Living Economics

The Seduction of Cheap Labor
Michael Hill
Cheap immigrant labor has kept labor-intensive lettuce farming in America that should perhaps have been offshored or mechanized.

In the late fall of 2004, lettuce was rotting in fields in Arizona. The time for harvest had come, but there were not enough workers to gather the lettuce. (WSJ 3/11/2005) This labor shortage was in effect a collateral damage of the US effort to tighten its borders on both legal and illegal workers in its war on terror.

There has been a lot of public outcry recently about immigrants stealing native citizens' jobs. Immigrants comprise 13% of the US workforce and 11% of the population, but the jobs that are the most dominated by immigrants are not occupations to which most Americans aspire: meatpackers, hotel maids, gardeners, seamstresses, farm hands, and construction workers, to name a few. (USA Today) If immigrants were stealing jobs that would otherwise go to native-born Americans, then a shortage of lettuce harvesters should have led to a rise in the percentage of Americans harvesting lettuce. Yet, to the contrary, when Antonio Oseguera, an Arizona farmer, placed ads in the local papers for field workers, he received only one response, from a mechanic who chose not to take the job. (WSJ 3/11/2005) Why are Americans so unwilling to pick lettuce?

Lettuce-harvesting is a low-pay, back-breaking job offering nearly no room for advancement. Americans are simply unwilling to do such work at the going rate, even if they are unemployed. For one thing, the average American today is better-educated than in the past, so employment expectations are higher. 91% of today's workforce holds a high school diploma, whereas only 48% did in 1960. (WSJ 3/11/2005) Also, American workers have temporary access to unemployment benefits and can afford to wait for better-paying jobs. To the migrant workers, these jobs offer better pay than what they can get back home. Americans might choose to pick lettuce if the job paid more, but then the lettuce could not be sold at the higher price.

The flow of immigration has greatly increased in the past few years, with the majority coming from Central America. One of the effects of this has been an abundant labor supply for low-skill jobs dominated by fresh immigrants. Foreign-born workers now hold 35% of all unskilled labor jobs in the US. Such large numbers of workers have depressed wages for those jobs. The median weekly earnings for Hispanic workers in the US was $420 in 2002, but dropped to $411 in 2003, and to only $400 in 2004. (WSJ 5/2/2005)

A popular sentiment is to keep industry at home, presumably to keep jobs at home. But if the only way to keep industry at home is to import cheap foreign labor, no jobs have been saved. Instead, scarce resources are being tied up with low-profit businesses that should better be offshored to countries with cheaper labor. There is no reason why lettuce should be grown in the US instead of in Central America. Instead, the ready supply of cheap migrant labor has discouraged many American companies from investing in labor-saving machinery. If the Arizona lettuce farmers had mechanized instead of Mexicanized, they would not be worried now about the tighter borders.

References:
  • USA Today. 7/22/2001. "USA Just Wouldn't Work Without Immigrant Labor." 2001.
  • WSJ 3/11/2005. "Crucial Ingredient: As Border Tightens, Growers See Threat to 'Winter Salad Bowl.'"
  • WSJ 5/2/2005. "Low-Wage U.S. Jobs Get 'Mexicanized,' But There's a Price."
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