Minimum wage and a K6 million fence: the plutonomics of Pacific tuna

American Samoa may lose its tuna industry. One cannery, Chicken of the Sea, left a few years ago, and now because the U.S. Congress would impose minimum wage standards, the remaining cannery, Starkist, is slashing up to 800 jobs.

 

StarKist CEO, Don Binotto has told the Pacific News Service, it's almost impossible to compete when workers' wages are nearly 10 times those of competitors in Thailand and other countries.

American Samoa’s Congressman Honorable Eni F.H. Faleomavaega says this is sour grapes. A press release on his web site explains his support for the minimum wage law and the disappointment he feels now with Starkist.

“For American Samoa, this matter is serious and I will not rest until the Office of the United States Trade Representative and the U.S. State Department are on record stating that the canned tuna provisions will be revised to reflect our past agreement with FSM and the Marshall Islands.  I also will not rest until wages in American Samoa are increased and this is why I have submitted a statement to Special Industry Committee No. 25 to be considered and included as part of the official record,” Congressman Faleomavaega said.

“I have also released copies of my statement to the Samoa News, our local radio stations, and other media outlets.  My statement is also posted on my government website and anyone wishing to obtain a copy may download it or contact my office in Washington or America Samoa.” 

“While I cannot include the full text of my statement in this press release, I can state that I was hopeful that when Del Monte took over ownership of StarKist that more thoughtful consideration would be given to the needs of our cannery workers.  In fact, it was my sincere hope that there would be a shift in thinking on the part of our tuna processors.  I was hopeful that our processors would come to believe that employees are as important as stockholders and I am disappointed that this has not been the case.”

“I am especially disappointed that StarKist’s Vice President for Seafood Operations and Procurement began his minimum wage statement by saying that ‘one basic idea guides the actions of all major businesses.  A business has an economic, legal, and moral responsibility to maximize the return it gives to its investors or shareholders.’ StarKist went on to say that ‘businesses are obligated to maximize their profits.’”

“As I have said before, I support business and the need for business to make a reasonable profit.  But to paraphrase President Franklin D. Roosevelt, I will not let calamity-howling executives with million dollar incomes tell me that wage increases will have a disastrous effect on the U.S. economy or that we must exploit labor in developing countries to remain competitive.  Neither will I support the notion that businesses are to maximize their profits without a moral obligation to also increase the wages of our cannery workers,” Congressman Faleomavaega said. 

“As Senator Borah from Idaho said during the 1937 fair labor standards debate, ‘whether North or South, East or West, there [is] a standard of…living, and we ought to recognize that and fix a minimum wage upon that basis.’  Senator Borah also said that he looked upon ‘a minimum wage such as will afford a decent living as a part of a 
sound national policy.’”

“‘I would abolish a wage scale below a decent standard living just as I would abolish slavery,’” he said.  “‘If it disturbed business, it would be the price we must pay for good citizens…. I take the position that a man who employs another must pay him sufficient to enable the one employed to live.’”

“Senator Pepper from Florida asked, ‘What if he cannot afford to pay it?’”

“Senator Borah responded, and I quote, ‘If he cannot afford to pay it, then he 
should close up the business.  No business has a right to coin the very lifeblood of workmen into dollars and cents…. Every man or woman who is worthy of hire is entitled to sufficient compensation to maintain a decent standard of living…. I insist that American industry can pay its employees enough to enable them to live.’”

“Senator Ellender from Louisiana then asked, ‘Without exception?’”

“Senator Borah replied, ‘Yes without exception.  If it cannot do so, let it close up…I am opposed to peon labor, whether it is employed by one man or another.  I start with the proposition that the right to live is higher than the right to own a business.’”

“As I said two years ago in my statement before Special Industry Committee No. 24, I also believe that the right to live is higher than the right to own a business. Furthermore,” Faleomavaega said, “I believe a business has an economic, legal, and moral responsibility to pay its employees enough to enable them to live and I believe this should be the basic idea that guides the actions of all major businesses, including those of the tuna industry.”

“Quite frankly, it is an insult to our people for executives who are paid top dollar to recommend that there be no increase to the minimum wage and to suggest that their only obligation is to their investors or stockholders.  If this is the basic idea that guides StarKist or Del Monte, so be it.  But I believe that higher laws should guide our actions and that we have a moral responsibility to do unto others as we would have them do unto us,” the Congressman said.

