Thousands lose jobs due to higher federal minimum wage

May 14, 2009

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. —

As President Obama considers whether to fulfill his campaign promise to raise the minimum wage from $7.25 to $9.50 per hour by 2011, there’s no better illustration of the consequences of well-intentioned policy-making than recent events in American Samoa, a United States territory in the South Pacific that falls within the purview of Congress.

Chicken of the Sea, the tuna company, announced this month that it will close its canning plant in American Samoa in September. The culprit is 2007 legislation in Washington that gradually increased the islands’ minimum wage until it reaches $7.25 an hour in July 2009, almost double the 2007 levels.

In 2007, the hourly minimum wage in American Samoa for fish canning and processing was $3.76 and the minimum wage for government employees was $3.41. Shipping had the highest minimum wage, at $4.59. Garment manufacturers got the lowest, at $3.18 an hour. A $7.25 wage is a substantial increase for most residents.

Chicken of the Sea will lay off 2,041 employees—12 percent of total employment, almost half of all cannery workers. And the 2,700 workers at StarKist, the other American Samoa tuna canning company and Chicken of the Sea’s rival, are probably concerned that their jobs are the next to go.

American Samoa’s loss is Georgia’s gain. Chicken of the Sea will move to Lyons, Georgia, (2007 population 4,480) employing 200 people in a new $20 million plant on a more capital-intensive production line.

In January 2007 the legislation originally did not include American Samoa, perhaps because Del Monte, at the time the parent company of StarKist, was headquartered in Speaker Nancy Pelosi’s district.

Until then, the Labor Department had set wage rates in American Samoa every two years, following an extensive study on economic conditions on the island. But before final passage, Congress included American Samoa.

Back in 2007 American Samoa Governor Togiola Tulafono worried that increasing the minimum wage “would kill the economy” and Congressional Samoan Delegate Eni F.H. Faleomavaega forecast that it would devastate the local tuna industry.

They knew that industries would go elsewhere if they have to pay $7.25 an hour.

They were right. American Samoa will lose not only the 2,041 jobs at the Chicken of the Sea canning plant, but also secondary jobs from the ripple effect of loss of income—stores and eateries that cater to cannery workers, shops that mend fishing nets, shipyards, and buses that transport workers.

In a telephone conversation this week, Representative Vaito’a Hans A. Langkilde of the Ma’oputasi District #10, representing the villages of Leloaloa, Satala and Atu’u, described the prospective devastation of the community. His district is home to both StarKist and Chicken of the Sea.

Mr. Lankilde told me, “Over the past 50 years the industry provided massive job opportunities for unskilled labor. The 2007 law that increased the minimum wage was the beginning of the end for the tuna industry and the cause of massive job losses for our already fragile economy. The only way to resolve the trend towards total economic disaster is for Congress at its soonest opportunity to reverse its position.”

With the recent laying of fiber-optic cable linking American Samoa to the United States, Samoans could get jobs in call centers. Yet the higher minimum wage could discourage firms.

Raising the minimum wage to $9.50 an hour would drive even more jobs away from American Samoa. In the United States it would have the effect of shifting jobs from low-skill to high-skill workers, raising unemployment among those who are least equipped to handle it.

Rather than having to accept direction from a government thousands of miles away where they have no voting representation, residents of American Samoa should be given the power to decide on their own minimum wage. Congress should leave further minimum wage increases to individual states to choose as they see fit, because wage levels and the cost of living vary substantially between states such as Mississippi and New York.

The closure of the Chicken of the Sea cannery in American Samoa shows us that higher minimum wages cause low-skill workers to lose jobs. What’s true for American Samoa holds equally true for the United States.

169 comments

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Our laws impose a huge penalty to our businesses who would otherwise prefer to locate their workforce on US soil because we refuse to apply them to our offshore competition. $9.50 per hour sends the clear message: Get Out Now! Now, just think, who benefits from this?

Posted by Brian | Report as abusive

You are right—why should the “low-skill” workers of the United States suffer the burden of unemployment? How pitiless that from them we try to embezzle the dream of such lavishness as food and shelter with the suggestion of a living wage. That they are paid at all reflects our nation’s failure to acknowledge the irrelevance of those whose profession involves actual work. After all, why should anyone care that, had wages kept pace with rising productivity from 1968, the average hourly wage would be $18.23?

