Opinion

The Great Debate

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.

Comments
169 comments so far | RSS Comments RSS

The truth is that Somoa has been fished out.

Posted by Sinbad | Report as abusive
 

Mrs. Furchtgott should apply her reasoning to herself first: Let’s consider age, maintenance cost and expectations vs. output, shall we, and see the end result. Unwillingness to recognize other factors makes the author a liability to the company she writes this column for because all that is provided is erroneous information.

I don’t think the minimum wage change alone is what made Chicken of the Sea decide to close down their facilities in the American Samoa. Surely there are other figures at play here. Not being very familiar with the company or the industry I still felt something was wrong about Furchtgott’s column so I decided to scratch the surface a little.
My initial reaction was one of puzzlement at this column: How can a cannery in Georgia – in the East Coast of the USA, far from the areas of bountiful tuna harvesting – be more cost-effective than the local canneries in the Samoa, Pacific Ocean? Prior to canning, tuna is a short term, perishable good, so the time elapsing from harvest and transportation to the East Coast canning facilities is very important to consider… unless the company is thinking of not canning tuna from the Pacific at all, relying instead on the smaller stock supply of the Atlantic. This didn’t make sense right there…I was confused.
What left me even more confused is that last year, according to the link I am providing from http://www.house.gov, Chicken of the Sea, Starkist and Bumble Bee were together in their support of a bill by Congressman Faleomavaega (native A. Samoan) to support the U.S. tuna fishing fleet. How does moving to Georgia in the Atlantic/Gulf of Mexico support the American tuna fishing fleet of the Pacific? I understand the transportation issues may be a more relevant determining factor in why the Chicken of the Sea factory is closing, but somehow don’t explain it fully, and the fact that this company has been shutting down canneries in the United States for years now and that it has been bought by a Thai company in December of 2000 seems too important to dismiss. Blaming the current salary level of Samoan workers isn’t a valid reason at all in my perspective because no matter how low Furchtgott thinks the wages in A. Samoa have to be to keep the business there, the Thai and South American’s will simply be lower and that is it. Domestically speaking, Samoans have had it rough for many decades, forced to put up with lower than national average wages and that hasn’t made Samoan economy any more competitive and attractive to other types of businesses – and that includes ship building. What I am seeing is that, bit by bit, canneries want to shut down production in the US altogether from harvesting to canning, and sticking only with the lowest unavoidable cost of import and distribution. A huge primary industry such as this shouldn’t be allowed to be outsourced but that is what is happening and has been happening for 3 decades. It’s absolute rubbish that the increase of the minimum wage for the Samoan population is the cause of it. I hope the links below will be enlightening enough to those who, like me, are not aware of the other dealings going on about this.
I will leave you with this direct quote from Congressman Faleomavaega in his letter to Governor Togiola, dated 5/07/2009:
“While I am seeking a $20 million emergency set aside in the supplemental appropriations bill, and while I will also ask to increase operations and CIP funding for ASG, I am not sure how successful federal efforts might be, especially given our tuna canneries were recently provided with a $33 million federal income tax break at a time when the United States is faced with an unprecedented financial crisis. Prior to this extension, each cannery received over $5 million per year in federal tax breaks for almost 20 years, which equates to well over $200 million, not to mention the tax breaks they got for the 20 or so years preceding this.”
Sources: http://www.house.gov/apps/list/press/as0 0_faleomavaega/enitotogiolaresamoapackin gclosure.html
http://www.house.gov/list/press/as00_fal eomavaega/3canneriesallsupporteni.html
http://articles.latimes.com/2001/aug/02/ business/fi-29727
http://www.dol.gov/esa/whd/AS/sec3.htm

Posted by Van Dan | Report as abusive
 

Yes, go after executive salaries! Let’s say we have one of those capitalist bloodsucking leeches pulling down $5 million a year. Let’s take his WHOLE salary and divvy it up. Hmmmm, 5 mill divided by 2,000 hours per year equals $2,500 an hour; an outrage! Divided by 2,000+ workers equals ..uh.. $1.25 an hour. OK, OK, it seems we need to go after some more heartless executives. Come on people, the math ain’t that hard! The tuna cannery probably would have shut down in favor of a more automated plant anyway (progress, you see), and the wages just helped move it along a bit sooner.

Posted by Bruce H. Anderson | Report as abusive
 

Shouldn’t the headline be more like, “Large corporation finds more efficient way of delivering products by building a modern food processing plant, replacing an out of date facility and reducing staff needs by 90%”

In a major victory for productivity and efficiency, Chicken of the Sea built a new, state of the art processing plant in Georgia.
————-
See, it really isn’t about the minimum wage, but the Republicans want to make it that way. How many years has Chicken of the Sea, or rather its parent corporation, Thai Union International, been planning to move to this new facility. I can guarantee you that they didn’t decide to move in sudden reaction to the minimum wage.

