The Federal Minimum Wage and American Samoa

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The Federal Minimum Wage and American

Samoa

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April 8, 2008

Congressional Research Service

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CRS Report for Congress

Prepared for Members and Committees of Congress

The Federal Minimum Wage and American Samoa

Summary

In 1938, when the Fair Labor Standards Act (FLSA) was adopted, Congress appears to have

given little consideration as to how its provisions might affect the various possessions and

territories of the United States. The first off-shore jurisdiction to request exception from the FLSA

was Puerto Rico, which, in 1940, along with the Virgin Islands, was given an exception under the

act. Special industry committees were appointed to visit the Caribbean islands and to recommend

minimum wage rates consistent with the insular economies.

In the wake of World War II, new attention was focused upon the Pacific islands. American

Samoa, basically, had no industry other than harvesting of copra, the dried meat of the coconut,

and an economy very different from the mainland. In the early 1950s, the Department of the

Interior contracted with the Van Camp Sea Food Company to move onto the island and develop a

fish processing plant. However, the FLSA minimum wage was regarded as too high to be

competitive and, in 1956, Van Camp appealed to Congress to extend the Puerto Rican special

industry committee (SIC) model to American Samoa. Thereafter, the Secretary of Labor would

review economic conditions and establish minimum rates.

The SICs were admonished to reach “as rapidly as is economically feasible without substantially

curtailing employment” the American standard under the FLSA. While the rates established by

the committees were lower than those prevailing on the mainland, the device was regarded as

temporary. During the 1980s and 1990s, special treatment of Puerto Rico and the Virgin Islands

was phased out, and those islands came fully under the FLSA. Of the three jurisdictions, only

American Samoa remained under the SIC structure.

Fish processing has become Samoa’s primary private-sector industry. In early 2007, the minimum

wage for the industry was $3.26 per hour: the federal minimum wage was $5.15 per hour.

However, in late May 2007, Congress adopted H.R. 2206 (P.L. 110-28) which, through a series of

step increases over several years, would raise the federal minimum wage to $7.25 per hour. At the

same time, the SIC for American Samoa was abolished and the insular minimum wage was raised

(through a more prolonged series of step increases) until the federal minimum level, whatever

that may ultimately become, might be reached.

At least since the 1950s, the companies involved in fish processing have suggested that, were the

minimum wage to be raised to the national rate, they might consider leaving the island and

operating out of a country where wage rates were more favorable. Now, with the new wage rate

for American Samoa in effect, what will be the reaction of the tuna canning companies? Will they

improve technology to raise labor productivity, change the type of production done in Samoa,

absorb the new rates—or migrate? And, if they were to migrate, what alternative employment

might be available for the people of American Samoa?

This report will be updated as warranted.

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The Federal Minimum Wage and American Samoa

Contents

Introduction ................................................................................................................................1

The FLSA and Insular Coverage .................................................................................................1

Application to American Samoa ............................................................................................2

The 1955 FLSA Amendments .........................................................................................3

The 1956 FLSA Amendments in the House .....................................................................3

The Senate Hearings of 1956...........................................................................................7

Creating a Special Industry Committee Structure (1956)........................................................8

The Minimum Wage in American Samoa (1956-1986) ................................................................9

The Structure and Functions of the Committee ......................................................................9

Appointment of Industry Committee No. 1 (1957)............................................................... 11

Thirty Years of Escalating Wages (ca. 1958-1986)............................................................... 11

Special Industry Committee No. 17 (1986)................................................................................ 13

Appointment of the Committee Members ............................................................................ 13

Guidance from the Department of Labor ....................................................................... 13

Findings of the Committee ............................................................................................ 14

Congress v. the Special Industry Committee ........................................................................ 16

Special Industry Committee No. 18 (1987)................................................................................ 17

A New Committee Appointed.............................................................................................. 17

The New Committee’s Recommendations ........................................................................... 18

Minimum Wage in American Samoa (1987-2007) ..................................................................... 18

Improving the Quality of Evidence...................................................................................... 18

Affirming Substantial Documentary Evidence (1974).................................................... 19

Controversy Over the Minimum Wage Rate (1990) ....................................................... 19

New Legislation (1990)................................................................................................. 21

Hearings on the Samoan Minimum Wage (1991-1992) ........................................................ 22

Comments from Public Officials ................................................................................... 22

Comments from the Industrial Sector ............................................................................ 23

Rejecting the Special Industry Committee System (2007).................................................... 24

Concluding Summary ............................................................................................................... 26

Tables

Table A-1. Part A. Compilation of Wage Rates Established by the Various Special

Industry Committees for American Samoa ............................................................................. 29

Table A-2. Part B. Compilation of Wage Rates Established by the Various Special

Industry Committees for American Samoa ............................................................................. 32

Appendixes

Appendix. ................................................................................................................................. 29

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Contacts

Author Contact Information ...................................................................................................... 35

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Introduction

The Samoan archipelago, a series of sparsely populated islands in the south Pacific, is located

about 2,300 miles southwest of Hawaii. The area is divided into two parts: Western Samoa,

formerly British and now independent; and American Samoa, a cluster of about half a dozen

islands governed from Pago Pago on the island of Tutuila. The population of the American group,

although rising rapidly, is estimated to be about 60,000.1

Contacts between the Samoan islands and the United States developed late in the 19th century, but

they were infrequent. A coaling station was opened at Pago Pago, but only in the wake of the

Spanish-American War (1898) did the American presence become permanent. In 1900, President

William McKinley “directed the Navy to assume responsibility for Eastern (thereafter, American)

Samoa.”2 His directive remained in effect until 1951, when the naval station was closed and

jurisdiction was transferred to the U.S. Department of the Interior. During the middle 1950s, an

insular constitutional government was developed; in 1960, a constitution was formally approved.

The islands are mountainous, the climate tropical. There is little land suitable for commercial

agriculture. Fruits and vegetables, along with various root crops, are grown locally and consumed

largely by the families of the growers.3 More diverse products are imported. The harbor at Pago

Pago provided, during earlier periods, a naval base, but now it appears to be especially notable as

a tuna port. Although some tourism has developed over the years, the relative isolation of

American Samoa has rendered the islands a somewhat exotic destination.

Fish processing is Samoa’s single primary private-sector industry. Under the Fair Labor Standards

Act (FLSA), the insular minimum wage has been fixed by the Secretary of Labor through a

Special Industry Committee (SIC). In early 2007, the rate for the tuna canneries was $3.26 per

hour; the federal rate, $5.15 per hour. Then, in late May, Congress adopted a new minimum wage

standard: to escalate to $7.25 per hour over several years. At the same time, the SIC system was

abolished and the insular rate was raised, though in more extended steps, until it might coincide

with the federal rate.4

The FLSA and Insular Coverage

In 1938, Congress enacted the Fair Labor Standards Act (FLSA)—a measure designed to provide

minimum wages and overtime pay, to limit child labor, and to restrict industrial homework.

Although the act would seem to have applied to the states and the territories (to Puerto Rico, the

Virgin Islands, etc.), little thought appears to have been given to how that act might be applied to

jurisdictions that were, in significant ways, economically different from the U.S. mainland.

U.S. Department of Labor, Employment Standards Administration, Wage and Hour Division, Economic Report: The

Minimum Wage in American Samoa, 2005, p. 8. (Cited hereafter as DOL Economic Report, and by date. )

Ruth G. Van Cleve, The Office of Territorial Affairs, New York, Praeger Publishers, 1974, pp. 60-65.

See DOL Economic Report, 2003, p. 7, and the essay by Howard J. Critchfield, “Samoa,” in The Encyclopedia

Americana, International Edition (Danbury, Conn., Grolier Incorporated, 2001), Vol. 24, pp. 180-183.

Federal Record, June 13, 2007, p. 32683. See Public Law 110-28.

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Shortly after its passage, the act was modified. In response to industry complaints, Puerto Rico

and the Virgin Islands were exempted from the full force of the act (1940), being placed under a

special industry committee (SIC) structure.5 Thus, Puerto Rico and the Virgin Islands were set

aside for special treatment under the FLSA—a process that would continue, in part, for the next

50 years.6

Under Section 8 of the original enactment, the Department of Labor (DOL) was required, “from

time to time,” to convene an industry committee for each industry covered under the act and,

through the committee, to “recommend” a rate (or rates) of wages that might be higher than those

established by the act. Section 8(b) states:

The industry committee shall investigate conditions in the industry and the committee ... may

hear such witnesses and receive such evidence as may be necessary or appropriate.... The

committee shall recommend to the Administrator the highest minimum wage rates for the

industry which it determines, having due regard to economic and competitive conditions, will

not substantially curtail employment in the industry. (Emphasis added.)

Rates the committee could recommend were not to exceed the statutory standard (40 cents per

hour). The Administrator was admonished to “consider among other relevant factors ...

competitive conditions as affected by transportation, living, and production costs....” Discretion

rested with the Administrator.7

Application to American Samoa

Following World War II, an unrelated circumstance brought American Samoa to governmental

attention. The issue was a 1948 decision of the U.S. Supreme Court: Vermilya-Brown Co. v.

Connell [335 U.S. 377 (1948)]. It involved application of the FLSA to employees of American

contractors building a military facility for the United States in Bermuda (part of Great Britain). In

its decision, inter alia, the Court identified a “possession” covered under the act as including

“Puerto Rico, Guam, the guano islands, Samoa and the Virgin Islands.”8 Even in dissent, Justice

Jackson stated that a U.S. facility in Bermuda was of a character different from that of “our

possessions” as specified by the Court’s majority—and, thus, covered by the act.9

In 1953, development of a tuna canning operation commenced in American Samoa, an industry

which quickly became the island’s primary private-sector employer. With the Supreme Court

decision in Vermilya-Brown, Samoan industry became gradually—and increasingly—aware of the

likely enforcement of minimum wage and other FLSA standards.

P.L. 76-667, Title IV, Section 3 (June 26, 1940).

Guam was covered under the FLSA in 1938—though the act may not have been enforced there until after World War

II. The Commonwealth of the Northern Mariana Islands has maintained insular control over its minimum wage. The

SICs were gradually phased out during the late 1980s and early 1990s—except for American Samoa.

See Section 8 of P.L. 75-718. Section 5, of the original enactment, established the rules under which the committee

would function.

Vermilya-Brown Co., Inc., et al v. Connell et al., 335 U.S. 388 (1948).

Ibid., pp. 391-392.

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The 1955 FLSA Amendments

In 1955, William D. Moore, Jr., Foreign Production Manager of the Van Camp Sea Food Co.,

wrote to Representative Graham Barden (D-NC), chair of the House Committee on Labor and

Education, urging that “Samoa should be exempt” from the FLSA. He emphasized that few

industries were located in the islands. “This company, at the behest of the Department of Interior,

has gone to Pago Pago for the purpose of endeavoring to establish a fishery and a fish processing

and canning plant. It is on a trial basis,” he suggested. “In the first 12 months of our experiment,

it has been found that the American Samoans are adaptable to catching, cleaning, and processing

fish and seafood, but it takes 3 to 5 people to do and perform what one American laborer or

worker in the States can do.” If federal wage/hour standards continue to apply in Samoa, “... there

will be no incentive for American concerns to move in and build up the island.”10

Further, Orme Lewis, Assistant Secretary of the Interior (DOI) wrote suggesting “the need for

special consideration” for American Samoa. He explained to chairman Barden that Samoans

“have clung to their ancient ways of life and their traditional forms of economic and social

organization.” Thus, “...any justification for protective labor legislation in American Samoa

should be cast in entirely different terms.” Lewis urged that the Secretary of Labor be allowed to

“establish minimum wages for workers in American Samoa” as he may find that “economic

conditions warrant.”11

C. S. Thomas, Secretary of the Navy, wrote to House Speaker Sam Rayburn to urge amendment

of the FLSA to include a new provision for off-shore jurisdictions. Thomas reviewed the

Vermilya-Brown decision and the likely impact if “...wage payments on the part of contractors

performing work for the Department of Defense [were] to be made at higher wage scales than

those generally prevailing in the area.” These wages, Thomas stated, “would obviously distort the

local economy and, in some instances, objections have been received from foreign governments.”