Posted by jb | Report as abusive

This woman is so obviously biased in her “opinion”. She fails to mention that the new 20 million dollar plant is going to be state of the art and only employ 200 people compared to the 2000+ people employed in American Somoa.
It is obvious to me that the company was going to move the operation anyway, as soon as a new cannery was finished. Chicken of the Sea’s corporate move has absolutely nothing to do with the mandated wage increases. In mainland America the minimum wage is higher than that of the Island of American Somoa and everything to do with being able to reduce the work force to 10% of what was needed to run the “Old and outdated” cannery on the Island. Moving to mainland America should also cut its shipping fees, thus reducing overhead to maximize profits while the reduction in workforce will also reduce the amount needed to be set aside for benefits, social security, and taxes.

The move by Chicken of the Sea is based entirely on completing a newer facility with modern equipment while moving closer to consumers to reduce transportation costs. If this is her type of “opinion” piece, I wonder if she even grasps the concepts of newer business models.

Your argument has one massive flaw:

‘American Samoa’s loss is Georgia’s gain. Chicken of the Sea will move to Lyons, Georgia, (2007 population 4,480) employing 200 people in a new $20 million plant on a more capital-intensive production line.’

So they have $20 million dollars to spend on setting up a new factory, and I’m sure there’s additional costs to be considered in that move. Why? Because paying 2041 people an extra $3.49/hr is too costly. How much will the workers in the new factory be paid? How much more could they afford to pay these poorly paid people by cutting the wages of top executives by even 5%? This to me smacks of an inauthentic reason to avoid having to pay the poorest people a livable wage. The other factor to be considered is how much the cost of living went up during this time. $7.50/hr isn’t enough to live off of and certainly not enough to live comfortably off of.

Diana, how can you illustrate such a lack of logic? First, the move from A. Samoa to Georgia changed nothing in salary. As you stated they moved into a new automated facility that could be run by 200 bodies verses 2000 bodies in A. Samoa. This facility had to be planned far in advance and obviously without regard for minimum wage effects. How you could use this as some sort of reason not to increase minimum wage leads me to wonder what motivates your opinion pieces.

Posted by B.Free | Report as abusive

So the alternative is what? Paying people a salary that will garuntee that they are on social services? I suppose that is a great use of tax payer dollars, to subsidize businesses for their lack of responsibility toward their workers. I would suggest that the writer take a minimum wage job and see if she is able to survive. Perhaps than she might actually grow some empathy and compassion towards those who work in low wage jobs, but are unable to escape poverty. I doubt the writer will survive such an experiment in hardship. Placing corporate profits on the predication that workers have to be condemed to a lifetime of poverty is not only unfair, but it is immoral. We should stop calling ourselves the “greatest nation on earth” if we cannot provide hard working men and women a working wage. That should not be happening in the richest nation on the planet.

Posted by BB | Report as abusive

Where are the facts (both positions)?
When did the planning for this new facility start?
When did construction start?
Is GA giving the company tax breaks?
How much money do most people live on in American Samoa?
Is it possible that the company knowing the wage increase was coming decide to bail?
Is everyone living in poverty there since the highest wage is $4.59/hour?
People that don’t live there shouldn’t be commenting on what an acceptable wage is. Maybe they aren’t the pigs we are in the mainland and can live happily without iPods, SUVs and $100/month cell phone & cable TV plans.

Posted by SC | Report as abusive

The minimum wage debate will continue on and on. In the short term it raises wages for the workers at the bottom, but in the long term they are not any further ahead than they were at the lower wage. Do you remember when you could get a hamburger at McDonalds for sixty nine cents back in the late 90′s. Now, you can get them for a one dollar. As wages are artificially increased, so do the costs of everything else. More people earning more money means that in the short term more people buy more things. As time goes on, businesses have to pass the increased costs to consumers. Consumers then buy what they used to buy before the wages were increased. I know that a minimum wage increase is not the only thing that raises costs, but wages are the largest expense that most businesses have.

