13"”??? hmfifiégfil ABSTRACT OCCUPATIONAL MOBILITY IN RURAL MICHIGAN by Ralph Arthur Loomis This is a study of the process by which labor transfers from farm to nonfarm employment. More specifically the analyses focus on: (1) the employment practices of nonfarm firms that may affect the ability of farm people to compete for nonfarm employment, (2) the effect of selected socio-economic differ- ences between communities on the transition from farm to non- farm work, (3) the uses of farm resources that are controlled by Operators who have transferred partly from farming to off- farm work, (u) farm residents' interest in and qualifications for nonfarm employment, and (5) measures designed to facilitate the transfer of farm operators to nonfarm work. Primary data were obtained from a sample of industrial employers, part- time farmers, low-income full-time farmers, community leaders, and members of various institutions in Kalamazoo and Muskegon Counties, Michigan. This analysis suggests that the nonfarm labor market has functioned with equal effectiveness for farmers in the two counties studied in spite of significantly different levels of unemployment, differences in farm structure, population growth, Ralph Arthur Loomis educational levels, and a number of differences in the overall socio-economic patterns of the two areas. Furthermore, in neither county do the employment policies and practices of industrial employers appear to discriminate between farm and nonfarm employees or employee applicants. The processes of employing and promoting are based on criteria that are equally applicable to all. The findings of this study do not contradict the theory that money income differentials stimulate occupational mobility, but they do substantially qualify the relationship. The qualifications include such variables as: Opportunities for employment at higher income earning activities, the matching of job requirements with employee qualifications, and the im- portance of non-money income preferences. It was found, for example, that it would take approximately $1200 less annual income to induce part-time farmers to quit their non-farm job than to quit farming in favor of a single income earning activity. The results further suggest that neither training facilities related to nonfarm job requirements nor increased information about nonfarm job vacancies will have a substantial impact on the off-farmnigration rate of those already committed to farming. The support for this position rests with such variables as: the existence of a high level of general unem- ployment, lack of interest in receiving additional training, relatively advanced age of the rural farm population, relatively high incidence of physical handicap among low-income farmers, Ralph Arthur Loomis existing familiarity with the nonfarm job market within commuting distance, and the uncertainty regarding change. This is not to say that improved information and training facilities may not have an impact on the number of people who become committed to farming in the future. This investigation lends credence to the position that combining off-farm work and some degree of farming is becoming an increasingly feasible means of fulfilling a broader range of goals or desires than is possible by limiting oneself to one or the other activity. Therefore, this type of multi-jobholding is becoming an increasingly more permanent institutional arrangement on the rural scene, particularly in areas of industrialization such as typifies southern Michigan. OCCUPATIONAL MOBILITY IN RURAL MICHIGAN By Ralph Arthur Loomis A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1964 \1 ACKNOWLEDGMENTS The work reported in this manuscript was conducted under a cooperative agreement between the Michigan Agricultural Experiment Station, Department of Agricultural Economics and the Economic Research Service, U. S. Department of Agriculture. I am appreciative to members of these groups for establish- ment of a favorable environment for conducting this research. I thank Professor Dale E. Hathaway, chairman of my .guidance committee, for constructive suggestions on the organiza- tion and presentation of the study. Thanks are also extended to Myron E. Wirth for his criticism of the study, and to Clyde J. Lewis for his assistance in gathering primary data. Special recognition goes to my wife, Isabel, whose patience and quiet encouragement contributed immeasurably to the culmination of this work. Ralph Arthur Loomis ii TABLE OF ACKT‘IOWLEDGITEIJTS o o o o o o 0 LIST OF TABLES . o . o . o 0 LIST OF ILLUSTRATIONS. . . 0 LIST OF APPENDICES . . . . . CONTENTS Chapter I. TETE STUDY. 0 O O O O O O O O O O 0 O O O O 0 Introduction . . . . . . . . . . . . . . . Procedure. . . . . . . . . . . . . . . . . II. OCCUPATIONAL MOBILITY--SOME THEORETICAL COIqSIDERATIONS O C O O O O O O O O O O C 0 Introduction . . . . . . . . . . . . . . . Economic Theory and Occupational Mobility. Sociological Concepts and Occupational Mobility . . . . III. Agriculture. . . . Demography . . . . Employment . . . . Income and Welfare Other Observations Farm-Nonfarm Labor IV. HOW MANAGEMENT VIEWS Introduction . . . Policies . . . . . Employer Attitudes Farmer Employees AN IMAGE OF TWO AREAS. . . . . . . . . . Indicat rs. . Transfer. . FARMER EMPLOYEES. . and EXperiences with Education and Training . . . . . . . . iii Page ii viii ix 01H 11 18 26 26 29 32 3% 38 H2 50 50 5M 58 61 iv Chapter V. PART-TIME AND LOW-INCOME PULL-TIME Introduction . . . . . . . . Demographic Characteristics. Age. 0 o o o 0 Education. . . Health . . . . Family Size. . Adult Children Personal History Patterns. . Residence. . . . . . . . . Occupational . . . . . . . The Farm Business. . . . . . Resources. . . . . . Farm Labor . . . . . Adjustments. . . . Plans for the Future The Nonfarm Job. . . . . . . Getting a Nonfarm Job. . . Nonfarm Job Classification Labor Unions . . . . . Off- Farm Work--Further Insights FARMING VI. INCOME DIFFERENTIALS AND PREFERENCES Introduction . . . . . . . . Income Differentials . . . . Money Income Versus Work Preferences VII. CONCLUSIONS AND POLICY IMPLICATIONS. BIBLIOGRAPHY O O O O O O O O O O O O 0 APPENDIX 0 O O O O O O O O O O O O O O Page 71 71 72 72 73 73 76 78 81 81 83 86 86 90 91 92 95 96 102 103 105 110 110 110 122 132 150 15k Table 1. 9. LIST OF TABLES Selected Characteristics of Kalamazoo and Muskegon Counties, Michigan . . . . . . . . . Selected Income and Welfare Characteristics of Kalamazoo and Muskegon Counties, I/IiChiganO O O O O 0 O O O I O O O O O O O O 0 Disappearance of Farm Operators (Farms) From Kalamazoo and Muskegon Counties, Michigan, 1939-59 0 O O O O O O O O C O O O O O O O O 0 Change in Off-Farm Work Patterns of Farm Operators, Kalamazoo and Muskegon Counties, MiChigan, 1939-59 0 o o o o o o o o o o o o 0 Average Annual Rates of Change in Number of Farm Operators and Farm Operators Working Off the Farm, Kalamazoo and Muskegon Counties, TTiChigan, 1939-59 0 o o o o o o o o o o o o 0 Frequency Distribution of Number of Employees, by Sex, for a Sample of Industrial Firms, Muskegon and Kalamazoo Counties, Michigan, 1939-59 0 o o o o o o o o o o o o o o o o o o The Labor Force Represented in the Industry Survey, Compared With the County Aggregates, Muskegon and Kalamazoo Counties, Michigan, June 1961 O O O O O O O O O O O I O O C O O 0 Distribution, by Age, of Interest in Obtaining Additional Training, For a Sample of Part- Time and Full-time Michigan Farmers, 1961 . . Age Distribution of a Sample of Part-Time and Full-Time Michigan Farmers, 1961. . . . . . . Pace 27 36 L01. as M 52 53 72 Table 10. 11. 12. 13. 1M. 15. 16. 17. 18. 19. 20. 21. 22. 23. vi Page Years of School Completed by Different Family Members, for a Sample of Part-Time and Full- Time Michigan Farmers, 1961 . . . . . . . . . . 7” Family Size and Composition, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961. O I O O C C O O O O O O O O O O O O O O O 77 Characteristics of Adult Children Not Living With Parents, for a Sample of Part-Time and FUll-Time MiChigan Farmers, 1961. o o o o o o o 79 Residence Mobility of Farm Operators, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961 o c o o o o o o o o a o o o o o o 82 Characteristics of Nonfarm Jobs Held by a Sample of Michigan Part-Time Farmers, 1961 . . . . . . 8% Land Tenure From a Sample of Part-Time and Full- Time Michigan Farmers, 1961 . . . . . . . . . . 87 Farm Capital Structure for a Sample of Part-Time and Full-Time Michigan Farmers, 1961. . . . . . 89 Total Family Labor Input for a Sample of Part- Time and Full-Time Michigan Farmers, 1961 . . . 91 Changes in Farm Operation Associated With Working Off the Farm, for a Sample of Part-Time Michigan Farmers ’ 1961 O O O O O O O O O O O O O O O O C 9 3 Frequency Distribution of Major Farm Enterprises, For a Sample of Part-Time and Full-Time Michigan Farmers,1961000000coco-cocoon 91+ Classification of Type of Off-Farm Work, by Age, for a Sample of Michigan Part-Time Farmers, 1961. O O I O C O O O O C O O O O C O O O O O O 103 Labor Unions and Nonfarm Work: Observations by a Sample of Part-Time Michigan Farmers, 1961. . ..10M Farm and Nonfarm Income, for a Sample of Part- Time and Full—Time Michigan Farmers, 1961 . . . 111 Gross Farm Income per $100 Expense and Deprecia- tion, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961. . . . . . . . . . . . . 113 vii Table Page 2%. Family Income From All Nonfarm Sources, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961. . . . . . . . . . . . 113 25. Frequency Distribution of Cash Income for Family Living and Re-Investment, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961 . . . . . . . . . . . . . . . . 114 26. Residual Net Returns to Farm Capital and Farm Operator's Labor and Management, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961. O O O O O O O O O O C O O O O O O O O O 116 27. Comparison of Hourly Farm and Nonfarm Earnings, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961. . . . . . . . . . . . 118 LIST OF ILLUSTRATIONS Figure Page 1. Reasons Given by Respondents That Tend to Inhibit, or May Encourage Them, to Move to Another Part of the United States, for a Sample of Part-Time and Full-Time Michigan Farmers, 1961 O O O O O O O O O O O O O O O O 100 2. Ranking of the Importance of Nonfarm Job Conditions by a Sample of Part-time Michigan Farmer‘s, 1961 O O C C O O O O O O O O C O O O 121 3. A Comparison of Money Income Levels Required Before Quitting Nonfarm or Farm Work, For a Sample of Michigan Part-Time Farmers, 1961. . 12“ viii LIST OF APPENDICES Number Page A. Statistical Procedure Used in Estimating Money Income Preference for Farm and Nonfarm occupations. O O O O O O O O O O O O O O O O O O 155 B. Questionnaire used in the Survey of Farmers. . . . 