Beginning in the 1970s, Congress passed legislation that set minimum wages for  certain industries in these two territories to equal the federal minimum wage and  created a schedule of increases for minimum wages in the remaining industries to  eventually equal the federal minimum wage. (See fig. When adjusted for inflation, the U.S.’ GDP rose by 15 percent, and its  GDP per capita rose by 6 percent during the same period. 7). StarKist Co. has had a cannery in American Samoa for more than 50  years. In 2014, total American Samoa employment  was about 4 percent lower than in 2007, while cannery employment was  about 50 percent of its 2007 level. From 2007 to 2014, average annual inflation-adjusted earnings of  American Samoa workers fell by about 11 percent. Both canneries announced plans to suspend canning operations in  American Samoa in response to such challenges. American Samoa Government Sees Minimum Wage Increases Conflicting with Sustainable Economic Development

The American Samoa government, the territory’s largest employer,  continues to report concerns about the economic impact of the scheduled  minimum wage increases. Alternatives for Increasing American Samoa Minimum Wages to Keep Pace with the Cost of Living and Eventually Equal the Federal Minimum Wage

There are two basic approaches for increasing American Samoa’s  minimum wages to (1) keep pace with the cost of living in the territory;  and (2) eventually equal the federal minimum wage—the criteria included  in the statutory provision for GAO to report on this issue. The first  approach relies on adjustments indexed to changes in the cost of living,  and the second relies on a schedule of adjustments within a specified  timeframe. In addition, aspects of each approach may be combined with  respect to the amount and timing of future increases to minimum wages. Other factors would also warrant consideration, including design options  to safeguard against any negative effects that increasing minimum wages  might have on American Samoa’s economy. Scheduled Increases in American Samoa Minimum Wages

The second approach—applying scheduled increases to American  Samoa minimum wages—would establish a timeframe for ensuring that  American Samoa’s minimum wages eventually equal the federal  minimum wage, thus addressing the second criterion included in the  provision for GAO to report on this issue. Whether based on an index, a schedule, or  some combination of the two, increases to minimum wages could be  reduced or suspended on the basis of one or more economic  indicators that reflect the general health of the American Samoa  economy or critical sectors. Agency Comments and Our Evaluation

We provided a draft of this report to the U.S. Appendix I: Objectives, Scope, and Methodology

This report (1) relates the history of minimum wages in American Samoa,  (2) examines the status of the territory’s economy, and (3) identifies  alternative approaches that could be used to ensure that minimum wages  in American Samoa keep pace with the cost of living in American Samoa  and eventually equal the federal minimum wage. Our discussion of the  American Samoa economy updates our previous reports on the impact of  minimum wage increases in American Samoa, including changes in  employment and earnings and changes in key industries since the most  recent federal minimum wage increase and since the scheduled  increases in American Samoa minimum wages began. To describe the status of the American Samoa economy, we reviewed  relevant GAO reports and analyzed gross domestic product data from  the U.S. Bureau of Economic Analysis; tuna export data from the U.S.  Census Bureau; tax data from the American Samoa government; and  employment, earnings, and wage data gathered through a questionnaire  that we submitted to the two tuna canneries currently operating in  American Samoa—StarKist and Tri Marine. L. No. 114-61 for GAO’s review (see app. The federal minimum wage in the United States has been set through the passage of,  and amendments to, the Fair Labor Standards Act of 1938 (FLSA). GAO-14-381.
Why GAO Did This Study

The federal minimum wage, established by the Fair Labor Standards Act of 1938, has not been applied in American Samoa for many years. In 2007, Congress passed legislation to incrementally raise minimum wages in American Samoa to the federal level. Subsequent legislation postponed or reduced these increases.
Pub. L. No. 114-61, enacted in October 2015, included a provision for GAO to report on alternative ways of increasing minimum wages in American Samoa to keep pace with the territory's cost of living and eventually equal the federal minimum wage. In addition, Pub. L. No. 111-5, enacted in February 2009, included a provision for GAO to report periodically on the economic impact of minimum wage increases in the territory. This report examines (1) the history of minimum wage implementation in American Samoa; (2) the status of the American Samoa economy, including changes in employment, earnings, and key industries since scheduled minimum wage increases began in 2007; and (3) alternative approaches for increasing minimum wages in American Samoa to meet GAO's two reporting criteria in Pub. L. No. 114-61. GAO reviewed American Samoa local and federal earnings information; collected data from American Samoa employers in a key industry through a questionnaire; and reviewed methods used to set minimum wages in the United States and around the world.
Commenting on a draft of this report, the Department of the Interior suggested further study and the American Samoa government suggested creating a committee to set minimum wages in the territory.

What GAO Found

Federal legislation passed in 2007 created a schedule of periodic increases to minimum wages in American Samoa. During the previous 50 years, special industry committees had periodically recommended industry-specific minimum wages. Historically, minimum wages in the U.S. territory have generally remained below the federal minimum wage (see fig.). The current schedule of increases would raise all American Samoa minimum wages to the current federal hourly rate of $7.25 by 2036. However, any new increase in the federal rate will lengthen the time required to achieve convergence.
American Samoa's gross domestic product (GDP) per capita is less than a quarter of the U.S.'s GDP per capita and, adjusted for inflation, has declined over the past decade. Local government and tuna canneries are the largest employers, accounting in 2014 for 42 percent and 14 percent of the workforce, respectively. From 2007 to 2014, overall employment fell by 4 percent, and workers' average inflation-adjusted earnings fell by about 11 percent. During the same period, cannery employment decreased by 50 percent, and the minimum wage for cannery workers rose. Cannery officials reported labor costs and fisheries access among the challenges of operating in the territory, and one of the two canneries announced plans to suspend operations indefinitely in December 2016. The American Samoa government has expressed concern that continued minimum wage increases are at odds with sustainable economic development.
There are two basic approaches for increasing American Samoa's minimum wages to keep pace with the cost of living in American Samoa and to eventually equal the federal minimum wage—the criteria included in the provision for GAO to report on this issue. The first approach relies on indexing minimum wages to the cost of living. The second approach relies on using a schedule of future adjustments. Aspects of each approach could also be combined, as needed, with respect to the amount and timing of future increases to the territory's minimum wages. Given concerns about potential negative effects of increasing American Samoa's minimum wage on the territory's economy, other design options could be incorporated to safeguard against such effects. For example, minimum wage increases could be reduced or suspended based on economic indicators that reflect the general health of the American Samoa economy or critical sectors.