The New Cannery Row

WSJ ^ | JUNE 1, 2010 | Editor

[throwback]

Hidden inside the latest Democratic spending bill is an $18 million taxpayer handout to American Samoa. How did that get in there? Read on for another lesson in the uncreative jobs destruction of the minimum wage.

When Democrats in Congress increased the minimum wage in 2007, the U.S. territory of 65,000 in the South Pacific pleaded for its traditional exemption from the wage law to prevent job losses. But Democrats followed union orders and said that if multinational companies like StarKist, one of Samoa's largest employers, could pay its CEO millions it could afford to pay workers $7.25 an hour. So they raised the minimum wage for low-skilled Samoan workers from $3.26 an hour to $5.25 today and by 2015 it will rise to the current U.S. minimum of $7.25.

Job losses have followed the way that any economics 101 student would expect. Last September Chicken of the Sea closed its tuna canning operation in the territory, leaving more than 2,000 Samoans jobless.

Then last month StarKist announced it will lay off as many as 800 workers, bringing its work force there from 3,000 before the minimum wage hike to 1,200 by 2011. StarKist explained that because of the minimum wage hike Samoa is no longer competitive with other tuna canning countries. American Samoa's unemployment rate, which was less than 10% in 2003, has climbed to some 30% or more today. Sorry, Charlie.

[throwback]

Obama wants Republicans to help with the economy. They probably don't understand "help" in the Obama sense.

[gundog]

Paul Pelosi, Nancy’s husband, owns $17 million dollars of Star-Kist stock....Googled “Paul Pelosi; Starkist”

[stuartcr]

Did any of the CEOs take a pay cut to help avoid this? When they saw the minimum wage enacted and knew this would happen, what did the CEOs do to help...other than close down?

[rockinqsranch]

I couldn’t remember if it was Feinstein’s husband, or if it was Pelosi’s husband that owned all that stock. Glad you found it. I looked too, but used the wrong keywords I guess. Thanks for that.

[hinckley buzzard]

Why should they have taken a pay cut? Their job is to insure profitability for their firms, not fund a personal welfare program at their own expense to make up for congressional malfeasance.

[throwback]

What’s the cost of living in Samoa? Making them conform to a mainland minimum wage is probably way out of line and economic suicide. Think the article mentions the unemployed workers now think the government largess of forcing their wage higher was a bad idea too, now.

[Oshkalaboomboom]

Why should they have taken a pay cut?

Really no reason to take a pay cut when they can just destroy a community and send the jobs to the next lowest bidder. It's worked wonders for both CEO compensation and the American manufacturing sector.

[stuartcr]

Because it would possibly be the right thing to do? Anyway, I guess assuring a lower profit and maybe keeping employees, is out of the question...or taking a personal financial hit.

[outpostinmass2]

If you cut the CEO’s salary to zero you would still have the same problem with profitablitiy. The same holds true for GM. It is kind of a straw-man argument based on emotion rather than fact. Notice how there are no tuna canning plants in the U.S?

[stuartcr]

I don’t know much about Samoan economics. I agree that it was a bad idea, but it seems that since it was a sure thing, the CEOs perhaps could have done something more. I don’t have any details though, so who knows?

[throwback]

I understand your point too. I was laid off ten years ago, and have survived more recent rounds. I received an increase recently (probably will still get the ax shortly in any case). I would have been willing to take say a 10% cut to have kept more on board than get a 3% increase, because some of those jobs were not fat.

[stuartcr]

This is the main reason I’m not in management.

[DrymChaser]

In my company, the entire senior staff could cut their salaries to zero and it wouldn’t make a dent in trying to offset an over 100% increase in salaries below them.

And the raises at the minimum level most definitely have an upward push throughout the organization.

This is beyond stupid and typical of Congress and like minded non-thinkers.

[stuartcr]

Yes it was, but one would think that if CEOs are worth the millions they get paid, they should be able smart enough to come up with some idea that would lessen the impact on those employees that are depending on them.

[Oshkalaboomboom]

The same straw man argument could be made for anything manufactured in the US. Why not just follow China’s lead, have a few hundered million peasants to work for $25/month and let the rest live it up?

I haven’t seen tuna getting any cheaper now that it’s canned overseas.

[gundog]

May be an urban legend about Mr. Pelosi...but Starkist’s parent company, Del Monte is in San Fran Nan’s district.