What American Samoa lives on: one cannery and a federally funded government

How a copra economy became a cannery economy

After the Second World War the islands had almost no industry beyond copra, the dried meat of the coconut, according to a Congressional Research Service history of the territory's wages. In the early 1950s the Department of the Interior contracted the Van Camp Sea Food Company to set up a fish processing plant, and canning began in 1953. It quickly became the territory's main private employer.

The wage question arrived with it. The federal minimum wage was judged too high for the plant to compete, and in 1956 Van Camp asked Congress to extend to American Samoa the system already used in Puerto Rico, in which a Special Industry Committee appointed by the Secretary of Labor set lower local rates. Congress agreed that year. Van Camp then had about 300 employees, and its managers told Congress the islands' output was 3.5% of the company's stateside production between January 1954 and January 1956.

By the mid-1980s the pattern was fixed. The territory had about 35,600 people and a labour force of about 12,000. Some 3,660, roughly 35%, worked for the American Samoa Government, and about 6,740 were in the private sector, most of them in two canneries. Raw fish made up 65 to 70% of a cannery's costs, and the fish came from outside: Britannica lists fish destined for the canneries among the territory's main imports.

What held the plants on the island was a pair of advantages that StarKist Samoa's own officials still named to the Government Accountability Office in 2020: wages below those on the mainland, and duty-free access to the United States canned tuna market.

How Congress took over the wage

The committee system lasted half a century. In early 2007 the cannery minimum was $3.26 an hour against a federal minimum of $5.15. In May 2007 Congress abolished the committees and wrote a schedule into the Fair Minimum Wage Act, raising every rate in American Samoa by 50 cents an hour a year until it reached the federal $7.25.

The 2007 bill at first made no special provision for American Samoa, and the territory's delegate, Eni Faleomavaega, protested that the increases were unfair to its economy and asked for an exemption. House Speaker Nancy Pelosi first agreed and then withdrew, after critics pointed out that Chicken of the Sea, owner of one of the two canneries, was based in her district. The schedule itself did not last. Samoa Packing, the Chicken of the Sea plant, closed in 2009 and laid off 2,041 workers, naming foreign competition as the main reason and the wage rise as a factor. StarKist began cutting jobs in August 2010. Congress postponed and reduced the increases in later laws. Under the version now in force, rates set separately for sixteen industries rise by 40 cents every three years on 30 September, and the Department of Labor lists increases in 2021, 2024 and 2027. The Government Accountability Office reported in 2020 that all rates would reach the federal level only in 2036.

The companies that closed told the GAO that wages were a factor but not the main one. The territorial government told it that the increases conflicted with sustainable development and asked for a local committee to set wages and a moratorium until one existed. The Chamber of Commerce wanted cannery increases delayed. Workers and employers the GAO interviewed described better livelihoods on one side and risk to the remaining cannery on the other.

What the one cannery now carries

StarKist Samoa is the only cannery left, at Atuʻu on Pago Pago Harbor across the water from Fagatogo. The harbour's shore is where the territory's industry concentrates: the cannery, the fisheries around it and a Marine Railways workshop that maintains and repairs fishing boats. StarKist itself was bought from Del Monte by the South Korean company Dongwon Industries on 24 June 2008 for slightly more than $300 million. Exports are almost entirely canned tuna, sent to the United States with a small amount of pet food, and the GAO found the plant facing financial difficulty in 2020, squeezed by competitors paying lower wages in other countries.

The economy's swings follow its output. From 2002 to 2007 real GDP grew at an average of 0.4% a year, with annual changes from minus 2.9% to plus 2.1%, and the swings followed canned tuna exports. In 2021 private output fell 5.2%, mainly because the cannery produced less. In 2022 exports rose 3.0%, and the quantity of prepared or preserved fish shipped to the states and the District of Columbia was 3.3% higher than in 2021.

What the territorial government pays for

The other half of the economy is the government, and most of its money is federal. For fiscal year 2007 revenues were $155.4 million, 37% raised locally and 63% from United States grants, against spending of $183.6 million. Federal dollars also arrive as Social Security payments, military retirement pay and categorical grants. Britannica names the government as the main employer, and federal grants as a large part of national income. The constitution keeps the two streams apart: the Fono may not appropriate more than local taxes bring in, and the federal share is requested through the Secretary of the Interior after the Fono has reviewed the plan.

