Immigration, Elasticity and Why Americans Won’t Pick Onions (Yet)

A study released this week by NBER measures the elasticity of substitution between American workers and their immigrant counterparts — in non-economic speak, the study asks whether immigrants are good substitutes for equally skilled native workers.

While some comparisons remain murky, it appears that non-native workers are actually “perfect substitutes” for equally skilled native workers. The authors write:

In terms of the elasticity of substitution between equally skilled immigrants and natives, we conclude that the OP data, correctly analyzed, imply that the two groups are perfect substitutes. In fact, by using a statistically valid set of regression weights and by defining the earnings of a skill group as the mean log wage of the group (rather than the unconventional log mean wage used by OP), we find that the OP data reveal an effectively infinite substitution elasticity. The evidence thus implies that native workers are exposed to adverse effects from immigration-induced increases in labor supply.

The study sheds some light on the thinking behind (and backlash against) Alabama’s court-upheld crackdown on illegal immigrants. A recent New York Times article outlines the fallout in one town, describing Hispanic families leaving at night, pulling their kids out of school and selling fully furnished trailer homes for $1,000. Lawmakers cited the removal of illegal immigrants as a step towards giving jobs back to American “native”citizens, although a short-term labor shortage was expected.

Another Times article published this week, however, challenges the idea of “perfect substitutes” advanced by the NBER study and paints an alternate picture of the economic reasoning behind Alabama’s legislation. John Harold, a Colorado farmer profiled by the Times, tried to hire some unemployed Americans to work on his ranch and paid them a wage of $10.50 an hour, like the migrant workers he usually employs from the federal H-2A program (Colorado’s regular minimum wage is $7.36). The American workers quit, citing the labor as too hard – something that didn’t happen with the Mexican laborers Harold traditionally used.

Elasticity, it seems, has its limits. States that crack down on immigrants are likely facing an uncertain agricultural future, despite the economic downturn, for jobs that this era of American citizens still find too arduous. What Alabama sees as a short-term problem might be a much longer-term problem for the toughest kinds of labor, like farming. It is worth wondering, though, whether a few more years of economic hardship may change American attitudes towards what kind of work qualifies as too hard.

 

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  1. Eric M. Jones says:

    A lot more work could be put into machines that pick crops. But I wonder how much additional the farmer would have to charge for…let’s say an onion…to allow the picker’s wage to be $20/hour (or whatever rate one would have to pay to get sufficient pickers)? I expect that 2000 onions/hour could be picked by the average picker.

    So that’s what?… 2000 pennies divided by 2000 onions? Hmmmm let’s see….where’s my calculator?

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    • Enter your name... says:

      And if the farmer’s existing profit margin is less than one penny per onion, then the result is called “bankruptcy” for the farmer. The market doesn’t pay more just because a small fraction of farmers have seen their expenses increase. Instead, the market puts those high-cost farmers out of business altogether.

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      • 24AheadDotCom says:

        Awwww. Let them go out of business (or better yet renounce their citizenships and leave) if they can’t deal with our laws. The idea that good farm land would go unused is absurd: smarter and patriotic growers will find a way to deal with our laws.

        The fact is that growers have been singing the same song demanding cheap serf labor for decades, see what happened in the 60s:

        http://24ahead.com/s/crops-rotting-fields

        P.S. Maybe one of these days this site will list *all* the costs of importing a serf labor class. Of course, first they’d need to figure that out, then they’d need to pluck up the courage to acknowledge some of those costs.

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    • Trevor Boudreau says:

      2000 onions an hour, eh? 33 onions a minute seems a little far fetched to me. Good luck.

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  2. Nanno says:

    Isn’t that why legal immigrants are welcomed, to do our ‘dirty and hard’ jobs? I would expect that equally skilled immigrants are more willing to work no matter what the job, the relative value of their wage is simply higher.

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    • richard d says:

      The same goes for even really skilled jobs.

      Look at who’s on student visas doing top research in science and engineering at universities.

      Look at the demographics of the folks working in silicon valley.

      One issue is that the relative wages here are way higher than what the immigrants would get at home and we’ve conditioned to very high wages for doing less physical or brain-busting work.

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      • James says:

        I have to say this: many, perhaps most, Americans today just aren’t willing to do hard jobs, whether the jobs are physically hard, like farm labor, or mentally hard, like science & technology. They’ve been conditioned to a sense of entitlement (how many ads do you see selling something with the phrase “you deserve”?), and would rather sit on their butts in front of the TV. So immigrants aren’t perfect substitutes for native workers, they are (on average) better than perfect.

