70-9595 MASON, John Dancer, 1941THE AFTERMATH OF THE BRACERO: A STUDY OF THE ECONOMIC IMPACT ON THE AGRICULTURAL HIRED LABOR MARKET OF MICHIGAN FROM THE TERMINATION OF PUBLIC LAW 78. Michigan State University, Ph.D., 1969 Economics, general University Microfilms, Inc., Ann Arbor, Michigan © _ John Dancer Mason 1970 ALL RIGHTS RESERVED THE AFTERMATH OF THE BRACERO: A STUDY OF THE ECONOMIC IMPACT ON THE AGRICULTURAL HIRED LABOR MARKET OF MICHIGAN FROM THE TERMINATION OF PUBLIC LAW 78 By John Dancer MaBon A THESIS Submitted to Michigan State University In partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Economics 1969 ABSTRACT THE AFTERMATH OF THE BRACERO: A STUDY OF THE ECONOMIC IMPACT ON THE AGRICULTURAL HIRED LABOR MARKET OF MICHIGAN FROM THE TERMINATION OF PUBLIC LAW 78 By John Dancer Mason As a result of the termination of Public Law 78 In 1964, Michigan agriculture failed to receive Mexican national workers (braceros) In the following year: the first year since the early 1940's that braceros were not used in the state. In 1964, the foreign workers were used primarily in the pickle industry of Michigan, con­ stituting roughly 80 per cent (12,800 workers) of the peak employment in pickles. Before 1965, the pickle Industry argued that termination of the bracero program would seriously affect the Industry, because domestic migrants simply would not pick pickles ("stoop labor" work). Consequently, Increased wage offers would not elicit a very large supply response from domestic migrants, and the end result would be acreage declines and other adverse adjustments. In addition, several previous studies of the seasonal labor market for agriculture, and John Dancer Mason particularly the seasonal labor market for Michigan pickles,1 tended to support the claims of the industry. The thesis examines the "stoop labor" hypothesis that the supply response of domestic migrants to increased wages would be inelastic, by examining three questions: What was the wage adjustment for all seasonal workers in Michigan agriculture following 196*1? What was the supply response of domestics to wage adjustments in the pickle industry? To what extent did acreage declines and capital substitution occur in the Michigan pickle industry as a result of the termination of the bracero program? A detailed microeconomic study of the seasonal labor market for Michigan agriculture was conducted, Involving: interviews with agriculture and labor offi­ cials, growers, and pickle industry personnel; a mailed questionnaire to pickle growers in Michigan; examination of data collected by other agencies. On the basis of the study the stoop labor hypothesis was not supported. The major findings of the dissertation are: (1) From 1964 to 1965* a statistically significant increase in the wages of all hired workers in Michigan « ^Lloyd Gallardo, "An Evaluation of U.S. Department of Labor Policy Regarding Wages Paid Mexican Nationals: Michigan Pickles, A Case Study" (unpublished Ph.D. dissertation, University of California, Berkeley, 1962), 76. John Dancer Mason agriculture was found, and there were noticeable Increases in non-wage provisions of employment. (2) The supply response of domestic migrants to higher wage offers in the pickle industry was not clearly inelastic as the hypothesis suggested. An identification problem was encountered in measuring the appropriate supply curve of domestic agricultural labor, compounded by wage and employment data which measured the market "between" seasons, when the needed measurement was "within" an ongoing season. An attempt was made to resolve this problem, and the indications were that the supply curve may have been elastic. Both of the above findings suggest that the pickle labor market was not segmented from other agricultural labor markets in the state and that domestic migrants would do stoop labor work. (3) Acreage declined slightly in 1965 and 1966, but in 1967 the harvested acreage for the state was clearly as high as for years prior to 1965. The increase in 1967 however, was probably due to the increased use of a mechanical pickle harvester. The industry doubled its use of the harvester each year between 1964 and 1967, as measured by acreage covered in the state. The thesis examines in detail the agricultural labor market in Michigan, particularly with respect to the nature of wage changes and the effect of fixed wages. John Dancer Mason In doing this a considerable amount of institutional information about this labor market is developed. To Sharon and Matthew (who were there at the end of a long day In the library) ii ACKNOWLEDGMENTS A work like- this obviously develops from the efforts of many people, though none but the au t h o r bear the responsibility for any misconceptions and errors. I would like to thank my thesis committee and p a r ­ ticularly my chairman, Jack Stieber, for their patient willingness to read over several drafts and m a k e detailed comments. In addition I greatly appreciate the coopera­ tion received from the federal and Michigan labor departments in ma k i n g information available to me and warmly chatting with me. I think particularly of William Haltlgan and Stan Knebel in Washington, and the several Crop Area Supervisors in Michigan. Noel Stuckman of the Michigan Fa rm Bureau was Instrumental in he lpi ng establish the methodology. Several Michigan employers of migrant labor were very kind in making time available to me, including my father, who not