It is more likely they made the move to a more modern facility because the company is moving from simply canning tuna to selling its tuna in pouch form, which requires completely re-tooling its facility. We could be happy that the Thailand based corporation decided to build their plant on US soil.

But no, because Republicans have been serving fear, uncertainty, and doubt for many years. Why waste the chance for some pseudo-economist to push a republican agenda by making up some nonsense.

Posted by Lord Astral | Report as abusive
 

The income of working Americans has been stagnating for many years. Many stupid things have been done in those years to try to make up for that failure of American capitalism. Wives having to work, going too deep into debt. etc. Something has to be done to solve the root problem, income stagnation.

Posted by chris | Report as abusive
 

“They are not in business to provide jobs or benefits.”

Sure not. They’re in to make a profit. What many people here (the author of the article included) don’t understand, however, is that if everybody acts like business is just about making profit, it’s only a matter of time before we’re all going to be out of business. Every time a company slashes jobs and benefits Wall Street cheers. Nobody seems to care what happens if a lot of jobs and benefits are slashed across the system. We are now witnessing the long-term consequences of this mentality, of the colossal greed and utter, self-defeating stupidity that generates it and keeps it alive.

Posted by Andre | Report as abusive
 

Nonsense! American companies are used to running from paying workers fair wages, so they run to where ever they can take advantage of poor people. By doing so, poor people live forever in poverty. And then be called “Third World”.

Screw these companies, most of whom evade taxes too. And for this writer Diana, I want her to get paid $4.50 per hour, let me see how she will live. Or let her children get paid $3.18 per hour. If you cannot make enough money per hour to have a hamburger, that is slavery by another name.

Why is it that well-to-do people, always argue that poor people should accept poor wages in order to have jobs? Who is getting cheated here? How many millionaires do we have to create in order to keep so many people in perpetual poverty. I am sure that the CEO of Chicken of the Sea makes more money per year than the sum total of the laid-off workers. So much for “Pursuit of life and liberty and happiness for all”.

America! Where is your moral? Where if your fairness?

Posted by Theo | Report as abusive
 

RE: Andre
“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.”

Lotta big words there fella. You wanna tell us the point you were tryin’ to make??

Posted by Michael | Report as abusive
 

Amnesty International has long cited the low wages as the leading cause of poverty around the world for decades now. The IMF and World Bank economists have drawn similar conclusions. The American people who remain employed are by far earning much less than a year or so ago. By your logic the economy should be taking off right now.

It is easy to argue for the different schools of economic thought in an ivory tower and within the confines of academic assumptions as to how an economy functions. This is by definition the hypothetical. Nothing historically approaches the economic catastrophe we now endure accept perhaps the Great Depression. Depressed wages will bring depressed prices. This might be survivable for a largely self sufficient economy. This was the U.S. situation in the 1930s, unfortunately we no longer enjoy that luxury.

I find it refreshing that President Obama invited Joseph Stiglitz and Paul Krugman to dinner at the White House. Perhaps it is time you consider the consul of these Nobel and Pulitzer prize winning authors. Their work is exhaustive as it is replete with hard data and lucid insight as to the dynamics of market economies. There are many others in academia that are coming around too. District Appeals Judge Posner comes to mind as one.

It is time we conduct business in this country by how actions effect people and not concern ourselves with theoretical implications of the aggregate.

Posted by Anubis | Report as abusive
 

All moot points in the comment section. American Somoan population 3.2 million, jobs at cots, a couple of thousand. Not going to effect AS or Georgia in any significant way, nor wage level interpretations, etc, etc.

 

Anubis: You are incorrect on several things. One, to claim we were self sufficient in the 1930′s is disingenuous or ignorant. We were heavily reliant on foreign trade and internally we had no controls on food production. This lead to FDR creating a cartel of sorts out of agriculture so as to avoid destroying the small farms. Like most progressives, however, his meddling only hurt the poor. Of course we know that subsidy was an incentive for VC to invest in large corporate farms that eventually killed off small farmers.

Likewise, you speak as if our country had never suffered a more severe Panic than the crash of 1929. That simply isn’t true to history, if you believe in it at all (which I can’t believe those who call themselves progressives could, considering the overwhelming historical record disproving their theories of economics). In fact, the US had several Panics much worse than the 1929 crash. The only difference is the depth and length of the stagnant economy. You may argue that it was because of corporate greed. However, corporate “greed” existed much more in the 1800′s during gold rushes and economic downturns then lasted on average less than 2 years, usually bouncing back as quickly as it fell (much like it did during the more recent stock market crashes when government didn’t intervene – like say 1987). Long standing business that bet incorrectly or took too much risk folded and the government didn’t save any jobs. In the 1930′s, government did interfere and it took a decade for the markets to recover. We are doing it again, which is why we will be able to compare the 1930′s to this time – we have the same type of “progressive” policies of spending our way into long-term economic stagnation. If you enjoy high inflation and depressed standards of living, I can’t see how you can call yourself progressive. We need to replace “pro” with “re”.

