Farm labor is evolving – more legal immigrant workers


Important changes are afoot in the use of immigrant workers in farming: more dependence on legal immigrants, higher wages. This is one element in the gradual normalization of the immigrant workforce in America: better paid, less dependent on an unauthorized workforce.

Hired farm labor was 53% immigrant (70% of them unauthorized) in 2014. In 2019, the immigrant share declined to 49% (and 55% of these were documented). (Go here.) Thus we see a decline in the use of immigrants. Farms are employing much fewer unauthorized workers.

Over the same period, temporary farm labor visas (H-2A) increased from 89,000 to 213,000!

It appears that American agriculture is trending away from using immigrants here in the U.S. either legally or illegally towards using temporary workers from Latin America (almost all from Mexico).

The wage benchmark for farm labor used as part of the visa program increased by 20%; in 2021 the wage benchmark was $14.62 vs $10.36 in 2010. Thus farms that use H-2A workers are paying their workers more.

One side effect: more produce is being imported. The great majority of raspberries are now imported.

The UK workforce and migrants from the E.U.

The U.K, has a workforce of 35 million. About 2.9 million of them, or over 8%, have migrated from the E.U. before Brexit and are eligible for shifting to formal post – Brexit immigration status.

This is equivalent to half of the foreign-born workers in the U.S. having to adjust their immigration status in the space of a few years, and with a severe deadline for applying for adjustment.

The penetration of the EU workers is very high in some sectors. “In 2018, according to the Migration Observatory, 21% of low-skilled factory and construction jobs were held by EU-born workers, as were 17% of factory and machine operators jobs, and 13% of jobs in food preparation and ‘other skilled trades’. People from older EU member states tend to be more concentrated in the education, and professional and scientific sectors while workers from newer member states tend to be more concentrated in the retail, and transport and storage sectors. In 2018, more than half of workers from newer EU member states were overqualified for the work they did, compared to less than a quarter from older member states.” (from here.)

Also data from here and here.





The American Basin of foreign labor

I looked at how ten Latin American and Caribbean countries are economically dependent on their citizens who live outside their countries. (See the list at the end, below). For the most part, the great majority of their expatriate citizens are in the United States.

Let’s call these ten countries the American Basin of foreign labor. Since 1960, they make up 20 million or 45% of all immigrants today. They include 4 of the top 10 countries of origin of American immigration since 1960.

The American Basin has a blended average per capita income of $17,000. 21% of the citizens live outside their country. Remittances back to the Basin counties are equivalent to 8% of Gross National Product.

A few of these countries are very little dependent on expatriate labor. Notable is Costa Rica, with per capita income of $20,000, less than 3% of its population outside, and with extremely low remittances as percentage of GDP (0.5%). Costa Rica has by far the lowest corruption rating of the ten countries.

The extreme opposite is Haiti. Its per capita income is $3000, 14% of its citizens live outside, and remittances are 18% of GDP. The following countries have remittances > 19% of GDP: El Salvador, Haiti, Honduras and Jamaica


The ten countries: Costa Rica, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, and Panama. Cuba is not included because it is missing from some key databases.

Data sources: 
emigration

remittances

GDP per capita

Also, detailed analysis of global and regional trends are available in the Migration and Development Brief 34 at www.knomad.org 

A Mexican foreign minister reflects on the U.S.


Jorge Castaneda, a Mexican who has spent many years in the U.S, as a student, faculty member, and diplomat, has written America Through Foreign Eyes (2020). He writes with sometimes unsettling insight about the United States. He devotes much attention to immigration, in four frames of reference:

The role of early European migration: European migrants killed and drove out Native Americans, imported slaves from Africa, drove out Mexicans. They did not bring over the authoritarian European institutions of class, church and state. These early white European migrants established the first mass middle class in the world. This social/political arrangement, internally democratic for white males and anti-democratic to all others, is the hallmark of America political culture. Voter suppression efforts today hark back to the exclusive democracy of the 18th C. [Castaneda does not use this term, but he is saying that from the first European settlements the U.S. has performed as a gate community.]

The role of immigration in American 20th Century economic prosperity: “American openness to the rest of the world…has made an enormous difference in terms of plowing invention in the profits. It could not flourish without a welcoming attitude toward immigration, without which these inventors would not have ventured far from their shores. Had their products, services, attitudes and experimentation not been well received in the United States, they would not have thrived.” (page 146).