The Bureau of Economic Analysis figures for the pandemic years show how directly federal money moves the total. In 2021 the government sector grew 8.1% while private output fell, and total compensation rose from $345 million in 2020 to $364 million in 2021, all of the increase from territorial government pay. In 2022 government spending rose 5.0%, carried by federal relief grants under the CARES Act, the 2021 relief act and the American Rescue Plan, and together with exports it accounted for real GDP growth of 1.8%, after a fall of 0.8% in 2021.

Household spending fell as the federal economic impact payments of 2021 tapered off. Investment fell sharply in both housing and business. Imports fell too, and because imports are subtracted in calculating GDP, their fall added to growth. The BEA's figures for 2022 are preliminary and are revised as later data arrive.

How federal money built the infrastructure

The territory's roads, port and power were largely paid for from Washington in one burst. After President Kennedy appointed H. Rex Lee governor in 1961, federal funds built an international airport, seaport facilities, roads, schools, houses, a hospital, a tuna cannery, a hotel and an island-wide electricity supply during the 1960s. Britannica adds a public works programme from the 1970s to the 1990s that paved most of the roads on Tutuila. The territory had about 240 kilometres of highway in a 2008 estimate, no railway and a speed limit of 30 miles an hour.

The power system runs on imported fuel. Electricity production was 180 gigawatt-hours in 2006, and in 2001 all of it came from fossil fuel; oil imports were about 4,066 barrels a day in 2005. The 2009 tsunami damaged the main generating plant at Satala and cut power across much of Tutuila, and a replacement plant there was due to be commissioned in May 2017.

Connections to the outside world have been slow and dear. A 2012 study found American Samoa's internet the most expensive of any United States territory, with speeds close to mainland dial-up of the 1990s. By the 2020 census 69.0% of households had a broadband subscription and 86.6% a smartphone.

How households get by

Employment is split in three roughly equal parts, about 5,000 workers each: the public sector, the cannery and the rest of the private sector. Unemployment was measured at 29.8% in 2005 and 23.8% in 2010. Few federal civilians work in the territory and almost no active-duty forces are stationed there, apart from the Coast Guard, recruiters and staff at the Army Reserve centre at Pele in Tafuna, which hosts six reserve units. The workforce is educated to a high-school level: at the 2020 census 88.7% of adults aged 25 and over had finished high school and 13.3% held a bachelor's degree, most often in education.

The 2020 census, which asked about income in 2019, put numbers on the rest. Of 48,506 people whose poverty status was determined, 26,480, or 54.6%, lived below the poverty line. Median household income was $28,352, barely changed from $28,539 in 2009 in 2019 dollars. A third of households, 33.1%, received benefits from the Nutrition Assistance Plan. Owners occupied 71.1% of homes; the median home value was $84,400 and the median rent $601 a month.

Two other incomes do not show up in those figures as wages. Many families rely on money from relatives on the mainland, and Britannica records that more American Samoans now live abroad than on the islands. Military service is the second: the territory's enlistment rate is high, and service is widely seen as an opportunity where local work is scarce. Manuʻa shows the pattern at its sharpest. Per capita income there was $5,441 in 2010, families lean on earnings from relatives in Tutuila and the United States, and the government is the main employer.

What the land and the sea add

Agriculture is semicommercial: taro, bananas, tropical fruit and vegetables, with coconuts, breadfruit and yams from family gardens. Production nearly meets local needs, according to Britannica, and only a small share is exported. Most of that land is communal, and more than 90% of it cannot be sold to anyone outside a Samoan family.

Tourism has been promoted since the mid-1960s and remains small. Its growth was held back by inconsistent airline service, a shortage of good accommodation and of trained staff, and the territory's distance from everywhere else. The BEA recorded rising visitor spending in 2022 as a component of service exports. Pago Pago is the one major port, and the international airport is on Tutuila, with smaller airstrips on the other islands.

How taxes and customs frame business

American Samoa is a separate customs territory. It sets its own import rules, levies no sales tax and charges a general import tax of 8%. The territory taxes the worldwide income of its residents under its own law, largely copying the United States tax code of 2000 with a minimum rate of 4%. Washington collects payroll taxes but no federal income tax on income earned in the territory.

The customs line matters to the cannery in both directions. Fish, cannery materials, food and fuel come in across it, from the United States and Singapore above all and also from Fiji and New Zealand, according to Britannica, while canned tuna goes out duty free to the United States market. In 2004 materials for the canneries made up 56% of the value of imports and canned tuna 93% of exports.