr. FALEOMAVAEGA. I want to thank you, Director Paopao, for 

his informative statement, and I do want to thank you Lieutenant 

Governor and Senate President for substantial testimonies. I do 

have a couple of questions, Madam Chair. 

Would all three of you gentlemen agree that one of the biggest 

problems of trying to figure out exactly what is the economic status 

of our territory is the fact that we don’t have sufficient data and 

information to make such proper conclusions. In terms of exactly 

what our economic status is, that seems to be the result of the report of the Department of Labor? Even they were not able to obtain 

or get proper data and information to even make a more specific 

assessment on the minimum wage issue. Although, in a very broad 

sense, they say it will have a negative impact on our economy, but 

I just wanted to ask you gentlemen if you agree that we really are 

lacking real hard nose facts and information to do this. 

Lieutenant Governor? 

Lt. Governor SUNIA. With all due respect, I think that is a copout. They started out knowing—with all those smart people that 

were selected, they should have known the status of the type of 

data and information that we have. They alluded to two main 

things why they couldn’t do the study. One, they didn’t have 

30 

enough time; and second, there was no data. Well, they started out 

knowing that they are not going to have the data to arrive at some 

scientific solution. But there is data. There is data all around. All 

they needed to do was come down here and ask the right people 

and ask the right questions and have their data. Why is that a big 

deal? 

Mr. FALEOMAVAEGA. I was going to reserve this question for our 

management at the canneries but maybe I will ask it. Were there 

ever any layoffs at the canneries since we implemented this first 

50-cent increase on the wages? Maybe Mr. Director of Commerce? 

Mr. PAOPAO. Thank you Congressman. I don’t think there was 

any layoff on the first 50-cent raise, but we do agree on the data 

that we would like submitted with our report on the second 50 

cents. That is, we can see problems there and on the tables that 

were submitted based on data available—like what the Lieutenant 

Governor has alluded to or said about the availability of data—the 

Legislature of American Samoa passed the ANIVA Act, which is 

national income part and the Department of Manpower Resources 

are putting together all the data in regard to American Samoa. 

And we know for sure that those data are available with us and 

that is how we develop some of the tables that we have in our report and my testimony that are available for the Committee to look 

into it. 

Mr. FALEOMAVAEGA. I am going to wait for the second round, 

Madam Chair. Thank you, Mr. Paopao. 

Mr. MOLIGA. On the issue of the economic study commission, 

that was the understanding that we have. This was a DOI initiative. That is why they put up $600,000 to conduct this. 

Mr. FALEOMAVAEGA. $600,000? 

Mr. MOLIGA. Right and it was our understanding looking for the 

report that the commission should submit an official report to the 

Department of the Interior, whereas the Interior would direct 

American Samoa on the utilization of this report as a basis for our 

economic plan. But as far as we know, there was no official report 

submitted to DOI as well as to the American Samoa Government. 

A couple of years ago, we were looking for the report and for the 

Legislature to review it, and that was our finding. There was no 

official report. They have bits and pieces of the report everywhere 

but as far as any official report to the Department of the Interior, 

which forks out the $600,000, we have never seen that report as 

far as I know. 

Mr. FALEOMAVAEGA. Madam Chair, may I just follow up with the 

statement that the president made? 

Is it your understanding that the Department of the Interior or 

the Secretary of the Interior should then direct the Government of 

American Samoa to review the contents of this commission report 

and then come back? Is that your understanding of the procedure? 

Mr. MOLIGA. The procedure this is what I am talking about. It 

was their initiative. It was DOI, and it was our understanding that 

the report would go right back to the Department of the Interior 

not the Government of American Samoa and from there DOI will 

submit that report to the government and Legislature for our review and recommendation. 

31 

Mr. FALEOMAVAEGA. So you would suggest that it should go back 

to Mr. Nikolao Pula working through the channels of the Department of the Interior and eventually have the Secretary of the 

Interior follow up with this economic study commission and 

Mr. MOLIGA. That is our understanding and then the Governor 

of American Samoa and the Legislature can use that to form an 

economic policy for the government as you wish. 

Mrs. CHRISTENSEN. Thank you. I do have just a few more questions. 

The Department of Labor report has been referred to a number 

of times, and it is the basis for the Department of the Interior’s position it seems. Did the Department of Labor consult with either 

you Lieutenant Governor or you President Lolo? Did they consult? 

Did they interview you as part of the preparation for issuing this 

report? 

Lt. Governor SUNIA. Madam Chair, are you referring to the committee appointed in the bill? 

Mrs. CHRISTENSEN. The U.S. Department of Labor report in January on the impact of the minimum wage and the proposed potential impact. Did someone from the Department of Labor interview 

you Lieutenant Governor or the President of the Senate? 

Lt. Governor SUNIA. No, madam. They didn’t talk to me and I 

don’t know. 

Mrs. CHRISTENSEN. Are you aware of their speaking to anyone in 

American Samoa in preparation for their report? 

Lt. Governor SUNIA. Not only am I not aware if they talked to 

anyone in American Samoa, I am not even aware if they even came 

to American Samoa. 

Mrs. CHRISTENSEN. Thank you. We’ve talked a lot about the impact of the increase of the minimum wage on the cannery industry. 

What about the impact on—I am asking this question to Lieutenant Governor Sunia—government. Has there been a noticeable impact on the government with the 50-cent increase that has gone 

into effect? 

Lt. Governor SUNIA. Financially, Chair, you can follow up. It is 

in our statement. The money impact—the encumbrance—is that 

the impact you are—the impact on the government financially? 

Mrs. CHRISTENSEN. What has transpired with the 50 cents that 

has already been enacted, if you have seen any adverse impact, on 

the operations of the government? Have you had to lay off anyone? 

Lt. Governor SUNIA. Not to that extent. Not to the extent that 

we have to deal with the workforce or lower hours or reduce the 

workforce. But we did have to absorb a bit of the payroll by taking 

a little bit from other categories. 

Mrs. CHRISTENSEN. So you did have to do some cutting in some 

other areas to be able to meet the cost of salaries of the employees? 

Lt. Governor SUNIA. That is correct, Madam Chair. 

Mrs. CHRISTENSEN. Legislature have any noticeable impact? 

Mr. MOLIGA. No that I know. We are OK. 

Lt. Governor SUNIA. They have a larger budget than we have. 

Mrs. CHRISTENSEN. The other area that has been referred to a 

number of times has been relied on in the past for the increase of 

wages in setting increases in the minimum wage and which has 

been recommended as a possible way to address it in the future, 

32 

this Special Industry Committee. Given the fact that wages have 

been stagnant under—while we’ve been utilizing the Special Industry Committees, do you still believe that there is an effective way 

of balancing needs of providing workers with higher wages and the 

fragile nature of the American Samoa economy? Do you believe 

that process can still work and whether you do or do not, are there 

some recommendations that either of you would have? And I will 

start with the Lieutenant Governor. Do you have any recommendations that could improve upon the Special Industry process of determining whether and how much of an increase in the minimum 

wage this should be? 

Lt. Governor SUNIA. Well, I believe that the matter is relative, 

Madam Chair. Since the passing of recent legislation, now we have 

something to compare the old system with; and I will tell you that 

the old system is much better. Inconsistency is the very soul of 

that. It is not a bad thing. They have to be inconsistent because 

as the facts of the economy determine the right and wrong is what 

wages are concerned, the outcome cannot be consistent. They can 

go up and down, and it is driven by the economic factors that are 

involved. So I don’t see why the inconsistency is portrayed as an 

evil. It is not I suppose. But whether or not that committee has always arrived at the right level at the right wage, it is an issue that 

needs to be addressed with the commission. But the mechanism 

itself I think is much better than just us getting rolled up with 

CNMI and just sorry it is Washington politics that we don’t take 

it very considerate. In fact, I think it is insulting to tell us that 

‘‘Sorry, this is politics in Washington, and you just got caught up 

and we are going to try to fix it.’’ It is viewing it from American 

Samoa where we live under a very unique and traditional culture. 

We don’t take that as a very respectful way to handle our matters. 

Mrs. CHRISTENSEN. Anyone else would like to respond? 

Mr. MOLIGA. To the issue of balancing cost of living versus what 

we earn, I would sure like to see that rest with DOI and Government of American Samoa. There is no question as to the gradual 

increase in cost of living, and much of that is to be counted toward 

the high cost of government services in American Samoa. You take 

services that he is providing to the people versus what people are 

making, there is no question it is too high for such a level of income to absorb. But we are not saying that we should be pushing 

that burden to the people. What we are saying is that is where DOI 

and the government should be working—for instance, the high cost 

of electricity, the high cost of hospital fees, the high cost of servicing the people here in American Samoa. Much of that can be reduced by negotiations through DOI and our local government instead of us pushing for minimum wage to be increased without any 

foundation. 

My recommendation is for DOI and our local government to sit 

down and consider ways, provide subsidy for the high cost of fuel, 

and you know it is outrageous the way we are living now. And that 

is exactly one of the reasons why people are coming out in support 

of this minimum wage, but that can be balanced out if DOI and 

local government can sit down and devise a mechanism where that 

can be absorbed without adding on to the peoples. The old saying 

that we have in Samoan that one in your hand is better than two 

33 

in the bush. Economic development and economic pace stays more 

jobs. There is no question to that. The more jobs we have, the more 

solid our foundation is going to be. And a series of activities that 

the government is now pursuing to make sure that we have an option to our economic development, DOI set aside $3 million for the 

fiber optic. Both the Governor and the Fono concur. We feel there 

must be an option. In the event the canneries leave, then we have 

something else. That is why we allow for the call center to come 

in, and we are hoping such legislation that the Fono will be passed 

and approved and signed by the Governor and that will provide an 

option for new business to come in the territory. Otherwise we 

don’t have anything. 

The cost of fuel and the cost of government services is outrageous, and there is no way we can support that with the earnings that people are making. 

Mrs. CHRISTENSEN. You answered one of my questions—what 

other avenues were being explored for economic development—call 

centers and fiber optic? I just want to ask you one other question. 

In your experience with the Special Industry Committee, what factor or factors carries the most weight in their deliberations and 

their determination of 1 cent or 2 cents or no increase in the minimum wage? What was the most weighted factor? What was the 

factor that carried the weight in that decision? 

Lt. Governor SUNIA. I have never had the opportunity to be a 

member of those committees, but I understand from the findings 

that it is very high in their consideration—the cost of living, the 

purchasing power of the workers. 

Mrs. CHRISTENSEN. To what extent? The canneries have testified 

on a number of occasions that they could not sustain an increase 

in the wage. I think 2003 and 2005, we have testimony to that effect. To what extent do you think the canneries again saying that 

they could not sustain the wage, play the role in the Special Industry Committee’s decision? 

Lt. Governor SUNIA. As much as our champion Congressman 

tries to have the canneries reveal to us how much money they 

make here, I think they never will. So your question, Madam 

Chairwoman, I truly cannot answer that. 

Mrs. CHRISTENSEN. I accept that. I don’t know if anyone else has 

anymore knowledge in the workings of the Industry Committee? 

Anyone at the panel? No one at the panel has insight on one of the 

committees? 

Did you have any other questions? 

Mr. FALEOMAVAEGA. Yes, I do. 

Mrs. CHRISTENSEN. We are going to wrap this up shortly, but I 

give my colleague an opportunity to ask another question or two. 

Mr. FALEOMAVAEGA. Madam Chair, we are discussing the ability 

of the Special Industry Committee that was created since 1989 I 

believe, but I think we also need to understand how this whole 

thing came about. How we ended up to the current minimum wage 

system that we end up with. And our office did a little research 

that in the mid-1950s at that time in America, the minimum wage 

was $1 an hour. Then the executive officers of the canneries, at 

that time in Van Camp, appeared before a Congressional hearing 

before the Senate as well as in the House. It was their opinion that 

34 

Samoans were incapable of doing the work that they would be sent 

out to do if they were to establish their canneries here in the territory. True stories. They said it would take five Samoans to do the 

work of one person in the United States. So, therefore, we need to 

lower the minimum wage for this territory because our people were 

incapable of doing the work. At that time it started off with 27 

cents an hour. 27 cents an hour! And then the Congress in its wisdom established this Special Industry Commission to meet this 

consideration of the differences of economic standing, if you will, 

but it was supposed to be for a temporary basis. Because since 

1989, all the other territories have now come under the national 

minimum wage with the exception of American Samoa. So I think 

this is something that I would like to say to our dear friends of the 

panel that I have attended a couple of these Special Industry Committee hearings here in the territory, and I might say that I have 

some very strong feelings about the proceedings and the situation 

where one year it was the recommendation of 2 cents an hour increase in wages for our workers. Another year it was 3 cents an 

hour increase in wages. 

Madam Chair, can you tell me how a person making 24 cents a 

day with the kind of minimum wages that were being done by Special Industry Committees—I accept it and support the concept. But 

in my humble opinion, the Industry Committee is not really getting 

a real substantive on-line issue as to where exactly is the economic 

standing of this territory for all the years. And I would like to ask 

our Director from the Department of Commerce if this 50-cent increase has been the best increase ever in the last 50 years since 

this territory came under this system in terms of determining the 

kind of minimum wage that should be given to our workers? 

Mr. PAOPAO. Congressman—— 

Mr. FALEOMAVAEGA. And a word of caution, also, because this 

territory is the only territory that has 18 different minimum wages, 

depending on the kind of job that was being described. Unbelievable! The minimum wage in Alaska is just one minimum wage. It 

is not a different minimum wage for carpentry, for cannery workers, for lawyers. This is the way we have this system. 

I’m sorry. I did not mean to—please, Mr. Paopao. 

Mr. PAOPAO. I agree with you on the 50-cent increase for the canneries and probably the canneries most probably will respond to 

that, but as far as we know based on the statistics that we have, 

the wages that we provided it was not no impact with the canneries and even American Samoa Government on the first 50 cents. 

But however on the second 50 cents then we’ll experience some impact on the curtailment of workers and that type of thing on the 

second 50 cents and will continue on until total effect on the entire 

government and the entire economy. 

Mr. FALEOMAVAEGA. You indicated earlier, Paopao, that we have 

some 10,000 workers. Would you agree that we have actually two 

levels of working people in our territory? Those who work for the 

government and those who work in the private sector? 

Mr. PAOPAO. I agree with that. 

Mr. FALEOMAVAEGA. May I ask what is the minimum wage of our 

government workers? How much are they paid if they start tomorVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
35 

row? What is the minimum wage for our government workers to 

start tomorrow? 

Mr. PAOPAO. Currently, in the government work starts at about $3.40 an hour right now. 

Mr. FALEOMAVAEGA. How many government employees are under 

that pay scale right now may I ask? 

Mr. PAOPAO. As far as I can tell based on information and the 

data available, no one is working below $3.41 an hour. 

Mr. FALEOMAVAEGA. May I hear you again? Among those who 

work in the Government of American Samoa, no one was being 

paid below $3.40 an hour? 

Mr. PAOPAO. Right. 

Mr. FALEOMAVAEGA. What is the general realm of how much 

wages our government workers are getting currently? Is it—what 

percentage of government workers get paid $6 an hour right now? 

Mr. PAOPAO. I do not have that information available but we do 

have that data available with the Department of Commerce in 

terms of how many are paid $3.50 to $4.00 and so forth and up to 

$30.00 an hour. We have that data available with the Department 

of Commerce. 

Mr. FALEOMAVAEGA. Would you agree that actually maybe a good majority of government workers are being paid $6 an hour and 

above? 

Mr. PAOPAO. I will say yes. 

Mr. FALEOMAVAEGA. So in effect they are not affected by the minimum wage issue that we are discussing here? 

Mr. PAOPAO. We are beginning to get effect on the second year. 

So many of them will be curtailed on the second year and then the 

third year and by the fourth year, the government cannot afford 

from the second year beginning to affect the government budget financially on a second year escalation of minimum wage increase. 

And it will be worst on the third year. 

Mr. FALEOMAVAEGA. You indicated that American Samoa makes 

the lowest per capita income. What is the lowest per capita income 

of our workers here in American Samoa? 

Mr. PAOPAO. I think it is about $4,000-plus—about $4,817. 

Mr. FALEOMAVAEGA. What is the average per capita income in 

the United States? I am just curious. I am just trying to get my 

own motors. 

Mr. PAOPAO. But it is a lot more than that. I think it is about 

$9. 

Mr. FALEOMAVAEGA. So is this same per capita income is the 

same with those that work for the government as opposed to work 

in the private sector such as the canneries? I am just curious because obviously the scale of our work in the government is much 

higher than those who work for the canneries and in the private 

sector it seems to me. Am I correct on this? 

Mr. PAOPAO. Yes, you are. 

Mr. FALEOMAVAEGA. So which means that government workers’ 

per capita income is higher than the poor cannery workers and 

those who work in the private companies? 

Mr. PAOPAO. No. It is reviewed the same, and we came up with 

that per capita income for all the territory. 

Mr. FALEOMAVAEGA. The average. 

36 

Mr. PAOPAO. The average is about $4,817 per annum. 

Mr. FALEOMAVAEGA. I just want to say that I think the whole 

issue of minimum wage—please, I welcome your comments. The 

worth of the labor is higher in terms of that person working for 

whatever profession, and how we then can measure what should be 

the minimum wage given the standard of our economy. I could not 

agree with you more, Mr. President. We want the minimum wage 

to increase for our workers, but it has to be commensurate with the 

ability of our economy to also sustain that income increase. Am I 

correct? 