America as the engine of today’s global modern mass culture: “Why have so many foreign cultural talents worked in the United States? …. United States is the first country to produce a mass culture. While over the centuries, European, Latin American, and Asian nations constructed literature, philosophy, art, architecture, and music for the very few, the United States lacked the authoritarian history, centralized religion, and monarchy or institutions that favored elitist culture. Instead, with the emergence of the world’s first middle class society in the earlier early 20th century, cultural products were generated and for these new consumers in the same way as cars, homes, and ice boxes.” (page 59). This feature of American culture continues to attract outstanding cultural talent from around the world.

On immigration of lower skilled workers: America has a long tradition of importing Latino workers to meet the labor demand of employers. American attitudes about immigration mix pragmatism and hypocrisy. We want these workers to keep costs of goods and services low but we also want to say it must be legal. This results in selective immigration law enforcement. [PFR: failure of every administration to impose effective demands on employers to verify employment status is a feature of selective enforcement.] Latinos are a “better fit” in the US than migrants to Europe from Muslim and African counties, in part because their religious practices are more compatible. The real reason for conservative opposition to legalization is that those legalized will bring their families, and two thirds will vote Democratic.

How much wage gain by migrating to the U.S.?

I recently posted about the higher output in scientific research in the U.S. Now let’s look at the wage impact of a less educated worker migrating from a developing country to the U.S. It turns out that the person’s real wage goes up four times, and this is due largely to higher productivity in the U.S.

Researchers estimated the income differences between 42 developing countries and the United States. They focused on males 35–39 years old, with nine to twelve years of education acquired in the their home country. They used the real cost of living gap. (For example, in 2021 you can have the same standard of living in Colombia with 43% of the income in the U.S.; in Nigeria, 36%). They then compared the wage one receives in the home country vs. the U.S. Wages in the U.S. are so much higher that they far make up for the higher cost of living.

The researchers found that these working migrating to the U.S. increase their real earnings by 395% or more.

The real wage gap can be mostly explained by higher productivity of the American workforce. How does higher productivity happen? Through three forces: more technological know-how; efficiency of production involving many factors (such as quality of transportation); and the state of education. (From Productivity Differences Between and Within Countries, by Daron Acemoglu and Melissa Dell, 2010.)



Who is working here with irregular status

How many persons are in the 160 million workforce whose legal status is either non-existent or irregular but permitted to work? Less than I thought, and the many are working with authorization.

The Center for Immigration Studies estimates there are about 5 million who conventionally would be called illegal. Another 2 million who would be considered otherwise illegal workers but are working with federal government authorization. The total of 7 million constitutes 4.4% of the total private sector workforce.

Those working illegally. They comprise (A) 2 million “off the books,” (B) 1.8 million where the names and SS numbers do not match, (C) 700,000 with expired temporary work visas, and (D) 600,000 with stolen SS numbers. They total to 5.1 million, or 3.2% of the workforce. Most are paying into Social Security and Medicare, and pay income taxes. Off the books are 2 million or 1.25% of the workforce.

Those working with federal approval. They comprise (E) 650,000 DACA status, and (F) 1.3 million other temporary status, including 410,000 Temporary Protected Status, 440,000 persons with asylum applications, and 440,000 others with formal work permission but whose status is irregular. They total to 0.8% of the workforce.

Hispanic house buying


Hispanic buyers have been a consistent source of strength in the housing market in recent years. Their buying power continues to grow as individuals enter their early 30s, the most typical years for first-time home buyers. Hispanics in the U.S. had a median age of 30 in 2019, which was about 14 years younger than the median age for non-Hispanic white Americans.

The Urban Institute projects that between 2020 and 2040, 70% of the net new homeowner households will be Hispanic. Over that same period, it projects white and Black homeownership rates to decline. This reflects the Hispanic population’s household formation growth and youth, said Laurie Goodman, co-director of the Urban Institute’s Housing Finance Policy Center.

Mary Arenas, a real estate agent in Houston, said about half her clients don’t speak English or prefer to speak with her in Spanish.

The typical home bought by a Hispanic household with a mortgage in 2020 had a value of $265,000. That was below the overall median U.S. existing-home price of $313,000 in February, according to the National Association of Realtors.

White households had a 73.1 percent homeownership rate in the second quarter of 2019, compared to 46.6 percent for Hispanic households and 40.6 percent for Black households.

