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For better or worse, our economy depends on undocumented workers. The consequence of laws like the one in Georgia will be higher prices, especially higher food prices. The article quoted below goes on to detail how Georgia's governor seems shocked that the new law is having these consequences, and he promises to find a solution. His first proposal is that farmers hire unemployed probationers to fill 2,000 of the 11,000 jobs that must now be filled. I have a feeling that neither the farmers nor most of the probationers will go for that.
<< After enacting House Bill 87, a law designed to drive illegal immigrants out of Georgia, state officials appear shocked to discover that HB 87 is, well, driving a lot of illegal immigrants out of Georgia.
<< It might be funny if it wasn't so sad.
<< Thanks to the resulting labor shortage, Georgia farmers have been forced to leave millions of dollars' worth of blueberries, onions, melons and other crops unharvested and rotting in the fields. It has also put state officials into something of a panic at the damage they've done to Georgia's largest industry. >>
Source:
http://blogs.ajc.com/jay-bookman-blog/2011/06/17/gas-farm-labor-crisis-playing-out-as-planned/
The full text of HB 87 is available here:
http://www.legis.ga.gov/legislation/en-US/display.aspx?BillType=HB&Legislation=87
<< For better or worse, our economy depends on undocumented workers. The consequence of laws like the one in Georgia will be higher prices, especially higher food prices. The article quoted below goes on to detail how Georgia's governor seems shocked that the new law is having these consequences, and he promises to find a solution. His first proposal is that farmers hire unemployed probationers to fill 2,000 of the 11,000 jobs that must now be filled. I have a feeling that neither the farmers nor most of the probationers will go for that. >>
The prices will go up, yes. However, if prices go up by more than a few cents per pound, then the farmers are just price gouging us the way oil companies do. A worker can harvest/plant/water thousands of pounds worth of fruit or vegetables per day. Spreading the cost of that worker out over tons of fruit or vegetables amounts to a pocket change increase in price. I'm willing to pay that price.
Josh
The prices will go up, yes. However, if prices go up by more than a few cents per pound, then the farmers are just price gouging us the way oil companies do. A worker can harvest/plant/water thousands of pounds worth of fruit or vegetables per day. Spreading the cost of that worker out over tons of fruit or vegetables amounts to a pocket change increase in price. I'm willing to pay that price.
Josh
Labor costs represent three or four percent of what you pay at the store for produce. Most of the cost is in shipping and overhead for the store. That is why buying from stands and sharecroppers is such a great value (assuming you live near farms).
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
<< A worker can harvest/plant/water thousands of pounds worth of fruit or vegetables per day. >>
That doesn't sound reasonable to me, but I certainly cannot claim any expertise on the subject. The article mentioned blueberries, onions and melons as some of the Georgia crops rotting in the fields because of the lack of labor. I assume each of those must be harvested by hand. Perhaps one person could harvest thousands of pounds of watermelons per day, but I doubt that's the case with blueberries or onions.
Why are the crops rotting in the fields if they would be so easy to harvest without undocumented workers?
<< Labor costs represent three or four percent of what you pay at the store for produce. >>
Assuming that's true, it would be helpful in predicting the change in prices only if we knew how much farm labor costs would increase if farmers are forced to harvest their crops without the use of undocumented workers.
That doesn't sound reasonable to me, but I certainly cannot claim any expertise on the subject. The article mentioned blueberries, onions and melons as some of the Georgia crops rotting in the fields because of the lack of labor. I assume each of those must be harvested by hand. Perhaps one person could harvest thousands of pounds of watermelons per day, but I doubt that's the case with blueberries or onions.
Why are the crops rotting in the fields if they would be so easy to harvest without undocumented workers?
<< Labor costs represent three or four percent of what you pay at the store for produce. >>
Assuming that's true, it would be helpful in predicting the change in prices only if we knew how much farm labor costs would increase if farmers are forced to harvest their crops without the use of undocumented workers.
>Labor costs represent three or four percent of what you pay at the store for produce.
Also want to point out that this says very little about the price sensitivity to the cost of labor. In some situations, a small increase in cost can lead to a dramatic decrease in supply, which in turn can lead to a dramatic increase in prices. It totally depends on the elasticity (price sensitivity) of supply and demand of the product.