I think all of you agree with that concept. You don’t mind increases in wages but it has to be in conformity or the ability of our 

economy to sustain that increase. 

Lt. Governor SUNIA. Congressman, you know for the same reason 

that I don’t make the kind of money you make because your job 

is much more important than mine. 

Mr. FALEOMAVAEGA. Please, please. 

Lt. Governor SUNIA. So, you know, to compare, like I said, it is 

relative. You have to try to. You are saying that what we are doing 

here is raise the canneries up to imperative with the government. 

I don’t know if that is the issue we are facing here, but to me it 

is relative and then perhaps when the cannery people come here, 

they will address that. But just to demonstrate that, the industry 

committee that was there before. The bill was correct. Because 

when the first 50 cents came into effect, our minimum wages of the 

government was not really affected. Now to me that demonstrates 

the committee’s work was right on there—give or take. Now I am 

speaking for the government employees’ minimum wage, but I don’t 

know about the canneries because we indicated earlier we never 

know we are not driven in our wages. Our wages are driven by different interests all together. You know that I don’t have to say 

that. Our interest is plain just service provider but the canneries 

can tell you their interest in how their wages are driven. 

I suppose I am trying to save my director here by saying the 

wrong thing or contrary to what I am saying. I am advising him 

try to not talk too much but he kept answering your question. 

Mrs. CHRISTENSEN. Thank you. I just needed some clarification 

so when the minimum wage went up, it was increased 50 cents, the 

government workers saw an increase? 

Lt. Governor SUNIA. The effect—what we have to do to comply 

with the first 50 cents—wasn’t really much. So that is why I said 

what I said—therefore, where we are at and maybe it was correct 

after all. 

Mrs. CHRISTENSEN. OK. And then the second clarification, I 

guess Mr. Paopao you said that there wasn’t much impact. I wanted to also clarify was there any impact on tax revenue collected 

with the increase in the minimum wage, or has that not shown up 

yet? 

Mr. PAOPAO. No. 

Mrs. CHRISTENSEN. No you have not seen any recent 

Mr. PAOPAO. Yes. 

Mr. MOLIGA. If I can add to that. The recent data and information gathering show a downward trend in terms of revenues with 

ASG. It has been down since 2005, 2006 in terms of you know the 

37 

revenues from taxation and other areas. And we feel like you said 

there is no real data. That is the concern I have right now—the 

availability of the actual data for that commission to be based on. 

The question is do you have sufficient data to provide a more reasonable decision for American Samoa? I think the most honest and 

the most practical data we have is the everyday life of people that 

we experience on this island. We’ve been talking to the business 

community; we’ve been talking to store owners; and it shows in our 

business with us. We have problems with how much money people 

are spending and the more jobs that we lose, the more downward 

spiral our economy will take. 

Mrs. CHRISTENSEN. Well, thank you. I would like to thank both 

the Lieutenant Governor Sunia and President Lolo as well as Mr. 

Paopao for their testimony and their answers to the questions. We 

may have—the Subcommittee may have additional questions for 

you which we would submit to you in writing. We appreciate your 

taking the time to be here and to be so patient with us as we ask. 

We went over the time quite a bit, and without objection, I would 

like to enter into the legislative record the Senate Concurrent Resolution No. 30-20 as well as the American Samoa Legislature’s Joint 

testimony on the minimum wage. So thank you, and you are excused. Thank you again for your patience. 

Mr. FALEOMAVAEGA. Madam Chair, I would like to really thank 

you Lieutenant Governor, Senate President, and Director of Commerce. I would just like to let you know that next week the Senate 

Committee on Energy and Resources is also going to be holding a 

hearing on the minimum wage issue, especially our good Senator 

from the State of Hawaii, Senator Daniel Akaka will be leading 

that hearing. That will be held in the Senate on the issue of minimum wages for both American Samoa and the CNMI, so we are 

not sitting still on this issue. And I believe and hopefully the Governor will be passionate to travel, and we hopefully expect that he 

will testify in that hearing as well next week. 

Lt. Governor SUNIA. Thank you Mr. Congressman and on behalf 

of the President of the Senate and Director Paopao, thank you for 

the opportunity to come here before you, and I would like to apologize if we have spoken out of turn or raise our voices. That is the 

way we want you to know it is our strong desire to make sure you 

understand where we are coming from and hope you enjoy the rest 

of the stay here. By the way, Congressman, this being the second 

hearing after more than half a century, you should have planned 

a real big hearing, two weeks you know, half a day and then you 

are going to go for another half a century. Anyway, good afternoon, 

Ma’am. Thank you very much. 

Mrs. CHRISTENSEN. Thank you. Thank you, Lieutenant Governor. 

So we would like to call up what would be the last panel of the 

day. The Chair now recognizes the next panel to testify: Mr. David 

Robinson, President of the Chamber of Commerce; Mr. Brett Butler, General Manager of StarKist Samoa; and Alfonso ‘‘Pete’’ 

Galea’i, Plant Human Resources Manager of the Chicken of the Sea 

Samoa Packing Company. 

Mr. Robinson, you may begin your testimony whenever you are 

ready. 

38 

STATEMENT OF DAVID ROBINSON, PRESIDENT, 

CHAMBER OF COMMERCE 

Mr. ROBINSON. Thank you very much, Honorable Chairwoman 

Donna Christensen, Honorable Congressman Faleomavaega Eni 

Hunkin, Members of the Committee and staff. On behalf of the 

American Samoa Chamber of Commerce, may I welcome you here 

today. Thank you for making time today to hear various testimonies on this very important subject. 

Madam Chair, the origins of the Federal minimum wage applying to American Samoa appear to have been motivated by political 

points scoring rather than a genuine concern for the people and the 

economy of American Samoa. The original minimum wage bill as 

approved by the Democrats beginning January 2007 exempted 

American Samoa from the minimum wage increase proposal. It was 

not until the Republicans made an issue of the fact that the headquarters of Del Monte, the owners of the StarKist Tuna Cannery 

are located in Mrs. Nancy Pelosi’s electorate in San Francisco that 

the bill was amended to include American Samoa. 

The amendment appears to have been made without any serious 

degree of prior economic research on the impact of the potential 

negative outcomes that would arise for American Samoa and without the appropriate level of consultation with the Governor and 

senior government officials. The idea that the local minimum wage 

in a small Pacific island country should become consistent with one 

of the world’s largest economies seems quite absurd. At the time, 

the Chamber of Commerce requested that American Samoa not be 

included in the minimum wage bill. The Chamber felt that the escalator clause included in the bill would have significant impacts 

that would be detrimental to the economy of American Samoa 

namely the two canneries whose operations would become uncompetitive in the global trading environment and they would either 

scale down their operations or even decide to leave. It would impact 

the government, as the largest employer could embark on a retrenchment program. The private sector would be affected and they 

would probably retrench staff and, in some cases, be forced to close 

their business. The general wage scale parity in the territory would 

be upset by wage compression. There would be mass unemployment, and it would cause considerable outflow of capital. It would 

cause the banks to foreclose on delinquent accounts, it would cause 

an increase in crime rates, and property values would decline as 

vacancy rates soared. 

The position of the Chamber remains the same today in that the 

initial increase to the minimum wage was manageable, but any 

further increases should be decided on in a biennial review. This 

review would take into account the position of the economy to accept any increase, a position that is glaringly missing from the current legislation. The overall effect of the escalator clause in the bill 

will touch all facets of the economy and quality of life for the population of American Samoa. 

There would be a reduced collection of corporate and personal income tax, adding pressure to the government’s budget and the Federal government would probably be called upon to increase its financial support as departments such as the Treasury, Health, and 

Education would all be short of funds. There would not be any 

39 

much needed new investment and development projects. Increased 

wages would make us less competitive with other Pacific countries 

competing for investment dollars. There would be a significant 

tightening of credit and lending from our retail banks. 

Sea freight costs would increase and shipments would be less frequent causing shortages of basic food items. Cost increases would 

be passed on to the consumer causing unsustainably high inflation. 

Essential services and utilities such as their power, the telephone 

company, the hospital and public works would suffer due to lack 

of funding. 

Madam Chair, the recent report commissioned to assess the impact to the first increase in the minimum wage on our economy by 

the Department of Labor and the McPhee report, to evaluate American Samoa’s future and the canneries’ industry, both concur with 

the Chamber’s concern. Our Congressman Faleomavaega has recently introduced a bill to put an end to automatic raises for American Samoa as to continue is to cause economic devastation to our 

economy, the Chamber is fully supportive of this initiative as it is 

vital that the escalator clause is removed. Time, unfortunately, is 

against us as the next 50-cent increase is due on 25th of May, and 

if this automatic increase is not stopped or the very least delayed 

for perhaps a year, it is the Chambers opinion that it will cause 

the canneries to make some serious pronouncements about their 

immediate and their longer term future here which will have a significant and detrimental effect on our economy. 

Madam Chairwoman, the Chamber would respectfully draw your 

attention to the recent establishment by the Governor of a private 

public partnership known as the Economic Advisory Council. This 

Council was established as a means for the territory to become 

more economically self sufficient and to deal with the impact of 

issues such as the imposition of the minimum wage. It is intended 

to bring closer collaboration between the private sector and the 

government in economic development. And it will aid government 

in understanding, designing, and implementing new economic development programs and policies. The Council has already made 

considerable progress toward the development of new projects in 

industry sectors such as agricultures, hydroponics and aquaculture, 

fisheries, light manufacturing, the environment and alternative energy. And the Council has also used data and recommendations 

from previous and very expensive economic studies and reports to 

assist it with its work. 

In this area of changing economic circumstances for the territory 

and then the rapidly new changing highly competitive global economy, the Chamber applauds its initiative and makes reference to 

it today as it demonstrates a will by the government to be 

proactive in its desire to stimulate the economy and to seek new 

development and investment from overseas and will assist in supporting the economy in the short term and continue to support it 

in the longer term if the two canneries decide to scale down or 

move their operations elsewhere due to unfavorable economic conditions that exist for them here in American Samoa. 

Madam Chairwoman, the Chamber of Commerce urges you and 

your Subcommittee to do everything in your power to ensure that 

the escalator clause is removed from the minimum wage bill immeVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
40 

diately so that we have some time to encourage new investment 

into our economy, and we return to a regular assessment of the 

needs of our people on the minimum wage on a biennial review 

basis, and act to increase their wages in line with prevailing economic conditions at the time. 

Thank you. 

[The prepared statement of Mr. Robinson follows:] 

Statement of David Robinson, President, 

American Samoa Chamber of Commerce 

Madame Chairwoman: 

The origins of the federal minimum wage applying to American Samoa appear to 

have been motivated by political points scoring rather than a genuine concern for 

the people and the economy of American Samoa. 

The original minimum wage bill as approved by the Democrats at the beginning 

of January 2007 exempted American Samoa from the minimum wage increase proposal. It was not until the Republicans made an issue of the fact that the headquarters of Del Monte, the owners of the Starkist Tuna cannery, are located in Mrs 

Nancy Pelosi’s electorate in San Francisco, that the bill was amended to include 

American Samoa. 

The amendment appears to have been made without any serious degree of prior 

economic research on the impact and the potential negative outcomes that would 

arise for American Samoa and without the appropriate level of consultation with the 

Governor and senior government officials. 

The idea that the local minimum wage in a small Pacific island country should 

become consistent with one of the world’s largest economies seems quite absurd. 

At the time the Chamber of Commerce requested that American Samoa not be 

included in the minimum wage bill. The chamber felt that the escalator clause included in the bill would have significant impacts that would be detrimental to the 

economy of American Samoa. Namely—— 

• the two canneries whose operations would become uncompetitive in the global 

trading environment and they would either scale down their operations or even 

decide to leave; 

• the government as the largest employer could embark on a retrenchment 

program; 

• the private sector who would retrench staff and in some cases be forced to close 

their business; 

• the general wage scale parity in the territory upset by wage compression; 

• there could be mass unemployment; 

• it could cause a considerable outflow of capital; 

• it would cause the banks to foreclose on delinquent accounts; 

• it would cause an increase in crime rates; and— 

• property values would decline as vacancy rates soar. 

The position of the Chamber remains the same today, in that the initial increase 

to the minimum wage was manageable but any further increases should be decided 

in a yearly review. This review would take into account the position of the economy 

to accept any increase; a position that is glaringly missing from the current legislation. 

The overall effect of the escalator clause in the bill will touch all facets of the 

economy and quality of life for the population of American Samoa. 

There would be a reduced collection of corporate and personal income tax adding 

pressure to the government budget and the federal government would have to increase it’s financial support as departments such as the treasury, health and education would all be short of funds. 

There would not be any much needed new investment and development projects— 

increased wages would make us less competitive with other Pacific countries competing for investment dollars. 

There would be a significant tightening of credit and lending from our retail 

banks. 

Sea freight costs would increase and shipments would be less frequent causing 

shortages of basic food items. Cost increases would be passed on to consumers causing unsustainably high inflation. 

Essential services and utilities such as the power authority, the telephone company, the hospital and public works would suffer due to lack of funding. 

41 

Our Congressman Faleomavaega has recently introduced a bill to put an end to 

automatic rises for American Samoa as to continue is to cause economic devastation 

to our economy. The Chamber is fully supportive of this initiative as it is vital that 

the escalator clause is removed. 

Time is against us as the next $0.50 cents increase is due on 25 May and if this 

automatic increase is not stopped, it is the Chamber’s opinion that it will cause the 

canneries to make some serious pronouncements about their immediate and longer 

term future here which will have a significant and detrimental effect on our economy. 

Madame Chairwoman, the Chamber of Commerce urges you and your subcommittee to do everything in your power to ensure that the escalator clause is removed from the minimum wage bill so that we have some time to encourage new 

investment into our economy and we return to a regular assessment of the needs 

of our people on the minimum wage on an annual review basis and act to increase 

their wages in line with prevailing economic conditions at the time. 

Mrs. CHRISTENSEN. The Chair would now recognize Mr. Brett 

Butler for his testimony. 

STATEMENT OF BRETT BUTLER, GENERAL MANAGER, 

STARKIST SAMOA 

Mr. BUTLER. Thank you Chairwoman Christensen. First of all, 

good afternoon to the Subcommittee members here. I am Brett Butler, General Manager of StarKist Samoa, a subsidiary of Del Monte 

Foods. Thank you for inviting me to testify on the subject of the 

economic effects of the recently increased minimum wage. 

As you know, the matter we are here today to discuss today, 

mandatory minimum wage increases, is of great interest and importance to the American Samoa economy and the businesses who 

have chose to locate here. Through Del Monte Foods, StarKist has 

been working with the U.S. Department of Labor as well as Congressman Eni Faleomavaega to ensure the Federal government and 

decision makers in Washington fully understand the gravity of the 

current mandatory wage increases. 

I began my employment with StarKist Samoa in 1995 as a Capital Appropriations Clerk, and I have held several supervisory and 

management positions prior to becoming plant general manager in 

2005. I was born and raised in American Samoa where I attended 

elementary and high school. I received a Bachelor of Arts degree 

from Pomona College in 1993. 

Let me begin by informing the Committee of Del Monte’s most 

recent involvement in this issue. As indicated by the United States 

Department of Labor, Office of the Assistant Secretary for Policy, 

Del Monte’s employees we were interviewed on multiple occasions 

by the authors of the recent report on this subject issued on January 25 of this year and provided further information in writing as 

requested by the authors. From the sources cited in the report, the 

information provided by Del Monte was indeed included in their 

analysis. In addition to the Federal study, Del Monte provided responses to the questions asked by Malcolm D. McPhee & Associates, for inclusion in their recent report on the subject prepared for 

the Department of Commerce, American Samoa Government. It 

should be noted that the United States Department of Labor incorporated the report prepared by Malcolm D. McPhee & Associates 

in its report. 

With specific regard to American Samoa, we noted in our discussions with both teams of researchers that constantly shifting cost 

42 

pressures, excess global tuna manufacturing capacity and uncertainty in labor markets means that the American Samoa tuna industry is at significant and immediate risk. Additionally, the continued uncertainty in the tax code, both Federal and local, dramatically shifting energy costs and exponentially increasing labor costs 

annually mandated by law conspired to create a significant detriment to American Samoa’s economic viability as a place to continue to do business. 

The mandatory annual 50-cent-per-hour wage increases that are 

scheduled to continue in May, and each year thereafter creates the 

most significant new uncertainty and rapidly adds to the attraction 

of competing manufacturing locations in pursuit of our industry. 

While the Department of Labor report correctly notes that 85 percent of the American Samoa’s economy is derived from tuna processing, American Samoa supplies less than 15 percent of the 

world’s tuna supply. American Samoa only serves the U.S. market 

and primarily with commodity canned tuna products. Industry 

growth products such as pouch and other value added products are 

produced elsewhere like Ecuador. However, to date StarKist has remained committed to diversifying American Samoa production into 

these products if economically feasible. 

It is important to understand, however, that the U.S. commodity 

tuna market is declining. Indeed from 2004 to 2007, the overall 

U.S. tuna market declined by 8 percent. Furthermore, significant 

excess tuna processing capacity exists globally, primarily in nearby 

low costs countries such as Thailand and the Philippines, and Fiji 

who are eager to absorb this production. Furthermore, competitive 

trade advantages previously enjoyed by American Samoa no longer 

exist. Tuna processing countries in North and Central America are 

now completely duty free under CAFTA and NAFTA and in Africa 

are duty free currently under AGOA. Wage rates in these countries 

are considerably lower than American Samoa’s. 