Posted by Brian | Report as abusive
 

While I agree that high wages are a danger, I tend to see the danger in the people at the top of the company, not the working stiffs that are just getting by. How about this for an equitable solution, let’s set the minimum wage a company can pay a worker at a fixed fraction of the total compensation the highest paid person in the company gets.

Posted by rhonan | Report as abusive
 

Nonsense. Raising the minimum wage will in both the long run and the short run help American Samoa. No mention is made by the author of the benefit to those whose standard of living will be vastly improve as a result of the wage hike. The conservative view is always that the lower the wage the better things are because it enables more people to be employed. The fact that those employed cannot survive on those low wages is immaterial to them. It is for this same reason that they believe that unions, not the Madoff’s, are the cause of all of our problems. They forget that the heyday of this county was between 1950 and 1970 when unions were powerful and only one breadwinner could support a family. Unions and good wages and benefits were not the cause of our present problems. They resulted from an unregulated banking and loan industry that created great wealth for a few at the expense of real growth for the many and we will not return to the good days of the 50′s and 60′s until workers can earn enough money to pay for a car and a home without resorting to the tricks and gimmicks that brought on our current mess. If the concern is that higher wages will only put unskilled workers out of work, then the answer is to retrain them to have the skills to earn a better living, not to force them to work for nothing.

Posted by Eugene Oreck | Report as abusive
 

The lesson from all of this is Businesses will go where wages are lowest, as well they should. Look no further than Detroit to see what happens when the wage exceeds value of labor.
Is it right? YES… Is it fair? YES… How about teaching your children to CREATE jobs and not go searching for them? Our Universities gather our BEST and BRIGHTEST to beat the entrepreneurial spirit out of them before they graduate. How else to you explain the fact that only 19% of businesses in the U.S. are run by PhDs?
69% of ALL business owners have LESS than a 4 year degree!!!!
Education is a wonderful thing, but what are you educating YOUR children to do after College? You need to make sure they go into business for themselves, and stay in business for themselves.
If you do they cannot be fired, or laid off worst possible outcome is they go out of business, and go to work for someone else. (In other words… My plan B is YOUR plan A.)

 

The myth that you have to pay people crappy wages in order to run a business is just that, a myth. Pay people well, and they work hard and are loyal and productive. Pay them low wages, and it sends the message that you don’t respect them, and thus, they have little or no motivation to work hard for you. Productivity drops, and employee turnover goes up. There can be even worse consequences sometimes: just ask all the people who died in the commuter jet crash in Buffalo, NY recently. Underpaid, undertrained, overworked pilots who didn’t know what to do under the weather conditions present – end result – lotta dead people. I’m sure the airline company accountants, executives, and shareholders were thrilled with the cost cutting. But the families of the dead will tell another story. And let’s just see how many tens or hundreds of millions the airline will have to pay out when it’s proven that the airline was negligent.

Posted by charles | Report as abusive
 

http://www.house.gov/apps/list/press/as0 0_faleomavaega/enitoinouyeforhelprecanne ryclosure.html

“Yet, given our history with the tuna industry, I am not surprised. More than 50-years ago in 1956, Chicken of the Sea’s once parent company, Van Camp Seafoods, actively lobbied the U.S. Congress to suppress wage rates in American Samoa. Commenting on the company’s desire to pay Samoan workers 27-cents per hour as opposed to the then prevailing minimum wage rate of $1 per hour, Van Camp stated, “The company has found that it takes from 3 to 5 Samoan workers to perform what 1 continental worker in the United States will do. It is therefore felt that this justifies a lower rate for Samoans.”

Over 50-years later, Chicken of the Sea leaves American Samoa with the same attitude, justifying lower rates for Samoans while soon to be paying workers in Georgia almost double the money. Therefore, I am not one to believe the hype that minimum wage increases drove Chicken of the Sea to do business in another location. Truth is, Samoans have not received a significant wage increase for more than a decade, until the recent enactment of P.L. 110-28.

With the enactment of P.L. 110-28, I fully supported a one-time increase of 50-cents per hour for our Samoan workers. From the outset, I also opposed escalator clauses, or automatic increases, as mandated by P.L. 110-28, given the uncertainty of the economic status of the Territory. As you are aware, per the mandate of P.L. 110-28, the U.S. Department of Labor (DOL) conducted an 8-month study of the Territory’s economy and concluded that automatic increases would be harmful, but the report was harshly criticized by Chairman Miller and Senator Kennedy for not addressing the issues raised in the law.