157 ix CHAPTER I THE STUDY Introduction Industrialization is a process of reallocating economically productive resources from primarily agrarian em- ployment to manufacturing, commerce, and services. Most im- portant among these resources is people. In the United States the transfer of people from farm to nonfarm employment has occurred at a dramatic rate. In the 50-year period prior to 1960 the pr0portion of the total U.S. labor force engaged in agriculture decreased from 31 to 8 percent.1 For the same period the absolute number of agricultural workers declined from 13.6 to 7.3 million.2 This trend continues in the decade of the 1960's. Continuing increases in agricultural produc- tivity suggests that fewer and fewer peOple will be needed to produce the nation's increasing requirements for food and fiber. lManpower Report of the President, by the U. S. Depart- ment of Labor, March 1963, Table A-1, p. 139; and Statistical Abstract of the United States, 1957, Table 237, p. 195. 2Farm Employment, Statistical Bul. No. 33%, Statistical Reporting Service, United States Department of Agriculture, Table l, p. 7 (undated). 2 The transfer of labor from farm to nonfarm employment has been rapid-~but not rapid enough. Labor as an input in farming is redundant. The effect of this over-commitment is low returns to labor and capita1--returns substantially below those earned by labor and capital employed in nonfarm pursuits. The primary question becomes, "Why don't more farmers leave farming--why do they accept such substandard remunera- tion for their labor and capital?" DO low-income marginal farmers stay in farming because there is no demand for their skills in industry? Do they stay on the farm simply because they are unaware Of other alternatives, or is farming--even with substandard money income--preferred to the extent that it represents real rewards that are comparable? These are important questions that need answers. Policies and programs for solving the low-income problem in agriculture are doomed to failure until we better understand the fundamental reasons why low-income submarginal farmers remain in farming. The primary purpose of this study is to investigate these reasons. More specifically the analysis will focus on: (1) the employment practices of nonfarm firms that may affect the ability of farm pe0ple to compete for nonfarm employment, (2) the effect of selected sociO-economic differ- ences between communities on the transition from farm to non- farm work, (3) the uses of farm resources that are controlled by Operators who have transferred partly from farming to off- farm work, (4) farm resident's interest in and qualifications for nonfarm employment, and (5) measures designed to facilitate 3 the transfer of farm Operators to nonfarm work. There are extensive writings, ranging from pOpular to technical, on the innumerable ramifications of the chang- ing sociological, economic, and institutional structure of American agriculture. Within these writings is an abundance of literature concerned with low-income farm families, the transfer of labor from farm to nonfarm uses, the role of public agencies in servicing peOple in the process of occupa- tional transition, the interdependence of the farm and non- farm sectors of the economy, and so forth. Nevertheless, largely due to the dynamic nature of our society, time renders irrelevance to much that has been written and generates, if not new, at least change in the shape and character of prob- lems and their solutions. And because of the complexity Of human behavior, the validity of any single utterance must of necessity depend upon assumptions, with varying degrees of reality, which also change over time. The general context of writings to date suggest that in addition to money income other factors are important in explaining occupational mobility. However, little has been done to identify or quantify these "other" variables. Much remains to be done in analyzing the importance of forces such as: motivation, expectations, uncertainty, and Opportunity as they relate to occupational mobility. Some of the following hypotheses stem from this arena. Time and again the literature points to the need for greater availability of information about nonfarm job opportunities in order to facilitate the u transfer of labor from agriculture to nonagricultural uses. Yet little has been done to evaluate the importance of public versus private sources Of information in the occupational de- cision making process of individuals. Much is written about the hiatus between job requirements and employee qualifica- tions, and in fact we are witnessing public programs designed to close this gap. It is assumed that all peOple who in some sense "need" retraining so as to improve their lot will re5pond to these programs, thereby substantially alleviating the low- income problem, even in agriculture. There is need for analyses of farmers' attitudes toward these efforts in order to evalu- ate the potential effectiveness with reSpect to farm people. While the above comments on literature are very brief, they are intended to merely illustrate, but in no sense exhaust, the genesis of hypothesis formulation for this study. The Objectives of this investigation will be met by the testing and subsequent acceptance or rejection of the following hypotheses: 1. Industrial employers do not discriminate against farmers, vis-a—vis nonfarmers, when hiring new employees. 2. Examination of wage-rate differentials, or relative earnings, will not provide an adequate explanation of employment mobility, or immobility patterns. 3. For those combining farm and nonfarm income earning activities, the farm income is viewed as supple- mentary to the Off-farm income. 5 u. Increasing the availability of information about nonfarm employment Opportunities would have little impact on the farm to nonfarm employment flow. 5. Increased nonfarm job training facilities would have little impact on the movement of farmers out of farming. 6. An Off-farm labor market characterized by a relatively stable and low unemployment pattern will facilitate the adjustment problems Of the surrounding agricultural sector to a greater degree than will a labor market characterized by an unstable employment pattern with periods Of high unemploy- ment. Procedure The data used in testing the hypotheses were Obtained from both primary and secondary sources. Secondary data sources were largely population and agricultural census in origin, along with data regularly published by the Michigan Employment Security Commission. Primary data were Obtained from farmers, nonfarm employers, and a number of institutions, community leaders, and the like. Two Michigan counties were selected for study. Each county has a major urban center which functions as the nucleus of economic activity for the rural regions of the county. One Of the counties had a relatively low unemployment pattern during the past decade, while the other county had a relatively high unemployment pattern.3 Management was interviewed in all the industrial firms 4 In addition, the management employing 500 or more workers. of several smaller firms outside the urban centers were inter— viewed. This pattern of data collection on the nonfarm labor market enabled maximum coverage of the nonfarm job market Oppor- tunities. Limiting the nonfarm labor demand set to large industrial employers has the disadvantage of omitting types of nonfarm employment which have different qualification require- ments. However, to have expanded the study to include service and other types of employment would have added excessively to the data gathering process. Labor supply, or potential supply, from the farm sector may be conveniently classified into four groups: (1) thegroup Of farm operators who have left agriculture entirely in favor of nonfarm employment, (2) the children Of farm families, (3) the_group Of Operators who have made a partial adjustment in the farm to nonfarm labor shift, i.e., those who combine the two income-earning activities, and (H) low-income, full—time farmers who, on an a priori basis, 3A detailed comparison of these counties is made in a subsequent chapter. “Management, usually the personnel officer, was inter- viewed using a conversational approach rather than a stylized questionnaire. Continuity was maintained by use of informal guidelines for directing the conversations. Substantially more information was Obtained in this manner than would be the case if a set questionnaire had been utilized. 7 seem to have an economic incentive to move to other employment but have not made the transition. For purposes of this in- vestigation, the group Of Operators who have left agriculture completely are not included as part of the population to be studied because Of the extreme difficulty of identifying and contacting them. Likewise, the children of farm families were not interviewed, per se. However, information about adult children was Obtained from the farmers who were sampled. A random sample of the other two groups, i.e., part-time farmers and low-income full-time farmers residing in the two counties delineated for study, was interviewed. In addition to gathering cross-sectional and historical primary data from employers, part-time farmers, and low income, full-time farmers, information was Obtained from a number of sources to facilitate analyses of the general sociO-economic structure Of the areas as related to farm and nonfarm employ- ment mobility. For example, interviews were held with Officials representing chambers Of commerce, labor unions, city govern- ment, Michigan Employment Security Commission, banks, community development oriented.institutions, agricultural agents, adult education leaders, and the like. While the investigation is not designed to be a morphological analysis of the areas involved, substantial reliance was placed on the use and interpretation of historical information. Various statistical measures and tests were used as the situations warranted. In Chapter II we will examine some of the economic and 8 sociological theory relevant to the analysis. In Chapter III we examine the demographic and economic structure among regions or areas, pointing out that major differences may dictate substantial variation in problem-solving measures. The theoretical systems and regional structural characteristic will then be related to the major analyses of primary data in Chapters IV, V and VI. The final chapter is concerned with inferences, policy implications and concluding Observations. CHAPTER II OCCUPATIONAL MOBILITY--SOME THEORETICAL CONSIDERATIONS Introduction "The quality of life most useful in nature, from the point of view of the domination of a wider environment is the quality of changeableness, plasticity, mobility, or versatil- ity."l Hawley has written, "It is largely, if not entirely, through the development of his capacity for movement that man has arrived at a position of world domination."2 The conceptual core of this investigation rests within this framework of man's facility to initiate and subsequently adapt to change. Understanding of this adjustment process takes on added importance with the realization that change becomes increasingly rapid as our culture has more elements to work with. The dynamics of our material and social culture harbors the challenges for the social sciences. As the condi- tions for change become more favorable, the resistance to 1George W. Crile, Man! An Adapting Mechanism (New York: 1916), p. 18. 