STATEMENT OF THE

HONORABLE ENI F. H. FALEOMAVAEGA

	SPECIAL INDUSTRY COMMITTEE NO. 24 U.S. DEPARTMENT OF LABOR WAGE AND HOUR DIVISION REGARDING THE MINIMUM WAGE IN AMERICAN SAMOA
	FAGATOGO, AMERICAN SAMOA JUNE 4, 2001

The minimum wage debate is not new to the United States or to American Samoa. Neither are the arguments offered by those in favor of an increase or those opposed to it. The debate has been with us since 1935 when President Franklin D. Roosevelt proposed a New Deal for an America that had not yet established minimum wages, maximum hours, or fair labor standards.

The debate began at a time in our nation’s history when hundreds of thousands of people were compelled to work 12 to 14 hours a day, 7 days a week, for 5, 10 and 15 cents an hour. Congress took notice in 1937 with consideration of S. 2475, a bill to provide for the establishment of fair labor standards in employments in and affecting interstate commerce. During the debate, U.S. Senator Neely from West Virginia stated that:

“More than 5,800,000 American families – 21 percent of our people – are existing on incomes of less than a thousand dollars a year. Three-fifths of American families have incomes of less than $2,000 a year…. On the other hand, in 1935, the last year for which complete figures are available, a certain corporation executive received compensation of $500,000, or $369 more for his service for a single day than the total income upon which any one of more than 5,800,000 American families lived for an entire year. In 1935 another corporation executive received compensation of more than $398,000, and another a salary of more than $374,000, while others received compensation of more than a quarter of a million dollars a year.”¹

Commenting on the need for Congress to enact legislation to close the gap between corporate income and workers’ wages, Senator Neely said, and I quote:

“The alarming spectacle of fabulous wealth and insufferable poverty living side by side; the menacing pageant of corporation executives with preposterous salaries of a half a million dollars a year ruling employees of the corporation who work long hours for starvation wages should move the Congress to instant and heroic efforts to banish the evils and exile the agonies which a third of the people has so long suffered and so patiently endured.”²

For four tense and anxious days, Congress argued the merits of Senate Bill 2475. At issue was whether or not the establishment of minimum wages and the regulation of working hours were matters for legislation by the Federal government. Of concern was the wage differential between the Northern and Southern states. Senator Black of Alabama read this excerpt, and I quote:

“I do not see how the South can ever become prosperous when we give our principal resources away, namely, cotton, lumber, and labor. Our cotton, lumber, and labor is based on 10 cents and 15 cents an hour wages. Whereas everything we buy from the North is based on 75 cents to $2 labor. The prices we pay for mill supplies and machinery parts is based on labor which is paid 5 to 10 times more than our labor. There can be no real prosperity in the South until there is a leveling of wage differential.”³

To those who moved their businesses from North to South in pursuit of cheap labor, Senator Black of Alabama further noted:

“Many of them come south with a mill which has sometimes been considered unfit for human use in New England and when they get down into the South they seem to consider that a southerner is worth only about one-fourth of what a man is worth who lives in New England. I myself never fully subscribed to that doctrine. I rather subscribe to the gospel that a man who is born in Alabama, and who can do as much work as a man born in any state in New England, or in any country across the water who emigrates to New England, is entitled to the same pay if he does the work.”⁴

I have always subscribed to a similar doctrine when considering the worth of the Samoan people. I have never understood why a corporation that pays fish cleaners in Puerto Rico $7.00 per hour seems to think when it gets down here that a Samoan is only worth $3 per hour. I do not subscribe to pseudo economics that say this is the way it must be. I rather subscribe to the gospel that a Samoan is entitled to the same pay from the same corporation if he does the same work as any man or woman born in any other part of America.

I would certainly like to believe that both Puerto Rico and American Samoa are part of America. After all, our sons and daughters fight and die for America. All we ask in so doing is that we be given no more or no less than any other American. Senator Borah of Idaho said it best in the heat of the 1937 fair labor standards debate. He said it was his view that “whether North or South, East or West, there [is] a standard of American living, and we ought to recognize that and fix a minimum wage upon that basis.”⁵Senator Borah further added, and I quote:

“I look upon a minimum wage such as will afford a decent living as a part of a sound national policy. I would abolish a wage scale below a decent standard living just as I would abolish slavery. If it disturbed business, it would be the price we must pay for good citizens….⁶ I take the position that a man who employs another must pay him sufficient to enable the one employed to live.”⁷