In response to the DOL’s findings, Governor Togiola and, I with the support of the Fono, sought your assistance in 2008 and 2009 to include, in the omnibus or supplemental appropriations bills, language to eliminate escalator clauses. Regrettably, neither Senator Kennedy nor Chairman Miller would support your efforts or ours. This is why last year I also requested your support of a one-time set aside of emergency funds for American Samoa and CNMI to offset the automatic minimum wage increases. Unfortunately, it was not possible for this request to be supported by the House or Senate.

Now, with the announcement of Chicken of the Sea/Samoa Packing’s closing, I am once more seeking your assistance in setting aside emergency funds for American Samoa. The reason for this request is because other factors including rising energy and fuel costs and the crash of the global economy are severely impacting any company’s ability to do business in the Territory. Corporate greed and mismanagement are also factors that have affected both tuna canning operations in the Territory.

For years, StarKist and Chicken of the Sea have paid their executives top-notch salaries with benefits, but not once in our 50-year history has StarKist or Chicken of the Sea ever offered profit-sharing incentives or stock options to our workers. Instead, our cannery workers were given a case of wahoo at Christmas and a turkey at Thanksgiving and told that their wages must remain below the federal minimum wage rate.

While suppressing Samoan wages, both tuna canneries employed poor marketing strategies, in part, enabling Bumble Bee to become the number one selling brand of tuna in the country. In a December 9, 2008 meeting with Mr. Kim Jae-Chul, Chairman and CEO of Dongwon, who recently purchased StarKist for some $363 million, he informed Governor Togiola and I and other local leaders that figures showed a 20% decrease in production due to a 20% drop in sales after Dongwon took over from Del Monte, a drop that Del Monte officials who are managing StarKist through an agreement with Dongwon attribute to marketing reasons.”

Posted by Van Dan | Report as abusive
 

I say it’s about time that Ms. Blowhard-Roth’s job as pundit/apologist be outsourced to someone who can do an honest assessment of the situation. I’m sure we can find an unemployed American with an MA degree who will be willing to work for less.

Posted by Mark | Report as abusive
 

No minimum wage is something that I have advocated for years but am usually met with blank stares. Surely if the Government did make employers pay a certain wage then the employer would pay next to nothing. And yet it has been shown time and time again that this is not the case. Yes, it is true that perhaps some people will be taken advantage of but this will be a fraction of what already exists. Currently there are millions of people that are paid “under the table” and because of this they have no protections. If they are not told of dangers or given proper training they cn not turn to Government Agencies that help police these types of abuses.
This is but one of many reason to have no minimum wage and not just in American Samoa. If you look at who actullt makes minimum wage you will be surprised to discover that it is mostly students. Raise the minimum wage and those students will become unemployed as companies must pay other fees instead of just wages. It is time to repeal this bad labor law

Posted by Liam McDonald | Report as abusive
 

What can I say? As congress is pressing for tax increases for the population due to their passage and inept enforcement of the laws, rules, and regulations governing our country it seems they should share in the economic downturn just like all of us are doing!

As most retirement plans have decreases on average of 50% it seems only fair that congress and the remaining federal government reduce their salaries, expenses and staff (total government employees) 50% also!

Something has to be done and it is up to the public to start the ball rolling for fiscal reforms to government employee benefits and salaries.

Why should we pay this President and congress to make these types of mistakes?

So stop complaining and get the ball rolling! Contact your local churches, clubs, meetings, town halls, and especially your state congressmen and tell them you want to pass laws cutting back congressional salaries, staff members, allotments and expenses! Be sure to discuss this at your next tea party!

Please pass this to all of your e-mail contacts and post on as many political news agencies on the net as often as possible until changes are made!

If you are faint of heart, I would appreciate your moral support!

 

what it does show is the greed that corporations have. it is unfair not to have a liveable wage. i also feel, any tax credit or breaks these companies are receiving should be removed.

enough is enough.

 

It’s always amazing how someone can make comments on minimum wage packages yet they can be considered as someone in the high income group.

See if she will survice on such a package before advising others to do so. In my opinion she is insulting Obama’s intelligence and goodwill and should instead of filing such comments walk the talk.

Posted by Johan Aggenbach | Report as abusive
 

OK so a community that has grown with low wage jobs is going to move on. They have had 30 years to aspire to higher wage more skilled employment.
You might suggest that there is a need for companies to be able to hire at below minimum wage if those affected approve the lower wages by a secret ballot.
We obviously need to understand what we expect as a society. Is minimum wage a living wage or why not have both. Even then what is minimum wage?
Your blather about a cannery moving to exploit some other low wage location. Try Haiti. Have you ever been to a cannery? Disgustingly unskilled.
I do believe we should address low skilled and no skilled segments of our population. Something NOT nothing.

Posted by Ray Thomas | Report as abusive
 

I have just deduced the reasoning behind your article, you have mercury poisoning because you are a tuna fish glutton and you want prices to be CHEAP so you can have MORE.

Posted by Clay | Report as abusive
 

Another incompetent from the Bush administration trying to justify slave labor.

