What Raising Minimum Wages Has Meant for Two American Island Territories

James Sherk / April 27, 2010

Liberals, and especially unions, frequently claim that raising the minimum wage helps workers and the economy. They contend that if people earn more money through a higher minimum wage, then they will be able to spend more as well, creating more jobs, and making everybody better off as a consequence. Now two U.S. territories are putting these theories to the test.

The Federal minimum wage increase passed in 2007 also applied to American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI). The law incrementally raises the minimum wage in these two territories by $.50 per hour per year, until the minimum wage reach the level of the U.S. minimum wage. Both these territories have lower cost of living than in the continental United States so the Federal minimum wage hike affected a substantial portion of their workforces: 74 percent of workers in American Samoa and 33 percent of workers in the CNMI. The Government Accountability Office recently issued a report examining the effects that this enormous increase in wages has had on the local island economies. (more…)