Samoan Economics 101

Hello, TOTB readers! My name is Nate. I’m Melinda’s husband, partner in crime, and travel companion! Unfortunately, Melinda is under the weather this week. We thought that she had Dengue Fever (surprisingly common in American Samoa). Fortunately, a blood test, performed during a late-night trip to the ER a couple of nights back, confirmed that it is not actually Dengue. Phew! Whatever it is, though, it’s had her out for the count since Sunday. These sorts of things happen when you take a leap into the unknown. Especially in the tropics. Unfortunately (for you), I’m going to fill in for her this week!

As Melinda has mentioned in earlier posts, I’m an economist. I am actually, for all intents and purposes, the Chief Economist for the entire territory. I also happen to be the only economist for the entire territory. So, by the same logic, I could also be considered the junior economist for the territory. Either way, I have been learning a lot about the economy of American Samoa over the last three months.

I wanted to share some of the tidbits that I’ve learned with you. While I can be known to put the occasional person to sleep with my economic ramblings (think Ben Stein in Ferris Bueller’s Day Off), I’m going to keep it pretty high level in this post.

So, first things first, the entire territory only has about 60,000 people in it. That’s pretty close to the same size as the small city that we moved from in Idaho. The main private industry in American Samoa is Tuna Canning. In fact, almost the entire US fleet of Tuna boats in based right here! It used to be a lot bigger a couple of decades ago, when there were several tuna companies here. Today, there’s just one. Starkist Tuna. The entire economy kind of revolves around this one company! The other main industry is government. The territorial government is, by far, the largest employer in the economy.

The minimum wage is still very low here, in the $4-$5/hr range for most industries. There is a lot of opposition to increasing the minimum wage, because it could entice the tuna canneries to relocate to another country with lower wages. While the mainland US is still deeply divided about the minimum wage issue, there is almost a consensus in American Samoa that it should remain low. McDonalds workers aren’t striking here!

Because American Samoa is a small island economy, not a lot is produced here. Pretty much just tuna! That means that almost everything is imported. Food, fuel, building materials, tools, clothing, automobiles. This can help to shed some light on the cost of living here. It’s not as low as you would expect for a developing economy, but it’s not as high as many other island economies.

Because everything is shipped in, a lot of things are more expensive. Namely food. Fortunately, we benefit from our relationship with the US, which reduces or eliminates duties associated with importing. That has helped to keep other costs low. Costs like fuel and clothing. All in all, we don’t pay much more that we did in the US on a monthly basis.

For an island economy with its labor force disproportionately dispersed into only a couple of highly volatile industries, and a consumer goods sector that is highly dependent on trade, American Samoa is a surprisingly comfortable place to live!

The communal property land ownership structure is one of the main reasons that the economy’s ability to grow has been restricted. It’s also the main reason that these islands have remained some of the most beautiful in the world. Land cannot be simply bought and sold here. That means that there will almost certainly not be any big development projects bringing in foreign investment and waves of tourists. It also means that you can still park within 20 feet of crashing waves at almost every beach on the island. It will still be paradise, even hundreds of years after the resorts and condos block out the sun in Waikiki.

It’s a beautifully flawed economy that is complicated in its simplicity. There’s no other place that we would rather spend the next two years of our lives, though!