The reason people are losing their jobs is because corrupt politicians and failed economic policies enabled the top 1% of the country to grab 20% of nation’s income and 40% of the nation’s wealth. That hasn’t happened since 1929.

The current federal minimum wage is only 57% of the living wage–the wage needed to bring a family of four up to the poverty threshold.

Those who supported union-busting, deregulation, privatization, corporate welfare, tax breaks for the wealthy, and offshoring for the past 30 years are at fault, NOT wage-earners. When the dollar finally collapses (it has already lost 94% of its value between 1920-2009; most of which has been lost since the 70s), I suppose that unions and greedy wage-earners will be blamed for that, too.

Posted by Jade | Report as abusive
 

Wow.
Grasping at straws(or should I say gasping) is apt for this
piece.
I cannot believe that this woman continues to write stuff
like this….just how many times do we have to continue to
read that lower wages are “the answer” to solving the
world’s economic ills?
American Samoa yet!!!
How about here on the US mainland? Has national catastrophe befallen us with our new minimum wage rules?
No? Hmmmmmm, I wonder why not?

A token conservative economist with an old refrain that
still doesn’t work after all these years.
Can you write a little about “trickle-down” theory?
Or maybe another old classic like “tax breaks for large
corporations and upper income individuals which will
result in job creation”…

Posted by Darlene | Report as abusive
 

Reading the comments posted here makes it obvious that many do not understand what it was that built the business empires of the USA over the last two hundred years. As a result of those business empires, our economy flourished. Even low-skilled labor could make a living. So the idea that a rising tide lifts all boats (thanks JFK) does have a proven record.

So what was it that built those empires? It was greed, plain and simple.

In order to be the biggest or best, it required investment (meaning $$) going into the business. That investment purchased more equipment and hired more people. That, in turn, created growth in supporting industries, which, in turn, created more oppotunity for others.

Therefore, greed is not a bad thing. In a roundabout way, that greed employed the masses.

However, because the rich have been made to feel guilty for the wealth they have earned (wealth is earned – not distributed), they are reluctant to build empires anymore. That translates into less reinvestment, which translates into less growth, which translates into less job opportunity for the average Joe.

Do you want to see the US economy return in more robust fashion? Stop vilifying wealth and greed! And implore the wealthy to start building business empires – again.

Oh, and one more thing. The middle class in the US has shrunk from what they were 30-40 years ago while the lower class has remained about the same (percentage-wise). So, the question is this: Where did they go?

Posted by One | Report as abusive
 

Sweet!

Let’s also slash the wages of all the moronic corporate execs who put us in our current predicament.

Posted by PJ | Report as abusive
 

You can disagree with the ladies line of thinking but you can’t with the fact that the tuna plant is gone. What would the liberal propose here, a law that says factories can never leave? If so start working on the next problem..the factories never came. Think about all those oceans out there and you’re looking at cans of tuna. One costs 50% more and they both taste the same. What happens most of the time?

Posted by Bob | Report as abusive
 

I have read many comments here I am struck by the lack of logic and reason. Many here lack any understanding of business and economics. It is all about emotion and feeling. “Oh, these greedy companies! They don’t want to pay anyone!” A business is not a social service. They are in it for profit because the shareholders demand that a company be profitable in order to justify its investing in that company. A company is there only to increase shareholder value. That is business 101, folks.

Living in American Samoa is not like living in New York or Boston. The people there do fine on $3.50 an hour because the cost of living is low. The author is COMPLETELY RIGHT. American Samoa should have the right to set its own minimum wage because Washington doesn’t know the hell what is going on there. Each state should be able to set its own minimum wage. Say if California wanted to raise theirs to $12 an hour, they should be ready to hear the sucking sounds of jobs going to neighboring. So be it. They would have made their choice. Too bad for the people because the Democrats in that state may be beholden to labor which comprises a minute part of the population.

I lived in eastern Europe. Because of different reasons like high taxes, welfarism, and such, wages in western Europe were high, but so was unemployment and this was before the recession. Many eastern European countries like the Czech Republic and Slovakia had lower wages and lower taxes. They were able to take jobs from western Europe, making matters worse for themselves. The western Europeans only had themselves to blame. A Slovak didn’t really need to make as much as a Frenchman. A Slovak making half that of a Frenchman could live comfortably in Slovakia. This is because the cost of living is lower in Slovakia. This is the same thing that is going on in American Samoa. American Samoa is like Slovakia and western Europe is like New York.

Yes, there is poverty in the world. But there is not the dire poverty of Africa or southern Asia in American Samoa. Because of liberal policies, the Samoans are doomed to the fate of Africans.

Thank you liberalism and empty-headedness. (WHICH ARE ONE AND THE SAME.)

