[Adam Ozimek]
Jay Bookman provides some unsurprising news about Georgia’s crackdown on illegal immigration: There are unintended, negative consequences.
After the passage of House Bill 87, a law to evict illegal immigrants from Georgia, state officials seem shocked to discover that HB 87 is evicting, well, many illegal immigrants from Georgia…
The resulting labor shortages forced Georgia farmers to leave millions of dollars’ worth of blueberries, onions, melons, and other crops unharvested and rotting in the fields. It has also panicked state officials at the damage they have inflicted on Georgia’s largest industry….
The results of this study have now been published. According to a survey of 230 Georgian farmers conducted by Agriculture Commissioner Gary Black, farmers expect to need more than 11,000 workers at some point during the season, a number that likely underestimates actual needs because not all farmers in the state have responded to the survey .
The economics here are not particularly complicated, and I’m sure they will not be new to discerning readers of the Atlantic, but they are useful to consider and explicitly consider when considering subjects such as these.
It’s going ok. If you don’t let illegal immigrants do the jobs they are currently being hired for, farmers will have to raise wages to replace them. Since farmers take a risk by hiring immigrant workers, you can bet they got a significant deal in labor costs relative to “market wages.” I am putting market wages in quotation marks here because it is quite possible that the wages required to get workers to work are so high that it is no longer profitable for farmers to grow the crops. The following simple labor market supply and demand curves illustrate exactly what I am talking about.
Here, the leftward shift of the labor supply curve in the transition from an immigrant to a non-immigrant market reflects the fact that, for a given wage, there are fewer people willing to do the job. If the supply curve shifts far enough to the left, the equilibrium labor supply becomes negative, meaning farmers will hire zero workers. If workers are needed to run a farm, then zero workers is the same as zero crops and zero farm. Some of the labor can be replaced with capital, but in other cases the farms may simply close.
Importantly, the more competitive the final product market (that is, the market for the product that workers are hired to produce), the flatter the labor demand curve will be. When the market is competitive, a small price increase will cause buyers to switch to a competitor’s products. This means that a firm’s (or farmer’s, in this case) profits are sensitive to small shifts in input prices. In the case of agriculture, where one farmer’s harvests are usually very comparable to another farmer’s, the market will be highly competitive and the demand curve will be flat. This problem is exacerbated when demand is specific to Georgia farmers, as retailers buying their produce may switch to farmers in competing states.
All of this means that if you want to discourage illegal immigrants from working, you should be prepared for the job, and perhaps even the business itself, to disappear. You may think it’s worth it, but you should at least acknowledge the risks and weigh them against what you think will be gained.