2Amos H. Hawley, Human Ecology, A Theory Of Community Structure (The Ronald Press Company, 1950), p. 325. 10 change also becomes greater because of the increased inter- dependency of our cultural parts, fear of the new, and respect for the traditional. Within this process of change, for which progress is the Optimistic name, this investigation is focused on the occupational mobility Of farmers. The term occupation en- compasses at least three sets of phenomena: (1) technological, (2) economic, and (3) social. As such, occupation is a con- stituent element of our general social history, for it re- flects the efforts of man to engage in a Specific, relatively continuous activity in order to earn a livelihood and to maintain a definite social status. Likewise, the term mobility embraces the three concepts Of technological, economic, and social. For purposes of this study, occupational mobility may involve all of these phenomena. For example, a shift in major income earning activities from farming to industrial employment is technological in the sense that the machine- man relationship is dramatically altered. It is economic in the sense of increased Specialization in the productive contri- bution of labor, and it is social in the sense of changing the personal relationships and social identity of those involved. Changing occupations may be viewed from different levels of aggregation and different time dimensions. The emphasis in this study is on the behavior of individuals and small groups, rather than the overall net movement of farmers out of agriculture. Of course, the implications derived from this approach may be applicable to the broader aggregate shifts 11 taking place in the occupational mix. Closely associated with this is the time dimension or the various stages in the life cycle during which peOple leave agricultural activities in favor of other work. In a long-run context the major impact on the size Of the agricultural pOpulation is the out- migration of young adults, most of whom have not become committed to farming as an occupation.3 While this group is Of some interest in this study, the major emphasis relates to those who have been committed to farming as a means of earning a livelihood and have subsequently changed their major occupation. Changing occupations is a pervasive event, penetrating the theoretical constructs of both the economics and sociology disciplines. The balance of this chapter is devoted to dis- cussion of some of the basic concepts, assumptions, and theories Of particular relevance to the investigation of occupational mobility as a behaviorial phenomenon. Some of the theory associated with occupational mobility approaches the axiomatic. I will not dwell on these in this chapter, but I will present the supporting evidence in subsequent chapters to illustrate the consistency of the primary data gathered for this study. Economic Theory and Occupational Mobility Whether we are considering one individual shifting jobs or the overall changing occupational mix of the economy, 3Farm Population Estimates for 1910-62, Economic Re- search ServIce, United States Department of‘Agriculture, ERS-130 (October, 1963), p. 8. 12 the principle of factor resource allocation encompasses the most relevant body Of economic theory for describing this behavioral pattern. In over-simplified terms, labor—saving technological innovations in agriculture are "pushing" labor Off the farm. Simultaneously, expansion of the industrial and service sectors of the economy are "pulling" people off the farm. The price system is the mechanism through which the signals are transmitted for allocating productive resources, in this case, primarily the labor resource. If the system were frictionless and there were no transfer costs in shifting resource use, maximum efficiency in resource use and maximum net national product would be attained, with returns to labor in all uses being equal at their value Of marginal product. Of course, there are many reasons for the absence Of this frictionless, perfect mobility relationship. Certain of these reasons and how to combat them, both in the interest Of efficiency and distributive justice, is the raison de etre for this study. Our heritage of traditional equilibrium analysis stipulates that disturbances away from an equilibrium position provoke countervailing reaction which tends to restore the system in the direction Of equilibrium. For example, if for some reason the returns to labor, assuming for the moment that labor is homogeneous, in industry were increased over returns to labor in agriculture, we would expect labor to shift from the lower to the higher remunerative activity. The reduced supply of agricultural labor would tend to result in increased 13 returns until a new equilibrium was reached between the two sectors. In fact, there is ample evidence of a persistent disequilibrium in labor returns between these two sectors. Hathaway explains this continuous disequilibrium in terms of the combined elements of: (l) a highly inelastic demand for products, (2) a low-income elasticity for products, (3) rapid rates of technological change which increase the physical productivity of certain inputs, (u) a competitive structure (in agriculture), and (5) a high degree of asset fixity which reduces resource mobility from the (agricultural) industry.“ Myrdal has develOped an hypothesis of social change which explains persistent disequilibrium among sectors of an economy, and areas of the world, which he calls "circular cumulative causation."5 In essence he challenges the natural tendency for the economic system to move toward equilibrium, ". . . a social change does not call forth countervailing changes, but, instead, supporting changes, moving the system in the same direction as the primary change but much further. A social process thus tends to become cumulative and Often moving with accelerating Speed."6 He goes on to point out that localities, regions, or sectors of exPanding economic activity ”Dale E. Hathaway, Government and Agriculture, Public Policy in a Democratic Society (The MacMilIan CO., 1963), p. 126. 5Gunnar Myrdal, Development and UnderdevelOpment-- A Note on the Mechanism of NationaICand International Economic Inequality, Fiftieth Anniversary Commemorative Lectures, National Bank of Egypt, Cairo, 1956, p. 23. 6 Ibid.’ p. 18. 1% are favored by the unfettered market system, favored by selective migration, capital migration and trade. Simultan- eously, the unfavored localities are experiencing a series of interconnected, circular and cumulative forces resulting in yet greater relative poverty. Myrdal refers to these effects as "backsetting effects" Of economic expansion in other regions.7 Against these there are also "spreading effects" Of expansionary momentum from the centers of economic expansion to other regions. In a rapidly growing economy, large regions will lag behind, stagnating or even retrogress depending on the balance between the backsetting and spreading effects. The concept of a factor market is implicit in an analysis Of factor mobility. A simple definition Of a factor market is the area within which the resource is free to move among alternative employments.8 But such a definition is of limited usefulness in discussing a labor market. In an historical and aggregative framework labor has always been "free" to move within the United States. More pertinent to defining a labor market, particularly in the context Of em- ployment mobility of farmers, is the establishment of geo- graphic boundaries in terms of time, space, and types of alternative employment for which farmers are qualified. Of greater concern than the definition Of a labor market is the extent to which the market departs from the 7Ibid., p. 31. 8Richard H. Leftwich, The Price System and Resource Allocation (Holt, Rinehart and Winston, 1961), p. 279. 15 concept of a perfect labor market. The usual criteria of a perfect market include: (1) homogeneity of factor (product), (2) perfect mobility Of factor (product), (3) large number Of buyers and sellers and (u) full knowledge of market condi- tions on the part of participants. Each of these criteria will be discussed in varying degrees in subsequent chapters in conjunction with analyses of the primary data used in this investigation. Yet another body of economic theory particularly germane tO the topic at hand is wage theory. The relevance of wage theory is suggested by the fact that money income is one Of the major variables considered in making a decision about changing employment. Likewise, income differentials are the primary mechanism for signaling changing demand and subsequent allocation of labor among sectors, regions, firms, etc . Wage theory has a long history of evolvement. The "just price" of medieval times was really a wage concept, namely, the price for one's wares should be sufficient to enable maintenance of one's customary position in the community. Adam Smith's labor theory of value equated the exchangeable value of commodities with the amount of labor the good could command or purchase.9 He explained wage differentials in terms of five circumstances: agreeableness of employment, cost of learning the work, constancy Of employment, trust to be 9Adam Smith, The Wealth of Nations (Random House, Inc., The Modern Library, 1937), p. 30. 