This is the accessible text file for GAO report number GAO-11-956T 
entitled 'American Samoa And Commonwealth Of The Northern Mariana 
Islands: Employment, Earnings, and Status of Key Industries Since 
Minimum Wage Increases Began' which was released on September 23, 2011. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Fisheries, Wildlife, Oceans, and Insular Affairs 
Subcommittee, Committee on Natural Resources, House of Representatives: 

For Release on Delivery: 
Expected at 9:00 a.m. EDT:
Friday, September 23, 2011: 

American Samoa And Commonwealth Of The Northern Mariana Islands: 

Employment, Earnings, and Status of Key Industries Since Minimum Wage 
Increases Began: 

Statement of David Gootnick, Director:
International Affairs and Trade: 

GAO-11-956T: 

Chairman Fleming, Ranking Member Sablan, and Members of the 
Subcommittee: 

Thank you for the opportunity to discuss our recent report[Footnote 1] 
on the impact of minimum wage increases in American Samoa and the 
Commonwealth of the Northern Mariana Islands (CNMI). 

In 2007, the United States enacted legislation that incrementally 
applies the U.S. minimum wage to the U.S. insular areas of American 
Samoa and the Commonwealth of the Northern Mariana Islands 
(CNMI).[Footnote 2] This legislation raised the minimum wage in both 
territories in a series of $.50 per hour annual increases, which were 
to continue until these wages equal the federal minimum wage.[Footnote 
3] Enactment of subsequent legislation delayed the scheduled minimum 
wage increases in both areas, providing for no increase in American 
Samoa in 2010 or 2011, and no increase in the CNMI in 2011.[Footnote 
4] Currently, the minimum wage of the lowest paid workers in American 
Samoa is $4.18,[Footnote 5] and in the CNMI the minimum wage is $5.05. 
[Footnote 6] 

Public and private sector officials and workers in both areas have 
expressed concern about the impact of the federal minimum wage 
increases on the local economies. Economic indicators in both areas 
show decline. Both governments have faced budget gaps in most recent 
years, and they have reduced the work hours of government employees 
and taken other steps to reduce the shortfalls. In January 2008, the 
U.S. Department of Labor issued a report on the economic impact of 
minimum wage increases in both American Samoa and the CNMI; the report 
noted concern that the scheduled minimum wage increases would lead to 
the closing of tuna canneries in American Samoa and concluded that it 
seemed likely the increases would worsen CNMI's existing economic 
decline.[Footnote 7] Also in 2008, studies funded by the U.S. 
Department of the Interior projected major additional contraction of 
the two economies.[Footnote 8] 

American Samoa's private sector is largely based on the tuna canning 
industry, and the closure of one of its two tuna canneries in 
September 2009 significantly affected the labor market and economy. 
[Footnote 9] Before the first minimum wage increase in 2007, about one-
third of workers in American Samoa were employed by the two canneries, 
and more than three-quarters of cannery employees were foreign workers 
from neighboring Samoa, an independent country. 

Until recently the CNMI private sector relied on the garment industry 
which had employed close to a third of all workers; however, by early 
2009, the last garment factory had closed. Tourism, the major 
remaining private sector industry, has seen visitor arrivals drop from 
nearly 727,000 in 1997 to roughly 368,000 in 2010, a decline of almost 
50 percent. The CNMI also faces uncertainty due to the application of 
U.S. immigration law to the commonwealth, ending decades of the CNMI's 
control over its own immigration system.[Footnote 10] In 2005, foreign 
workers represented a majority of the CNMI labor force and outnumbered 
U.S. citizens in most industries. 

GAO is required to report every two years on the impact of minimum 
wage increases in American Samoa and the CNMI.[Footnote 11] My 
statement today describes, since the minimum wage increases began, (1) 
employment and earnings, and (2) the status of key industries. 