From the WSJ

For an analysis of inequality in home ownership , go here.

 

Japan actually has some immigrants

Japan’s working age population peaked in 1990 at roughly 85 million. This population will be about 52 million in 2040.

In 2019 there were about 3 million foreign born residents in Japan, about 2.3% of the total population. The number of foreign workers doubled from 700,000 in 2013 to 1.5 million in 2018. According to Noah Smith, “In 2017 Japan implemented fast-track permanent residency for skilled workers. In 2018 it passed a law that will greatly expand the number of blue-collar work visas, and — crucially — provide these workers with a path to permanent residency if they want it. These changes thus represent true immigration, as opposed to temporary guest-worker policies.”
The next two or three decades will reveal whether the country’s culture and institutions will be able to learn from Europe’s experience and manage a smooth transition, or whether immigration will spark a nativist backlash that closes the country off once again.

Differences between sending and host immigration countries

One way to look at international migration is to compare incomes between a host country, such as the U.S. and Germany, to the major source of immigrants, such as Mexico and Poland. In the table below, I show five host countries (U.S., U.K., Canada, Australia and Germany) with their leading source countries. For the U.S. I include another source country, El Salvador.

The table shows the host country, the leading source country, the percentage of all immigrants associated with that host country, and the ratio of personal income. Personal income is GDP per capita, adjusted by Purchasing power parity (PPP), which uses local prices adjust for the purchasing power.

In this table we see two host countries with a significant share of immigrants from a contiguous country: the U.S. with Mexico, and Germany with Poland.  The table reveals the economic incentives to migrate and implied control of a host country over immigration flows. For example, the ratio of adjusted income between the U.S. and Mexico is 3.1, and between the U.S. and El Salvador 7.2.  Even in today’s hot Mexican border environment, a migrant might be very incented to slip over the border or to apply for asylee status.

Host Sending % of Imm Diff $ Per Cap
US. Mexico 23% 3.1
U.S. El Salvador 3% 7.2
U.K. India 10% 7.1
Canada China 9% 3.1
Australia U.K. 17% 1.1
Germany Poland 33% 1.7

A troubled guest farm worker system in the U.K.

I recently posted on discussion in the U.S. about a guest worker program, the Seasonal Workers Pilot. The United Kingdom introduced such a program which has horrible results, as reported by the Financial Times. Excerpts:

Two labour providers, Concordia and Pro-Force, are permitted to recruit people from places such as Russia, Ukraine and Belarus to work in edible horticulture on strict six-month visas. The pilot started in 2019 with an annual quota of 2,500 workers. It was extended to 10,000 workers in 2020 and to 30,000 workers in 2021, with an additional two recruitment agencies set to be added.

The workers on the farm that employed Russia [one worker from Russia], Castleton Fruit in north-east Scotland, were on zero-hour contracts, which do not guarantee any work, and were paid for the amount of fruit they picked rather than by the hour. Under the law, pickers on this “piece rate” system must be “topped up” to the minimum wage of £8.72 [$12.10] an hour if they have not picked enough to earn this amount. Because of this, the supervisors would check everyone’s work every two hours, and the workers who had not picked fast enough would be sent back to the caravans for the rest of the day, unable to earn any more money.

Between March 2020 and February 2021, Focus on Labour Exploitation, an NGO, investigated the experience of workers in Scotland on the pilot programme, in a project part-funded by the Scottish government. FLEX surveyed 84 farm workers and interviewed 62 on 12 different farms, of which 39 were on the scheme.

The researchers found that more than half were on piece rates, and three-quarters felt like they were always or usually being pushed to do more work than was possible in the time they had. Two-thirds reported receiving threats of loss of work, 60 per cent said the information they were given about earnings before travelling proved inaccurate, and a similar proportion said they were refused transfers to other farms.

A Home Office minister stated in a written parliamentary answer in 2019 that “the scheme operators are not permitted to offer zero-hours contracts to workers” but the Financial Times has seen worker contracts that do not guarantee any hours, including one titled “Terms and conditions of zero hours employment”.

Research suggests that, over the course of decades, UK farmers have intensified these jobs in response to the rising minimum wage and the pressure from powerful supermarkets for flexibility, speed and low prices. For example, according to British Summer Fruits, an industry body, government data suggest that prices paid to farms for strawberries barely rose between 2008 and 2018. The UK has some of the lowest food prices in western Europe.