Economic realities have been greatly affected by the coronavirus outbreak and the ensuing travel bans that governments have instituted to socially distance on the macro-scale. There are all sorts of problems of convenience that these travel bans cause, but there are also deeper economic consequences. What, for instance, are companies that rely on NOT hiring nationals within their own country to do when they cannot rely on temporarily importing cheap labor to benefit their own bottom-line?
Travel bans brought in to prevent the spread means they have lost the thousands of foreign workers they need to pick fruit and veg crops.
The industry trade body British Summer Fruits is warning that produce will rot in the fields and orchards unless they can find replacements.
‘Last year 98 per cent of harvest staff were from outside the UK. We are now very concerned about securing enough workers to help harvest our vital crops and get fresh fruit and vegetables to the public.https://www.dailymail.co.uk/news/article-8134285/Farmers-call-army-Land-Girls-boys-help-pick-fruit-veg.html
Of course, it is not entirely the farms who are to be blamed for the importation of cheap labor. They are simply responding to market incentives and behaving like fiscally responsible companies should.
After all, if you don’t hire the Mexicans, or in the British case the Romanians, to harvest your crops, then you are going to have to hire local labor to do it. Here’s the rub: Farm labor is not fun work and it is seasonal in nature. So, in order to attract the necessary labor a farm would have to offer a much higher salary to an American worker than they would a Mexican worker. This is not good for the farm’s bottom-line because it is an increased cost. When Farmer Joe, who hired American field hands goes to market, he is forced to sell his potatoes at a higher price than Farmer Dan. The latter hired Mexicans and was able to save money on labor. This decreased his costs so he can afford to sell his potatoes for a lower price. In reality, if Farmer Joe wanted to sell his potatoes at all, he would have to come down to the market price of the cheaper Farmer Dan, thus paying out of pocket his higher labor cost. If Farmer Joe continues to engage in the practice, he will quickly be out of business. Ergo, market competition demands that Farmer Joe hires Mexicans just like Farmer Dan.
Now, the free market uni-party Republicans & Democrats will tell you that hiring Mexicans is ahckschually an excellent state of affairs for Americans, both consumers and for the labor force. The consumer is benefitted because the cost savings is relayed to the local grocery. The potatoes are cheaper because the farmers used less expensive labor. The labor force is benefitted because now that Americans are not being forced to do manual labor they are freed up to work in a fancy high-tech job. They’ll make more money as a consequence. Everyone wins!
This biggest lie in the reasoning of the previous paragraph is that hiring immigrants somehow creates other jobs for the American workforce. This is the ol’ “High-Tech” jobs argument. Just to be clear, when Americans are forced to compete with immigrants in the labor force for unskilled positions like working on a farm, it does not magically create new jobs for them in another higher paying field. Quite the opposite: the amount of jobs remain the same. But, since there is an increase in the supply of labor with the immigrants involved in the equation, this forces wages downward across the board, especially in the low-skill categories. When workers are imported, all lower and middle-class Americans lose money.
This is why the cost saving of potatoes for consumers is illusory. Yes, potatoes are cheaper. But, in order for the potatoes to become cheaper, Americans had to be made poorer. These are the same Americans who are consumers for whatever product or service that you are selling, which they are less able to now afford.
So, who benefits from these state of affairs? Well, the immigrants for sure who are being paid much more in the United States than they would in Central America. But also are archetypal farmers Joe and Dan, who are executives of multi-billion dollar farming corporations.
But, the Joe’s and Dan’s are not entirely to blame. At the root of the problem are politicians who allow, and even encourage, the immigrants to come across to the border to do jobs that Americans could do. At least until a pandemic forces them to shut down the international subsidization.
Thank you, COVID-19, for making governments look after their own constituents for a change! Along this line of reasoning, you could say that the coronavirus is racist.