Thomas advised the Speaker: “In addition, such payment would result in higher costs to the

United States.”12 But, Representative Barden decided not to act “at this time.”13

The 1956 FLSA Amendments in the House

It was with Vermilya-Brown in mind that representatives of Van Camp Sea Foods appeared before

the Senate Committee on Labor and Public Welfare, May 1956, seeking FLSA amendment.

The Industry’s Perspective

William Moore spoke for the company. In 1952, DOI had circulated an invitation to bid on an

unused facility at Pago Pago. Moore went out to the islands and presented a “discouraging”

U.S. Congress, House of Representatives, Committee on Education and Labor, Amendment to Increase the Minimum

Wage. Hearings, 84th Cong., 1st Sess., June 1, 1955, and forward Washington, U.S. Govt. Print. Off., 1955, pp. 11801181. (Cited hereafter as House Hearing, 1955.) With Moore’s comments was a resolution from the Fono (the insular

legislature) urging an exemption from the FLSA.

House Hearing, 1955, pp. 1179-1180.

House Hearings, 1955, pp. 1182-1185.

See U.S. Congress, House, Committee on Education and Labor, Amending the Fair Labor Standards Act to Make the

Minimum Wage $1 an Hour Effective March 1, 1956, Report To Accompany H.R.7214, Report No. 1095, 84th Cong., 1st

Sess., July 11, 1995, p. 2.

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report, noting that the supply of fish was not apparent and that the local refrigeration plant

(government owned) was “in rather poor repair.” Further, Moore stated: “We were aware, or soon

learned during our survey, that the wage-and-hour laws applied to American Samoa and it was

very unlikely, although we had not gotten into any operation at that time, whether or not our

company could pay the minimum wages as required in the United States.”

Nonetheless, Van Camp bid on the operation and was awarded “a 5-year lease with the provision

that the first year would be an experimental period.”14 Under the lease signed with the

government of American Samoa, the firm agreed “... to provide for improvement of the economy

of American Samoa by developing the skills relating to fishing and fish processing among the

Samoans, by providing local income through wages, and by insuring a local supply of raw,

frozen, and processed fish.”

Moore explained that, though the company was operating at a loss, the loss was gradually

diminishing and that the company was “...the only industry that has come into the island from the

outside.”15

In 1956, the company had about 300 employees—reportedly a mixture of British and American

Samoan.16 Their productivity, it was explained, was somewhat less than cannery workers on the

mainland. “Climatic conditions are not particularly conducive to energy and activities.” The

temperature runs about 70 to 90 degrees throughout the year—but there is high humidity: upward

of 80%. In terms of turnover, Moore stated, “... I am quite sure that the changeover in personnel

there is less than it is stateside.” He added: “Most of our employees are women.”17

Moore then turned to the wage/hour law, stating that the cannery paid “from 27 cents an hour to

$1 an hour, which is only paid 1 employee.” Representative James Roosevelt (D-CA) then

suggested: “You come before this committee to establish the fact that you are having difficulty

making any profit, and that this [payment of not less than the minimum wage] would seriously

impair your profit picture or your chances of making a profit....” The witness, Roosevelt stated,

comes as something of “a special pleader” for his company. “Therefore, it seems to me incumbent

that you show us what effect it would have, in some relation to your cost of operation, or what it

would do to you if you had to pay, let us say, 75 cents an hour, or $1 an hour, or whatever the

wage law would require.”18

Roosevelt then turned to another issue: What would happen to regular U.S. workers in canning

factories on the West Coast were the wage/hour statute modified for American Samoa? Moore

responded that, from January 1954 through January 1956, “the total production was 3 ½ percent

of the total production of Van Camp’s stateside plants for the same period.” Roosevelt was not

entirely satisfied.

U.S. Congress. House, Committee on Education and Labor, Minimum Wages in Certain Territories, Possessions, and

Oversea Areas of the United States, 84th Cong., 2nd Sess., February 15, 1956, and forward, pp. 5-7. (Cited hereafter as

House Hearings, 1956.) The original firm had been started by Harold Gatty, an Australian, and had gone bankrupt. In

1956, Van Camp was still the only firm operating in Pago Pago. See also pp. 58-59.

House Hearings, 1956, p. 9.

House Hearings, 1956, p. 12.

House Hearings, 1956, pp. 13-14.

House Hearings, 1956, pp. 15-16.

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Mr. ROOSEVELT. (...) What I am trying to get at is that I want to make awfully sure that I

understand from you that this is not going to be a substantial part of your operation, the plans

of your company and you and everybody else are such that they are not aimed at making this

a substantial part of your production.

Mr. MOORE. That is true, it is not going to be a substantial part of our operations.19

Moore stated: “There may be some advantages gained on the one hand, but these advantages are

definitely offset by additional expenses that we do not normally have stateside.”20 Moore pointed

to costs for the “the transportation of cans and cartons, and oil, and salt, and labels, and

everything that goes into the product, and everything has to be transported to Samoa.”21 As for

wages, Moore observed, “we have a plan in effect now”—a 2 cent an hour raise annually—“that

will increase those wages....”22

Roosevelt further questioned Moore on his statement that closing the cannery would have a

deleterious effect on the general economy of the island and would deter other firms from entering

insular commerce. Might that be a threat, he reasoned? “By implication,” he suggested, “that

means to me that if you cannot get this relief that you would feel that it would be impossible for

you to continue the operation....” Representative Roosevelt stated:

In other words, what you have in essence said is that this is important to the economy there,

and which I believe it is, and on the other hand, I have to be shown that without this relief it

would not be possible for you to operate. ... I for one, would want—and I think the

committee would want—some information to back up the statement that you would not

consider this possible of continuation unless the relief which you seek is granted.

Moore queried: “Are you asking that we give you a statement that says that unless we get this we

will not continue?” Roosevelt suggested that the interpretation had been correct, to which Moore

answered:

Mr. MOORE. It would put our costs out of line.

Mr. ROOSEVELT. And therefore, in order to maintain the operation at approximately the

same cost as your west-coast operation, you would have to have this relief in order to stay in

the islands.

Mr. MOORE. That is right, sir.23

Support from Officials of Government

As the hearing progressed, there was considerable speculation about the impact of the minimum

wage for Samoan workers.

House Hearings, 1956, pp. 17-19.

House Hearings, 1956, p. 19.

House Hearings, 1956, p. 16.

House Hearings, 1956, p. 19.

House Hearings, 1956, pp. 21-22.

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Phil Landrum (D-GA) asked Wayne Aspinall (D-CO), a witness who had visited Samoa, what in

his judgment would happen to Van Camp Seafood Co. if the minimum wage were enforced in the

islands. “It would fail,” Aspinall stated. “It would close up and these people would be put out of

employment.”24 But, Aspinall acknowledged that Samoa has certain “cultural advancements or

attributes” which are, “to me ... necessary to have retained among those people. Just how far,” he

added (in reference to the Samoan way of life, or fa’asamoa), “you can go in bringing in

industries and uprooting their traditional economy is a question for continuing study.”25

Representative Orvin B. Fjare (R-MT) wondered if people of such “deeply seated customs” might

not “[p]erhaps rebel at the so-called curse of civilization moving in on them.”26

Roosevelt, from his understanding of the bill under consideration, stated that “they are not asking

for complete exemption from the wage and hour law. We are using the same machinery which is

already in effect ... in Puerto Rico, so that the wage scale will be reviewed and established from

time to time.” (Italics added.) Roosevelt suggested that “the possibility exists, for instance, that

another industry might come into the area, and we certainly would not want to just make a

blanket exemption and invite industry to come down and exploit these people.”27

“It will readily be seen,” said William Arnold, Assistant Director, Office of Territories, DOI, “...

that any application of stateside 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.”28 A letter from Richard Barrett Lowe, Governor of American Samoa, was read

into the record. The Governor explained the modest character of economic life in the islands and

stated, as his first choice, placing decisions concerning the minimum wage in the hands of the

Secretary of Labor. He urged Congress, “at an early date,” to enact legislation that will “exempt

American Samoa from the Fair Labor Standards Act.”29

The Views of Organized Labor

Walter J. Mason, AFL-CIO legislative representative, took a different approach. He pointed to the

“first and foremost challenge facing this committee” as the removal of “unnecessary and unjust

exemptions now provided in the law.” He chose not to support further exemptions.

Turning to the islands, Mason stated that a Samoan exemption “would simply feed grist to the

mills of the Communist propaganda machine. Our relationship with the peoples in

underdeveloped areas,” especially those under U.S. administration, “must be exemplary and

beyond criticism....”30 If an exemption were made for American Samoa, he stated, it might

House Hearings, 1956, p. 37.

House Hearings, 1956, p. 39.

House Hearings, 1956, pp. 40-41. The matter of fa’asamoa has continued to be an issue through the late 1990s and

into the 21st century.

House Hearings, 1956, pp. 39-40. As Representative Aspinall was departing, he as asked about the competitive

impact for mainland production of having low-wage labor in the islands. Roosevelt suggested that, “at this moment,”

there really is not that sort of competition. See dialogue on page 42.

House Hearings, 1956, pp. 84-85.

House Hearings, 1956, pp. 92-93.

House Hearings, 1956, pp. 149-150.

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“provide the precedent to permit interested parties to request other exemptions from coverage

under the act”—that could “precipitate a virtually endless chain of requests” from one group or

another.31

Mason opposed making changes in the FLSA that “would make Samoa ... a refuge for runaway

shops.” Further, he objected to placing the “entire discretion” within the hands of the Secretary of

Labor.32 Finally, he saw no excuse for condoning past violations of law (non-payment of the

minimum wage) by “extending retroactive immunity from prosecution to those who knowingly

failed to comply with the act’s requirements.”33

Representative Sam Coon (R-OR) asked if Mason would insist on payment of “the minimum

wage of 75 cents even though it would put them out of business....” Mason replied: “I want them

to stay in business and make money. But I also want to see that the Samoan workers get a fair

wage....” Coon referred to the insular temperature as a debilitating force. Mason responded:

“What I am saying is that we should take a look at it and consider all aspects of what the

repercussions may be....” He affirmed: “...I do not think there is any need for hasty action....”34

If other options were not sustainable, Roosevelt questioned, what course might be acceptable to

labor. Mason, reluctantly, suggested the Virgin Islands formula—with committees set up on “a

tripartite basis so that all parties concerned will take a part in arriving at a fair determination of

what the minimum wage should be.” Again: “If Samoa should be exempted from the statutory

minimum, I believe the procedure should follow along the same lines that we have for the Virgin

Islands.”35

Others voiced economic concerns. The Seafarers International Union explained that Van Camp

tuna canneries located in San Diego and Terminal Island, Calif., “employ approximately 2,000

tuna-cannery workers” and pay $1.65 and $1.85 for women and men respectively. Tuna, from

low-wage labor in Samoa, “enter the continental United States duty free and are sold to

consumers under the same Van Camp label as tuna canned domestically. This,” he suggested, “is

unfair competition to the domestic tuna industry and its workers.”36 And, Representative Earl

Chudoff (D-PA), suggested as a possibility that “...goods would be manufactured in a possession

at very cheap labor rates and would be sent into the United States and sold cheaper than our own

people could manufacture them....” Chudoff was open to the establishment of “industry boards or

something” to provide for a fair labor scale in Samoa.37

The Senate Hearings of 1956

Moore, spokesman for Van Camp Sea Foods, returned as lead witness in the Senate. He declared

the existing minimum wage (75 cents per hour) “unrealistic” and “unwarranted” and affirmed that

House Hearings, 1956, pp. 150-151.

