The Cost (to your grocery bill) of Deporting Illegal Aliens Working in Ag

[roo_ster]

$8 and our Sec of Agriculture is a Nitwit.

See Here:
http://www.nationalreview.com/corner/245254/and-guy-secretary-agriculture-mark-krikorian

Here are the basics:
Farmers get ~$0.18 of every dollar spent on things like fruits & veggies
Farm workers get ~$0.08 of every dollar spent on things like fruits & veggies

An increase of 40% to the cost of farm labor would make what used to cost $1.00 now cost $1.02.

The typical consumer unit spends ~$357/year on fruits & veggies.  After the farm labor wage increase of 40%, that would now cost them ~$366, an increase of about $8.

Plus, our Sec of Agriculture in Washington is a nitwit.  (Worth repeating.)

[Headless Thompson Gunner]

Hmm?

$8 per household is an insignificant amount of money.  That's rather the point of the article, right, to convince folks that it wouldn't matter if we started using legal workers and paying them reasonable (whatever that means) wages?  

$8 per household is 0.006% of GDP, and we can't even measure GDP accurately to within 1%.  $8 per household is trivial.

Well, I'm convinced.  I see no benefit to making the switch from illegal to legal workers, it wouldn't amount to a hill of beans either way.  Nobody would notice the difference.

 

Don't get me wrong, I'm not trying to weigh in on the immigration debate one way or the other.  I just find it funny that most of the anti-immigration rhetoric seems to be focused on how much influence illegals have on everything.  Illegals are sending vast amounts of money to families down south, money that should be going to honest hard-working Americans that just want a job.  Employers are getting rich on illegal labor, getting rich by not paying fair wages and not paying taxes.  

It's all presented as such a big deal, a huge economic impact, making us all poor.  It's so big and important that we must do something about it.  Now.  Or else.

And then here's this article showing that illegals don't have much influence at all in the economics of produce farming, a field where they're most heavily concentrated.  Presumably they have even less influence on fields where they're less of a presence.

The inconsistencies are hard to ignore.

[AZRedhawk44]

Farmers get ~$0.18 of every dollar spent on things like fruits & veggies
Farm workers get ~$0.08 of every dollar spent on things like fruits & veggies

An increase of 40% to the cost of farm labor would make what used to cost $1.00 now cost $1.02.

I appreciate your point and sympathize with your agenda.

But your numbers are wrong.

Farmers get $0.18 because their labor only costs $0.08.  An increase in their speculative costs to produce food for market will result in them expecting a larger share, since they made a greater investment.  40% increase in pay to workers will also result in that 40%, times two, being an expected return to the farmer in profit.

So, if the labor was getting $0.08 and you want to give them $0.10, then the farmer is going to want at least $0.20 instead of $0.18.  Maybe even $0.22 or $0.24.

That then results in higher costs to the distributors or grocery stores, passed on to us.

A 40% increase to labor turns out to cost us perhaps 20% increase in produce cost at the retail level.

[makattak]

I appreciate your point and sympathize with your agenda.

But your numbers are wrong.

Farmers get $0.18 because their labor only costs $0.08.  An increase in their speculative costs to produce food for market will result in them expecting a larger share, since they made a greater investment.  40% increase in pay to workers will also result in that 40%, times two, being an expected return to the farmer in profit.

So, if the labor was getting $0.08 and you want to give them $0.10, then the farmer is going to want at least $0.20 instead of $0.18.  Maybe even $0.22 or $0.24.

That then results in higher costs to the distributors or grocery stores, passed on to us.

A 40% increase to labor turns out to cost us perhaps 20% increase in produce cost at the retail level.

Ummm... what?

By what reasoning can you claim farmers will be able to command a higher price for their goods in a perfectly competitive market?

What, he's going to refuse to put his tomotoes on the market unless we give him a 10% increase to his profit?

I'm sure the market would be unable to absorb the shock of losing his insignificant percentage of total produce. Tomatoes might end up costing $.0001 more without his tomatoes!

Edit: Number of farms in the U.S.: 2,143,150- My estimate of effect on price is probably too high.

[AZRedhawk44]

An increase in labor cost results in an increase in other costs to the farmer.

The result is an expectation of equal profit ratio to expended investment.

If your logic held true, then flat 19th century levels of profit (I just made 4 bits today!) would be acceptable regardless of the investment necessary to make that profit (I needed $100 in gas to make that 4 bits, and grossed $100.50 total all day!).

The farmer had a cost of $0.08 to make his $0.18.  He's getting a 125% return on his labor investment (and other investments such as seed, fertilizer, pesticide, machinery, etc).

He's going to continue to want and need a 125% return ratio on his labor costs.  That means with a $0.10 labor cost, he's going to want $0.22 to $0.23 return on that labor.