Senator Pepper from Florida asked, “What if he cannot afford to pay it?”⁸

Senator Borah responded, and I quote, “If he cannot afford to pay it, then he
should close up the business. No business has a right to coin the very lifeblood of workmen into dollars and cents…. Every man or woman who is worthy of hire is entitled to sufficient compensation to maintain a decent standard of living…. I insist that American industry can pay its employees enough to enable them to live.”⁸

Senator Ellender from Louisiana then asked, “Without exception?”⁹

Senator Borah replied, “Yes without exception. If it cannot do so, let it close up…I am opposed to peon labor, whether it is employed by one man or another. I start with the proposition that the right to live is higher than the right to own a business.”¹⁰

I start with the same proposition and borrow these words from Senator Borah:

“When we are fixing a minimum wage we are undertaking to determine what is a minimum standard of decent living…and that is all we are undertaking to determine. We are not undertaking to determine what a full wage should be or what the different conditions may be which affect wages in different circumstances. We are simply determining what it costs to live.”¹¹

I believe this should be the focus of our discussions during the course of these hearings. What does it cost to live in American Samoa? What is a minimum standard of decent living? The Department of Labor reports that from 1986 to 2000, the American Samoa Consumer Price Index rose 54 percent. During the same period, the tuna industry minimum wage rose only 12 percent. Figure 19 in Section Three of the Department of Labor’s 2001 Economic Report shows the “widening cumulative gap between the tuna cannery minimum wage and the cost of living in American Samoa.”¹² While production at the canneries increased during this period, “6 out of 10 American Samoa residents were living below the poverty line, according to the 1990 U.S. Census.”¹³

While there has been a significant decline in real minimum wages in American Samoa, I have yet to see any in-depth analysis which shows how the cost of living in American Samoa compares to other areas of the United States, including Hawaii, Guam and the Virgin Islands, where the U.S. minimum wage does apply. I know from experience that the cost of fuel in American Samoa is as high as the cost of fuel in Hawaii, and this is also true of most food items. I also know that the living wage in the United States is calculated to be at $8.15 per hour. Can the living wage in American Samoa be far behind? It does not appear that statistics in this area are readily available, but I believe they would be useful, and I urge the Department of Labor and this Committee to consider undertaking such an analysis as the Committee deliberates on these fundamental issues and questions.

For purposes of these hearings, I believe it is important to state that the Fair Labor Standards Act has applied to American Samoa since 1938. However, it was not enforced until the late 1950s and only then through a special industry committee structure. In other words, under the Fair Labor Standards Act of 1938, American Samoans were entitled to receive the federal minimum wage established by Congress. But under U.S. Naval rule, the law was never enforced.

In 1951, President Truman, by Executive Order, transferred the administration of American Samoa to the Department of the Interior. In 1953, Van Camp Sea Food came to American Samoa and established a tuna canning operation. What happened next is a history lesson every school child in American Samoa should be taught. It bears repeating at this hearing.

On May 8, 1956, William D. Moore, Overseas Operations Manager for the Van Camp Sea Food Co., accompanied by the Honorable Cecil R. King of California, and Linton M. Collins, legal counsel for the Van Camp Sea Food Co. appeared before the U.S. Senate Committee on Labor and Public Welfare to urge consideration of legislation for the exemption of American Samoa from the wage and hour provisions of the Fair Labor Standards Act of 1938. Let me share with you what the tuna industry was saying back in 1956 as part of its lobbying effort to suppress wages in American Samoa.

Let’s begin with this statement from Mr. Moore. Commenting on his company’s desire to pay Samoan workers 27 cents per hour as opposed to the prevailing minimum wage rate of $1 per hour, Mr. Moore said:

“A minimum wage of $1 per hour, as required under present laws, is unrealistic, unwarranted, and unquestionably will have a deleterious effect upon the economic and social structure of the islands.”¹⁴
As justification for suppressed wages, Mr. Moore said:

“The Samoans are Polynesians. They are not American citizens.”¹⁵

Mr. Collins, legal counsel for Van Camp, said it this way:
“The company has found that it takes from 3 to 5 Samoan workers to perform what 1 continental worker in the United States will do. It is therefore felt that this justifies a lower rate for Samoans.”¹⁶