        For what it’s worth, I say this as someone who spent years doing farm labor, put myself through college, and now work in tech.

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      • Steve says:

        science and technology are not mentally hard if you enjoy it. what they are though is not worth it monetarily to people smart enough to do it.

        spend 4 years at a top notch engineering school, graduate with decent to good grades. your options? $50K start to maybe $120k at your peak in the engineering world OR $70K start to $millions if you peak or at worst $200K on average in the financial sector.

        once society revalues itself and realizes that the finance sector folk should not be paid more than the people that invent the technology they use for their business and more people will go into it.

        all the immigrants coming to this country to do science and technology? they go home and reap the benefits because their societies still value those skills. the ones that stay here still do much better than they would back home, without having to deal with jackass Americans making fun of their accent on Wall Street.

        But that’s just what I learned going to a top notch engineering school and not taking a finance job. One of those two was the biggest mistake of my life.

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      • James says:

        I disagree. Science & technology ARE mentally hard, even if you enjoy them – I do, and I work in the field. So are things like hiking up the local mountains, biking 70-100 miles (or more) in a day, or repeatedly lifting heavy weights. Yet some of us do these things for fun, and/or because we want to enjoy the benefits, while the majority do not. So why is it OK to for instance pay monthly fees at a gym to do hard physical exertion, but not to get paid for similar levels exertion doing physical work?

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      • luke says:

        There are plenty of Americans who are sufficiently smart and hard working to do those silicon valley jobs; I don’t think we are any dumber or lazier than any other nationality.

        The difference is that if you are a native born American and you are smart and driven enough for one of those silicon valley jobs? You can easily make three times the money in the medical field, or even more in finance.

        Same probably goes for field work. There are plenty of Americans who are hard-working enough to do stoop labor, but if you have the privilege of being a native-born American and you are willing to put in that kind of effort? you can get paid quite a bit more.

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    • Michael Peters says:

      But anti-illegal-immigrant sentiment in a community is just one step away from anti-immigrant sentiment. Legal immigrants in those communities are leaving too. This is probably due to lots of reasons (their communities are getting smaller so they are also leaving with their families and friends; discrimination because people can’t tell whether your hear legally if you speak in Spanish, etc).

      I’m not saying this means we shouldn’t enforce immigration laws but the hostility that surrounds this issue will drive legal immigrants away too.

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  3. Mike B says:

    Hidden due to low comment rating. Click here to see.

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    • Peter says:

      That’s right, work like that is degrading. We all should work in an air-conditioned office. Being outdoors is too dangerous. I see my neighbors working in their garden every weekend–do they know they can hurt their backs by digging with a shovel? They might also get sunburn. Technology needs to improve–we can’t have people using muscle power, unless it is in a health club.

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      • Mike B says:

        Hidden due to low comment rating. Click here to see.

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      • Joshua Northey says:

        While I sympathize with your overall position.

        A) We ARE bio-robots. We are not some special demi-angel create by god. We are a slightly more intelligent squirrel.

        B) 90% of people in all of human history have been a cog in a mindless process.

        C) We as a species cannot at this point really afford to bring the world’s population up to non-mindless cog employment.

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      • Mike B says:

        A) I would like to think that living beings with a brain have properties such as free will that make us more than some sort of deterministic machine. If it’s a good thing that I don’t need a girl in a stenno pool to type my e-mail it should be an equally good thing that I won’t need some Mexican in the field picking my onions.

        B) It is exactly because 90% of people in the past have been employed as cogs is the very reason we should hope to eliminate such jobs in the future.

        C) The only costs of non-cog employment are those that stem from the resulting unemployment of those who have been displayed through automation. Hopefully the process of global aging will rebalance the pool of workers with the pool of available jobs if re-training and the other forces of creative destruction come up short.

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    • Joe Dokes says:

      Mike is correct, unfettered illegal immigration or undocumented immigration has had two pronounced effects. First, by greatly increasing the supply of labor, it has forced down the price paid for that labor.