House Hearings, 1956, p. 150.

House Hearings, 1956, p. 152.

House Hearings, 1956, p. 164-165.

House Hearings, 1956, pp. 155-156.

House Hearings, 1956, p. 365.

House Hearings, 1956, p. 166.

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it would “unquestionably ... have a deleterious effect upon the economic and social structure of

the islands.” Moore then reviewed the “substantial losses” of prior years.38

The difference in labor costs is attributed, he suggested, to efficiency, reiterating: “... it takes from

3 to 5 Samoans to produce what 1 stateside employee can produce.”39 Moore claimed: “If Van

Camp is compelled to pay $1 per hour, under these circumstances and not released of its liabilities

under the act, it cannot go forward with its plans for developing the fishery and processing

plant....” Notwithstanding the House hearings, Moore affirmed: “We know of no objection from

organized labor.” He stated further that Van Camp “ must be relieved from its liabilities under

existing law” and from costs that a $1 dollar minimum will impose. 40

Senator Paul Douglas (D-IL) observed: “I never thought of Samoa as an area in which the Fair

Labor Standards Act would be applied....” Douglas questioned whether Samoa was actually

covered by the act. Linton Collins, counsel for Van Camp, replied: “Samoa is now covered under

the definition of ‘State’ in the bill.”

Following discussion, including reference to the Vermilya-Brown case, Senator Douglas stated:

“This is news to me. I never thought the Fair Labor Standards Act applied to Samoa.” Collins

replied: “... I don’t think the Congress had that in mind when the act of 1938 was passed, but I

think in the definition of ‘State’ it had been left there and there was never been (sic.) any

change....”41

Creating a Special Industry Committee Structure (1956)

In May of 1956, Senator H. Alexander Smith (R-NJ), the ranking Member of the Committee on

Labor and Public Welfare, introduced S. 3956—a bill to amend the FLSA.42 On July 11, the bill

was called up in the Senate. Senator John Kennedy (D-MA) explained that the measure, which

had received unanimous support from the committee, would “provide means for adjusting the

minimum wage in Samoa.” It further proposed “exemption from liability [for] those employers

who ... have not observed the Fair Labor Standards Act.” Kennedy explained: “We feel that the

provisions of the bill are acceptable, and are essential if the Samoan economy is to continue to

operate.”43

There followed a dialogue between Senator Spessard Holland (D-FL) and Senator Kennedy.

Mr. HOLLAND. Is it not true that the rate of pay which is maintained in the one industry,

which I believe is the sea-food canning industry—

Mr. KENNEDY. The Senator is correct.

U.S. Congress. Senate, Subcommittee on Labor, Committee on Labor and Public Welfare, Amending the Fair Labor

Standards Act of 1938, 84th Cong., 2nd Sess., May 8, 1956, and forward, p. 387. (Cited, hereafter, as Senate Hearings,

1956.)

Senate Hearings, 1956, p. 388.

Senate Hearings, 1956, pp. 390-391.

Senate Hearings, 1956, pp. 392-393. See also the discussion on p. 442.

Congressional Record, May 29, 1956, p. 9147.

Congressional Record, July 11, 1956, p. 12303.

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Mr. HOLLAND. Has been fixed by reference to the request of the Department of Defense,

which is the largest employer of labor in American Samoa, and which has not wanted to

have any level of pay come into the picture which would disturb their ability to continue to

operate as they are operating, and the general ability of the little island to preserve its

economy on the present level? Is that correct?

Mr. KENNEDY. The Senator is correct. As the Senator knows, the company which is

engaged in the industry to which he refers has been operating at a loss, even with the present

wage scale. I think the statement of the Senator from Florida is correct.

And Kennedy explained: “... passage of the bill would also free employers of liability to maintain

the minimum wage scale, which I think is a satisfactory situation.”44 Without objection, the Smith

amendment (modified by the Humphrey amendment) was adopted by a voice vote—the measure

then being dispatched to the House.45

On July 26, 1956, the Samoan bill was called up in the House. Representative Roosevelt placed a

brief statement in the Record and, thereafter, the bill was adopted.46 The measure was signed by

President Dwight Eisenhower (P.L. 84-1023).47

The Minimum Wage in American Samoa (1956-1986)

Taking into account the special economic circumstances existing in American Samoa, Congress

opted to follow the Puerto Rican example. On October 1956, the first special industry committee

(SIC) notice was published in the Federal Register.

The Structure and Functions of the Committee

The SIC fell under the Secretary of Labor (and then, the Administrator of the Wage and Hour

Division). It was stated: “The wage orders issued by the Administrator must by law give effect to

the recommendations of the industry committees.” The notice, which would largely apply to

subsequent committees, provided the rules for the hearing, the evidentiary requirements, and

names (in the first two cases) the various committee members.

The committee “will be composed of residents of the island or islands where the employees with

respect to whom such committee was appointed are employed” and of other residents of the

Congressional Record, July 11, 1956, p. 12303. The reference to a “request of the Department of Defense” is not

entirely clear.

Congressional Record, July 11, 1956, pp. 12303-12304. There was a dialogue between Senator Hubert Humphrey

(D-MN) and Senator Smith. There had been concern that the bill would have impacted Guam and the Panama Canal

Zone—but Senator Smith denied such was his intent. See also U.S. Congress. Senate. Amending the Fair Labor

Standards Act of 1938, as Amended. S.Rept. 2394, 84th Cong., 2nd. Sess., p. 3.

Congressional Record, July 26, 1956, p. 14849. Inter alia, Representative Roosevelt’s statement for the Record: “I

sincerely hope that all interested groups and particularly organized labor, the Department of State and the Department

of Defense will come to a satisfactory agreement in the intervening months before the new Congress assembles.”

President Eisenhower signed the bill reluctantly “...because I am convinced that some adjustment of the existing

provisions of the Fair Labor Standards Act to the Samoan economy is needed.” But, he added: “... it is my earnest hope

that the Congress at its next session will amend the Fair Labor Standards Act to provide for review by the Secretary of

Labor of determinations of industry committees.” See Public Papers of the Presidents of the United States: Dwight D.

Eisenhower, 1956. National Archives and Records Service, GPO, 1958, p. 172.

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United States from outside the affected islands. The Secretary will appoint “an equal number of

persons representing (a) the public, (b) employees in the industry, and (c) employers in the

industry.” The public members “shall be disinterested, and the Secretary will designate one as

chairman.” Further, it was provided: “An industry committee shall cease to perform further

functions when it has filed with the Administrator its report containing its findings of fact and

recommendations with respect to the matters referred to it....”

Each industry committee is to be furnished a lawyer and an economist “to advise and assist the

committee at all of its meetings.” Any person or association who “in the judgment of the

committee has an interest sufficient to justify” participation shall be designated “an interested

person.” The committee has subpoena powers.

The committee was advised: “No classification shall be made ... and no minimum wage rate shall

be fixed solely on a regional basis or on the basis of age or sex.” Among factors to be considered

were the following:

[c]ompetitive conditions as affected by transportation, living and production costs

the wages established for work of like or comparable character by collective labor

agreements negotiated between employers and employees by representatives of their own

choosing

the wages paid for work of a like or comparable character by employers who voluntarily

maintain minimum wage standards in the industry

employment and labor conditions and trends ... on the mainland ... including such items as

present and past employment, present wage rates and fringe benefits, changes in average

hourly earnings or wage structure, provisions of collective bargaining agreements, hours of

work, labor turnover, absenteeism, productivity, learning periods, rejection rates, and similar

factors

comparative production costs ... on the mainland, and in foreign countries, together with the

factors responsible for differences

financial conditions and trends ... as reflected in profit and loss statements and balance sheets

Hardship testimony must be documented. “Testimony on behalf of an employer or group of

employers as to inability to absorb wage increases shall be received in evidence only if supported

by tangible objective data, such as the pertinent profit and loss statements and balance sheets for a

representative period of years....” As noted above, each committee “shall recommend minimum

wages which will reach as rapidly as is economically feasible without substantially curtailing

employment” the general federal minimum wage. (Emphasis added.)

The committee, charged with investigation of the insular economy, had before it “an economic

report” prepared by the Department of Labor. Once established, the committee was to operate on

it own initiative. 48

Federal Register, October 6, 1956, pp. 7669-7672. The economic report, prepared by DOL, was advisory: it did not

control the actual deliberation of the committee.

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Appointment of Industry Committee No. 1 (1957)

James Mitchell, Secretary of Labor, appointed the first industry committee for Samoa on March

20, 1957, admonishing them “to reach as rapidly as is economically feasible the objective of the

minimum wage of $1.00 an hour” (the standard federal minimum). Where there was variation

within an industry, he urged the committee to “recommend such reasonable classifications ... as it

determines to be necessary for the purpose of fixing for each classification the highest minimum

wage rate” that can be determined for the category. Both DOL and the Congress appear to have

been in agreement: that the highest possible rate should be reached as quickly as possible.49

Samoan industry was divided into four categories—none of which initially came close to meeting

the $1.00 federal minimum. Wage/Hour Administrator Newell Brown (May 31, 1957) presented

the findings in the Federal Register.

Fish Canning and Processing Industry: “This industry shall include the canning, freezing,

preserving or other processing of any kind of fish, shellfish, or other aquatic forms of animal

life and the manufacture of any by-product thereof.” The wage: not less than 38 cents an

hour.

Shipping and Transportation Industry. “This industry shall include the transportation of

passengers and cargo by water or by air, and all activities in connection therewith, including,

but not by way of limitation, the operation of air terminals, piers, wharves and docks,

including stevedoring, storage, and lighterage operations, and the operation of tourist bureaus

and travel and ticket agencies....” The wage: not less than 40 cents an hour.

Petroleum Marketing Industry. “This industry shall include the wholesale marketing and

distribution of gasoline, kerosene, lubricating oils, diesel and marine fuels, and other

petroleum, products, including bunkering operations....” The wage: not less than 45 cents per

hour.

Miscellaneous Industries. “Miscellaneous industries shall include all operations and

activities not included in the shipping and transportation industry, the petroleum marketing

industry, or the fish canning and processing industry....” The wage: not less than 35 cents per

hour.

The Federal Register announcement called for a posting of the results (and minimum wage rates)

so that each affected individual would be aware of the wages to which he or she was entitled.

Thirty Years of Escalating Wages (ca. 1958-1986)

By 1958, the procedure for appointing committees had become standardized. 50 Thereafter, very

minor changes were effected in the work of the committees. Some new classifications of

employment were added; some were removed. (See Table A-1 in the Appendix for the evolution

of minimum wages.)

Federal Register, March 26, 1957, p. 1991.

Federal Register, March 6, 1958, pp. 1604-1605, and June 6, 1958, p. 3967. Under Public Law 85-750 (August 25,

1958), the Secretary, “in his discretion, may order an additional review during any such biennial period.” See Federal

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The Federal Minimum Wage and American Samoa

In 1961, a further division was made, separating ‘shipping and transportation’ into two categories.

Category “A” was reserved for seafaring: “all activities engaged in by seamen on American

vessels which are defined as those vessels documented or numbered under the laws of the United

States.” Category “B” would include all persons engaged in shipping, transportation and related

crafts “other than those” engaged in seafaring—though such definitions would change from year

to year.51

In 1963, a further category was identified: the construction industry. This would include “... all

construction, reconstruction, structural renovations, and demolition, on public or private account,

of buildings, housing, highways and streets, catchments, dams, and all other structures....” Other

categories gradually came under the act. For example, in 1967, hotels, retail trades, hospitals and

educational institutions were added; in 1969, laundry and dry cleaning, the bottling industry, and

printing and publishing; in 1971, the wholesaling, warehousing, and finance and insurance.