Regarding Van Camp’s intent to improve the local economy, Mr. Moore said:
“The economy of American Samoa, when administered by the United States Department of the Navy prior to July 1951, was on a higher level than at present…. The Department of the Interior has diligently worked to restore the economy but on a more stable basis. Its policy has been to encourage secondary industries and processing plants to locate in Samoa so that the natives may be trained in industrial procedures and skills. Any products so produced by manufacturing on the islands would be exported to United States markets or other countries. This will provide wage income, make the natives self-sustaining, enlarge the total product of the islands, now less than a half million dollars, and thus improve the Samoan economy…. Van Camp is sufficiently encouraged with its progress to consider continuation of its Samoan cannery because a nominal supply of fish has been found. In its first 2 years of operations, Van Camp suffered substantial losses. It is hopeful of finishing this fiscal year in the black.”¹⁷
Regarding the labor force and associated costs of production, Mr. Moore further stated:
“Van Camp now employs 300 Samoans, mostly women…. Its wages range from 27 cents per hour for the women who clean the fish to $1 per hour for 1 employee, who is a technician…. During the past year the cost of labor in Samoa at the rates presently paid was 7.66 percent of the total cost of production in the American Samoa plant. The cost of raw materials was 56.20 percent. For the sake of comparison, the cost of labor in the company’s plants in the United States is 10.52 percent of the total cost of a case of tuna produced on stateside. The difference in the costs of labor between the average in the United States and Samoa is only 2.86 percent. The small difference in labor costs is attributable to the lower production output in Pago Pago, where we have found that it takes from 3 to 5 Samoans to produce what 1 stateside employee can produce.”¹⁸

I must pause here for comment. What company sincerely intent on improving our
economy and “making the native self-sustaining” would use as its basis for suppressing wages a claim that more than 300 Samoan women cleaning fish for 27 cents an hour were substandard to stateside employees being paid 75 cents to $1 per hour?

I invite you to consider the testimony used 45 years ago to suppress wages in
American Samoa. I also invite you to consider the parallel arguments that will be presented during the course of these hearings. I submit, that to this day, these arguments fail to recognize that when we are fixing a minimum wage we are not undertaking to determine what a full wage should be or what the different conditions may be which affect wages in different circumstances. We are simply determining what it costs to live.

I do not know what it cost to live in American Samoa in 1956. I only know this was of no consideration to Van Camp. Mr. Moore only spoke of Van Camp’s interests and intents. He stated, and I quote:

“If Van Camp were compelled to raise its wage rates to a minimum of $1 an hour in Samoa, labor costs would increase to 18.88 percent or approximately double the cost of producing a case of tuna in the United States…. Van Camp does not expect the plant on the islands to ever be very large, much less to be a substantial part of its overall operations. It does not contemplate making large profits, other than a normal return on its investment…. It is evident that the company could not pay the American standard of wages because of the disruption of the entire local economy…. Let me make it clear, however, that we should look forward to a gradually increased wage scale. Someday the territory may be ready for the minimum wages applicable within the United States, but when that day will be is anybody’s guess. Certainly it is not today.”¹⁹

Committee members, parties to these hearings, this is our history with the tuna industry. Some 45 years later, the tuna industry would have us believe that when the territory may be ready for minimum wages is still anybody’s guess. For this reason, it is important for the people of American Samoa and members of this committee to fully understand that the tuna industry has lobbied Congress since 1956 to suppress wages in American Samoa. Although Van Camp made the case that it paid wages equivalent to those paid by the government of American Samoa, it failed to state for the public record that the islands of American Samoa were administered by the Department of the Interior during the time of these discussions.

The people of American Samoa had no real voice in these proceedings. We had no local representation in Congress. We had no duly elected Governor in our Territory. What we had was an advisory body, or Fono, that had no authority to veto or enact law. To be precise, in 1929 and under the Territorial clause of the U.S. Constitution, the Congress ratified the 1900 and 1904 Deeds of Cession of Tutuila/Aunu’u and Manu’a and delegated its plenary authority for the administration of American Samoa to the President or his designee. In 1929, the President officially transferred administration of the Territory to the Secretary of the Navy. From 1951 to 1977, authority fell to the Department of Interior which in turn appointed civilian Governors from Washington to administer the affairs of the Territory. In 1977, American Samoa elected its first Territorial Governor and in 1980 we elected our first representative to the U.S. Congress.

I believe it is important for us to be well aware of the history of these islands before arbitrarily suppressing wages based on special interest presentations that have been well rehearsed since 1956. The fact of the matter is the Fair Labor Standards Act of 1938 was amended in 1956 to exempt the tuna industry from paying workers in American Samoa a minimum standard of decent living. As a direct result of Van Camp’s lobbying efforts, a special industry committee was assigned to substitute a sub-minimum wage structure that was supposedly commensurate with insular economic conditions.

The industry committee structure for American Samoa was intended to be an interim measure. But 45 years later, the special industry committee structure remains in effect and as a result we meet here today. This can only mean that during the course of these hearings we will once again hear tale of how the largest single industry in American Samoa cannot afford to pay a minimum standard of decent living.