“Indeed, I do not believe one corporate executive at Del Monte, StarKist, or Chicken of the Sea/Samoa Packing would oppose minimum wage increases if their mothers, fathers, sisters, brothers, sons or daughters toiled day in and day out in tuna canneries here or abroad.  If suppressed wages are not good enough for their families and low yields are unacceptable to their stockholders, why should wages of $3.26 and less per hour be sufficient for our cannery workers?  Furthermore, why should low wages be acceptable for cannery workers anywhere?  This is not the way the world should be and I will do everything I can to make sure this is not the way things will be in American Samoa,” Congressman Faleomavaega said.

“Nevertheless, I do not have a vote in these proceedings and neither do the people of American Samoa.  The U.S. Department of Labor picks and chooses its Special Industry Committee and, for the most part, the outcome is determined before we testify.  In some ways, it is unclear to me why the U.S. Department of Labor bothers to hold these hearings.  If the Department of Labor was serious about minimum wage then it would be serious about conducting a study to determine the cost of living in American Samoa.  If it was serious about minimum wage it would be serious about making the tuna industry declare its margin of profit.  Simply put, until we know what the canneries are making we cannot determine what a fair wage is for our workers.” 

“Having spent the past year and half fighting the Andean Trade agreement, I can tell you that I understand what our canneries are up against when it comes to competing against countries with low wage rates.  I understand the realities of supply and demand.  I understand that production will leave high cost locations when low cost alternatives exist.  I also understand that these are the same words the U.S. tuna industry has been regurgitating for the past 47 years.” 

“In 1956, as part of its lobbying effort to suppress wages in American Samoa and pay Samoan workers  only 27 cents per hour, Van Camp (now Chicken of the Sea/Samoa Packing) said that ‘a minimum wage of $1 per hour, as required under present laws, is unrealistic, unwarranted, and unquestionably will have a deleterious effect upon the economic and social structure of the islands.’  Forty-seven years later,” Faleomavaega said, “neither Samoa Packing nor StarKist thinks any more or less of our cannery workers.”

“Nevertheless, I believe workers in American Samoa are the backbone of the U.S. tuna industry and I believe that men and women of conscience will agree with me that businesses are also obligated to act in the interest of its workers.  After 47 years of working against us, I believe it is time for our canneries to work with us and I am pleased that the U.S. tuna industry has united in support of H.R. 1424 -- a bill I introduced in Congress to make permanent or extend the federal IRS section 936 tax credit to American Samoa for another ten years.” 

“I am also pleased that our local Senate issued a Concurrent Resolution in support of H.R. 1424,” Congressman Faleomavaega said.  “However, I need to understand why StarKist has taken the position that favorable local and federal tax treatment makes little difference to our canneries.  Since our tax incentives make little difference, I would suggest that a 10% duty on loins coming into this Territory will be a good source of revenue for our local government.” 

“My point is you can’t have it both ways.  Either favorable tax treatment benefits our canneries and frees up cash to increase minimum wages or it doesn’t.  If StarKist is not in need of favorable local tax treatment and if 936 means so little, then by all means increase the minimum wage.  Increase the minimum wage for our cannery workers and also increase the minimum wage for our government workers who make less than the federal standard of $5.15 per hour,” Congressman Faleomavaega said.

“The federal government has sent more than a billion dollars to American Samoa in the past seven years and I believe this is reason enough to support an increase in minimum wage for ASG workers.  I also believe if we take another look at the tax breaks we are giving to foreign companies doing business in this Territory, we will be able to find the revenue we need to increase minimum wage for entry level workers in other industries.”

“Finally,” Faleomavaega said, “if the minimum wage cannot be increased, I believe our canneries should subsidize medical care at the LBJ Tropical Medical Center.  In any other U.S. location, the tuna industry would be required to provide health care benefits for its employees.  In American Samoa, however, ASG subsidizes the tuna industry by providing health care for sick or injured employees and their families.  In itself, this is a savings of at least $5 million per year to our canneries and it is time for our canneries to return this money to LBJ and assume responsibility for the medical care of its employees.” 