In 1974, Warren D. Landis, then Acting Administrator, Wage and Hour Division at DOL,

proposed “revisions” in the general instructions. It would no longer be sufficient for “an employer

or group of employers” simply to testify “as to inability to pay the minimum wage rate specified”

and, thus, to reduce labor costs. To the now standard “tangible objective data,” profit and loss

statements, etc., a new section was added under the title “Evidence.” It affirmed, “Financial

statements filed in accordance with this provision ... shall be certified by an independent public

accountant or shall be sworn to conform to and be consistent with the corresponding income tax

returns covering the same years.”

As for persons who could not be present at the hearing, it was possible to submit affidavits. “The

committee will give such weight to these statements as it considers appropriate,” it was affirmed,

“and the fact that such affiants [affirmations] have not been subject to cross-examination may be

considered, along with other relevant facts, in assessing the weight to be given such evidence.” (It

is not clear how seriously the various witnesses took this instruction nor, for that matter, how

rigorously the arrangement was carried out.)

In appointing Industry Committee No. 11 in 1974, Secretary Peter Brennan expanded the scope of

the committees to include government workers and others—reminding the committee that it

should recommend the “highest minimum wage rate or rates” that it determines “will not

substantially curtail employment in the industry....”52

In 1975 and forward into 1976, a new complication arose as the National Labor Relations Board

investigated a contested election in the canning industry. “It is my concern that the investigations

may substantially affect the industry committee process,” explained Labor Secretary John

Dunlop. Thus, he delayed the meeting of Industry Committee No. 12 through the spring of

1976—though he recognized the “possible adverse effects of the delay.”53

In 1978, when Industry Committee No. 13 reported, another complication arose: namely, the

Supreme Court’s decision in National League of Cities v. Usery....” In that case, the Court held

Federal Register, August 30, 1961, pp. 8101-8102. In 1973, there was a further restructuring of the categories and,

since “no employees were covered in classification A (Seafaring) in the Shipping and Transportation Industry, this

category should be excluded from this industry and that any seafaring activity” subsequently fall under the category of

miscellaneous. See Federal Register, November 27, 1973, p. 32576.

Federal Register, July 5, 1974, p. 24713

Federal Register, January 27, 1976, p. 3878.

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The Federal Minimum Wage and American Samoa

that the minimum wage and overtime provisions of the FLSA “are not constitutionally applicable

to the integral operations of the States and their political subdivisions in areas of traditional

governmental functions.” While American Samoa was not directly involved in the case, Xavier

M. Vela, for the Department, affirmed that “it is apparent, as a matter of statutory interpretation,

that the restrictions imposed by National League of Cities should be the same in American

Samoa.” But, The League of Cities case would be overturned in Garcia v. San Antonio

Metropolitan Transit Authority et al. (469 U.S. 528 (1985).54

To this point, for nearly 30 years, American Samoa had been under a system of administrated

wage rates. Very gradually, the rates had moved up.

Special Industry Committee No. 17 (1986)

On February 25, 1986, Labor Secretary William Brock appointed a new Special Industry

Committee (SIC) No. 17. The instructions to the Committee appear to have been consistent with

prior Committees in use since 1956.55

Appointment of the Committee Members

When announcing appointment of Industry Committee No. 17, Secretary Brock advised members

that Wage/Hour would “prepare an economic report containing the information which has been

assembled pertinent to the matters referred to the committee.” Further, he stated: “The committee

will take official notice of the facts stated in this report. Parties, however, shall be afforded an

opportunity to refute such facts by evidence received at the hearing.”56 The notice was pro forma,

similar to those issued with each appointment through the years.

In March 1986, the Department produced an economic report, Various Industries in American

Samoa. It opened with a 63 page essay to which 138 pages of statistics was added.

Guidance from the Department of Labor

In the mid-1980s, insular population was about 35,600 persons. The labor force was about 12,000

with female employment increasing steadily. Because of out-migration of workers (especially in

the 20-29 age bracket), a large number of skilled craftsmen in the islands were from Western

Samoa or Tonga. About 3,660 people (roughly 35 percent) worked for the American Samoan

Government. About 6,740 were in the private sector “with the majority of these employed in the

tuna canneries.”57 Thus, the government and the canneries were primary employers and held a

substantial and continuing interest in employee compensation.

Federal Register, June 15, 1978, p. 25816. See National League of Cities v. Usery, 426 U.S. 833 (1976).

Federal Register, February 25, 1986, p. 6605.

Federal Register, February 25, 1986, p. 6605. See Federal Register, May 26, 1959, p. 4219.

U.S. Department of Labor, Employment Standards Administration, Wage and Hour Division, Various Industries in

American Samoa: An Economic Report, March 1986, pp. 8-9. (Cited hereafter as Various Industries In American

Samoa, and by date.)

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Within the tuna industry, about 65% to 70% of cost was attributable to raw fish. “The price of fish

is negotiated between the vessel operators and the processors and the contract period varies from

several months to several years, depending upon perceived harvesting conditions and anticipated

demand....” However, cannery workers, with little organization in a western industrial context,

received low wages that kept labor market expenses down. “It is this situation that has enabled

imports to capture so much of the U.S. market,” the DOL Report stated. “... U.S. producers have

had to lower their prices and delay wage increases in order to survive.”58

By the mid-1980s, tuna canneries operated in only three areas within the United States: California

(one cannery), Puerto Rico (five canneries), and American Samoa (two canneries). In California,

cannery workers are represented by the Seafarers International Union, AFL-CIO. In Puerto Rico,

two canneries had collective bargaining agreements: National Packing (Van Camp, with the

Congreso de Uniones Industriales de Puerto Rico) and Caribe Tuna (Mitsubishi Foods, apparently

with the Seafarers Union, AFL-CIO). In 1985, there seem to have been no collective bargaining

agreements among Samoan cannery workers.59 State and local governmental employees,

conversely, had been gradually drawn into coverage under the FLSA—partly growing out of

litigation under the National League of Cities (1976) and Garcia (1985) decisions.

Commission members were advised: “Once the rates in American Samoa reach the mainland

levels, they are subject to the same time schedule for further increases that prevails on the

mainland without further industry committee reviews.”60 The Report then walked the parties

through the currently existing minimum wage rates—ranging from a low of $1.46 per hour for

workers in laundry and dry cleaning to a high $2.82 per hour for fish canning and processing. It

was also pointed out that the tuna industry employed 72% of employees in the private sector

subject to FLSA coverage.61

Findings of the Committee

Under the chairmanship of Ronald St. Cyr, the SIC met on April 28 through May 2, 1986. It heard

from 20 witnesses and received some 30 pieces of testimony “including one exhibit received in

confidence under the committee’s seal.”62

Before looking at the individual industries, the Committee examined a more basic question. The

evidence before them, in the judgment of the dominant group on the Committee, indicated that

the minimum wage rate for Samoa could be raised to the mainland level without the risk that it

would “substantially curtail employment in the industries” of the island.63

Various Industries in American Samoa, 1986, p. 18. The Report states: “The price of raw tuna to be processed is

determined in the U.S. industry by exclusive dealing arrangements between the canneries and the fishing vessels. The

price is set by a bargaining process between the canneries and the American Tuna Sales Association ... which

represents the tuna boat owners.”

Various Industries in American Samoa, 1986, pp. 42-46.

Various Industries in American Samoa, 1986, p. 51.

Various Industries in American Samoa, 1986, pp. 51-53.

Transcript of Special Industry Committee No. 17 (1986), pp. 1-2. (Cited hereafter as SIC No. 17, 1986.) The Report

(p. 2) stated: “The committee invited several other witnesses to submit confidential financial and other data under seal,

but no others took advantage of the opportunity....” St. Cyr was Deputy Assistant Secretary for Labor-Management

Standards.

SIC No. 17, 1986, p. 9.

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The Committee then reviewed the industrial rates. “Employee witnesses generally testified

concerning the need for increases in [the] applicable minimum wage rates. Employer witnesses,”

on the other hand, “in some cases opposed any upward adjustment of minimum wage rates and

generally opposed reaching a $3.35 per hour minimum rate over any specific future time

period.”64

Governmental opinion was mixed—though, for budgetary purposes, it seems to have shared an

interest in keeping wages low. One witness argued that an increase to $3.35 per hour would have

a deleterious impact for the insular budget. Yet, the director of nursing stated that “nurses and

other workers in the government medical center were grossly underpaid with a resultant shortage

of qualified help which has adversely affected the quality of health care in American Samoa.”

Having heard the witnesses, the “... committee concluded that an increase in the minimum wage

to $3.35 an hour spread over a two-year period ... would not significantly curtail employment

opportunities.”65

Witnesses for the tuna industry pointed to the “precarious position” of the industry, confronted

with fish from other low-wage areas, and argued that there “should be no increase in the

industry’s minimum wage rate.”66 However, there was another side to that equation.

Evidence presented to the committee showed that production costs for the AS [American

Samoa] tuna canneries between 1983 and 1985 declined substantially while the value of tuna

shipments from AS increased very substantially from 1983 to 1984 (the latest available data).

Also, the committee heard evidence that the tuna industry in AS enjoyed substantial

advantages including: a favorable tariff posture (compared to foreign producers); an

exemption which permits raw fish to be landed in AS in foreign vessels (not permitted in

Puerto Rico or the mainland) resulting in lower raw fish prices which constitute 60% to 70%

of total costs; and minimum wages 46% lower than average lowest regular wages for tuna

canning in Puerto Rico and 135% lower than in the mainland U.S.

The Committee further pointed to “tax incentives” provided by the Samoan Government, with

other similar advantages, that “have further contributed to a highly favorable economic situation”

for the canneries. Reluctance of the industry to present evidence, “even under seal” from the

Committee, seemed to raise further doubts. The Committee raised the industry standard to

$3.35.67

Gradually, from one industry to the next, the Committee mandated that the minimum wage be

raised to the statutory federal rate of $3.35 per hour—at least by April 4, 1988. The thirty-year

sub-minimum wage rate for American Samoa, it seemed, would end. However, the Committee

produced a mixed review. The Report was signed by the two members representing the public and

the two employee members. The two representatives from industry declined to sign the

document.68

SIC No. 17, 1986, p. 2.

SIC No. 17, 1986, pp. 9-10.

SIC No. 17, 1986, p. 10.

SIC No. 17, 1986, p. 11.

SIC No. 17, 1986, p. 17.

