Pelosi's Tuna Surprise

January 16, 2007 - WSJ

Economists of every political stripe agree that a higher minimum wage will cost some low-skill workers their jobs. But don't believe us; just ask Democratic Speaker Nancy Pelosi.

The House last week whooped through an increase in the minimum wage to $7.25, by a vote of 315-116. But, lo, included as part of this boon to the working man was a loophole: The new, higher wage floor applied to all of these United States and its territories -- save for the Pacific outpost of American Samoa. In the immortal words of Congressman Patrick McHenry (R., N.C.), "There's something fishy going on here."

It turns out that American Samoa has a big fish and tuna canning industry, specifically operations run by StarKist and Chicken of the Sea. Both companies are headquartered in California, and StarKist's parent is located in none other than Ms. Pelosi's own San Francisco district. So faster than you can say "middle class squeeze," Democrats rediscovered the eternal economic truth that a higher minimum wage can cost jobs and granted Samoa its reprieve.

They have a good point. In 2004, according to the Department of Labor, Samoan canneries directly employed some 4,800 people, or nearly 40% of the work force. StarKist and Chicken of the Sea would have plenty of other low-wage locations to do their canning. The average hourly wage for the American Samoan canneries in 2004 was about $3.60. In contrast, the average cannery wage in Thailand was 67 cents an hour and in the Philippines 66 cents.

You don't have to go as far as American Samoa to discover other liberals who understand this -- at least when they do the hiring. In 1995, the union-financed lobby, Acorn, sued California seeking exemption from the state's then-$4.25 minimum wage. Acorn argued in its court brief that, "The more that Acorn must pay each individual outreach worker -- either because of minimum wage or overtime requirements -- the fewer outreach workers it will be able to hire." As liberal economist Joseph Stiglitz once wrote: "A higher minimum wage does not seem a particularly useful way to help the poor."

None of this insight will do American Samoa much good, however. Red-faced after her tuna surprise was discovered, Speaker Pelosi announced late last week that she was directing her cannery compadre, California's George Miller, to re-examine whether the bill also should apply to the Pacific island. Maybe the poor Samoan workers who lose their canning jobs can relocate to Thailand.