U.S. foreign tuna imports from 2003 to 2005 were the highest 

level ever, and from 2004 to 2005 these foreign imports officially 

surpassed total domestic production. Despite a 12.5 percent duty, 

importers from low wage countries are still making a profit. These 

imports are split among Thailand, 47 percent; Philippines, 22 percent; Ecuador, 14 percent; and Indonesia 9 percent. Even with this 

rapid growth in U.S. foreign tuna products, there remains significant excess capacity to absorb more production in these countries. 

As stated in the Department of Labor report on page 20, there are 

forty canneries in Thailand, and that nothing would have to be 

built or moved. To implement a production transfer, the companies 

would simply place more orders with existing plants. It has been 

reported that the world tuna processing has an excess of production 

capacity on the order of 20 to 40 percent. 

I read the following statement from Congressman Eni F.H. 

Faleomavaega: ‘‘By way of our mutual cooperation and based on 

the findings of the DOL study, I am confident that the Governor, 

Fono, and I will send a unified message to Congress requesting an 

enactment of legislation which will put an end to automatic increases in minimum wage and which will empower the DOL, in 

consultation with the Secretary of the Interior and the American 

Samoa Government, to conduct economic assessments every two 

43 

years to determine when and if our economy can absorb future increases.’’ Del Monte supports the resolution outlined in this statement, and we pledge our support and assistance to the Governor, 

Fono, and the Congressman to achieve this outcome. 

Thank you again for the opportunity to appear here today. Thank 

you. 

[The prepared statement of Mr. Butler follows:] 

Statement of Brett Butler, Del Monte Foods, 

General Manager, StarKist Samoa 

Good morning. I am Brett Butler, General Manager of StarKist Samoa, a subsidiary of Del Monte Foods. Thank you for inviting me to testify on the subject of 

the economic effects of the recently increased minimum wage. 

As you know, the matter we are here to discuss today—mandatory minimum 

wage increases—is of great interest and importance to the American Samoan economy and the businesses who have chosen to locate here. Through Del Monte Foods, 

StarKist has been working with the U.S. Department of Labor as well as Congressman Eni Faleomavaega to ensure the federal government and decision makers in 

Washington fully understand the gravity of the current mandatory wage increases. 

I began my employment with StarKist Samoa in 1995 as a Capital Appropriations 

Clerk, and have held several supervisory and management positions prior to becoming Plant General Manager in 2005. I was born and raised in American Samoa, 

where I attended elementary and high school. I received a Bachelor of Arts degree 

from Pomona College in 1993. 

Let me begin by informing the Committee of Del Monte’s most recent involvement 

in this issue. As indicated by the United States Department of Labor, Office of the 

Assistant Secretary for Policy, Del Monte employees were interviewed on multiple 

occasions by the authors of the recent report on this subject, issued on January 25 

of this year, and provided further information in writing as requested by the authors. From the sources cited in the report, the information provided by Del Monte 

was indeed included in their analysis. 

In addition to the Federal study, Del Monte provided responses to the questions 

asked by Malcolm D. McPhee & Associates, for inclusion in their recent report on 

the subject prepared for the Department of Commerce, American Samoa Government. It should be noted that the United States Department of Labor incorporated 

the report prepared by Malcolm D. McPhee & Associates in its report. 

With specific regard to American Samoa, we noted in our discussions with both 

teams of researchers that constantly shifting cost pressures, excess global tuna manufacturing capacity, and uncertainty in labor markets means that the American Samoan tuna industry is at significant and immediate risk. Additionally, the continued 

uncertainty in the tax code—both Federal and local, dramatically shifting energy 

costs, and exponentially increasing labor costs annually mandated by law conspire 

to create a significant detriment to American Samoa’s economic viability as a place 

to continue to do business. 

The mandatory annual $0.50/hour wage increases that are scheduled to continue 

in May, and each year thereafter, creates the most significant new uncertainty and 

rapidly adds to the attraction of competing manufacturing locations in pursuit of our 

industry. 

While the Department of labor report correctly notes that fully 85% of the American Samoan economy is derived from Tuna processing, American Samoa supplies 

less than 15% of the world’s canned tuna supply. American Samoa only serves the 

U.S. market, and primarily with commodity canned tuna products. Industry growth 

products (such as pouch and other value added products) are produced elsewhere, 

like Ecuador. However, to date StarKist has remained committed to diversifying 

American Samoan production into these products if economically feasible. 

It is important to understand, however, that the U.S. ‘‘Commodity Tuna’’ market 

is declining. Indeed, from 2004—2007, the overall U.S. tuna market declined by 8%. 

Furthermore, significant excess tuna processing capacity exists globally, primarily 

in nearby, low labor cost countries such as Thailand, the Philippines, and Fiji who 

are eager to absorb this production. Furthermore, competitive trade advantages previously enjoyed by American Samoa no longer exist. Tuna processing countries in 

North and Central America are now completely duty free under CAFTA and NAFTA 

and in Africa are duty free currently under AGOA. Wage rates in these countries 

are considerably lower than American Samoa’s. 

44 

U.S. foreign tuna imports from 2003—2005 were the highest level ever, and in 

2004 to 2005 these foreign imports officially surpassed total domestic production. 

Despite a 12.5% duty, importers from low wage countries are still making a profit. 

These imports are split among Thailand (47%), Philippines (22%), Ecuador (14%) 

and Indonesia (9%). 

Even with this rapid growth in U.S. foreign tuna imports, there remains significant excess capacity to absorb more production in these countries. As stated in the 

Department of Labor Report, on page 20, ‘‘...there are forty canneries in Thailand, 

and that nothing would have to be built or moved. To implement a production transfer, the companies would simply place more orders with existing plants...It has been 

reported that the world tuna processing has an excess of production capacity on the 

order of 20 to 40 percent.’’ 

I read the following statement from Congressman Eni F.H. Faleomavaega, ‘‘By 

way of our mutual cooperation and based on the findings of the DOL study, I am 

confident that the Governor, Fono, and I will send a unified message to Congress 

requesting enactment of legislation which will put an end to automatic increases in 

minimum wage and which will empower the DOL, in consultation with the Secretary of the Interior and the American Samoa Government, to conduct economic 

assessments every two years to determine when and if our economy can absorb future increases.’’ Del Monte supports the resolution outlined in this statement and 

we pledge our support and assistance to the Governor, Fono and Congressman to 

achieve this outcome. 

Thank you again for the opportunity to appear here today. 

Mrs. CHRISTENSEN. Thank you, Mr. Butler. 

The Chair now recognizes Mr. Galea’i for his testimony. 

STATEMENT OF ALFONSO ‘‘PETE’’ GALEA’I, PLANT HUMAN 

RESOURCES MANAGER, CHICKEN OF THE SEA SAMOA 

PACKING COMPANY 

Mr. GALEA’I. Chairwoman Christensen, Congressman 

Faleomavaega, and members of the Subcommittee, I am Alfonso 

Pete Galea’i, Plant Human Resources Manager, COS Samoa Packing Company of Chicken of the Sea International. On behalf of 

Chicken of the Sea, thank you for the opportunity to testify on the 

economic effects of the recently increased minimum wage. 

This hearing is not only timely but it is also very important for 

the people and businesses of American Samoa. As the Department 

of Labor reported only weeks ago, the new minimum wage requirements could result in the closure of the tuna canneries which could 

cause severe and wide spread damage to the American Samoa 

economy. While my comments today will focus primarily on the 

minimum wage, I will also discuss some of the additional economic 

issues that we face as a business operating in American Samoa. I 

will be happy to address questions related to any of these economic 

issues. 

Chicken of the Sea has been a partner with American Samoa 

since 1954. We have nearly 2,000 employees in American Samoa, 

and their welfare and that of their families is very important to us. 

We understand our responsibilities to the local economy and have 

worked to maintain operations in American Samoa. Unfortunately, 

changing economies, which include high labor costs, have undermined the profitability of tuna canneries in American Samoa. 

These labor costs decrease our ability to compete with foreign 

businesses who enjoy significantly lower labor costs in Thailand, 

Philippines, Ecuador, Mexico, and Papua New Guinea to name a 

few. Moreover as the Department of Labor reported, our competitive disadvantage cannot be offset by increased productivity, or reVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
45 

duced profits, or high prices passed along to consumers. Our concerns about the increasing minimum wage are well founded. According to the Department of Labor, there appears to be a genuine 

cause for concern that at some point before the escalation to $7.25 

per hour is reached, the rising minimum wage combined with other 

factors may lead to the closing of both canneries in American 

Samoa. As you well know, the loss of canneries’ jobs in American 

Samoa would devastate the territory’s economy. About 7,825 job 

losses would result from the closure of both canneries in American 

Samoa. That is the equivalent to 40 percent of all employment in 

American Samoa. 

The Department of the Interior predicted that direct wage loses 

from the closure of two canneries would amount to $33.4 million 

a year. This figure excludes management compensation or the immediate second tertiary losses including goods and services provided to fishing fleets and crews. According to the Department of 

the Interior, the total loss is likely to be significantly higher. The 

potential costs to the U.S. Government, if the canneries shut down, 

are significant. The American Samoa Government would lose its 

primary source of corporate revenues and the economic and financial distress caused by such an event would result in increased use 

of Federal assistance. This assistance would take the form of food 

stamps, temporary assistance to needy families, Women, Infant, 

and Children (WIC), and Medicaid. It is estimated that those affected directly by the cannery shutdown may number as many as 

19,189 persons. This means the total estimated Federal aid can be 

as much as $46.3 million a year, twice the amount of current discretionary Federal grants to the American Samoa Government. 

Over time, the closing of the cannery will likely result in a $150 

million to $200 million shortfall in the local governments’ 

revenue—revenue that could only be replaced with a Federally appropriated subsidy according to a letter sent from Congressman 

Faleomavaega and Senators Inouye, Bingham, and Akaka who are 

ranking members of the Health, Education, Labor and Pensions 

Committee, and Mr. Michael Ensi. Given the constantly shifting 

cost pressures, excess global manufacturing capacity and uncertainties in labor markets, the American Samoa tuna industry is at 

a significant and immediate risk. Moreover, the potential and exponential and annual increase in labor costs undermines American 

Samoa’s economic viability as a place to continue to do business. 

Those most hurt by the negative effects of the minimum wage increase are actually the people intended to benefit from the Fair 

Minimum Wage Act of 2007. This reality is recognized by those 

tasked with protecting the people of American Samoa. 

In a letter to the Chairman of the Committee on Energy and 

Natural Resources Jeff Bingaman, American Samoa Governor 

Togiola requested that the future increases to the minimum wage 

be conditioned on the Secretary of Labor’s determination that the 

increase be economically feasible and will not substantially curtail 

employment in American Samoa. Likewise Congressman 

Faleomavaega introduced H.R. Bill 5154 which would amend the 

Fair Minimum Wage Act of 2007 and condition further increases 

in the minimum wage on a determination by the Secretary of Labor 

46 

1 U.S. Department of Labor, Impact of Increased Minimum Wages on the Economies of American Samoa and the Commonwealth of the Northern Mariana Islands, 17 (Jan. 2008). 2 Id. at 16. 

3 Id. at 14. 

4 Id. at 18. 

5 Id. at 21. 

that such increases will not have an adverse impact on American 

Samoa’s economy. 

On behalf of Chicken of the Chicken of the Sea, I would like to 

express our strong support for Congressman Faleomavaega’s important legislation as well as Governor Tulafono’s efforts to encourage Congress to enact similar measures. Calibrating the labor costs 

in American Samoa with the territory’s economic viability is only 

one step in the process of strengthening the island’s economy. 

American Samoa is seeking to diversify its corporate economy, attracting new investments, and creating new business opportunities. 

To do that, American Samoa must address additional cost issues 

like fuel cost and local taxes. We support the efforts to strengthen 

the American Samoa economy, and Chicken of the Sea would be 

honored to help Congress develop an economic incentives package 

geared toward the territory’s economic diversification and stabilization. 

Thank you for the opportunity to testify before you today. I am 

happy to answer any questions you might have. 

[The prepared statement of Mr. Galea’i follows:] 

Statement of Alfonso ‘‘Pete’’ Galea’i, Plant Human Resources Manager, 

COS Samoa Packing Company, Chicken of the Sea International 

Chairwoman Christensen, Congressman Gallegly, Congressman Faleomavaega, 

and members of the subcommittee, I am Alfonso ‘‘Pete’’ Galea’i, Plant Human Resources Manager for COS Samoa Packing Company of Chicken of the Sea International. On behalf of Chicken of the Sea, thank you for the opportunity to testify 

on the economic effects of the recently increased minimum wage. This hearing is 

not only timely, but it is also very important for the people and businesses of American Samoa. As the Department of Labor reported only three weeks ago, the new 

minimum wage requirements could result in the closure of the tuna canneries, 

which would cause severe and widespread damage to the American Samoa economy. 1 While my comments today will focus primarily on the minimum wage, I will 

also discuss some of the additional economic issues that we face as a business operating in American Samoa. I would be happy to address questions related to any of 

these economic issues. 

Chicken of the Sea has been a partner with the people of American Samoa since 

1954. We have nearly 2000 employees in American Samoa, and their welfare and 

that of their families is very important to us. We understand our responsibilities 

to the local economy and have worked to maintain operations in Samoa. Unfortunately, changing economies—which include high labor costs—have undermined the 

profitability of tuna canneries in American Samoa. 2 These labor costs decrease our 

ability to compete with foreign businesses who enjoy significantly lower labor costs 

in Thailand, Philippines, Ecuador, Mexico, and Papua New Guinea, to name a few. 

Moreover, as the Department of Labor reported, our competitive disadvantage cannot be offset by increased productivity, reduced profits, or higher prices passed along 

to consumers. 3

Our concerns about the increasing minimum wage are well-founded. According to 

the Department of Labor, ‘‘[T]here appears to be genuine cause for concern that, at 

some point before the escalation to $7.25 per hour is reached, the rising minimum 

wage combined with other factors may lead to the closing of both canneries in American Samoa.’’ 4 As you well know, the loss of cannery jobs in American Samoa would 

devastate the territory’s economy. About 7,825 job losses would result from the closure of the two canneries; that is the equivalent of 40 percent of all employment 

in American Samoa. 5 The Department of Interior predicted that direct wage losses 

47 

6Office of Insular Affairs, U.S. Department of the Interior, The Economic and Financial Impact of American Samoa Cannery Shutdown on the Territory’s Economy, Employment, Public 

Sector and the Federal Budget, 3 (July 2006). 7 Id. 

8 Id. at 5. 

9 Id. 

10 Id. 11Letter from Congressman Eni Faleomavaega and Senators Daniel Inouye, Jeff Bingaman, 

and Daniel Akaka to The Honorable Michael Enzi, Ranking Member of the Health, Education, 

Labor & Pensions Committee, 1 (Dec. 13, 2007). 12Letter from The Honorable Togiola T.A. Tulafono, Governor of American Samoa, to The 

Honorable Jeff Bingaman, Chairman of the Energy and Natural Resources Committee, 2 (Dec. 

27, 2007). 13 Rick Turner and Adam Stein, American Samoa Business Opportunities Report, 1 (July 

2007). 

from the closure of the two canneries would amount to $33.4 million a year. 6 This 

figure excludes management compensation or the immediate secondary and tertiary 

losses, including goods and services provided to fishing fleets and crews. According 

to the Department of Interior, the total loss is ‘‘likely to be significantly higher.’’ 7

The potential cost to the United States government if the canneries shut down 

are significant. The American Samoa Government (ASG) would lose its primary 

source of corporate revenues, and ‘‘the economic and financial distress caused by 

such an event would result in increased use of Federal assistance.’’ 8 This assistance 

would take the form of food stamps; temporary assistance to needy families (TANF); 

women, infants, and children (WIC); and Medicaid. It is estimated that ‘‘those affected directly by the cannery shutdown may number as many as 19,189 persons.’’ 9

This means the ‘‘total estimated Federal aid can be as much as $46.3 million a year, 

twice the amount of the current discretionary Federal grant to the ASG.’’ 10 Over 

time, the closing of the canneries ‘‘would likely result in a $150 million to $200 million shortfall in the local government’s revenue—revenue that could only be replaced 

with a federally appropriated subsidy,’’ according to a letter sent from Congressman 

Faleomavaega and Senators Inouye, Bingaman, and Akaka to the Ranking Member 

of the Health, Education, Labor & Pensions Committee Michael Enzi. 11

Given the constantly shifting cost pressures, excess global manufacturing capacity, and uncertainty in labor markets, the American Samoan tuna industry is at significant and immediate risk. Moreover, the exponential and annual increase in labor 

costs undermines American Samoa’s economic viability as a place to continue to do 

business. Those most hurt by the negative effects of the minimum wage increase 

are actually the people intended to benefit from the Fair Minimum Wage Act of 

2007. This reality is recognized by those tasked with protecting the people of American Samoa: • In a letter to Chairman of the Committee on Energy and Natural Resources Jeff 

Bingaman, American Samoa Governor Togiola Tulafono requested that the future increases to the minimum wage be conditioned on the Secretary of Labor’s 

determination that the increase ‘‘economically feasible and will not substantially curtail employment in American Samoa.’’ 12

• Likewise, Congressman Faleomavaega introduced H.R. 5154, which would 

amend the Fair Minimum Wage Act of 2007 and condition further increases in 

the minimum wage on a determination by the Secretary of Labor that such increases will not have an adverse impact on American Samoa’s economy. 