I can assure you that the tale won’t be much different than the one told by Mr. Moore on behalf of Van Camp in 1956. It goes like this:

“Mr. Chairman, it will readily be seen, we are sure, that any application of state-side wage scales to industrial activity in American Samoa would completely disrupt the local economy, impose price inflation upon the people and create serious personnel and financial problems for the Territorial government, to say nothing of the impact which such a situation would exert on the prevailing economic conditions of neighboring islands and territories.”²⁰

The charts and tables and indexed exchange rates soon to be presented before Special Industry Committee No. 24 may be new. But the calculated intent to suppress wages remains the same. Maybe in 1956 it made sense to create special arrangements for a new and developing industry to establish operations in American Samoa. And maybe the American Samoa legislature supported the arrangement as a will of good faith.

After all, the tuna industry made and entered into an agreement with the Government of American Samoa that “only United States citizens and nationals will be employed in the cannery and related shore activities…and no aliens, or their dependents, shall be allowed to enter American Samoa in connection with fishing operations relating to the cannery without the permission in writing of the Governor.”²¹

This lease agreement was conditioned on a provision “that subject to the laws of the United States applicable to American Samoa and to the laws of American Samoa, the Governor shall permit aliens and their vessels to land fish for delivery to the Lessee, to enter the harbor therefor, and to enter the harbor for the purpose of obtaining fuel and supplies.”²²

In turn, “the Lessee shall take practicable positive steps, at the earliest feasible date, and by January 1, 1958, if possible, with a view toward the establishment of a fishery capable of supplying the full capacity of the cannery with fish caught by Samoans on boats operating out of American Samoa, and shall submit to the Governor quarterly reports on the steps taken to that end.”²³

My friends, if you were privy to recent hearings held on this island regarding legislation proposed by our Senators to impose a 20% duty on light meat tuna purchased from foreign vessels you would know that after 45 years the canneries have failed to live up to their promise of establishing a fishery capable of supplying the full capacity of the canneries with fish caught by Samoans on boats operating out of American Samoa. If I read the original lease agreement correctly, Van Camp promised that by 1958, if possible, this fishery would be established.

Here we are 45 years later and where’s the fishery? More than 30% of light meat tuna processed in our local canneries is supplied by foreign vessels and when our legislative body requested a 20% tax on foreign purchased tuna, the canneries did what the canneries always do when an increase of any kind is proposed. The canneries threatened lay-offs and closure.

As for only United States citizens and nationals being employed in the canneries, we now know that more than 70% of the cannery workforce is made up of foreign nationals. This begs the question, what has American Samoa gotten out of its 45 year relationship with the tuna industry?

I do not know what American Samoa has gotten out of the arrangement. However, I know a little of what the tuna industry has gotten in return.

In FY 1999, Star Kist Samoa and Chicken of the Sea/Samoa Packing exported a total of more than $446.5 million worth of canned tuna from American Samoa to the United States.
Since 1975, Star Kist Samoa and Chicken of the Sea/Samoa Packing have exported nearly $6 billion worth of canned tuna from American Samoa to the United States.

n addition, the U.S. Department of Labor notes that the canneries enjoy a tariff savings of $6 million for every 10 percent of processed tuna production. In 1999, this equated to a savings of somewhere between $61 to $66 million.²⁴

The tuna industry also enjoys Federal and local tax benefits. Some may recall that during the debate about proposed legislation to tax tuna purchased from foreign vessels, a Star Kist executive called into question the special tax arrangement the industry has with our local government. He noted that “a tax exemption certificate incentifies a company to invest capital and protect that investment from unknown future costs.” I asked then and I asked now, isn’t $6 billion worth of canned tuna exported from American Samoa a reasonable enough incentive?

I thank the U.S. Department of Labor for pointing out the following, and I quote, “the American Samoa government provides medical facilities for sick or injured employees and their families. This allows employers not to provide health insurance or other benefits that might be subsidized by employers in the U.S. Even assuming a modest health insurance plan costing $1,000 per employee per year, the savings for the tuna processing industry’s more than 5,000 workers would be more than $5 million.”²⁵

I would also like to make a statement about pensions. In doing so, I would invite members of this committee to visit the villages of Amanave, Vatia, Tula, Aunu’u and Onenoa. Visit these villages at about two or three in the morning and see our Samoan women dressed in their white uniforms waiting to catch their one-hour long bus ride to the canneries. Then visit the canneries and again observe these same women cleaning fish and standing for some eight hours each day. After twenty years of service these women are rewarded for their efforts with a pension check of about $40.00 per month, compliments of Heinz Corporation/Star-Kist or Samoa Packing/Chicken of the Sea/Thai Union.