16 10 Wage differentials reposed, and probability Of success. in the short run were his concern. Ricardo's "iron law of wages," a restatement of Malthus in wage terms, held that wages above subsistence would be canceled by population in- crease. His was a long-run concept of wages. The exploitation theory of wages held by Karl Marx was a literal interpreta- tion Of Smith's thesis, contending that any part of the returns withheld from labor was an exploitation of labor by capitalists. The marginal productivity theory is the "orthodox" theory of wages. It relates wages to worker productivity as measured by market demand. Men are allegedly paid their "worth," rather than according to their social posifion (just price), job characteristics (Smith), subsistence requirements (Richardo), available working capital (wages fund), what was left over (residual claimant), need (Marxian socialism), or bargaining power.11 Of course, the marginal productivity theory Of wages stands or falls on the degree of competition existent in the labor market. In the long run, the theory holds that the general level of wages is determined by the capital-labor ratio, the higher the ratio, the higher the wage level. But this is in turn subject to an equilibrating process. .In trying to equalize the rate Of marginal substitution, if wages are high, there is pressure to substitute labor-saving "technology. In an economy with a high capital-labor ratio loIbid., pp. 100-109. llOrme W. Phelps, Introduction to Labor Economics (McGraw-Hill, 1955), p. #2“. l7 and a high wage, there can be no turning back from increasing industrialization except at the cost of lowered wages and earnings and a drOp in the level of living.12 The bargaining theory of wages holds that wages, hours and working conditions are largely a matter Of the relative bargaining strength of the two sides, laborer and employer. Doubt is cast on the conventional positively in- clined labor-supply function yielding the possibility of an undetermined wage via other than bargaining power. Employers attack the notion Of a negatively sloping supply curve, pointing out that they raise wages to attract more applicants. This position is countered by the "fallacy of composition" argument, i.e., that the general labor market may respond quite differently to a change in wages than the market for a single employer. The inflexibility of wages and the rate of national income and expenditure levels elaborated by Keynes is the most recent contribution to wage theory.13 The theory as developed by Keynes, and since elaborated by numerous economists, leaves some room for collective bargaining and competitive individual wage adjustments, though the emphasis is on national policy and programs to influence national income and employment. It is evident that there is no consensus on the theories relating to wages. It may well be that in an economy lzIbid., p. 033. 13John M. Keynes, The General Theory of Emplgyment, Interest and Money (MacMilIan and Company, 1936). 18 typified by a mixture of organizational structures, ranging from near perfect competition to monopoly and monopsony, plus varying degrees of public intervention, that a general theory of wages has no meaning. Another way of viewing the determinants of wages, or relative wages, is to consider the reasons for differences in wage structure among types of work. Friedman lists three kinds of forces or phenomena which tend to result in income differentials among occupations: (l) equalizing differences, i.e., differences due to relative attractiveness of the work, (2) non-competing groups, i.e., barriers which prohibit free choice to some groups, and (3) transitional differences, i.e., incomplete adjustment to changes in demand and supply.lu The alleged amenities or psychic income associated with rural life and farming would, to some, be an equalizing difference between lower money income in agriculture versus nonagricultural pursuits. This will be discussed in greater detail subsequently. Of course, it is likely that transitional differences are al- ways present in a dynamic economy. Sociological Concepts and Occupational Mobility We noted in the introduction to this chapter that social, as well as economic, phenomena were pertinent to occu- pational mobility. In the collection Of the primary data for this investigation an effort was made to gather information which would provide insights into some of the noneconomic 1“M. Friedman, Price Theory, A Provisional Text (Aldine Publishing Company, 1962), pp.’2I1-213. 19 implications of the occupational mobility process. This included demographic data, such as age, education, family size, migration patterns, etc. Likewise, respondents were asked about several areas of value, e.g. their preferences with regard to occupation, rural versus urban living, kinship ties and the like. As well as the individually oriented observations, data was sought with reSpect to group and community elements Of the two communities studied. The types of community organizations and some of their Objectives were noted. Atti- tudes Of community leaders were sought concerning issues pertinent to the overall social and economic change in the communities. With these supplementary sociological data it is hoped that a more complete and composite understanding of the occupational mobility process will be possible. As with the relevant economic theories, the major sociological theories pertinent to occupational mobility re- volve around the concept and dynamics of social change. Change results, after all, from inventions, both physical and managerial, with a continuing interaction among the dimen- sions and elements Of social structure.15 In the interest Of perspective and because of the 15Elements are the relationships among institutions, .groups, formal organizations, or other component units within the society. Dimensions are the variable influences Of these elements extendihg through the breadth and depth of a society. Elements and dimensions make up the societal structure. See Lowry Nelson, C. E. Ramsey and C. Verner, Community Structure and Change (The MacMillan CO., 1960), p. 21. 20 importance of having a sociological and cultural anthro- pological frame of reference for the subsequent analyses, a brief resume follows Of some basic concepts about the nature 16 Only those concepts of particular Of social systems. relevance to this investigation will be mentioned, with no attempt to set out a complete and integrated framework Of social systems. Social systems consist of social interaction and cultural factors which structure or give a sense of uniformity to these interactions. Elements are simply the constituent parts of a larger whole and they serve as units of analysis. It is certain of these elements of social systems which are of particular interest to this investigation Of occupational mobility. Belief or knowledge is one such element, with a belief being any proposition about the universe that is accepted as true. The significance of beliefs is not necessarily deter- mined by the objective truth or falsity of the beliefs. As an illustration Of the importance Of this element, belief, to this investigation, a perponderance Of the respondents stated a preference for rural living. Among other reasons for this preference was the belief that it was a superior setting for rearing children, in preference to an urban setting. In a more general sense, there is still an absence of consensus 16For references on these concepts, see Charles P. Loomis and J. Allan Beegle, Rural Social Systems (Prentice- Hall, Inc., 1950), pp. 3-9 and 780-788; Nelson, g£;_al;,‘gp. cit., pp. 12-19; and Charles P. Loomis, Social Systems (D. V33 Nostrand CO. Inc., Princeton, 1960). 21 on the possible impact of beliefs in agrarianism or rural fundamentalism as they may influence the choice of a place to live and subsequently influence occupational mobility.l7 Regardless of the position one takes or the relevancy of fundamentalistic beliefs to labor mobility, evidence of these beliefs can be found among farmers, urban dwellers, politicians and professionals alike. For example, Baker has recently said: Rural rennaissance is surging ahead . . . rural areas are now called upon to provide vital new contributions to national security and welfare, such as: (l) A re- vitalization of the abiding values of Western civiliza- tion that are grounded in rural life; (2) A satisfying place, where growing numbers of people can recreate mind and spirit; (3) Essential Open spaces that must be pre- served within growing metropolitan areas; and (H) A rewarding rural environment where a greater number Of people can live and work. Roles, or that which is expected of individuals in given situations, is another element of social systems. The assumptions underlying expected behavior are: (1) human rela- tions are predictable, (2) one form of predictable behaVior is the emergence of informal, implicitly understood patterns, which are called group relations, and (3) the predictability of these relations depends upon the fact that individuals 17For a particularly rich source on agrarianism, rural fundamentalism and related values, see Paul H. Johnstone, "Old Ideals Versus New Ideas in Farm Life," United States Department of Agriculture Yearbook (1900), pp. 111-170. 18John A. Baker, Assistant Secretary, Rural Development and Conservation, United States Department of Agriculture, from an article in the United States Department of Agriculture, Employee News Bulletin, (January, 196”). 