On behalf of Chicken of the Sea, I would like to express our strong support for Congressman Faleomavaega’s important legislation, as well as Governor Tulafono’s efforts to encourage Congress to enact similar measures. 

Calibrating the labor costs in American Samoa with the territory’s economic viability is only one step in the process of strengthening the island economy. American 

Samoa is seeking to diversify its corporate economy, attracting new investments and 

creating new business opportunities. 13 To do that, American Samoa must address 

additional cost issues, like fuel cost and local taxes. We support the effort to 

strengthen the American Samoa economy, and Chicken of the Sea would be honored 

to help Congress develop an economic incentives package geared toward the territory’s economic diversification and stabilization. 

Thank you for the opportunity to testify before you today. I am happy to answer 

any questions that you might have. 

Mrs. CHRISTENSEN. I would like to thank all of the three panelists for their testimony. I now recognize myself to start the first 

round of questioning. I will begin with Mr. Robinson, representaVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
48 

tive of the Chamber of Commerce. Those who believe that because 

the canneries have not shut their doors and left after the first 50- 

cent increase that perhaps the next 50-cent increase would yield 

the same results and wouldn’t have a great impact. What do you 

say to those who feel that way. 

Mr. ROBINSON. Thank you, Madam Chair. 

We do not subscribe to that line of thinking. It is the belief of 

the Chamber and its members that if the second 50 cents goes on 

on the 25th of May, this will encourage both canneries to review 

their current operations and the effects of the outcome of their review, we feel would either be a scaling down or in fact a departure 

from American Samoa. 

Mrs. CHRISTENSEN. I would believe that you know it was always 

envisioned that after 50 years of—continue with it Mr. Robinson— 

being under the Special Industry Committee, that American Samoa’s wages would have progressed at least to maybe what the 

U.S. wages were—$5, perhaps $5.50—the whole U.S. minimum 

wage. I am sure that that was the thinking that somehow it would 

have increased over that 50-year period. So why in your opinion 

has that not occurred, and what do you see as the main factor in 

the Industry Committee’s deliberations that has prevented the 

wages from increasing more than they have over these 50 years? 

Mr. ROBINSON. Madam Chair, I have not been privy to those previous meetings, but my understanding of the documentation that 

I have read regarding the outcomes from those deliberations would 

suggest that the private sector, excluding the canneries, was forever seeking to raise the minimum wages to a much higher level 

than they were. But it was the canneries in fact who objected to 

that on the basis of the fact that the impacts of any significant 

wage increase would have a severe impact on their operations. 

Mrs. CHRISTENSEN. Let me turn to the canneries. It has been the 

impression that the canneries have been the main obstacle to increase the wages over the years. How do you respond to that impression and to Mr. Robinson’s testimony? 

Mr. BUTLER. We can’t help the fact that 50 percent of the private 

sector is operated by the canneries. It is a competitive arena that 

we work in globally, and labor is one of the cost significant cost factors in our industry. And this is an area where we will take a position to lower costs to become competitive in the global market. 

That is basically our position in these Industry meetings. 

Mrs. CHRISTENSEN. Well, let me ask this question first. You 

have—do each of you have canneries in other parts of the world? 

Mr. BUTLER. StarKist has a cannery that operates in Ecuador. 

Mrs. CHRISTENSEN. How does that compare in size to the one 

here? 

Mr. BUTLER. How does that compare in size in terms of people? 

Mrs. CHRISTENSEN. Number of employees. 

Mr. BUTLER. I can tell you that we employ close to 2900 people 

here in American Samoa. I can’t give you the facts but I can get 

that information to you for Ecuador. 

Mr. GALEA’I. Samoa Packing is the sole cannery of the Chicken 

of the Sea. 

Mrs. CHRISTENSEN. This is a sole packing? 

Mr. GALEA’I. Yes. 

49 

Mrs. CHRISTENSEN. How many employees? Do you have companies in other places? You have factories or other than the packing? 

It is just the packing occurring here? 

Mr. GALEA’I. Packing and marketing. 

Mrs. CHRISTENSEN. So what is the total number of employees? 

Mr. GALEA’I. Two hundred Chicken of the Sea International and 

2,000 Samoa Packing employees. 

Mrs. CHRISTENSEN. Two hundred and 2,000? 

Mr. GALEA’I. Yes. 

Mrs. CHRISTENSEN. I am going to let Mr. Faleomavaega take his 

initial questions and I will come back. 

Mr. FALEOMAVAEGA. Thank you, Madam Chairwoman. And I do 

want to thank Mr. David Robinson for doing such a fantastic job 

as a President of the American Samoa Chamber of Commerce with 

the years that he has taken this position. For all these years, 

Madam Chair, I have always been very critical of the fact that it 

is very difficult to really get a sense of what the needs are from 

our business community because our Chamber was not very effective, and let alone even the numbers, let alone even having received any input of their concerns as far as the business community is concerned whenever there are issues affecting the economy 

of the territory’s concern. So I want to really commend Mr. Robinson for his leadership and for doing this for the territory. 

Mr. Robinson, how many members are there in the chamber? 

Mr. ROBINSON. 62 at the moment. 

Mr. FALEOMAVAEGA. How many businesses do we have here in 

the territory approximately? Stores, well enterprises for that matter. I guess Mr. Paopao can probably give us a number. 

Mr. ROBINSON. He could probably give me a more accurate take 

on that in terms of stores and things like that. In terms of stores, 

there are 230, I think, and in terms of other business I would say 

another 100. I would say round figures 400 perhaps. 

Mr. FALEOMAVAEGA. Would you say maybe 1,000 business licenses have been issued by the Department of Commerce in terms 

of business being conducted here in the territory? 

Mr. ROBINSON. I don’t know that that is an accurate figure, but 

I would say there are a considerable number of licenses issued. 

Mr. FALEOMAVAEGA. And from that only 62 members are involved with the Chamber of Commerce? 

Mr. ROBINSON. Yes. 

Mr. FALEOMAVAEGA. I know there has been a lot of discussion of 

diversification. I believe this issue has been with our territory for 

the last 100 years, the idea of diversification of our economy. And 

now we come to the point where 80 percent of our entire economy 

depends on the standing and the livelihood of our two canneries, 

and you had indicated in your testimony that suggestions as you 

have offered—and by the way I want to commend the Economic 

Advisory Council for being visible in terms of looking into areas 

where we need to do this part of our diversification. I had indicated 

earlier to the Lieutenant Governor and to the President of our Senate, do you know what our economic priorities are in our government? 

Mr. ROBINSON. No. 

50 

Mr. FALEOMAVAEGA. Do you know what the priorities are of our 

government? 

Mr. ROBINSON. I know what they should be. 

Mr. FALEOMAVAEGA. So when we raise the issues of economic development and what should our $300 million budget that we are 

under, I am a little confused myself in terms of—the difficulty of 

my job in trying to determine how I could best compliment, if I 

know what our economic priorities are. 

Mr. ROBINSON. You are quite right and don’t think I am being 

flippant about this. I am not. My response to that would be that 

perhaps over the years, over the past years and in the past many 

years, there has been a reliance on the canneries and the government to be the employers of choice here on the island. And there 

has been a great reliance on the generosity of the Federal government in supplying on an annual basis a quantum of dollars which 

allows the territory to operate. I would add to that that I think 

there has been as a result of that the reliance on those three areas. 

There has been perhaps—how should I say it—simply a lack of attention to a specific strategic development plan. As you said before, 

there have been many, many economic studies, surveys, reports 

carried out. And I think that most of them are being filed away 

neatly in various filing cabinets over the years and never see the 

light of day. 

I would suggest to you once those reports are in existence, I have 

a chance to have a look at most of them. And those reports have 

one significant failure, all of them. They are all very good recorders 

of historical events. They are all very good reporters about a ‘‘wish 

list’’ of things they would like to see done, but not one single one 

of them articulates the real opportunities on how those opportunities can be carried out. Not one. So, therefore, in my testimony before hand, I refer to an initiative by the government made last year 

of the Economic Advisory Council. And we have taken those reports 

for what they are worth. I have extracted from those reports the 

relevant sections that apply to the committees we have established 

in this Council, and there are five of them. And we have used the 

information from those reports to provide to the chairs of each of 

those committees as a basis to start the overview of their industry 

sectors then to perhaps identify some of the areas that can be developed and can be supportive and can stimulate the current economy. 

Mr. FALEOMAVAEGA. Your understanding of the declining of the 

business community here in the territory, who controls the retail 

industry right now in the territory? 

Mr. ROBINSON. I would say that it is controlled predominantly by 

the Asian community and predominantly in that Asia community 

by the Koreans. 

Mr. FALEOMAVAEGA. How many Korean stores do you think we 

have now in place in the territory? 

Mr. ROBINSON. I think probably over 190 of them. 

Mr. FALEOMAVAEGA. Would you say they have a tremendous impact in the economy of the territory? 

Mr. ROBINSON. I would say that most of them have their own 

particular agendas and most of them don’t really integrate into the 

economy. They don’t integrate into societies they should. They don’t 

51 

put back what they should put back given the amount of revenue 

that they take. 

Mr. FALEOMAVAEGA. So that might also play a very important 

impact on the overall economic health of our territory in that respect? 

Mr. ROBINSON. They certainly do. If it was that they were paying 

the right level of income tax; if it was that they are paying the 

right level of duties when bringing in goods; if it was that they 

were doing all other things that perhaps non-Asian companies do, 

I would suggest that their impact on the economy would be much 

greater. 

Mr. FALEOMAVAEGA. May I ask how many members from our Korean community are members of the Chamber? 

Mr. ROBINSON. Of the Asian community? 

Mr. FALEOMAVAEGA. Yes. 

Mr. ROBINSON. At the present time, there are none. Last year 

there were, from memory, eight and most of them were Koreans 

and a couple of them Filipinos. 

Mr. FALEOMAVAEGA. So 196 retail stores are run and operated by 

members of the Korean community and not one is a member of the 

Chamber of Commerce in this territory. So how are we going to expect to work a real positive economic plan if they are not even participants in the process of developing our economy? 

Mr. ROBINSON. Well, as I said, Mr. Congressman, they have their 

own agendas. They don’t want to be part of an organization like the 

Chamber of Commerce. To them it doesn’t offer them any particular value. The only reason why they joined in the first place a 

year or two back, it was because they collectively thought that the 

Chamber of Commerce could offer them some assistance when 

there was a great deal of pressure put on by the immigration on 

the renewal of work visas. 

Mr. FALEOMAVAEGA. Madam Chair, I know my time is up. I will 

wait for my second round because I still want dialogue with our 

friends from the canneries. Thank you. 

Mrs. CHRISTENSEN. Thank you, Mr. Faleomavaega. 

I would like to ask maybe I will start with Mr. Galea’i because 

you spoke to this in your testimony. For many years now there has 

been tuna canneries in like Thailand where I believe Chicken of 

the Sea is owned by Thai Union, one of the largest tuna canneries 

or second largest and Ecuador maybe in the world which Mr. Butler referred to. And they have done that with extremely low wage 

rates and little or no environmental regulation. Yet the tuna canneries have continued to stay here in American Samoa where there 

is environmental regulation and the wages are slightly higher. So 

there must be some advantage to staying here despite the fact that 

those low wages already exist and less regulation is there. So could 

you tell me and Mr. Butler, you can follow up, I am asking this 

directly to Mr. Galea’i because he mentioned this in his testimony. 

What are the advantages because they obviously have something? 

What are the factors that determine your profitability in American 

Samoa versus Thailand or elsewhere? How does American Samoa 

measure up despite the other places, but basically I am trying to 

establish that there must be some advantage to being here despite 

52 

the higher salaries that you pay and the more regulations that you 

have to adhere to. 

Mr. GALEA’I. Thank you, Chairwoman Christensen. That is a 

very good question. The advantage is for the canneries locating to 

American Samoa in the first place are the Pago Pago port, the fact 

that we are in the middle of good fishing grounds particularly for 

albacore, central to tuna fishing grounds. The fact that we have 

preferential treatment in the United States market although that 

is under siege by the free trade initiatives by the Bush Administration. Our wages are below the mainland wages. These mixtures of 

advantages have been eroding because of other factors. The fact of 

rising fuel costs, again the free trade initiatives NAFTA provides. 

Mexico duty free access for canned tuna to enter since January 

2008. 

Mrs. CHRISTENSEN. The energy costs that shouldn’t be a big difference in the factors between here and somewhere else should 

they? 

Mr. GALEA’I. They are about twice. Our costs are about twice 

what they are in the mainland and even more so what they are in 

the foreign countries such as Thailand and Asian countries, Ecuador. 

Mrs. CHRISTENSEN. Apart from wages? 

Mr. GALEA’I. Yes, apart from wages. Our wages are about four 

to five times higher than our foreign competitors. 

Mrs. CHRISTENSEN. What about energy costs? 

Mr. GALEA’I. Energy costs are about twice what they are 

Mrs. CHRISTENSEN. Twice here? 

Mr. GALEA’I.—yes, what they are in the mainland. And that includes electricity and steam that we use for cooking fish. 

Mrs. CHRISTENSEN. Do you issue reports annually that would 

show us the way we can really take a look at these numbers? 

Mr. GALEA’I. Yes. We have that information readily available. 

Mrs. CHRISTENSEN. Do you have it available? 

Mr. GALEA’I. No, I don’t have it with me. 

Mrs. CHRISTENSEN. I think the committee would like to take a 

look at that so that we can get a better handle on it, maybe the 

challenges that you do face or do not face elsewhere as compared 

to American Samoa. 

Mr. FALEOMAVAEGA. Madam Chair, if I may, I think it would be 

welcome for by both Mr. Butler and Mr. Galea’i to submit whatever 

records to make it to be part of the records if they could submit 

whatever information that would be helpful to the committee. 

Data, facts, and information that will support what we are trying 

to achieve here under the recently introduced bill H.R. 5154. 

Mr. GALEA’I. I will be happy to introduce that information. 

Mrs. CHRISTENSEN. Companies have to plan and in your planning I am sure as you project over the years, we’ve heard a lot of 

talk about uncertainties, but every company deals with some uncertainties. You have to plan. You have to make projections as to 

costs over the years, and I would be surprised if an increase in 

wages was not a part of that planning. And I would be very interested to know what kinds of increases were factored for use in factoring out your plan in going forward. Did you just assume then 

as you projected what your operating costs might be going forward 

53 

if there was no minimum wage increase, or did you assume 35 

cents, 25 cents every two years? What did the company use as you 

planned your expenditures going forward in your business plans? 

Mr. GALEA’I. If I may. 

Mrs. CHRISTENSEN. That is both you and Mr. Butler. 

Mr. GALEA’I. If I may if you are talking about the initial escalator 50 cents, that was an abrupt increase in our labor cost of $2 

million. We could not properly plan for that abrupt increase in our 

cost. 

Mrs. CHRISTENSEN. What I am really asking of both of you is you 

have been here how many years? 50? 

Mr. GALEA’I. I have been here much of my life. 

Mrs. CHRISTENSEN. But the packing— 

Mr. GALEA’I. 13 years with the canneries. 

Mr. BUTLER. 13 years. 

Mrs. CHRISTENSEN. We realize that 50 cents was imposed and 

that, of course, was imposed because the wages had not gone up 

significantly barely, but as companies plan you know future budgets and project growth or changes, they ought to be projecting within that what the cost of salaries would be and what the cost of 

wages would be. Are you telling me that the company projected 

over 13 years no increase or 2 percent increase in wages over that 

time? 

Mr. BUTLER. I would like to answer that. Generally, we make a 

forecast. You look at trends. It is what the trend is for the last previous years that we use to anticipate wage increases. And to prove 

Galea’i’s point, the 50-cent increase was introduced on July 24— 

maybe to affect—but it did come all of a sudden. And because that 

is long out that there is 50-cent increases every year, that is obviously an easy forecast for us to make; so it is basically history 

trends that we look at and anticipate what we see in wages. 

Mrs. CHRISTENSEN. Same for you? 

Mr. GALEA’I. We’ve, of course, forecast our costs, and we have the 

‘‘bean counters,’’ so to speak, and they make the forecasts based on 

scenarios and how costs are going currently and make projections; 

so, yes, we do forecast increases and incorporate anticipated increases in minimum wage across the board for our employees. 

Mrs. CHRISTENSEN. Well, when the Special Industry Committee 

meets and ask you for your input, have you ever suggested well because in your business plans and projections, you have projected 

such and such an increase that the company could really tolerate 

15 cents, 25 cents, 35 cents? And have you ever said to the Industry Committee that you can accept a raise more than 2 cents or 3 

cents? 

Mr. GALEA’I. Our position is that was that we provided the Industry Committee with response to the criteria they were to base 

whether or not to provide any increase. We provided that economic 

information to them to make their determination whether what increase was warranted. 

Mrs. CHRISTENSEN. Does Chicken of the Sea speak for itself and 

StarKist speak for itself so you all don’t get together and—— 

Mr. BUTLER. I can’t answer that question because I have never 

been part of the Special Industry Committee directly but past manVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
54 

agement, I can make that a request to that question and get a response to you. 