Committee members, when I think about our 45 year relationship with the tuna
industry, I am reminded again of the floor debate that took place in the U.S. Senate in 1937 over minimum wage and fair labor standards. During the course of the debate, Senator Black of Alabama reminded his colleagues about the history of the lumber business in Mississippi. He said:

“A great deal of timber has been taken from the virgin forests of the South and of the West, but originally in the main it was not taken out for the benefit of those who lived in that section. The dividends went North. The wages stayed South. The wages were very small indeed. All over that section one may find ghost villages. Some of those who lived there had worked for wages so low that they were helpless to take care of themselves for a week after the trees were gone and the plants were closed.”²⁶

I can’t help but wonder how long a woman who has worked day in and day out for 20 years cleaning fish for a multi-billion dollar corporation can care for herself on a pension of $40 per month.

To a man from Mississippi who wrote to Senator Black advocating higher wages in the South, the Senator said:

“Perhaps the gentleman from Mississippi who wrote this letter was somewhat familiar with the history of the lumber business in Mississippi. Perhaps he had traveled over that great state. Perhaps he had seen stumpage that was left, and how the winds would come and blow the dust about from place to place. Perhaps he had read the article in last week’s Saturday Evening Post about unknown multimillionaires. Perhaps he read about one of those who had taken the timber from the State of Mississippi, not to enrich the laborers who worked in his mill from 10 to 14 hours per days. If Senators will read the article in the last week’s Saturday Evening Post, they will find where Mississippi’s virgin forests went, and in whose pocket the proceeds from them were finally found.”²⁷

Committee members, just as the lumber industries left Mississippi the tuna industry will one day take its proceeds and leave American Samoa. Heinz Corporation/Star-Kist and Chicken of the Sea/Samoa Packing/Thai Union are not going to be part of American Samoa’s economy forever. I predict these canneries will leave American Samoa in another 7 to 10 years, if not sooner. Our leaders and our people need to face up to this reality and we must remember, these companies are here to make a profit on their investment, and only that – a profit.

Looking at the situation globally, countries like Columbia, Peru, Ecuador, and Bolivia as part of the Andean Agreement, are all pushing for duty free imports of canned tuna to the United States similar to NAFTA and the Caribbean Basin Initiative. The countries of Japan, Costa Rica, and Italy can now export yellow fin tuna to the United States. You can be sure that Star Kist and Chicken of the Sea are going to find ways to maximize their profits in other locations, and leaving American Samoa to do it will be a reality as long as labor can be bought for 30 cents an hour in other parts of the world.

But as long as the canneries choose to operate on American soil, they should be
required to abide by fair labor standards enacted to protect those who do not have the means to lobby Congress for an increase in minimum wage. As noted on page 37 of the U.S. Department of Labor’s Economic Report for 2001:

“The American Samoa minimum wage Committee is required to recommend the Mainland Federal minimum wage unless evidence ‘establishes that the industry, or a predominant portion thereof is unable to pay that wage due to such economic and competitive conditions.’”²⁸

For the record, I would like to note that in 1986 Special Industry Committee No. 17 following routine hearings and investigation concluded that the minimum wage for American Samoa could be raised to the mainland level without risk that it would “substantially curtail employment in the industries” of the island.²⁹ However, before the Committee’s recommendations could be enacted, the Department of Labor explained that “several interested groups” commenced litigation to have them set aside. I hope this will not be the case should this Committee find that the tuna industry can and should increase its minimum wage rate.

I would also like to note that in 1999 Special Industry Committee No. 23 recommended an increase of 3 cents per hour for Samoan fish cleaners. This wage increase, as reviewed and implemented through the Wage and Hour Division of the U.S. Department of Labor, was a farce and a sham, and quite frankly, an insult to the Samoan fish cleaners in the Territory. I hope such a pittance of an increase is never recommended again.

I also hope that as the Committee reviews the evidence to be presented by the canneries that it will keep in mind CROW’s Nest November 1999 in-depth report on the status of the tuna industry.