In preparing our June 2011 report, we reviewed and analyzed existing 
information from federal sources and from the American Samoa and CNMI 
governments. To describe employment and earnings, we analyzed earnings 
data from the Social Security Administration (SSA) for American Samoa 
and tax data from the CNMI government, and we adjusted the earnings 
data using Consumer Price Index (CPI) data for each area. For both 
objectives, we analyzed responses from GAO's questionnaire of large 
employers in the American Samoa tuna canning and CNMI tourism 
industries, and we conducted discussion groups with employers and 
workers and interviews with public officials during site visits to 
American Samoa and the CNMI.[Footnote 12] A limitation of our study is 
that although our approach yielded information on trends in 
employment, wages, and earnings in both areas, it is difficult to 
distinguish between the effects of minimum wage increases and the 
effects of other factors, including the global recession beginning in 
2009, fluctuations in energy prices, global trade liberalization, and 
the application of U.S. immigration law to the CNMI. 

We conducted work on our June 2011 report from September 2010 to June 
2011 in accordance with all sections of GAO's Quality Assurance 
Framework that are relevant to our objectives. The framework requires 
that we plan and perform the engagement to obtain sufficient and 
appropriate evidence to meet our stated objectives and to discuss any 
limitations in our work. We believe that the information and data 
obtained, and the analysis conducted, provide a reasonable basis for 
the findings in this product. 

Summary: 

In American Samoa, employment declined 14 percent--from 17,852 to 
15,434--between 2006 and 2009, and average inflation-adjusted earnings 
of those employed fell by 11 percent over the same period. In 
addition, roughly 2,000 to 3,000 temporary federal jobs will end when 
funding is no longer available. Employers in the tuna canning industry 
attributed most of their past and planned actions, including worker 
layoffs and hiring freezes, to the minimum wage. Cannery officials 
also expressed concern about American Samoa's loss of competitive 
advantage in the global tuna canning industry. Workers principally 
expressed concern over job security. Analysis of alternate models 
suggests that moving tuna cannery operations from American Samoa to 
another tariff-free country with lower labor costs would significantly 
reduce cannery operating costs. 

In the CNMI, employment fell 35 percent--from 43,036 to 27,897--
between 2006 and 2009, and average inflation-adjusted earnings of 
those employed remained largely unchanged. Also, fewer than 1,000 
temporary federal jobs will end when funding is no longer available. 
Employers in the tourism industry generally attributed their 
employment actions to multiple factors, such as immigration law and a 
decrease in the number of customers, more than to the rising minimum 
wage. Workers said they would like pay increases to help meet rising 
prices, but they were concerned about losing jobs and work hours. CNMI 
hotels have generally absorbed minimum wage costs rather than raise 
room rates. If this trend continues, scheduled minimum wage increases 
would increase hotels' operating costs due to payroll from 
approximately 29 to roughly 34 percent of total operating costs 
between 2010 and 2016. 

American Samoa: 

Employment and Average Inflation-Adjusted Earnings Declined Between 
2006 and 2009: 

Employment. Social Security Administration (SSA) data show that from 
2006 to 2009, employment declined 14 percent from 17,852 to 15,434 
with employment having peaked in 2008 at 19,171. From 2008 to 2009, 
the total number of people employed in American Samoa declined 19 
percent. In addition, we estimated that from 2,000 to 3,000 temporary 
federal jobs funded beginning in June 2009 will end when federal 
funding is no longer available.[Footnote 13] Data on total employment 
from the 2010 Decennial Census are not yet available. Questionnaire 
responses from the tuna canning industry show that employment of their 
workers--most of whom are foreign workers from independent Samoa--
dropped by 55 percent from 2009 to 2010, reflecting the September 2009 
closure of one cannery and layoffs in the remaining cannery.[Footnote 
14] 

Inflation-adjusted earnings of those employed. Earnings data from SSA 
and consumer price data show that from 2006 to 2009, average inflation-
adjusted earnings of those employed fell by 11 percent. This resulted 
from a rise in average annual earnings of about 5 percent while local 
prices rose by about 18 percent. From 2008 to 2009, average inflation- 
adjusted earnings fell by 5 percent, resulting from a decrease in 
average earnings of 2 percent and an increase in prices of 3 percent. 
The inflation-adjusted earnings of minimum wage cannery workers who 
retained their jobs and work hours rose by about 23 percent for the 
entire period from 2006 to 2009 and about 8 percent from 2008 to 2009. 