Mrs. CHRISTENSEN. It sounds to me as though the projections 

were based on no increases until the 50 cents came up. 

Mr. BUTLER. Can you repeat that please? 

Mrs. CHRISTENSEN. What I am hearing is that there was never 

any consideration that wages would increase with the projections 

of business planning of the companies moving forward, and I find 

that would be between 1990 and 2000. Now correct me if I am 

wrong. Between 1990 and 2000, did you forecast any increase in 

wages, or were you just confident based on past years before that 

Industry Committees would never raise the wages and so your own 

projections did not include any wage increases at all? 

Mr. BUTLER. And to answer your question that we looked at previous increases in the past and we used those increases as a trend 

to forward forecasts or projections. You have to project some sort 

of increase, and with the 50-cent increase that went into effect on 

July 25th that was definitely not in our projection but will be now 

since it is locked. 

Mr. GALEA’I. If I may add, we Samoa Packing has provided performance-based increases to our employees, and it was based on 

meeting performance goals that could pay for the increases. So yes, 

we have had a voluntary hand performing wage increases during 

that time frame that you mention 1990-2000, and we have forecasted increases in labor costs as well as all the other cost factors 

based again on trends. 

Mrs. CHRISTENSEN. What level of increase? Could you give me an 

example? How much of an increase based on the performance, and 

how many employees, other than 2,600 or so, might have met those 

performance standards to get an increase? 

Mr. GALEA’I. The performance increase is more across the board 

increases of the same amount, the same percentage of increase 

across the board. And it was offered to our employees, and they 

were made aware exactly of what performance goals had to be met 

and what time frame they had to be met and when they were met. 

Mrs. CHRISTENSEN. When was the last year that it was done? 

Mr. GALEA’I. I believe and my recall may be in error. I believe 

it was 2003, 2004. 

Mrs. CHRISTENSEN. And so that was done internally, but was 

there ever a time that a wage increase was recommended to the 

Special Industry Committee by either company? 

Mr. BUTLER. I can get you that information from StarKist. Again, 

I wasn’t part of this special committee but I can look it up for you 

and let you know. 

Mrs. CHRISTENSEN. We would ask for that information as well. 

Mr. GALEA’I. Same for me, please. 

Mrs. CHRISTENSEN. Mr. Faleomavaega? 

Mr. FALEOMAVAEGA. Thank you, Madam Chair. 

I certainly don’t intend to want to make Mr. Butler and Mr. 

Galea’i feel uncomfortable. In terms of the questions that are being 

asked, please they are not in any way a personal attack on both 

of you. We know that you do your job to the best of your abilities; 

so please bear with us. We are just trying to get some answers 

here. 

55 

You noted that in the Department of Labor’s report mentioning 

that somebody from the tuna industry had mentioned that if there 

was a possibility or the situation as whether or not the canneries 

were going to leave and the response was in minutes. And I wanted 

to know from both of you gentlemen that if there was some indication that it seems to imply that the canneries are going to leave 

not necessarily because of any love or compassion for the Samoa 

people but it is a matter of profit; and it is a matter of losses in 

terms of having to pay dividends to your stockholders. And that is 

absolutely understandable in those terms. But I would appreciate 

maybe if you could clear for the record that you really didn’t mean 

that you are going to leave in minutes just for the record because 

I don’t think that really it was the intent of the response and the 

report did not say who exactly in the tuna industry they met with 

or contacted but the response was you guys were going to leave in 

minutes. Could you clarify that? 

Mr. BUTLER. Congressman Faleomavaega, obviously it was 

meant with no disrespect to Americana Samoa and the people of 

American Samoa but in the business that we work in, again, the 

term ‘‘in minutes’’—there are a lot of connotations one can look 

at—but there is extra capacity elsewhere, in Thailand particularly. 

And all it takes is a matter of communications to these other canneries to say, ‘‘I cannot produce 100,000 cases here because of 

costs. Move it to Thailand—have it produced.’’ That is simply the 

message of how quick or how easy it is to move volumes out of 

American Samoa into a competitive low-cost country. 

Mr. FALEOMAVAEGA. Mr. Galea’i? 

Mr. GALEA’I. Thank you Congressman. 

Mr. FALEOMAVAEGA. Could you please speak a little louder? 

Mr. GALEA’I. Thank you very much, Congressman. I have no 

statement to that because I didn’t make that statement. 

Mr. FALEOMAVAEGA. Well, leave it at that. I realize that the tuna 

industry has spoken, and you have indicated that it is a real competitive situation. Now I used to brag for years that we have the 

largest tuna canning operation in the world. No longer. I just met 

with the Chairman and owner of the Thai Union company which 

owns Chicken of the Sea Samoa Packing. The canneries they have 

there alone in Thailand employs 20,000 employees. That is four 

times more than the workforce that we have here in American 

Samoa. So I fully recognize the competitiveness of the market given 

the fact it is no longer just American Samoa and Puerto Rico previously. We have approximately 20 countries competing for the exporting of tuna to the United States. The U.S. is the largest consumer market in the United States. There is absolutely no question 

that the presence of our two canneries is the very base foundation 

of our economy; and I think the concern, as everybody has all been 

worried about the fact that if in fact the canneries do plan to leave, 

I believe the total investment facilities StarKist has is about $70 

million, and the investment the StarKist has made in the facilities 

and everything. What is the dollar value of StarKist as far as the 

facilities are concerned? 

Mr. BUTLER. I can get you that information, Congressman. I can 

try to get that for you. 

56 

Mr. FALEOMAVAEGA. Can you submit that for the record? Mr. 

Galea’i, can you do the same? What is the value of Samoa Packing 

with all the money, the millions that you put in to make this a better operational facility for our workers. 

Mr. GALEA’I. Congressman Faleomavaega, let me just clarify 

what—COS Samoa is the only cannery of the Chicken of the Sea. 

The Thai Union, which owns Chicken of the Sea, yes, has quite a 

few canneries in Thailand and is the largest tuna processing entity 

in the world. 

Mr. FALEOMAVAEGA. Well, thank you. 

Mr. BUTLER. I would like to add, Sir, that StarKist Samoa is the 

largest single producing cannery in the world. 

Mr. FALEOMAVAEGA. All right. I am not going to argue with you. 

Gentlemen. The process of pouch packaging, as you know, is a new 

system where tuna is no longer canned; but the tuna now is going 

to be put in pouches, which is a very labor-intensive form of packaging tuna. I want to ask you both, are StarKist and Chicken of 

the Sea going to be doing pouches here in our territory? 

Mr. BUTLER. Sir, we have already been producing pouches. We’ve 

been producing pouches for our U.S. military. We actually produce 

pouches for our soldiers in Iraq, and we are continuing an investment that is looking closely at the minimum wage, where this is 

going, for expansion of pouch. So we have capabilities currently, 

and we are looking at potential expansion efforts but are looking 

at the economic feasibility of these investments at this time. 

Mr. FALEOMAVAEGA. Mr. Galea’i? 

Mr. GALEA’I. Yes, similar to Brett’s and Del Monte’s plans. Pouch 

represents a very small portion of our business. 

Mr. FALEOMAVAEGA. What is the total dollar value of the amount 

of canned tuna that we exported to the Unites States last year? 

Both canneries? 

Mr. BUTLER. I can’t really give you that information right now 

but I could again yeah 

Mr. FALEOMAVAEGA. Can you submit that for the record? 

What about two years ago? Do you have any knowledge? I just 

want to make sure I get my facts correct. Wasn’t it somewhere 

around $500 million in gross sales and the cans that we export 

Mr. BUTLER. I have no clue until I can get that information to 

you, Sir. 

Mr. FALEOMAVAEGA. Both canneries, can you submit that for the 

last 5 years? The total dollar value of canned tuna that we exported to the United States in the last 5 years. And gentlemen, 

would it also be possible to suggest what is the total dollar value 

of the amount of canned tuna that we exported in the last 50 

years? Can you supply that for the record? 

Mr. GALEA’I. We’ll, certainly try. As you know, we’ve gone 

through different owners in that 50 years. 

Mr. FALEOMAVAEGA. I know. I know. 

Mr. BUTLER. It would be difficult. I would say that. 

Mr. FALEOMAVAEGA. About ten years ago and I am going to work 

on this with the Library of Congress to assist me through the Congressional Research Service. The last time, I think, the amount— 

it was over $40 billion worth of canned tuna that this territory exVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00060 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
57 

ported to the United States during a 30-year period. So I just wanted to share that with you. 

Tax incentives: I think our canneries have been receiving tax incentives ever since we started. Let’s say the last 40 years maybe 

from the local government? Is that still in place? 

Mr. BUTLER. Yes. We are currently under tax exemption with the 

American Samoa Government. 

Mr. FALEOMAVAEGA. And these tax exemptions have been renewable every 5 years or 10 years? 

Mr. BUTLER. Our exemptions expires in April this year. 

Mr. FALEOMAVAEGA. And you are negotiating now another exemption? 

Mr. BUTLER. We will be, Sir. 

Mr. GALEA’I. Let me clarify. Samoa Packing, formerly Van Camp 

Seafoods, was under partial tax exemption. Partial tax exemption 

and it was structured on a progressive, the more profits we make, 

the higher tax rate, the lower the tax incentive. So I just want to 

clarify that. 

Mr. FALEOMAVAEGA. I also want to clarify something for the 

record for both of you gentlemen. Mr. Robinson, I will get back to 

you. 

In no way am I ever to imply or to suggest that our two canneries should not be making a profit. That is what business is all 

about, absolute supporter of the business community. This is where 

economic growth is to be given and to have our people depend less 

on employment with the government but with private sector. I 

think this is what our Governor, our leaders, and government are 

advocating very strongly. So I just want you both gentlemen to 

know. Don’t misunderstand or think that I am against the presence 

of our canneries. Absolutely not, and I guess as you may have 

heard our Lieutenant Governor say earlier, the only problem I have 

with our friendly canneries is that I don’t know what marginal 

profit you are operating on so that that way, perhaps, it will make 

it more reasonable for the government or the leaders to say well 

maybe this is how we should work out a minimum wage that is 

reasonable based on the margin of profits that any business will 

operate on, I suppose. And knowing that both canneries, Mr. 

Galea’i, as you know, last year I was under heavy attack. Chicken 

of the Sea was the first company that came out with its intention 

to lay off 200 workers, and I had to personally go to San Diego and 

have a real double edge argument with the top executives of Chicken of the Sea because they were making presumptions that were 

not based on what we are trying to do under the provisions of the 

Federal law. 

If I might ask both of you, have there been layoffs from the canneries since we implemented the 50-cent increase in wages? 

Mr. BUTLER. I can tell you we’ve been hiring more people as a 

result of pouch expansion actually went into the effect prior to the 

50-cent increase. So we have been gearing ourselves up for those 

new opportunities that we are bringing into StarKist Samoa and 

American Samoa. But more importantly, and I can probably speak 

for Pete and Kosey that the canneries, it is a manufacturing business and you need to produce the volumes to offset the high fixed 

costs that we have. It is very labor intensive; so to lay off people 

58 

means you are going to reduce your volume in a sense. It is not 

an effective way to run the business we are in particularly with 

fish. 

Generally, the smaller the fish, the more labor you need to get 

the volume out. The fish sizes we experienced in the last two or 

three years here have gone smaller which require more people, and 

that is the challenge StarKist Samoa faces and I am sure Chicken 

of the Sea faces as well. 

Mr. GALEA’I. If I may add, Brett is correct about the realities of our business. We are only able to offset, not completely, the $2 million increase in labor costs by increasing volume. But there is a 

ceiling to that. We are at that ceiling. We are at maximum capacity. Another additional increase we can’t utilize the same economy 

of scale benefits that we prevail for the first increase because we 

are at maximum capacity right now. 

Mr. FALEOMAVAEGA. Thank you, Madam Chair, for your patience. 

And I want to say this to Mr. Robinson. I want to say this for the 

record. I am utterly disappointed for the lack of any sense of interest and participation for the members of our business community, 

the Korean business community, and our Chinese business, and 

Filipino business community for showing any sense of their presence because the fact is millions of dollars are also just as much 

involved in the economy. We talk so much about the 50-cent increase but that is only one portion out of the overall picture of the 

economy knowing exactly if the revenue is collected. I hope, Mr. 

Robinson, we are probably losing $20 million a year in not collecting revenue amounts that seems to disappear or not be getting 

by our local government to address some of these issues about 

wages and the sort. But I again, if I have a couple more questions, 

but Madam Chair and I want to thank Mr. Robinson again. I think 

the Chairwoman has more questions. 

Mrs. CHRISTENSEN. I have a few more. Thank you, Mr. 

Faleomavaega. 

Mr. Robinson, I wanted just to go back for a moment to ask to 

your knowledge, has the Chamber ever recommended any increase 

to the Industry Committee? You said you have not participated but 

would the Chamber be asked for recommendation; and if so, has 

the Chamber recommended an increase at any level in minimum 

wage? 

Mr. ROBINSON. Thank you, Madam Chair. I think it is true to say 

that in the years gone by, the Chamber was a member of the committee looking at biennial wage increases. I am not sure. To be 

quite honest with you, what sort of recommendation the Chamber 

put forward or whether they just went along with the general feeling and the recommendations of the committee. In last year, I 

think there was another one of the biennial committee meetings 

due to take place, at which the Chamber was going to be represented, and I was going to represent the Chamber. At that time 

we were certainly, through the Chamber, planning to take a fairly 

aggressive stance on the question of increase of minimum wage. 

Mrs. CHRISTENSEN. Aggressive stance? 

Mr. ROBINSON. In terms of trying to raise it. 

Mrs. CHRISTENSEN. Trying to raise it. Did you have a particular 

amount in mind? 

59 

Mr. ROBINSON. No. We were overtaken by events. 

Mrs. CHRISTENSEN. But prior to the events overtaking you, were 

you going to suggest a specific amount? 

Mr. ROBINSON. No. We were in the presence of our review at the 

time so we haven’t gotten as far as that I am afraid. 

Mrs. CHRISTENSEN. Mr. Butler, in your testimony you talk about 

biennial review by the Department of Labor, Department of the 

Interior, and the American Samoa Government. Are you putting 

that forward as a preferred method of deciding on wage increase 

to the Special Industry Committee? 

Mr. BUTLER. Not to the Special Industry. You mean versus Special Industry? 

Mrs. CHRISTENSEN. Yes. 

Mr. BUTLER. No. It seems like legislation that is already out 

there appears to be that the Department of Labor’s involvement, 

and we think the two years is a prudent time frame to understand 

the effects and to get the government involved with the Secretary 

of the Interior I think would be fair as well as community members 

in American Samoa’s territory. But it wasn’t in a sense to say 

versus the Special Industry. 

Mrs. CHRISTENSEN. So you were using what was in the legislation in making that statement? 

Mr. BUTLER. Exactly. 

Mrs. CHRISTENSEN. It is about—but you wouldn’t, so you are not 

opposed to continuing this Special Industry Committee, or do you 

think one is a better 

Mr. BUTLER. I think the Special Industry Committee provided a 

democratic approach. You are hearing from different views. I 

believe it would make sense that the Department of Labor’s involvement—probably better background statistical analysis of the 

economic situation on island would be of benefit. But I think in 

theory the Special Industry approach is supporting because it is 

well-rounded. It is democratic. You get to hear views from a lot of 

people from a lot of different perspectives. 

Mrs. CHRISTENSEN. You don’t feel that there is a greater ability 

to control the outcome by one industry or another or the business 

community that counts, and the Special Industry Committee versus 

the departments? 

Mr. BUTLER. If there is a perception that the tuna canneries are 

controlling the committee, that is false. It seems like the lines of 

questions are heading that way. It is not. 

Mrs. CHRISTENSEN. If any one industry feels that they might be 

mostly more impacted by another, wouldn’t they be able to exercise 

more influence over the Special Industry Committee? 

Mr. BUTLER. I think everyone gets hurt equally. I can’t see how 

one would—you know, the canneries are again the biggest industry. I mean it is looked at as the big boy on the block but I think 

the special industry approach is everyone equally. And the decision 

is made by a panel that is I think well-rounded. So that is I think 

my view on that. But I would like to add I haven’t been directly 

participating into the Special Industry Committee’s hearings, but 

again that is from my perspective. 

Mr. FALEOMAVAEGA. Chairwoman, may I—— 

Mrs. CHRISTENSEN. Sure. 

60 

Mr. FALEOMAVAEGA. Because the question is very important. I 

have been personally involved in the Special Industry for years, 

and I would say right now for the record, I do not support the 

structure and the way the Special Industry Committee was set up. 

My concern was that we had representatives from the government, 

representatives from the business industries, but there was no one 

representing the workers. And I dare say probably all the workers 

there at the canneries are afraid to come up and testify before the 

committee for fear of their jobs. Now I know with all due respect 

to Mr. Butler, understandably it is nice if it is done in an ideal situation but it is not. And I dare say I want to say I will not support 

any Special Industry Committee as it has been done, one. Second, 

I think a neutral agency like the Department of Labor—what they 

need is data and information. That is what is the problem here, 

and I think if we can make sure that the Department of Labor with 

the Department of the Interior working together come up with a 

comprehensive economic study for the territories of American 

Samoa and CNMI, then we can get a better gauge exactly what 

type of minimum wage we should be given. 