So instead of a $0.26 total cost of production ($0.18 + $0.08), produce would cost $0.32 ($0.22 + $0.10).  The distributor marks up 100% to the supermarket.  It used to be $0.52 per unit, now it's $0.64 per unit.  The supermarket used to sell it for $1.04 (actually, it was probably a $0.99 per unit price to make it attractive to the consumer) and now that is no longer economically profitable with a loss of $0.12 profit to the supermarket at that price point.  Instead of a gross profit of $0.47, they see a gross profit of $0.35 after the increased labor costs.  And, their employees (making $10 an hour) are SEIU employees who will be quite aware of an increase in labor costs of produce.  They'll want a pay increase.  And they're unionized.

The result is an increased price to the consumer to the $1.19 price point of that formerly $0.99 item.

Not that I mind that, as long as it fixes the illegal situation.

But I don't think it will.

[makattak]

An increase in labor cost results in an increase in other costs to the farmer.

The result is an expectation of equal profit ratio to expended investment.

If your logic held true, then flat 19th century levels of profit (I just made 4 bits today!) would be acceptable regardless of the investment necessary to make that profit (I needed $100 in gas to make that 4 bits, and grossed $100.50 total all day!).

The farmer had a cost of $0.08 to make his $0.18.  He's getting a 125% return on his labor investment (and other investments such as seed, fertilizer, pesticide, machinery, etc).

He's going to continue to want and need a 125% return ratio on his labor costs.  That means with a $0.10 labor cost, he's going to want $0.22 to $0.23 return on that labor.

...

Not that I mind that, as long as it fixes the illegal situation.

But I don't think it will.

Again, what does it matter what he wants?

Farmers exist in a perfectly competitive market. This means they are price takers- they cannot demand a price for their goods, they can only take what the market gives them.

They have no market power. Thus, without market power, what they want as compensation is of no consequence.

Increases in costs for all farmers (such as labor becoming more expensive) will cause the price to go up.

Wanting to get a higher price for his labor will not. What he wants is irrelevant.

[roo_ster]

If one were to click through to the article and then click the link to the original research, one might find that an abrupt 40% increase in farm labor has already occurred once in the past and the aftereffects studied.

I won't spoil the ending.

[roo_ster]

Oh, who am I kidding, here's a snippet:

After the �Bracero� Mexican guestworker program ended in the mid-1960s, farm worker wages rose 40 percent, but consumer prices rose relatively little because the mechanization of some crops dramatically increased productivity.

IOW, farmers spent $$$ that used to go to stoop labor on capital that made the remaining, better-paid laborers, more productive.

[AZRedhawk44]

Agreed, roo_ster.

That was an effect that I did not take into account, but it is an obvious one. 

I've just never seen an apple-combine, or a cherry harvester, or an orange-picker.  There are still certain types of crops that are extremely difficult to automate their harvest.

[Brad Johnson]

I've just never seen an apple-combine, or a cherry harvester, or an orange-picker.  There are still certain types of crops that are extremely difficult to automate their harvest.

Don't think for a moment they aren't trying.  Even with immy-grint labor the market is being flooded by fruit and produce from South America that was produced at a fraction of the cost of domestic products. Domestic producers are scrambling to cut costs even more.  Farmers can't just say "I'm going to get $x for my crop."  They are at the whims of the market.  With cheap fruits and veggies coming in from other countries it's cutting domestic producers' margins even further.

A $200,000 automated picker that takes the place of forty or fifty hourly laborors would be a windfall.  Even at some rediculous pay rate, say $5 an hour, fifty laborors means $2500 a day in hard cost.  That's not including lost productivity and revenue to illness, lawsuits, etc.  At the same rediculous $5 an hour the picker would have to offset 40,000 man-hours to be financially viable.  That may sound like a lot but it really isn't.  50 people working 10 hours a day for a 10 day harvest period is 5000 man-hours per year.  At that rate the machinery would only require a service life of 8 years in order to justify the initial expense.  Never mind the incidental savings that would easily offset things like fuel and maintenance expenses.  And it shows up for work every day.

All that to say producers and harvesting service providers would LOVE automated equipment.  Problem is some crops are so tempermental or just plain difficult to harvest that current tech or economy simply can't accomodate.

Brad

[roo_ster]

Agreed, roo_ster.

That was an effect that I did not take into account, but it is an obvious one. 

I've just never seen an apple-combine, or a cherry harvester, or an orange-picker.  There are still certain types of crops that are extremely difficult to automate their harvest.

They have them today.  Human pickers, however, are less likely to damage the fruit.  Maybe this time it will require a 100% increase in the cost of farm labor to make mechanization the obvious choice. 

[longeyes]

As if the issue could be reduced to economic costs...