“It is also time for our canneries to increase pensions for our workers and I believe something needs to be said on and in behalf of Samoans who stand for 8 hours a day cleaning fish and after 20 years of service only get a pension of approximately $120 per month.  This is not right and this is simply un-American.” 

“For 47 years, the U.S. tuna industry has told us it would leave American Samoa if wages were increased.  Forty-seven years later, both canneries are with us and only last year StarKist erected a statue and declared that American Samoa is the permanent home of Charlie the Tuna.  Maybe I missed it but I did not see any fine print beneath the statue stating that Charlie the Tuna’s home is conditional on whether or not we raise the minimum wage.  In fact, as I recall, StarKist’s Vice-President was emphatic in stating that StarKist had no intention of leaving American Samoa.  However, he also said StarKist was not up for sale and only a few months later it was sold to Del Monte.” 

“Given these nonsensical statements,” the Congressman said, “I have come to believe that the only thing we may know for certain is that our future with the industry is uncertain.  But with the Andean Trade agreement behind us and the minimum wage hearings before us, I am reminded of a Samoan proverb--O le upega e fili i le po ae talatala i le ao-- which means that the net that became entangled at night will be disentangled in the morning.  In other words, I am hopeful that when the night passes and the morning comes we will settle our differences and work together to protect American Samoa’s tuna industry.” 

“To this end, I support business and the need for business to make a reasonable profit.  To this end, I also support an increase in minimum wage for our cannery workers.  I believe this is what fair trade demands and I am hopeful that this is what men and women of conscience will thoughtfully consider,” the Congressman concluded.

But others would argue that a more generalised economic climate, and not merely minimum wage rises, has forced the cannery out. That the congressman is invoking false heroics.

On another website we have a public response to the Congressman:

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MINIMUM WAGE BARRIER

Submitted by CARLOS (not verified) on Fri, 06/26/2009 - 18:40

• Minimum Wage

June 22, 2009 ---   MINIMUM WAGE BARRIER

An open letter to Congressman Faleomavaega and the people of American Samoa:

Before the announcement by COS of their departure from the territory, I sent numerous letters to the editor about the impact of the minimum wage increases including the possible closure of the canneries. 

Furthermore, about a year and a half ago, in a meeting of the Chamber of Commerce, I made comments in detail of how the canneries left California when the minimum wages reached $5.25 and how the same happened in Puerto Rico when their wages also reached $5.25. Now with the new world economy, the wage proximity to the $5.00 level did it here for American Samoa. During the last two months or so, a group of people have been working aggressively to try and attract investors that are and have been in this industry to come and fill the void after COSI leaves. What do we find?   

The minimum wages barrier. Everyone is concerned that with the actual minimum wages along with the escalating clause attached to the labor laws and other factors such as the electricity rates (this factor can be solved locally), it is impossible to compete with the new generation of canneries located in Thailand, Indonesia, Vietnam and other low-labor cost countries. 

The major stonewall that we find is the continuous insistence of Congressman Eni that the minimum wages is not the major factor of COS leaving; and he is the only one in the whole world that is knowledgeable of this industry that keeps assuring everyone that the minimum wages is the least factor which caused the departure of COS from American Samoa. I have been talking to people from Europe, Latin America and Asia about establishing themselves here in American Samoa, and it is a laughing matter in this industry every time Faleomavaega says that the increase of minimum wages is not the key factor for the departure of COS from American Samoa. Why aren’t there any fish cleaning/ canning facilities in New York which is better living than in Vietnam or in Indonesia? Because, the minimum wage is high there. Why don’t they have tuna cleaning fish facilities in Los Angeles or Las Vegas where there is a large labor pool available? Because the minimum wages are high. Why did these canneries come here in the first place? For many factors - the low wages was one of them. Why are they cleaning fish in Latin America, Majuro, Solomon Islands, Papua New Guinea, etc..? Is it for the high wages? Definitely NOT! It is unbelievable that Eni is still spinning in that subject. (…)

written by Carlos Sanchez-

The arguments are interesting, not least because they echo certain political positions regarding PNG’s tuna industry.

In Samoa, the Congressman lashes out at big business and the bottom line, where corporate loyalty to the shareholders always come at the cost of loyalty to the worker and his country (in this case Samoa).  The Congressman says the territory gives the canneries enough tax incentives and other breaks to allow them to provide for their workers and still compete.