22 usually select their roles from a narrow range of expected behavior patterns. A large number Of peOple working at a given division of labor is identified as an occupation. Certain specified patterns of behavior and performance are associated with this occupation, taking on the attributes of roles. Until recent years, the occupation of farming as a role did not include multi-job holding. However, it seems to me that a new role has evolved and become accepted by society for part-time farming. A different pattern of behavior is expected from this occupational group than from the purely farm or nonfarm occupationalgroups. Closely associated with role is the element of status, or the ranking of individuals, based upon the consensus of members as to what traits and qualities are to be rated high and low. Again in the context Of this study, the element Of status is a very important concept associated with occupation. On the basis of well defined criteria Of performance, individuals are ranked with occupational groups. Likewise, different occu- pational groups are ranked, or assigned a given relative status. In our culture money income is an important variable in the ranking function. Various questions were asked of part-time farmers, employers, and others in the communities studied in an effort to determine the impact of changing jobs on status. The results will be discussed in a subsequent chapter. In an economy experiencing a rapid change in the occu- pational mix of the labor force, an understanding Of the ele- ment Of power should help in efforts to comprehend employment mobility. Power has two dimensions: (1) rights, or the immunity 23 from authority and duties, and (2) authority, or the right and power Of individuals to influence others. Riesman's, "The Lonely Crowd," Whyte's "The Organization Man," and Wright's "The New Men of Power," are examples portraying shifts and concentrations of power as our society becomes in- creasingly transformed from a rural to an industrial, urbanized complex. Unquestionably, the immunity from authority changes as a farmer shifts to industrial employment. This is not to say there may not be equal or greater offsetting benefits, as there evidently are or the shift would probably not occur. Several of these social system elements can be noted in action by Observing the impact of technology on work patterns. Technology, along with other forces, has resulted ingreater diversification of occupations and has necessitated new physical routines in both Old and new occupations. Versa- tility within an occupation was necessary and rewarding in times past; today specialization is essential for Obtaining distinctive rewards. While technology requires numerous high skills, in the main, only semi-skilled (Operative) talents are required for the operation Of mechanized industry. Ad- vancement depends less on the skill required in job perform- ance than it does on training in specialized scientific subject 19 matter. Changes in social patterns go hand in hand with these changing work patterns. Specialization of economic 19Ralph Turner, "The Cultural Setting Of American Agricultural Problems," United States Department of Agriculture Yearbook (1900), p. 1015. 29 endeavors has led to structuring a hierarchical organization Of employment. Instead of moving from status of employee to small independent Operator, the pattern is now one of moving from grade to grade as an employee. Loyalty becomes a key quality, replacing individual initiative, and conformity pays dividends over individualism. The employee, consumer and owner are interlocked in a highly interdependent organizational structure. For the traditional self-sufficiency and self- decision has been substituted a system of selling labor for a price. Economic need is likely to compel individuals to take the job Offered in the labor market and to remain unemployed if no jobs are available. Thus, need rather than rationally determined interests guides behavior Of an increasing number Of peOple. This economic interdependence is associated with a social interdependence. The needy become identified as a Special group(s), barred from the mainstream because of race, disability, or technical unemployment. Within the previously mentioned Myrdal model, the backsetting effects of circular and cumulative causation tend to push the underprivileged even further down on the relative sociO-economic scale. In this chapter some of the major sociO-economic theories and concepts have been discussed as they relate to our problem of understanding the presence or absence of occupa- tional mobility among farmers, keeping in mind that an in- dustrial-exchange economy is premised on the free mobility of labor. The complexity and dynamics of change restricts us to working with partial theories of human behavior and of drawing 25 limited and at times conflicting inferences. For example, we hear responsible scientists and politicians question the wis- dom of continuing to purposively stimulate the creation of technological know-how at a seemingly increasing rate. They attribute many of the sociO-economic ills of our society to different rates Of change and innovation among various com- partments of society. Individuals and many institutions are alleged to lag the physical science rate of change such as to cause unacceptable social costs. Yet in historical perspective we point to the phenomenal versatility and adaptability Of the major components Of our society to the ever changing techno- logical mix. We look with pride at our level Of living, mass educational attainment, and scientific prowess. But we simultaneously lament persistent high unemployment rates, relatively slow economic growth rates, and continuing problems of inequity and disequilibrium among groups and areas within the economy. It is within this setting of accomplishments, failures, and conflicting goals that we will examine more closely the matter of occupational mobility. Labor is the one unique pro- ductive factor in the sense that it is common to all productive efforts. The adaptation of labor to the changing occupational mix and the technological production processes is a key varia- ble in explaining rates Of change in numerous economic and social phenomena. CHAPTER III AN IMAGE OF TWO AREAS The two areas selected for this investigation were Kalamazoo and Muskegon Counties, Michigan. They were selected because they possess a number of contrasting variables which, on an‘g priori basis, were judged to have an influence on the process of farm-nonfarm labor transfer. In this chapter we will discuss the contrasting variables in question and relate them to their apparent affect, if any, on the transfer Of labor from agriculture to industry. While the variables are interrelated, they will be discussed by groups to facilitate clarity in presentation. Agriculture The two counties studied are essentially equal in land area, approximately 500 square miles each, Table 1. However, Kalamazoo County has over 60 percent of the land area in farms as compared with only 30 percent in Muskegon County. Further- more, the average value of land and buildings per farm in Kalamazoo County is nearly double that in Muskegon. The per acre value of Kalamazoo farm land in 1959 averaged $70 greater than in Muskegon County. Fifty-six percent of the farms in 26 TABLE l.--Selected Characteristics of Kalamazoo and Muskegon Counties, Michigana Item Units Kalamazoo Muskegon County County Agriculture: (1959) Land Area Sq. Miles 567 509 Land Area in Farms Percent 61.5 30.2 Value Land and Bldgs., per farm Dollars 39,920 19,039 Land Value, per acre Dollars 256 185 Commercial Farms (Class I-VI) Percent 56.5 99.9 Part-time (Class VII) Percent 39.8 93.9 Part-time Retirement and Ab- normal (Classes VIII-IX) Percent 8.7 11.7 Value of products sold, per farm Dollars 6,799 5,392 Farm Opgrator Level-of-living Index Index 125 111 Population: (1960) Population Number 169,712 199,993 Change (1950-60) Percent 33.9 23.9 Change (1990-50) Percent 26.6 28.6 Migration: Migrants from Different 'Counties Percent 18.5 9.5 Net Change Via Migration (1950-60) ' Number 17,982 990 Residence: Urban Percent 70.2 67.0 Rural Farm Percent 9.1 2.3 Rural Nonfarm Percent 25.7 30.7 Race: White Percent 95.1 87.7 Nonwhite Percent 9.9 12.3 Education: (25 years 8 Older) Median school completed: County Years 11.7 10.9 Rural Years 11.7 10.2 Rural-Farm Years 11.0 8.9 Kalamazoo (urban area) Years 11.7 --- Muskegon (urban area) Years --- 10.9 Completed less than 5 years Percent 3.3 9.9 Completed high school or more Percent 97.8 36.3 28 TABLE 1—-Continued Item Units Kalamazoo Muskegon County County Employment: (1960) Labor Force Number 65,393 55,077 Unemployed (1960) Percent 9.1 6.1 Unemployed (Aug. 1959-62) Percent 3.9 8.0 Employed persons: Agriculture Percent 2.8 1.6 Construction Percent 5.9 3.5 Manufacturing: Durable Goods Percent 13.7 92.3 Nondurable Goods Percent 29.7 6.9 Total Mfg. c Percent 38.9 98.7 White Collar Occupations Percent 92.7 36.1 aData obtained from Agricultural Census, Population Census and Census Of Manufacturing. bFarm-Operator level-of-living indexes, with 19598100 for the average county in the nation. five items, as follows: (1) average value Of (2) average value of (3) percent of farms (9) percent of farms (5) percent Of farms The index is based on land and buildings per farm, sales per farm, with automobiles, with home freezers, and with telephones. cProfessional, managerial (except farm), clerical and sales. 29 Kalamazoo County were classified as commercial farms in the 1959 Agricultural Census, compared with 95 percent in Muskegon. The average value of products sold per farm in 1959 was $6,800 for Kalamazoo, and $5,900 in Muskegon. The farm-operator level of living index in 1959 was 125 and 111 for Kalamazoo and Muskegon reSpectively. The fact that these data are in terms of averages tends to Obscure much of the detail. Nevertheless, they are adequate to illustrate that the two counties are distinct in their relative agricultural resource wealth. A much larger proportion of the land base in Kalamazoo County is suitable for farm use. Furthermore, the farms in Kalamazoo County are larger, have a greater volume Of sales per farm and on the average yield a higher level of living for the farm families. CeterisParibus, then, we would expect greater Off-farm employ- ment migration to occur from Muskegon County than from Kalamazoo County. However, as the analysis develops we will see that other things are not equal, which may tend to modify our ex- pectations based on only the agricultural variable. Demography The total pOpulation of the two areas in question differs very little, with approximately 170,000 and 150,000 residents in 1960 for Kalamazoo and Muskegon Counties, re- spectively, Table 1. However, the change in total pOpulation during the past two decades reveals a more rapid growth taking place in Kalamazoo County. For the period 1990-50, the popula- tion increase was relatively greater in Muskegon County, 28.6 30 percent as compared with 26.6 percent in Kalamazoo County. But during the more recent decade, 1950-60, the percent change in total population was 33.9 in Kalamazoo County and 23.9 in Muskegon County. These data will take on added significance as we discuss the comparative industrial bases Of these two areas and the attendant impact of World War II on migration to Muskegon during the 1990-50 decade. Commensurate with the more rapidly increasing popula- tion of Kalamazoo County, the net increase in population due to migration during the period 1950-60 was a substantial 17,982, or 10 percent of the total population. The comparable figure for Muskegon County was 990 net migrants, or less than 1 percent total pOpulation. The differences between the counties studied are slight with respect to classification of residence among urban, farm and rural nonfarm. For each county the split be- tween urban and rural inhabitants is near 7 to 3 respectively. The overwhelming prOportion of rural residents are rural non- farm, Table 1. These data, combined with the employment classification which follows, are adequate to categorize these counties as primarily urban-industrial in structure. The two remaining demographic characteristics which reflect