Posted by Keith | Report as abusive
 

You are right Diana:
You do not care the fact that those minimum wages are not even living wages, and even if those poor workers can have minimum of what they need stil you do not care! how about you trying to live with such small amount?? sure that is not happening, but for others to be in such condition it is ok.

Posted by robert | Report as abusive
 

Ms Diana Furchtgott-Roth, take a year away from your cushy six-figure job and live, I mean live with those minimum wages. I bet you couldn’t make it a week. . .

Posted by joe | Report as abusive
 

The basic thing that is missed by most or all of the commenters is this one “Is this the best that I can get”
I worked for minimum wage for a long time, but I dont do that job, ot that kind of work anymore I am a Systems administrator now and i do better than the minimim wage. However the process is similar at higher levels of pay I serve in an IT position for the US Govt I perform IT duties that are the same or more so than others in IT, but my Job code is “computer clerk and assistant” not IT specalist if my job were correctly coded then My 3 other colleagues and I would get the Bonus that comes from being in an IT position about 6000 more per year… Now those were the wages and I did sign on the dotted line, but when a position opens where i can actually get credit for my education, training, and experience like most of the people in DOD do I will cast my ballot with my feet and I am so gone. Im not stuck staying there, as the idea is to move to a better position. this is not a one size fits all solution, but it does work for a large percentage of people.

I dont think McDonalds indended to people to work for them for life… with the comming increases in EVERYTHING Busniesses will be in a position to choose between keeping the doors open or closing down shop… If i were one of these So called Greedy men I would Close the doors cash out my busniess and put everyone out of work.

as a side note if some one came to unionize my workers, and if I was paying higher wages and benefits then the competetion I’d close the doors and take my dough and cash out of the system let the government take care of them…

Posted by manny | Report as abusive
 

If you dig how hard enough Diana, I’m sure you can find some “spin” that Medical Care can be hazardous to the people also.

Cherry picking info can debate “pro and con” for ANY ISSUE OR SUBJECT !!

Posted by BillyBob | Report as abusive
 

American Samoa should be an independent nation.
The reason StarKist is leaving the area is not due to wage increases but the fact that the Communist Chinese fishing fleet has nearly eradicated the tuna schools in the area.

You had to go pretty far afield to get this little morsel.

Posted by Alfred | Report as abusive
 

I spend nearly 25% of my year overseas on China working on the design and manufacture of products consumed in the US. Why?!? Because labor is cheaper over here, and when the customer is choosing between my product and my competitor’s product on the shelf at the retail store, they don’t look at where the product is manufactured, they simply evaluate the styling and the price (perhaps this is not true for all products, but for the product line and price point at which I develop product, this is a _completely_ true statement).

I’d also like to point out that while the wages in China are roughly 3% of the wages in the US, this is not a “slave” wage. The quality of life that the workers enjoy at $.50/hr here in China is very good. Interestingly enough, in 2008 when China enacted the new Labor Contract Law that set out to improve worker’s wages and other conditions, the results were devastating. In the area in which I work, nearly 9,000 factories shut their doors within the first 10 months of 2008 (http://online.wsj.com/article/SB1232150 43508192065.html). I wonder whether the now unemployed workers feel that these labor laws improved their quality of life?

Everybody who is bashing the author must HONESTLY ask themselves, “would you be willing to pay 20%, 50% or 80% more for all of your consumer goods?” I doubt it, so while in theory everyone would LOVE to make a higher wage, are you also willing to pay more money for all products you consume? It ends up being a zero sum game. In the end, the intelligent producer won’t pay for higher labor, and instead will find innovative ways to produce a lower cost good (move to an area w/more affordable labor) and to take market share from their competitors. We’re seeing it happen in China, where they are losing manufacturing jobs to lower cost producers in other southeastern Asian countries. As we continue to raise our wages in the US, we are forcing our US manufacturers to consider moving operations elsewhere so that they can continue to offer competitively priced products. This issue should not be decided by emotion, but by sound economic and business judgment. “Greed” bears no relevance on this discussion.

Posted by Rachel | Report as abusive
 

How must it feel to live without a heart?
I suggest you try living on minimum wage before opposing any increase in same.

When working people have more money, they spend more money and thus raise the level of the economy.

All you have to do is look at California to see just how costly “cheap labor” really is.

Employers are paying illegals under the table in cash.
As a result revenues are down for that state.

That leads to cuts in basic services and increased taxes for those still playing by the rules. It has taken 30 years of such behavior, however California is now knocking on the door of third world type poverty.

Social unrest is a real possibility.

Don’t forget Diana that the buffer between your ilk and social unrest has always been a solid middle class. Take that away and gues what? No buffer anymore.

You sure you want to go down that path?

Posted by john rogers | Report as abusive
 

Why not make the minimum wage $20 an hour? Why not $50 an hour? Surely that would help the economy much more than $9.50 an hour! Just imagine what $1000 an hour would do!!