      Thus, when people say, “Undocumented immigrants only do the jobs that Americans won’t do.” they are really saying an incomplete sentence, the complete sentence should read. “Undocumented immigrants only do the jobs Americans won’t do at that wage and under those working conditions.” Several times a year there are reports of migrant workers dying in the field because of harsh working conditions. This would be far less likely to happen if Americans where to do this job. Not because Americans are heartier, but because they would not tolerate such working conditions and wouldn’t fear the retribution of deportation as a result of complaining.

      Proof of this can be seen with Amazon. Workers at a warehouse in were passing out from excessive heat. The workers didn’t fear deportation as a result of complaining. Some quit in protest, but the negative press harmed Amazon’s “brand” and as a result Amazon is changing the working conditions.

      Finally, the artificially low wages of migrant workers has absolutely delayed or impaired technological improvements in agricultural harvesting. It is clear to me that a hearty crop like an onion could easily be mechanically harvested. Yet, they are harvested by hand. Why? Simply put there was little economic incentive to invest in new technology so long as an inexhaustible supply of cheap labor existed. Clearly not all crops can be mechanically harvested, YET, but technology moves forward and I would like to think the days of back breaking field work are soon to be behind us.

      Regards,

      Joe Dokes

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      • Mike B says:

        The ironic part is that soon laws like Alabama’s will be completely unnecessary. Back in the 1970′s Mexico’s fertility rate was something around 5-7 children per woman. Today it is down around 2-3, scarcely higher than the rate in the United States. The vast pool of cheap Mexican labour simply won’t exist anymore to cross the border, fence or no fence. Moreover a whole lot of farms are simply moving south of the border where they can simply put the whole documented/undocumented BS behind them and gain all sorts of other cost savings to boot.

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      • richard d says:

        Some (more than you think) people want to keep things the way they are and have manual labor just so the masses can continue “working”.

        Just look at the auto unions.

        At a certain point in life, people find it hard to adapt or learn new skills.

        Sure people can get retrained to do more managerial roles or maintain automated equipment, but there’s way less of those jobs.

        There’s been a call to keep manufacturing jobs in the USA, but it’s hard to fight automation and immigration.

        Heck, I figure a place like starbucks can easily automate their coffee system, and the machine would probably do it better, but they haven’t introduced these things because they don’t want to cheapen their product.

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      • Mike B says:

        A lot of automation does cheapen what would normally be “artisan” products, but where a product is mostly competing on cost, automation is a no brainer and probably would increase quality as well as decrease cost. Service jobs will always require a human touch up until we develop some sort of hard AI, but picking fruit isn’t a service job, its a mechanical job and mechanical jobs should be done by machines.

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  4. Mike B says:

    One solution would be to shift the harvest over to Prison labour which would not only be sufficiently cheap, but also have a nice punishment component with it. Such jobs could also be required of those out on parole, but unable to find other work. Of course to make this a reasonable alternative the prisoners must be paid the full or nearly full wage, which can be held in escrow until their release. Trying to pay them <$1 an hour, which many prison jobs currently do, denies them any sort of safety cushion upon release which then results in recidivism. This has the effect of subsidizing private beneficiaries of prison labour at taxpayer expense.

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    • stedebonnet says:

      We tried this already in the form of chain gangs during the early 20th century. Recently, Arizona has continued the practice, and Alabama tried it in 1994, but decided to end the program after coming under lawsuit from a number of organizations, including the Southern Poverty Law Center.

      Considering the number of African-Americans who are in prison compared to whites, coercing criminals into penal labor as a form of punishment and rehabilitative justice is too much like slavery. The costs of instituting such a system–both fiscally and socially–by far outweigh any potential gains that the policy might realize.

      While I will agree that the low wages of undocumented farmers have retarded (to some degree) technological advancement, I have a tough time buying the argument that “nobody should be doing this type of work” suggested earlier. While the work is tough, working in agriculture under harsh conditions is still significantly better than the alternative employment opportunities. Maybe “nobody should be doing this type of work,” but people are willing to do it and it presumably beats the heck out of the other options available.

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  5. gusperver says:

    One ‘problema’ with this type of jobs, is that machines cannot easily replace human labor (I disagree with Joe). Onions, peaches, tomatos, and other crops have to be picked manually, with the care that only a human being can provide. So, if we are betting on new technology, forget it; it simply won’t work (at least for now). So, in the case of Alabama, what to expect next: an increase of price due to expensive labor and probably a shortage of products due to lack of labor. In the mid term, farmers and politicians have to negotiate and allow legal inmigrants to come and do the job. Of course, it is not the same paying to non-legal or legal workers; so, more price increases are anticipated. Eventually, I wonder what was the benefit-cost ratio of this political measure?

