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November 26, 2011

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Even the steadfast capitalist American Governor General of the Philippines, William Cameron Forbes, recognized the paradox you note, more than 80 years ago: "To some of the employers of labor who complained that the Filipinos would not work, it was suggested that they add 'unless paid'."

Well, the capitalists noticed that, while one has to care for one's slaves because they are your valuable property, the same is not necessary for 'free' workers. If all employers cooperate, workers can be motivated by threats that would fall on deaf ears with slaves. A used-up worker can be replaced with a new one at no or low cost while getting a new slave is expensive. Prisoners probably fall between these categories but a few changes in those obsolete treat-prisoners-like-humans regulations could combine the best from both worlds, i.e. produce highly incentivized workers at minimum costs. I guess there must still be some German guidebooks from the early 40ies left that could serve as template. And for those that find this too secular, there is always the biblical 'he who does not work, he shall not eat either' (btw, lately quoted by the GOP lady candidate with the strange eyes). Rule of thumb, pay should cover 90-95% of food expenses (depending on job). That guarantees motivation, docility and a regular but not too high turnover (keep people too long and they develop a sense of entitlement reducing their value).

The idea that all markets should be free except the one you are in strikes me as rational. Under conditions of pure competition, all actors are price takers, and adjust according to current market signals. In reality, not so much.

Capturing economic rents is what it's all about.

An example of the correlation between status and wages in the employment of foreign labor by Nazi Germany during WWII. For instance, there was a huge shortfall of agricultural labor, so Poles were imported from occupied Poland to pick the crops. Since it was unacceptable to pay them the same rate as German workers, their wages were limited to a maximum of 25 Rm per month, along with a whole host of restrictions on movement and socialization. Of course, the result was that the Poles refused to volunteer for such work. Rather than raise wages, the Germans turned to conscription.

I suspect that the people who argue that "illegal immigrants take farm jobs from Americans" have no clue how hard the work in agriculture. Dr. S. clearly has some idea from her CSA experience. But having grown up on a farm, I have to say that there is still a substantial difference between spending part of a weekend picking crops for your table, and doing it full time for weeks on end. It may be like the difference between taking a long weekend bike ride, and training full time for a major bike race. Both are hard work, but one is a fun change of pace, while the other is grinding toil.

As for Massey's "Americans didn't turn away from the work merely because it was hard or because of the pay but because they had come to think of it as beneath them" I have to say that the suspicion of ignorance goes double for him. Yes, some people probably did think that the work was beneath them. And some were unwilling to do it because of the low pay. But the experience of farmers in Alabama suggests (anecdotally, admittedly) that even when you can get Americans to try working the harvest, the vast majority of those who try it last about 2 days.


It is an interesting question why wages for non-immigrant labor do not rise to market clearing levels. Let me suggest just one. If you are a farmer in a state which has just forced out immigrant labor (including, effectively, legal immigrants; at least based on what we have seen this year), you have a problem. Your choice of crops for this year depended on certain assumptions about labor availability and cost. If you have to pay more for that labor, you have two choices: You can eat the cost, cutting your profits. Or you can raise your prices to cover that increase cost.

The first option can leave you making a loss. Perhaps even a loss sufficiently large that you are better off just writing off the crop instead.

The second option is worse, since you are competing with those in other states who did not have that cost increase -- and if that means that you can't sell your crop, then you are even worse off than you would have been just letting it rot unharvested.

Now it might be that, if everybody across the country faced the same cost increase, the competition problem wouldn't occur. But the prices of food would jump substantially. Anybody care to guess what the reaction would be to food prices generally doubling in a single year? Not pretty.

What I don't understand is why free-market solutions are so particularly unattractive for field labor.

Beyond considerations regarding 'imperfect competition', it is conceivable to consider "free-market theory" itself deeply flawed.

Take our jobs, they said.

Been a while since I've been following this, but last I checked they had exactly three responses.

One was Stephen Colbert.

Your choice of crops for this year depended on certain assumptions about labor availability and cost. If you have to pay more for that labor, you have two choices: You can eat the cost, cutting your profits. Or you can raise your prices to cover that increase cost.

An interesting point. Even more interesting should be what the farmers do next year, when they already know they cannot get immigrant labor (I don't understand why legal immigrants are excluded, but that is a different subject). Will they find new crops that they can indeed harvest cost-effectively? If so, the price of the abandoned crop will presumably rise due to scarcity.

