New Minimum Wage Proposal
Main Issues
January 22, 2007

Lt. Governor, Mr. Chairman, Mr. President, Hon. Senators and Hon. Members of the House, thank you for the opportunity to express the views of the Chamber of commerce to your committee today.

 We have been caught in a political football match with the Republicans and the Democrats each trying to score cheap points with no regard for the economic prosperity of American Samoa.  The stakes are high for our economy and if this proposed legislation is passed it will have devastating effects.

 The Chamber has written to the House Speaker urging her not to include American Samoa in the proposed changes and to maintain the present system of a two yearly review. Everyone in both government and the private sector must unite and be supportive on the Governor and our Congressman in their efforts to exclude American Samoa from the proposed new legislation.

The Chamber believes that periodic wage rises are necessary particularly for those at the low end of the pay scale as the cost of living continues to rise making life more difficult for families to manage on small incomes. However the increases should be kept in line with economic conditions in the Territory and moved upwards gradually over time.

We are not sure what the time frame will be but if we are included as part of the new legislation for the proposed minimum wage it will impact heavily upon us

1.  Main Impact
   – the canneries, scale down, close
   – the ASG, retrench
2. The private sector, retrench, close
3. Affect the wage scale parity throughout the territory
4.  Impact Of Mass Unemployment
   – outflow of capital
   – foreclosures by banks
   – inability to repay debt
   --increase in crime rates
5. Less Corporate And Private Income Tax
   – added pressure on the ASG budget
6. Federal Government To Increase Financial Support
7. Treasury, education, health, all will be short of funds
8. More and more checks and balances from the federal govt.
9. No New Investment And Development Projects
   – cancellation of new projects and expansion of existing projects
   –increased labor costs would make us non competitive with asia/pacific
10. Tightening Of Credit And New Lending By Banks
11. Sea And Airfreight Cost Increases
    --high cost of imported goods passed on to consumers, increased cost of living
    -- reduced frequency of services
12. Services And Utilities ASPA, LBJ, Public Works
    - all will suffer due to lack of government funding
13.  A Staged Increase Could Be Considered
    - from $3.60 to the us mainland minimum of $5.25 over a 5 year period

In closing Mr. President,  assessing the impact of this minimum wage case highlights our economic vulnerability and emphasizes the need for the ASG to embark on a serious strategy of policy reform and industry sector development along the lines recommended by the Chamber in it’s White Paper and it’s letter to the Governor on tax reform.

Economic reports have been commissioned one in 2002 costing $600k and one recently for the AS Economic Advisory Commission both make recommendations for investment and industry sector development but so far there are no strategies based on these recommendations. The ASG must act.

The Chamber urges the Senate Economic Development Committee to fully support the ASG in it’s stand against the inclusion of the Territory in the proposed minimum wage change and it hopes that it will aggressively move to persuade the ASG to implement much needed policy reforms  and seek the assistance of the Chamber to help with strategic planning and feasibility studies that will encourage much needed new investment and development in the territory.

The Chamber fully supports the S.C.R. No. 30-3 introduced by the Senate President, to support governor Togiola Tulafona and U.S. Congressman Faleomavaega Eni Hunkin on the Fair Labor Standards Act of 1938 as it applies to American Samoa.