Also, to answer the question as to how much the company would save by moving to Georgia, here are the figures. 1800 fewer employees working 26 80 hour pay periods at an increased rate of 3 dollars per hour.
1800 * (26 * (80 * 3)). The savings is $11,232,000 in wages payable alone without including the savings for any health care benefits that may have been paid. Also, a new facility requires less maintenance and is more up to date as far as food safety and codes are concerned. Also, by acquiring a brand new facility, the company will likely be able to take advantage of the tax and income effects that the newfound plant depreciation will give them for several years to come.

As far as CEO and executive pay is concerned, how much is enough? Shouldn’t we all make as much as we can? If my farm grows more fruit and my herds grow faster than someone elses, shouldn’t I be able to eat more? If I own the land and work it and help it to produce, shouldn’t I enjoy the harvest? If I take the risk, shouldn’t I be able to enjoy the reward?

Posted by Raul | Report as abusive

Ideas such as these are at the root of the crisis that we are all in. They betray a complete inability to see the greater picture, the interconnections that make up the economic system. Or worse, they are the expression of a propaganda machine trying to legitimize an economic model that is extremely destructive, both socially and ecologically.

Posted by Andre | Report as abusive

It was “planned” because the minimum wage was going up. This 2009 increase was part of 2007 legislation.

So, instead of 2000 Samoans having a job that pays $3.50, they now have no job, which pays $0.00.

This helps poverty, how, exactly? If they couldn’t “live” on $3.50, they could quit. Now the choice isn’t theirs.

Let’s just make the minimum wage one hundred dollars an hour and we’ll all be rich. What’s wrong with that? You can’t simply “give” people a wage. The best possible outcome of a minimum wage is simple inflation that makes the increased salaries worthless. The typical outcome is that automation and general economic decline will cause massive unemployment.

Besides the economic illiteracy regarding the minimum wage, this tuna example just shows how racist the minimum wage is.

Posted by AmishDude | Report as abusive

USA is going down the drain. This is economic genocide against your own people. Support the people/help the people to be prosperous. Anyway: easier said than done. If buying any kind of small item is so difficult when you are poor in USA how can USA call itself developed. People milking a goat in Greece are far less stressed than civilized homeless,jobless americans. Sorry for the negativity.

Posted by Dracula | Report as abusive

Diana, I understand that you are paid to write these biased opinions, but this time is completely nonsense and laughable. Exactly the same ignorant economic reasoning brought the Republican party to its current reality :)

Posted by Ananke | Report as abusive

What does the minimum wage law matter anyway? When there are no real consequences for hiring illegal immigrant labor and paying them under the table, who cares what the official minimum wage is?

Posted by balloon | Report as abusive

Attempts to smooth out the bumps in the road often backfire.

No matter what you were taught you in school, it’s a jungle out there, and failure is always an option. Stop blaiming “them” for not looking out for your best interests.

I’ve never been given a job or a hand up by a bleeding heart. Life is made up of those who will use you for their own interests and those who are think they have the right to tell you what to do.

Posted by dlerhetal | Report as abusive

I quit school in the 10th grade and entered the work place with a job paying $40 a week for 6 twelve hour shifts. This was when weekly wages were exempt from minimum wage controls. Moving onto an hourly job at .90 cents, current minimum wage, equaled a considerable raise at the time. I continued on moving from job to job that payed higer wages. I have neer belonged to a union, as I see this as an artifical support for deadbeats. Minimum wages should be set for each State individually, as only they are aware of living expenses in their area. Raising the wages in A. Somao to what it may take to live in the U.S. solves nothing of benifit to the locals who are lurched out of a job when the business relocates. Get our Government out of trying to control everyone’s lives, as they can’t even manage the basic Government functions without wasting tax dollars.

The harmful effects of higher wages? well…aren’t you the popular one.

Posted by John J. | Report as abusive

I guess we should change the minimum wage to $1.50 an hour then. If you poor people don’t like it, well then just quit! Greedy poor people, trying to make a living wage. When will people learn that it should be what the corporations want to pay us, not what we need to get by on without handouts and Federal aid! Big Business is more important than the working poor.

