American Samoa’s real gross domestic product (GDP) and  population have both declined in recent years. Earnings. Earnings analysis based on American Samoa tax, GAO  questionnaire, and consumer price data show that, from 2011 to 2012,  average inflation-adjusted earnings of those employed in American  Samoa fell by 2 percent. The two employers attributed  all of these plans to a moderate or large extent to the minimum wage  increases, but also to increased utility and material costs and  business factors. CNMI Earnings, Employment, and Status of Key Industries

The minimum wage in the CNMI has increased five times since 2007,  with the most recent increase on September 30, 2012, bringing the  minimum wage to $5.55 per hour. Hotels representing the majority of all workers  employed by questionnaire respondents took cost-cutting actions and  raised prices from 2010 to 2013. Although employers attributed a  number of actions to the minimum wage increases, they also  attributed them to other factors, such as increased costs and changes  to U.S. immigration law. Hotels representing 90 percent or more of all  workers employed by questionnaire respondents stated that they  planned to introduce labor or cost-saving strategies and raise prices in  the next 18 months, with hotels representing all or almost all workers  employed by questionnaire respondents attributing that plan to  minimum wage increases to a moderate or large extent. While acknowledging the recent  upturn in tourism, industry representatives characterized the growth  as an opportunity to recover from several down years and reinvest in  their properties. Appendix I: Objectives, Scope, and Methodology

This report updates our previous reports on the impact of minimum wage  increases in American Samoa and the Commonwealth of the Northern  Mariana Islands (CNMI) and discusses for each territory (1) changes in  employment and earnings and (2) changes in key industries since the  most recent federal minimum wage increase and since the increases  began. Application of Federal Minimum Wage Law to American Samoa and CNMI

In 2007, the United States enacted legislation that incrementally applies  the U.S. minimum wage to American Samoa and the CNMI. The most recent minimum wage increase in  American Samoa was on May 25, 2009. In 2010, the U.S. enacted a law  delaying the scheduled American Samoa minimum wage increases for 2   Further changes to the  years, providing for no increase in 2010 or 2011. law in 2012 provided for no increases in 2012, 2013, and 2014 and  changed the interval of the increases from every year to every 3 years.Under current law, therefore, the next minimum wage increase will occur  on September 30, 2015, and the minimum wage in the American Samoa  tuna canning industry will reach the current U.S. minimum wage of $7.25  on September 30, 2027. 1). 3). The inflation-adjusted earnings of minimum wage  cannery workers who retained their jobs and work hours fell by about 4  percent from 2011 to 2012 (a period that did not include a minimum wage  increase) and also decreased by about 5 percent overall from 2007 to  2012. Tuna Canning Employers Cut Costs Due to Minimum Wage Increases and Other Factors

Two employers in the tuna canning industry in American Samoa reported  in our questionnaire that they had taken cost-cutting actions from June  2010 to June 2013 including labor- and cost-saving strategies and  reduced overtime. After 4  years of consistent decline, the CNMI real GDP has remained relatively  flat since 2009 (see fig. CNMI Employment Fell from 2011 to 2012 and Has Decreased Substantially Since 2006; Average Inflation-Adjusted Earnings Have Declined

		CNMI Employment Decreased Substantially from 2006-2012

Overall CNMI employment dropped every year from 2006 to 2012,  according to CNMI tax data. Hotels representing nearly all workers employed by questionnaire  respondents also attributed their cost-cutting actions to a moderate or  large extent to increased utility, material, and transportation costs. As occupancy has increased in recent years, room rates have also risen.
Why GAO Did This Study

In 2007, the United States enacted a law incrementally raising the minimum wages in American Samoa and the CNMI until they equal the U.S. minimum wage. American Samoa's minimum wage increased by $.50 per hour three times, and the CNMI's four times before legislation delayed the increases amid concerns that they would have a detrimental effect on the American Samoa and CNMI economies. The most recent increase in American Samoa occurred on May 25, 2009. The next is scheduled for September 30, 2015, with additional increases every 3 years thereafter. Under current law, the minimum wage in American Samoa's tuna canning industry will equal the current U.S. minimum wage of $7.25 in 2027. The CNMI's most recent increase occurred on September 30, 2012. The next increase is scheduled for September 30, 2014, with additional increases in 2016 and annually thereafter until it reaches the U.S. minimum wage.
GAO is mandated to report in 2014, and every 3 years thereafter, on the impact of the minimum wage increases. This report updates our previous reports and discusses for each territory (1) changes in employment and earnings and (2) changes in key industries since the most recent federal minimum wage increase and since the increases began. GAO reviewed local and federal earnings information; collected data from employers in key industries through a questionnaire and from employers and workers through discussion groups and interviews during visits to each area.
American Samoa's government said GAO captured the consensus to postpone a 2015 minimum wage increase. CNMI's government said GAO captured the general economic condition of the CNMI.

What GAO Found

American Samoa employment and earnings have decreased since 2007, but employment increased slightly from 2011 to 2012. Since 2005, the American Samoa economy has had a flat or declining real gross domestic product (GDP).
Average inflation-adjusted earnings of those employed fell by 5 percent overall from 2007 to 2012 and by 2 percent from 2011 to 2012.
One of American Samoa's two tuna canneries closed in 2009. However, a new company is renovating the closed cannery and plans to re-open it in 2015. Two employers in the tuna canning industry took cost-cutting actions from 2010 to 2013, including labor-saving strategies and reduced overtime. The employers attributed to a moderate or large extent all but one of their actions to minimum wage increases, but also to increased utility and material costs. Two of the three employers planned more cost-cutting actions and attributed those plans to a moderate or large extent to minimum wage increases, but also to other increased costs and business factors.
Commonwealth of the Northern Mariana Islands (CNMI) employment and earnings have decreased overall since 2006, but earnings increased slightly from 2011 to 2012. After falling rapidly from 2005 to 2009, CNMI real GDP remained relatively stagnant from 2009 to 2012.
Average inflation-adjusted earnings of those employed fell by about 2 percent overall from 2006 to 2012 but rose by 1 percent from 2011 to 2012.
CNMI hotel occupancy and room rates have risen in recent years, but industry representatives we spoke with characterized the recent growth as an opportunity to recover and reinvest in their properties. Hotels representing the majority of all workers employed by respondents to GAO's questionnaire attributed past cost-saving strategies and price increases to minimum wage increases. Hotels also attributed their actions to other increased costs and changes to U.S. immigration law, which reduce the number of available permits for foreign workers in the CNMI. Hotels representing 90 percent or more of all workers employed by questionnaire respondents attributed plans for further cost-cutting to minimum wage increases, but also to increasing utility, material, and transportation costs.