sufficiently contrasting magnitudes between the counties in question as to warrant noting are education and race composi— tion. With regard to the median years of schooling completed, for those 25 years or Older, of particular interest is the difference between the rural-farm segment of the population 31 in the two counties. In Kalamazoo County the median years of schooling was 11.0 in 1960, but only 8.9 in Muskegon County, Table 1. This difference in educational attainment is in Spite of a greater median age for the rural-farm population in Kalamazoo than in Muskegon County, 39 and 28 years reSpectively. Also, within Muskegon County the rural-farm group was substantially lower than the overall county median, 10.9 years. While the median years of schooling provides a general picture for relating educational attainment and occupational mobility income improvement possibilities, more rigorous indicators are: (a) the proportion of adults who have completed five or fewer years of schooling, and (b) the prOportion who completed high school or more.1 In Kalamazoo County, 3.3 percent of the adults had completed 0 to 5 years of schooling, compared with 9.9 percent in Muskegon County.2 Consistent with this relationship, Kalamazoo County reflects a generally higher educational level when viewed on the basis Of the pro- portion of adults having a high school or more education, 97.8 1For a discussion Of the association between years Of schooling and income differentials, see Keith Bryant, An Analysis Of Intercommunity Income Differentials in Agriculture in the United States. *Unpuinsh a Ph.D. dissertatiOn, Michigan State University,'1963. The essence of Bryant's findings on this matter is that number of years of schooling is significantly correlated with income differentials in a discrete, not continuous manner. Having from 0-6 years of schooling is associated with relatively low incomes, 12 or more years with relatively high incomes, with the discrete steps of the intermediate years (7 to 11) failing to explain income differentials within this group. 'zBoth counties compare favorably with the United States and Michigan on this measure, being 8.9 and 5.8 percent re- spectively. 32 and 36.3 percent for Kalamazoo and Muskegon Counties re— Spectively.3 Just a single Observation on racial composition-- in 1960 the population Of Kalamazoo County included 9.9 per- cent nonwhite and in Muskegon 12.3 percent nonwhite. There is overwhelming evidence from many sources that level of education is one Of the most important variables, if not the most important, positively associated with Opportuni- ties tO enter the nonfarm labor market. However, interpreta- tion of the above data on education as it related to farm- nonfarm labor transfer in the areas studied is far from straight forward. In the first place, available data does not permit a thorough urban-rural farm comparison. Secondly, it is extremely difficult to evaluate the relative importance to mobility of the within county differences versus the differ- ences between counties. If we assume that discrimination due to education is practiced at comparable educational attain- ment levels for both counties, the rural-farm folk in Muskegon County would find it more difficult to transfer to nonfarm jobs. There is reason to question the validity Of this assump- tion, however, as we shall see in the subsequent comparison Of the industrial composition. Employment The employment pattern of the two areas under study was compared from the viewPOints of: (a) the level Of 3Comparable figures for the United States and Michigan are 91.1 and 90.9 percent respectively. 33 unemployment, (b) the stability of employment, and (c) the composition of employment structure. For the period 1959-62 the average level of unemployment was 3.9 percent of the labor force in Kalamazoo County and significantly higher in Muskegon County (8.0 percent, Table l.)u Both of the areas in question were characterized by an unstable employment pattern during the 1959-62 period, ranging from 2.1 to 5.9 percent unemployment in Kalamazoo County and 9.6 to 13.7 percent in Muskegon County. While the mean level of unemployment differed significantly, the varia- tion around the mean was the same in each county.5 The implica- tion of these two characteristics, i.e., different in level but alike in relative stability of unemployment, suggests that while it may be more difficult for farmers to initially enter the nonfarm labor market in the county with a higher rate of unemployment, the probability of becoming unemployed is essentially the same in either county. The employment structure between the areas studied reflects the difference in the types of industries in the communities. In 1960 over 92 percent Of the labor force in Muskegon County was employed in durable goods manufacturing industries, compared with about 19 percent so classified in Kalamazoo County, Table 1. On the other hand, in Kalamazoo “The difference between these two means is significantly different from zero at the 1 percent level of t. 5The coefficients of variation were .33 and .39 for Kalamazoo and Muskegon Counties respectively. 39 County 25 percent of the labor force worked in nondurable goods industries while only 6 percent were in nondurables in Muskegon County. Kalamazoo County had more employees in white-collar occupations than in manufacturing, 93 and 38 percent reSpectively. The relationship was reversed for Muskegon County with 36 percent on white-collar jobs and 99 percent in manufacturing. In view of the contrasting pattern Of level of unem- ployment, and the interrelated employment structure, between these two counties it would seem reasonable to expect that farm-nonfarm labor transfer would be restricted to a greater extent in Muskegon than in Kalamazoo. As in the case of the variables being considered in this chapter, the validity of this expectation, when co-mingled with other variables, will be re-examined subsequently. Income and Welfare Indicators In addition to the brief comparisons Of the agricul- tural, demographic, and employment patterns in the preceding paragraphs, further insights relating to the farm-nonfarm labor markets can be obtained from selected income and general welfare indicators for the two areas under study. We are limited, however, by the availability of comparable time series data for relevant income groups, i.e., rural-farm '(potential labor migrants) versus nonfarm employees. Compara- tive historical income data for rural-farm and nonfarm em- ployee income groups are needed to make a definitive analysis Of income differentials as they relate to farm-nonfarm labor 35 transfer. Nevertheless, with the data that are available we can discern some tentative inferences. Several income measures indicate that families in Kalamazoo County have greater incomes than families in Muskegon County. In 1960 the median income Of all families in Kalamazoo County was $6,526, compared with $6,098 in Muskegon County, Table 2. Accordingly the families in the respective Standard Metropolitan Statistical Areas (SMSA'S) and the rural families Of these counties had a similar income differential. Also the income differential for wage earners in manufacturing favored Kalamazoo County. However, the median income of rural-farm families was the same in 1960 for the two counties, namely, $5,300, Table 2. In fact, the median earnings of farmers and farm managers in Muskegon County exceeded the earnings Of their counterparts in Kalamazoo County in 1959, $2,953 and $2,683 reSpectively. Likewise the average hourly wage of production workers in manufacturing was slightly greater in Muskegon County. This higher wage rate of employed workers for the area with the significantly greater level Of unemployment suggests the presence of rigidities in the labor market. In Kalamazoo County there was a difference Of 11.8 percent between the 1960 median income of families residing in the SMSA'S and rural-farm families. The difference in in- come between comparable groups in Muskegon County was 3.7 per- cent. Ceteris paribus this suggests slightly more incentive for labor transfer from farm to nonfarm employment in Kalamazoo than Muskegon. On the other hand, the differential income 36 TABLE 2.--Selected incomes and welfare characteristics of Kalamazoo and Muskegon Counties, Michigana Item Units Kalamazoo Muskegon County County Median Income of All Families: 1950 Dollars 3,605 3,185 1960 Dollars 6,526 6,098 Median Income of Families in SMSA's: Kalamazoo, 1960 Dollars 6,526 Muskegon-Muskegon Heights, 1960 Dollars 6,098 Median Income of: Rural Families, 1960 Dollars 6,959 5,978 Rural-Farm Families, 1960 Dollars 5,837 5,833 Median Earnings of Farmers and Farm Managers, 1959 Dollars 2,683 2,953 Family Income: Under $3,000 Percent 12.3 13.9 $3,000 to $9,999 Percent 70.2 73.8 $10,000 and over Percent 17.5 12.8 Manufacturers, 1958: AVg. Wages, all employees Dollars 5,928 5,285 AVg. Wages, production workers Dollars 9,893 9,929 Avg. Hourly Wage, Pro- ‘duction workers Dollars/hr 2.35 2.58 Retail Sales, per person, 1959-60 fiscal year Dollars 1,519 1,323 Hospital Beds, per 1000 pOpulation, 1960 Number 3.9 2.2 Medical Doctors, per 1000 population, 1960 Number 1.2 0.8 Dentists, per 1000 popula— tion, 1960 Number 0.5 0.9 Housing Units with sound plumbing facilities Percent 85.5 76.5 37 TABLE 2--Continued Item Units Kalamazoo Muskegon County County New Capital Expenditures by Mfg: Change, 1959-58 Percent +2.6 -59.9 Retail Trade, Change in Total Sales, 1959-1958 Percent +25.0 +10.8 Wholesale Trade, Change in Total Sales, 1959-1958 Percent +3l.6 +37.6 aData obtained from Agricultural Census, Population Census, Manufacturing Census, and Annual Reports of Michigan Banking Department and Department of Revenue. between rural-farm families and the average wage of production workers would seem to favor labor transfer in Muskegon County over Kalamazoo County. Of course, all the above comparisons refer to a point in time, i.e., 1960, and therefore have limited usefulness in explaining past patterns of labor move- ment. The only comparison we can make over time is the median income Of all families. In 1950 the median income of families in Kalamazoo County was 13 percent greater than in Muskegon County. By 1960 this gap had closed slightly, to a difference of 8 percent. This indicates that some adjustment has taken place between the two areas in question. Based on the fragmentary relative income data for the two counties, there is no clear—cut evidence that the nonfarm labor market has not been functioning equally well in both counties. In subsequent paragraphs we will examine the patterns of adjustment that have occurred. 