Employment. Social Security Administration (SSA) data show that from 2008 to 2009, the total number of people employed in American Samoa declined 19 percent (from 19,171 to 15,434) and that over the entire period from 2006 to 2009, employment declined 14 percent (from 17,852 to 15,434, with a peak of 19,171 in 2008). Data from 2010 on total employment are not yet available. Questionnaire responses from the tuna canning industry show that employment of their workers—most of whom are foreign workers from independent Samoa—dropped by 55 percent from 2009 to 2010, reflecting the September 2009 closure of one cannery and layoffs in the remaining cannery. In addition, we estimated that from 2,000 to 3,000 temporary federal jobs funded beginning in June 2009 will end when federal funding is no longer available. Private sector officials said minimum wage was one of a number of factors, including the high cost of goods and utilities, making it difficult to do business in American Samoa. American Samoa government data show the minimum wage increases would raise government payroll costs for its employees by about 1 percent (about $9 million) over 7 years, and the American Samoa governor and other public officials said they supported a return to biennial reviews of minimum wage in American Samoa or other alternatives to the scheduled increases. Inflation-adjusted earnings of those employed. Earnings data from SSA and consumer price data show that from 2008 to 2009, average inflation-adjusted earnings of those employed fell by 5 percent. This resulted from a decrease in average earnings of 2 percent, and an increase in prices of 3 percent. For the period from 2006 to 2009, average inflation-adjusted earnings fell by 11 percent. This resulted from a rise in average annual earnings of about 5 percent while local prices rose by about 18 percent. Although earnings data do not allow for a direct comparison of average and minimum wage annual earnings or for tracking the earnings of workers who lost their jobs, the hourly wage of minimum wage workers increased by more than inflation. The inflation-adjusted earnings of minimum wage cannery workers who retained their jobs and work hours rose by about 8 percent from 2008 to 2009 and by about 23 percent for the entire period from 2006 to 2009. Tuna canning wages. Without a minimum wage increase in American Samoa in 2010, there was no increase in the median wage of tuna canning workers—in both 2009 and 2010, the median tuna canning worker wage was $4.76. Consistent with our last report, from 2007 to 2010, the median wage among workers in the tuna canning industry employed by questionnaire respondents rose by $1.46 (44 percent). Based on questionnaire responses about workers’ wages as of June 2010, the future minimum wage increases would affect the wages of 99 percent of current workers in the tuna canning industry by the time the minimum wage reaches $7.25, increasing the average annual cost per worker in 2016 by $4,660 since June 2010. Tuna canning employer actions. The two employers in the tuna canning industry reported in our questionnaire that they had taken cost-cutting actions from June 2009 to June 2010, including laying off workers, reducing overtime hours, freezing hiring, decreasing benefits, temporarily closing, reducing operating capacity or services, and raising prices, among other actions. They reported plans to take the same types of cost-cutting actions by early 2012, including laying off additional employees. They attributed most of their past and planned actions largely to the minimum wage increases and did so more often than they attributed their actions largely to some other factors, such as transportation and shipping costs and changes in business taxes and fees. However, they said a decrease in the number of customers, such as wholesale customers, was another important factor affecting their actions. Tuna canning industry analysis. In addition to the minimum wage increases, cannery officials also expressed concern about American Samoa’s dwindling competitive advantage in the global tuna canning industry and said that current operations in American Samoa were not competitive with other models. Analysis of alternate models available to the industry suggests that moving tuna cannery operations— including unloading, loining (cleaning, cooking, and cutting), and canning fish—from American Samoa to another tariff-free country with lower labor costs would significantly reduce cannery operating costs. However, given that tuna facilities in American Samoa are among few in the United States that can meet the requirements of U.S. government contracts, many of which require U.S.