California Farms and the Curious Labor Shortage

Earlier this month I talked about the curious increase in job openings going unfilled by businesses despite high unemployment. I learned about another example of the phenomenon this week in California, where fruits are rotting in the fields:

“We have 100 fewer people this year,” said Sergio Diaz, who provides workers under contract for growers. “We’re having difficulty finding people to do this work.”

The lack of workers is forcing farmers to pay more. In one of Underwood’s fields, pickers are harvesting peppers for $9.25 a hour, or $5 a bucket, whichever is more…

When asked if any local residents have come out to apply to work in the fields, Craig Underwood replied, “None. Absolutely none.” He is even having trouble finding truck drivers and other semi-skilled labor for jobs that pay $12-$18 an hour.

A slightly older article offers a few more details:

To explain the dwindling number of workers, most point to the U.S.-Mexico border, where the Pew Hispanic Center this year found net migration to the United States fell to zero and may have reversed.

“It’s more difficult to get across the border now. It’s more dangerous because of the drug cartels, our government is doing a better job of enforcing the borders and the Mexican economy is doing better,” said Jim Lincoln, a vintner and former president of the Napa County Farm Bureau.

Wine Country laborers are among California’s best-paid farmworkers, earning well above minimum wage because the high-priced commodity demands a highly skilled and reliable workforce, Lincoln said.

So the immigrants that worked California farms are dwindling, and the farmers aren’t finding workers to replace them, despite their state having one of the nation’s highest unemployment rates at 10.7%. How can this be?

Like any good conservative, my first instinct is to blame generous unemployment benefits. It looks like the average weekly benefits in California are just shy of $300 per week, with a maximum of $450. Now I’m not sure how all the taxes and details work, but 40 hours at $9.25/hr is $370, and it seems certain that at least some of California’s unemployed would literally take a “pay cut” if they got a farm job, and many others might get a small enough “raise” that they don’t have much incentive to apply.

Some of California’s unemployed may not live anywhere near a farm, but the first article sounds like they are 100 workers short in Ventura County, where as of July 2012 there were 40,900 people officially unemployed (9.4%). Santa Cruz and Napa counties, mentioned in the second article, have 15,400 (9.7%) and 6,000 (7.7%) unemployed, respectively.

Yet such a theory seems too simplistic. Less than half of the unemployed in each of those three counties are actually receiving those benefits. I find it astonishing that they can’t find 100 workers out of 40,900 people, but it’s just as astonishing that they can’t find 100 workers out of the 23,400 who aren’t even collecting benefits. I’m genuinely curious how real people like that are getting by, but unfortunately I’m too far removed from them to speculate. Many of them are probably too old or fat for farm work (not meaning to be rude, just looking at demographics), but many of them aren’t, especially with California topping the nation’s “teenage” unemployment rate at a staggering 36.2%!

Others, of course, would rather blame the businesses for having unrealistic expectations. Maybe agriculture has become dependent on cheap immigrant labor, and now that it’s gone, they don’t want to pay American workers more and/or Americans don’t want to pay the higher food costs required to sustain it. The second article quotes a worker advocate claiming “we haven’t really seen any significant effort by ‘ag’ employers to increase wages, employment benefits or anything like that,” although both articles indicate that many of these jobs are already well above minimum wage, and the first at least claims that wages are rising.

It also seems that some of these farm jobs require more skills than I might have first expected, although as I wrote before I would expect the market to take care of these disparities over time. The more cynical, however, suggest that the farmers don’t care if they can’t find enough workers because their crops are already insured. With real drought causing other crops to wilt, though, I wonder how much cunning insurance companies would put up with that.

I do think it’s kind of funny how all this is happening in California. I thought it was supposed to be the conservatives in Arizona and Georgia driving out immigrants with their crazy laws; apparently all the hard-working illegals of Arizona haven’t made it to those northern Californian farms yet. Of course, there are national trends involving both Mexico and the United States (including immigration enforcement by the Obama administration, something neither liberals nor conservatives like to talk about, for opposite reasons). And those conservative states seem to be having some labor shortages as well (can’t blame those on the liberal California government). Maybe Americans really don’t want to do these jobs; the shortages sure make pet theories about lazy modern generations look attractive…

Reality is usually complicated, and maybe governments and businesses are both adding friction here. If the supply of labor drops enough that the supply of crops drop, prices should rise until farmers are able to offer enough pay to attract enough workers to stop supplies from dropping – unless, of course, there are additional frictions continuing to prevent these markets from clearing.