Posted by askljf | Report as abusive
 

It’s very sad that most of the uneducated people are allowed to vote and they do so with their emotions instead of actually understanding economic impact. All I hear is “I need more benefits because I’m too incompetent to earn them on my own.” This article is well written and shows what will happen here if we go down this path. Unfortunately there are more of the “uneducated masses” that are controlled by government and are allowed to “vote”. Why don’t you get some economic education and spend some time in a socialist country and then tell me what your opinion is.

Posted by Doug | Report as abusive
 

John Rogers – “How must it feel to live without a heart?” Are you kidding? You need to look those 2000+ people who just lost their jobs and tell them this is for their own good. That should make their life much easier.

Whose fault is it that a person must rely on an entry level wage? It’s that person’s fault – not society’s.

And you sound like a good Marxist when you mention “revenues are down” when people are paid cash “under the table”. All you need to add is that all wealth belongs to the state, and the government will decide what each person needs.

 

Arizona voted in an increase of minimum wage and people are losing jobs and benefits are decreasing because of it. See below:

http://news.prnewswire.com/ViewContent.a spx?ACCT=109&STORY=/www/story/12-30-2008  /0004947720&EDATE=
it gives an example of why a $2.10 increase of minimum wages cause businesses to close and loss of jobs and benefits.

Here is a more recent article on local restaurants. http://www.azcentral.com/news/articles/2 009/04/15/20090415politics-wages0415.htm l?source=nletter-news

A restaurant close to us called On the Border closed a couple of locations and most lost jobs but some were put at other locations if a position was available. They also significantly cut benefits to employees.

http://www.tucsoncitizen.com/ss/fromtope mails/114426.php

Posted by Jon | Report as abusive
 

I can tell most of the commenters here telling Diana to live on minimum wage for a while have never actually done it themselves.

I worked 2 part time minimum wage jobs for a year after I finished college (2 years ago). In that time, I lived alone, ate 3 good meals a day, never missed a bill payment, and was even able to save money.

Anyone who says minimum wage isn’t enough to live on hasn’t tried.

Posted by Drewbie | Report as abusive
 

All the talk about raising the minimum wage “to help poor people” is a smoke screen. Many union contracts are written so that their pay rate is a multiple of the minimum wage, so what Democrats aren’t telling you is that every time they increase the minimum wage, they’re giving unions a big pay raise. That’s the real motivation: they’re paying off their supporters. They don’t care if more people are unemployed as a result.

Posted by Finrod | Report as abusive
 

I have had minimum wage jobs throughout my life, and it is not easy to live on them. However, it can be done, provided you don’t live the American dream and run up a ton of debt for crap you don’t need.

I don’t plan on being here forever, but I am doing OK on my wage and tips now. If the minimum wage is raised $2 more tho, I will be screwed. Everytime they raise the wage, people who work for tips suffer most because customers don’t realize how little they make, and are tightening their moneybelts when they go out. But tip earners still have to claim tips at least up to minimum wage, whether they earn that money or not, and they get taxed on it.

And it’s true- companies who pay minimum wage, such as McDonald’s or the grocery store or whatever, don’t expect those people to work for them for life. And if they do, they usually promote them to some form of manager with a healthier salary compensation and benefits. It’s ridiculous to pay unskilled workers and high school kids high wages for go-between jobs.

On the other hand, if you are so concerned about how they fare, maybe just being nicer and showing a small amount of respect or friendliness to the individual would be helpful. They still don’t make enough (whether it’s $7.25/hr or $9.05/hr or even $900/hr) to take a customer’s crap just because they are behind the counter.

Try to remember that nobody is their job, and everyone is a fellow sentient being (for the hippy love revelers).

Posted by stephanie | Report as abusive
 

John,
Minimum wage is not susposed to be a wage to live on but to enter the workforce. You are a fool if you think so. In fact, most people on minumim wage stay there only a short time and proceed upward in compensation.

Have you heart? In fact, John, you must not have a heart given you seem to not feel for all those in Samona who will be losing their jobs. Wouldn’t they say that making $3.50 an hour is better than not having a job? I would think so. But you are so busy having a heart. All that does is make YOU feel good. It’s not helping the jobless.

If you really cared, you would support policies that employeed more people and did not take their jobs away.

Rasing the minimum wage hurts worst back and hispanic males, and others on the lower ladder of job skills. Apparently, you care little for those folks. Don’t you want them to have jobs? When working people have NO money because the do not have a job, that really hurts the economy.

Middle class folks start at minimum wage then rise up. I did it when I was 16. Guess what, I am making a bit more now that I am in my 40′s. Funny how that happens.

Really, I want to people to be employed and learn the discipline of working for someone, coming in on time, serving a customer or boss. All these are very valuble lessons. And I know more people will learn that if they are employee. And I know more people will be employeed if the minimum wage is lower. I guess it makes me heartless that I want people to have job.