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The Federal Minimum Wage and American Samoa

Congress v. the Special Industry Committee

Under date of June 20, 1986, the findings of the Special Industry Committee were published in

the Federal Register. The earliest increases in the insular minimum wage rate, to $3.35, were to

take effect after July 7, 1986.69

In the wake of the SIC’s hearings, “several interested groups” commenced litigation to have the

findings set aside so that employers might continue to pay rates lower than the national

minimum. 70 However, the judicial process was cut short when Congress, calling up the “Insular

Areas Regulation Act” (99th Congress), added language to overturn the findings of Special

Industry Committee No. 17: that is, retaining wage rates pre-Committee No. 17 and directing that

a new committee be appointed that would recommend minimum wage rates that would be less

threatening to the insular economic structure.71

Representative Morris Udall (D-AZ), chairman, Committee on Interior and Insular Affairs,

assessed the situation in Samoa. “A committee that met this year ... failed to adequately

comprehend the reasons that Congress had determined that a special minimum wage should apply

in the territory.” (Italics added.) Udall explained: The rate increases “could cost the territorial

government $7 million by FY1988, a cost the Federal Government might have to make up.” In

addition, there were “clear indications that it would also force the tuna canning industry, which

directly and indirectly accounts for half of the private sector employment in the territory, to

substantially shift its operations to foreign locations.” The new rates, Udall stated, “have already

discouraged proposed investment from locating in the islands” and “... would make American

Samoa more uncompetitive than it already is as a place of doing business.” He continued:

“Reasonable increases are warranted and we would favor increases as great as are reasonable. The

proposed increases,” he stated, “are not reasonable, however.”72

Udall stated that the language of the “Insular Areas Regulation Act” does not amend the FLSA

“nor does it modify the statutory system for periodic review and revision of minimum wages in

American Samoa.” Instead, he stated, “[i]t merely suspends the current wage order and continues

the prior minimum wage in effect, pending the recommendations of a new industry committee

convened in accordance with existing law.” He admonished any further committee to consider “...

the extent to which rates facilitate maximum employment; the extent to which they enable

American Samoan businesses to be competitive within the region; and the potential impact on the

insular and Federal budgets.” Udall added: “We also appreciate the statesmanship on this matter

of Delegate Sunia, who is concerned both about fair wages and maximum employment in the

territory.”73

The House then approved the conference report on H.R. 2478 by a voice vote.74

Federal Register, June 20, 1986, pp. 22517-22518.

Various Industries in American Samoa, 1987, pp. 53-54.

Congressional Record, August 1, 1986, p. 18612.

Congressional Record, August 1, 1986, pp. 18617-18618. Representative Udall explained: “Legislative relief is

needed because the Department of Labor takes the position that it lacks legal authority to grant administrative relief.”

Congressional Record, August 1, 1986, p. 18618. Delegate Fofo I. F. Sunia appears to have been involved here but,

apparently, did not comment on the minimum wage.

Congressional Record, August 1, 1986, pp. 18623-18624.

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In the Senate, James McClure (R-ID) explained the conference report. “It is the intent of the

FLSA that the minimum wage in American Samoa shall be increased to the national minimum

wage at a rate that ‘will not substantially curtail employment.’ However,” McClure affirmed, “the

previous Special Committee’s recommendation [No. 17], effective July 7, 1986, have [sic.]

already resulted in the loss of 700 jobs.”75 Again, the conference report was accepted by voice

vote.76 On August 27, H.R. 2478 was signed by President Ronald Reagan becoming P.L. 99-396.

Special Industry Committee No. 18 (1987)

A new committee was promptly appointed and the process recommenced; but, unspoken, there

was a cautionary note. Reasonableness, in terms of a minimum wage, rested with the Congress.

The powers of a Special Industry Committee were now limited by what Congress would accept.

A New Committee Appointed

Secretary of Labor Brock appointed a new committee that arrived in the islands on June 8, 1987,

with the mandate to recommend the highest rates of wages that “will not substantially curtail

employment” in the insular industries.77 The Committee stated that it had heard from 16

organizations and companies including DOI, the Government of American Samoa, “the two tuna

canning firms and the Chamber of Commerce of American Samoa. Other parties testifying at the

Committee hearing consisted of 11 local businesses.” It noted: “In addition, there were other

witnesses representing both employers and employees.” If unions were present, they were not

identified by name. 78

At the opening ceremony, Governor A. P. Lutali “recommended no increase in the current FLSA

minimum wage rates because of the severe budget situation ... and the pressing need for an

expanded employment base at the tuna canneries”—as well as with firms associated with the tuna

industry. Delegate Fofo Sunia “also expressed concern” regarding the insular budget and “the

economic situation of the tuna firms and other businesses.” However, he felt that “some increase

in the minimum wage would be warranted at some future time once the budget and economic

climate improved.” Richard Montoya of Interior was similarly dubious. The Government of

American Samoa “... could not sustain any increase in payroll costs at this time.” Montoya

referred to the plight of “the tuna canneries and other business” and stated that an increase in the

minimum wage “would be counter-productive” to efforts “to to expand the employment base in

the private sector of the American Samoan economy.” Ultimately, Montoya “recommended the

Committee grant no increase in any of the minimum wage rates at this time.”79

The Committee was reminded of Representative Udall’s comments—“(1) the extent to which

rates facilitate maximum employment; (2) the extent to which they enable American Samoa

businesses to be competitive within the region; and (3) the potential impact on the insular and

Federal Budgets.” It was noted that “such considerations could be related to the Committee’s

Congressional Record, August 9, 1986, p. 20394. The industry from which the jobs were lost was not identified here.

Congressional Record, August 9, 1986, p. 20397.

Federal Register, February 19, 1987, pp. 5219-5220.

SIC No. 18, 1987, pp. 1-2.

SIC No. 18, 1987, p. 2.

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assessment of the impact of any possible changes in the current FLSA minimum wage....”80

(Emphasis added.)

The New Committee’s Recommendations

The committee commenced with the two major industries of the islands. Representatives of the

government and the tuna canneries presented “a great quantity of economic data.” Government

witnesses emphasized “budget and fiscal constraints.” Spokesmen for the tuna industry suggested

the “increasing competition from foreign imports from low-wage countries” and stated that “the

various economic advantages of performing their operations in American Samoa were lessening.”

The committee was unable to agree on whether an increase in the minimum wage “would

substantially curtail employment” and, so, “made no recommendations.” Thus, the old wage

remained in place: government workers and cannery employees would not receive a raise. 81

Similar controversies swirled around other industries. In petroleum marketing, no evidence was

presented to the committee. However, “the largest employer” stated that his business was heavily

dependent “on business from the fish processing and canning industry.”82 So, they voted 4 to 2

against an increase. In shipping and transportation, testimony suggested that “much of the

business activity in this category depended in some way upon the fish processing and canning

industry.” One segment was given 10 cents the first year and 10 cents the second.83 In

construction, workers would receive 10 cents the first year and 10 cents the next.84 Other

industries experienced similar increases.

Minimum Wage in American Samoa (1987-2007)

In March of 1990, Labor Secretary Elizabeth Dole announced the appointment of SIC No. 19.85

But, a new complication arose—and the timing of the Committee’s work was deferred.

Improving the Quality of Evidence

When establishing an SIC for American Samoa in 1956, it was assumed that the committee would

operate under the same rules as committees in Puerto Rico and the Virgin Islands. However, in

the early 1970s, a group of agricultural workers in Puerto Rico argued that their rates, under the

FLSA, should be increased because their employers had not established, beyond a reasonable

doubt, that they were not able to pay a higher wage without “substantially curtailing

employment.” Gradually, the issue led to the courts.

SIC No. 18, 1987, p. 3.

The vote was 3 to 3, but a tie vote was regarded as negative—the former wage structure remained in place. SIC No.

18, 1987, p. 8.

SIC No. 18, 1987, p. 10.

SIC No. 18, 1987, p. 11.

SIC No. 18, 1987, p. 12.

Federal Register, March 28, 1990, p. 11454.

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Affirming Substantial Documentary Evidence (1974)

Regulations of the period suggested that “tangible objective data” must be assembled to show that

employers were not able to raise wages to the federal minimum standard. For Puerto Rico, it

seems, data may not have been possible to obtain. The farmers were often poorly educated and

may not have had “profit and loss statements” or “balance sheets.” In such situations, the SIC

could make recommendations “on the basis of evidence which is available;” but, the Court

argued, those recommendations must be “sustained by the evidence.” In the Puerto Rican case, it

found the record “devoid of a single subsidiary finding to support the Committee’s conclusion.”86

When reporting legislation that would evolve into the 1974 FLSA amendments, the House

Committee on Education and Labor referred to the Puerto Rican case and explained that

“Congress intended” that findings of the SICs “would be based on record-evidence adequate to

reveal the financial and economic condition of the covered employers.” In the absence of such

evidence, proceedings have sometimes “...degenerated into a process by which a majority of the

members work their will knowing that the record is bare of the facts necessary to controvert their

argument that higher wages would substantially curtail employment.” It proposed language to

insure that a future SIC “be in a position to act rationally rather than arbitrarily.”87

The new language was contentious. Senator James Buckley (R-NY) opposed the evidentiary

requirements. He stated: “The simple fact is that this requires a level of proof that too few Puerto

Rican employers are unable [sic.] to provide.”88 Senator Harrison Williams (D-NJ) disagreed. He

argued that the bill reflected “broadly a consensus.” Williams pointed to a history of abuse and

affirmed that “as long as it is part of the procedure to have these industry committees, let them be

required to support their conclusions” with “substantial documented evidence.”89

Thus, in the 1974 FLSA amendments, there appeared an explanation: that there must be

“substantial documentary evidence, including pertinent unabridged profit and loss statements and

balance sheets for a representative period of years” or, where the employees are of the

government “other appropriate information.” That documentation must establish that an

“industry, or a predominant portion thereof, is unable to pay that wage.”90

Controversy Over the Minimum Wage Rate (1990)

Gradually, DOL began to distinguish between Puerto Rico and the Virgin Islands, on the one

hand, and American Samoa on the other.91 In the 1976 report to the Congress, it noted: “If the

committee has no objective data establishing the industry’s inability to pay the mainland rate, the

Comments are taken from Sindicato Puertorriqueno de Trabajadores v. Hodgson (448 F-2nd 1161 ff. (D.C. Cir.

1971)).

U.S. Congress, House, Fair Labor Standards Amendments of 1973. Report To Accompany H.R. 7935, H.Rept. No.

93-232, 93rd Cong., 1st Sess., Washington, U.S. Govt. Print. Off., 1973, pp. 25-26.

Congressional Record, March 7, 1974, p. 5737.

Congressional Record, March 7, 1974, p. 5738.

P.L. 93-258. The issue was not a central focus of hearings or debates (1973-1974), but the legislative history did

make reasonably clear the general purpose of the provision.

U.S. Department of Labor, Employment Standards Administration, Minimum Wage and Maximum Hours Standards

Under the Fair Labor Standards Act, Washington, U.S. Govt. Print. Off., 1975, pp. 7, and 21-24. (Hereafter cited as

Section 4(d) Report, and by date.)

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The Federal Minimum Wage and American Samoa

committee (except in American Samoa) is required under the 1974 FLSA Amendments to

recommend the mainland rate without regard to the other criteria.”92 (Italics added.)

In the late 1980s, American Samoa was, in effect, a company town—or, more precisely, a three

company island. It may not be surprising, therefore, that the canneries and the Samoan

Government opposed minimum wage increases and, where increases were unavoidable, sought to

keep them to the lowest possible level. In so doing, the canneries have been afforded a relatively

low wage workforce and the Government (with DOI support) has kept its budget accordingly low.

Conversely, there seems to have been little alternative to existing work at whatever the wage

rate—given the isolated location of American Samoa.

When, in March 1990, Secretary Dole announced appointment of SIC No. 19, no special

reference was made to evidentiary requirements. On June 12, 1990, Samoan Governor Peter Tali

Coleman wrote to the Department of the Interior on that issue. Governor Coleman stated:

The provision requires the Industry Committee to impose the mainland minimum rate unless

an industry can establish its inability to pay that rate by “substantial documentary evidence.”

The term “substantial documentary evidence” is defined to include specific financial

statements which many smaller employers do not have. Even those employers who do

maintain formal financial records normally consider the information sensitive and

confidential.

Coleman added that DOL had “specifically ruled that the requirement did not apply to American

Samoa” and stated: “...the industry Committee could be forced to promulgate wage rates which

are unreasonably high....”93 An exchange of letters followed—generally expressing concern about

a wage increase and objecting to the concept of substantial documentary evidence.94

If there was confusion over the concept of substantial documentary evidence, it seemed

opportune to make whatever changes may have been appropriate. On July 20, Delegate Eni F. H.