For example, imagine the following:
1 (good) producer: $9.45 fixed cost + $0.05/unit, with a max production of 10 units
9 (okay) producers: $9.50 fixed cost + $0.05/unit, with a max production of 10 units
99 consumers: will buy 1 each at up to $1/unit
1 consumer: will buy 1 at up to $9.50/unit
In this situation, $1 is the optimal price. Assuming all the producers charge $1, then they will each bring in $10 in revenue, and the okay producers will have $0 net profit ($9.50 + 10*.05 = $10 cost), and the good one will have $0.05 profit. (Note that there's no incentive for any of them to charge any more or less, since either way their revenue would decrease.)
Now imagine the unit cost goes up $0.01/unit for each producer. Now the 9 okay producers can no longer make ANY units without taking a loss, and so must drop out of the market (long term anyway, assuming they can liquidate their fixed cost). Only the 1 good producer is left, and his options are a) charge $1 and make $10, but lose $9.45 + 10*$0.06 = $10.05 to costs, or b) charge $9.50 and make $9.50 from the 1 consumer who can pay that, but only cost $9 + .06 = $9.06. He'll obviously take the option that nets him 44 cents, and so the price of this product has gone up 950%, even though the unit cost only went up 20% and only ever constituted 5% of the cost of the product.
Obviously this is a very contrived example where both supply and demand are extremely elastic, but the point is just that prices can change very quickly. If fruit really is rotting in the fields, what that means is that supply is in fact dropping off (as the "okay" producers just can't stomach any increase in cost), which means that prices will rise.
- Greminty
Also want to point out that this says very little about the price sensitivity to the cost of labor. In some situations, a small increase in cost can lead to a dramatic decrease in supply, which in turn can lead to a dramatic increase in prices. It totally depends on the elasticity (price sensitivity) of supply and demand of the product.
For example, imagine the following:
1 (good) producer: $9.45 fixed cost + $0.05/unit, with a max production of 10 units
9 (okay) producers: $9.50 fixed cost + $0.05/unit, with a max production of 10 units
99 consumers: will buy 1 each at up to $1/unit
1 consumer: will buy 1 at up to $9.50/unit
In this situation, $1 is the optimal price. Assuming all the producers charge $1, then they will each bring in $10 in revenue, and the okay producers will have $0 net profit ($9.50 + 10*.05 = $10 cost), and the good one will have $0.05 profit. (Note that there's no incentive for any of them to charge any more or less, since either way their revenue would decrease.)
Now imagine the unit cost goes up $0.01/unit for each producer. Now the 9 okay producers can no longer make ANY units without taking a loss, and so must drop out of the market (long term anyway, assuming they can liquidate their fixed cost). Only the 1 good producer is left, and his options are a) charge $1 and make $10, but lose $9.45 + 10*$0.06 = $10.05 to costs, or b) charge $9.50 and make $9.50 from the 1 consumer who can pay that, but only cost $9 + .06 = $9.06. He'll obviously take the option that nets him 44 cents, and so the price of this product has gone up 950%, even though the unit cost only went up 20% and only ever constituted 5% of the cost of the product.
Obviously this is a very contrived example where both supply and demand are extremely elastic, but the point is just that prices can change very quickly. If fruit really is rotting in the fields, what that means is that supply is in fact dropping off (as the "okay" producers just can't stomach any increase in cost), which means that prices will rise.
- Greminty
<<<< Thanks to the resulting labor shortage, Georgia farmers have been forced to leave millions of dollars' worth of blueberries, onions, melons and other crops unharvested and rotting in the fields. It has also put state officials into something of a panic at the damage they've done to Georgia's largest industry. >>>
We knocked that unemployment rate down to next to nothing? Wow, when did that happen? Obama is going to get re-elected in a heartbeat if he can do that.
SGM Sleken
We knocked that unemployment rate down to next to nothing? Wow, when did that happen? Obama is going to get re-elected in a heartbeat if he can do that.
SGM Sleken
>We knocked that unemployment rate down to next to nothing? Wow, when did that happen?
Don't be dense. Good luck getting any college grad to do farm work, no matter how unemployed they are. Same with anyone with 10+ years experience in a trade. Not to mention they need very physically fit people to handle this type of work.
- Greminty
Don't be dense. Good luck getting any college grad to do farm work, no matter how unemployed they are. Same with anyone with 10+ years experience in a trade. Not to mention they need very physically fit people to handle this type of work.