“It was reported that a change in the way Heinz accounts for its tuna inventories means its older products are still tallied at higher prices, depressing profits…. [The report also states] that in April of 1999 the company became aware of operational and accounting irregularities in its Ecuador tuna processing facility and expensed $10.0 million as an estimate of the losses. In the first quarter, the company recognized an additional $20.0 million of expenses related to this facility.”³⁰

I hope Special Industry Committee No. 24 will not make Samoan fish cleaners pay for the way Heinz tallies its inventories or mismanages its Ecuador facility. As noted in CROW’s industry report:

“StarKist is the leading brand of canned tuna in the United States, followed by Bumble Bee and Chicken of the Sea. The competition among the three brands in the U.S. market has been fierce. It has been announced that StarKist will be advertising for the first time in 10 years to reinforce brand loyalty.”³¹

I ask again, should the wages of any fish cleaner in the world be suppressed to pay for corporate competition? Should wages be suppressed to pay the former CEO of Heinz $65 million a year? Should wages be suppressed by a company that generates $9.4 billion in annual sales? It is naïve to assume that a company that generates $9.4 billion in sales is operating so close to the edge that it cannot afford to raise the wages of workers in American Samoa.

To those who make the case that secondary businesses in American Samoa will suffer if the minimum wage is increased, I submit that history teaches us that the multiplier effect works both ways. When wages were raised in the South at the height of the 1938 minimum wage debate, what happened? The South prospered as it never had prospered before.³²

Now I would like to address the subject of increased wages for employees of the American Samoa government. I want to say from the outset that I support Governor Tauese’s efforts to stabilize our local economy. He has my full support and I will do everything I can to assist him in his efforts to create a better future for the people of American Samoa.

While many have said that ASG is the second largest employer in the Territory, the fact of the matter is 70% of the money ASG utilizes each year comes from the Federal government. As the Bank of Hawaii states in its 1997 Economic Report for American Samoa, “the main business of ASG is the management and distribution of federal income and capital subsidies.”³³

According to the U.S. Department of Labor³⁴ and ASG fiscal reports for 1996, the federal government provided for 64% of ASG’s budget through Congressional appropriations and other federal assistance and grant programs. In 1997, funding from the federal government accounted for 67% of the Territory’s total budget. Audit reports for 1998 to present have not yet been released but I suspect that for the past ten-year period the federal government has provided for nearly 70% of ASG’s total budget and expenditures. The remaining 30% of ASG’s operating budget comes from individual income taxes, corporate taxes, excise taxes, and other duties and surcharges.

What does this mean? This means that we must begin to account for how we manage and distribute our federal dollars before we can have a serious discussion about an increase in the minimum wage rate for government employees. I will state for the record that I fully believe the working men and women of American Samoa deserve and are entitled to an increase in the minimum wage rate. I will also state that I believe there is currently a wage disparity between government officials and the lower echelons of government workers. That is why I believe it is incumbent upon this Committee to narrow the disparity by increasing wages for the 41% of government employees who are making less than the mainland minimum wage. Surely if we can find the funds to increase the salaries of our government officials or elected leaders, we should certainly be able to fund increases in wages for our government employees.

However, we should keep in mind that according to ASG’s quarterly financial report for December 31, 2000, the local government is in “serious financial and cash flow difficulty.”35 The estimated general fund deficit is at $39 million. In other words, ASG owes a lot of money to a lot of people, including $4.5 million to the working people of American Samoa for tax refunds past due unless this problem has now been remedied.

In addition to its $39 million deficit, ASG also has a long-term debt of $18 million. Put another way, ASG has overspent its budget every year for the past decade. It is now estimated, and I further quote from the ASG quarterly financial report, “that ASG will have an operating loss of between $4 to $6 million in FY 2001…. Combined with the accumulated losses of prior years, ASG is facing a cash and financial crisis of enormous proportions.”³⁶ If action is not taken immediately, ASG may not be able to meet its payroll, much less provide for an increase in minimum wage.

Given our present set of circumstances, it is difficult to ask the federal government to pick up the tab for any additional increases in funding. However, if we are serious about expeditiously moving our wages to more reasonable rates, I believe one of the things we must re-think is our local tax structure. As you are aware, Congress recently passed legislation which would reduce federal taxes by $1.35 trillion over ten years. Under American Samoa’s tax law, this change in federal law will become applicable in the Territory unless ASG enacts a local law to prevent the change from taking place.

As every single item in the bill is either a reduction in taxes, an increase in tax credit, or an increase in the availability of tax reductions, we can be fairly certain that the change will reduce the income ASG is expecting for current and future years. Given ASG’s current financial situation, I hope ASG will take a hard look at this bill and decide very soon whether to reduce government expenditures to compensate for reduced revenues or to enact a new local law which would make all or part of the bill passed by Congress not applicable to American Samoa.

