Sunday, July 24, 2011

How's that minimum wage working?

Not good..............

In 2007, the United States government imposed a new federal minimum wage on American Samoa and the Commonwealth of Northern Mariana Islands (CNMI.) While this increase was well intended—a response to the islanders' wages being lower than that of their mainland counterparts—the results have been nothing less than devastating.

According to a new report from the United States General Accountability Office (GAO), the 19 percent decline in employment in the workforce that American Samoa has experienced since 2008 was in large part the result of imposing minimum hourly wages across various industries. The island’s primary industry is tuna fish canning, with major employers Chicken of the Sea closing and Starkist announcing huge layoffs. In 2008 the number of workers in the canneries was slightly more than 19,000 but has since fallen to 15,400.

Imagine the impact of this kind of job loss on an island with a total population of just over 67,000 people. At the same time, according to the GAO, the value of canned tuna fell from almost $600 million at the end of 2008 to $312 million by the beginning of 2010. What is even more astonishing is that, despite minimum wage laws, earning overall for American Samoans has fallen. “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,” the GAO report stated.


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