The Economics of Farm Labor Shortages

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Marc Brazeau | Editor | Food and Farm Discussion Lab | @eatcookwrite


This NYT piece on the dawning realization that farmworkers do essential work regardless of their citizenship status touches on — without mentioning — two related economic phenomena that are necessary to understand immigrant labor in the food system which are rarely made explicit.

People often scratch their heads, thinking, “Why can’t native-born Americans do that work? ”

Here’s why.

These are global markets, so the price that consumers pay for a US-produced product is bounded. First by what it is worth to consumers and second by the price of imports. If imported produce can be brought in at a lower price, then that limits what the domestic market can charge.

That limits what domestic producers can pay for labor. That’s not to say that they can’t pay more on the margins than they are — campaigns by Florida tomato pickers have demonstrated that. But when faced with immigrant labor shortages, market-clearing wages for native-born workers don’t pencil out for the farmer’s break-even.

Farms Can’t Move Offshore in Search of Cheap Labor

This sets agriculture apart from other industries. When global production of clothing started putting downward pressure on sewing plants in the US South during the 90s, factory owners just packed up the sewing machines and moved them to the Dominican Republic. You could move your business to where the workers were. While there is some of that in the US, with large produce companies diversifying into Mexico, for the most part, farmers can’t move their operations in search of cheap labor. They have to bring the cheap labor here or lose the business to farms in other countries with lower labor costs.

At this point, somebody will always point out that they know some lazy layabout on welfare (and they always over-estimate how generous the US social safety net is — Hint: It’s very stingy, especially for able-bodied men) they know some native-born folks who they think should be doing that work but aren’t.

But here’s the thing. They aren’t because they can’t. They aren’t qualified. Farm labor is grueling, physically demanding work that most Americans can’t hack. Even if they could, it’s skilled work that they don’t know how to do. Not fast enough to keep up or pay them to do.

Which leads to the second economic phenomenon.

Think of Immigrant Pay in Terms of the Purchasing Power Back Home

This is something I figured out reading Ted Genoways excellent exposé ‘The Chain’ about meatpacking work in the Midwest — also grueling, skilled work.

The workers in the story were making MULTIPLES of what they would have made back home in Mexico — around three times as much (if memory serves). So the same wage was three times as valuable to them as it was to local native-born workers.

When I cooked in New York City all our line cooks and dishwashers were undocumented workers from Mexico and they were all building houses back home over the course of a few years. You get much tougher, smarter, disciplined workers when you pay them a wage that allows them to own a home free and clear with three years of wages.

So when you think about what sort of wages it would take to get native-born workers to take ‘back’ those jobs — think $15/hour X 3 = $45/hour to get similar quality workers.

Guess what. Dairies can’t charge enough for milk to pay native-born workers enough to build a modest house on the savings from three years of wages.

These are rough models, but this is why the agricultural economy suffers from labor shortages. In most industries, labor shortages are solved by raising wages to market-clearing rates or moving production to where the workers are. That doesn’t work as easily in agriculture. It did a few years back with garlic in California. Facing a shortage of workers, the farms raised wages significantly and shortages were solved. But the US garlic industry is insulated by more protectionism than other crops. And solving their labor shortages just exacerbated the shortages for their neighbors.

The Times article underscores what I started thinking a number of years back. We shouldn’t necessarily think of those jobs as US jobs that are being taken by Mexicans, but as Mexican jobs that happen to be located in the US. That’s been the case for a hundred years. It would make it a lot easier for everyone if we stopped trying to pretend otherwise.

Here’s some personal experience with the second part.

In high school I worked on a local farm in Massachusetts, we were known as an apple farm, but we had a peach orchard, a pumpkin patch, and vegetable garden as well. I worked as part of four-man year-round crew. We pruned the apple trees and maintained the orchards, jugged cider, ran the peach orchard from pruning to thinning to picking — and did all around scut work on the farm.

I was also a pretty competitive high school wrestler. I wasn’t a great athlete, so I made up for it with weight training and conditioning. Even for an 18-year-old kid, I was in top shape.

When apple picking came around the farm brought in H2 workers from Jamaica. Same guys every year.

I picked peaches all summer and had picked my share of apples.
But as good as physical shape as I was in and as competitive as I was at the time, there was no way I could keep up the Jamaican guys. They picked and we gathered bushels and packed them in the truck and did a range of support chores to keep them moving. I could finish a ten-mile run at a dead sprint but I couldn’t for the life of me figure out how those guys could pick apples so damn fast all day long (in flannel shirts and wool caps in the middle of summer no less).

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