Worker views. Some workers said they had looked forward to the 2010 
minimum wage increase and were disappointed to see the increase 
delayed. However, more tuna canning workers expressed concern over job 
security than favored a minimum wage increase with the potential for 
subsequent layoffs. 

The American Samoa Tuna Canning Industry Has Continued to Lay Off 
Workers and Has Considered Alternate Locations: 

Employers in the tuna canning industry reported that they had taken 
cost-cutting actions, including laying off workers, reducing overtime 
hours, freezing hiring, decreasing benefits, temporarily closing, 
reducing operating capacity or services, and raising prices, among 
other actions. They reported plans to take the same types of cost- 
cutting actions by early 2012, including laying off additional 
employees. 

Employers attributed most of their past and planned actions largely to 
the minimum wage increases and did so more often than attributing 
their actions to other factors, which included the high cost of goods 
and utilities, transportation and shipping costs, and changes in 
business taxes and fees. 

In addition to the minimum wage increases, cannery officials also 
expressed concern about American Samoa's dwindling competitive 
advantage in the global tuna canning industry and said that current 
operations in American Samoa were not competitive with other 
models.[Footnote 15] Analysis of alternate models available to the 
industry suggests that moving tuna cannery operations--including 
unloading, loining (cleaning, cooking, and cutting), and canning fish--
from American Samoa to another tariff-free country with lower labor 
costs would significantly reduce cannery operating costs. However, 
given that tuna facilities in American Samoa are among the few in the 
United States that can meet the requirements of U.S. government 
contracts, many of which require U.S.-sourced and processed fish, 
maintaining some operations in American Samoa would allow the facility 
to continue to compete for these contracts. Figure 1 compares 
estimated wage and tariff costs for tuna canneries using four 
alternative business models: 

* Model A: All loining and canning located in American Samoa; 

* Model B: Relocating loining to Thailand or another country with 
lower labor costs, and canning frozen loins in the U.S. 50 states 
[Footnote 16]; 

* Model C: Relocating all loining and canning to a tariff-free country; 

* Model D: Hybrid, with loining and canning for U.S. government 
contracts located in American Samoa and with other production 
relocated to a tariff-free country. 

Figure 1: Comparison of Estimated Wage and Tariff Costs for Tuna 
Canneries Using Alternate Business Models: 

[Refer to PDF for image: illustrated table] 

Model A: All loining and canning located in American Samoa; 
Boat for fishing: Loining and canning in American Samoa; 
Boat exporting tariff-free canned fish to the United States from 
American Samoa. 

Jobs in American Samoa: 1,500 remaining; 0 lost. 

2010 tariff cost = $0; 
2016 tariff cost = $0. 

Year: 2010; 
Labor cost: $14.9 million; 
Total Cost: $14.9 million. 

Year: 2016; 
Labor cost: $23.4 million; 
Total Cost: $23.4 million. 

Model B: Relocating loining to Thailand or another country with lower 
labor costs, and canning frozen loins in the U.S. 50 states; 
Boat for fishing: Boat transporting loined, frozen fish to the United 
States to be canned. 

Jobs in American Samoa: 0 remaining; 1,500 lost. 

2010 tariff cost = $0.32 million; 
2016 tariff cost = $0.32 million. 

Year: 2010; 
Labor cost: $11.1 million; 
Total Cost: $11.4 million; 
Cost savings compared to Model A: $3.5 million; 

Year: 2016; 
Labor cost: $11.1 million; 
Total Cost: $11.4 million; 
Cost savings compared to Model A: $12.0 million. 

Model C: Relocating all loining and canning to a tariff-free country; 
Boat for fishing: Loining and canning in tariff-free country; Boat 
exporting tariff-free canned fish to the United States from a tariff-
free country. 

Jobs in American Samoa: 0 remaining; 1,500 lost. 

2010 tariff cost = $0; 
2016 tariff cost = $0. 

Year: 2010; 
Labor cost: $3.1 million; 
Total Cost: $3.1 million; 
Cost savings compared to Model A: $11.7 million; 

Year: 2016; 
Labor cost: $3.1 million; 
Total Cost: $3.1 million; 
Cost savings compared to Model A: $20.3 million. 