-sourced and processed fish, maintaining some operations in American Samoa would allow the facility to continue to compete for these contracts. Despite the advantages of moving some operations to other countries, the remaining cannery’s lease obligation through 2013 and the cost of building new facilities elsewhere may pose obstacles to near-term relocation. In addition, a new tuna facility operator has hired a small number of workers formerly employed by the cannery that closed, but it is unclear how many additional workers they will hire. Tuna canning and other worker views. Some workers said they had looked forward to the 2010 minimum wage increase and were disappointed to see the increase delayed. However, more workers, particularly tuna canning workers, expressed concern over job security than favored a minimum wage increase with the potential for subsequent layoffs. See table 2 for key findings and appendix III for detailed findings and tables on American Samoa. Employment. From 2008 to 2009, the total number of people employed fell by about 13 percent, according to CNMI government tax data. For the entire period from 2006 to 2009, the number employed fell 35 percent. The decrease largely reflected the early 2009 closure of the CNMI’s last remaining garment factories, which employed many foreign workers. In addition, we estimated that less than 1,000 temporary federal jobs funded beginning in June 2009 will end when federal funding is no longer available. In the tourism industry, employment among GAO questionnaire respondents fell 8 percent from 2009 to 2010 and fell 14 percent over the entire period from 2007 to 2010. Private sector employers reported in discussion groups some layoffs and hiring freezes, and they said minimum wage increases imposed additional costs during a time in which multiple factors made it difficult to operate. They also expressed concerns about the departure of the garment industry, decline of the tourism industry, population loss, and changes to immigration law. According to CNMI government payroll data, about 17 percent of government workers are paid at or below $7.25 and would be affected by the minimum wage increases by 2016. Inflation-adjusted earnings of those employed. From 2008 to 2009, based on CNMI government tax data and consumer price data, inflation-adjusted average earnings of those employed rose by 3 percent. This resulted from a 7 percent increase in average earnings, with a 3.5 percent increase in prices. Over the entire period from 2006 to 2009, average inflation-adjusted earnings remained largely unchanged, with a slight drop of .5 percent. This resulted from a 19 percent increase in average earnings and a 19.5 percent increase in prices. Although earnings data do not allow for a direct comparison of average and minimum wage annual earnings or for tracking the earnings of workers who lost their jobs, the hourly wage of minimum wage workers increased by more than inflation. The inflation-adjusted earnings of minimum wage workers who retained their jobs and work hours rose by about 9 percent from 2008 to 2009, and by about 25 percent for the entire period from 2006 to 2009. Tourism wages. From June 2007 to 2010, a period that included three minimum wage increases, the median wage among workers employed by CNMI tourism industry questionnaire respondents rose by 95 cents (26 percent). In addition, in the tourism industry, the 2007 through 2010 wage increases narrowed the wage gap between the lowest and highest paid employees of questionnaire respondents by 52 percent. Employers said in interviews that the wage compression had lowered morale for more senior employees. Based on questionnaire responses about workers’ wages as of June 2010, the future minimum wage increases would affect the wages of 95 percent of current workers in the CNMI tourism industry by the time the minimum wage reaches the U.S. minimum wage of $7.25, increasing the average annual cost per worker in 2016 by $4,707 since June 2010. Tourism employer actions. Hotel and other employers in the CNMI tourism industry responding to our questionnaire reported having taken cost-cutting actions from June 2009 to June 2010, including reducing hours, freezing hiring, decreasing benefits, and raising prices of goods or services. Employers also reported plans to take the same types of cost-cutting actions by early 2012, as well as laying off workers. Few employers—weighted by numbers of employees— attributed their past actions largely to the minimum wage increases, and one half or less did so for each of the planned actions. Employers noted other factors, including changes in immigration law and a decrease in the number of customers, that largely contributed to their actions. Hotel industry analysis. Due to competition from other vacation destinations and to declining visitor arrivals, CNMI hotels have generally absorbed minimum wage costs rather than raise room rates. Both visitor arrivals and flight seats available to the CNMI declined from 2005 to 2010, and the greatest declines in both by country were from Japan—the CNMI’s largest tourism market. Industry data show that since 2006 the hotel occupancy rate has remained between 58 and 64 percent, while inflation-adjusted room rates declined by about 12 percent from 2006 to 2009. If observed trends continue, scheduled minimum wage increases will increase the share of hotels’ total operating costs attributable to payroll from approximately 29 percent of operating costs in 2010 (with minimum wage increases representing about 1 percent of total operating costs) to 34 percent in 2016 (with minimum wage increases representing about 8 percent of the total).