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.

 


Juan

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

Joe J

There is also various aspects of relative pay, exchange rates, and opportunity cost.
Exchange rate is the true buying power of a US dollar vs the immigrants currency. It is more noticeable with other countries where as the adds would say person in country X works for a $1 a day, but what is often left out is the true buying power of that $1 in that country, could buy food for a family for the day.
Next is relative pay vs opportunity cost. If the immigrant were not working here but back in whatever country, what is the pay differance? I' would assume much greater, since otherwise no economic migration would happen.
Opportunity cost comes into play on the America side of things in that the comparison of minimum wage vs the farming pay, but it also should be figured in vs the US non-working pay (unemployment, welfare foodstamps) something which would not fully apply to the immigrant worker.
Basic concept is if through unemployment/welfare etc, you recieve the equivalent of $X/hour for not doing any work then the opportunity cost for doing this work, or any work is $(10 - X) per hour. A quick check of Colorados UI benifits put a cap at $500/week. Or $12.50/hour. This is the maximum, but it would not be unrealistic for an unskilled laborer to be reciving the equivalent of $7 per hour on UI. So the real question would be would they be willing to work for $3/ hour more to do much more strenuous work.

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Dan

Having worked with Hispanic people in various agricultural activities, I can attest that there is a tremendous competitive disadvantage. The most blatant example is in the number of dependents declared. You have eighteen year-old kids with three sets of names claiming twenty or twelve or whatever number they think will give them a full paycheck. The older people know the ropes very well, they have a routine and know exactly what they can get away with.

I am against these laws because they are essentially legalized racism. The Alabama law in particular is the modern day equivalent to the Fugitive Slave Law of 1850 in that it denies giving aid to a fellow human. A much better solution from a worker's point of view is to give people an incentive to go home once in a while. Withhold all their taxes and let them have their refund as they pass Go on the way home. What this does is it encourages proper documentation, better tracking of who comes and goes, and it gives people here who want to work a chance. If people are here who do not belong, they should be sent home, not to jail. If employers are hiring undocumented workers, paying people under the table, and paying people with favors and not proper payment, they are the ones that should go to jail.

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Dave Francis

NOT JUST FARMERS, AGRICULTURE? IT IS EVERY AMERICAN BUSINESS? SHAME ON YOU!

Pay Farm labor a decent living wage, with health care and education for their family, instead of dumping the illegal labor costs on the taxpayer. Then you will find people desperate for a job, any job will come forward to work the fields. Farmers and giant agricultural consortium’s have been underpaying illegal labor forever and along with all the special subsidies, the same as most business owners. It has been proofed that it only cost a few more cents to the consumer, for vegetable and fruit if labor for the agrarian community pay fair wages for the work done. My grandfather picked apples in Washington State as did other family members. To make ends meet after World War Two, my distant relatives in the English countryside, picked strawberries for the local farmers. Make it a national policy to implement the E-Verify bill (H.R. 2885), identifiable as the “Legal Workforce Act”. Contact your own local Senator or Representative and insist as a voter to your federal politician at 202-224-3121.

This is just not about the farmers; it’s about meat packing plants, factories and manufacturing. Of course they don’t want to employ regular Americans-legal residents. It’s about any company owner—big or small—who wants to pay as little as possible, with no restrictions on as little they want to pay, for a person’s labor. They have violated this ‘Rule of Law’ because there have been no restrictions on prohibitions to stop them, until Lamar Smith’s H.R. 2885. Special interest groups and the radical open border activists, are currently trying to kill the federal ‘Secure Communities’ initiative. Any individual that is apprehended by the police will have their fingerprints forwarded to ICE, Homeland Security and the FBI for processing. Police data-bases can quickly assess who has been previously arrested, whether he/she is an illegal alien or not.

Learn the facts about illegal alien costs, statistics and business corruption at NumbersUSA, Judicial Watch and American Patrol. Make every Business, Company and workplace be committed to E-Verify or face harsh consequences. No business owner, no matter who he is, should think he is above the law. That also is a constant with political figures who own grape plantations in the bread basket of central California. This is not just for Farmers and agriculture but for every business owner, so that we can put every American worker in a job and stop catering to other counties impoverished. Go further and re-enact the "Bracero Project" of 1942 with rules and regulations, arranged so migrants from across the Southern border have easier access to specific jobs. The “Bracero Program” established why the plan proved immeasurably accepted among so many migrants, for whom seasonal labor in the US presented grand opportunities, despite some of the poor conditions they often were confronted with in the fields and camps.