I think the key is that free market theory does not guarantee that wages and prices will necessarily adapt instantaneously, but eventually, it should be pretty hard to defy gravity.

BTW, I should note that the reluctance to pay higher prices in the face of scarcity is hardly limited to low-wage jobs. I recently interviewed at a large high tech company for a position they are constantly having a lot of trouble filling. Everything went along fine until they asked for my current salary - the next I heard was that they were no longer interested.

Of course, a similar effect would be in play. Even if they cannot get enough workers at the rate they are offering, paying me more than their salary scale would make it hard not to pay others more. Over time, they might well decide they have no choice, but I can certainly understand their reluctance in the short term.

The opening sentence about Thanksgiving being a harvest festival has been bumping around in my head a bit. I'm thinking that Thanksgiving is a _North American_ festival, and its focus on the meal is an interesting departure from other, more traditional harvest festivals. I think this is because the last thing you want to do at a harvest festival is pig out, because you are thinking how this food is going to last you all winter. Yet the US and Canadian versions seem to be really attached to a meal so vast that you would have to, as we said in my hometown, break the back legs of your chair to move away from the table, cause you certainly couldn't move under your own power. It also seems that the primary end of summer festival is something along the lines of Halloween, where you anticipate the spirits of the dead coming back. That is also wrapped up in some sort of harvest-y festival, but I don't remember any meal based celebration in either England or France when I lived there. (though as a starving student, any meal was a meal based celebration!)

One thing I like about Japan is that we have national holidays for both the March and September equinoctes.

Harvest festivals are mostly about eating the parts of the harvest that are not good enough to preserve. If you look at the directions for preserving food you will find that you should not use blemished fruit and vegies because they do not preserve well. So sorting is very important. Once you sort out the less than perfect foodstuffs you invite everyone who worked the harvest with you to eat the blemished stuff and put up the perfect stuff. You also have to determine the amount of fodder you have for the critters over the winter and then eat the culls at your feast.
While people were indeed thankful that they had enough food to make it through the winter, the harvest feast was a very practical matter.

When my dad grew up on a farm in the Imperial Valley in California, farm workers worked very hard for six months and then goofed off the rest of the year and spent time with their family.

A modern equivalent to what they were paid would be to hire a law student for three months and that would pay tuition and living expenses for the year, and I'm not kidding.

My father-in-law had an apple orchard. A family of illegal immigrants came up from California and worked for him andhis brother every summer over about a twenty year period. It started out just a couple, but over time they had eight kids.

They lived in a small house on the property-not a shack. A house. They put in a garden, raised some chickens and a pigs, and poached deer.

The boys went thorugh comunity college programs and got out of the fields. The girls got married. One of the girls got married and pregnant at about twelve which caused a huge controversy. The family hada little motor boat that came up from California with them and after work they would go out on the Columbia and swim.

At the ed of the season they always threw a big pig roast for the employers and their families.

My father-in-law did't pay much because he did't make much. Some years he lost money on the orchard and many years he just broke even.

After my father-in-law's death, the orchard was sold. That was about fifteen years ago.

I don't thik this was typical. I saw the shacks provided for most of the orchard workers--straight out of Grapes of Wrath. There was a lot of prejudice toward the Spanish speaking farm laborors. They were treated with hostility and suspicion and are not made to feel welcome in the community. Some of this was due to culture clash. The deer poaching, for example, didn't make anyone popular. A lot of it was fear of the Other and some of it might have been contempt for people who were doing work that was despised. In any case it was routine for me to hear people other than my father-in-law's family saying the most blatantly bigotted stuff about Mexicans when I went over there. It would have been very difficult for a farm worker to get any other kind of job.

I've worked as a farm laborer; Where I grew up as a child, it was pretty much the only option for summer jobs. Picking radishes and rocks at agricultural sub-minimum wage, mostly. I'd never dis somebody willing to do that work; It did a marvelous job of persuading me I wanted a desk job when I grew up.

I expect the stickiness in agricultural labor rates in the face of a reduction in the availability of illegal immigrants is due to a number of factors. Including the expectation that it won't last, as the former tolerance of illegal immigration will be resumed by hook or by crook. It's been sustained for decades in the teeth of public opinion, that's not an irrational expectation.

I don't understand why legal immigrants are excluded, but that is a different subject).