Model D: Hybrid, with loining and canning for U.S. government 
contracts located in American Samoa and with other production 
relocated to a tariff-free country; 
Boat for fishing: Loining and canning in American Samoa and in tariff-
free country; 
Boat exporting tariff-free canned fish to the United States from 
American Samoa[A]; 
Boat exporting tariff-free canned fish to the United States from 
American Samoa: Production for U.S. government contracts[A]. 

Jobs in American Samoa: 300 remaining; 1,200 lost. 

2010 tariff cost = $0; 
2016 tariff cost = $0. 

Year: 2010; 
Labor cost: $4.8 million; 
Total Cost: $4.8 million; 
Cost savings compared to Model A: $10.0 million; 

Year: 2016; 
Labor cost: $6.6 million; 
Total Cost: $6.6 million; 
Cost savings compared to Model A: $16.8 million. 

Sources: GAO analysis of information from tuna industry data and U.S. 
tariff law; Art Explosion (clip art); Map Resources (map). 

Notes: Calculations for 2016 assume constant level of production and 
assume minimum wages in Thailand and the tariff-free country remain at 
2010 levels. They assume an average hourly wage in Thailand of $.75, 
in the U.S. state of Georgia of $14.00, and in the tariff-free country 
of $1. American Samoa hourly wages are based on the minimum wage 
increases as scheduled. 

[End of figure] 

Despite the advantages of moving some operations to other countries, 
the remaining cannery's lease obligation through 2013 and the cost of 
building new facilities elsewhere may pose obstacles to near-term 
relocation. In addition, since October 2010 a new tuna facility 
operator[Footnote 17] has hired a small number of workers formerly 
employed by the cannery that closed, but it is unclear how many 
additional workers they will hire. 

See appendix III of our June 2011 report for detailed findings and 
tables on American Samoa. 

Commonwealth of the Northern Mariana Islands: 

CNMI Employment Fell Substantially from 2006-2009, and Average 
Inflation-Adjusted Earnings Have Remained Largely Unchanged: 

Employment. For the period from 2006 to 2009, the number employed fell 
35 percent from 43,036 to 27,897 according to CNMI government tax 
data. The decrease largely reflected the closure of the CNMI's last 
remaining garment factories, ending in 2009, which employed many 
foreign workers.[Footnote 18] From 2008 to 2009, the total number of 
people employed fell by about 13 percent. In addition, we estimated 
that fewer than 1,000 temporary federal jobs funded beginning in June 
2009 will end when federal funding is no longer available.[Footnote 
19] Because CNMI tax data are not available for 2010, we are unable to 
report on the overall level of employment for the year. In the tourism 
industry, employment among GAO questionnaire respondents fell by 14 
percent from 2007 to 2010 and fell 8 percent from 2009 to 2010. 

Inflation-adjusted earnings of those employed. Over the entire period 
from 2006 to 2009, based on CNMI government tax data and consumer 
price data, average inflation-adjusted earnings of those employed 
remained largely unchanged. This resulted from a 19 percent increase 
in average earnings and a 19.5 percent increase in prices. From 2008 
to 2009, average inflation-adjusted earnings rose by 3 percent. This 
resulted from a 7 percent increase in average earnings, with a 3.5 
percent increase in prices. The inflation-adjusted earnings of minimum 
wage workers who retained their jobs and work hours rose by about 25 
percent for the entire period from 2006 to 2009, and by about 9 
percent from 2008 to 2009. 

Worker views. Workers in our discussion groups expressed mixed views 
regarding the minimum wage increases and said they would like pay 
increases but were concerned about losing jobs and work hours. 
Participants said they wanted to receive the pay increases to help 
meet rising prices, including for utilities and consumer goods. 
However, they said they had observed that while some workers received 
pay increases, others lost jobs or work hours. 

As Visitor Arrivals Decline, Hotels Have Taken Cost-Cutting Actions 
and Have Absorbed Minimum Wage Increases Rather than Raising Room 
Rates: 

In response to the decline in visitor arrivals, hotel and other 
employers in the CNMI tourism industry reported having taken cost- 
cutting actions including reducing hours, freezing hiring, decreasing 
benefits, and raising prices of goods or services, and these employers 
reported plans to lay off workers. Employers generally stated that 
other factors, including changes in immigration law and a decrease in 
the number of customers, contributed to their actions more than the 
rising minimum wage. In discussion groups, some hotel and other 
tourism employers and managers expressed concern about the minimum 
wage increases, but others said the minimum wage increases were needed 
and manageable and that the primary difficulty was the CNMI tourism 
industry's general decline. 