Posted by theDagda | Report as abusive

My firm actually is forced to pay not minimum wages but a legally mandated rate for government work called Davis/Bacon. New rates were just handed out for a new round of contracts that increase the hourly rate for skilled labor by more than half. Has there been a 50% inflation since last year. Obviously not. This is a union sponsored effort to grab some of the wasteful government stimulus spending. Fair enough, but, in reality, none of this will happen. to win the contracts a company has to be competitive and so THEIR prices cannot increase. As a result, they CANNOT afford to pay these greedy legally mandated rates and stay in business. Instead, every minute not spent doing the nominal work category will be paid at any lower applicable rate as long as consistent with the law (bathroom breaks at minimum wage, walking to the job at laborer rates, travel to the job at minimum wage, there is no law that says you have to be paid the same amount every minute you work…you get the picture) and everyone, worker, bookkeeper, will have to spend much more time complying with the requirement by filling in forms. No one will make any more except the union bosses. it will be a complete waste of more time instead of productive expenditure. thats what you get with having your government run your life…a life lived at the Department of Motor Vehicles.

Posted by Markie Mark | Report as abusive

The minimum wage issue is very emotional to some people but Diana’s point is well taken. The company had two years to weigh the cost of continuing to employ 2,041 unskilled workers at $30,000,000 wages a year wages plus benefits or spend $20,000,000 for a new plant and employ 200 skilled workers at $4,000,000 to $5,000,000 wages plus benefits. This is a savings to the company of at least $5,000,000 the first year of operating the new plant even after paying for the new plant.
The compassion for the unskilled workers needs to be shown by Congress, they know that they are putting unskilled workers out of work every time they raise minimum wage. The point is, if congress cared about poor people they wouldn’t make it so profitable to hire skilled workers over unskilled workers.
Most workers only work for minimum wage while they are building their skills or until they can increase their income. Those that are unable to acquire skills need to be considered before congress raises minimum wage because they are the ones that loose when minimum wage goes up. Skilled workers don’t stay at low wages very long anyway.

Posted by Craig Coal | Report as abusive

…and, of course, no discussion of the role of corporate remuneration, golden parachutes and excessive shares/options for the board, the necessity of having ridiculous profits (due, amongst other things, to the thousands of mom/pop shareholders with their fingers in the pie via superannuation), the thirty year trend toward ever greater profits despite wage stagnation and rising living costs, a general corporate culture of tax avoidance, secret offshore bank accounts… but no, let’s not talk about that. Let’s punish labour and let big capital off the hook.

Posted by Peter Chambers | Report as abusive

The entire American lifestyle depends on a near-infinite supply of cheap labor. Does anyone realize that if their Plasma Screen televisions were manufactured in a fair-wages situation, they would not be able to afford such devices? Americans need to wake up and realize that the rest of the world is not their personal valet.

Posted by J Smith | Report as abusive

I see just as much bias in the comments as in the commentary. Businesses must make money to stay in business by competing with companies all over the world, not just in the U.S.
They are not in business to provide jobs or benefits. Any community or region relying on one company or industry will fail at the moment that industry or company is undercut by better technology, either in production or in product.
Also, a one industry community sells it population short since it creates a have and have-not society, even at minimum wage. You have a job, or you don’t. Diversity in industry provides competition and choice in the workforce, which forces companies to pay competitive wages. This is much more effective than artificial wage standards which always result in less competitive and less efficient business practices, which leads to failure.
In a diverse economy, if a company takes advantage of its workers, they leave for higher ground and the company changes its ways or goes away. It is quite simple.

In A. Samoa’s case, if they thought they had it made riding on Pelosi’s skirt tails, they just learned a very valuable, albeit painful, lesson. The canneries very well may have left anyway, but the minimum wage made it a very easy decision that the governing body of Samoa had no power to negotiate for themselves. Had they broadened their base of industry, this would still be painful but not devastating. This is the same situation as the auto industry in Michigan where I spent many years. If there is no consideration of business costs in social/economic policy, the businesses will be driven out and you be left crying in your soup at the shelter.

Posted by Dale | Report as abusive

Responding to jb’s comment about average wage following the rise in productivity: According to http://www.bls.gov/news.release/empsit.t 16.htm, the average hourly wage is about $18.50 for the first few months this year – slightly above your suggested $18.23.

Posted by JD | Report as abusive

Raul, your comments, if not meant to satirical, are so devoid of empathy as to be truly frightening. You ask “Shouldn’t we all make as much as we can?” The answer if you or other like-minded beings care, is NO! Utopia does not exist, but we will never approach anything like compassion if we choose to simply ignore anyone who is less fortunate. Greed can be disguied in innumerable masks, but it inevitably springs from an attitude of not caring. Unfortunately, during my life I have never learned how to convince a person to care about something, short of their experiencing some type of personal catastrophe which opens their eyes to the condition of the rest of humankind.