38 In Table 2, other general indicators of comparative community well-being are itemized. Kalamazoo County has more medical doctors, hospital beds and dentists per 1000 popula- tion than does Muskegon County. Retail sales per person are _greater in Kalamazoo. Sound plumbing facilities are foundin a larger proportion of family homes. Expenditures for new capital investment increased 2.6 percent between 1959 and 1958 in Kalamazoo, while they declined 59.9 percent in Muskegon. Other Observations The preceding paragraphs have utilized statistical data as a means of comparing the two counties being studied. This is, of course, a conventional manner for comparing characteristics of areas. In addition to these secondary data sources I interviewed a number of community leaders in an attempt to gain some knowledge about nonquantifiable characteristics of these communities which may have a bearing on their reSpective sociO-economic develOpment history, and accordingly on off-farm employment Opportunities for farm operators. As alluded earlier, probably the most basic difference between these two communities is the contrast in composition of industry. Kalamazoo harbors a diverse industrial pattern, with emphasis on manufacturing nondurable goods. Together the diversity and composition of industry have contributed to economic stability and growth of the area. By and large the types of industry in the Kalamazoo area are less subject to 39 the impact of overall economic fluctuations than is the case in Muskegon. Two types of industry, namely, paper and pharmaceuticals, form the backbone of the Kalamazoo industrial base. These two, coupled with sports equipment manufacturing, high-precision machine manufacture, and the presence Of two universities are conducive to a healthy economic climate. On the other hand, the Muskegon industrial complex is dominated by durable goods types of manufacturing. In turn, the major firms are heavily dependent upon the transportation industry. In the minds of those interviewed there was little doubt of the fact that the Muskegon transportation industry manufacturers were among the first to reflect the impact of any fluctuations in the overall activity of the auto and truck manufacturing industry. They are not only the first reflectors of changes in activity, but also suffer the greatest magnitude of changes. This obviously creates a highly fluctuating employment situation. In addition to the instability noted in the Muskegon industrial complex, they experienced a much greater influx of workers during World War II and the Korean conflict than was true for Kalamazoo. This was the result of having types Of industry readily convertible to producing the heavy armor de- manded for war. Following a series of interviews with civic leaders, industrialists, and labor union Officials it soon became evident that the two areas were distinctly different with respect to the history of relationships between organized labor and industry management. While I was unable to obtain statistics 90 on the relative prOportions of the labor force which was organized in each community, there is little doubt that the prOportion is higher in Muskegon. For example, among the firms with 500 or more employees (each area has the same num- ber of such firms), 3 out of 10 firms in Kalamazoo were not represented by labor unions, while only 1 out of 10 was un- organized in Muskegon. If data were available, say on the man days of work lost due to labor-management relations, (and I was unable to discover such data) there seems to be little doubt that historically the Muskegon area has suffered relatively more than the Kalamazoo area from the economic impact of such work loss. A number of the respondents indicated that over time they felt this difference in labor-management relations had worked to the detriment of the overall economic expansion of the Muskegon area relative to the Kalamazoo area. This is, of course, a tentative hypothesis, validation of which would require more extensive and intensive inquiry than was possible for this study. Closely associated with the topic Of labor-management relations is the degree or sense of community responsibility exercised by various groups within the community. In Kalamazoo there is unmistakable evidence of a sense of community leader- ship and pride. Numerous organizations and individuals are engaged in community improvement projects. COOperation among group organizations is the usual pattern for this community. At least the history of the Muskegon area differs considerably 91 in these respects. However, there is evidence that the com- munity is beginning to coordinate their efforts. New groups are being formed for the specific purposes of improving the community, including creation of a more viable and stable economy for Muskegon. While I fully realize that a rigorous sociO-anthropologi- cal study Of these communities would be required to test my tentative findings, they are strengthened to some extent by the mere fact that such patterns became evident without the benefit of a highly formalized inquiry. In an attempt to probe more thoroughly into reasons for these differences in community responsibility, I combined the community leader interviews with study of historical material about the develOpment of these areas. At least one tentative hypothesis which may help to explain the differences in develOpment is the fact that Muskegon was originally a lumber mill and lumber shipping site. With the demise of the lumber industry it was necessary for the community to make a complete transition to other types of economic activity. The wealth of the community was concentrated in the hands of relatively few lumber baron families. Inde- pendence and a history Of extreme social status differences did not readily bend to community integration. It is only in recent years, one or two generations removed from the original wealth pockets, that community leadership has passed on tO a younger generation which is more aware of the need for coordination and COOperation among groups in order to stimulate the economy of the area. 92 An entirely different historical pattern typifies the early history of Kalamazoo. While paper processing formed the early core of the economy, diversification of industry also started early. Furthermore, Kalamazoo had the immeasurable benefit of one unusually progressive and community oriented business man, whose personal business success was shared with the community in innumerable ways. It is undoubtedly tenuous to attribute too much of the development pattern of a community to the impact of one man, however, it would be equally tenuous to ignore this impact. Farm-Nonfarm Labor Transfer A summary of the material presented in this chapter up to this point reveals that, based on the relative agricul- tural economies of the two counties, there is more incentive for Off-farm employment migration in Muskegon than in Kalamazoo County. However, comparisons of growth indicators, data on education, unemployment patterns, community solidarity, relative labor union strength, and the like, all point to expectations that the farm-nonfarm labor transfer market would be function- ing more effectively in Kalamazoo County. Definitive tests of this hypothesis are lacking in available secondary data. Nevertheless, available data on the historical pattern of change in total number of farms (or farmers) and on the Offefarm work patterns of farmers provides at least a tentative evaluation. During the span of years, 1939 to 1959, the decrease 93 in number of farm Operators (or farms) in the two counties was nearly equal, namely, 1301 in Kalamazoo and 1276 in Muskegon, Table 3. As a percent of total farm operators in 1939, however, the decrease in number of operators was greater in Muskegon County, 56 percent versus 95 percent in Kalamazoo County. With respect to decreases in number of farm Operators within the 1939-59 span of time, we note in Table 3 that the major difference between the two counties occurred in the 1939-99 period. During this period, the number of farm operators decreased only 7 percent in Kalamazoo County, but by 9 times this proportion, 28 percent, in Muskegon County. A reasonable explanation for this difference lies in the differ- ing types of industry and the advent of World War II. The demand for military hard goods resulted in a particularly strong, derived manpower demand in Muskegon, with its durable goods industry being easily converted to production of military hardware. During the other periods shown in Table 3, the dis- appear e of farm Operators was of similar relative magnitude the two counties. The second set of available empirical data pertinent for drawing inferences about the relative functioning of the nonfarm labor market is the change in patterns of Off-farm work, Table 9. It is first relevant to note that for each census year since 1939 a larger proportion of the farmers in Muskegon County have combined farm and Off-farm work. Further- more, a larger prOportion have worked 100 or more days per year Off the farm. 91+ TABLE 3.-—Disappearance of farm Operators (farms) from Kalamazoo and Muskegon Counties, Michigan, 1939 to 1959a Periods Decrease in Number of Farmggperators Kalamazoo *Muskegon County County Numberb Percent Change Numberb Percent Change Accumulative Decrease: 1939 to 1959 1,301 95 1,276 56 1999 to 1959 1,095 91 691 39 1999 to 1959 910 36 976 32 1959 to 1959 657 29 391 25 Period Decreases: 1939 to 1999 206 7 635 28 1999 to 1999 185 7 165 10 1999 to 1959 253 10 135 9 1959 to 1959 657 29 391 25 aBased on Agricultural Census data. In the census, number of farms and farm Operators are synonymous. bAdjusted for the change in definition of a farm in the 1959 Agricultural Census, i.e., decreases of 92 and 67 farms for Kalamazoo and Muskegon Counties, respectively. The adjusted number of farms in 1959 was 1,608 in Kalamazoo County and 1,001 in Muskegon County. 95 TABLE 9.-—Change in off-farm work patterns of farm Operators, Kalamazoo and Muskegon Counties, Michigan, 1939 to 1959a Item Kalamazoo Muskegon County County Percentb Farm Operators Working Off the Farm, Total: 1939 39 99 1999 37 50 1999 55 57 1959 60 65 1959 58 63 Farm Operators Working Off the Farm 100 Days or More: 1939 26 39 1999 33 92 1999 93 93 1959 98 55 1959 98 56 Other Income of Family Exceeding Value of Farm Products Sold: 1999 an 95 1959 91 93 1959 50 59 aBased on Agricultural Census data. bPercent of total farms. 