Monday, July 4, 2011

Economics Literacy Link - Effects of Minimum Wage Law in Samoa

Prof. Mark J. Perry's blog Carpe Diem is a great source of wisdom on economic policy. Day after day, he explains examples of failed interventionist policies by government that have led to calamity. Undeterred the left continues to argue for more intervention. On Saturday, he blogged about American Samoa, which is under a Congressional mandate to gradually increase its minimum wage to that of the United States over the next few years. This has eroded its competitive advantage and caused huge economic impact. In studying the situation, the Government Accountability Office, not known for being a secret shelter of libertarians and conservatives had this to say.
1. In American Samoa, employment fell 19 percent from 2008 to 2009 and 14 percent from 2006 to 2009. Data for 2010 total employment are not available.

2. GAO questionnaire responses show that tuna canning employment fell 55 percent from 2009 to 2010, reflecting the closure of one cannery and layoffs in the remaining cannery. Private sector officials said the minimum wage was one of a number of factors making business difficult.

The money quote comes from the Governor of American Samoa:

4. Application of the U.S. minimum wage to American Samoa, pursuant to the scheduled increases mandated by Congress, continues to have devastating effects on American Samoa's economy. It is causing severe distortions in American Samoa's labor market. It has driven up labor costs such that businesses are being forced to cut employment, close or relocate.
Leftists in Congress, attempting to mandate prosperity through legislative action only cause increased poverty. This is all you need to know about government's attempts to run the economy.

1 comment:

  1. That explains why the Samoan families my parish suddenly has a lot of relatives visiting.

    Really wish we could get rid of federal minimum wage here, too. (about as likely as getting rid of payroll taxes)