Pepper Picking Policy Pushes Prices
One of my favorite comedians is a guy named Stephen Wright, the so-called “king of one-liners.” And one of my favorite lines from him is this: “You can’t have everything….where would you put it?”
I’ve been reading a lot of analysis over the past couple of weeks about which issues finally decided the US presidential election. There are two things I hear more often than others:
1. People voted for lower grocery prices. Some 96% of people said “high prices for gas, groceries and other goods” influenced their vote, with the greatest number citing higher grocery prices specifically. Of the 40% who ranked it as their “most important” issue, two-thirds voted for Trump.
2. People voted to send unauthorized migrants* out of the the country. US. President-elect Trump promised his administration would mount “the largest deportation operation in American history,” and that had an important impact on a very close vote. Overall 51% of Americans – 68% of Republicans, 46% of Independents and 42% of Democrats – say they support “mass deportations of undocumented immigrants.”
We can have either lower grocery prices or mass deportations. But we can’t have both.
The problem is supply and demand.
Some 70% of US farm workers are foreign-born; 40% (blue bar) are unauthorized migrants (Chart from Baker Institute).
About 40% of those working in agriculture right now are unauthorized migrants. Take them out of the workplace and farmers, already short on labor, face a five-alarm labor crisis. I talked to one row-crop farmer earlier this week and he put it simply:
“In the near term, it would kill us. We literally wouldn’t be able to get the crop out of the field.”
That would be bad. But maybe after the initial crisis, there would be other options for policymakers. Here are some possibilities:
· Recruit more US-born workers: For the past year, the US unemployment rate has been running between 3.4%-4.1%. Economists consider “full employment” — the amount of unemployment we can have without inflation — 4%. So there aren’t many US employees looking for work. More importantly, average farm worker wages run about 60% of nonfarm wages. That means the farm jobs left open by deportation would be unlikely to attract interest from US-born workers – unless wages go up substantially. Vice President-elect Vance and economist Oren Cass argue that this would get more native-born Americans excited about farm work and put more money in their pockets. Absolutely true. But it also means higher food prices.
· Dramatically increase the temporary workers program – About 25% of farm workers come here through a short-term visa program called H2A. That program has been steadily increasing since its creation and has spiked 50% over the past five years. Currently more than 300,000 farm workers, 90% of them Mexican, work under H2A visas. One option would be to expand this program even further. But H2A workers cost more than unauthorized migrants. In addition to higher wages, farmers are required to pay for housing, transportation, food and visa expenses, making them effectively an option only for large-scale farmers.
· Speed up mechanization of equipment – Agriculture is increasingly automated, but huge parts of the industry, particularly fruits and vegetables and livestock, are still labor-intensive, and labor costs have been going up. Even without the loss of unauthorized migrant workers, median wages in the dairy and meat sectors rose 33.7% between 2019 and 2022. Analysts estimate automation of the fruit, vegetable and livestock sectors will come first to large-scale farms that can afford the capital investment, maybe in about ten years, with small farmers having to wait till equipment prices come down or having to sell. In the meantime, Dave Anderson, an ag economist at Texas A&M, told The Atlantic, there’s a glaring problem: “You gotta get the cows milked and fed every day.”
· Increase food imports – The US currently imports about 15% of its food. That includes 60% of our fresh fruit, 80% of seafood, 90% of avocados and 99% of our coffee. If we are willing to let US farmers go out of business, we could increase those percentages, but the promises of tariffs – 60% or more on Chinese goods and 10-20% on all other countries – will mean that food will cost more if we import more.
Picking peppers — and nuts and berries — is still labor intensive.
The Trump administration could, in theory, decide to exclude ag workers from the mass deportation effort, but then it would hear other industries making the same arguments as farmers.
There are an estimated 1.5 million undocumented immigrants working in our construction industry, 870,400 in manufacturing, 500,800 in general services (auto repair, barber shops), and 460,000 in transportation and warehousing.
The reality is that unauthorized migrant workers do a bunch of stuff US-born workers just don’t want to. They wash dishes. They clean hotel rooms. They cut meat. They take care of other people’s children. And because of their status their employers can get away with paying them less.
They pick things, plant things, make things, lift things, sort things, and dig things (that’s not all the migrants do, of course. About 1.5 million have bachelor’s degrees and work in other parts of the economy; another 1 million run small businesses. And they pay US taxes and buy things in the US too). Add it up, and mass deportation is likely to mean not just higher grocery prices, but higher housing prices, landscaping prices, restaurant prices and hotel prices. We just can’t take that many people out of the economy unless we are willing to pay for it.
There’s a line from the musical Hamilton that sums up where we are on this: “Winning was easy… governing’s harder.” It’s time to look for the best political way through two mutually incompatible goals. If you don’t want higher prices, the only option really is to make a big show of sending home the 1.4 million immigrants who have completed appeals or committed crimes and are eligible to be deported. Crack down on the rules for future asylum seekers. Then take a long pause and figure out how to deal with folks picking our crops, building our houses, taking care of our kids, and cleaning our schools -- without breaking the economy.
Cause you can’t have everything. You can’t have your deportate and eat cheap too.
-Leslie
*I’m borrowing the term “unauthorized migrants” from Tangle, an organization I’ve come to admire for its ability to present issues neutrally. The term sits somewhere in a slightly more neutral zone between “illegal aliens” and “undocumented workers.”
Notes:
CNN analysis of exit polling: https://www.cnn.com/2024/11/14/economy/trump-grocery-prices-inflation/index.html
Fox Poll on high grocery prices as a motivator to vote: https://www.foxnews.com/official-polls/fox-news-poll-voters-cite-high-prices-biggest-motivator-vote
Harris Poll showing support for mass deportations: https://www.axios.com/2024/04/25/trump-biden-americans-illegal-immigration-poll
Data on farmworker legal status: https://www.bakerinstitute.org/research/feeding-america-how-immigrants-sustain-us-agriculture
Impact of deportations on food processing industry: https://www.axios.com/2024/12/17/meatpacking-industry-supports-trump-but-braces-for-deportation-fallout
Impact of deportations on caregiving: https://www.axios.com/2024/12/04/trump-immigration-crackdown-caregiving-workforce
Migrants and crime rates: https://www.npr.org/2024/03/08/1237103158/immigrants-are-less-likely-to-commit-crimes-than-us-born-americans-studies-find
Vance and Cass on value of upward wage pressure deportation will bring: https://www.nytimes.com/2024/11/22/business/economy/immigration-trump-economy.html?smid=nytcore-ios-share&referringSource=articleShare
Estimates of price impact of mass deportations: https://www.piie.com/sites/default/files/2024-09/wp24-20.pdf
Brookings net economic growth forecast under mass deportation: https://www.brookings.edu/articles/immigration-and-the-macroeconomy-after-2024/
Number of unauthorized migrants who have exhausted legal processes: https://www.foxnews.com/us/1-4-million-illegal-immigrants-us-ordered-deported-removed-official
Polling shows, notwithstanding support for mass deportations, 70% of Americans support a path to citizenship for unauthorized migrants “if they meet certain requirements over a period of time.” 81% support that pathway for migrants brought here as children: https://news.gallup.com/poll/647123/sharply-americans-curb-immigration.aspx?version=print