The Industry Committee, Madam Chair, may I also note the fact 

we had 18 separate different minimum wages. Unheard of in America. When you have one minimum wage, it should go to everybody 

if you are flipping hamburgers at McDonald’s and digging ditches, 

that is a minimum wage one. This is the only territory that has 

18 separate minimum wages. Unbelievable how they come up with 

this. I just want to note that, Madam Chair, I didn’t mean to interrupt but with due respect to Mr. Butler’s statement, I will not support any Special Industry Committee because in my humble opinion, it did not speak well enough for the needs of our workers. 

Mrs. CHRISTENSEN. Well, I should have asked Mr. Robinson before Mr. Faleomavaega jumps in what his opinion was of having a 

Special Industry Committee versus Department of Labor, Department of the Interior, and the Government come together to make 

that decision? 

Mr. ROBINSON. Thank you, Madam Chairwoman. It is a difficult 

question to answer directly because there is a number of different 

angles to this. One of the things many companies in the private 

sectors, excluding the canneries, and let’s talk about the private 

sector excluding canneries excluding government, one of the things 

that we at the private sector do is to pay our people for what we 

think is a reasonable amount of money. We are not governed and 

controlled by the minimum wage necessarily although it might be 

a benchmark on which to use for paying some of our workers at 

the bottom end of the scale. But generally speaking, we would like 

to set up a wage that we feel comfortable with in terms of providing that worker with the right level of wage for the type of job 

that the type of person is doing. So, therefore, when this first 50- 

cent increase came around, there were quite a lot of companies who 

were able to manage the situation quite well because it didn’t affect 

a great number of their stock. 

Second thing about it is too if it was the company had a lot of 

workers at the bottom end of the scale and their wages were increased by 50 cents or whatever it was, this has a compression effect on the rest of the staff and company. This is something which 

61 

is of great concern to the private sector. You are gradually pushing 

wages lower pay getting closer to the higher pay so what do you 

do? The higher pay turns around and say well the gap between us 

now is not as great as it was before. We need ours to be increased 

as well, too. So suddenly you find in the private sector you have 

an enormously big wage built. So to come back to the original question, the question of Industry committees, plus I think they are important. They don’t necessarily have the sort of bearing on the private sector perhaps they would have on the canneries or on the 

government which individually employ larger amounts of people. 

Mrs. CHRISTENSEN. Thank you. 

Mr. GALEA’I. Excuse me. May I respond to your question? 

Mrs. CHRISTENSEN. Sure. 

Mr. GALEA’I. As I have been involved with the Special Industry 

Committees, both as a member of the Chicken of the Sea Samoa 

Packing Company and as Director of Commerce—formerly the Department of Planning and Economic Development—I am very familiar with the procedures. And I agree with Mr. Butler. I believe 

the Special Industry Committee provides you with a community 

based forum that was identified—representatives of the Department of Labor, employee-employer, and industry. That as an alternative to a Federal agency dictating what our appropriate wages 

in American Samoa, approximately 5,000 miles away, I believe that 

it is, you know, to me doesn’t make sense, OK. The Special Industry Committee is a much more representative, responsible forum to 

make determinations on appropriate minimum wages. As far as 

Congressman Faleomavaega’s perception that there was not adequate input from the employees, all I can say is the hearings were 

open to all employees as well. And I just want to say many of the 

employees at Samoa Packing, most likely at StarKist, are very 

aware of the fact that we are constantly looking for things to save 

costs to keep our footing on being competitive with the low costs. 

So, they are very appreciative and they understand that our primary objective—although we would like to increase wages, too, and 

be able to pay for them—our main responsibility is job preservation, viability preservation. And I strongly would like to discuss 

with you, Congressman, the Special Industry Committee—perhaps 

you would consider at some point. 

Mr. FALEOMAVAEGA. May I respond to that, Madam Chair? 

Mrs. CHRISTENSEN. Yes. 

Mr. FALEOMAVAEGA. I appreciate Mr. Galea’i’s statement and listen, that is great. I appreciate your concern but I would just like 

to comment on your statement that you are against a Federal agency dictating what the wages should be for American Samoa. With 

all due respect, the Congress is the one that sets the law for the 

entire nation. And this is what the minimum wage is going to be 

for America. Now, we are making exceptions for that. And one of 

the things that is very difficult for me, especially when I meet with 

my Republican friends is what are you being an exception? I have 

30 percent unemployment in my district. Jobs have gone overseas 

and all of this stuff, and American Samoa is given a break but not 

given the minimum wages they should be with all other states. So 

I am confronted with that predicament, but I would say to my good 

friend Mr. Galea’i to suggest that the Federal agency is dictating 

62 

this, what I am saying is the Department of Labor is the best 

source of person or agency that could give us a comprehensive economic study. And in addition to that I might also note I am not 

an economist. When you look at wages, the fact of the matter is we 

have no unions in our territory, Mr. Galea’i, teachers’ union, government employees’ union, cannery workers’ union, nothing. So 

who do our workers have to depend on for speaking on their behalf 

in terms of what should be the proper minimum wage no, no. Now 

with all due respect and this is not being critical of the fact that 

our CEO of Del Monte gets paid $2.6 million in annual salaries or 

the previous owner of StarKist, but I meant Del Monte’s $2.6 million-plus bonuses. And then previous owners of StarKist Heinz Corporation, the CEO of that corporation was paid $65 million per 

annum in salaries. Maybe I am just too simple in my outlook in 

saying, with such tremendous executive pay that come in from the 

top executives of the corporation, to suggest that our working people here do not deserve a raise. I might also mention that this raise 

has been the biggest that it has ever had in the history of American Samoa. When was the last time we had a raise with the Special Industry Committee recommending 10 cents an hour? I have 

never heard it or even 15 cents an hour. But 2 cents an hour, it 

is OK; 3 cents an hour, it is OK. But now we’ve gone up to 50 cents 

an hour, I would like to ask the two gentlemen what is the cost 

now of our two canneries because of the raising of 50 cents per 

hour salaries for our cannery workers? I am curious. How much do 

the two canneries spend with this increase for the cost of our workers there in the canneries? Do we have a figure on that? 

Mr. GALEA’I. I mentioned that it was an additional $2 million 

cost. 

Mr. FALEOMAVAEGA. $2 million? 

Mr. GALEA’I. $2 million to Samoa Packing. 

Mr. FALEOMAVAEGA. Now I would like to ask our Director of the 

Department of Commerce, Mr. Paopao, how much was this cost to 

ASG for government workers on account of this 50-cent increase on 

the minimum wage? 

Mr. PAOPAO. For the first increase is zero. 

Mr. FALEOMAVAEGA. It did not cost ASG workers anything? 

Mr. PAOPAO. No. 

Mr. FALEOMAVAEGA. Thank you, Mr. Paopao. I was just curious 

about it. 

I’m sorry, Madam Chair. 

Mrs. CHRISTENSEN. A few questions. Let’s see. I want to go over 

some of the reasons why the canneries have said they cannot afford 

minimum wage increases, and Mr. Robinson spoke about when you 

increase at the lower paid level of employees at 50 cents up, you 

have to probably increase those above them because the gap begins 

to close. But both of you have different wage rates for your hourly 

employees depending on the kind of work that they do. What are 

the hourly wages at the top of the wage scale? There is going to 

be a follow-up. Dis those wages go up in the last year or two, and 

how much did they go up? 

Mr. BUTLER. Without getting too specific, because I don’t have 

that data in front of me that the 50-cent increase, the initial 50- 

cent increase compressed the wage categories in StarKist Samoa. 

63 

Mrs. CHRISTENSEN. It compressed? 

Mr. BUTLER. It compressed the wage pay categories in StarKist 

Samoa, so meaning same example as David Robinson, that we had 

a pay grade category of 17 separate pay grades. The law affected 

minimum wage earners so that 17 pay-grade system went down to 

15 pay grades in that. So, we’ve compressed it as a result of trying 

to look to offset the minimum wage earner. 

Mrs. CHRISTENSEN. What I am trying to get at—testimony has 

been given by either or both companies that if you increased at the 

lower levels, you have to increase everybody. And I am trying to 

ascertain— 

Mr. BUTLER. That is not necessarily true. 

Mrs. CHRISTENSEN. Not necessarily true? 

Mr. BUTLER. No. 

Mr. FALEOMAVAEGA. The increase was just for those starting pay 

at minimum wage? 

Mr. BUTLER. The law expressed the minimum wage earners. 

Mrs. CHRISTENSEN. I am not really referring to the law but I 

think that there was testimony somewhere that if you increase the 

minimum wage for those of lower level that you have to increase 

it—it should also be noted that it is policy of the StarKist Samoa 

to apply to all grades any percentage increase applied to the minimum wage and which as I understand it that means if you increase the minimum wage, everybody else had to get an increase. 

What I am trying to get at is, have there been wage increases at 

the upper level that have not been passed down across the board? 

I mean, does it work both ways—if you raise it at the lower level 

and everybody has to get an increase; if you increase at the upper 

level then you also increase across the board? And have there been 

any increases at the upper levels of the wages? 

Mr. BUTLER. As a result of the 50-cent increase? 

Mrs. CHRISTENSEN. No, not as a result—say before July, did 

StarKist and Chicken of the Sea say they had not provided—based 

on the fact that if you increase for some, you increase for all. Can 

you tell me say in 2006, you did not increase anyone else’s wages 

because you would have had to increase everybody else’s? 

Mr. GALEA’I. If I may answer this. In increases, minimum wage 

increases and performance based increases that I mention earlier, 

the proportion or percentage of increase was applied across the 

board and that was to maintain the integrity of wage differentials 

and classification system. We have not been able to do that with 

the last 50 cents because of the significant increase, but we did 

have compressed wages similar to StarKist Del Monte. We raised, 

of course, the minimum wage by 50 cents and then provided increases of 15 cents to 25 cents for all the other classifications. We 

went from 12 classifications to 9 classifications because of the compression. I will say that whenever you do compress your wages, you 

have moral problems because wage differentials no longer represent the skill differentials that are inherent in your classifications system. 

Mrs. CHRISTENSEN. So— 

Mr. BUTLER. It is basically what we do. When you increase the 

minimum wage earner a certain amount, you are not going to necessarily give everyone across the house the same increase, but 

64 

there is a certain increase that is given with the same idea to reflect job responsibilities scale level that we separate when we classify the pay grade level. 

Mrs. CHRISTENSEN. So when you increase just as Mr. Galea’i, he 

said they increased across the board by the same percentage. If you 

had given increases at the top that applied to StarKist at the top, 

you increase by the same percentage increase? 

Mr. BUTLER. Not necessarily. The increase will be taken but not 

necessarily the same increase to the minimum wage earner. 

Mrs. CHRISTENSEN. So really we can’t use that statement against 

an increase in the minimum wage that an increase in the minimum wage will have to apply to everyone across the board? 

Mr. BUTLER. That is correct. 

Mrs. CHRISTENSEN. To strike that from StarKist testimony in 

2005. There is two other areas that I would like to try to clarify 

because the Department of Labor apparently spoke to the Industry 

Committee even though they didn’t speak to government officials 

because they have some quotes in their report that refer to what 

the companies told the Department of Labor. The consumers choose 

their tuna based on price, and it is really little or no brand loyalty. 

I don’t know who said that, or is that your experience? Do you 

stand by that statement? There is no brand loyalty that people 

choose by price. 

Mr. BUTLER. Do you eat tuna, Ma’am? 

Mrs. CHRISTENSEN. Yes, I know how I choose my tuna. 

Mr. BUTLER. How do you choose it? By price? 

Mrs. CHRISTENSEN. Not by price. But I am saying this is what 

the canneries—I don’t really maybe Del Monte said that there is 

no brand loyalty. They choose it based on price, and this was to say 

that increasing the minimum wage would increase the price and 

make them less competitive. Yet in another statement to the SCC 

they said that their brand is everything. And those two statements 

are inconsistent. Brand name, recognition in the product, quality 

associated with our brand are key factors in the success of our 

products, that was what was said to the SCC but when it came to 

the DOL report, it was a different story. 

Mr. BUTLER. I can’t speak for those who made those statements 

depending on the conditions it was said on and the exact questions 

that were asked. There is in fact both parts a lot of price driven 

on your commodity items. It is definitely price driven but your 

higher priced item, for instance pouch, that is more it tends to be 

more loyalty there with higher priced tuna items. 

Mrs. CHRISTENSEN. But let me just—let’s cut through the basic 

question. Mr. Galea’i and Mr. Butler, what is the most important 

for the company? Brand or the price in terms of your competitiveness? 

Mr. BUTLER. It would be price. 

Mrs. CHRISTENSEN. Price? 

Mr. BUTLER. Price. 

Mr. GALEA’I. Tuna is a price driven commodity basically. 

Mrs. CHRISTENSEN. I never look at the price. I look at a brand 

I know. 

Mr. GALEA’I. I wish all our consumers were like you. 

65 

Mrs. CHRISTENSEN. I figure they’re all probably cost close the 

same. I mean I am not going to buy any no-name brand because 

it costs less. I am sorry. 

Mr. GALEA’I. Can you tell us whether you prefer Chicken of the 

Sea or Del Monte? 

Mr. BUTLER. We have a profile with people. 

Mrs. CHRISTENSEN. Some of the stores sell some and some stores 

carry the other but you are one of them. Let me ask this other 

question. Do you foresee either of your companies going through 

the process of calculating, or maybe you have done this already, 

when you are going through calculations to determine what level 

of wage increase can the company sustain it? It has been said that 

if it goes up another 50 cents in May, other options are going to 

be considered. And maybe some options have been considered already. Do you foresee the companies going through that kind of a 

process where you say we can sustain this kind of increase every 

two years, or have you already done that and if you go through 

that process which I imagine you will if you have not already, 

would you see sharing that with either the Department of Labor 

and the Department of the Interior and the government if they are 

going to be the deciders or Special Industry Committee? Would you 

share those projections as to what you could sustain as an increase 

because obviously the cost of living is going up and people have to 

be able to meet the cost of living to provide for their families. So 

do you foresee going through that kind of assessment? And do you 

see sharing that? 

Mr. BUTLER. If I had a crystal ball to tell you that, I would give 

you that answer, but the fact of the matter is we are right now 

looking at potentially moving some volumes into Ecuador as a result of the 50-cent increase that is projected in May. So there is a 

debate going on as we speak right now, and we consider these 

things dynamically. There are a lot of costs and pressures not only 

in wages but in the taxes, the economic climate of that environment we operate in; so it is an ever moving variable here that we 

are looking at. I can’t tell you what number it is because I don’t 

really know. 

Mrs. CHRISTENSEN. No. I don’t expect you to know but I was just 

asking, do you foresee the company going through that process and 

saying, well we can sustain another 20 cents in two years or maybe 

another 20 percent. And this is as much as we can tolerate to keep 

our companies profitable here in American Samoa? 

Mr. BUTLER. It is difficult to assess that because of other cost 

pressures that you don’t know where they’re going; you don’t know 

the duty free advantages in other countries; where that law or potential law is going. So it is a variable assessment to make. But 

I could say we are looking right now and we are trying to be as 

competitive as we can with the current situation that we are facing 

at this very point. 

Mr. GALEA’I. Chicken of the Sea American Samoa Packing Company is currently looking at the increased cost for the next escalator. And as Congressman Faleomavaega actually stated, we have 

a lot of tuna capacity in Thailand, and we are always competing 

with whether or not we can provide a competitive edge. 

66 

Mrs. CHRISTENSEN. How much weight is given to the fact that 

you are in a U.S. territory, a stable country, and maybe because 

you are here you have the opportunity to market to the military? 

It seems to me that that would carry a lot of weight in the decisionmaking processes. 

Mr. GALEA’I. You are correct, Chairwoman Christensen. The fact 

we are a domestic, the last domestic cannery for Chicken of the Sea 

has value, and again our duty free preferential treatment into the 

U.S. market certainly is another factor but when you combine all 

other costs going up—fuel, shipping—and the fact that duty free is 

being extended to or is planned to be extended to our competitors, 

it weighs against the benefits of being able to provide a pouch for 

the military or the USDA. And that part of our business is not a 

major part of our business as well, but we certainly want to hang 

on to it. I can say that Chicken of the Sea lost money in 2006. We 

had a marginal year in 2007. The additional increase in the next 

escalator would be very difficult in trying to offset that increasing 

production because, like I said, we are at maximum capacity. So 

the owners of Thai Union will review what are the options and that 

will include the transfer of production to our Thailand canneries. 

And any time you have transfer of production, the economies of the 

business become exacerbated, such as the ability to meet overhead 

costs, and are further eroded. It is a vicious circle. So we want to 

maintain a certain level of production capacity to be able to sustain 

the operations here in American Samoa. 

Mrs. CHRISTENSEN. Last round of questioning. 

Mr. FALEOMAVAEGA. I just want to ask Mr. Robinson the current 

status of our Samoa Advisory Economic Council. What are its 

plans? Has the Council made some firm recommendations? I know 

you presented several areas—I think maybe a part of our diversification system—but I am just curious—where does the Council’s 

activities go from here? I guess primarily it just serves to advise 

the Governor, right?—not necessarily the Legislature? Is it just an 

effort to develop the Administration’s position in terms of what its 

economic priorities will be or should be? 

