U.S. Territories to Congress: Please Don’t “Help” Us With Any More Minimum Wage Raises

As you probably know, there has been a lot of talk about Congress raising the federal minimum wage from $7.25 an hour to $10.10. What you may not know is that two governors have asked congress to please exempt their jurisdictions if such a raise is implemented.

No, they are not Republicans. They are the governors of American Samoa and the Commonwealth of the Northern Mariana Islands. In 2007, Congress raised their minimum wage with the goal of eventually getting it high enough to match the U.S. minimum wage.

According to the Washington Post,

According to the GAO, the auditing arm of Congress, both territories experienced significant economic downturns from 2007 to 2009, including a complete exodus of the garment industry in the Northern Mariana Islands where the minimum wage increased five times since 2007. The current minimum wage there is $5.55 per hour.

From 2006 to 2012, the gross domestic product in the Northern Mariana Islands plummeted by 36 percent and the employment rate fell by 45 percent. Average earnings increased by 29 percent, but local prices rose by 31 percent. The wage increases have left the islands’ economies dependent on tourism from Russia and China.

Economic conditions are even worse in American Samoa.

Since 2007, the minimum wage in American Samoa has increased three times across 18 individual work sectors, ranging from $4.18 to $5.59 per hour. The GAO reported that average earnings in American Samoa rose by 27 percent, but local prices increased by 34 percent. The employment rate in American Samoa declined by 11 percent from 2007 to 2012, and average inflation-adjusted earnings fell by 5 percent. In the tuna canning industry alone, the employment rate fell by 58 percent from 2007 to 2013.

The wage increases prompted the closure of the Chicken of the Sea tuna cannery in American Samoa, the only cannery on the island competing with StarKist. The tuna canning industry is the largest source of private-sector employment on the island.

Both territories are scheduled for more wage increases. A 50-cent rise is scheduled for Sept. 30 in the Northern Mariana Islands, and further wage hikes are set for Sept. 30, 2015, in American Samoa. Additional increases are scheduled every three years.

Governors in the island territories are protesting further wage increases. The governor of the Northern Mariana Islands has said he supports postponement of the minimum wage increase. In American Samoa, the governor has said he would “pursue changes in U.S. Law to allow American Samoa to take control of its minimum wage.”

Wow. Imagine that. Raising the minimum wage resulted in increased unemployment and business closures. Isn’t that exactly what anyone with economic sense would predict?

Cool posers on Youtube.com will not be able to stop the economic damage if Congress is stupid enough to raise the minimum wage.

It ought to be abolished both in the territories and in the United States.

minimum wage economics