I would also hope that during the course of these deliberations, ASG would take a hard look at its corporate income tax structure. It is my understanding that after corporate tax returns are filed, there are routinely disagreements between ASG and the canneries, for example, as to the correct amount of taxes to be paid. In the past, this has resulted in protracted negotiations and audits of the canneries’ financial records to determine if the correct amount of taxes have been paid. After two or three fiscal years have passed, our canneries continue to contest the amount of corporate taxes they owe ASG. As such, ASG finds itself in cash flow difficulty and short in revenue collections. Is it any wonder ASG ends up financially strained?

I have suggested before, and I wish to suggest again, that perhaps it is time to change our local laws so that the canneries pay a fixed tax based on a fixed unit of production. I think it is fair to mention that in 1956 Van Camp’s original agreement with ASG provided for increased duties and rents based on increased production. I believe the idea still has merit today. Quite frankly, I believe this taxing regime would have several advantages including simplification of the determination of the corporate tax owed to ASG, certainty to both ASG and the canneries of the amount of tax to be paid, timely payment of the tax owed, and a substantial reduction in the amount of money spent on tax audits and compliance. Presumably, these savings could be used to increase employee wages while maintaining acceptable corporate profits.

While this Committee cannot make recommendations as to the taxing policy of the local government, I wish to note my concern at this time, and I hope that this suggestion will be given due consideration as part of a broader effort to improve our economy. As a matter of public policy, I believe it is time for tax rates to be publicly debated and defined by our local government. In this manner, tax rates would be known in advance by any investor or industry wishing to conduct business in the Territory. In turn, ASG would have a better sense of what it could expect in tax revenues. Simply put, every business should be placed under a uniform and standardized period of tax holidays, exemptions, and corporate tax rates.

As an example, a company that wants to conduct business in Western Samoa is entitled, by law, to a seven-year tax exemption period. Afterwards, that company pays the same tax rates as others. This causes me to question why our canneries have been given special tax exemptions for the past 40 years. It also causes me to question why some businesses pay one rate while others pay another. I am convinced that if a uniform and standardized tax law is enacted, this Territory could avoid providing inconsistent and prolonged tax holidays and exemptions.

I also believe the Territorial Tax Exemption Board has served its usefulness. ASG needs to standardize, by law, corporate tax rates, exemptions, tax holidays, and capitalization requirements so that the Tax Exemption Board can be terminated. The Governor need not be burdened with such discretionary authority.

I also want to make a comment about immigration. Some reports suggest that there are as many as 10,000 illegal aliens residing in the U.S. Territory of American Samoa. Any way you cut it, our Territory cannot absorb the associated costs of playing host to 10,000 illegal aliens. Neither should we continually look to import labor as a means of economic development.

I still maintain that the working people of American Samoa deserve to be paid a minimum standard of decent living. But we must work together to bring this change about. We must re-adjust and re-define our tax policies. And we must insist that our canneries pay fairer wages and corporate taxes.

I want to end with the same proposition with which I began. I believe that the right to live is higher than the right to own a business. I welcome business. I am for business. I support the need for business to make a reasonable profit. But to paraphrase President Franklin D. Roosevelt, I will not let a calamity-howling executive with an income of $65 million a year tell me that a wage increase in American Samoa is going to have a disastrous effect on the entire tuna industry.³⁷

After more than 45 years of rapid, uninterrupted and unsurpassed return of prosperity to the tuna industry, it is time for the U.S. Department of Labor to support a scheduled movement of minimum wages that is commensurate with today’s costs and standard of living which still has not been properly determined by this Committee or ASG. What is more aggravating is that about 10 years ago, the per capita income in the Territory was about $6,500. Now it is about $3,500 or less, yet consumer prices have increased. These trends are unacceptable and must be immediately addressed.

During the 1938 House debate on Fair Labor Standards, Congressman Maverick of Texas said, and I quote:

“For my part, I want the laboring people in my section of the country to exercise [a] spirit of independence…and demand that we have better standards of living…. No, I don’t want my people to be docile, bowed-down beggars, but upstanding courageous Americans demanding all their rights…. Yes sir, I want them to demand the same wages as those received by the rest of the people of the United States of America.”³⁸

I can assure you that I want the same for the people of American Samoa. I realize reorganization and change is not going to be an easy matter. But the principle of minimum wage is sound. The U.S. Congress believed the principle was sound in 1938 and I believe the principle is just as sound today.