only provided me with a great deal of Information over the years, but also taught me by example to love those who were less for­ tunate, as he did his many workers. Finally, I want to thank my wife, Sharon, both for her help in the research and preparation of the thesis, and for her willingness to support me emotionally throughout the many l ong hours involved. iii The material in this project was prepared under a Grant from the Manpower Administrator, U. S. Department of Labor, under the authority of Title I of the Manpower Development and Training Act of 1962. Researchers under­ taking such projects under Government sponsorship are encouraged to express freely their professional Judgment. Therefore, points of view or opinions stated in this document do not necessarily represent the official position or policy of the Department of Labor. iv TABLE OP CONTENTS DEDICATION . . , ACKNOWLEDGMENTS . , LIST OP TABLES . , LIST OP FIGURES . , Chapter I. INTRODUCTION The Problem ............. Hypothesis . . . . Methodology . . . . The Problem in Perspective Supply Problem . • Poverty Problem . II. MICHIGAN AGRICULTURE: GROUND INSTITUTIONAL BACK­ - Characteristics of Michigan Agriculture Crops of the State ................ Seasonal Employment ............. Work Characteristics ............. Migrant Wage Package . . . . Worker Costs: Bracero vs. Domestic . Contracting Expense ............. Housing Expense ................... Employment Expense ................ Productivity ................... . III. LITERATURE DISCUSSION AND THEORETICAL COMMENTS ............................ General Nature of the Market Demand Considerations . Supply Considerations Wage Determination Theoretical Overview v Page Chapter Higgling in the M a r k e t ................... Imperfections in the Market . . . . . . Unilateral Decision Making . . . . . . Bracero Program ............................. Role of the Farm Labor Service . . . . . IV. ANALYSIS OF H Y P O T H E S I S ...................... 78 62 84 88 92 94 Exogenous Factors ............................. 96 W e a t h e r ................... 96 Legislative Changes . . . . . . . . 100 Examination of the Wage C h a n g e ................ 103 Expected Impacts on Wage R a t e s ................ 103 Overall Wage D a t a ............................. 106 Specific Crop Wage D a t a ....................... Ill Impacts on Non-Wage Provisions ............. 118 Data for All C r o p s ............................. 119 Questionnaire D a t a ............... 124 C o n c l u s i o n ....................................129 Supply Response ............................. 129 Market A n a l y s i s ............................ 133 Elasticity Measurement: 1964-1965 • • . 137 Elasticity Measurement: 1965-1966 . . , 143 C o n c l u s i o n s ....................................146 V. ACREAGE AND CAPITAL ADJUSTMENTS ............. 148 Acreage Changes ............................. 151 Acreage Changes within Michigan . . . . 151 Interstate Relocation of Acreage . . . . 153 C o n c l u s i o n s ....................................159 Capital Substitution Changes ............. . 160 Impact on Pickle Prices ...................... 165 VI. SUMMARY AND C O N C L U S I O N S ................... . 169 Some Implications ............... 172 Labor Supply P r o b l e m .......................... 173 Poverty Problem ............................. 177 A P P E N D I C E S ............................................. 181 SOURCES CONSULTED ................................... vi 243 LIST OP TABLES Table 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Page Peak employment of foreign workers In U.S. . and Michigan agriculture,1941-1967 . . . . 2 Michigan's rank among all states In acreage and production for selected fruit and vegetable crops, 1966 16 Peak employment and average May-October employ­ ment as recorded by the U.S. Department of Agriculture and the Michigan Farm Labor Service, 1959-1967 ............................. 19 Total U.S. hired agricultural employment and percentage comparisons with Michigan hired agri­ cultural employment, 1950-1966 ................ 21 Peak employment in selected Michigan crops, 1959-1967 .......................... 22 Percentage of interstate workers in Michigan agriculture from selected states,1961-1967 . 25 Annual production during 1963-1967 of selected Michigan crops, as a percentage of the five year average production, with the given year as the terminal year of the five year average . 97 Estimated average hourly wage rates for agri­ cultural workers in Michigan, 1950-1967 • . 107 Estimated average hourly wage rates in selected crops of Michigan agriculture, 1963-1967 . . . . . . Estimated wage rates for pickle harvest work in Michigan, 1964-1967* taken from grower q u e s t i o n n a i r e ......................... .... . The number of "yes" responses to non-wage payment methods on the pickle grower questionh a i r e ................................ vii 1 114 Page Regional responses to questions on non-wage ................ payment methods ............. 127 Estimated peak employment of domestic pickle workers In Michigan and estimated average hourly earnings of all pickle workers in Michigan, 1964-1967 ......................... 138 Matrix of possible employment responses to con­ ditions of supply and demand elasticity and inelasticity, in Michigan pickles '............. 150 Total pickle production of the U.S., Michigan, and regional state blockings, and Michigan and regional state blockings as a per cent of U.S. production, 1950-1967 ......................... 