- Greminty
A have a graduate degree and have had jobs in farming and road construction. The idea that people are somehow insulted by picking fruit or general labor when it would pay the bills is at best a hilarious joke. Hell, my jobs cleaning fish poop out of drains in an aquaculture farm and shoveling asphalt were way better than working fast food and retail jobs (which I have also had).
People don't do farm work because the pay is crap. The pay is crap because there is a huge captive workforce of migrant workers who can't do other work for lack of documentation. Why would a farmowner pay a wage a college grad needs to make it, when he can pay an immigrant half as much? It's not like an illegal alien is going to report minimum wage violations or a lack of payroll tax withholdings. Subject farming to the same effects on wages as every other occupation, bring the wages up to something that fits into the rest of the economy, and you'd have a line for those jobs.
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
People don't do farm work because the pay is crap. The pay is crap because there is a huge captive workforce of migrant workers who can't do other work for lack of documentation. Why would a farmowner pay a wage a college grad needs to make it, when he can pay an immigrant half as much? It's not like an illegal alien is going to report minimum wage violations or a lack of payroll tax withholdings. Subject farming to the same effects on wages as every other occupation, bring the wages up to something that fits into the rest of the economy, and you'd have a line for those jobs.
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
>Subject farming to the same effects on wages as every other occupation, bring the wages up to something that fits into the rest of the economy, and you'd have a line for those jobs.
The fact is there aren't people picking these crops. You can think whatever you like, but it's not reality.
- Greminty
The fact is there aren't people picking these crops. You can think whatever you like, but it's not reality.
- Greminty
<< That doesn't sound reasonable to me, but I certainly cannot claim any expertise on the subject. The article mentioned blueberries, onions and melons as some of the Georgia crops rotting in the fields because of the lack of labor. I assume each of those must be harvested by hand. Perhaps one person could harvest thousands of pounds of watermelons per day, but I doubt that's the case with blueberries or onions. >>
<< Why are the crops rotting in the fields if they would be so easy to harvest without undocumented workers? >>
Because people won't work for the cruddy wages that these farmers pay the illegals. They would need to pay their worked more, which would raise costs by a few cents a pound.
A quick google search revealed both onion and blueberry harvesting machines. I didnt click on the links to see how effective they are, but I'm assuming they are better than hand picking and would allow the workers to harvest quite a bit more.
Josh
<< Why are the crops rotting in the fields if they would be so easy to harvest without undocumented workers? >>
Because people won't work for the cruddy wages that these farmers pay the illegals. They would need to pay their worked more, which would raise costs by a few cents a pound.
A quick google search revealed both onion and blueberry harvesting machines. I didnt click on the links to see how effective they are, but I'm assuming they are better than hand picking and would allow the workers to harvest quite a bit more.
Josh
>Subject farming to the same effects on wages as every other occupation, bring the wages up to something that fits into the rest of the economy, and you'd have a line for those jobs.
<< The fact is there aren't people picking these crops. You can think whatever you like, but it's not reality. - Greminty >>
There are two problems with your statement. First, the reality is that the wages are not reasonable for anyone other than illegals to work for and that's the reason for the existence of your fact. Second, Menos said that bringing the wages up to those reasonable levels would get citizens to do the work and your statement does absolutely nothing to refute that.
Josh
<< The fact is there aren't people picking these crops. You can think whatever you like, but it's not reality. - Greminty >>
There are two problems with your statement. First, the reality is that the wages are not reasonable for anyone other than illegals to work for and that's the reason for the existence of your fact. Second, Menos said that bringing the wages up to those reasonable levels would get citizens to do the work and your statement does absolutely nothing to refute that.
Josh
>The fact is there aren't people picking these crops. You can think whatever you like, but it's not reality.
Because it is 100% impossible that the system takes actual time to adjust to new market forces. No way farmers may take more than a few hours to decide and hike wages to get new workers. No possible motive other than a lack of willing workers that could ever, ever, lead to crops going bad in a field somewhere. No other possible market forces in the national food distribution system that could lead us to this result. It just isn't realistic you see.
Seriously, I thought we got over this "Jobs Americans just won't do" malarkey of Bush's somewhere near a jobless rates of 15%.
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
Because it is 100% impossible that the system takes actual time to adjust to new market forces. No way farmers may take more than a few hours to decide and hike wages to get new workers. No possible motive other than a lack of willing workers that could ever, ever, lead to crops going bad in a field somewhere. No other possible market forces in the national food distribution system that could lead us to this result. It just isn't realistic you see.