Even under some poor situations they saved money, could buy consumer good, tools or an older vehicle, and returned home with new outlooks and a greater sense of self-respect.
In places as Mexico counselors studied these positive aspects of the economic and cultural effects of bracer project. If they are retained for employment the government must oversee they are treated correctly. They have to be issued a field workers visa that terminates at the end of harvesting and a mandatory return to their own country. Only through an employment office at entry ports can these people be hired and not through third parties or recruited by less than honest business enterprises. If they remain free of any major problems while employed in the U.S., they can renew their visas. As in Mexico—every person is tracked; all the farm and agricultural workers must be tracked, so they cannot decide to drop the job they are allocated to and disappear in the American job market. The "Bracero program" seemed to work very well, until it was dismantled in 1964. Through unfettered fraud millions of illegal aliens and their families have arrived here, after the 1986 Immigration Immigration Reform and Control Act (IRCA)

Eventually there was an increasing apprehension among businesses owners that the provisions within the guide lines of the program ensured the amplification of costs for the imported labor. This fair program mandated an assured level of wages, housing, food and Health care for the workers (to be paid for by the employers) that kept the standard of living above what many from across the border. Farmers and their associated Agrarian colleagues realized they could elevate their profits, by enjoying the extremely hard work in the fields, by hiring illegal aliens who are now exploited. Agriculture didn’t want to pay for the health care or schooling for their children and other benefits, as in the orderly federal “Bracero program.” They prefer the Taxpayers carry the weight of costs for the labor that they hire. Farmers already receive huge subsidies from the U.S. Government. Simple fact the farmers and all the growers of produce got greedy, for even larger profits.

A new fair migrant worker program will never, ever be possible under the entrenched GOP establishment and many in the Democratic ranks. Illegal Immigration will never end under the elitists Republicans or Democrats who really run the House and Senate. Americans can join forces and stop the overcrowded classroom full of the children of illegal parents. Stop the suffocation in the emergency rooms from foreign nationals crowding the waiting areas. Unable to locate a job; the only reasonable answer is to ‘Self Deport’ and will no longer steal jobs, approved by businesses that hire them. A very large majority of people that come here and fall into a financial backwash owing to the original sponsor, not able to support his immediate or her immediate family members. This becomes a burden to U.S. taxpayers who end up with the yoke of supporting these people through—CHAIN MIGRATION.

Many politicians have their own revenues in the illegal alien labor market. Only the TEA PARTY will stop the toxic pollution that emanates from Washington and the Congress.

One Old Vet saying, “Stand next to me and you’ll never stand alone.”

MY EARLIER BLOGS: http://brittanicus-enoughisenough.blogspot.com

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CS

I say that someone (I mean someone else, not me) needs to invent great technology so that we don't have to hire farm workers (or factory workers, or garbage workers) to do those hard dirty jobs. That way I can continue to have my cheap lettuce and tomatoes and my good roads and my clean streets, without having to feel bad about the poor people, and we can continue to keep those danged immigrants out. Oh, I mean the illegals, I'm really quite fond of the legal ones, although I do have a hard time telling them apart.

DeLong

OK, I'm 60-ish, white and male with a college degree a good retirement plan with medical, dental, etc. I also am working part time. BUT, when I was is school back in the late 1960's, I worked on a farm, harvesting crops, tilling for weeds and irrigating the crops. I worked alongside illegal immigrants who would run off whenever a green INS truck or van was in sight. I was paid a whopping $1.40 an hour. It was difficult work and I was glad I only did this a few weeks each summer. My challenge to all of the anti- illegal and anti-immigrant people is: have you ever personally lost a job that you really wanted to an immigrant? My bet is that most don't know or would not know. This is a red herring argument by people who want an excuse for their own racial prejudices. If the Alabama law spreads, the economy will tank even further as the cost of food and other agricultural products will sky rocket.