For those who oppose the principle of minimum wage, I borrow these words from Congressman Cochran of Missouri:

“All I ask is for those who oppose [a minimum wage] to stop and think for a moment, and then publicly let the people in their community know their opposition. Let them put themselves in the place of the workers we seek to help and see how soon they would change their views. We are not only doing something for the employee but we are also assisting the employer, because the increase in wages means an increase in buying power which brings better business…. In setting this standard…we strike at those who for years have exploited their labor; at those who furnish unfair competition by selling their products at a price far below the producer who pays his employees a fair wage…. Those who care nothing about a reasonable standard of living for others so long as they can reap a harvest in dollars, those who deny a reasonable share of the profits of their industry to the men and women who are responsible for those profits and those who would pay themselves hundred of thousands of dollars in wages and bonuses annually, at the same time paying starvation wages to their employees, for selfish reasons oppose this legislation.”³⁹

While some oppose, I think it is important for the rest of us to remember that “it is the community that cares for its citizens when exploiters of labor refuse to do so.”⁴⁰ Neither our local government or our Federal government can continue to carry the full weight of exploitation. Mr. Chairman and Committee members, I urge you to hold the tuna industry more accountable in its labor dealings so that we can begin to more fully address the serious economic conditions facing this U.S. Territory.

In closing, I just want to say that some members of the community have been
critical of my participation in these hearings, suggesting that minimum wage issues are not part of the Congressman’s responsibilities. But the fact of the matter is I am a federal official responsible to the people of American Samoa on any and all issues where there is involvement of the federal government. In this instance, these hearings are federal in nature. The operations of this Committee come under the purview of a federal law. The U.S. Department of Labor is the federal agency responsible for carrying out the intent of the Congress. And the more I look into this matter, the more I realize there are very serious issues that need to be brought out for public discussion and review. This is why I am here testifying before this Committee just as I testified two years ago and two years before that.

At each hearing, I always keep in the back of my mind a discussion the late Congressman Phillip Burton and I once had when I worked as a staff counsel to one of the Congressional Committees he chaired. As many may be aware, Congressman Burton was a national leader and a great advocate and champion of the rights of working men and women throughout America. At a time when we were discussing the issues of corporate business and the labor movement, Congressman Burton turned to me and said, “Eni, don’t worry about those large corporations because they can afford to pay high priced teams of lawyers to protect their interest, but it is the little guy out there who is struggling to make a decent salary to support his family that you need to watch out for, and I trust that you will not forget that.”

Mr. Chairman and members of this distinguished Committee, as you thoroughly review all aspects of the minimum wage rates in American Samoa, I also trust that you will not forget that. For the past 40 years, and in the absence of any established labor unions to look after the needs and rights of the working men and women of this Territory, the wage rate in American Samoa has always tilted in favor of corporations and management. I submit that it is time for the wage rate to tilt in favor of the working people in this Territory struggling to support their families. So that there may be fairness and equity in the process, I urge Special Industry Committee No. 24 to grant a more reasonable increase in the minimum wage rate.

ENDNOTES

¹74 Cong. Rec. S. 7938. (1937).
2 Id.
3 Id. 7649.
4 Id. 7655.
5 Id. 7723.
6 Id. 7793.
7 Id. 7796
8 Id.
8 Id.
9 Id.
10 Id.
11 Id. 7798.
12 U.S. Department of Labor. Economic Report: The Minimum Wage in American Samoa, 2001. 30.
13 Id. 35.
14 U.S. Congress. Senate. Committee on Labor and Public Welfare. Amending the Fair Labor Standards Act of 1938. Hearings, 84th Cong., 2d Sess., May 8, 1956. p. 387.
15 Id.
16 Id. 401.
17 Id. 387-88.
18 Id. 388.
19 Id. 389.
20 Id. 391.
21 Id. 396.
22 Id.
23 Id.
24 U.S. Department of Labor. Economic Report: The Minimum Wage in American Samoa, 2001. 63.
25 Id. 65.
26 74 Cong. Rec. S. 7649-50. (1937).
27 Id. 7649.
28 U.S. Department of Labor. Economic Report: The Minimum Wage in American Samoa, 2001. 37.
29 CRS Report for Congress. Minimum Wage in the Territories and Possessions of the United States: Application of the Fair Labor Standards Act. June 16, 1999, p. 9.
30 CROW’s Nest. November 1999.
31 Id.
32 74 Cong. Rec. H. 7268. (1938).
33 Bank of Hawaii Economic Report for American Samoa. p. 14. (1997).
34 U.S. Department of Labor. Economic Report: The Minimum Wage in American Samoa, 2001. 61.
35 American Samoa Government Quarterly Financial Report. December 31, 2001. 1.
36 Id. 3.
37 Franklin Roosevelt. Public Papers and Address. Vol. VII. (New York, Random House, 1937). 392.
38 74 Cong. Rec. H. 7292. (1938).
39 Id. 7409-10.
40 Id. 7410.

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