I suspect it's because given the states where these anti-immigration measures occur, they don't want to put themselves in situations where they're constantly being hassled by authorities. When authorities are willing to arrest an executive from Mercedez Benz because he only had a German ID on him when stopped by police, why would farm workers want to risk that kind of disruption in their lives on a probably daily basis?

First, I have tremendous respect and appreciation for people who farm and/or work farms full time. It is an incredibly risky and brutal way to live.

A very good friend of mine, he is Hispanic, grew up as a migrant crop picker (cotton, strawberrys....you name it). Over the the thirty years of our friendship I have heard many stories and have a good idea of what that life must be like. He managed to obtain a tech degree when he was in his early 20s and now works in an office in NYC. I myself live in a rural community and own/run a little thoroughbred farm (horses for the track).

Farming is hard work. Period. It takes a toll on ones physical health. There is a lot of mental stress involved as one is constantly at the mercy of the capricious ways of mother nature as well as "the market". In the long run it is rarely profitable. Take the CSA experience and imagine that every day, year after year after year. Also imagine that as your only source of income.

"....but it doesn't really explain why farm labor isn't acting like a free market."

A couple basic reasons.

First, many of the crops involved are highly price elastic. So an increased labor cost cannot be passed onto the consumer; e.g. if strawberries are going to cost twice as much then we just won't buy strawberries. We don't need to eat strawberries. Nice to have, but not a dietary staple.

Second, the presence of crop insurance skews incentives. At some point on the cost/benefit curve - and this point is set not too far up from current levels - it makes more sense to just let the crop fail and collect the insurance than to pay the increased labor cost necessary to get the crop harvested.

I expect the stickiness in agricultural labor rates in the face of a reduction in the availability of illegal immigrants is due to a number of factors. Including the expectation that it won't last, as the former tolerance of illegal immigration will be resumed by hook or by crook.

I think it might be closer to say that the expectation is that either the former tolerance will be resumed OR our immigration laws will be revised to provide for either more immigration of farm labor or (more likely) something like the bracero program which, until 1964, provided for farm labor to come temporarily (for the harvest) without actually immigrating.

I've worked in the harvest, as a picker and as a supervisor. It is, as you say, somewhat skilled work, and the body must adapt to its physical demands. There's a brief description of my experience here: http://booksellersvsbestsellers.blogspot.com/2011/11/anchor-babies-lets-welcome-some-good.html

The problem is, employers must work in a competitive environment. We are not the only country that grows these crops, and what employers can pay pickers depends in part on what they can sell their produce for.

This works both ways. There are Mexican growers who can't compete with the efficiency of American growers with certain crops (although they might be able to if the American growers didn't have immigrant labor from Mexico.) And, of course, if you are a grower and you pay more than the other growers in your area, you are at a disadvantage in your market.

I can see where the social effects of raising the pay of low-status employees might have the effects described in a restaurant, but I doubt that's what's suppressing agricultural wages.

If farmers had to compete with higher wages in their cost structure, some would go out of business and eventually their farms would be used for a different crop or subdivided and used for housing. In my area, strawberries became an uneconomic crop because of competition from California, where immigrant labor was more readily available, and some farmers went to raising wheat, others subdivided their farms, depending on what the demand for land was.

It may be a simple matter of fact that American farmers are raising too many labor-intensive crops for a high-wage country. The solution may be to let other countries with lower labor costs grow those crops.

So an increased labor cost cannot be passed onto the consumer

This does not strike me as germaine to the good Doctor's question. The theory of the firm (i.e., pure competition) does not allow firms to "pass on their costs" to consumers. Firms are price takers, not price setters.

...it makes more sense to just let the crop fail and collect the insurance

I'm no multi-peril crop insurance salesperson, but I find it hard to believe "unwilling to pay a market clearing wage, so I let my crops rot in the field" is a qualifier for crop insurance.

It may be a simple matter of fact that American farmers are raising too many labor-intensive crops for a high-wage country

This would seem to imply that 'free market theory' is (a.) not working in this market for some reason; or (b.)not a very good theory to begin with.

You "some reason" could be the fact that we haven't had a free market in agriculture in this country since the 1930's.

Brett:

We do have a "free market" in fruits & vegetables, more or less -- at least they aren't covered by subsidies.

There is also the issue of automation. The cotton picking machine was invented in the 1930s, but no one adopted it, because there was lots of cheap sharecropper labor. It was only after the war, when wages rose, that cotton farms automated.

If wages were high enough, there would be all sorts of machines invented and deployed. Australia has very restrictive immigration policies, so they've been using sugar cane cutting machines for ages. In countries with cheap labor, like the US, they use guys with machetes.