Faleomavaega of Samoa asked his congressional colleagues to “correct an inadvertent change”

made in the 1989 amendments to the FLSA. With Puerto Rico and the Virgin Islands now subject

to routine (national) minimum wage standards, only American Samoa remained subject to the SIC

proceedings. My district, Faleomavaega noted, “...is unfortunately a one-industry community, and

that industry is the canning of tuna.” Again: “Should Samoa lose this industry, the economic and

social impact on the people in Samoa would be devastating. 95 On August 1, 1990, nine Members

of the House wrote to Secretary Dole—requesting a postponement of SIC No. 19.96

Section 4(d) Report, 1976, p. 43. Both Puerto Rico and the Virgin Islands were, even then, moving out from under

the SIC system.

Letter from Governor Peter Tali Coleman to Stella Guerra, Assistant Secretary for Territorial and International

Affairs, DOI, June 12, 1990.

See, for example, letter from Tuana ‘ltau F. Tula, Speaker, House of Representatives, and Letuli Toloa, President of

the Senate, to Governor Peter Tali Coleman, July 18, 1990; and Guerra of DOI to J. Danforth Quayle, President of the

Senate, July 18, 1990.

Congressional Record, June 20, 1990, p. 18538. Inserted with his statement was H.R. 5329, a bill to remove the

“substantial documentary evidence” provision. See also S. 2930 by Senator James McClure (R-ID). Both are from the

101st Congress.

Representative Carl C. Perkins (D-KY), et al., to Secretary Dole, August 1, 1990. The letter spoke of a hazard to “the

regions’s tuna export market” and further stated their belief that “there is strong, bipartisan support for the technical

correction” with respect to Samoa and the concept of substantial documentary evidence.

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The Federal Minimum Wage and American Samoa

Finally, Stella Guerra, Assistant Secretary for Territorial and International Affairs, DOI, wrote to

William C. Brooks, Assistant Secretary for Employment Standards at DOL. She observed that

DOL had “already postponed the hearing at the request of the American Samoan Government”

but she urged further delay. Ms. Guerra stated that the procedure “created a possibility of wage

increases that could bankrupt small businesses, cause the largest businesses (the tuna canneries)

to abandon the territory, and force the territorial government to lay off workers....” She sought

additional time to allow Congress to “complete action on the amendment that we have

proposed.”97

New Legislation (1990)

On July 20, 1990, Mr. Faleomavaega introduced H.R. 5329, a measure that would have stricken

the entire section on “substantial documentary evidence.”98 Other bills followed: H.R. 5382, by

Representative Austin Murphy (D-PA)99 and S. 2930 (at the request of the Department of the

Interior) by Senator James McClure (R-ID). 100 On August 4, S. 2930 was called up for floor

consideration. The bill, in its original form, was passed by the Senate.101

In the House, S. 2930 was called up by Mr. Murphy on October 18 who explained that the bill

would accommodate “two separate groups of employers. It is very narrowly drafted.” He

continued:

When we originally passed the Fair Labor Standards Act amendments last year, the intent

was to continue to provide American Samoa with the right to have their minimum-wage

level set by the Commission in the Department of Labor. We did not make that clear, and the

Senate bill is addressing that particular matter.102

Murphy was seconded by Representative Steve Bartlett (R-TX) and, then, by Representative

William Goodling (R-PA). 103

At this juncture, Murphy proposed a slightly different amendment. He would insert: “unless there

is evidence in the record which establishes that the industry, or a predominant portion thereof, is

unable to pay that wage due to such economic and competitive conditions.” Murphy explained:

This amendment is intended to soften this additional burden for private sector employers in

American Samoa. While still requiring proof of economic hardship, the language of the

amendment makes it clear that the evidence necessary to justify special wage orders relates

to economic and competitive conditions on the island which affect the employment situation

for Samoans.104

Stella Guerra to William C. Brooks, Assistant Secretary for Employment Standards, DOL, August 7, 1990.

Congressional Record, July 20, 1990, p. 18538.

Congressional Record, July 26, 1990, p. 19769.

100

Congressional Record, July 27, 1990, pp. 20097 and 20099-20100.

101

Congressional Record, August 4, 1990, pp. 23403-23404.

102

Congressional Record, October 18, 1990, p. 31021.

103

Congressional Record, October 18, 1990, p. 31022. Representative Faleomavaega explained more fully the

character of the measure (to “correct an inadvertent error”) in a statement for the Record. No dissenting views were

expressed.

104

Congressional Record, October 18, 1990, pp. 31023-31024.

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Thus, the measure passed the House. The amended version required reconsideration by the

Senate, and on October 27, the Senate agreed to the House-passed bill.105 The measure was signed

on November 15, 1990 (P.L. 101-583).

Hearings on the Samoan Minimum Wage (1991-1992)

On November 26, 1991, Representative Murphy introduced a bill to amend the FLSA and,

through a three-year period, “to bring the minimum wage in American Samoa up to the wage in

effect in the United States.”106

As chairman of the Labor Standards Subcommittee, Murphy convened a hearing on June 3, 1992,

on H.R. 4011—a bill intended “to stimulate debate and interest in the welfare and well-being of

American Samoan workers” whom, he suggested, were “sometimes neglected and overlooked in

the crush of other important national issues.” Our objective, he noted, is to bring the Samoan

wage up to par with the federal rate “as rapidly as possible without curtailing employment.”107

Comments from Public Officials

Governor Peter Tali Coleman’s testimony, submitted for the record, began: “The American Samoa

Government vigorously opposes this bill.” It would “raise artificially the minimum wage of

American Samoa” without taking into account the status of its “economic development.”

Coleman urged an appreciation of “the uniqueness of our culture and its impact in the workplace

... “ Describing Samoa as “a group of very small islands with few natural and human resources,”

he stated: “We are heavily dependent on ... the economic strength of our largest private sector

employers, the tuna canneries. These two companies, StarKist and Van Camp, are responsible for

much of our economic growth....”

Coleman added that he was “... especially troubled by the potential for substantial increases in

unemployment.” (Emphasis in the original.) He continued:

We lack the diversity, capital, raw materials, skill levels, market or transportation systems of

the United States. Geographically, the Territory is remote and isolated. Our natural resources

are severely limited. (...) Tuna canning continues as our primary private sector employer. (...)

Rather than improving the income levels of our people, thousands may be thrown out of

work with no present job alternatives.

The SIC system “works well in American Samoa.” Under that system, “...statistical data and

economic conditions are examined to determine whether the Territory’s minimum wages can be

increased without substantially curtailing employment....” Coleman concluded: “This is simply an

ill conceived piece of legislation. It fails to take into account how the present system is working

or the tremendous adverse consequences that could result from enactment.”108

105

106

Congressional Record, October 27, 1990, pp. 36376 and 36392.

Congressional Record, November 26, 1991, p. 35873.

107

U.S. Congress, Hearing before the Subcommittee on Labor Standards, Committee on Education and Labor, Hearing

on H.R. 4011, Minimum Wage Rates in American Samoa, 102nd Cong., 2nd Sess., June 3, 1992, pp. 1-2. (Cited hereafter

as House Hearing, 1992.)

108

House Hearing, 1992, pp. 4-9.

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Delegate Faleomavaega’s testimony, now, provided something of a contrast. “Since entering

office, many of my constituents have related to me tales of woe about the rapidly increasing cost

of living in American Samoa, which has far outstripped salary increases of average wage

earners.” These “cries for help” are “growing in number.” “Perhaps,” Faleomavaega suggested,

the hearings will provide the answer to why American Samoa, unlike people in other US

territories, “are told they must be satisfied with the substandard wages set by the Department of

Labor’s industry committees.”

It may be, Faleomavaega suggested, that StarKist and Van Camp, “invaluable mainstays of our

territory’s economy, are overly sensitive.” From “media reports,” one hears of highly

compensated executives whose corporate income is many times more than “the combined annual

salaries of the 2,500 cannery laborers gutting tuna in Pago Pago.” Such reports may be “wrong or

outright lies” but “... perhaps the canneries should open their books and let their financial records

speak for themselves.” He observed: “Continuing to fail to divulge relevant financial information

while pleading lack of funds for wage increases ... will only be seen as a sign of bad faith.” Still,

he suggested that it was a “... delicate economic balance that must be struck to keep our canneries

in the territory.”109

John R. Fraser, Deputy Wage/Hour Administrator, resisted any increase. “There was concern that

the industry might respond to a larger increase by shifting production to lower-cost areas,

possibly resulting in very significant reductions in employment in the American Samoan

canneries.” This was of special concern “...in an economy dominated by only two major

employers and where there is scant evidence that the territory can significantly expand its

employment base in other areas to provide additional job opportunities.”110

Donald Senese, Deputy Assistant Secretary for Territorial and International Affairs, DOI, was

equally candid. He recalled the abortive SIC No. 17 and suggested that H.R. 4011 was essentially

“the same proposal.” Detailed economic studies suggested, he stated, that “any large increase in

minimum wages would encourage the tuna canneries to move at least some of their operations

from American Samoa.” In our view, he concluded, “... the artificial setting of wage rates at the

U.S. minimum would be very likely to eliminate the tuna canning industry and, in turn, threaten

to destroy the entire private sector economy of American Samoa.”111

Comments from the Industrial Sector

In over 30 years as an executive with StarKist, Robert W. Hetzler stated: “... I have seen the tuna

industry change from a homebred domestic industry ... to the foreign-dominated business it is

today.” He added:

As this shift has occurred, the industry has suffered massive job losses, first in California and

more recently in Puerto Rico, as tuna processors have moved to lower labor cost areas such

as Thailand, Indonesia, and the Philippines. As costs to U.S. producers rise, compounding

the cost advantages of foreign producers, the elimination of domestic production will

109

House Hearing, 1992, pp. 11-14.

House Hearing, 1992, pp. 16-17.

111

House Hearing, 1992, pp. 28-29. Senese, during the hearing and in the transcript, was identified, in error, as an

official with the Department of Labor.

110

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The Federal Minimum Wage and American Samoa

continue and even quicken, to the detriment of U.S. producers, their workers, and the

communities in which they live.

With factories in Mayaguez, Puerto Rico, and Pago Pago, “the canneries provide the majority of

private employment as well as create many additional jobs in service and support industries.” The

current bill would have “a devastating effect on tuna operations in American Samoa” and StarKist

“must emphatically oppose H.R. 4011.”112

Hetzler pointed to the alleged differences between American Samoa and elsewhere: the costs of

environmental protection, the absence of routine living costs. “Most cannery workers do not pay

rent, there is no property tax, clothing costs are minimal due to the single-season climate, and

medical costs are covered nearly 100 percent by the government.” Some workers were not

American: a “large majority of cannery workers in American Samoa are from Western

Samoa....”113

The government, Hetzler stated, “continues to add costs to U.S. industry through labor

regulations, environmental controls, and numerous other measures.” There is “simply no

replacement industry” and “...no way to recover the cost increases in the market-place.” Further:

“If government desires to place such wage and other controls on industry ... job and business

transfers to foreign low cost areas will result....”114

Jose Munoz, president and CEO of Van Camp, argued that the “...typical tuna consumer is a very

budget conscious homemaker, raising a family.” Although his firm had experimented with offsetting pricing, he had found “The consumer is unwilling to pay more for canned tuna to protect

or to save U.S. jobs.” Munoz reviewed various initiatives and affirmed: “We all ultimately report

to somebody, and in the tuna industry, we report to the consumer.” Even in the best of times, he

suggested, the consumer “had been unwilling to pay an increase.”115

As the hearing closed, Representative Murphy announced that “we had two witnesses

representing organized labor, both of whom have served on the special industry committees, who

were unable to make today’s hearing. The record of this particular hearing,” he stated, “will be

kept open in order to give them an opportunity ... to submit a written statement.”116 No statement

from labor appears.

