October 10, 2006

Cheap labor is expensive for America in the long run

As Ben Franklin pointed out in 1751, the social basis for the superior American way of life -- what later became known as the American Dream of a vast middle class of prosperous home owners -- has been based on high wages and cheap land, which are due to America's enduring lack of labor relative to the abundance of land.

This had the side effect of encouraging American inventiveness. Clever farm boys who were good with their hands, such as Henry Ford, eventually made America the world's industrial giant.

In recent years, though, it has become a journalistic cliché that cheap labor is "good for the economy." The truth is that cheap labor discourages inventiveness.

New machines alter agriculture's future
By Dennis Pollock / The Fresno Bee
(Updated Sunday, October 1, 2006, 7:05 AM)

In a green bean field near Fowler, hundreds of metal fingers on a machine are doing what 66-year-old Joe Santellano's fingers did decades ago when he harvested beans in the San Jose area.

They're picking the beans and sending them into a box — their first stop before being hauled to Sunnyside Packing in Selma.

Santellano and Todd Hirasuna, field representatives with Sunnyside, watch the machine make its way through the field. It's the first time they have used it.

They sort through the harvested beans and wince at those that have snapped.

Broken and misshapen beans will be culled from what is sold to retailers.

A broken bean," Hirasuna says, picking one up. "That's a necessary evil."

But most are in perfect condition.

Plagued by rising costs for labor and worker shortages, the packinghouse bought the $28,500 harvester this year.

The irony: Bean harvesters have been in use for about 30 years elsewhere in the United States. Simple geography — the proximity to a huge, low-cost labor force in Mexico — virtually had kept them out of California fields until now. [Emphasis mine.]

Severe spot-labor shortages, crackdowns on illegal immigration and planned increases in the minimum wage have opened California's doors to existing machinery, fostered research and development to meet niche agricultural needs and taken talk of orchard robots out of the realm of science fiction...

Growers shied from the expense in days past, Stich said.

"But now, there is a serious question of whether the labor will be there," he said...

This year's raisin harvest is nearly 70% complete, and for the first time in years, labor needs did not become an issue, said Glen Goto, who heads the Raisin Bargaining Association. He cited two reasons: At least 40% of the crop is mechanically harvested, and grape yields may be down as much as 30%...

Countries where low-cost labor is in short supply have been in the machine-farming vanguard. Australians and Italians, for example, pioneered using machines to prune grapevines, said Maxwell Norton, a University of California farm adviser for Merced County...

Selma grower Bill Chandler said he saw pickers in apple orchards standing on moveable platforms instead of ladders in Spain.

The practice could be spreading into California. For the second time this year, a grower of pears used the platform technique in Lake County, where thousands of tons of the fruit were left to rot this year because of a worker shortage.

Rachel Elkins, a UC farm adviser for Lake and Mendocino counties, said the self-propelled platform, which rolls through the orchard on wheels, is being evaluated by the Agricultural Ergonomic Research Center at UC Davis and others for productivity, fruit quality, costs and other matters.

An advantage of the platform approach, Elkins said, is that it could broaden the pool of workers, adding some who are unable or unwilling to wrestle with long ladders in the orchards. Moreover, it may cut down on workers' compensation claims.

In other words, fewer injured workers.

Agricultural economist William Bailey points out in Farm Week:

"American agriculture faces intense global competition. The effect of encouraging the continued use of inexpensive immigrant labor may have the unintended consequence of reducing the competitiveness of American agriculture."

This is especially true for the ultra-labor intensive farms of California, a state second only to Hawaii in cost of living in this country. To compete with overseas growers, it doesn't make much sense for California farms to follow a labor intensive strategy because the cost of living in California is so high.

My published articles are archived at iSteve.com -- Steve Sailer


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L D Garland said...

The greedy capitalist employers know when it's best to replace workers with machines.

The long-run benefit is achieved by taking advantage of whatever is cheapest and still does the job, keeping down the cost, letting competition determine when it's time to replace those workers with machines.

No need to artificially drive up wages = higher cost of production = higher prices. Lower prices are best for consumers, especially the poor, not artificially-high labor cost.