Really, I don’t care if you think I am heartless because my concern is not me it’s the guy or gal would would be working but is not because a rising minumum wage has caused a company to elimate a position.

You go on feeling good about yourself and be full or care and heart. I am sure that will not help someone get employeed.

Posted by Steve | Report as abusive
 

This article is so obviously slanted. Moving the company to Georgia had absolutely nothing to do with the minimum wage whatsoever! It was simply a business decision that the author of this article is skew so far out of proportion to fit her “ideology”. A new cannery was built for 20 million in Georgia to be closer to consumers and reduce the cost of shipping product across 1000′s of miles. Also, since the cannery is brand new, and I’m guessing built with state of the art equipment, the work force is being reduced from just over 2000 employees to 200, an 1800 difference. Lets do the math for wages 3.50 x 2000 = $7000 an hour in Somoa. 200 x 6.55 = $1310 an hour in Georgia. The moved to an area with a higher minimum wage to save money for the company, as well as saving money for shipping. This whole article is just blowing smoke and I am disgusted with Reuters for allowing such a biased piece into their website. Didn’t an editor do the math? Fact check?

 

I’m amazed that so many (via their comments) would choose no income to a minimum wage they don’t like. $3.76 per hour is a lot better than $0.00 per hour.

Posted by everyman43 | Report as abusive
 

Brian you have misunderstood. I am not suggesting that New Deal policies will work today either. I think it is time to correct some of your factual errors.

Bank failures, soil erosion and depressed crop prices led to food shortages. Have you not heard of the dust bowl? We did not import all that much of anything in the 1920s and 1930s. Tariffs levied by the U.S. government simply caused other nations to do the same. World trade contracted and worsened the situation.

I was not talking about the panic of 1929. I was talking about the Great Depression and banking collapses. Only the economic collapse following Andrew Jackson’s decision to let the Federal Bank of Americas charter expire was worse. 95% of all factories closed. The nation was then far more rural and industry counted for far less of economic output. This occurred at the birth of the industrial age. It is impossible to know with absolute certainty how the world will fair as this current situation unfolds.

The economy did not recover during the thirties based on New Deal policies. Congress approved huge spending programs for the Lend Lease Act in 1939. Truly heavy spending necessitated by the war lead to increased GDP and reduced unemployment.

To say greed existed much more in the 1800s is to suggest human nature has fundamentally changed. It probably has not in 10,000years. Greed is the motivating factor of all free market economies and business activity. Perhaps you should read Stiglitz, Krugman and Posner as well.

Clearly you sound angry and that is why you insult me. That neither makes up for your misinformation or enables you to truly understand the crisis at hand. As in the 1930s environment played a pivotal role along with greed and and a lack of coherent regulation before the crisis. To take such actions afterwords fixes nothing and only protects future generations should recovery occur. The effect war time spending had on economic recovery should be scrutinized. Perhaps similar dynamics can be employed with out having to fight a war.

Posted by Anubis | Report as abusive
 

I lived alone on minimum wage for years back when it was $3.50/hr. Later I and my fiancee lived together, both of us making near minimum wage (~$5.50/hr at the time). We did fine. We had electronics (including early cell phones) and cars and went out to eat regularly. We managed our finances responsibly and when we overspent we did without to make up for it. Those of you who think you CAN’T live on minimum must also believe that you are entitled to spend lavishly or have a right to expensive luxuries. By being responsible we lived in a solidly middle-class apartment and maintained a relatively decent standard of living. For those who believe that “keeping up with the Jones’” is a priority, go learn skills that make you more valuable as an employee or start your own business.

Posted by Scott | Report as abusive
 

Guess the thought of actually EARNING a living wage never crossed anyone’s minds. Desire a higher wage, aquire a valuable skill. Of course, it is probably much easier to whine than apply oneself.

Posted by Dan | Report as abusive
 

I’m French, and here the minimum wage is 8.87 € by hour, which makes for 12$.
And it doesn’t seem too much for me. In fact, a lot of people are in favor of raising it. I did economic specialisation to have the equivalent of your A-Level (baccaulĂ©rat) and I’m currently at Sciences Po Paris: I am definetly able to talk about these issues since I am studying them, and a lot of the comments I heard are unfounded.

In france, according to the national radio, the sum of all the benefits are shared like this:
about 50% for the shareowners, 43% redistributed in the business company, 7% to the employees.
See? In fact, if the company you’re working for was paying you more, it could afford it… and it would be better for your economy in fact: since low wages cannot enable you to save a lot of money, you end up consuming more than rich people (Keynes, money is lost by rich people). It is not the investment the basis of the economy but the consumption, if people were buying more companies would make more profit: to enable growth then, your government should decide to focus on the people rather than a few rich people who tend to pay fewer taxes, priviledging the exportations.

Posted by MONTIEL | Report as abusive
 

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