Rejecting the Special Industry Committee System (2007)

The Murphy proposal of 1992 was not adopted, and instead, the SIC system continued through

the next several years with missions being sent to Samoa at two-year intervals. On May 10, 2007,

112

House Hearing, 1992, pp. 51-52.

House Hearing, 1992, pp. 52-53. In subsequent testimony, p. 84, Jose Munoz, CEO of Van Camp, agreed that the

majority of lower level employees are Western Samoans. “We work very closely with the government to hire American

Samoans. Whenever there is a job opening, we advertise it on the local radio stations, we post it in the newspapers, and

we work with the government training and job employment offices. Only when we have been unable to find any

American Samoans to do the job do we then go to Western Samoans.” Conversely, John Fraser of DOL stated, p. 15,

that “American Samoa’s unemployment rate has remained at about 13 percent over the last decade....”

114

House Hearing, 1992, p. 53.

115

House Hearing, 1992, pp. 65-66. See also ibid., p. 74.

116

House Hearing, 1992, p. 89.

113

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Secretary of Labor Elaine Chao appointed a new commission.117 The instructions were routine.

An economic report on labor conditions in Samoa, traditionally the responsibility of the

Department of Labor, had been prepared and was circulated. 118

In the 110th Congress, George Miller became chair of the Committee on Education and Labor.

Targeted for immediate action was H.R. 2, the “Fair Minimum Wage Act of 2007.” The bill (with

some 222 cosponsors) had two provisions: (1) to raise the federal minimum wage, in steps, to

$7.25 per hour, and (2) to render the federal minimum wage applicable to the Commonwealth of

the Northern Mariana Islands—to take place in steps through the next several years. No mention

was made of American Samoa: its Special Industry Committee was, by this point, an established

institution.

On January 10, 2007, H.R. 2 was called up in the House and, as a clean minimum wage bill, was

adopted on a vote of 315 yeas to 116 nays. The measure was promptly referred to the Senate

where it was also adopted: 94 yeas to 3 nays. But, in the Senate, several revenue-oriented

proposals were added, posing a procedural problem. The result was a variety of votes and new

bills until, in late May 2007, H.R. 2206 (P.L. 110-28) was adopted and signed by the President.

The final bill was a compromise. Minimum wage constituted only a very small part of the

composite bill—the rest being concessions to industry in exchange for support of the wage

measure. In addition, American Samoa had been added to the bill on final passage. 119

No immediate hearings had been held on application of the minimum wage to American Samoa.

Some concern had been voiced, however, about not having Samoa included in a bill that included

the Commonwealth of the Northern Mariana Islands. And, some suggested that a ‘special

exemption’ had been instituted for the vested interests of the Samoan islands. Rather than contest

the issue, Samoa was added, but with a slightly different procedure. Of the several classifications

of industry in Samoa (now numbering about 18), each would be given a 50 cent increase in the

minimum wage to take effect on July 25, 2007. Thereafter, a 50 cent increase by industry

classification would be affected each year until the collective minimum wage of Samoa reached

the standard national minimum wage: namely, $7.25 per hour or whatever new wage might be

imposed. Then, the insular minimum would rise (or fall) in tandem with the national rate.

Further, within eight months after enactment of P.L. 110-28, the Department of Labor was

asked—under mandate from Congress (Section 8104)—to produce a study of the impact of the

minimum wage for Samoa and for the CNMI. No action was associated with the report, which

was purely advisory. 120

117

Federal Register, May 15, 2007, pp. 27337-27338.

118

U.S. Department of Labor, Employment Standards Administration, Wage and Hour Division, Economic Report: The

Minimum Wage in American Samoa, 2007. 135 pp. The report was reasonably complete with various charts and tables

representing employment in American Samoa—including a lengthy section on the tuna industry and pro and con

arguments with respect to the minimum wage.

119

See CRS Report RL33754, Minimum Wage in the 110th Congress, by (name redacted).

120

See U.S. Department of Labor, Office of the Assistant Secretary for Policy, Impact of Increased Minimum Wages on

the Economies of American Samoa and the Commonwealth of the Northern Mariana Islands, January 2008. 45 pp.

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On June 13, 2007, with P.L. 110-28 in place, Secretary Chao “discharged the Industry

Committee” that had recently been appointed and closed that aspect of the case of American

Samoa.121

Meanwhile, Representative Faleomavaega introduced H.R. 5154, an amendment to the ‘U.S.

Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability Appropriations Act,

2007.” The bill would allow the several minimum wage increases to go into effect if, in the case

of American Samoa, “the Secretary of Labor determines, based on the study required under

section 8104 [the DOL study] and in consultation with the Secretary of the Interior and the

government of American Samoa, that an increase under this subparagraph will not have an

adverse impact on the economy of American Samoa....” New studies would be conducted at each

two-year interval. The bill adds: “The Secretary of Labor shall make the determinations required

... each year at least 60 days before the scheduled increase in the minimum wage” and publish

such determinations in the Federal Register.122

H.R. 5154 has been referred to the Committee on Education and Labor. No action has been

reported.

Concluding Summary

Throughout most of the United States, the minimum wage is a floor—the lowest wage that can

legally be paid to covered workers. In American Samoa, the minimum wage tends to represent

both a floor and a ceiling—though some rates do go up a few cents beyond the minimum. It

appears that most fish processing workers in Samoa are paid at or near the minimum wage.

Through now fifty years (1956-2007), American Samoa had been under the Special Industry

Committee structure. During the early years, that option included Puerto Rico and the Virgin

Islands. However, during the late 1980s and into the 1990s, Puerto Rico and the Virgin Islands

graduated to a full minimum wage leaving only American Samoa under the SIC umbrella. Where

the two Caribbean territories have special characteristics that have allowed for the gradual

elevation to a full minimum wage, American Samoa is in a somewhat different position. Samoa

evidences no serious or sustained movement into an industrial world with a diversified

economy. 123

American Samoa is isolated: 2,300 miles southwest of Hawaii. The population, though modest by

mainland standards, has been expanding: perhaps, now, to about 60,000 or a little above.

Distances render major tourism unlikely. There may be some market for handicrafts, but hardly

enough to sustain even native/resident workers under current marketing arrangements. In spite of

a relatively high level of Samoan unemployment (somewhere in the teens during recent years),124

121

122

Federal Register, June 13, 2007, p. 32683.

H.R. 5154 also applied to the CNMI.

123

In American Samoa Economic Advisory Commission: Transforming the Economy of American Samoa. Vol. One: A

Report to the President of the United States of America through the Secretary of the U.S. Department of the Interior,

Honolulu, July 2002, p. 9, it is stated: “...the people of American Samoa make clear they will not support any economic

development that ultimately undermines the tenets of fa’asamoa, the Samoan way of life.”

124

The unemployment rate reached 13.6 percent in 1999, though it has fluctuated at somewhat lower levels. See

Economic Report: The Minimum Wage in American Samoa, 2003. U.S. Department of Labor, Employment Standards

Administration, Wage and Hour Division, May 2003, p. 9.

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workers often arrive from Western Samoa (a former British colony, now independent) to engage

in fish canning and to replace those workers who migrate to the States. There would seem to be

little interest in trade unionization and, it appears, the territory offers little reward for national

labor federations.

In the early 1950s, the Department of the Interior sought a tenant for a vacant fish processing

plant at Pago Pago. The search seems to have been difficult—but Van Camp Sea Foods took up

the challenge. Soon, the firm was confronted with payment of a federal minimum wage. In order

to sustain its insular existence, Van Camp sought two concessions from the Congress. First, the

minimum wage for the island should be overturned, placing responsibility in the hands of a

special industry committee under the Secretary of Labor (as had been done for Puerto Rico and

the Virgin Islands). Second, it sought immunity from past underpayment of the minimum wage in

Samoa. In each case, Congress concurred.

Gradually, the tuna industry has come to dominate the island’s private sector as the primary

employer. For workers in the canneries, there would seem little option but to take jobs at

whatever wages the companies chose to pay (assuming that the SIC and the Congress would

agree). A second option, less desirable by insular standards, would have been to migrate to the

States or elsewhere.

With the first dispatch of a SIC to the islands in 1957, the native economy was assessed and a

minimum wage was assigned—to be updated every year or two. At first, cannery workers were to

be paid 38 cents an hour. Petroleum workers earned 45 cents an hour; shipping, 40 cents; and

miscellaneous workers, 35 cents. The upward movement was slow until, in 1986, SIC No. 17

determined that the federal minimum wage ($3.35 per hour) could be instituted without

endangering employment. However, under pressure from the canneries and the insular

government, the judgment of SIC No. 17 was overturned and Congress urged reestablishment of a

lower rate.125

What some may have seen as a further setback occurred in 1990 when Congress enacted

legislation reducing the level of evidence required in order for an employer to affirm his or her

inability to meet a minimum wage payroll. Further, in 1992, legislation was introduced that would

have increased the insular minimum, over time, to the full federal minimum rate. But, with

industry in full opposition, the bill was not adopted. Since that time, little new has developed. In

2001, SIC No. 24 visited the islands and raised the wage for fish cannery workers from $3.20 to

$3.26. No further increases in that category of work, it seems, have been instituted, though

Committees were dispatched in 2003 and 2005 and would have met in 2007. Other rates of pay

for insular workers have remained similarly low.

In 1992, John R. Fraser of DOL explained that there is “concern that the industry [tuna] might

respond to a large increase [in the minimum wage] by shifting production to lower-cost areas”

and, for that reason, “the department opposed” legislation to provide equality with the general

federal rate.126 Robert W. Hetzler of StarKist was more blunt. Were the tuna industry to disappear,

“the entire Samoan economy will collapse, resulting in massive social welfare costs to the

125

126

See Amerika Samoa: The Lutali Years, 1985-1986. Privately published for the Samoan Government, p. 7.

House Hearings, 11992, pp. 16-17.

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government of American Samoa and the United States.” There is, he stated, “simply no

replacement industry” and “...no way to recover the cost increases in the market-place.”127

That rationale, however justified by insular economic conditions, may not satisfy the workers in

tuna and in other industries. “[M]y district,” observed Delegate Faleomavaega during hearings in

1992, “is the only jurisdiction where the American flag flies and Federal minimum wage law

applies, yet our people ... are told they must be satisfied with the substandard wages set by the

Department of Labor’s industry committees.”128

On May 15, 2007, Labor Secretary Elaine Chao announced appointment of a new Special

Industry Committee to meet in Pago Pago in mid-June.129 But, the work of the committee was

interrupted by congressional action. In late May 2007, Congress adopted (and the President

signed) the “U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability

Appropriations Act” (H.R. 2206, P.L. 110-28). Under the act, the SIC system was abolished and a

new insular minimum wage was mandated—to be raised each year in fifty-cent increments until

the new federal minimum rate, however specified, might be reached.

127

House Hearing, 1992, pp. 52-53.

House Hearing, 1992, p. 12.

129

Bureau of National Affairs, Daily Labor Report, May 15, 2007, p. A11.

128

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Appendix.