In fact, many argue that it was high wages in 18th century England that led to the Industrial Revolution. Cheap labor is a drug that holds all society back. In the long run, it is very expensive.

Great comments on this post...

@Fuzzyface:

I recently interviewed at a large high tech company for a position they are constantly having a lot of trouble filling. Everything went along fine until they asked for my current salary - the next I heard was that they were no longer interested.

THAT was probably the result of a rigid bureaucracy deciding on acceptable wages without regard to market conditions.

You know, like communism.

I expect the stickiness in agricultural labor rates in the face of a reduction in the availability of illegal immigrants is due to a number of factors. Including the expectation that it won't last, as the former tolerance of illegal immigration will be resumed by hook or by crook.

Rational expectations theory meets immigration paranoia. In a heartwarming ending, both lose.

Speaking of automation, I had a vague recollection of a lawsuit against the Dept of Agriculture about how their plant breeding programs were designed in that they selected for particular traits that were helpful to big agribusiness and in looking for that, I found this related piece. The blog, an outpost of CNN, itself seems a bit lightweight, but I suppose it illustrates the same thing as the post, how something like a Thanksgiving dinner can give rise to serious considerations of societal problems.

bobbyp, "This does not strike me as germaine to the good Doctor's question. The theory of the firm (i.e., pure competition) does not allow firms to "pass on their costs" to consumers. Firms are price takers, not price setters."

The theory of the firm is not the appropriate one for the scenario, IMO. Regardless, no one is going to pay $20 for a little box of strawberries. Also, yes, insurance does kick in if labor can't be secured at a price that makes the harvest financially viable.

Regardless, no one is going to pay $20 for a little box of strawberries.

Yes. There will be customers at $20/box, just not as many. The theory is quite central to this question, since the theory posits that firms would bid up the price of labor. But they don't. Invoking the ceteris paribus assumption (it's like magic), letting the crop go unharvested restricts supply--effectively increasing the market clearing price anyway. In terms of the theory, the firms (growers) are acting irrationally. We wouldn't want that now, would we?

As to your assertion about the crop insurance, I'd appreciate a cite. My limited google search did not substantiate your claim.

In countries with cheap labor, like the US, they use guys with machetes.

http://www.scgc.org/xsteps.html > The cane growers disagree

Not $20, but maybe $45

There will be customers at $20/box, just not as many

Oh, like Megs McAddled? Price 'em at $200/box and she'll slip a decimal and buy a dozen just to enlighten the peons in her next column.

Marginally related to the topic of the thread: I find it interesting how many people on this blog have actually spent some time in agriculture and know something about the realities. Somehow, looking at the opinions current in the general population, I suspect that this is yet another aspect of the uniqueness of ObWi participants.

Anyone want to speculate as to why the correlation? Or even suggest some kind of causation?

in related news...http://www.blueridgenow.com/article/20091103/NEWS/911031011 > Apple farmers seek silk purse from pig's ear-spin government flax into gold

No labor shortage claim here, but still trying to negotiate a piece of the apple pie. It's the American way.

Darned socialists!

Anyone want to speculate as to why the correlation? Or even suggest some kind of causation?

Sure, it is all just selection bias. OW readers with farming experience read the thread and then feel compelled to comment describing their first hand experience. OW readers who don't have any such experience don't feel compelled to write comments saying "I have zero direct experience, but...". The result is that a large fraction of the commenters on this post have some sort of direct experience. That doesn't say anything about the OW commenting population as a whole though.

Well, except that, as a percentage of population, we seem to have a larger one than the general population by quite a bit. Sure, we may have a lot of lurkers, but I'm thinking more of the people who comment a fair amount of the time.

Not that I'm doubting some other form of selection bias is going on. I just wonder if self-selection to comment here is influenced by past experience.

"Sure, it is all just selection bias."

Is that the same selection bias that explains why nearly all snarky conservative comments on liberal blogs are by self described tall, handsome, and incredibly well off self made men?

Will wonders never cease?

OW readers with farming experience read the thread and then feel compelled to comment describing their first hand experience.

LOL. Here's mine.

My father, my brother, and I once visited my father's family near where he grew up, in Statesboro GA. My old man grew up on a farm and my uncle still kept an EXTREMELY LARGE garden, which he worked every day from about 5AM until it got too hot at about noon.

It was his retirement hobby.

