Minimum Wage

Last year, amid some controversy, Congress passed an increase to the national minimum wage. There was the usual nonsensical political gamesmanship of course, but also something interesting. For the first time, American Samoa was included under the US minimum wage law. Until that point, their minimum wage had been determined by a Labor Department committee with significant input from local elected officials and business leaders. Every two years the wage was revisited and adjusted if called for by local conditions.

American Samoa's congressional representative, Eni Faleomavaega, argued that by raising the island's minimum wage Congress was ruining its economy. You see, much of the population is employed by the tuna industry, and should labor costs rise exponentially, those factories will shut down. An industry spokeswoman agreed with Representative Faleomavaega, as did a Department of Labor study. Sadly, no one in Congress paid attention.

What was so interesting about this whole episode were the economic principles on display. American Samoa's economy is far different than California's, and for decades they had been able to set their own wages according to their unique needs. But, isn't Utah's economy different than California's as well? In fact, doesn't Utah have varying mini-economies within its own borders? Then why shouldn't we be allowed to set our own wages?

As we ponder what happened to the American manufacturing industry, and why we call India for tech support, and wonder why our jobs were shipped overseas, maybe we should take a closer look at American Samoa. It appears there is an economics class being taught there in real life.

Our New Minimum Wage

As promised, during the House of Representatives' first 100 (working) hours the federal minimum wage was raised. Immediately after its passage questions were raised as to why American Samoa was exempted from the wage increase. Some representatives pointed to the fact that one of the largest employers in American Samoa, Del Monte, is headquartered in San Francisco, which just happens to be Speaker of the House Nancy Pelosi's home district. These representatives waxed indignant at Speaker Pelosi's hypocrisy, especially considering her vocal proclamations of presiding over the most ethical Congress in history. Congressional leadership initially defended American Samoa's exemption, saying that the US territory had always been exempted from the federal wage standard. However, within days these leaders promised to change the bill to include American Samoa.

Despite the public brouhaha, I don't think anything unethical happened here, unless you count giving in to political pressure in order to save face as being unethical. For you "follow the money" folks, the Washington Times reported that Del Monte has not given a penny to any Democrat in the last five years. What I do think happened is that Speaker Pelosi and other House leaders listened to American Samoa's non-voting representative, Eni Faleomavaega, when he said that the minimum wage could "devastate the local economy". Or perhaps they read Del Monte VP Melissa Murphy Brown's warning that the wage hike would "severely cripple the local economy."

Interestingly, the sponsor of the bill, Representative George Miller, argued that American Samoa doesn't need to be covered by the minimum wage because a Labor Department committee reviews the island's minimum wage every two years. It would seem that this committee has historically agreed with Rep. Faleomavaega and VP Brown and allowed the current wages of $2.70 per hour to remain. It is instructional to note that listening to local elected officials, local business leaders, and providing some federal oversite and auditing functions has for the past 50 years settled on a local minimum wage far different than the one Congress has arbitrarily set. Unfortunately, because of its inevitable passage, the new federal minimum wage has put many American Samoans in danger of losing their job.