154 Number of users of weed control bhemical and;’ irrigation in Michigan pickles, 1964-1967 163 Estimated peak employment of foreign workers in U.S. agriculture by state, 1967 • 174 Questionnaire planted and harvested acreages and the percentages these comprise of the state amounts, 1964-1967 ...................... 216 Questionnaire yield per acre, with standard deviations, compared with USDA figures, 19641967 ................................. .. . 217 Seasonal farm employment estimates for Michigan agriculture, taken from PLS and USDA sources, 1966-1967 ...................................... 226 Measures of the variables used in the regres­ sion analysis of five independent variables on wages, in Michigan agriculture, 1951-1966 239 The partial correlation coefficients of the variables displayed in the multiple regression 240 vili LIST OP FIGURES Figure 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Page Demand for and supply of seasonal workers to stoop labor cropsIn M i c h i g a n ................. 5 Concentration of migrant worker employment in Michigan by counties, I960 and 1965 . . . . 18 Bi-monthly employment in selected Michigan crops during the 1967 migrant season . . . 23 The July-October average wage rates for hired agricultural workers in Michigan, 1950-1967 . 37 Hypothetical labor demand curve for harvest l a b o r ......................... .56 Hypothetical labor‘supply curve for harvest l a b o r ............................ 64 Demand-supply diagram of the harvest labor m a r k e t ......................... 71 Short run and long run labor demand curves for harvest labor ................................ 75 Hypothetical supply-demand interaction in the hired labor market of agriculture . . . . 86 Hypothetical supply-demand interaction in the hired labor market of agriculture showing a shift in s u p p l y ............................. 89 Demand for and supply of seasonal workers in Michigan agriculture .......................... 95 Estimated average hourly wage rates for agri­ cultural workers in Michigan, 1950-1967 . . 108 Hours of work per day and per week for hired workers in Michigan, 1950-1961 and 1965-1967 . 122 ix Page Figure 14. Demand for and supply of pickle workers in the seasonal labor market of Michigan agri­ culture, 1964 134 15. Demand for and supply of pickle workers in 1965 considering possible changes in demand and s u p p l y .......................................136 16. Demand for and supply of seasonal workers in Michigan pickles for 1965* considering supply curve shifts ....................... l4l 17. Pickle production in the U.S., Michigan, and regional areas, in absolute and percentage terms, 1950-1967 155 Retail prices of selected pickle products in the U.S. and Detroit marketing area, 1953-1967 166 Pickle Grower Qeustionnalre 227 18. 19. x ., CHAPTER I INTRODUCTION The Problem For most years since the outbreak of the Second World War, Michigan agriculture has had access to foreign workers. As Table 1 Indicates*, foreign workers were imported into the state in 19^3 and continued to be imported through 1964. The number of foreigners dwindled in the late 19^0's, since the regulations then allowing importation were extended war-time regulations and pro-1 vided no sound basis for a peacetime program of supple­ mental labor. In 1951* the Congress enacted Public Law 78 (PL-78) which provided for the importation of foreign workers from Mexico (braceros), (1) whenever domestic agricultural workers could not be obtained, and (2) when the use of foreign workers would not "adversely affect" the wages and working conditions of domestic workers.1 ^ c t of July 12, 1951, ch. 223, 65 Stat. 119, "Title V— Agricultural Workers," an amendment to the Agricultural Act of 19^9. The seasonally hired labor force of agriculture is composed of local and migrant workers, whether intrastate, interstate, or foreign. Most seasonally hired workers in Michigan agriculture are migrants. Unless otherwise noted, the term migrants will mean all seasonally hired workers, and the labor market, however named, will be the seasonal labor market of agriculture. 1 2 TABLE 1 .— Peak employment of foreign workers in U.S. and Michigan agriculture, 1942-67. Year U.S. Peak# 1942 4,200 1943 36,289 1944 Mich. Peak## Year U.S. Peak Mich. Peak 1955 240,841 8,398 3,838 1956 290,156 10,851 66,572 8,549 1957 272,435 14,372 19^5 94,210 10,031 1958 284,835 9,549 1946 45,354 4,359 1959 308,168 11,046 1947 96,840 1,970 I960 246,675 11,234 1948 40,000 1,247 1961 220,934 14,350 1949 85,600 224 1962 127,032 12,712 1950 89,100 200 1963 105,454 13,500 1951 130,104 2,494 1964 92,784 12,843 1952 139,437 4,587 1965 23,698 — 1953 171,128 8,880 1966 12,169 — 1954 202,626 6,300 1967 12,531 — — Source: USDL, Bureau of Employment Security, Farm Labor Developments (February, 1968),lij.