It is a disingenuous and myopic idea to suppose that a living wage is the cause of poverty. Businesses will always pass along any increased cost that they are able to; if they can’t, then they go looking for a population that is so mired in poverty that they have no choice but to accept whatever is offered to them. It’s a simple concept; it’s what is known as exploitation, and unscrupulous and greedy businesses have been doing it for decades. Of course, as long as the world is mired in the zero sum ‘game’ known as ‘competition’, things will not change. The question seems to me to be why the ‘winners’ think that the ‘losers’ will simply go away or magically disappear from the planet. One of the very legitimate purposes of government, at least in my opinion, is to do whatever it can to regulate greed and assist the losers. It’s not very Darwinian, I realize, but I believe that if there is any hope of extricating the disadvantaged from lives of misery and hopelessness, we all must one day realize that we’re all in this together. Greed will ultimately destroy everyone, not just the poor.

Posted by R. J. | Report as abusive

Besides the inflationary effect of a minimum wage rise that will give temporary relief to low income workers, it should be quite carefully adapted to expecially sensitive geagraphical areas like the Samoa Islands. For them, a low wage is better than no wage for sure. On a greater scale, in order to be competitive with low wages in other countries, a carefully concerted approach to taxation, productivity and labor cost should be considered. e.g. in the USA corporations pay too much taxes compared to Singapore, for example.

Posted by Rob | Report as abusive

Looks like this article got spammed by Obama’s Welfare Nation who believe that people go into business to provide them with a job and not to get a return on the money THEY invested and accepting the risk of losing that investment.

Not to worry though, these leeches now have Obama in power and if any business isn’t will to pay them $100 an hour, sell the product for 1.99 and take a loss for the “greater good”, then Obama will just take it away from the business anyway and give it to his Welfare Nation.

And these brainiacs can’t understand why the unemployment rate is going above 10% and no one is spending or providing investments or capital. These people are how we end of with a “community organizer” taking control and trying to run the auto, banking and insurance industries to a complete failure.

Posted by LogicalUS | Report as abusive

this move is good for the samoan’s….packing tuna in a factory is god awful…now they will have more free time to live in tranquility on their beautiful island.

Your Chicken of the Sea example does not support your argument. They are moving $7.25/hour jobs to Georgia, which has the same $7.25/hour minimum wage. Obviously, the wage hike had little to do with their decision.

why do so called experts who make high 5,6,7 and even 8 figure salaries want people who do not have to endure low wages?
I have a BS degree and I only make $13.99 an hour on a job that I’ve had since 2003!!!!!!!!!!!!! I live in Chicago.
It isn’t fair!!!! Gov, Mayor, and Cook County Commish are taxing us unfairly.
We should always have the right to repeal unfair increases…especially during a recession!
Oh by the way…they increase their salaries without the voters approval. Should’nt we??

Posted by PETER | Report as abusive

Soylent green is the answer.

Posted by kelly p | Report as abusive

How dare that Obama, He wants min wage to pay above the poverty line.Next thing he’ll want something craze like health care for all.

Posted by Rentsdueagain | Report as abusive

Dale writes–

“Diversity in industry provides competition and choice in the workforce, which forces companies to pay competitive wages. This is much more effective than artificial wage standards which always result in less competitive and less efficient business practices, which leads to failure.”

What you have stated is a very broad and generalized conclusion, which to be discussed effectively would mean conducting valid research into a broad sampling of data for support. For example, does ‘diversity’ itself actually cause competition so that employers will be forced to pay higher wages? The answer, I suspect, depends to a great extent on the industries, their geographic location, their relative market dominance, and many other factors. There have no doubt been many instances in our economic history where diversity has not produced upward wage pressures, just as there are probably examples where it has. If that is the case, then it becomes necessary to closely examine the contradictory examples to determine if ‘diversity’ is actually the driving or predominant force or reason for upward wage pressure. It may well be other factors that have nothing to do with ‘diversity’. Of course, it seems a truism that competition cannot exist without at least some ‘diversity’, but that is not a critical analysis that would suport a generalization that diversity always leads to increased wages, or that it is a better vehicle to use than government regulation. It seems to me that your statement presupposes that there is a relatively small workforce for those ‘diverse’ employers to call on. For me, it has been my experience that as long as there is a relatively large available workforce, there will be little, if any, upward wage pressure, no matter how ‘diverse’ an economy may be.