Seriously, I thought we got over this "Jobs Americans just won't do" malarkey of Bush's somewhere near a jobless rates of 15%.
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
>No possible motive other than a lack of willing workers that could ever, ever, lead to crops going bad in a field somewhere.
No, as I said before, inability to profit at a higher cost of labor is also a significant possibility. Your claim that there'd be a line for the jobs is meaningless if the farmers can't hire people at those wages. My point is that you can come up with all the hypotheticals you like, but they aren't currently happening. All that's happening now is that there are fewer people working (illegal or not, they'd still be spending their wages), and fewer crops being produced leading to higher prices.
>Seriously, I thought we got over this "Jobs Americans just won't do" malarkey of Bush's somewhere near a jobless rates of 15%.
Perhaps, but to claim that unemployment has to be near zero for there to be a paucity of labor in any particular sector is also malarkey (which is what I was responding to). Yes, long term, people will fill whatever jobs are available. But short term, that's not the case, regardless of your personal anecdotes.
- Greminty
No, as I said before, inability to profit at a higher cost of labor is also a significant possibility. Your claim that there'd be a line for the jobs is meaningless if the farmers can't hire people at those wages. My point is that you can come up with all the hypotheticals you like, but they aren't currently happening. All that's happening now is that there are fewer people working (illegal or not, they'd still be spending their wages), and fewer crops being produced leading to higher prices.
>Seriously, I thought we got over this "Jobs Americans just won't do" malarkey of Bush's somewhere near a jobless rates of 15%.
Perhaps, but to claim that unemployment has to be near zero for there to be a paucity of labor in any particular sector is also malarkey (which is what I was responding to). Yes, long term, people will fill whatever jobs are available. But short term, that's not the case, regardless of your personal anecdotes.
- Greminty
Can farmers in Georgia afford to pay higher wages if other states do not have laws similar to the new law in Georgia?
Apparently, those delicious Vidalia onions won't grow anywhere except Georgia, but there are states that compete with Georgia for the other crops. I'd say the Georgia legislature just did a huge favor for competing states.
Apparently, those delicious Vidalia onions won't grow anywhere except Georgia, but there are states that compete with Georgia for the other crops. I'd say the Georgia legislature just did a huge favor for competing states.
<< No, as I said before, inability to profit at a higher cost of labor is also a significant possibility. Your claim that there'd be a line for the jobs is meaningless if the farmers can't hire people at those wages. My point is that you can come up with all the hypotheticals you like, but they aren't currently happening. All that's happening now is that there are fewer people working (illegal or not, they'd still be spending their wages), and fewer crops being produced leading to higher prices. >>
People won't stop eating fruit and vegetables simply because rising labor costs have increased prices by 5-10 cents a pound and I doubt all that many would even cut back.
Josh
People won't stop eating fruit and vegetables simply because rising labor costs have increased prices by 5-10 cents a pound and I doubt all that many would even cut back.
Josh
>People won't stop eating fruit and vegetables simply because rising labor costs have increased prices by 5-10 cents a pound and I doubt all that many would even cut back.
In today's age, fresh fruits and vegetables are a luxury, not a necessity. You can get food to survive on far more cheaply. So, yes, people will change their consumption habits for these. (As an anecdotal aside, I personally will buy blueberries every week when they're at $2/box (here in nyc), but once they go above that, for whatever reason, I rarely buy them.) But really, you have absolutely no idea how much the price will rise. Even if you know the cost is only 5-10 cents a pound (which you don't, and it probably isn't*), it is not a direct correlation to the resulting price; see my previous post on this.
While something must be done about illegal immigration, it doesn't help anyone to hand-wave away the potentially serious effects of it. A less draconian approach is probably better for everyone. (Also, we have far more pressing issues to deal with currently.)
