Unintended consequences of relying on immigrant labor

William Bailey:

Agriculture is often trotted out as unable to function without immigrant labor. To quote a recent headline in Illinois AgriNews, “Migrant laborers help agriculture industry thrive.”

It may be, however, that agriculture is the loser, rather than the winner, using immigrant workers. There has been some research suggesting that use of cheap labor, the key component in illegal immigration, may be harming the productivity of American agriculture.

If this is correct, increased use of immigrant workers, either legal or illegal, could impair the ability of American agriculture to compete internationally.

Could this mean our two Illinois senators, and even President Bush, might be harming American agriculture by their strong support of legislation to ease immigration standards? A very brief response is “Yes, it could.” A longer answer requires the use of economics.

Labor has long been a key component in agriculture. Over time, however, technology has reduced the number of farm laborers required in agriculture.

For example, according to W.E. Huffman at Iowa State University, no-till farming has greatly reduced the demand for labor. According to Huffman, the same substitution of capital and technology for labor also exists for the mechanical harvesters used to harvest stone fruits (cherries, peaches and plums).

The mechanical harvesting machines shake the tree, the fruit falls off and is collected, untouched by human hands. The net result of the substitution of capital and technology for labor has been a significant reduction in labor required for some areas of agriculture.

While farm equipment is very expensive, when agricultural wages reach a certain level, the purchase of farm equipment is more cost effective than hiring people. As the cost of farm labor increases, it follows that agriculture equipment is substituted for people.

The reverse also is true — if farm labor costs are low, agriculture will not invest as readily in new technology to replace labor. As long as labor costs are kept down, cheap labor will continue to slow the adoption of cost-efficient technology in agriculture.

For example, again according to Iowa State’s Huffman, dairy farmers have found that “immigrant farm workers are more cost effective than totally automated milking systems.”

This means that while the technology exists for automated milking, a steady supply of inexpensive immigrant farm workers keeps labor costs down and, thus, prevents the adoption of new technology.

American agriculture faces intense global competition. The effect of encouraging the continued use of inexpensive immigrant labor may have the unintended consequence of reducing the competitiveness of American agriculture.

Cheap labor is expensive for America in the long run

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