Posted by R. J. | Report as abusive

Wow – so the minimum wage laws are different, and employers in American Samoa pay more than employers in Georgia?

No, of course they don’t. Diana conveniently ignores the fact that the minimum wage is a federal law, and that Chicken of the Sea will have to pay the same wage in Georgia, because that destroys her argument that it’s the big bad Democrats who are putting these poor people out of work.

Its plain old American greed, something Diana chooses to defend surreptitiously instead of with honesty and integrity.

Posted by Lee Ward | Report as abusive

The reason rich people want to push minimum wage is because they want to preserve their wealth. Her argument is completely wrong because low wages create the walmart effect where the communities and the gov’t have to subsidize their expenses through welfare programs. I love the example of the $100 wage. Scare tactics by extremes. Please read the 7 methods of propaganda before reading any article or listening to anyone with an opinion about politics or business.

Posted by Matt | Report as abusive

Professor Alan Krueger has already taken the time to prove Mrs. Furchtgott-Roth wrong, and over 16 years ago.

To quote from an article published in the New York Times on August 22, 1993,

“Their studies of the minimum wage have attracted the most attention. Classic economics assumes that a higher minimum puts more money in the pockets of some low-wage workers, but forces others out of work, dismissed by companies who cannot afford to pay them. Professors Card and Krueger decided to test that when New Jersey, in the middle of a recession, raised the minimum wage in the state to more than $5.05 — 80 cents higher than neighboring Pennsylvania

They surveyed 400 fast food restaurants and found that those in New Jersey actually added 2.5 workers after the minimum wage went up. In Pennsylvania restaurants, meanwhile, payrolls shrank.”

I wonder how the author of this blog will react to actual evidence and hard facts.

Posted by DCX2 | Report as abusive

Without getting into the political dimension of this, it should be recognized that running a business on a remote island (ignoring labor) is more expensive than running the same business on land. Electricity, clean water, parts, supplies, etc. all cost more. If the plant is older and has a lower level of industrial sophistication (and is less efficient) than a new facility, the only way to make the island factory cost competitive is cheaper labor. Raise the labor rates to the same level as the mainland and it will make sense to invest new capital on shore since the island labor advantage is gone. 7 dollar labor on an island is not the same as 7 dollar labor in Georgia and the wisdom of investing capital in each is also not equal.

People should be able to sell their labor at a rate that makes sense in the real economic system where everyone has competition.

Posted by Bryan Baskin | Report as abusive

Take her words with a pinch of salt, folks. This was what she said about the likelihood of a recession in 2008 when her buddies, the Republicans, were in power:

“On balance, it is not likely that the United States will experience a recession in 2008.”

http://www.american.com/archive/2007/dec ember-12-07/the-great-recession-of-2008

Posted by Peter | Report as abusive

Hold it people. Please note: 2041 people will lose their job. And only 200 people will get one. That is only 10% of the jobs lost. Have any of you even thought about that factor. I want a pay raise too, but this dose not add up as being the way to do it.

Posted by Dana | Report as abusive

Diana Furchtgott-Roth misleads readers repeatedly in this article. This is ALL SPIN. Shame on the author. I will not trust anything by Diana Furchtgott-Roth in the future.

Posted by Joe | Report as abusive

A living wage is a fair wage where people can afford a roof over their head and food..it is the very least of the American dream. Homelessness is a huge issue for the working poor..

For those who say the US can’t compete if the minimum wage is raised, I disagree. The US can compete if people are well educated and have skills for the 21st century. Education is key to everything and it is there that the US is falling behind. Obama gets it.

Posted by ginny | Report as abusive

I wonder if anyone has ever thought about the thousands of jobs lost when executives are paid astronomical sums.

Posted by g a nanji | Report as abusive

Please stop allowing this woman to submit articles. Consistently short sighted and self serving.

I really hope the day comes when the educated middle and lower classed effectively coordinate a boycott of all large corporate products and services. Then tell me how giving these hard working individuals a raise would not benefit the economy.