- Greminty
* I don't know who said the cost of labor is only about 3% of the price of fruit, but a cursory search found at least one counter claim, stating that it's as much as 50% of the cost of production (while again, that doesn't translate directly to 50% of the price of fruit, it does strongly suggest it's not 3%... unless the farmers are raking in over 90% in profits). Of course, the article also promotes more mechanization, which I tend to agree with, but again, that takes much more time (perhaps decades in some cases, as the article suggests) to implement.
http://www.cis.org/FarmMechanization-ImmigrationAlternative
In today's age, fresh fruits and vegetables are a luxury, not a necessity. You can get food to survive on far more cheaply. So, yes, people will change their consumption habits for these. (As an anecdotal aside, I personally will buy blueberries every week when they're at $2/box (here in nyc), but once they go above that, for whatever reason, I rarely buy them.) But really, you have absolutely no idea how much the price will rise. Even if you know the cost is only 5-10 cents a pound (which you don't, and it probably isn't*), it is not a direct correlation to the resulting price; see my previous post on this.
While something must be done about illegal immigration, it doesn't help anyone to hand-wave away the potentially serious effects of it. A less draconian approach is probably better for everyone. (Also, we have far more pressing issues to deal with currently.)
- Greminty
* I don't know who said the cost of labor is only about 3% of the price of fruit, but a cursory search found at least one counter claim, stating that it's as much as 50% of the cost of production (while again, that doesn't translate directly to 50% of the price of fruit, it does strongly suggest it's not 3%... unless the farmers are raking in over 90% in profits). Of course, the article also promotes more mechanization, which I tend to agree with, but again, that takes much more time (perhaps decades in some cases, as the article suggests) to implement.
http://www.cis.org/FarmMechanization-ImmigrationAlternative
The portion of production that is labor costs is not the same thing as the proportion of what you pay. At least in the retail establishments I have worked at, the common markup is 100-200% on a given item. When you work in other margins for the farmer's profit and any middlemen, it has a multiplicative effect on the fraction that is labor costs. 30% of 50% of 50% and so forth.
If food costs are really a major concern for you (which does make sense). Perhaps some comments on the required ethanol in gasoline that both decreases the corn supply and increases transport costs (A huge part of total food costs and production costs for transporting materials). The WHO cites the subsidies as a contributer to the 2008 food crisis that left tens of thousands dead from starvation and brought about civil unrest in more than a score of countries. Not to mention the current relationship to a few minor political disagreements in the middle east (Riots, regimes falling and such things).
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
If food costs are really a major concern for you (which does make sense). Perhaps some comments on the required ethanol in gasoline that both decreases the corn supply and increases transport costs (A huge part of total food costs and production costs for transporting materials). The WHO cites the subsidies as a contributer to the 2008 food crisis that left tens of thousands dead from starvation and brought about civil unrest in more than a score of countries. Not to mention the current relationship to a few minor political disagreements in the middle east (Riots, regimes falling and such things).
AIM: GS4Menos
>Here lies the formless world we´re living in
>Gravity is finally giving in
>High altitudes and still upward we go
>I was never meant to lead but to follow
>The portion of production that is labor costs is not the same thing as the proportion of what you pay. At least in the retail establishments I have worked at, the common markup is 100-200% on a given item.
I agree, but I was mostly thinking about buying fruit from a stand on the street or something. In that case there's not nearly that markup, I'm pretty sure. But it would be interesting to know what proportion of fruit is sold pretty much farmer to consumer, vs say to a restaurant or other middleman who raises the markup significantly.
>Perhaps some comments on the required ethanol in gasoline that both decreases the corn supply and increases transport costs (A huge part of total food costs and production costs for transporting materials).
I'm definitely for removing the ethanol subsidies. It's not an industry that really benefits from subsidies anyway, since there's probably not all that much further technology will develop it and it's something that can be gotten elsewhere (oil, for now). (I agree with subsidies for things like Amtrak where the market can't easily replace them, or like solar and other next-gen power where subsidies can "kick start" an industry into eventual profitability.)
- Greminty
I agree, but I was mostly thinking about buying fruit from a stand on the street or something. In that case there's not nearly that markup, I'm pretty sure. But it would be interesting to know what proportion of fruit is sold pretty much farmer to consumer, vs say to a restaurant or other middleman who raises the markup significantly.
>Perhaps some comments on the required ethanol in gasoline that both decreases the corn supply and increases transport costs (A huge part of total food costs and production costs for transporting materials).
I'm definitely for removing the ethanol subsidies. It's not an industry that really benefits from subsidies anyway, since there's probably not all that much further technology will develop it and it's something that can be gotten elsewhere (oil, for now). (I agree with subsidies for things like Amtrak where the market can't easily replace them, or like solar and other next-gen power where subsidies can "kick start" an industry into eventual profitability.)
- Greminty