Table A-1. Part A. Compilation of Wage Rates Established by the Various Special Industry Committees for American Samoa

(in dollars)

Date and

Committee

Numbers

FLSA

Standard

Cannery

Workers

Construction

Hospital

and

Education

Petroleum

Hotels

Retail

Trades

Shipping

(1)a

Shipping

(2)a

Shipping

(3)a

Misc.b

1957 (1)

1.00

.38

.45

—

.40

—

.35

1958 (2)

1.00

.52

—

.50

—

.38

1959 (3)

1.00

.75

—

.75

—

.55

1961 (4)

1.15

.90

—

.50

.90

.70

1963 (5)

1.25

1.00

.70

—

.55

1.00

.80

1965 (6)

1.25

1.00

1.03½

.70

—

.55

—

.80

1967 (7)

1.40

1.05

1.15

.75

.62

.65

.80

—

1.10

.90

(2nd year)

1.60

1.10

1.20

.80

.70

.85

—

1.15

.95

1969 (8)

1.60

1.15

1.25

.84

.80

.75

.90

—

1.20

1.00

(2nd year)

1.60

1.20

1.30

.88

—

.80

.95

—

1.25

1.05

1971 (9)

1.60

1.23

—

1.00

.90

.85

1.00

—

.60

—

(2nd year)

1.60

1.28

—

1.08

1.00

.95

1.10

—

.70

1.30

—

1973 (10)

1.60

1.35

1.37

1.15

1.05

1.00

1.20

—

1.37

—

(2nd year)

2.00

1.42

1.44

1.20

1.10

1.05

1.25

—

1.44

—

1974 (11)

2.00

—

Correction

2.00

—

1976 (12)

2.30

1.54

1.64

1.35

1.20

1.10

1.30

—

1.57

1.10

(2nd year)

2.30

1.66

1.70

1.45

1.30

1.15

1.35

—

1.70

1.15

1978 (13)

2.65

1.81

1.82

1.52

1.35

1.22

1.42

—

1.82

1.25

(2nd year)

2.90

1.96

1.95

1.60

1.42

1.30

1.49

—

1.95

1.35

1980 (14)

3.10

2.16

2.15

1.75

1.48

1.40

1.57

2.08

—

2.15

1.43

CRS-29

Date and

Committee

Numbers

FLSA

Standard

Cannery

Workers

Construction

Hospital

and

Education

Petroleum

Hotels

Retail

Trades

Shipping

(1)a

Shipping

(2)a

Shipping

(3)a

Misc.b

(2nd year)

3.35

2.33

2.32

1.85

1.54

1.50

1.65

2.21

—

2.32

1.50

1982 (15)

3.35

(2nd year)

2.55

2.53

2.00

1.60

1.75

2.42

—

2.53

1.59

3.35

—

2.15

1.66

—

1.85

—

1.67

1984 (16)

3.35

2.67

2.65

2.25

1.74

1.68

1.94

2.53

—

2.65

1.75

(2nd year)

3.35

2.82

2.80

2.38

1.84

1.77

2.05

2.67

—

2.80

1.85

1986 (17, 1)c

3.35

2.93

2.19

(to 7/7/86)

2.12

(to 7/7/86)

2.35

(to 7/7/86)

3.22

—

3.35

2.30

(to 10/1/86)

—

3.35

2.54

(to 1/5/87)

2.47

(to 1/5/87)

2.65

(to 1/5/87)

3.35

—

2.65

(to 4/1/87)

—

2.89

(to 7/6/87)

2.82

(to 7/6/87)

3.00

(to 7/6/87)

—

3.00

(to 10/1/87)

—

3.24

(to 1/4/88)

3.17

(to 1/4/88)

3.35

—

3.35

—

3.35

—

1987 (17, 2)

3.35

2.82

2.80

2.38

1.84

1.77

2.05

2.67

—

2.80

1.85

1987 (18)

3.35

—

2.50

—

1.85

2.15

2.75

—

2.90

—

(2nd year)

3.35

—

2.60

—

2.25

2.85

—

1991 (19)

4.25

2.87

2.91

2.70

2.34

2.03

2.34

2.96

—

3.12

1.92

(2nd year)

4.25

2.92

3.03

2.81

2.43

2.11

2.43

3.08

—

3.25

2.00

1993 (20)

4.25

3.00

3.15

2.90

2.55

2.20

2.50

3.20

—

3.35

2.10

(2nd year)

4.25

3.05

3.30

3.00

2.75

2.35

2.60

3.35

—

3.50

2.25

1995 (21)

4.25

—

3.45

3.05

3.00

2.45

2.70

3.60

—

3.65

2.35

(2nd year)

4.75

3.10

3.55

3.20

3.10

2.60

2.80

3.70

—

3.75

2.45

1997 (22)

5.15

—

3.60

3.30

3.17

2.70

2.87

—

(2nd year)

5.15

3.17

3.73

3.40

3.24

2.78

2.94

3.76

—

3.87

—

1999 (23)

5.15

—

3.45

—

2.97

—

3.92

—

(2nd year)

5.15

3.20

3.78

3.50

—

3.01

3.81

—

3.97

2.50

CRS-30

Date and

Committee

Numbers

FLSA

Standard

Cannery

Workers

Construction

Hospital

and

Education

Petroleum

Hotels

Retail

Trades

Shipping

(1)a

Shipping

(2)a

Shipping

(3)a

Misc.b

2001 (24)

5.15

3.26

(2nd year)

3.82

3.55

3.29

2.82

3.06

3.87

—

4.03

2.54

5.15

—

3.85

3.60

3.33

2.86

3.10

3.92

—

4.09

2.57

2003 (25)

5.15

—

2005 (26)

5.15

—

2.93

—

2.63

(2nd year)

5.15

—

3.00

—

2.70

Sources: Wage rates are drawn from the Federal Register with each SIC entry.

Notes: This table, which covers a widely ranging series of fields, is broken into two parts because of the number of columns. Some of the 21 fields or occupations analyzed

appear for a time and then are absent before re-emerging, as is the case of some components of “Shipping.” Others emerge later, are active for a period and then

disappear, as in “Laundry, Dry Cleaning.” The table begins with 1957 and moves forward to 2005.

Through the years, some variation may appear with respect to certain worker categories. The several classifications of workers under the title of “shipping,” for

example, seem to fluctuate over time making precise definition uncertain. Each classification has some bearing upon transportation and/or longshore workers.

However, workers dealing with “petroleum,” under certain conditions, may fall into a separate category.

The classification of “miscellaneous” seems to be a catch-all for non-governmental occupations that are not listed separately. The classification of “government

employees” serves a similar function for its sector.

In 1986, the SIC set rates that would, eventually, reach those of the general federal FLSA standard. In 1987, at the mandate of the Congress, the rates were set back to

the lower wage levels in effect in 1985.

CRS-31

Table A-2. Part B. Compilation of Wage Rates Established by the Various Special Industry Committees for American Samoa

(in dollars)

Date,

Committee

FLSA

Standard

Laundry,

Dry

Cleaning

Bottling

Printer,

Publishing

Wholesale

Warehousinga

Finance,

Insurance

Travel &

Transport

Government

Employees

Ship

Maintenance

Shipping

(4)b

Garment

Workers

Publishing

Industry

1957 (1)

1.00

—

1958 (2)

1.00

—

1959 (3)

1.00

—

1961 (4)

1.15

—

1963 (5)

1.25

—

1965 (6)

1.25

—

1967 (7)

1.40

—

(2nd year)

1.60

—

1969 (8)

1.60

.85

.95

—

(2nd year)

1.60

—

1971 (9)

1.60

—

1.00

1.10

—

(2nd year)

1.60

.90

1.10

1.20

—

1973 (10)

1.60

.95

—

1.16

—

1.27

—

(2nd year)

2.00

1.00

1.15

1.22

—

1.34

—

1974 (11)

2.00

—

1.27 (cor)

—

(2nd year)

2.10

—

1.34

—

1.15

—

1976 (12)

2.30

—

1.20

1.30

—

1.45

1.20

—

(2nd year)

2.30

—

1.25

1.40

—

1.60

1.50

1.30

—

1978 (13)

2.65

1.05

1.32

1.50

—

1.70

1.57

1.40

—

(2nd year)

2.90

1.10

1.39

1.60

—

1.80

1.64

1.50

—

1980 (14)

3.10

1.15

1.49

1.72

—

1.93

1.76

1.60

—

(2nd year)

3.35

1.20

1.59

1.84

—

2.05

1.88

1.70

—

1982 (15)

3.35

1.26

1.69

1.99

—

2.18

1.98

1.79

—

CRS-32

Date,

Committee

FLSA

Standard

Laundry,

Dry

Cleaning

Bottling

Printer,

Publishing

Wholesale

Warehousinga

Finance,

Insurance

Travel &

Transport

Government

Employees

Ship

Maintenance

Shipping

(4)b

Garment

Workers

Publishing

Industry

(2nd year)

3.35

1.32

1.84

2.09

—

2.31

2.13

—

1984 (16)

3.35

1.38

1.93

2.19

—

2.42

2.23

1.87

—

(2nd year)

3.35

1.46

2.04

2.31

—

2.56

2.35

1.97

—

1986 (17, 1)c

3.35

1.95

(to 7/7/86)

2.35

(to 7/7/86)

2.86

(to 1/7/86)

—

3.11

(to 1/7/86)

2.90

(to 1/7/86)

2.30

(to 10/1/86)

—

2.30

(to 1/5/87)

2.65

(to 1/5/87)

3.35

—

3.35

2.65

(4/1/87)

—

2.65

(to 7/6/87)

3.00

(to 7/6/87)

—

3.00

(10/1/87)

—

2.95

(to 1/4/88)

3.35

—

3.35

—

3.35

—

1987 (17, 2)

3.35

1.46

2.04

2.31

—

2.56

2.35

1.97

—

1987 (18)

3.35

—

2.15

2.40

—

2.61

—

2.50

—

(2nd year)

3.35

—

2.25

2.50

—

2.71

—

1991 (19)

4.25

—

2.34

2.60

—

2.82

2.44

2.17

2.60

—

(2nd year)

4.25

—

2.43

2.70

—

2.93

2.54

—

2.70

—

1993 (20)

4.25

—

2.55

2.80

—

3.05

2.65

—

2.80

—

(2nd year)

4.25

—

2.75

2.95

—

3.25

2.85

2.37

2.95

—

1995 (21)

4.25

—

2.85

3.05

—

3.45

3.00

—

3.00

3.50

—

(2nd year)

4.75

—

2.95

3.20

—

3.60

3.10

2.45

3.10

3.62

—

1997 (22)

5.15

—

3.01

3.25

—

3.69

3.16

—

3.15

—

2.45

3.30

(2nd year)

5.15

—

3.07

3.35

—

3.78

3.22

2.57

3.20

3.72

2.55

3.45

1999 (23)

5.15

—

3.37

—

3.83

—

2.63

—

3.48

(2nd year)

5.15

—

3.10

3.40

—

3.88

—

2.69

3.25

3.77

2.60

3.53

2001 (24)

5.15

—

3.15

3.45

—

3.94

3.27

2.73

3.30

3.83

2.64

3.58

(2nd year)

5.15

—

3.19

3.50

—

3.99

3.31

2.77

3.34

3.88

2.68

3.63

CRS-33

Date,

Committee

FLSA

Standard

Laundry,

Dry

Cleaning

Bottling

Printer,

Publishing

Wholesale

Warehousinga

Finance,

Insurance

Travel &

Transport

Government

Employees

Ship

Maintenance

Shipping

(4)b

Garment

Workers

Publishing

Industry

2003 (26)

5.15

—

2005 (27)

5.15

—

3.39

2.84

3.42

—-

—

(2nd year)

5.15

—

3.48

2.91

3.51

—

Sources: Wage rates are drawn from the Federal Register with each SIC entry.

Wholesale and warehousing were merged into retail trades.

Through the years, some variation may appear with respect to certain worker categories. The several classifications of workers under the title of “shipping,” for

example, seem to fluctuate over time making precise definition uncertain. Each classification has some bearing upon transportation and/or longshore workers.

However, workers dealing with “petroleum,” under certain conditions, may fall into a separate category.

In 1986, the SIC set rates that would, eventually, reach those of the general federal FLSA standard. In 1987, at the mandate of the Congress, the rates were set back to

the lower wage levels in effect in 1985.

CRS-34

The Federal Minimum Wage and American Samoa

Author Contact Information

(name redacted)

Congressional Research Service

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