96 Change in prOportion of farm families whose other than farm income exceeds their farm income, is shown in Table 9. Data for this variable are available for only the last three agricultural census years. In 1999 about the same proportion of farm families in each county received income from nonfarm sources in excess of farm sources. However, by 1959 the pro- portion of farm families in Muskegon County so classified exceeded those in Kalamazoo County, 59 and 50 percent respect- ively. At least some of this change in relationship may be attributed to additional nonfarm income due to members Of the family working off the farm. To this extent, the nonfarm labor market would appear to be functioning at least as effectively for non-Operator farm family members in Muskegon as in Kalamazoo. An analysis of average annual rates of change Of the movement of farmers, either out of farming completely or into multi-jobholding situations, reveals substantial overall varia- tion, as well as variation between Kalamazoo and Muskegon Counties, for the period 1939-59. During the early years Of World War II, 1939-99, the number of farms in Muskegon County decreased by an average annual rate of 5.58 percent, Table 5. Furthermore, there was an approximately equal rate in the number of farmers working off the farm, and little or no change in the proportion of total farmers who were multi- jobholders. Therefore, during this period the labor adjust- ment between the agricultural and nonagricultural sectors of Muskegon County was one of farmers shifting out of agriculture 97 TABLE 5.--Average annual rates of change in number of farm Operators and farm Operators working off the farm, Kalamazoo and Muskegon Counties, Michigan, 1939-1959 Rates of change in Rates of Change in pro- Period Absolute Numbers: a portion of total: and Farm Farm Opera-Farm Opera- Farm Opera- Farm Oper- County Opah tors work- tors work- tors work- ators work- amms ing off ing Off the ing off ing off the the farm farm 100 the farm farm 100 days armors days or more Percent 1939-99: Kal. CO. -l.92 -2.10 +3.07 -.90 +1.90 Musk. CO. -5.58 -5.18 -9.28 -.20 + .60 1999-99: Kal. CO. -l.37 +7.58 +9.58 +3.60 +2.00 Musk. CO. -2.01 + .91 -l.95 +1.90 + .20 1999-59: Kal. Co. -2.01 - .02 0 +1.00 +1.00 Musk. CO. -l.83 + .59 +3.56 +1.60 +2.90 1959-59:° Kal. CO. -5.80 -6.63 -3.19 ' - .90 0 Musk. CO. -5.08 -6.99 -5.99 - .90 + .20 1939-59:° Kal. Co. -2.92 - .92 - .12 + .95 +1.10 MUSkO COO -2080 -2037 -2006 + .70 + 085 aA negative Sign (-) signifies a decrease in the ab- solute number of farmers between the polar years and a positive sign (+) signifies an increase in the absolute number of farmers. bA negative sign (-) signifies a decrease in the relative number of farmers between the polar years and a positive sign (+) signifies an increase in the relative number of farmers. cAdjusted for the change in definition of a farm in the 1959 Agricultural Census, see Table 3 footnote. 98 completely. However, in Kalamazoo County the adjustment was typified by a relatively low annual rate of farm dis- appearance (1.92 percent) but a substantial increase in the number and proportion of farmers working off the farm 100 or more days per year. Essentially the same adjustment pattern continued in Kalamazoo County in the 1999-99 period. In Muskegon County we note a reduced annual rate of farm dis- appearance during 1999-99 and an absolute and relative in- crease in the number of multi-jobholders. During the 1999-59 period the Muskegon County adjust- ment pattern was one of a relatively low rate of farm dis- appearance, but a substantial increase in the number of farmers working 100 or more days off the farm, Table 5. Kalamazoo County displayed a relatively stable farm-nonfarm labor adjust- ment pattern during these years. However, again in the 1959-59 period the rate of annual reduction in number of total farms in both counties reached the World War II rate of over 5 per- cent per year. Also, as in Muskegon County during the early 1990's, both counties experienced a rapid shift of farmers out of farming completely, with little or no change in the proportion of farmers working Off the farm. One of the varia- bles which undoubtedly contributed to this adjustment pattern Of the 1959-59 period was the advent of the Social Security retirement plan being extended to farmers. Now, what inferences can be drawn from the data we have reviewed? Based on consideration of individual types of variables, such as education, unemployment patterns, etc., it seemed that the farm-nonfarm labor transfer mechanism "should" L19 be functioning more effectively in Kalamazoo County. Yet when we analyze the patterns of farm Operator disappearance and extent of involvement in nonfarm work in these two counties, there is no evidence to suggest that the expected market restrictions are indeed any more restrictive in one county than the other. This is not to suggest that we find perfect labor mobility, by any means, or that the demand-supply relationship for labor is at equilibrium as between the farm-nonfarm sectors. Rather, we are suggesting that on the basis of our analysis the hypothesized expectations must be rejected. The farm- nonfarm labor transfer market seems to be functioning equally well in each county in spite of some substantial differences in level of unemployment, rural farm-urban educational levels, labor union activity, etc. A possible explanation of this phenomenon is that in Muskegon County, the apparent disfavored county with respect to occupational mobility Opportunities for farmers, the farmers and the hard core of unemployed are non-competing groups. From my conversations with community leaders it became evident that in their Opinion much of the influx of labor during World War II was labor of an inferior quality in terms of education, skill, aptitude, and attitude. Also, the larger proportion Of nonwhites in Muskegon than Kalamazoo suggests that to the extent that dis- crimination exists on this basis it would mean farmers and non- whites were non-competing groups in the labor market.6 6I do not mean to suggest that discrimination exists in this labor market on the basis of color alone, for if it does I failed to discern it. However, to the extent that nonwhite is associated with educational attainment, for example, then dis- crimination on the basis of education has a greater impact on the nonwhite groups. CHAPTER IV HOW MANAGEMENT VIEWS FARMER EMPLOYEES Introduction Most of the literature on the movement of labor from farm to nonfarm employment approaches the phenomenon from one of two vieWpoints: (a) The agricultural implications, or (b) the aggregate nonfarm labor market implications. As briefly mentioned in the introductory chapter of this report, an integral part of this study was to determine the attitudes, policies, and experiences of employers relative to the employ- ment of farmers. This part of the inquiry is not designed to be in any sense a comprehensive analysis Of the demand for farm labor in the nonfarm labor market. Rather, it is an analysis of various factors which may have an impact on the competitive position of farmers in the nonfarm labor market. It is felt that previous work in this field differs with respect to the method Of Obtaining and analyses of the variables studied. It has the advantage of taking the inquiry directly to a group, i.e., industrial managers, who exercise substantial influence on the standards for competition among potential employees. 50 51 Interviews were conducted with the management of all the business firms in Kalamazoo and Muskegon Counties with a production worker payroll of 500 or more. In addition, the management of several firms outside the primary urban centers was interviewed. These firms had fewer than 500 employees, but were included in the survey because it was assumed, a priori, that they would have a higher proportion of multi-job holders on their payroll. Furthermore, I wanted to determine whether there were any discernible differences between the policies of the urban versus the rural employers with respect to hiring farmers. The firms studied ranged in size from nearly 5000 to under 200 employees, with a median of over 1000 employees per firm, Table 6. One out Of five production workers in these firms were women. Of course, this prOportion of females is smaller than that for the total labor force of these counties, with over one-third being women. This difference results from the fact that the studied firms are all industrial and only production workers are included in the employee count. The larger firms were selected for study because: (a) this enabled coverage of a maximum proposition of the nonfarm labor market at minimum cost, (b) by covering a major proportion of the nonfarm labor market and by concentrating on industrial firms it increased the probability of including a large propor- tion of the nonfarm work Opportunities for farmers, and (c) it was assumed that the major firms in the communities studied would be leaders in setting policies and practices as they may influence the farm-nonfarm labor transfer Opportunities. The 52 TABLE 6.--Frequency distribution of number of employees, by sex, for a sample of industrial firms, Muskegon and Kalamazoo Counties, Michigan, 1961 INumber Of employees 5 Firm Codea Male Female TOtaI A 9150 600 9750 B 2250 1150 3900 C 2350 650 3000 D 2300 300 2600 E 2025 175 2200 F 1739 318 2057 G 1300 200 1500 H 1070 230 1300 O 700 900 1100 P 969 125 1099 Q 1015 69 1080 R 779 162 936 S 765 109 869 T 265 515 780 U 500 70 570 V 275 275 550 W 390 179 519 X 367 33 900 Y 200 0 200 Z 155 12 167 Total 23:5I0 5:562 297072 Percent 81 19 100 aThe firms will be identified by a code throughout the report to avoid revealing information given in confidence. bExcludes staff personnel (management and Office). 53 employees of the firms surveyed comprise 22 percent of the total labor force in the two counties, Table 7. More im- portantly, the survey encompassed 58 percent of the employed manufacturing labor force. In the following paragraphs we will discuss the policies, practices and experiences of nonfarm employers as they relate to the employment of farm people. TABLE 7.--The labor force represented in the industry survey, compared with the county aggregates, Muskegon and Kalamazoo Counties, Michigan, June, 1961 Number of Employees Proportion the Item Muskegon and Industry Industry Survey Kalamazoo Surveyb Is Of Totals Countiesa for the Counties Number Percent Industry Surveyb ."' 29,072 -- Total labor force 129,900 --- 22 Total nonfarm labor force 125,700 --- 23 Nonfarm labor force, employed 116,700 --- 25 Manufacturing labor force, employed 50,200 --- 58 aSource: Michigan Labor Market, M.E.S.C., July, 1951, p. 5. bData from 20 industrial firms surveyed in Muskegon in Kalamazoo Counties. 59 Policies All the firms reported having some employees with farm batfl