Rotting fish in the Samoan sun-Updated
Lance on Jan 12 2007 at 6:30 pm | Filed under: Developmental economics, Domestic Politics, Economics, Lance's Page
I am an opponent of minimum wage legislation, and one reason to oppose any regulation is that it is generally rigged to benefit someone somewhere who shouldn’t receive government help anyway. Ironically, one of the situations where minimum wage legislation might make the most sense is in a relatively isolated location where the local economy is almost entirely dependent on one or two employers who therefore have little competition for labor producing a product that is almost entirely exported and the profits of which are not spent in that local economy. Even if said employers reduced the workforce somewhat it is quite likely the increased wages would spur the local economy to produce more jobs. Employment losses are likely to be minimal because wages are possibly below a competitive market rate anyway. The local workers have had no alternatives to lead to a bidding up in wage rates.
Our local lovable contrarian curmudgeon Pogue Mahone posited such a situation and in such a peculiar circumstance he would have a possible point. So, if we are to raise the minimum wage the places we should most carefully consider making part of such a measure would be places where workers are in that very position. Luckily we have kind hearted liberal Democrats such as Nancy Pelosi around to make sure that these most vulnerable of workers, who if rewarded would have the most significant impact on their local economy, are covered. That is the whole point of having this particular species of congress critter around isn’t it?
One of the biggest opponents of the federal minimum wage in Samoa is StarKist Tuna, which owns one of the two packing plants that together employ more than 5,000 Samoans, or nearly 75 percent of the island’s work force. StarKist’s parent company, Del Monte Corp., has headquarters in San Francisco, which is represented by Mrs. Pelosi. The other plant belongs to California-based Chicken of the Sea.
75% of the workforce! A clear example of a situation where making the workers better off would take money away from a company and divert it into the local economy. A clear example of a situation where it is very likely that wages are lower than a free market would dictate! A clear example of where a congress critter of the liberal persuasion should be diligently protecting workers and not handing unfair competitive advantages to particular corporations!
So what did we do when we passed this bill which has effects mostly ranging from pointless to damaging? We exempted American Samoa!
On Wednesday, the House voted to raise the minimum wage from $5.15 to $7.25 per hour.
The bill also extends for the first time the federal minimum wage to the U.S. territory of the Northern Mariana Islands. However, it exempts American Samoa, another Pacific island territory that would become the only U.S. territory not subject to federal minimum-wage laws.
Now, we don’t seem to know at this point if majority leader Pelosi is responsible for this little piece of backhanded pig grease, but we know that Republicans are not happy. I love this from Rep. Patrick T. McHenry:
During the House debate yesterday on stem-cell research, Mr. McHenry raised a parliamentary inquiry as to whether an amendment could be offered that would exempt American Samoa from stem-cell research, “just as it was for the minimum-wage bill.”
A clearly perturbed Rep. Barney Frank, the Massachusetts Democrat who was presiding, cut off Mr. McHenry and shouted, “No, it would not be.”
“So, the chair is saying I may not offer an amendment exempting American Samoa?” Mr. McHenry pressed.
“The gentleman is making a speech and will sustain,” Mr. Frank shouted as he slammed his large wooden gavel against the rostrum.
Heh, nice to see you getting worked up there Barney. Good to know where you stand on the issue.
Of course there are arguments as to why Samoa would lose jobs if the workers in the tuna plants had to receive the new minimum wage:
But Samoa has escaped such notoriety, and its low-wage canneries have a protector of a different political stripe, Democratic delegate Eni F.H. Faleomavaega, whose campaign coffers have been well stocked by the tuna industry that virtually runs his island’s economy.
Faleomavaega has said he does not believe his island’s economy could handle the federal minimum wage, issuing statements of sympathy for a Samoan tuna industry competing with South American and Asian canneries paying workers as little as 66 cents an hour. The message got through to House Education and Labor Committee Chairman George Miller (D-Calif.), the sponsor of the minimum-wage bill that included the Marianas but not Samoa, according to committee aides. The aides said the Samoan economy does not have the diversity and vibrancy to handle the mainland’s minimum wage, nor does the island have anything like the labor rights abuses Miller found in the Marianas.
Maybe he is right, though I find it difficult to believe that wages are as high as they should be in such an uncompetitive labor market, but if the minimum wage makes sense then here of all places it should work. If not, then why would it be a good thing anywhere? Hmmmmm?