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    • stedebonnet says:

      Do farmers in Alabama control enough of the market to really cause a price increase? I imagine that competition exists to a level in agriculture that prevents Alabama farmers from impacting prices. Thus they will receive the same price for goods produced by legal, more expensive forms of labor. Since they will be competing with states who allow migrant workers and foreign countries with little no labor laws, rather than an increase in prices, we will see an increase in “out of business” farmers.

      While I have no problem with importing our foods from foreign countries, with more severe working conditions than those in America, I’m doubting the bankrupt farmers will feel the same way. For many agriculturalists, it is more than an economic decision of adaption, but instead a question of their way of life, their heritage, their culture, etc. Non-corporate farmers are largely continuing a family legacy (on land that has been used by their ancestors for centuries). This behavior might be irrational, but it is easier to understand the “reluctance” to acquire new skills if you keep the emotional commitment to the trade in mind.

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      • Joshua Northey says:

        “Non-corporate farmers are largely continuing a family legacy (on land that has been used by their ancestors for centuries).”

        Granted I haven’t met hundreds of farmers, but I have know dozens. I worked in economic development in a rural area for a few years and almost every “non-corporate farmer” I have ever met rents out the majority of their land to corporate farms and is for all intents and purposes a landowner not a farmer. They may farm a few things for fun/something to do, but the “family farm” could be a lot more accurately describe as the “family landowner”.

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  6. Mike says:

    Seriously?
    A while back, NPR ran a story on the subject of journalistic integrity. One of the points made was that a reporter can ALWAYS find at least one example to support ANY position. He even described the process – if you want to support or refute some statement, make a few calls, find someone who supports it, interview them, and you’re done…
    The problem is that a single example doesn’t actually mean it’s true – because of the small sample, there is a larger chance that it may be true but unreliable due to cherry-picked or otherwise unrepresentative of typical cases – it’s anecdotal.
    Let’s take a little closer look at the Times article. Is it possible that the folks the farmer hired weren’t good choices, but if he kept at it he would have found the workers he needed? Could it be that the H-2A workers have already been pre-screened?
    Maybe the real issue is that the folks who provide the H-2A workers are providing a service to the farmer (e.g. finding and pre-screening workers) which is of real value to the farmer and which he found difficult to do himself.
    The article actually says “Mr. Harold usually hires about 50 local workers for the season — regulars who have worked summers for years — and most returned this year, he said. Finding new employees was where he ran into trouble“. So, he does hire locally. Hmmm, is the article’s title )“Hiring Locally for Farm Work Is No Cure-All”) pure BS?
    Did the blogger actually read the entire article?
    This leaves me wondering – Is this blog entry exposing the “Hidden Side of Everything”? Or, is it just pushing some tired political position grubbing for more exposure?
    Next the blogger will be implying that all illegal immigrants pay their “fair share” of taxes.

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    • stedebonnet says:

      Boy, the US government is sure missing out on the taxation of income for undocumented workers! “Illegals” aren’t paying the 10% of their income that poor people typically pay, UH OH. Last time I checked, most illegal immigrants do not qualify for the healthcare, medical benefits, and housing subsidies that are handed out to American citizens of the same social class. Maybe then, poor people aren’t paying their “fair share” of taxes either? Maybe we have different ideas of “fair share?”

      Its not like illegals are abstaining from paying taxes. They still contribute to the tax base by consumption. They pay taxes on everything purchased, housing (albeit indirectly), etc. The tax argument is bogus.

      To view illegal immigrants as being detrimental to our economy is also bogus. Ecn 101 folks, when population increases, the demand curve shifts to the right. Excess demand will cause the price of a good to rise, and as price rises producers are willing to sell more, thereby increasing output. Producers selling more, means they ultimately have to make more of the good, which in-turn means “legal” workers getting jobs to meet this demand. It also means that the tax base increases.

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      • Mike says:

        So, you’re saying that poor Americans DO have to pay income tax but Illegal immigrants DON’T.

        That’s fair? Why?

        “They still contribute to the tax base by consumption.” So, because they pay a little tax, that makes it fair? Let’s test this idea a little further – if a guy making over $100K/yr, lies on his income tax forms and pays no income tax, but goes to the corner store and pays a penny in tax for gum, is that OK to? Or is it really a “class” or “race” issue?