* Michigan Farm Labor Service, Michigan Farm Labor Report: Post-SeaBon, annual Issues. This law gave rise to consistently larger numbers of foreign workers in Michigan agriculture than was true before its enactment. During these years two Michigan crops made the greatest use of braceros, the early 1950's, sugar beets and pickles. tn sugar beet companies imported bracJros in the late spring for w eeding and thinning and used t h e m again in the fall for harvesting. Between these two periods the pickle industry used the m for weeding and harvesting. Selected other crops made use of the foreigners, but the number of workers involved was very small. Into the 1960's the sugar beet industry lessJned its use of the braceros considerably. Mechanical har­ vesting operations had been implemented and much of the pre-harvest weeding and thinning was done either by domestic migrants or chemicals. braceros were used in pickles. Thus by 1964 most of the In 1964, approximately 80 per cent of the pickling cucumber harvest labor force were braceros, and this approximated 20 per cent of the August seasonal labor force for all crops in Mic hlg aJ. 1 In December of 1964, the Congress allowed PL-78 to expire, having extended it-six times previously. Roughly at the same time the Congress amended Public Law 4l4 1 These percentages are derived from estimates of seasonal employment made by the Michigan F a r m Labor Service, and reported in Michigan Fa rm Labor R e p o r t ; Post Season. 1964 (Detroit, Michigan: 1965). (PL-414) to allow for Importation of foreign workers,1 but admonished the Secretary of Labor to enforce the p provisions of this law strictly. Subsequent to 1964 Michigan employers failed to qualify for Importation of foreign workers under PL-414, and the flow of braceros to Michigan ceased. These events of the 1964-65 period provided the setting for an adjustment In the seasonal labor market of Michigan agriculture. As a result of the braceros1 departure considerable pressure was applied on selected employers to obtain domestic replacements. This pressure was heaviest on the pickle industry but was felt by employers in other crops as well. The adjustment of this labor market allows the testing of a commonly held hypothesis concerning the supply of domestic workers to agriculture. Hypothesis Employers of seasonal, agricultural labor have held a conception of the supply curve of domestic labor which ■^The Immigration and Nationality Act of 1952, 8 U.S.C. sec. 214(c) (1952), as amended by Public Law 89-236 (1965). Throughout the life of PL-78 this law was used to allow importation of workers from Canada, the British West Indies, and selected other countries, but these numbers were dwarfed by the large number of nationals from Mexico entering under PL-7 8 . 2 See "Statement by Secretary of Labor W. Willard Wirtz on the Termination of Public Law 78," released as U.S. Department of Labor NEWS, USDL— 6442, December 19. 1964. can be described as the "stoop labor" hypothesis. This hypothesis states that certain agricultural tasks (stoop labor) are so undesireable that domestic migrants will not want to do them regardless of remuneration. Also, the labor force of domestic workers willing to do seasonal agricultural work is perceived as a clearly defined amount, set apart from other segments of the general labor force by sociological and cultural factors. Consequently, a wage increase in stoop labor tasks would not attract outside domestic workers. Theoretically, this hypothesis suggests that the supply response of domestic workers to a wage increase in these tasks would be inelastic— curve SS on Figure 1. wage Employment Fig. 1.— Demand for and supply of seasonal workers to stoop labor cropB in Michigan. 6 Not only Is this view of the supply curve held by employers, but It has been suggested by various studies of the harvest labor market, and particularly by studies of the harvest labor market for Michigan pickles.1 On Figure 1, DD is the demand curve of a repre­ sentative employer (or area of the country) for stoop labor, and SS is the supply curve of domestic labor willing to work in the stoop labor task. The effect of the bracero program was to add a segment (aS1) to the supply curve at the minimum contract price, W q . With braceros available the ruling wage rate would be W q . If braceros were denied the employer (or region), wages would rise to w^ in order to attract domestic workers. This wage rate, w 1 , would be sufficiently high to create considerable hardship on growers. Some employers would plow the field up rather than pay w^. In this case their demand (DfD) would become highly elastic Just above w Q . More likely, most growers would not plant the crop again in the following year, or mechanize, such that in the long run, DD would shift back much closer to the vertical axis. In the period following 1964 in Michigan, most of these conditions were expected by the pickle industry, and also by selected other stoop labor crops. 1 For an expression of the views of both employers and students of the market, as well as a more elaborate theoretical examination of the hypothesis, see Chapter III below, under "Supply Considerations." If the stoop labor hypothesis were true, then in the years following 1964 in Michigan agriculture, the wages to domestic pickle workers would rise significantly (Wq to w 1 ),1 and the supply response of domestic workers to these higher wages would be limited (qQ to q ^ : surely less than an increase proportionate to the rise in wages. Since only very few domestic migrants would be attracted into the pickle fields, there.should be little "spill-over" effect of the reduced pickle labor force on other crops, and thus wages in other crops would not be affected very much. As a result of the higher wages in pickles there probably would be a serious reduc­ tion in pickle acreage, or a rapid substitution of capital for labor. If the stoop labor hypothesis failed to hold then the appropriate supply curve of domestic labor to pickles would be more elastic and the supply response to a wage increase would be much greater. Similarly, the effect of the bracero pull-out on other crops would be greater, since the pickle industry would be drawing workers from these crops and forcing wages in the competing crops upward. Finally, the acreage reduction and/or capital ■'"If there were not a significant wage increase the conclusion would follow that the presence of braceros exercised only a de minimus effect upon total supply and the supply curve of domestic workers was far more elastic than SS suggests, approaching SS*. 