Mr. ROBINSON. Thank you, Congressman. Yes, it is. I think it is 

true to say since the inception of the Economic Advisory Council, 

which was at the end of November last year, we’ve made a lot of 

progress in identifying the various industry sectors that we have 

divided the council up into. We have identified a lot of new business opportunities. We’ve only been at it for a couple of months, 

and it is a little bit difficult to come up for an instant fix. 

Mr. FALEOMAVAEGA. Are you under some kind of a deadline to 

say this certain time you are going to make some kind of recommendation, or is this going to continue on? I just want to know 

where the Advisory Council goes from here in terms of its activities. The bottom line I really am trying to get from our government 

is what are our economic priorities? And thus far, I have yet to find 

a resolution or statement unified form by Legislature, Governor endorsing it. What are our economic priorities? 

Mr. ROBINSON. Let me tell you. As far as we are concerned in 

the Council, we had a mandate issued by the Governor which 

lasted for two years to produce a set of policies, plans, and strateVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00070 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
67 

gies to improve the economic conditions of the territory. And that 

was broad in the mandate, and that is for a two-year period. 

Mr. FALEOMAVAEGA. I don’t know if you had a chance Mr. Robinson to review the report of the American Samoa Economic Study 

Commission. My fear if we’re not duplicating the very recommendation and things of this commission had recommended five years 

ago, are we repeating the wheel trying to come out with something 

firm? Not to say we dealt with tourism, we dealt with all this, but 

still no absolute definition—I am sorry definition of where exactly 

are we as far as our priorities are concerned. 

Mr. ROBINSON. Thank you, Mr. Congressman. I was about to add 

that we have adopted a totally different approach in this Council. 

And once we have a mandate which lasts for two years, I have 

made it very clear as is my Co-Chair in the Council that we do not 

wish to be another committee, another council which produces a 

nice glossy document at the end of the two-year period. And by that 

time, most of us won’t be in business, especially the way things are 

going. We don’t want to do that. So we decided to accelerate the 

situation. We meet every month. We were not mandated to do. We 

were mandated every quarter but we have met so far every month. 

We have divided Council members up into five committees, and we 

have made an awful lot of progress in identifying in those five committees which comprise agriculture and fisheries—— 

Mr. FALEOMAVAEGA. I know my time is limited. I didn’t mean to 

cut you off. The word in Washington is that if you want to know 

your priorities—if tourism is our priority—how much is being allocated of the $300 million budget we are operating under in tourism 

if tourism is really a serious priority? You have had a chance to 

review the budget of the territory? 

Mr. ROBINSON. I am sorry the time is running short. Perhaps we 

can extend the time because these issues are very important. I 

think it is very vital that we have a chance to explain our opposition particularly in this question of economic development. If I may 

continue for a little bit with your indulgence Madam Chairwoman. 

I know we are over the time but I would just like to explain a little 

bit further if I may what we are doing and what we are trying to 

achieve in terms of this economic development issue. We have divided the Council up into five separate committees—Agriculture, 

Fisheries, Light Manufacturing, Policy Reform and Privatization, 

Education and Work Force Training, and Recycling, Environment, 

and Tourism. And in each of those areas, the chairs of those committees are being tasked with providing for the Council co-chairs 

before or by the 25th of March next month a firm focus on what 

they think they can achieve in those particular industry sectors 

and how they propose to achieve it. As I mentioned before in most 

of the other reports that have gone on before, those two issues were 

not addressed. So we are making progress. There is no quick fix to 

the economy but I think by the time we have finished our first report, which I am going to put to the Governor by the end of April, 

it will identify the priorities. It will identify the issues, and it will 

also identify a number of issues that the Governor has to attend 

to in terms of policy reform in order the economic development can 

go forward. A policy reform not the least of which is our tax policy 

which is an inhibitor toward economic development. 

68 

So we are addressing those. We are closely working with DOC 

to provide a meaningful, and the emphasis is on meaningful, document which will articulate the sort of issues that you have been 

talking about—and perhaps some of the issues that have been 

overlooked or glossed over in the past. So I think I can safely say 

by the end of April, we will have a very meaningful document in 

the hands of the Governor. One thing I would like to say and it 

may be just a little bit irrelevant, Madam Chairwoman, but we are 

doing this under the shadow of the potential of the canneries leaving. Time is not on our side at all, and you have heard the testimonies from both canneries that if they had another 50 cents put 

upon them and their wage goes up by $2 million or so odd dollars, 

they will think very seriously about their future. Unfortunately, we 

cannot afford the luxury of time. We cannot afford for the canneries 

to pack up and leave or even to scale down. We need them to be 

here until such time as my Council and the Department of Commerce and the other people who are working on the economic development issues can start to encourage new industry, new developments to come in, and either support the existence of canneries in 

our economy, or to fill the gap if they decide to scale down and 

leave. 

So from the private sector, I feel very, very strongly, very strongly indeed that Congress no matter which committee is involved and 

all others involved must support our Congressman in having this 

escalator clause removed and removed quickly because the next 50 

cents goes on the 25th of May. And if it does that will accelerate 

the canneries’ potential for doing something fairly quickly and 

exiting here altogether, and we just cannot afford it. We need more 

time, and we need your help through your committee to help us to 

gain this time. 

Mr. FALEOMAVAEGA. Thank you, Mr. Robinson. I know my time 

is up. Very quickly if I could ask our Director of Commerce, Mr. 

Paopao, if he could submit for the record a breakdown of the workforce that we have among the workers in American Samoa Government, not names but just numbers in terms of who’s getting a certain pay grade in terms of how it is being currently structured. And 

I would really appreciate if Mr. Paopao can submit that for the 

record. 

Mr. PAOPAO. We have the information available in the insert. 

Mr. FALEOMAVAEGA. OK. Thank you. 

Also the two friends from the canneries do likewise. Submit a 

breakdown just where the curve is as far as the wages and salaries 

of our workers in the canneries. No names just the numbers just 

to kind of get an idea how it is being done. 

Madam Chair, I want to personally offer my apologies to Paramount Chief Galea’i. I read recently in the newspaper that he offered a very interesting proposal about the terms of a recent case 

by the Ninth Circuit Court, and a dear friend and now a member 

of the Supreme Court of the United States. Justice Anthony Kennedy is a dear friend who rendered that opinion. I want to assure 

that because our time is way over, I want to assure that his suggestions or recommendations are definitely noted by this member. 

And we will definitely follow up with the issues, and I do want to 

thank you for that. 

69 

Madam Chair, I cannot thank Mr. Butler and Mr. Galea’i enough 

for their patience. Thank you so much. And I just want to say my 

best to Mr. Robinson for his being so articulate and also understanding what the situation we are faced with in this territory. 

Mrs. CHRISTENSEN. I have just two very brief questions to Mr. 

Galea’i and Mr. Butler. 

Can you tell me what percentage of the canneries’ jobs are held 

by local residents versus non-resident labor? 

Mr. GALEA’I. 12 percent of our workforce are local residents; 88 

percent are residents here. 

Mr. BUTLER. About 85 percent versus 15 percent. 

Mr. FALEOMAVAEGA. 85 percent Western Samoan and 15 percent 

other? 

Mrs. CHRISTENSEN. 15 percent local? 

Mr. BUTLER. Local U.S. citizens, American Samoan, Tongan, a 

very small percent of that is in the 15 percent range, but 85 percent from Samoa, independent countries, and 15 percent other. 

Mr. FALEOMAVAEGA. Madam Chair, with the 85 percent Western 

Samoa, how many are married to American Samoans? 

Mr. BUTLER. I can’t answer that right now. 

Mr. FALEOMAVAEGA. Well, I think we need to submit that report 

for the record because it can be very misleading to suggest that 

they are aliens as far as our culture is concerned. Make sure we 

don’t because they are not. So we don’t twist it. 

Mrs. CHRISTENSEN. To all three of you, to what extent does the 

Chamber and canneries support the community, community activity, support our hospital and schools. Is that part of something that 

you do on a regular basis, and can you give me some examples of 

support that you have given to the community? That is my last 

question. 

Mr. ROBINSON. Thank you, Madam Chair. On behalf of the 

Chamber one of our roles is community support. Recently we’ve 

been really actively involved in supporting the upcoming Festival 

of the South Pacific Arts as a initiative, and we have recently set 

up through the Chamber a new committee which we call the Young 

Professionals. Through that we are setting up the first I think 

American Samoa Institute of Management in order to look after 

young professionals to mentor them and make sure they get some 

guidance as they go through careers, set up also a new committee 

called the Environmental Committee which is looking at what we 

can contribute to helping the environment, burning fossil fuel, recycling of wastes, or alternative energy and issues such as that. So 

I think that certainly I am quite happy as President of the Chamber with doing whatever we can do to assist the community. 

Mrs. CHRISTENSEN. I have visited the hospitals particularly interested. Can either of you want to talk about some of the things 

you have done in the community company wise? 

Mr. BUTLER. We do numerous things in the community. We help 

out with a lot of government, particularly in the schools area. We 

have a program called Charlie’s Kids, where we basically look at 

the lower elementary level education and challenge them to come 

up with programs to help develop elementary-level students. And 

we basically aid them financially and award based on the selection 

of the programs that they have turned in to us. We constantly supVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00073 Fmt 6633 Sfmt 6602 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
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port the Shriners and Rotary Club activities in American Samoa. 

We have numerous requests from local agencies, private businesses 

for support, and we help them out in terms of, if not financially, 

we have a local gift we call ‘‘wahoo’’ and consistently support all 

these activities. We are actively involved with almost everybody 

they ask for here. 

Mr. GALEA’I. Samoa Packing provides contributions to various organizations like Rotary, Department of Education, private schools, 

the Women’s Auxiliary at the hospital that you mentioned. We contribute there. We provide community scholarships. We would like 

to help more but as you probably can guess, when people are looking for fundraising, the canneries are on top of their list; and unfortunately, we have a lot more requests than we can fill but we 

would like to provide more contribution. 

Mrs. CHRISTENSEN. I don’t have any more questions. I am sure 

you’d be glad to hear that. It has been a long afternoon, and I want 

to thank you for your patience and your willingness to be under 

fire for a couple of hours this afternoon. And also those decisions 

we were asking about, were decisions made above your level, but 

we really thank you for your answers and your participation in 

this. And we feel this is a very important hearing. Giving the people of American Samoa, through their elected leadership, the opportunity to speak on this very important issue, we are very cognizant of the time constraints under which we are working. If we 

weren’t before, this morning the legislative bodies—the House and 

the Senate—did deliberately remind us that May 25th is not very 

far away and that we need to get to work on Eni’s bill and try to 

get that passed so that we can stop the increase. So we are very 

mindful of that, and when we go back to Washington, I know that 

it is not easy. It is not easy to reach a perfect solution here. Cost 

of living is going up, and we want to ensure that the people of 

American Samoa—as well as people across all the territories and 

across our country—have a wage that allows them to meet the cost 

of living for themselves and their families and provide a good quality of life. And the businesses need to be able to survive as well. 

So I think that the testimony that we’ve heard this afternoon and 

the discussions with the House and the Senate have been very 

helpful to us and provide the information we need to move forward 

to continue to address this issue. And the testimony this afternoon 

as well, and we really thank you for the opportunity to be heard 

and to hear from all of you. 

I’m going to let Mr. Faleomavaega your own representative have 

the final word this afternoon. 

Mr. FALEOMAVAEGA. Madam Chair, I want to thank you. I heard 

from certain parts of our little territory that there has been some 

criticism suggesting that we shouldn’t even come and hold this 

hearing here in American Samoa. But I think we really should 

come simply for the fact that we are doing this, and I cannot thank 

you enough and give this as my personal tribute and commendation for your initiative and leadership for coming to the territory 

and holding a hearing such as this. And I think it has been a very 

informative and educational one, and see how many people of the 

Congress of the United States operate in its committees and especially dealing with this very important issue that is now pending 

71 

before the Congress as well as the concerns that have been expressed by our leaders from the community and our people. 

I would be remiss if I did not recognize some of these members 

of the staff that have traveled all the way. Mr. George Miller on 

the Floor of the House. The concerns I raised with him is after all 

it is his committee that is going to be holding primary jurisdiction 

in moving this legislation through. And in doing this, he has assigned two members of his committee to join us in this hearing. 

Mr. Jody Calemine and Mr. Ben Miller—both from the Committee 

on Education and Labor—nice guys—and I also would like to recognize again Mr. Rich Stanton, the senior staff member for Don 

Young, who is the senior Ranking Republican. As most of you 

know, we work on a bipartisan basis and when it comes to doing 

the job for the needs of the people, I want Don Young on my side 

to oversee the Department of the Interior. For that reason, we very 

much appreciate Mr. Stanton’s presence. Of course, I want to thank 

our Staff Director, Mr. Tony Babauta, and Mr. Brian Modeste. And 

I will not forget my good friend, Allison Cowan, who’s been very patient. I do want to say again, I want to thank the Lieutenant Governor, President of the Senate and Speaker of the House, members 

of our Legislature, our business community leaders, and especially 

our two executives from StarKist and Chicken of the Sea. 

Again, I think this is the challenge that we are faced with, and 

I sincerely hope that we’ll find a resolution to make sure that our 

canneries will continue to stay here to provide employment for 

some 5000 of our working people in the territory. As I am sure they 

are also reasonable that if we do raise wages not just the canneries 

but also in the private sector. 

With that, Madam Chair, I want to thank also Paramount Chief 

Galea’i for his coming here to be part of our audience and joining 

our representatives from Ituau District, Mr. Archie Soliai and another top executive of StarKist Company shaking his head, Mr. 

Meki Solomona. At any rate, again thank you so much for having 

this hearing, and I sincerely hope that in the coming weeks we’ll 

be able to find a resolution with the problem to the escalation 

clause. I think unanimously I think some changes pass the effect 

for the economy and I hope Jody and Ben will carry the same message to the committee. 

Mrs. CHRISTENSEN. I thank the witnesses again for the valuable 

testimony and the members for their questions. I may have additional questions for the panelists, and we’ll ask you to respond to 

those and the hearing record will be open for 10 days. And I also 

want—this is very important. This is for members of the public for 

their interest and concerns on this issue, and I need to let you 

know that if you wish to submit testimony, please do so by March 

7th. It will become a part of the official testimony and the official 

record of the Subcommittee hearing. So if there is nothing else, I 

want to also thank the staff and our witnesses, and the Subcommittee stands adjourned. 

[Whereupon, at 4:45 p.m., the Subcommittee was adjourned.] 

[Additional material submitted for the record follows:] 

72 

[A statement submitted for the record by Nikolao I. Pula, Acting 

Deputy Assistant Secretary of the Interior for Insular Affairs, U.S. 

Department of the Interior, follows:] 

Statement of Nikolao I. Pula, Acting Deputy Assistant Secretary of the 

Interior for Insular Affairs, U.S. Department of the Interior 

Madam Chairwoman and members of the Subcommittee on Insular Affairs, thank 

you for the opportunity to testify on the economic effects of the recently increased 

minimum wage in American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI). 

Enactment of Public Law 110-28 last May not only raised the Federal minimum 

wage rate in the 50 states, but, for the first time, the Congress took direct action 

to increase the minimum wage rates in American Samoa and CNMI by 50 cents per 

hour on July 24 and 25, 2007, respectively. The law also scheduled additional annual 50-cent increases until the two territories reach the Federal minimum wage, 

and required that the U.S. Department of Labor (DOL) report on the effects of the 

minimum wage increases. Under this new law, American Samoa will reach $7.25 

per hour across all industries in 2014, and the CNMI will reach $7.25 in 2015. 

The new minimum wage law precipitated the following actions: 

(1) In December 2007, American Samoa Governor Togiola T.A. Tulafono proposed 

amending Public Law 110-28 so that (1) the annual 50-cent increases be 

amended to make them biennial and (2) any scheduled minimum wage increase be postponed for two years if the DOL Bureau of Labor Statistics determines that such an increase would ‘‘substantially curtail employment in’’ 

American Samoa. 

(2) In January 2008, the U.S. Department of Labor issued its report on the minimum wage increases in American Samoa and the CNMI describing potential 

adverse economic effects of the increases. 

(3) On January 29, 2008, Congressman Eni F.H. Faleomavaega introduced 

H.R. 5154, which would condition future increases in minimum wage rates in 

American Samoa or the CNMI on a determination by the Secretary of Labor 

that an increase will ‘‘not have an adverse impact on the economy of’’ the respective territory. 

History 

In 1938, when the Fair Labor Standards Act (FLSA) first established a United 

States minimum wage, special industry committees were established to phase in the 

minimum wage in those places when a minimum wage hike would substantially curtail employment. It was the intent of Congress that the minimum wage in such 

areas be raised in increments that would not destroy industries and jobs. 

But after World War II, the industry committee system continued to set local minimum wage rates only in Puerto Rico, the U.S. Virgin Islands, and American Samoa. 

In 1989, the Congress determined that the full application of the Federal minimum 

wage rate to the U.S. Virgin Islands and Puerto Rico could be accomplished without 

significant harm to continued economic growth and development. Both territories 

have been subject to the Federal minimum wage ever since. 

Before enactment of Public Law 110-28, a special industry committee, appointed 

by the Secretary of Labor, determined the minimum wage rates in American Samoa 

under authority of the FLSA. Composed of members representing industry and labor 

as well as disinterested persons representing the public, the committee reviewed 

minimum wage rates in the various local industries every two years. The committee 

recommended changes based on input from the community and an analysis of the 

extent to which the economy could support increases in the minimum wage without 

substantially curtailing employment. Minimum wage increases required a majority 

vote of industry committee members, and the committee’s recommendations were 

binding. The most important aspect of the committee process was that it took into 

account the economic reality and the unique circumstances of this small island economy. 