Of course the canneries say otherwise, and in the last word of Econ 101 remind us that shareholder must see profits. In the balance between productivity and wages---in this case low wages for low productivity in non-Union Samoa—wages lost, and the company is now willing to pay more for better workers elsewhere (in Georgia), because it means better profits.

The Congressman, after all, is saying why did we give you those breaks for all those years if you’re willing to skip out on us when things get tough?

People who work for the cannery and are at risk of losing their low-paying jobs are attacking the Congressman now for losing his gamble, and not providing the further incentives Starkist needed to stay around. Of making the noises of a hero but feeling none of the pain. They would capitulate, they say. They need a job. Come back from Washington, one says, and live with us when the cannery’s gone.

The stock players are the same in these fights, around the world. And the stakes are rising, of course, as tuna becomes more scarce and the conservation issues start to impinge upon business models.

Congressman Faleomavaega is calling corporate American a bogeyman, a greedy hypocritical whore who loves you today but leaves you tomorrow. He has a sold audience in his home territory and the mainland, now that Americans have grown weary of the greed is good Goldman Sachs models.

He invokes real populist sentiments about best practice and its responsibilities to the workforce, about refusing to be governed by a plutocratic elite. He will go down fighting.

Unfortunately, as congressman, he will not go down at all, and his constituents will pay the price of his ethical stand. This is the counter-argument. But it is a weak one. It necessarily implies capitulating to any wage structure, any management system, is better than nothing at all. Like the battered woman who has no skills so cannot leave her husband.

The Congressman is saying we must have some say in the structure of a company that has been our lifeblood for a generation. We must be able to tell a company that workers rank higher than executive perks, for example, or dreams of expansion.

In response, the critics of minimum wage say that the several incentives offered by a mainland US location weigh up better than the advantages of being near the fishing grounds themselves, now that lower productivity is not balanced by lower wage costs.

Some say, get real: it’s all about minimum wages, and that’s why new canneries are sprouting up all over the South West Pacific---in Mindanao, in Thailand, and in PNG. Wages are nothing in these countries.

But from the PNG perspective, I have to commend the Congressman for his sturm and drang. He may be dramatic, but we have none of those populist drama queens in PNG anymore, and they are sorely needed these days. Like Americans burned by Madoff and the mortgage crisis, we are living in a tyrannical plutocracy, where even the public officials themselves complain of two sets of laws for the haves and have-nots, and the father of corruption himself is trying to crawl overboard from the stinking ship that is the National Alliance Party.  

And we have a 500 million kina Chinese ExIm Bank loan for a Pacific Marine Industrial Zone to be established in north coast Madang flaunting precisely what US Samoa has lost: those rock bottom sub-minimum sub-living wages. Here we have a high turnover of supremely cheap labour (indeed most cannery workers here quit before their super-low wage training period is over) ---where a fulltime employee can cost the company as little as US$30 a fortnight---that is US 26 cents an hour (precisely what Samoan workers were paid in 1956). It’s a bonanza that makes up for any other expense.

But imagine an even better deal; where the government allows twenty year (often extended) tax breaks for a cannery, and tasks its own Ministers to seek foreign loans that will entice new canneries to share the cost of storage, transport, infrastructure and construction. It’s almost too good to be true.

And for all of that, no one would even consider raising the PNG minimum wage. We promise!

But what’s even better, is what cannot be spoken---the kickbacks and reciprocity of the New Melanesian Plutocracy. Ask Paraka Lawyers if you doubt this for a minute.

But ask Ace Ventures, too. This is the company that has received both contracts for the Madang PMIZ’s ground clearing and fencing, even as the project has no environmental or social assessment as yet. That aside, we learn that the bids for these contracts were open and that Ace won one, but not the other, when it went before the advisory board that is comprised of public stakeholders. Two companies, each with qualifications and each with the lowest bid, won those contracts separately. Until the contracts were signed, and it appears that Ace, a Filipino-PNG joint Venture, has received both contracts, after all, and been given the second contract for K2 million more than the lower bidder.

I’d say Madang is caught in the tangled net of a fair few professional fishermen, casting from summer homes in Brisbane and Mindanao and elsewhere. Sadly, I’m afraid that the net that became entangled at night will not be disentangled in the morning.