CNMI hotels have generally absorbed minimum wage costs rather than 
raise room rates. Industry data show that since 2006 the hotel 
occupancy rate had not changed significantly, remaining between 58 and 
64 percent, while inflation-adjusted room rates declined by about 12 
percent from 2006 to 2009. If observed trends continue, scheduled 
minimum wage increases will increase the share of hotels' total 
operating costs attributable to payroll from approximately 29 percent 
of operating costs in 2010 (with minimum wage increases representing 
about 1 percent of total operating costs) to 34 percent in 2016 (with 
minimum wage increases representing about 8 percent of the total). See 
figure 2. 

See appendix IV of our June 2011 report for detailed findings and 
tables on the CNMI. 

Figure 2: Estimated Average Impact of Minimum Wage Increases on CNMI 
Hotels' Payroll Costs in 2010 and 2016, Relative to Average Payroll 
and Other Costs in 2009: 

[Refer to PDF for image: stacked vertical bar graph] 

Year: 2009; 
Operating cost excluding payroll cost in 2009: $8,016,170; 
Payroll cost in 2009: $3,183,756; 
Total: $11,199,926 

Year: 2010; 
Operating cost excluding payroll cost in 2009: $$8,016,170; 
Payroll cost in 2009: $$3,183,756; 
Increases in payroll cost due to minimum wage increases since 2009: 
$160,528; 
Total: $11,360,454. 

Year: 2016; 
Operating cost excluding payroll cost in 2009: $$8,016,170; 
Payroll cost in 2009: $$3,183,756; 
Increases in payroll cost due to minimum wage increases since 2009: 
$983,076; 
Total: $12,183,002. 

Source: GAO analysis of wage and other data provided in responses to 
GAO CNMI tourism industry questionnaire. 

Notes: Our estimates of hotels' average costs in 2010 and 2016 are 
based on hotels' responses to our 2010 industry questionnaire. 
Estimates of hotels' average costs are for 2009 levels. Minimum wage 
costs only include workers directly affected by the future minimum 
wages. The impact of minimum wage increases on required employer 
contributions to Social Security and Medicare under the Federal 
Insurance Contributions Act (FICA) are excluded from this analysis. 
Including such elements as part of minimum wage costs would increase 
the estimated impact of minimum wage increases. However, if other 
operating costs excluding payroll were to increase, the minimum wage 
increases would have a smaller effect on overall operating costs. 

"Operating cost excluding payroll cost in 2009" includes Social 
Security and Medicare contributions under FICA, payments for employee 
benefits, and other operating expenses. "Payroll cost in 2009" 
includes payroll before deductions for taxes and benefits. "Increases 
in payroll cost due to minimum wage increases since 2009" is the 
annual cost of payroll increases that would be required to comply with 
the minimum wages since 2010, based on the 2010 distribution of wages. 

Costs shown are unweighted average costs for CNMI hotels that 
responded to our questionnaire. To determine the costs of the minimum 
wage increases, we assumed that all workers employed by questionnaire 
respondents were legally required to receive the minimum wage. If some 
are not covered or are exempt, the minimum wage increases would affect 
fewer workers, and cost increases would be lower. 

[End of figure] 

Agency Comments and Our Evaluation: 

We shared our June 2011 report with relevant federal agencies and the 
governments of American Samoa and the CNMI. Agencies agreed with our 
report or chose not to provide comments. In its written comments, the 
American Samoa government generally agreed with our findings but 
stated that employment losses and other aspects of economic decline in 
American Samoa are greater than the report suggests. In its written 
comments, the CNMI government said the draft report fairly 
characterized current conditions in the CNMI. Appendix VII of our 
report provides our detailed evaluation of the American Samoa 
government's letter and our response, and appendix VIII of the report 
provides our detailed evaluation of the CNMI government's letter and 
our response. 