8 substitution in pickles from the higher costs would be less if the hypothesis failed to hold. Chapters IV and V below take up the analysis of the hypothesis directly. Chapter II lays an institutional background for Michigan agriculture and Chapter III discusses the seasonal labor market theoretically in the context of the literature. Appendix I provides an insti­ tutional view of the production function in agriculture, as it gives rise to the demand for seasonal labor, with special consideration paid to pickles. Methodology* To evaluate these questions a detailed microeconomic study was conducted. Information were used: Four major sources of (1) Interviews with individuals Involved in the agricultural labor market of Michigan; (2) written reports on the nature of the labor market and the adjustment process; (3) quantitative data on wages, employment, non-wage provisions, and other per­ tinent variables collected by several agencies; and (4) data generated from a questionnaire used in the research. The first two sources of information, interviews and written reports, contain bias regardless of the con­ trol techniques; the only recourse is to identify the ___________ I__________ ^Appendix II discusses data sources and Includes a detailed account of the methodB used, some Idea as to the rationale for these methods, and possible problems with the data. 9 bias. Interviews were conducted in Michigan with employers of agricultural labor, employment service personnel, agricultural extension service personnel and selected pickle processing company personnel. Data relevant to this labor market are collected by two governmental agencies: (1) the Farm Labor Service, a branch of the Bureau of Employment Security, U.S. Department of Labor, and (2) the Statistical Reporting Service of the U.S. Department of Agriculture. Appendix II contains a discussion of the procedures used in obtaining these data and some indication as to their reliability. To provide information on the Michigan pickle industry for years since 1963, a questionnaire was designed and mailed to pickle growers throughout the state. As discussed in Appendix II, approximately twenty per cent of the state's pickle acreage in 1967 was represented in the responses to the questionnaire; and the responses seemed to be biased towards larger growers. The Problem in Perspective The examination of the adjustment of Michigan's agricultural labor market provides insight into two traditionally conflicting public policy issues: how to supply sufficient labor to meet a highly (1) 10 seasonal demand In America's agriculture and assure an adequate food supply, and (2) how to alleviate the poverty among large numbers of American migrants. These issues, both parts of an overall manpower policy, will be considered in turn. Supply Problem Many industries are affected by seasonality of labor demand and most have been able to control it. agriculture, however, For the combination of an acute seasonal labor need and a highly competitive industry structure seems to present a special problem. The peculiar biology of plants maturing and ripening as they do, and the continued reliance of the production process upon weather, combine to create short periods of time, usually at h a r v e s t , when large numbers of hand laborers are needed. The danger of perishability, either from spoilage of the crop in the field or loss of market va lue ,1 makes the seasonal requirements even more pressing. 2 Technological advances affecting both the pre­ harvest and harvest periods have lessened considerably R e f e r e n c e is again made to Appendix I for a dis­ cussion of these terms and other institutional background, 2 The forms of this technological change are diverse. Mechanically new techniques have been devised, and in conjunction with this new plants have been developed, new weed, disease, and insect sprays adapted, and new ecological methods used. The inter-working of all these forces can be seen vividly in the pickling cucumber industry (see Appendix I). the large seasonal labor need of the past, and this force appears to be the sole salvation for the future. Crops grown to be processed, for example frozen straw­ berries, onions in Campbell's soup, or cherries in a can, thus far have been most amenable to mechanization. is so because the quality This (or outward appearance) of the fruit is not of crucial importance and mechanical h arvest­ ing often bruises the surface of the fruit. However, the harvesting of crops to be sold fresh, without any processing other than cleaning or packaging, has proven particularly difficult to mechanize. On the one hand the market is reluctant to accept damaged fruit; in addition, damaged fruit, unless quickly treated (processed), will spoil. Thus, the nee d persists for relatively large numbers of workers for short periods to harvest these crops. The long run trend towards increasing far m size seems to affect seasonality in diverse ways. Larger farms, many specializing in one or a few crops, have intensified seasonal Jabor needs by greatly enlarging the acreage of labor-using crops in specific areas. At the same time these farms can afford economies of scale to make use of all available mechanical and technological techniques, thus red ucing seasonal labor demand from what would exist if the same acreage were grown on a number of smaller farms. An uneven rate of technological adaptation in different crops has created a heightened situation of structural imbalance in this labor market. At one time workers in Michigan could arrive in the spring and start work in strawberries, move into sugar beets and pickles, then to cherries, back to pickles, to tomatoes and potatoes, and finally to apples and then sugar beets again.. Interspersed throughout these major crops were numerous other work opportunities: asparagus early, raspberries and blueberries through the heat of the summer, and onions and other small labor-using crops in the late summer and early fall. beet work had dwindled was nonexistent. By 1968, early sugar considerably and late beet work Blueberries and processed cherries were becoming increasingly mechanized. The processed tomato harvest promised to become mechanical by the 1970’s, onions had been since about 1963* and almost all potatoes were dug mechanically. This presented a problem to workers, as will be explained below, but it also confronted the growers of certain crops with the problem of obtaining labor for only short periods, a costly proposition when workers had to be transported both to and from the farm and their place of residence, and provided housing while in Michigan. 13 Poverty Problem The other aide of the growers' labor supply problem Is the workers' problem of finding sufficient work. In an appallingly real sense the majority of the workers are caught between two alternatives, neither of which lends much hope. As the labor market tightens and wages rise, growers can choose the alternative of sub­ stitution— substitution of non-labor inputs for labor Inputs In the production of certain crops, and substitu­ tion of alternative.uses of land for high labor-using crops. The empirical result of these retaliatory responses to wage Increases has been reductions In demand roughly matching the reductions in labor supply.1 workers' alternatives are more bleak. The On the one hand, at the low wage levels of the past, is an existence of partial employment and unemployment reinforcing itself in what has been called a "culture of poverty." On the other hand as wages Increase, which brings relief to some employed workers, the reduction in the number of workers demanded pushes others into heightened unem­ ployment, a situation merely extending the former alternative. 1See: Edward G. Schuh, "The Long Run Equilibrium in the Hired Farm Labor Force: History and Implications," Journal of Farm Economics. 43 (December, 1961), 1338; Edward G. Schuh and Edward W. Tyrchniewicz, "Behavioral Equations and Equilibrium in the Agricultural Labor Market." Journal of Farm Economics, 48 (December, 1966), 1222 . 14 The dangers for workers are not just low wages, but a far more complex set of employment practices, all working to reduce their annual income and heighten work insecurity. As the seasonality of demand shrinks in terms of duration of employment, though perhaps not in peak intensity, gaps in the work schedule develop which cut into a continuous work pattern and reduce annual earnings. Irregular hours of employment have always plagued this labor market. Growers often are caught in the vices of weather and an oligopsonistic buyer market, which creates and destroys the demand for h a r ­ vested crops without warning. This feeds back to the workers in bits and pieces of work. Probably in no other sector of the general labor market is the security of continuous employment so lacking as in the agricul­ tural labor market. CHAPTER II MICHIGAN AGRICULTURE: INSTITUTIONAL BACKGROUND Characteristics of Michigan Agriculture'*' Crops of the State ‘Michigan is one of those unique states known pri­ marily for some feature other than agriculture but possessing a relatively large agricultural sector. For many years in the 1950's and 1960's, Michigan used more interstate migrants than all other states, though falling behind such states as California and Texas in total migrant employment. The location of the state, just east of Lake Michigan makes it climatically a favorable fruit­ growing area. Several factors have contributed to make Michigan a large producer of other crops— proximity to The following description of Michigan agriculture is not meant to be exhaustive. Other studies with greater depth are: Joachim G. Elterich, Glenn Johnson, and David Call, Perspective on Michigan's Farm Labor Problems, Agricultural Experiment Station, Michigan State University, 1963; Project '80: Rural Michigan Now and in 1980. Research Report, Agricultural Experiment Station, Michigan State University, 1966, 15 16 population centers, favorable land conditions, and historical development.1 Table 2 ranks selected fruit and vegetable crops among states on the basis of acreage and production in 1966. Characteristic of most of the crops on the table is their continued reliance upon seasonal labor for harvesting. TABLE 2.— Michigan’s rank among all states in acreage and production for selected fruit and vegetable crops, 1966. Acreage Rank Crop All States Sugar Beets 5 — Apples — Peaches — Grapes — Cherries, sweet — Cherries, tart Asparagus Cucumbers (pickles) 2 Onions it 2 Strawberries 12 Tomatoes, proc. Source: Seasonal Group _ — — -■ — — — 3 2 — Production Rank All States 7 3 8 it it 1 it 1 5 it 10 Seasonal Group _ — — 2 - it 3 3 Michigan Dept, of Agriculture, Michigan Agri­ cultural Statistics. 1967. An example apropos to this thesis is pickles. The industry developed in the state on a large scale in the early 19501s . The pickle can be grown on almost any high ground, but the climate of Michigan with cooler evenings turns out a firmer pickle that processes better. Also, Michigan State University was active in developing plant varieties which grow well in Michigan soil. The previous location of the sugar beet industry in Michigan provided a ready-made labor force. And earlier, with less effi­ cient transportation systems, location near the market favored Michigan. Growers who use seasonal labor are scattered throughout the bottom half of the lower peninsula of the state, and in selected areas above this line, notably along the western coast of the state up to the Grand Traverse Bay area and in the Alpena region on the upper eastern coast. In the lower portion they are concentrated along the western coast of the state with the densest con­ centration in the southwestern corner. The fruit farms are located mostly throughout this region. There are some strawberries grown in the Alpena and thumb areas, and apples are grown throughout the state. A band run­ ning across the middle of the lower peninsula contains numerous employers of seasonal labor, mostly pickle, potato, and sugar beet growers. Tomatoes are found along the southern edge of the state. Figure 2 shows the areas of migrant worker employment for i960 and 1965, and a comparison of the two years gives some idea of the shift in areas of employment. As can be seen, a more concentrated pattern of employment seems to be emerging in 1965* converging along the western coast and in a band across the center of the state. Seasonal Employment Precise data on the total number of seasonal workers in Michigan agriculture are not available, but can be estimated from two sources. Table 3 presents employment figures as recorded by the Farm Labor Service PEAK SEASONAL WORKERS IN COUNTY C D 00 ° - 10° E v 73 100-500 1*W»| 500-3,000 m u 3,000-10,000 10,000 or more I960 1965 Fig. 2.— Concentration of migrant worker employment in Michigan by counties, I960 and 1965Source: U. S. Department of Labor and U. S. Department of HEW, Domestic Agricultural Migrants in the U. S., Public' Health Service Publication No. 540, revised I960 and revised 1965* 19 TABLE 3.— Peak employment and average May-October employ­ ment as recorded by the U. S. Department of Agriculture and the Michigan Farm Labor Service, 1950-67. U.S. Dept. of Agriculture* Year 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 I960 1961 1962 1963 1964 1965 1966 1967 Peak Empl . May-Oct. Empl. 94,000 93,000 96,000 92,000 81,000 79,000 78,000 85,000 81,000 80,000 75,000 79,000 71,000 76,000 80,000 59,000 54,000 46,000 67,300 67,000 68,000 61,800 62,000 60,500 56,500 59,200 60,300 60,500 57,500 58,700 55,200 59,000 53,000 43,300 38,700 36,700 Mich. Farm Labor Service ** Peak Empl. May-Oct. Empl. 56,900 81,307 95,798 72,433 66,580 73,881 >4,001 74,228 82,479 86,580 83,989 91,584 97,665 83,447 93,384 70,688 67,635 70,439 32,056 44,500 54,105 45,460 42,918 42,759 46,723 50,085 48,700 48,369 48,500 43,498 45,357 38,869 42,985 40,107 33,811 40,167 n Source: Data are collected for the last week of each month and recorded In Farm Labor, USDA, Statistical Reporting Service, selected issues. **Data are esti­ mated on the 15th of each month, and recorded in Michigan Farm Labor Report, Post-Season, annual issues. Note: As can be seen, for the 1950’s the USDA estimates are larger than those of the FLS, while in the 1960’s the reverse is true. Undoubtedly this is due to the popula­ tion which the USDA estimates. This population includes all hired workers, not Just seasonal workers. -Thus, as. the secular decrease in the number of farms took place over this seventeen year period, the number of nonseasonal workers declined, shrinking the estimate. 20 of Michigan, and the U.S. Department of Agriculture's Statistical Reporting Service. The Farm Labor Service (FLS) estimates are for seasonal employment only, while the Department of Agriculture (USDA) estimates are for all hired workers in Michigan agriculture. The FLS data probably overstate peak employment during the I960*s, but are considered reliable in terms of May- October average employment, the period of greatest migrant use. The USDA data probably understate peak employment but are considered more reliable than the other estimates in terms of trends, even though they include all hired workers and not just seasonally employed workers. See Appendix II for a discussion of the dif­ ferences in the estimates. As the table shows, there was a fairly steady annual decline from 1950 through 1956 in both peak employ­ ment and average May-October employment. From 1956 through 1964 there was a period of fluctuation with a mild downward tendency. Since 1964 employment has dropped off considerably. These figures for Michigan can be compared with data on total U.S. agricultural employment— see Table 4. The percentage figures in this table provide some com­ parative perspective, however they must be viewed with caution since the factors which determine total U.S. employment can differ from those determining Michigan 21 employment. For example, bad weather one year In Michigan may not be matched by similar weather elsewhere, and this could result in a lower percentage figure. The general indication appears to be that Michigan employment, both its peak intensity and May-October average, is falling off slightly relative to total U.S. employment. TABLE 4.