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Eric

I am a farmer and I regularly hire crews of immigrant workers through labor contractors. I think there are many misconceptions based on the comments I have seen. First, manual labor is THE most expensive part of the produce business and everything that can be automated easily has been. Many individuals are working right now on labor saving machines and "harvest aids" to make the work less physically taxing and therefore more productive. I also can relate numerous stories of people who come to the US absolutely illiterate with no skill to sell except the ability to sweat. Like in any job the cream rises and the best workers become foremen and supervisors. Some eventually buy a van so they can provide transportation for a fee to recent immigrants who have no way to get to work otherwise. Long story short, there are many upstanding members in our community who have acheived far greater material success than their native counterparts because as children they sweated alongside their immigrant parents and it gave them a perspective that allows them to see opportunity where others might only see arduous tasks. I had to learn the hard way that mechanization does not always deliver lower costs or better produce when you are dealing with non uniform sized and shaped commodities like apples or asparagus or sweet corn. Automation pays best when the capital costs can be spread over a long consistent period. When a crop is only produced in your area for a 30 day season like cherries for instance the capital costs of automation just can't be defrayed well enough and if they could be they may still not be adopted because then the farmer would be "locked" into producing a certain type and amount of a commodity to support his investment. Since farmers produce commodities they are by definition price takers and one of their only responses to a market where prices have fallen below cost of production is to change to a more profitable crop.

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Eric

BTW the overwhelming majority of onions are harvested with machines and not manual labor.

Eric M. Jones

Eric,

Thanks for your informative post.

Please tell though....Is 2000 onions per hour wildly wrong? What would be-- a possible pay scale and production rate-- to attract USA workers?

I once picked Pennsylvania strawberries for five-cents a quart. That ended my career in picking strawberries.

Jim

Is there any research on the length of time that immigrants continue to do these jobs? My very limited experience is that it lasts only about one generation.
It is a sort of Ponzi scheme where there has to be a continual new supply of immigrants who will do this work for this pay. As their kids get an education they find other work and the cycle continues of having to bring in more immigrants who will do this work for this pay.

Andrew

A few qeustions about the comments and the article

IT seems as though the article is unfinished. I have heard this same thing over and over and I frankly don't believe it that no one wants to do the work. I think that many of the farms are being dishonest in their responses. I don't think that they want to hire "American" or alternatively, there are outside pressures placed upon the agricultural markets that skew the wages and prices which forces farmers to utilize virtual slave labor.

Illegal immigrants who do this type of work don't file W/C claims, they get paid less, they tend not to complain, and they work very hard for $10/hr. Why would anyone here do the job when they are getting the same amount from unemployment or (pick any other entitlement)? Currently, you can get unemployment benefits for 99 weeks (almost 2 years) for doing relatively nothing. Why would you want to work hard for $10/hr when you can get the same thing for doing nothing?

Why is there focus on MEXICAN illegal immigration. Stop making this a racial issue. I am so sick of this. I grew up in Houston, and the issue down there is very acute. Even "Hispanics" who are 2nd, 3rd, 4th 5th generation complain that illegals are taking jobs. In years to come, it will be illegal immigration from Africa, China, etc. From my point of view, it doesn't matter - does it.? Therefore, I am confused about Mike B's comment about the birth rates in Mexico. Illegal is illegal. I am of the belief that once you stop skewing the prevailing wage prices with unemployment benefits and minimum wage numbers, it will eventually force people back into the work force doing those jobs that they don't want to do.

I personally believe that if you cut back the unemployment (and other) benefits, people will start to take these hard jobs, and perhaps these same people will start to make the innovations that some of the comments talk about. By cutting unemployment to 6 months max, I guarantee people will start picking onions, sweeping floors, cleaning homes, painting houses, and mowing lawns. Moreover, they just may like it. They may start their own businesses managing people to do these same tasks.

I am an attorney. I was out of work for a while after my son was born. I did what I had to do to make some extra money. I loaded trucks, I took part time per diem work. I did what it took, and did not collect a penny from the government. I did not lose my house, I did not starve. I just swallowed my pride and got to work. I finally got another professional job, but I had no problem doing physical labor, and I would do it again if I had to do it again.

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Eric

I really can't say with onions but with sweet corn our most productive workers on the west coast pack about 1000 ears per hour. I once observed a crew in Florida that were regularly packing (boxing) 2500 ears per hour and there was a waiting list to get on that crew for $6/hr. Here in Washington a good manual laborer can make near $20/hr picking apples at about 1000 apples per hour and there is always a shortage of pickers.

mark

Elasticity is greater for the non immigrant because of the sociatal saftey nets. I've spoken to some of my mexican workers and right now they are terrified of going home. One of my workers was kidnaped and held for 3 weeks until a ransom of $30,000 was paid. Another employee stoped sending money to his mother through a bank account because criminal gangs have infiltrated legitimate banks and report to thugs when money is availible.