How is it that in my lifetime my basic cable and phone bills have never gone down? Progress huh? Particularly as we move away from expensive outdated wired infrastructures.

“In a diverse economy, if a company takes advantage of its workers, they leave for higher ground and the company changes its ways or goes away. It is quite simple.” …..tell that to the folk in Michigan…you think they only make cars there apparently.

Posted by Colin | Report as abusive

Yes you socialist brainiacs, the minimum wage is the same in Samoa as Georgia, but perhaps you should read more carefully that the Samoans are unskilled, as opposed to the Georgia workers being skilled in a high tech processing plant — therefore having greater PRODUCTIVITY for the same wage, a concept which evades big government, bureaucrats, big unions, and most minimum wage advocates. The point missed by the minimum wage brain-trust is that they are HARMING the most vulnerable members of society in their self-righteous crusade to raise wages above free market value by causing unemployment. Further, the cost of that unemployment is now an additional cost to government, paid with more taxes. Good grief!

Posted by JJ Bright | Report as abusive

RE prior comment on a New Jersey – Pennsylvania study. It has long been DISCREDITED as laughable pseudo-science due to NJ big labor which indexed their wages against the increase in minimum. This had NOTHING to do with the well being of the minimum wage earner and everything to do with the stranglehold labor has on NJ. It wasnt the min wage guys driving the fast food business – it was the indexed, big union, high wage guys. What a farce.

Posted by A.B. Smyth | Report as abusive

Yes, the rest of the world is not our personal valet, and neither is the USA the welfare State to the world.

Outsourcing jobs have put too many people out of work here, and government sticking their noses in everyone’s business sure isn’t helping either.

One doesn’t need every new gadget that comes out, especially if it has cost a US citizen their job, by having them made in another country.

With government policies, greed, & envy running rampant now, we will end up losing more jobs, and soon we will be just another 3rd world country….something the UN wouldn’t mind seeing anyway.

Posted by bobc | Report as abusive

Ms. Diana Furchtgott-Roth is absolutely right…. Lets let businesses set the wage for the workers… Perhaps Ms. Diana Furchtgott-Roth would even write about how wonderful it would be to perhaps make the workers pay the company for the privilege of having a job….(insert sarcasm here)

Posted by Edgy | Report as abusive

It goes without saying that a higher minimum wage causes jobs to move elsewhere and increases unemployment. Whats the answer to that, lower the minimum wage to the point of near slavery in order to better approach 100% employment? Burn social justice on the pyre of ecconomic might in the hope that the less skilled poor are ‘dragged along’ by the bigger ecconomic wave built on their backs?

If any nation decided to do that, for long enough, they would end up with a distribution of wealth so dangerously lopsided it risked creating widespread social unrest. People would begin to feel a minifest need to protect themselves from other citizens and the prisons would begin to overflow in attempt to maintain social order and cohesion.

Posted by John | Report as abusive

What the conservative business is afraid of is wage lead inflation. Which causes the cost of goods to follow cost of production. Not saying how it impacts the economy other than the obvious. The producer makes more money when he can raise his price ahead of his cost. The issue of this article is ridiculous to compare an economy based on the availability of cheap labor to our economy. What are you thinking ?????

Posted by riddel | Report as abusive

1): It must be a slow news day at Reuters to publish Diane’s story. They obviously needed ‘filler.’

2): Easy resolve for the laid-off American-Samoan workers:
Organize an ESOP, raise stock capital then with assistance from the SBA start their own business enterprise. Let the employee-owners elect their own Board of Directors.
Set-up the business model as minority owned and geographically disadvantaged when bidding on Federal government contracts.

Posted by dusty | Report as abusive

Alan Krueger’s experiment doesn’t mean much compared to the far bigger experiment that we are doing now. Right now, our minimum wage makes our labor costs far higher than many other countries, like China and Korea. As a result, our products can’t compete with theirs on the world market. If we raise it higher, we will be even less competitive. This is ruining our future economy.

I currently work for minimum wage. If minimum wage is increased, I’ll get a raise, but I would prefer that it doesn’t happen. Increasing wages increases the cost of EVERYTHING. In the end, it doesn’t increase the buying power of low pay workers unless they buy things from even lower pay(foreign) workers.

Posted by Dwane Anderson | Report as abusive