The covenant that created the CNMI ‘‘in political union with and under the sovereignty of the United States of America’’ became law in 1978. The covenant establishing the Commonwealth provided potential exemption or relaxation of some U.S. 

legal requirements affecting employment and immigration law, including the FLSA 

minimum wage provisions. The minimum wage in the CNMI was set by Public Law 

9-73 at $3.05 per hour in 1996 when the U.S. minimum wage was $4.75 per hour. 

In enacting Public Law 110-28, Congress declined to continue the special industry 

committee for American Samoa, but nevertheless was concerned about whether the 

mandatory increases in minimum wage would cause serious and irreversible ecoVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00076 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
73 

nomic and financial harm to the CNMI and American Samoa. To provide needed 

information about this possibility, the statute mandated the Department of Labor 

to report on the impact of the minimum wage increases on living standards, employment and the economy in the two territories within 8 months of enactment of the 

Act. 

DOL Study 

DOL released its much anticipated report, titled ‘‘Impact of Increased Minimum 

Wages on the Economies of American Samoa and the Commonwealth of the Northern Mariana Islands’’ late last month. The report notes that it was not possible to 

analyze the actual impact of the minimum wage increase, given the short (eightmonth) prescribed timeframe for the report and absence of timely labor market data 

for American Samoa and the CNMI. Nevertheless it raises concerns that future increases in the minimum wage rate in American Samoa and the CNMI will likely 

cause significant economic and financial harm to the territories. 

An economy’s capacity to create jobs and wealth should be one of the primary factors taken into account when minimum wage rates are adjusted. While the mainland U.S. economy had the strength and flexibility to adjust to a minimum wage 

increase, the economic situations of the CNMI and American Samoa are very different from the U.S. mainland. These territories face unique challenges in attracting 

private sector businesses because of their geographic isolation and location in a part 

of the world where most neighboring economies have much lower minimum wages 

and living standards. Given the structure and tempo of these economies, doubling 

of the minimum wage over a 10 year period, as would happen in American Samoa 

and the CNMI under Public Law 110-28, would present significant challenges to 

each territory. 

The largest sources of employment in the American Samoa economy are the tuna 

cannery operations and the American Samoa Government (ASG). The DOL report 

notes the likelihood that both the canneries and the ASG would be significantly affected by future increases in minimum wage rates. The DOL report says: 

At present, the tuna canneries continue in operation, but there is concern 

that they will be closed prior to the escalation of the minimum wage to 

$7.25 per hour in 2014 and that production will be shifted to facilities outside U.S. jurisdiction where labor costs are significantly lower. 

An input-output model analysis commissioned by the government of American Samoa (conducted by McPhee and Associates) has estimated that closure of the tuna canneries will cause a total loss of 8,118 jobs—45.6 percent 

of total employment (in American Samoa)—including both direct effects 

(5,538 jobs) and indirect effects (2,580 jobs). 

The canneries, which have shipped processed tuna to the United States for more 

than 50 years, have noted that in the future, they may leave the territory and take 

their production to other countries where labor costs would be much lower, such as 

60 cents to 70 cents per hour in Thailand and the Philippines. The canneries are 

extremely important to the American Samoa economy as a result of their export of 

tuna products and the support of secondary trade and services businesses. 

The canneries are not only the most critical component of the private sector, they 

also make up a significant part of the tax base supporting ASG operations. Without 

the canneries as an anchor for the private sector tax base, cutbacks in local government operations and services would likely be necessary. 

ASG is the territory’s single largest employer. In 2006, the 5,894 ASG employees 

represented 33.9 percent of total employment in the territory. ASG is a unitary system of government, with no local or municipal governmental layers and it performs 

not only the usual governmental functions, it also manages public utilities. If ASG’s 

minimum wage increases continue as mandated in Public Law 110-28, the DOL report says: ‘‘Paying for the increases in government worker minimum wages will 

present a significant challenge to ASG.’’ Numerically, if the minimum wage rate 

rises to $7.25 in 2015, as scheduled, ASG’s increase in wage costs could be at least 

$5.2 million in 2015, according to the DOL report. 

The DOL report also addresses the minimum wage issue with regard to the 

CNMI. The DOL report notes that the effect of the minimum wage increase in the 

CNMI, would be like raising the Federal minimum wage to $16.50 per hour in the 

50 states. The report states that job losses in the CNMI will result in the return 

of foreign workers to their home countries and the migration of United States citizen workers to other United States jurisdictions. 

The DOL report suggests that scheduled minimum wage increases could cause the 

canneries in American Samoa to relocate to lower cost countries long before they 

are forced to pay $7.25 per hour, and that more garment factories in the CNMI may 

close sooner than otherwise expected. The shuttering of industries in American 

74 

Samoa and the CNMI could cause the respective economies to suffer prolonged and 

wrenching contractions. 

Conclusion 

In light of the risks to the American Samoa and CNMI economies that are identified in this statement and in the DOL report, the Administration suggests that Congress give strong consideration to amending P.L. 110-28 in order to avoid increases 

in the minimum wage that could result in significant job loss and harm the economies of the two territories. We offer some suggestions regarding the factors that 

should be kept in mind in evaluating any potential legislative revision. 

First, regarding proposals for a determination by the Secretary of Labor that 

would stop the implementation of an increase in the minimum wage, we would draw 

Congress’s attention to the difficulty inherent in making any objective determination about the impacts of a proposed minimum wage increase before it goes into effect. Increases in the minimum wage have numerous, complex impacts on an economy and, generally speaking, create some positive and some negative economic impacts. Broad language that would postpone an increase in minimum wage based on 

a finding of any adverse impact on the respective economies of the CNMI or American Samoa might have the effect of preventing all progress towards a higher minimum wage. Narrower language requiring a determination that the increase will not 

substantially curtail employment allows more flexibility, but the difficulties for the 

Secretary of Labor of obtaining reliable information upon which to base any determination will be significant. 

Another model that Congress might consider is the special industry committee 

that set the minimum wage rates biennially in certain areas of the United States 

and American Samoa for over 60 years. The advantage of the committee structure 

is that it ensures that the people who determine the minimum wage increases share 

first-hand knowledge of island economies, while representing different stakeholder 

groups within those economies as well as the public interest. When compared with 

proposals to vest the decision making authority in the Secretary of Labor, this 

model offers the advantage of ensuring that local knowledge is fully incorporated 

and that stakeholders in the territorial economies are able to play significant roles. 

Thank you for considering the Administration’s views. 

[A statement submitted for the record by The Honorable Togiola 

T.A. Tulafono, Governor of American Samoa, follows:] 

Statement submitted for the record by 

The Honorable Togiola T.A. Tulafono, Governor of American Samoa 

Talofa and greetings Chairwoman Christensen and Honorable Members of the 

Committee. I greatly appreciate this opportunity to testify before the Committee on 

the urgent need for remedial legislation addressing the minimum wage increases 

that Congress has mandated for American Samoa. 

Current Economic Conditions in American Samoa. 

In its January 25, 2008 report to Congress, the Department of Labor states that 

the economy of American Samoa is small and developing. Similarly, in hearings before the Senate Committee on Energy and Natural Resources on March 1, 2006, 

Deputy Assistant Secretary David Cohen of the Department of Interior stated, 

‘‘American Samoa has the narrowest economic base’’ of the four territories. To document this point, Secretary Cohen noted that the per capita domestic product (GDP) 

in American Samoa ranks far below the other territories. 

Further evidencing the urgent need for economic development: (1) American 

Samoa has a per capita income that is only one-fifth that of the rest of the United 

States. (2) The territory has a large number of subsistence workers who cannot find 

paid employment. (3) 88 percent of all farms in the territory operate on a subsistence basis. (4) Despite a large out-migration of American Samoans to the United 

States, the territory still has a young, rapidly growing population. (5) The territory’s 

income primarily comes from two fish canning operations and from the Federal Government’s operational and capital grants. (6) Recent employment gains in the territory have occurred mainly in low wage sectors. Even in the low-wage sectors, however, the territory is at a competitive disadvantage to the Philippines and Thailand 

where wages are a fraction of the mandated federal minimum wage in American 

Samoa. 

To compensate for the territory’s wage disadvantage, its remote location, limited 

resources, and small internal market, the Federal Government previously had proVerDate Aug 31 2005 15:26 Nov 05, 2008 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6621 L:\DOCS\40916.TXT Hresour1 PsN: KATHY
75 

vided trade and tax incentives for economic development in American Samoa. Specifically, preferential quota allocations, particularly for canned fish, as well as favorable tariff treatment and federal tax credits had allowed American Samoa to develop a seafood canning industry. As a recent Department of Interior-funded study 

has reported, the fish canning industry is the mainstay of the territory’s economy. 

The two canners in American Samoa are responsible for the employment of well 

over half of the territory’s entire workforce directly and indirectly. 

Such a heavy reliance on two canneries is not economically sound, and the Government of American Samoa with assistance from the Department of Interior has 

pursued every opportunity to diversify the territory’s economy. The territorial government has actively promoted business investment opportunities for agriculture, 

fisheries, tourism, call centers, and electronic information processing. If American 

call centers can operate in India and Guatemala, they should certainly be able to 

operate in American Samoa. 

Recognizing that the territory’s economic level is far below that of the 50 states, 

Congress had previously decided to establish the federal minimum wage rate in 

American Samoa proportionate to economic development. Under a procedure that 

had been applied to Puerto Rico and the Virgin Islands, Congress adjusted the minimum wage in American Samoa administratively every two years so as to reflect the 

territory’s progress. Such adjustments, therefore, were economically sustainable. 

The biennial adjustments over time would raise the territorial minimum wage to 

parity with the regular federal rate. 

As part of Public Law 110-28, the U.S. Troop Readiness, Veterans’ Care, Katrina 

Recovery, and Iraq Accountability Appropriations Act of 2007, however, Congress increased the regular federal rate nationwide. Congress also mandated an immediate 

50-cent increase in the hourly minimum wage rate for American Samoa as of 

July 24, 2007 with an additional 50-cent increase every year thereafter until the 

minimum wage in the territory matched the new federal rate of $7.25. This minimum wage hike for American Samoa, similar to the tariff and tax changes, was 

inserted in the rush to enact the larger legislation without assessing the impact on 

the territory. 

That legislation did call for an after-the-fact review of the consequences. The Department of Labor has now submitted that report to Congress and the report predicts bitter results for the people of American Samoa. For the level of economic development in the territory the Department illustrates the impact in a telling way. 

The Department states that the mandated wage increase is equivalent to raising the 

federal minimum wage to $16.50 an hour in the states. The economic and political 

fall-out of such a drastic hike for the United States’ economy is obvious. The territory must now contend with these very consequences. 

Minimum Wage Legislation. 

The regular federal rate reflects the United States’ advanced industrialized economy. American Samoa needs to undergo major economic development to match the 

United States’ economic level. The Department of Interior reports that per capita 

GDP in American Samoa amounts to $9,041 which is equal to 34.4% of per capita 

GDP in the lowest of the states and 22.8% of the national average. This also compares to a higher $13,350 per capita GDP in the Commonwealth of the Northern 

Mariana Islands, $22,661 on Guam, and $25,815 in the Virgin Islands. 

Our per capita income is the lowest of the territories and only one-fifth that of 

the United States. Can the new minimum federal wage rate which reflects a developed, industrialized economy be sustainable in American Samoa? To this question, 

the Department of Labor reports that the mandated increase is not sustainable in 

American Samoa. The report noted that 77.8 percent of workers in the territory currently earn less than the federally mandated hourly minimum wage. Raising hourly 

wages to $7.25 an hour, the report says, will result in an increased wage bill of $40 

million per year across all American Samoa industry sectors. Based on the $120 million annual payroll across all American Samoa industries reported by the 2002 Economic Census, this would represent a 33 percent increase in wage costs. General 

economic experience suggests that it is not likely that such an increase in wages 

could be absorbed through increased productivity, reduced profits, or higher prices 

passed along to consumers. 

An earlier Department of Interior-financed study of the minimum wage impact on 

the fish canning industry predicted the closure of the two canneries in the territory. 

From this economic analysis, the Department of Labor concludes that losing the 

canneries would eliminate 44 percent of all jobs in American Samoa. The economic 

contraction would increase costs for the remaining sectors. Moreover, the remnants 

of the territory’s economy would depend almost exclusively on Federal Government 

funds to survive. 

76 

In view of the Department’s stark assessment, I request expedited enactment of 

remedial legislation so as to make future increases of the minimum wage in American Samoa contingent on the Secretary of Labor’s determination (through the Bureau of Labor Statistics’ analysis) that such increase is economically feasible and 

will not substantially curtail employment in the territory. For the Bureau of Labor 

Statistics to conduct a substantive analysis, future increases should occur every two 

years. This position is along the same lines that you Madam Chairwoman had outlined with honorable Senators Inouye, Bingaman, Akaka and our Delegate in a letter on May 18, 2007 to congressional leaders. 

Legislative inadvertence is partly due to the fact that the Bureau of Labor Statistics and the Census Bureau do not collect timely economic data on American Samoa. 

Regular data collection provides Congress with ample details on labor market conditions, employers, and households in the 50 states, Puerto Rico, and the Virgin Islands. But the lack of such data for American Samoa leaves Congress and the federal Departments unaware of the economic consequences to this very distant part 

of the country. The remedial legislation should also require such data collection. 

Territorial Operational Costs. 

Increased business development in American Samoa depends on attracting investments from the United States. Following the recommendations of the American 

Samoa Economic Advisory Commission, the Government Accountability Office, and 

the Intergovernmental Group on Insular Areas, the American Samoa Government 

has worked on an economic development program. This program is similar to the 

initiatives various U.S. states have adopted to promote business development. Basically, these state programs offer economic incentives to businesses that commit to 

investments, hiring, and long-term operations in the respective state. 

The Government of American Samoa is absolutely committed to developing the 

territory’s economy so as to raise people’s standard of living. In addition to federal 

initiatives, the territory must create a local development program just as the states 

have. Following the best examples of state development initiatives, American Samoa 

is crafting its own local program. Resources for this and other territorial initiatives, 

however, have been diverted to cope with the problems produced by the mandated 

minimum wage increase. 

The Department of Labor’s assessment of the impact of the minimum wage increase states: ‘‘General experience in the U.S. and elsewhere has shown that potential adverse employment effects of minimum wage increases can be...offset to some 

degree by an expanding economy that is generating net employment growth. In a 

declining economy, any adverse effects on employment will not be offset.’’ Let me 

note that the territorial economy at present is anemic and that the territorial government must cope with falling tax revenues. 

The Labor report also projects that the minimum wage increase for territorial government workers alone will increase operating costs for the Government of American Samoa by $7.2 million a year. The report concludes: ‘‘Paying for the increases 

in government worker minimum wages will present a significant challenge to ASG 

[the American Samoan Government].... These increases may force ASG to make difficult choices between reducing government payrolls, reducing available hours of 

paid work, raising taxes, or cutting non-wage expenditures.’’ I would point out that 

the first 50-cent mandated increase has already imposed added operational costs on 

the territorial government as will the second increase coming in May. As a result 

the territory must request supplemental budget authorization and appropriations to 

cover the additional operational costs imposed by recent federal legislation and also 

to implement its local development initiatives. 

Conclusion. 

Madame Chairwoman, this Committee is acutely sensitive to the economic situation in American Samoa and has been very supportive. In particular, you and the 

Delegate sought to modify the 2007 minimum wage legislation to reflect actual economic conditions in the territory. On behalf of the people of American Samoa, I wish 

to publicly express appreciation for your attempt to ward off this well-meaning but 

disastrous legislative mandate. 

Now that the Department of Labor has documented the dire impact of the 2007 

legislative change on American Samoa, I urgently request this Committee and Congress to enact timely remedial legislation. Committee support for the pursuit and 

enactment of tax and appropriation measures to correct the unintended but very 

real consequences of past actions is also needed and would be greatly appreciated. 

We in American Samoa are proud to be Americans and we have served our country 

with valor and devotion. Remedial legislation will help us to develop our economy 

so that we can stand with the other territories and the 50 states as one nation. 

77 

[A list of documents retained in the Committee’s official files 

follows:] 

The information submitted for the record by the following individuals and 

organizations has been retained in the Committee’s official files: 

• American Samoa Department of Commerce, submitted by Director Faleseu Eliu 

Paopao 

• Lorn Cramer 

• Salu Hunkin-Finau 

• Lawrence and Jane French 

• Paul Krampe, Executive Director, American Tunaboat Association 

• Tony Langkilde, Tautai Fisheries Co., Inc. 

• Alofagia Vaita Nomura 

• LINA Saegaese Prendergast 

• Ruby Reed 

• Trudie Iuli Sala 

• Carlos M. Sanchez, Longline Services Inc. 

• Sisters of Nazareth of American Samoa 

• Taulapapa William Sword 

• P. Ben Teo 

• Petition submitted by employees of Starkist Samoa of Starkist Inc. 

• United States Department of Labor, submitted by Ronald Bird, Ph.D., 

Chief Economist in the Office of the Assistant Secretary for Policy 

Æ