UPDATE:
My esteemed co-blogger Michael has looked into how the minimum wage in Samoa is set (he is also responsible for the delightful photo accompanying this post. The industry in Samoa has its own special committee. Given the brouhaha about this issue for other companies (in the Mariana’s) the continuance of this for American Samoa seems a bit convenient for certain noted political figures:
This industry shall include the canning, freezing, preserving, and other processing of any kind of fish, shellfish, and other aquatic forms of animal life, the manufacture of any by product thereof, and the manufacture of cans and related activities.
What is the rate? $3.26/hr.
Technorati Tags: Pelosi, minimum wage, American Samoa, Tuna, Starkist, Del Monte, Barney Frank, Patrick T. McHenry, Democrats, Republicans
powered by performancing firefox
Sphere: Related Content13 Responses to “Rotting fish in the Samoan sun-Updated”
Trackback URI | Comments RSS
It truly is a mystery:
Now Michael, it is one thing for me to suggest they are falling down on their job of protecting the workers of Samoa, it is quite another to propose that it is because the honored Speaker is in the pocket of Big Tuna!
With that huge wage advantage, the federal minimum wage might well prompt Starkist to suspend operations entirely, throwing 75% of the Samoan workforce in unemployment. The general downside of a minimum wage is I think, maximized in an environment where the work is easily relocated, but the workforce is not.
The downside you posit(and my assumption is that it would reduce employment) is true anywhere where the minimum wage is relevant. The fact is that few workers receive it. In the few places where it is common the workforce is obviously unable to relocate or they would go where wages were higher. Most places where this is true have competitive wage markets. Samoa does not.
If the idea is a good one in an impoverished inner city then it is a much better idea in Samoa where the economy is fairly closed. That it is possibly a bad idea in Samoa speaks to the poor policy that it is. In fact however, I would assume that the factories in American Samoa can operate at higher wages than their competitors or they already would have moved. Is the new wage too high? I have no idea, but that is true for all present minimum wage jobs isn’t it?
[...] … but not for American Samoa. [...]
It gets better! According to the DOL, roughly 80% of the workforce in American Samoa works for less than the new minimum wage approved by the House (see here).
The average hourly wage works out to $5.67 — man, those guys need a raise!
[...] A blogger named Lance provided a very impressive exposition on the Minimum Wage and was quoted by Instapundit who I found through V-squared. Instapundit’s blurb from Lance: When I was reading the story on American Samoa, it occurred to me that the irony is that if the minimum wage makes sense, it is precisely in those cases where an isolated market dominated by one or two employers in the same industry leads to wages being held down and where the resulting higher profits are not reinvested in that isolated local economy. American Samoa is a case study. 75% of the local workforce! [...]
I wonder what $3.26 buys in Samoa. How much is a house?
Here in central Austin it will now cost you more than $200k to get past 1000 square feet. I hope it’s a little cheaper there. I’ve worked in a fish cannery before, in Alaska. It pretty much sucks.
It is pretty amazing how many of my friends have worked in Alaska sliming fish. You, Chip, my brother and it seems Pogue as well. I will say this, everybody I know who went to Alaska was paid far more than minimum wage. Pretty much it was more money by a significant amount than they could make doing anything else. So how does American Samoa pay only 3.26/hr? I say because there is little competition for a captive labor force. That doesn’t mean a minimum wage is a good idea there (because let us face it, they are setting the wage at what Starkist feels they can get away with paying, thus it is irrelevant and really doesn’t exist) but it does mean that the case is generally strongest in situations such as this.
[...] However, to be fair, apparently American Samoa has always been excluded from the federal minimum wage. See Second Hand Conjecture for more. [...]
I’m from San Francisco and will definitely send communication to Pelosi’s office on this. My question though is one of thoroughness. For the congressmen and congresswomen who were surprised by the exclusion, didn’t they read that in the bill before they voted?
Few Congressmen or women read the bills they support. The volume of legislation precludes reading throughly more than a few bills a year, and most do not read those. None read more than 1% of the total. That is one of the problem of a large state in a democracy. While representatives are supposed to be voting in our interest, the state is far larger than any humans ability to understand. Thus our fate is more and more in the hand of unelected technocrats who pass regulations (laws) that not only our representatives are not aware of, or even competent to decide upon, but not subject to normal constitutional protections.
Hence, actions that would be unconstitutional in a criminal investigation are part and parcel of running the state, see the IRS as an example. Warrant? We don’t need no stinkin’ warrant. In fact it is a crime not to turn over what they would otherwise need a warrant to search for!
[...] The fight to raise the minimum wage is about to become a rout. Of course, as we noted earlier that fight doesn’t include American Samoa, and we still have no way to know exactly why. Actually, what I should say is that the explanation is incoherent. [...]