Chairman Fleming, Ranking Member Sablan, and Members of the 
Subcommittee, this completes my prepared statement. I would be happy 
to respond to any questions you may have at this time. 

[End of section] 

GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

David Gootnick, (202) 512-3149 or gootnickd@gao.gov Tom McCool, (202) 
512-2642 or mccoolt@gao.gov: 

Staff Acknowledgments: 

In addition to the contacts named above, Emil Friberg, Assistant 
Director; Mark Speight, Assistant General Counsel; Marissa Jones, 
analyst-in-charge; Ashley Alley; Pedro Almoguera; Benjamin Bolitzer; 
David Dayton; Etana Finkler; Jill Lacey; Luann Moy; Nalylee Padilla; 
Suneeti Shah Vakharia; and Vanessa Taylor made key contributions to 
this report. Technical assistance was provided by Holly Dye. 

[End of section] 

Footnotes: 

[1] GAO, American Samoa and the Commonwealth of the Northern Mariana 
Islands: Employment, Earnings, and Status of Key Industries Since 
Minimum Wage Increases Began, [hyperlink, 
http://www.gao.gov/products/GAO-11-427] (Washington, D.C.: June 23, 
2011). 

[2] U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq 
Accountability Appropriations Act, 2007, Pub. L. No. 110-28, § 8103, 
121 Stat. 188 (May 25, 2007), as amended by Pub. L. No. 111-244, 124 
Stat. 2618 (Sept. 30, 2010), codified at 29 U.S.C. § 206 note. Under 
the law, any future changes to the minimum wage enacted under U.S. law 
for the 50 states, District of Columbia, U.S. Virgin Islands, Guam, 
and Puerto Rico also will apply to American Samoa and the CNMI. For 
changes enacted before American Samoa and the CNMI would have reached 
the current U.S. minimum wage, the minimum wages in the two areas 
would continue to increase in $.50 increments until they reach the 
federal minimum wage, extending beyond the current time frames. After 
each area reaches the U.S. minimum wage, any additional increase in 
the U.S. minimum wage would apply to American Samoa and the CNMI on 
the same schedule as for the 50 U.S. states. 

[3] Pub. L. No. 110-28, § 8103, 121 Stat. 188 (May 25, 2007). The 2007 
law required minimum wage increases in May of 2008 and in May each 
year thereafter, until the American Samoa and CNMI minimum wages 
converged with the U.S. minimum wage in 2016 and 2015, respectively. 
However, the Consolidated Appropriations Act, 2010, included a 
provision delaying the minimum wage increases until September 30th of 
each year, beginning in 2010. Pub. L. No. 111-117, Div. D, Title V, § 
520, 123 Stat. 3034, 3283 (Dec. 16. 2009). 

[4] Pub. L. No. 111-244, 124 Stat. 2618 (September 30, 2010). American 
Samoa's minimum wage increased by $.50 three times and the CNMI's four 
times before this legislation delayed the increases. 

[5] Previously, American Samoa's minimum wage was set for each of 18 
industries by the U.S. Department of Labor under biennial reviews, and 
its minimum wages in 2006 ranged from $2.68 to $4.09. 

[6] The CNMI had authority to set its own minimum wage under its 1976 
Covenant with the United States, and its minimum wage in 2006 was 
$3.05. 

[7] U.S. Department of Labor, Office of the Assistant Secretary for 
Policy, Impact of Increased Minimum Wages on the Economies of American 
Samoa and the Commonwealth of the Northern Mariana Islands (January 
2008). The report noted that data and time limitations constrained the 
study. 

[8] Malcolm D. McPhee & Associates with Dick Conway and Lewis Wolman, 
American Samoa's Economic Future and the Cannery Industry, prepared 
for the American Samoa Department of Commerce under a grant award from 
the U.S. Department of the Interior, Office of Insular Affairs 
(February 2008); and Malcolm D. McPhee & Associates and Dick Conway, 
Economic Impact of Federal Laws on the Commonwealth of the Northern 
Mariana Islands, prepared for the CNMI Office of the Governor under a 
grant from the U.S. Department of the Interior, Office of Insular 
Affairs (October 2008). 