I thought it would be interesting to 'get my hands dirty', so I asked my uncle to get me up the next morning so I could go out and weed with him.

I lasted about an hour.

Hands-on farming will kick your butt.

As far as farming these days, here is what we grow:

Corn
Soybeans
Hay
Wheat
Cotton
Sorghum
Rice

Of these, most of the wheat and a lot of the rice are intended for humans to eat directly, as is.

Most of the corn turns into sugar and vehicle fuel.

Most of the soy, hay, and sorghum turns into meat.

Tomatoes, peppers, string beans, spinach - plants intended to be cooked and eaten, as is - are sort of noise, relatively speaking.

The corn, soy, the alfalfa part of the hay, and a number of other crops, notably sugar beets, are essentially monoculture agriculture, using patented genetically modified strains that are the intellectual property of a very small number of companies. The patented varieties are modified to provide a resistance to herbicides like glyphosate, most familiar as RoundUp, which make a highly automated method of farming possible.

There are still a lot of places in the US where "farming" means "growing stuff that people eat", but they are increasingly a smaller and smaller part of the picture.

I don't know if I count as a regular commentator or not, but I'm willing to regularize the odds by admitting I've never spent an entire day on a working farm in my life, much less labored on one.

And yet, many years ago, when our son was little, my wife was acting in a theater in a small town nearby, and found that the best child care available was with a family living in a farm on the edge of town. (Two teenage daughters + the mother, as I recall, were the human resources.) When we went there to drop him off before a show, we drove up the dirt driveway toward the big red barn, between the various outbuildings, toward the white farmhouse with its covered porch, all incredibly "typical," and it always felt to me like I was, in some spiritual sense, Coming Home.

Which shows the inherent power of pastoral mythology, I guess.

My own experience is limited to plucking fruit in an orchard (make that private garden with a handful of trees and currant bushes) and collecting berries* in the wood (using a fork-like collector tool I cannot find a picture of). Also I tried with little success to mow a meadow with a scythe. The latter was less backbreaking than frustrating since I was rather incompetent wielding the thing.

*blue and lingonberries in Norway

"Is that the same selection bias that explains why nearly all snarky conservative comments on liberal blogs are by self described tall, handsome, and incredibly well off self made men?"

For the record, I'm a short, fat, balding middle class engineer. I do have an incredibly hot wife, does that count?

My experiences I think I have recounted ad nauseam, but for the record: we had an approximately 5000 square foot garden in Alabama, and it took an enormous amount of work to keep it weeded and thriving. Which meant that I'd get home from work on weekdays and work until well past sunset, trying (vainly) to keep up with the weeding.

A tractor would have helped, some. But only some. Various soil-turning activities, and mowing. Weeding and picking, not at all.

But that garden produced far more food than we could consume, even if we put it all up. So we wound up giving lots of it away.

None of which is to suggest that I have any idea of what it's like to do picking and/or weeding for a living. I can only imagine. You do get used to it to an extent, but that doesn't mean that it's ever pleasant. One major difference is likely this: when you get done weeding your garden, you can look back on all of your good work and enjoy, knowing that it's your garden.

We also had an orchard that I gave up on as impossible to maintain. You have no idea what kind of damage Japanese beetles can do, until you've been infested with them for a few seasons.

And, not that anyone asked, I'm not tall or particularly handsome. But, like Brett, I have married way, way up in the attractiveness category.

I "walked beans" while in college for summer money.

Most of the other bean walkers were like me: on the way to a life that did not include farm labor. We exchanged stories about what colleges we were attending, what our majors were etc. I remember one young woman who was silent during these discussions. During lunch break her husband showed up with their baby. He was supposedly a muscian and she was supporting the family. I can remember thikig that I was glad I was not going to be living her life. She was eighteen at the most. Bad choices.

That was back before immigrant labor arrived i my home state. In my current state immigrant labor is here and from the illegal's perspective farm labor is a step up from what ever they were experiencing in their home country (Guatemala, mostly). Farm labor would be huge step down for most people born here.

I guess its a question of perspective. And a lot depends on one's access to a better future.

I can understand why wages are low. What I can't understand is degrading living conditions. I don't think it would kill any employer to provide showers or flush toilets at the work camps.

Wouldn't kill them, but that stuff does cost money, and a good deal of the point of employing illegals is that they aren't in a position to complain about substandard working conditions.

I guess its a question of perspective. And a lot depends on one's access to a better future.

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