Monday, January 25, 2010

Congress "rescues" exploited American Samoan workers

Effective last year, the U.S. Congress raised the minimum wage across all U.S. states and territories, including American Samoa, where half of the private sector workers were employed in one of the two tuna canning factories. Raising the minimum wage made tuna canning an unprofitable venture for the companies, one of which -- Chicken of the Sea -- closed its cannery. Starkist, the other company, is considering pulling out as well.

Peter Schiff writes:
In the case of American Samoa, tuna canners simply could not deliver $7.25 cents per hour of productivity, so their jobs were eliminated. Rather than being employed at $3.26 per hour (the level prior to the minimum wage hike), they are now unemployed at $7.25 per hour. Which do you think is better?

Among the unintended consequences of congressional "benevolence" are rapidly rising consumer prices, due to the higher shipping costs now necessary to bring consumer goods to the islands. Before the minimum wage hikes destroyed most of the canning jobs, lots of canned tuna were shipped from American Samoa to the U.S. (over 50% of the canned tuna in American markets came from American Samoa). One benefit of all the shipping traffic was a low cost of imports, as ships were coming to the islands anyway to pick up the tuna. However, with fewer ships coming to Samoa to pick up tuna, goods are now much more expensive to import.

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