[9] In November 2006, Chicken of the Sea's Samoa Packing operation 
employed 40 percent (1,906 workers) of the island's fish canning and 
processing workers. Chicken of the Sea relocated canning facilities to 
the U.S. state of Georgia while outsourcing the more labor-intensive 
processes, including cleaning and cooking the tuna loins (a low-tariff 
U.S. import), to countries with lower labor costs. 

[10] Consolidated Natural Resources Act of 2008, Pub. L. No. 110-229, 
Title VII, 122 Stat. 754, 853 (May 8, 2008). U.S. law established 
federal control of CNMI immigration on November 28, 2009, with 
provisions affecting employers' access to foreign workers. 

[11] The American Recovery and Reinvestment Act of 2009 required that 
GAO report annually on the impact of minimum wage increases in 
American Samoa and the CNMI. Under the Act, GAO was required to report 
on the minimum wage increases between March 15 and April 15 of 2010 
and each year thereafter until the minimum wages reach the U.S. 
minimum wage. Pub. L. No. 111-5, § 802, 123 Stat. 115, 186 (Feb. 17, 
2009). A subsequent law changed the GAO reporting requirement to not 
later than September 1, 2011; April 1, 2013; and every 2 years 
thereafter until the minimum wage in the respective territory meets 
the federal minimum wage. Pub. L. No. 111-244, 124 Stat. 2618 (Sep. 
30, 2010). 

[12] The scope of our study did not include workers in the underground 
economy in each area, and we did not focus on the extent to which 
relevant laws were properly enforced or implemented. See appendix I of 
our report for a detailed explanation of the methods we used and the 
scope and limitations of our work. See appendix V of the report for 
the industry questionnaire. 

[13] Temporary federal jobs included those funded by the Recovery Act, 
by the U.S. Census Bureau for the Decennial Census, and by recovery 
efforts after the 2009 tsunami. 

[14] If many foreign workers left American Samoa, the impact on the 
unemployment rate would be smaller than if those workers remained. 

[15] From 1997 through 2007, U.S. trade laws and agreements helped 
American Samoa's tuna canning industry remain viable in spite of 
competition. As tuna exports from other countries into the U.S. market 
increased, exports from American Samoa remained constant. In August 
2002, tariffs decreased on pouched tuna exported from countries 
covered by the Andean Trade Preference Act. The authority to extend 
duty-free treatment to Andean Trade Preference Act beneficiary 
countries expired on February 12, 2011, and has not been renewed. In 
January 2008, provisions of the North American Free Trade Agreement 
lifted tariffs imposed on canned tuna and other tuna products exported 
from Canada and Mexico. Nevertheless, some of American Samoa's foreign 
competitors still did not qualify for tariff-free access to the U.S. 
market. 

[16] The frozen fish carries a tariff of $11 per metric ton. 

[17] The new operator is Samoa Tuna Processors, Inc., part of Tri 
Marine International, which acquired the former Chicken of the Sea 
tuna cannery in American Samoa.The firm's local tax exemption 
certificate requires that the company invest a minimum of $5 million 
and employ 600 people within 5 years in order to retain local tax 
benefits. 

[18] If many foreign workers left the CNMI, the impact on the 
unemployment rate would be smaller than if those workers remained. 

[19] Temporary federal jobs included those funded by the Recovery Act 
and by the U.S. Census Bureau for the Decennial Census. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the performance 
and accountability of the federal government for the American people. 
GAO examines the use of public funds; evaluates federal programs and 
policies; and provides analyses, recommendations, and other assistance 
to help Congress make informed oversight, policy, and funding 
decisions. GAO's commitment to good government is reflected in its core 
values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each 
weekday, GAO posts newly released reports, testimony, and 
correspondence on its Web site. To have GAO e-mail you a list of newly 
posted products every afternoon, go to [hyperlink, http://www.gao.gov] 
and select "E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO’s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional 
information. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]: 
E-mail: fraudnet@gao.gov: 
Automated answering system: (800) 424-5454 or (202) 512-7470: 

Congressional Relations: 

Ralph Dawn, Managing Director, dawnr@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, D.C. 20548: 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, D.C. 20548: