- Tax breaks that benefit American Samoa, giving products from there access to closed markets because they are considered "Made in America," could be the next thing targeted.
If you think there’s something fishy about a Georgia Republican U.S. senator forcing a minimum-wage increase on a South Pacific island, you would be right.
Welcome to tuna politics.
Congress on Thursday unanimously cleared a 40-cent minimum-wage hike for American Samoa, a tiny U.S. territory that sits nearly six hours south of Hawaii by plane.
The driving forces behind the wage increase are U.S. Sen. Johnny Isakson, who single-handedly blocked a bill to delay a scheduled wage increase, and Chicken of the Sea, which has a tuna canning operation in the Middle Georgia city of Lyons. On the losing side are American Samoa’s nonvoting House delegate, Aumua Amata Coleman Radewagen, and the tuna companies located there, StarKist and Tri Marine.
As he sells his conservative credentials while seeking re-election next year, Isakson’s camp is careful to point out that he is not in favor of a “one-size-fits-all federal minimum wage.” But the state’s senior senator felt it was unfair for Georgia businesses subject to a $7.25-per-hour minimum wage to compete with the lower-cost islanders. The American Samoa tuna industry has a minimum wage of $4.76, as the territory has a range of minimum wages by industry.
"Since a federal minimum wage does exist, Senator Isakson is seeking to help level the playing field for Georgia jobs," spokeswoman Amanda Maddox said.
American Samoa leaders are fuming.
“The tuna canning industry is all we have,” Radewagen said in an emotional House floor speech on Monday night. “There is no Coca-Cola or IBM.”
Delays date to 2009
Congress passed a law in 2007 to raise the minimum wage to its current level, and it included gradual increases for U.S. territories to match $7.25 in the states. But since 2009 Congress has continually delayed the increases for American Samoa at the behest of the tuna industry and island politicians, who say the territory is a special, poverty-stricken case.
About 55,000 people live across the five islands of American Samoa, where the median household income of $23,000 is half that of the U.S.
Ahead of a Thursday deadline for a 50-cent increase, Radewagen had proposed another delay to allow another study on the wage increase’s effect on the tuna canning industry — the territory’s largest private employer.
Radewagen called a 50-cent increase “a proverbial nail in the coffin for the local economy.” The delay passed the House by voice vote without a single objection, including from Georgia. But Isakson put a “hold” on the bill in the Senate, forcing behind-the-scenes negotiations resulting in a compromise 40-cent increase.
This issue was not on Georgia’s radar until Chicken of the Sea left American Samoa in 2009, costing the island thousands of jobs, and moved part of its operations to the Peach State. Chicken of the Sea now processes its tuna in Thailand — where wages are far lower — but cans the fish in Lyons, at a facility currently employing 250 to 300 people.
StarKist remained, and now Tri Marine has taken over the old Chicken of the Sea plant in Pago Pago. A StarKist spokeswoman said she could not comment on specific job losses because of the wage increase.
According to a Government Accountability Office report, StarKist reduced overtime, froze hiring and raised prices from 2010 to 2013 in part due to the first rounds of minimum-wage increases, from $3.26 to $4.76.
U.S. tax breaks and foreign workers
The minimum wage is far from the tuna industry’s only problem, as increased foreign competition and decreased American canned tuna consumption have combined with new fishing restrictions to strain bottom lines. Free-trade deals have also eroded one of American Samoa’s key advantages: tariff-free access to the U.S. market.
The GAO reported that workers in American Samoa’s tuna industry opposed minimum-wage increases because they feared job losses or other cuts.
But those workers are mostly not American citizens — 85 percent of StarKist’s workers are noncitizens, mostly from the nearby islands of Samoa, a separate nation.
California-based Chicken of the Sea emphasized that statistic in a letter to House Speaker John Boehner urging him to allow the scheduled wage increase.
“(T)he ability of our competitors to utilize low-cost labor out of American Samoa while at the same time taking advantage of preferential tax treatment and access to closed markets because their product is considered ‘Made in America’ — albeit in American Samoa using low-cost and mostly foreign workers — inevitably impacts our ability to grow our workforce here in the United States,” wrote Kevin Bixler, a vice president at Chicken of the Sea.
American Samoa backers, meanwhile, point out that the most labor-intensive parts of Chicken of the Sea’s operations occur in Thailand.
Each of the tuna companies, naturally, has Washington lobby firms working on its behalf. The next frontier and billing opportunity comes in the aforementioned “preferential tax treatment.”
Isakson, who sits on the tax-writing Finance Committee, has indicated he could move to get rid of American Samoa tax breaks. American Samoa has no representation in the U.S. Senate, though StarKist did say U.S. Sen. Lisa Murkowski, R-Alaska, helped out on the wage negotiations.
“This new interest from the GA Delegation translates to a tougher fight on any tuna canning issue in the future,” Radewagen’s office wrote in a press release announcing the minimum-wage deal.