Work required on immigration, labor issues

For the sake of America's farmers and ranchers, both illegal immigration and labor shortage concerns need to be solved.

Dr. Nevil Speer

March 13, 2017

4 Min Read
Work required on immigration, labor issues

Work and immigration: no industry has a bigger interest in policy than agriculture. There’s no getting around it; the food industry is highly dependent on migrant labor. Moreover, a large proportion (over half by some estimates) of farm workers in the U.S. are here illegally.

Meanwhile, structural challenges make the labor / immigration issue increasingly complex and dynamic. Those need to be addressed in a comprehensive manner. Several recent Econtalk podcasts (a favorite of mine) highlight that reality.

The first episode ran in late-November featuring Erik Hurst, University of Chicago; the second being an interview with George Borjas, Harvard University. In combination, the episodes reveal broader systemic concerns for the labor markets –- especially around unskilled jobs.

Starting with the Borjas conversation, host Russ Roberts explains the conventional wisdom around immigration:

People often say, “Well, we have to have immigrants because if we don’t, there’ll be no one to do the certain types of jobs.” Americans won’t do these jobs, whether it’s mowing lawns, painting, basic construction, agriculture work in particular. These are all areas that often have lots of immigrant workers.

Borjas responds with the appropriate economic perspective:

The usual argument is that immigrants do jobs that natives don’t want to do. And the problem with that basic argument is that it ignores the roles of markets and the roles of incentives. I think the correct statement is that immigrants do jobs that natives don’t want to do –- at the going wage (emphasis mine). The presence or absence of immigrants basically changes the market. And markets react to people coming in or people going out.

Borjas is correct. Markets react to labor supply. From an economic perspective, removing (illegal) immigrants from the workplace would present a sizeable supply shock to the system. Over the short-run that would likely create havoc for farmers / ranchers, who are dependent upon guest workers.

Some would argue, though, that’s not the case. That is, domestic workers would simply fill the gap. Most of us would like to believe there are Americans who would do the work if provided the opportunity (albeit they may require a higher wage). However, it’s not that simple; people aren’t widgets, they don’t always respond in a predictable manner. That’s where this becomes complicated.

Enter Hurst -– his primary work revolves around labor markets. Most pertinent here is that some of his recent research focuses on structural changes within the labor market. He explained the following about young men, aged 21-30 with less than a bachelor’s degree:

…their hours [worked] during the 2000s…was about a 15% decline...A 15% decline in hours is a very large decline. This is NOT substitution to school…So, this is of people that aren’t working and who aren’t going to school. And if we go one step further…in 2000 if you were a man [aged 21-30] about 8% reported not working during the prior year. That number today – about 18% (emphasis mine). So, 18% of this group is sitting idle during the prior year. That trend started prior to the recession…So, we have an idleness -– not in school, not working…That is stunning to me…So you might ask yourself. Where are these people living? How do they eat?....In this group you see a large propensity, an increasing propensity, to cohabitate with their parents. Roughly 70% of this group [men aged 21-30, with less than a bachelor’s degree and are not working] live with a parent or a close relative. And that number was like 50% in the early-2000s. We’re seeing a shift in lifestyle. You might ask, “Are they married? Are they having kids?” And the answer is no.

Hurst further pointed out women have not experienced this sort of differential work pattern over time. Female work patterns look much the same in 2016 as they did in 2000.

All-in, Hurst’s reference to young males not working, nor going to school, equates to about four million men. Theoretically, those men are available to backfill any labor shortage that might occur due to changing immigration policy. Just raise the wages and they’ll come to work. Right?

Not likely given that Hurst has identified a prolonged trend that started, “prior to the recession.” Apparently, they’re living comfortably enough -– they’re not interested in working. As such, they’re indifferent to labor market signals. It’s not about workers, it’s about people.

We need to solve both illegal immigration and labor shortage concerns going forward. That’s especially important for America’s farmers and ranchers. The best first step would be to lower bureaucratic friction (and subsequent costs) associated with the H-2A program. At least over the short run, we’d get more workers to the U.S. in a transparent and legal manner.

Meanwhile, as a second step, our society needs to somehow address structural issues resulting in too many young men willing to simply be idle. Let’s get them back into the labor market. Failure to do so is a problem now, and will become even bigger as they miss out on work during their life-time. We can do better. When it comes to work -- we need to get to work.



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