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Did illegal immigration crackdowns hurt farmers? Part 2

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We earlier noted the absurdity of the idea of the "farm labor shortage": "as any economist can tell you, there's no such thing as a 'shortage,' only an unwillingness of purchasers to pay a market price that may have previously been artificially depressed." Ilya Somin is more economically savvy than most law professors, but buys into the idea of a shortage of farm-workers, because there are "crops rotting in the fields." But as Steve Sailer notes, a profit-maximizing farmer will always have "crops rotting in the fields"; there's always going to be last dregs of produce that are economically infeasible to harvest. We tolerate (indeed insist upon through such mechanisms as expiration dates) food waste at home, at restaurants, at grocery stores; why is it a surprise that farmers don't have 100% yields?

But John Carney blows away the notion that there's any labor shortage at all. Even as profits went up, farm labor expenses went down:

It's just basic economics. The overall cost of labor on farms is falling. The cost of seasonal labor is rising but at a rate far less than revenues. That implies that supply of labor is outstripping demand. Which is to say, farmers may be screaming about labor shortages but their checkbooks are telling a very different story.

1 Comment

Disagreeing with the legality of Obama's amnesty program and his use of the executive order to shove this down the American people's throat is worth criticizing. However, your analysis of the economics of immigrant labor falls short on a number of margins.

First, even if there is no farm labor shortage, your point about the "unwillingness of purchasers to pay a market price that may have previously been artificially depressed" is a bit misleading. Given minimum wage laws, the "market price" for labor really isn't set by the "market," but instead Washington bureaucrats.

Second, your analysis fails to consider the additional costs imposed on consumers by artificial barriers to the free movement of labor. Farmers' "checkbooks" might be "telling a very different story," but perhaps we should examine the checkbooks of consumers who have the additional labor costs pushed onto them at the supermarket?

Third, your earlier post contends that immigrants "reduce the wages of unskilled Americans," without considering other benefits of immigration. Low skilled immigrants increase labor productivity across the board. For instance, high skilled workers can spend more time on the job rather than doing non-work related chores that immigrants will readily do (for low cost). This is especially important for productivity gains from women in the workplace--who can now hire unskilled women to do laundry, clean the house, etc. Low-skilled immigrants indirectly raise the labor productivity of high-skilled workers.

Furthermore, a net loss to low skilled native workers, isn't a net loss for the economy as a whole. Employers, whether in the farm or the factory, are able to reinvest surplus capital gained from paying lower wages into expanding their businesses (thus creating more opportunity for employment for native workers).

Finally, imposing and enforcing immigration restrictions also has costs. Lowering the number of immigrants requires spending more of our burdened budgets on border patrol and workplace oversight. U.S. Boarder Patrol has more than doubled the number of agents (20,000)in recent years. If these individuals make $50,000 per year, that's an additional $1 billion imposed on the economy for policing borders, excluding other benefits like health care and lucrative retirement plans. Add this to the cost of other types of enforcement and suddenly we're throwing billions of taxpayer dollars at a problem that isn't getting any better--even with these drastic increases in policing, 11 million illegals are still here working.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

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