Wednesday, January 10, 2007

Minimum Wage Issues

An interesting political issue is whether to apply any minimum wage increases to the islands that belong to the United States, like American Samoa and the Northern Mariana Islands.

Under the new proposal before Congress to increase the minimum wage, the Northern Mariana Islands would now be subject to the minimum wage. The reason why that is so important is because the average wage in the islands is half of the proposed minimum wage. There is a lot of debate amongst economists as to how much an increase in the minimum wage affects employment, but I think most would say that doubling the average wage would have a significant impact.

To add to the interesting situation, right now, American Samoa would still be exempt from the minimum wage, offering a possible comparison of the effect of the minimum wage if instituted.

(Source: Marginal Revolution)


Anonymous said...

I do not think that any territories should have this minimum wage increase. I also think that if any have this, than all of them should have this. Fox News reported "StarKist has a large cannery in the [Somoan] island chain. StarKist is owned by Del Monte Foods Co., which has its headquarters in San Francisco, Pelosi's district." Nancy Pelosi is a main proponent for the raise in minimum wage in other areas. It looks like she is acting differently when her district is in question. I think this would have a detrimental affect on the overall employment and not really have a positive impact on the poor.

-Brian Meier

Anonymous said...

In class I brought up the question of the cost of living in these islands as compared to that in the United States. At first glance, that would seem to be the most important issue in deciding whether to increase the minimum wage there, as has been proposed in the US. In fact, and in accordance with the current minimum wage in the US-held Pacific islands (half of the continental US minimum), the cost of living there is about half as high. So—if the cost of living has increased in the islands in question as much as it has in the continental United States—it would be logical to increase both. But the bill’s proponents seem to have another issue foremost in their minds besides just fair wages: indentured servitude, inhumane sweatshop labor, and the personal and societal costs which result from it in America’s Pacific territories. However, increasing the minimum wage would not necessarily demand a decrease in servitude-type labor; if anything, such situations could actually become yet more prolific, only adding to the unemployment that could already result from a minimum wage increase. If inhumane working conditions are what its proponents are really trying to combat, there are probably other laws which could accomplish this equally as well or better, and without any further detriments.
-Nicole O.

Anonymous said...

I also agree with Brian that other territories should not have this minimum wage increase. I also don't think that America should have a minimum wage increase. Sure, the employees would be happy, but the employers would not be. While the employees, whether it be in America or its territories, would certainly enjoy the salary increase, I don't think it would solve anything. Employers would have to raise prices in order to compensate for the extra money they are giving away. Also, I think it is a good idea for minimum wage to be raised in one place and not the other. It can be seen as a test. The U.S. can see how both economies react, and act accordingly.

Bryan West