American Samoa and the minimum wage: what happens when one floor fits a very different economy

Most minimum wage debates concern small changes in large, diversified economies. American Samoa is the opposite. It is a U.S. territory of a few islands in the South Pacific whose economy, according to the Government Accountability Office (GAO), rests on two pillars: the territorial government and the tuna canning industry. When Congress raised its minimum wages sharply after 2007, the change landed on an economy where most private-sector workers earned close to the floor and where the largest private employer competed with canneries in countries paying a fraction of the wage.

That makes the territory a revealing case, and a messy one: almost everything that could go wrong for a tuna-canning island went wrong at the same time.

Before 2007: a floor set locally

From 1957 until 2007, American Samoa's minimum wages were set industry by industry, on the recommendation of special industry committees, across 18 categories. GAO notes that only once, in 1986, did the highest of these rates (for canning, petroleum marketing and stevedoring) catch up with the federal level, then $3.35. Otherwise the territory's floors stayed below the mainland's.

By October 2006 the committee-recommended rates ranged from $2.68 an hour in garment manufacturing, the lowest, to $4.09 in stevedoring, the highest. The rate for fish canning and processing was $3.26. The federal minimum on the mainland was then $5.15.

The 2007 law: 50 cents a year until $7.25

The Fair Minimum Wage Act of 2007 (Public Law 110-28) raised the federal minimum from $5.15 to $7.25 in three steps ending in July 2009. It also abolished the special industry committees for American Samoa and replaced them with a mechanical schedule: every one of the 18 industry rates would rise by $0.50 a year until it reached the federal minimum. The same law put the Commonwealth of the Northern Mariana Islands (CNMI) on a similar 50-cent path.

The first step took effect on July 25, 2007, and two more followed on May 25, 2008, and May 25, 2009. For cannery workers, that took the floor from $3.26 to $4.76, an increase of 46 percent in under three years. Under the original schedule, GAO calculated, every American Samoa rate would have reached $7.25 by 2016.

The scale matters. According to a Department of Labor analysis cited by GAO, nearly 80 percent of eligible American Samoa workers earned less than $7.25 when the law was enacted. This floor would reprice most of the wage structure, not a thin slice at the bottom.

The canneries

In 2007 American Samoa had two tuna canneries: StarKist Samoa, operating since 1963, and Chicken of the Sea's Samoa Packing plant. GAO's first report said the two together employed almost a third of the territory's workers, and processed tuna has accounted for over 88 percent of the territory's exports to the United States every year from 1995 to 2018.

• Samoa Packing (Chicken of the Sea) closed in September 2009. GAO's 2010 report said the plant employed more than 2,000 workers and that cannery company officials called the minimum wage increases "a significant contributing factor" in the closure, alongside other factors. By GAO's 2020 report, Chicken of the Sea officials called limited tuna supply the key factor and the wage increases a minor one. The company moved canning to Georgia and outsourced the labor-intensive cleaning and cooking of tuna to lower-wage countries.
• StarKist cut back. GAO reported in 2010 that the remaining cannery had told Congress it had reduced employment by nearly 1,000 workers since May 2008, and that its officials said operations in American Samoa were "no longer viable" at the $4.76 cannery minimum.
• A second cannery came and went. Tri Marine International bought the closed Samoa Packing plant in October 2010, renovated it, and reopened it as Samoa Tuna Processors in January 2015. It suspended canning indefinitely in December 2016. Tri Marine blamed global price competition and high costs such as utilities, calling the minimum wage a minor factor.
• StarKist is the last one standing. As of June 2018 StarKist Samoa employed 2,439 hourly workers, and in 2018 it signed a 10-year lease to use the former Samoa Tuna Processors facility. GAO found that cannery employment fell from about 4,500 in 2007 to 2,469 in 2018, a 45 percent decline, most of it between 2007 and 2010.

Notice the tension. In 2010, with further increases pending, cannery officials stressed the minimum wage. A decade later they stressed tuna supply and competition. Both can be partly true; both come from interested parties describing decisions with many causes.

What GAO found

The American Recovery and Reinvestment Act of 2009 directed GAO to report periodically on the increases. The main reports:

• April 2010 (GAO-10-333). Employment rose 5.5 percent from 2006 to 2007 and 3 percent from 2007 to 2008, then fell about 12 percent among large employers surveyed from June 2008 to June 2009, before the cannery closed. Median inflation-adjusted earnings fell about 6 percent from 2006 to 2008, while GAO estimated that full-time minimum wage workers who kept their jobs and hours gained about 14 percent. More employers blamed their cost-cutting on the minimum wage than on other factors, and workers said their support for the increases "had dwindled."
• June 2011 (GAO-11-427). Employment fell 19 percent from 2008 to 2009 and 14 percent from 2006 to 2009. Tuna canning employment among questionnaire respondents fell 55 percent from 2009 to 2010. Average inflation-adjusted earnings fell 11 percent from 2006 to 2009, while the hourly wage of minimum wage workers who stayed employed rose "significantly more than inflation."
• March 2014 (GAO-14-381). Employment was down 11 percent from 2007 to 2012, though up 1.5 percent from 2011 to 2012. Tuna canning hourly employment was down 58 percent from 2007 to 2013. Average inflation-adjusted earnings fell 5 percent from 2007 to 2012.
• December 2016 (GAO-17-83). From 2007 to 2014 overall employment fell 4 percent, average inflation-adjusted earnings fell about 11 percent, and cannery employment fell 50 percent. It offered Congress alternatives, such as indexing wages to the local cost of living with safeguards to suspend increases in bad times.
• June 2020 (GAO-20-467). Real GDP fell 18.2 percent from 2007 to 2017. Employment showed no clear trend: it ranged from about 16,000 to 20,000, peaked in 2009, and was about 17,000 in both 2007 and 2018. Average inflation-adjusted earnings fell about 11 percent over 2007–2018. The cannery minimum rose 70 percent against 44 percent inflation, so cannery workers who kept their jobs gained; GAO noted this excludes workers who lost jobs or hours.

The pattern that holds across every report is the one theory predicts: workers who kept minimum-wage jobs got real raises, the industry paying those wages shrank, and average real earnings fell. Whether the minimum wage drove the shrinkage is what GAO never settled.

Congress hits pause

The political reaction is itself evidence. Congress repeatedly slowed its own schedule:

• 2009 and 2010 (Public Laws 111-117 and 111-224): no increase in 2010 or 2011. These measures kept the 50-cent steps but pushed convergence back to 2018.
• 2012 (Public Law 112-149): increases were moved to every third year.
• 2015 (Public Law 114-61): each step was cut from $0.50 to $0.40.

As a result, after May 2009 the territory saw no increase at all until September 30, 2015. GAO's 2014 report recorded that American Samoa's government said GAO had "captured the consensus" to postpone the 2015 increase. By 2020 the territorial government and the Chamber of Commerce both told GAO the increases conflicted with sustainable economic development, and the government proposed a local wage-setting committee, with a moratorium on increases until it was formed.

The Northern Mariana Islands, the other territory on the 2007 schedule, followed a different path. Its last garment factory closed in early 2009 and its schedule was also delayed, but its minimum reached $7.25 on September 30, 2018, according to the Department of Labor.

Where the floor stands in 2026

Under Public Law 114-61, every American Samoa rate rises $0.40 every three years on September 30 until it reaches the federal minimum. Steps took effect in 2015, 2018, 2021 and 2024. The next is due on September 30, 2027.

Sources: GAO-20-467, table 1 (2006–2018 actual, 2027 projected); U.S. Department of Labor, Wage and Hour Division, American Samoa minimum wage poster (rev. 09/24) and industry pages (2021 and 2024). The 2027 figures assume the federal minimum stays at $7.25.

On that schedule, and if the federal minimum stays at $7.25, GAO projects that stevedoring reaches the federal level in 2027, fish canning in 2033, and the government sector and garment manufacturing, the lowest rate, in 2036. That would be 29 years after a law that expected to finish the job in nine.

What else was going on

An honest reading has to reckon with how much else hit American Samoa at the same time.

• Eroding trade protection. American Samoa's canneries enjoy duty-free access to the U.S. canned tuna market, while foreign canned tuna faces tariffs averaging about 12 percent by GAO's estimate. But cannery representatives told GAO in 2010 that "the lessening of the value of tariff protection, owing to global trade liberalization," and the loss of certain U.S. tax benefits contributed to the closure. Outsourcing cleaning to low-wage countries such as Thailand could sharply cut costs, which is what Chicken of the Sea did.
• The 2009 tsunami. In September 2009, the same month Samoa Packing closed, a tsunami following a magnitude 8.1 earthquake killed 34 people in American Samoa and severely damaged homes, businesses and infrastructure. Over $125 million in federal assistance followed, and the extra government spending helped real GDP grow in 2010 and 2011.
• The global recession and fuel costs. The first three increases arrived during the 2008–09 global downturn. Cannery representatives also cited rising fuel-driven shipping and utility costs.
• Tuna supply. GAO's 2020 report describes marine monuments closing fishing grounds and Chinese fishing subsidies drawing supply away.
• Government spending. The government employed about 42 percent of the workforce in 2018, and GAO, citing the Bureau of Economic Analysis, treats changes in its spending as a main driver of GDP alongside the canneries.

Together these make it impossible to say, from these data, how many jobs the minimum wage alone cost. Anyone who tells you the Samoa Packing closure was simply caused by the minimum wage is overselling, just as anyone who says the wage increases did not matter is ignoring what employers, workers and the territory's own government told Congress.

Where we come down

The lesson of American Samoa is not a single employment number but the shape of the policy failure. Congress applied a floor designed for the mainland's labor market to an economy where most workers earned below it and the main private employer competed directly with low-wage countries. Then Congress spent the next decade slowing that schedule, with the territory's own government asking for relief. When a legislature keeps postponing its own minimum wage, it is conceding that the floor was set above what that economy could bear.

That is the price-control logic at the heart of our case against the minimum wage: a uniform floor ignores local productivity. It also fits the wider literature, summarized in our review of whether the minimum wage causes unemployment, which finds the largest effects where the floor bites deepest. American Samoa is about as deep a bite as a U.S. jurisdiction has seen. For the broader story of how the federal floor reached $7.25, see our short history of the minimum wage, and for the studies themselves, our research tracker.

What American Samoa does not provide is a clean estimate. The GAO reports are careful audits, not natural experiments, and the confounders are real. The fair conclusion is narrower but still telling: the territory's government and employers concluded that the scheduled increases put too many jobs at risk, and Congress, by its own repeated delays, agreed.