Territories snared in wage debate

Just three years after a Democrat-led Congress imposed the federal minimum wage on two U.S. territories in the Pacific, lawmakers last month halted the program in its tracks, acknowledging the move had sapped thousands of jobs from American Samoa and the commonwealth of the Northern Mariana Islands.

The two-year delay in the case of American Samoa and one-year reprieve for the Northern Mariana Islands was imposed even as both parties have sparred over the effects of the minimum wage in the U.S. during the troubled economy.

“We said this increase would be harmful in 2007, and the Democrats did it anyway,” said Rep. Patrick T. McHenry, North Carolina Republican. “It proves our point that the federal government setting wage rates is destructive to job creation, whether it’s in American Samoa or western North Carolina.”

The story is a complicated study in political pressure, lawmaking and unintended consequences. It began just after Democrats took control of both chambers of Congress in early 2007.

The first order of business was trying to raise the federal minimum wage from $5.15 to $7.25 per hour, and to extend the wage level to include the Northern Mariana Islands to combat reports of labor abuses there.

That would have left American Samoa as the only territory outside the federal minimum-wage rules, and the GOP said Democrats were playing favorites. Under pressure, Democrats included both territories, and the legislation passed as part of an emergency spending bill.

In the three years since, some American Samoan employers have closed shop and shed thousands of jobs, and the wage increase was a factor contributing to job losses in the Northern Mariana Islands, according to the Government Accountability Office. The office, Congress’ watchdog agency, was charged with reviewing the results of the raised wage.

Mr. McHenry said blame for the job losses rests at the feet of House Speaker Nancy Pelosi, California Democrat. He said Mrs. Pelosi insisted on pushing through the legislation.

Democrats, including Mrs. Pelosi’s lieutenants, instead pointed a finger at Rep. Mark Steven Kirk, the Illinois Republican who forced American Samoa to be included along with the Northern Mariana Islands.

Mr. Kirk’s office didn’t respond to repeated phone calls or a detailed e-mail seeking comment on his role.

In an ironic twist, he is the GOP’s nominee for Mr. Obama’s former Senate seat, and the Democratic Senatorial Campaign Committee has attacked Mr. Kirk for having voted against minimum-wage increases on five other occasions.

It’s one of a series of congressional races in which the minimum wage has become a hot-button campaign issue.

A handful of Republican Senate candidates have questioned whether the federal minimum wage is constitutional, and Democrats have argued that the GOP is showing hostility toward workers.

While Congress approved the wage increase in 2007, it let the raise be phased in over two years, so the final 70-cent jump to $7.25 an hour didn’t happen until July 2009 - just as the economy was ending 18 months of recession.

Some economists blame the minimum wage for costing hundreds of thousands of jobs, while defenders argue that it has created stability for millions of workers.

That dispute makes the unanimity over halting the increase for Northern Mariana Islands and American Samoa last month all the more noteworthy.

The bill passed without dissent in the Senate, and with just a handful of opponents in the House. President Obama signed it into law on Sept. 30.

“The Democrat Congress voted to pass a minimum-wage increase for these territories in 2007, and therefore, it was only appropriate that they vote again to fix it,” said Rep. Doc Hastings of Washington, who led Republican efforts in the House. “In doing so, Democrats were admitting that they were wrong to impose this policy that cost real people their jobs.”

Pelosi spokesman Nadeam Elshami said last month’s vote does not undercut the minimum wage elsewhere.

“We believe in the minimum wage, but in this case, and because of the unique circumstances in American Samoa, which is a U.S. territory, we included a process for an independent, periodic evaluation of the potential impact. In this case, based on GAO’s recommendation, the Senate passed a bill that granted a short-term waiver and sent [it] to the House, which passed the House overwhelmingly,” Mr. Elshami said.

Mrs. Pelosi came under fire in 2007 when the debate over the minimum wage was revived. The initial legislation covered the Northern Mariana Islands but not American Samoa. Republicans said that smelled fishy, since Del Monte, the parent company of StarKist’s cannery, had headquarters in San Francisco, in the district Mrs. Pelosi represents. One Web-based news outlet even leveled a charge that Mrs. Pelosi’s husband was invested in Del Monte, though that accusation has been disproved by fact-finding websites.

Still, in the ensuing days, Mrs. Pelosi insisted American Samoa be added, in order to equalize the law.

“I have asked the Education and Labor Committee, as they go forward with the legislation, to make sure that all of the territories have to comply with U.S. law on the minimum wage,” she announced in mid-January of that year.

The legislation languished for several months, but Democrats eventually attached a wage increase - covering the Northern Mariana Islands but not American Samoa - to an emergency spending bill to fund President George W. Bush’s Iraq troop surge.

That was when Mr. Kirk attached an amendment in the House Appropriations Committee that extended the provisions to American Samoa, too.

Democratic leaders promised to try to remove the amendment later in the legislative process but never followed through, leaving American Samoa and the Northern Mariana Islands to face a 50-cent-per-year increase in the minimum wage until it reaches the full federal standard of $7.25 an hour. That is likely to happen sometime in the middle of this decade.

Throughout the debate, American Samoa’s representative to Congress, Delegate Eni F.H. Faleomavaega, watched in horror as Washington politicians weighed in on such a major change to the territory’s economy.

He blasted Mr. Kirk, who he said “knows nothing about American Samoa and did not have the courtesy to contact my office,” and pleaded with Democrats, who controlled Congress, to strip the language from the bill - which he said they could have done at several points.

Democrats said Mr. Kirk got the ball rolling with his amendment.

“American Samoa was covered at the insistence of Mr. Kirk from Illinois in the Appropriations Committee, who insisted that the original legislation apply to American Samoa,” Rep. George Miller, California Democrat, chairman of the Education and Labor Committee and a top Pelosi lieutenant, said during last month’s House floor debate.

In the end, the measure to halt the minimum wage in the Northern Mariana Islands and American Samoa attracted overwhelming bipartisan support. It passed the Senate without dissent, and was approved by the House by a 386-5 vote.

Mr. McHenry cast one of the five opposing votes, and he said he wasn’t going to give Democrats a pass for imposing the minimum wage in the first place.

“I’m not providing political cover for Nancy Pelosi,” he said.

One of the four others who voted against the bill, Rep. Ralph M. Hall of Texas, later entered a statement in the Congressional Record saying he miscast his vote. Reps. Devin Nunes, California Republican; Dale E. Kildee, Michigan Democrat; and Bill Owens, New York Democrat, never explained their votes on the floor, and their offices didn’t return messages seeking comment.

In fact, a number of those involved with the minimum-wage issue appeared not to want to talk about it. The White House didn’t return a call seeking comment, nor did the AFL-CIO, the chief umbrella group for labor unions. American Samoa Gov. Togiola Tulafono’s office didn’t return an e-mail for comment, and Mr. Faleomavaega didn’t respond to two phone calls seeking his views.

Gerard Finin, deputy director of the East-West Center’s Pacific Islands Development Program, said the debate doesn’t necessarily translate to the mainland U.S. debate because a huge proportion of the workers in the Northern Mariana Islands and American Samoa were guest workers, brought in under the territories’ immigration rules. He said those foreign guest workers are the ones who are most likely benefiting from the minimum wage.

“Sometimes, the debate is framed as one where it’s helping local residents, and I sometimes question that,” he said.

Still, he said, it makes sense to eventually have the territories reach the same wage floor as the rest of the U.S. - as long as it’s done at the right pace.

“Ultimately, I believe that the minimum-wage laws should apply to the entire U.S., but I think there may be a need for some breathing room in the process. That’s what this legislation will allow for,” he said.