        I’ve been out of work for a year. Before that I made about $26.4K/yr and paid taxes on every single paycheck. Now you’re telling me that because someone’s illegal, they shouldn’t have to pay income tax? The guy next door was just telling me that most gardeners pull in well over $20K per year. So, how do you figure the “The tax argument is bogus”?

        Last time I went to the emergency room, it was filled with Illegal immigrants. So, whether or not they “qualify” for healthcare – they DO get healthcare. And, because they often wait until they’re really sick to seek medical care, it ends up costing all of us bad a lot more. So, the argument that they don’t get subsidies is bogus. BTW, did you know that under the H-2A program (referenced in the story), employers are not required to provide health insurance, but workers are eligible for services at migrant health clinics?

        Also, the Econ 101 argument you reference assumes that all other factors remain constant. When the population increase is driven by a huge influx of poor/uneducated individuals, the picture isn’t so rosy.

        So, as for whether illegal immigration is a beneficial or detrimental overall – yea, I’ve seen the comments that most economists felt it was a net positive in the 80′s. As to whether it still holds in the 90′s, or 2000-2011, I’m haven’t seen new research. Doesn’t mean it doesn’t exist, just that I haven’t seen it.

        It’s hard to believe though that illegal immigration is better than a legal immigration approach which is more balanced between poor/uneducated and wealthier/more educated individuals. It would be safer for the individuals. They could work in the legal economy. And, yes, pay their fair share…

        So, maybe the question you should ask yourself is “why are you taking up sides to defend illegal immigration?”

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      • stedebonnet says:

        Mike,

        I appreciate your response, and actually think we agree more than not. I would like to clarify on a few points.

        Like you, I support an effective and efficient way for immigrants to travel here, without becoming “illegal.” Even if that means some type of documentation. However, its difficult to argue that immigration isn’t beneficial. It increases the standard of living here in the U.S. With cheaper labor, goods are cheaper, and subsequently people are wealthier. Many anti-immigration labor economists, like Harvard’s George Borjas, agree that there is negligible or no downward effect on the least skilled worker’s wages and there are positive effects for more productive workers.

        Given the alternatives, until the government adopts a sustainable and reasonable immigration policy, I will support immigration, of all types whether “legal” or “legal” and “educated” or “uneducated.” I know immigrant families that moved here with 400 dollars, who now run companies, work as research scientists, and in general make our lives better. I know children of immigrants from the “poor” and “uneducated” group, who undoubtedly received a public education, and are graduates from top American Universities. They will make a difference in our country and our world. I’m genuinely sorry that people trying to better themselves–seeking America’s Democracy and economic freedom–compared to a state ruled by gangs, violence, and political corruption (to the extent of extorting educators currently and mass murders), have inconvenienced you. But as I’m sure you noticed, anecdotal evidence can be vastly different depending on experience.

        The historical record is a lot more clear. Beginning in the 1850′s until today–you will notice similar trends in anti-immigration sentiments when the economy is performing below its potential. When unemployment numbers are high; politicians, labor unions, and activist groups start placing the blame on immigrants. They are an easy target, and have few rights. In case you need a refresher,, check out the Know-nothing party (and other anti-Irish groups) of the 1850′s, the 1870′s Anti-Chinese movement in California, and the anti-Italian / Semite movements throughout the early 20th century.

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      • Al Ford says:

        Being illegal “It increases the standard of living here in the U.S”

        My neighbourhood in CA.
        Flooded with illegals.
        Property prices dropped.
        Crime went up.
        Trash went up.
        Graffitti went up.

        Quality of life decreased.

        Tell me again about the benefits I’m experiencing?

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  7. Juan says:

    Yo siento que inmigracion es ingusto a la vez ya k cuando latino onrado trabajador y nada mas se dedica del trabajo asu casa ellos son los k tienen mas problemas. Cuando uno que es latino k es narco y hace trabakos sucios. Inmigracion no c mete con ellos eso se m hace muy ingusto

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  8. Juan says:

    Yo siento que inmigracion es ingusto a la vez ya k cuando latino onrado trabajador y nada mas se dedica del trabajo asu casa ellos son los k tienen mas problemas. Cuando uno que es latino k es narco y hace trabakos sucios. Inmigracion no c mete con ellos eso se m hace muy ingusto

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