There's a lot more to this than the price of vegetables and fruit.

[roo_ster]

As if the issue could be reduced to economic costs...

There's a lot more to this than the price of vegetables and fruit.

True.  But, doing one's homework on the economic front helps dispel lies told by the pro-illegal alien crowd.

[RoadKingLarry]

Easy solution to illegal immigrant farm labor, grow your own.
My 8,000 square foot garden not only provides my family with all the fresh veggies we can eat, freeze, dry and can I also sell enough to make a tidy profit.
I know that not everyone has the ability to have a garden but you can support local growers that do.
Find and patronize a local farmer's market.
http://www.caff.org/programs/buylocal.shtml

[longeyes]

Yes, we need to know the economic cost, but those numbers are spun daily, even by those who purport to be true-blue patriots (I mean the WSJ, e.g.).  I prefer to look at the cultural impact.

[Headless Thompson Gunner]

As if the issue could be reduced to economic costs...

There's a lot more to this than the price of vegetables and fruit.

Longeyes sees the danger of this line of reasoning...

 

[MechAg94]

Sure there is a lot more to it, but the simply point is that a potential increase in the cost of food is NOT a barrier to ending illegal immigration. 

[mtnbkr]

Easy solution to illegal immigrant farm labor, grow your own.
My 8,000 square foot garden not only provides my family with all the fresh veggies we can eat, freeze, dry and can I also sell enough to make a tidy profit.
I know that not everyone has the ability to have a garden but you can support local growers that do.
Find and patronize a local farmer's market.
http://www.caff.org/programs/buylocal.shtml

At least here in Manassas, many of the vendors at the local farm market are Hispanic (no clue about their legal status).

I prefer to look at the cultural impact.

Me too.  Several years ago, my cousin married an Hispanic guy (born in the US to illegal immigrant parents).  Being that my family is from rural NC (not far from RTP, HTG), it was a minor scandal at first, but it turns out, he is a gun totin', deer huntin', softball playin', church goin' "good ol' boy".  He's more full of "American" than most of the native born, white liberals I know here in NoVa.  Sadly, the marriage ended a few years ago.  The rumor going around was that she wanted to live in the city and be a career girl while he wanted the small town life, a business of his own, and a family.  Judging by the paths their lives have taken since the divorce, I would say that rumor is true.  He and my uncle remain friendly, so it likely wasn't due to any bad behavior on his part.  My uncle even sold him his dry cleaning business and has helped him run it ever since (He helped run the business for my uncle while they were still married).

We need more like him than native born white-guilters and America haters.

Chris

[HankB]

As if the issue could be reduced to economic costs...

There's a lot more to this than the price of vegetables and fruit.

Let's say we did eliminate illegal alien laborers on farms, and did raise farm wages 40%. An awful lot of illegals, with no jobs available to them, would go home.

I suspect the few percent added to our grocery bills would be more than offset by the reduction in the expenses of educating, medicating, and incarcerating illegals. (Unless our corrupt politicians decided to waste spend the money elsewhere, which is likely.)

[Ned Hamford]

(Unless our corrupt politicians decided to waste spend the money elsewhere, which is likely.)

I much prefer the pork that actually produces benefits to the society at large.  IE: Pork Parks 

[longeyes]

Me too.  Several years ago, my cousin married an Hispanic guy (born in the US to illegal immigrant parents).  Being that my family is from rural NC (not far from RTP, HTG), it was a minor scandal at first, but it turns out, he is a gun totin', deer huntin', softball playin', church goin' "good ol' boy".  He's more full of "American" than most of the native born, white liberals I know here in NoVa.  Sadly, the marriage ended a few years ago.  The rumor going around was that she wanted to live in the city and be a career girl while he wanted the small town life, a business of his own, and a family.  Judging by the paths their lives have taken since the divorce, I would say that rumor is true.  He and my uncle remain friendly, so it likely wasn't due to any bad behavior on his part.  My uncle even sold him his dry cleaning business and has helped him run it ever since (He helped run the business for my uncle while they were still married).

We need more like him than native born white-guilters and America haters.

Chris

Hey, I agree with you.  The cultural "problem" is complex.  We all realize that.  Too bad that "Hispanic guy" isn't representative of the entire influx.

[sanglant]

if produce from outside the US was labeled properly, produce from inside the US would be selling at higher prices. mainly because of three groups, the econuts thinking not shipping produce around the world is going to "safe da world". the people that are afraid of the pesticides, gasses(required before some can be imported) and possible contamination, and those of us that just like fresher produce.

[Perd Hapley]

Why are you eating popcorn?

[sanglant]

it was grown in the US.

[HankB]

If we weren't spending tax dollars to help keep the price of US produce high, there would be less incentive to import stuff from elsewhere.