In an article at the Wall Street Journal on the economics of illegal immigration it takes them a while before they get to the good part:
The labor shortage has caused some wages to rise. Carlos Avelar, a placement officer at Phoenix Job Corps, a federal job-training center, says graduates now often mull two or three jobs offers from construction firms and occasionally start at $14.65 an hour instead of $10.
At DTR Landscape Development LLC, the firm’s president, Dick Roberts, says he has increased his starting wage by 60% to $14.50 an hour because he is having trouble finding reliable workers.
One immigrant-heavy industry, construction, has added about 15,000 jobs in Arizona since 2011 and now has total employment of 127,000, according to the Bureau of Labor Statistics, half the number of 2006. Employment in farming, which also depends on immigrants, has rarely exceeded 9,500 since 2008, according to the bureau, whose numbers mainly cover workers on large farms.
Mr. Knorr, the pepper grower, says he planted just 120 acres last year, down from as many as 550 in years past, because he couldn’t find enough harvest workers.
Some peppers he was unable to harvest by Thanksgiving turned red on the vine—“chocolate,†in farmer parlance. That made them useless to salsa makers, who want only green peppers. He plowed the plants under.
He says mechanization is his future. He continues to pour time and money into a laser-guided device to remove stems from peppers, which pickers now do by hand in the field. Another farmer in the area developed a mechanical carrot harvester.
Mr. Knorr says he is willing to pay $20 an hour to operators of harvesters and other machines, compared with about $13 an hour for field hands. He says he can hire skilled machinists at community colleges, so he can rely less on migrant labor.
“I can find skilled labor in the U.S.,†he says. “I don’t have to go to bed and worry about whether harvesting crews will show up.â€
Of course individuals and companies who’ve built their business models around an unlimited supply of new, cheap workers are going to have a painful transition ahead of them. That’s the one sentence description of the balance of the article.
The question is what kind of country do you want to have? A country of low wages and high immigration or one of higher wages and low immigration? It’s our decision to make. Or at least it should be. We know what Mark Zuckerberg, Bill Gates, and Warren Buffett want.
And look Mr. Knorr has a patent for “PEPPER DE-STEMMING METHODS AND APPARATUS.” Maybe that’s where the real money is.
http://www.freepatentsonline.com/y2013/0302482.html
In the California Gold Rush the great fortunes weren’t made by the miners but by those who furnished supplies and services for the miners.
If I understand your point we are looking at the same story but arriving at different conclusions.
This is precisely what I have been citing over and over. Our pepper farmer is unable to find labor without immigrants. I know some will say ” well, if he’d only pay more.” Not that simple, for it presumes the ultimate customers will absorb the labor cost passthrough in higher final prices, or the growers and packers will absorb the costs. Not very likely for many products. How do I know? Well, the farmer pulled production from 3/4 of his land rather than attempt to pass through price, and he’s going to mechanize. And of course I know from first hand experience in owned businesses. Many customers will simply tell you within a couple percent what the price point needs to be or they will buy only a fraction of the product. A list of such names include Wal-Mart, walgreens, CVS, all the grocery store chains, Home Depot, Lowes, Pet smart etc. I suspect it holds for domestics and fast food, although we have never owned a company in those spaces. It’s a lot of products, a lot of retail volume.
So I would add another option. We can have higher wages, low immigration………and lower employment.
@Guarneri, “Our pepper farmer is unable to find labor without immigrants.”
He cannot find labor without a certain mass of ILLEGAL immigrants. That’s why he has found it advantageous to find a more reliable labor supply by redefining a job for community college students to perform. The seasonal nature of the job is a big part of the problem.
The employer can go the low-skill, itinerant worker route, for which there is always the risk that such marginally attached workers won’t show-up and/or the government enforces immigration laws. Or alternatively, the job can be adjusted so that students can do the work aided by technology.
The labor shortage has caused some wages to rise. Carlos Avelar, a placement officer at Phoenix Job Corps, a federal job-training center, says graduates now often mull two or three jobs offers from construction firms and occasionally start at $14.65 an hour instead of $10.
[Radio edit]! I started at $12 an hour with promises of quick raises doing construction work in 1988! Man, that’s bad!
…
How do I know? Well, the farmer pulled production from 3/4 of his land rather than attempt to pass through price, and he’s going to mechanize.
And mechanizing the work space instead of importing the entire Third World (so that the rich people can live fat and happy with near slave labor) is better for the country as a whole. The fact that you want to reduce the country to peons and padrons so you can have super cheap domestic labor that’s too scared to protest bad conditions speaks volumes.
And of course, Disne, replacing its American IT workers with cheap Indian labor is all about saving the company from complete bankruptcy. I mean, how else are they going to keep parking costs below $20 a space without the constant flow of Americans to the welfare rolls?
It’s all about the price point for the poor customer!
Yeah, that’s my point. Importing low cost (particularly illegal) workers rather than mechanizing offloads billions in costs from the producer to other taxpayers. Additionally, historically the U. S. has been the primary designer and producer of those machines. Building more of them means more jobs for engineers, skilled factory workers, and higher wages here.
The Germans are now calling the strategy of maximizing the creation of minimum wage jobs and importing low cost foreign workers to fill them “the American model”. I don’t think they’re wrong.
You won’t find me arguing for illegal immigration, for obvious reasons. I don’t think that changes the issue.
“The fact that you want to reduce the country to peons and padrons so you can have super cheap domestic labor that’s too scared to protest bad conditions speaks volumes.”
As I’ve pointed out before, I’m just the messenger, ice. You can spit, stomp, your feet and hold your breath all you want but you can see what real live market participants do. You can argue for tariffs to prevent imports. You can argue for limiting immigration, legal,or illegal. But then you will shift the harmed and pissed off people to those for whom the price of goods is raised. Or, as I noted, if consumers simply decline to purchase at the higher price point, you will create unemployment. We can only speculate as to how that will shake out, product by product, market by market.
If you actually can calm down for a moment and stop with the straw man arguments, where I personally come out is to encourage mechanization where warranted, and to set an overall limit on immigrants. There is no law that says the economic environment is always such that we must accept immigration in any numbers. We can adapt. But be aware that because of alternatives to work through government transfer payments you will wind up encouraging even more mechanization and/or product shortages as workers cannot be found. I doubt you will ever get progressive types to alter government transfers in response to this reality.