Jay Bookman provides some unsurprising news about the crackdown on illegal immigration in Georgia: There are unintended negative consequences.
Following the enactment of House Bill 87, a law to evict illegal immigrants from Georgia, state officials seem shocked to discover that HB 87 is evicting many illegal immigrants from Georgia …
Because of the resulting labor shortage, Georgia farmers have had to leave millions of dollars’ worth of blueberries, onions, melons and other crops unharvested and left to rot in the fields. It has also panicked state officials about the damage they have done to Georgia’s largest industry …
The results of this investigation have now been published. According to a survey of 230 Georgia farmers conducted by Agriculture Commissioner Gary Black, farmers expect to need more than 11,000 workers as the season progresses, a number that is likely to underestimate real needs as not every farmer in the state is the survey responded to this.
The economy here isn’t particularly complicated, and I’m sure they aren’t new to the discerning readers of the Atlantic, but they are useful to look at and explicitly considered when thinking about such subjects.
So so. Unless you let illegal immigrants do the jobs they are currently hired for, farmers will have to raise wages to replace them. Since farmers take a risk in hiring migrant workers, you can bet that they have struck a significant bargain on labor costs relative to “market wages”. I have quoted market wages here because it is entirely possible that the wages required to get workers to work are so high that it is no longer profitable for farmers to even grow the crop. The following simple labor market supply and demand curves illustrate exactly what I am talking about.
Here, the shift in the labor supply curve to the left in moving from an immigrant market to one without the fact that fewer people are willing to do the job for a given wage. If the supply curve shifts left enough, the equilibrium amount of labor becomes negative, which means that farmers are not hiring labor. When it takes workers to run a farm, zero workers equals zero crops and zero farm. Some workers can be replaced by capital, in other cases the farms may simply be closed.
The more competitive the final goods market (ie the market for the product for which workers are hired), the flatter the labor demand curve becomes. If the market is competitive, a small increase in price will cause buyers to switch to competing products. This means that a company’s (or, in this case, farmer) profits are sensitive to small shifts in input prices. In agriculture, where one farmer’s harvests are usually very comparable to those of another farmer, the market is very competitive and the demand curve is flat. This problem is exacerbated when there is demand for farmers in Georgia in particular, as retailers who buy their products can switch to farmers in competing states.
All of this means if you want to deter illegal immigrants from doing a job, be prepared for the job and maybe even the business itself to go away. You may think it’s worth it, but at least you should acknowledge the risks and weigh them against what you think will be gained.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.