— Total U.S. hired agricultural employment and ■ percentage comparisons with Michigan hired agricultural employment, 1950-66. Michigan Employment as % of U.S.*,** Year U.S. Employment (000)* 1950 1951 1952 4,342 3,274 2,980 2 .163S 2.84 3.22 1954 1956 1957 1958 1959 I960 1961 1962 1963 1964 1965 1966 3,009 3,575 3,962 4,212 3,577 3,693 3,488 3,622 3,597 3,370 3,128 2,763 2.69 2.18 2.14 1.92 2.23 2.03 2,26 1.96 2.11 2.37 1.88 1.95 Source: Mich. Peak May-Oct. Av. 1 .5456 2.04 2.28 2.06 1.58 1.49 1.43 1.69 1.55 1.68 1.52 1.64 1.57 1.38 1. 40 *U.S. Dept, of Agriculture, The Hired Farm Working Force. **U.S. Dept, of Agriculture, Farm Labor. Peak employment data for the main seasonal laborusing crops in Michigan are presented in Table 5 for 22 recent years. The vertical order of the crops is roughly that of the progression of demand periods through the migrant season. Employment in onions dropped off so much by 1967 that the Farm Labor Service discontinued listing it separately. Cherry employment also was down in 1967* reflecting a poor yield and increased use of cherry shakers. The highest wage bill would be found in pickles due to the length of the harvest season and a large pre-harvest labor demand. TABLE 5.— Peak employment in selected Michigan crops, 1959-67. Crop Asparagus Strawberries Sugar Beets Cherries Blueberries Pickles Raspberries Tomatoes Peaches Onions Grapes Potatoes Apples Source: 1967 1966 1965 1959 3,768 27,288 4 ,79*1 26,325 12,622 18,533 5,W 5,430 2,457 3,957 29,035 3,696 31,630 11,275 16,545 6,000 5,455 2,185 775 2,675 2,362 11,295 4,725 25,125 5,160 37,325 10,975 11,595 2,000 5,350 2,663 1,035 3,050 3,070 12,300 4,800 26,500 6,400 33,000 7,500 14,000 3,500 5,500 4,500 3,500 3,500 5,000 2,500 2,565 11,224 Michigan Employment Security Commission, Farm Labor Service, Michigan Farm Labor Report: Post Season, annual Issues. Figure 3 graphs the May-October employment esti­ mates of the Farm Labor Service for the 1967 migrant season for selected Michigan crops. The peak employment 29 28 27 26 25 Cherries Strawberr|Fs 2*1 23 22 21 20 pickles 19 o 18 o o 17 « 16 t 0* ) X14 15 o 2B 11 Vt 13 o 12 o s 11 Vjoinatoes v / I i 10 9 8 7 6 Sugar Beets 5 U O th e r \ III' / / SC } / /rill rl j 3 2 1 8/30 5/15 5/ v immigrant season. I 11 CI I , erin-Teoted Michigan crops curing the W67 , ..Bi-monthly employment in m - \T -rMn i j n n — sei 24 for each crop is the same as that presented in Table 5. Using this figure, the period of high labor use for the different crops and the progression of the work pattern through the summer can be seen. The pattern was far more complete in earlier years, however con­ tinuous work can still be found from the middle of May through the end of October. The major gapB are in late June and early July, between strawberries and cherries, and in middle September between tomatoes and pickles, and apples. The season's first migrants arrive in late April and early May for orchard-cleaning and strawberry prepara­ tion work. Large numbers appear in late May and early June for asparagus and strawberries, and they continue to come through the peak of the cherry season. Follow­ ing this, a net outflow begins which steps up con­ siderably in early September at the tail-end of the pickle crop, and by November few migrants can be found. Prior to 1963, braceros arrived in late May and early June to work in sugar beets, then moved to pickles for pre-harvest work and harvest work, staying through the middle of September or later. In 1963 and 1964, they arrived around the middle of July to work the pickle, fields and then remained about the same length of time as before. In all these years braceros worked in selected other crops, usually near the end of the pickle season. 25 Ethnically, the seasonal labor force of Michigan has more Mexican-American workers than other races, coming mainly from Texas— see Table 6. In addition to the Mexican-Americans are black and white workers from various southern states. A minority of the workers are whites from the Appalachia region, the stream of workers from that region having diminished considerably from earlier years. TABLE 6.— Percentage of interstate workers in Michigan agriculture from selected states, 1961-67. State 1961 1963 1964 1965 19 66 1967 Texas Florida Louisiana Missouri Ohio 50.0* 9.0 9.0 17.0 —— 68.0* 9.0 7.0 8.0 —— 54. 3% 6.5 14.3 7.6 4.2 52.5* 12.9 7.1 5.2 2.8 73.8* 11.6 2.3 2.7 1.7 61.7* 13.5 1.7 1.9 1.3 Source: Michigan Employment Security Service, Farm Labor Service, Post-Season Farm Labor Reports, consecutive issues. Work Characteristics The work requirements of the crops utilizing seasonal labor are sufficiently dissimilar that the labor market has become somewhat segmented, with certain types of workers tending to specialize in specific crops. Referring to those crops displayed in Figure 3 above, two general groupings can be made: (1) crops which do not require great physical stamina and exertion, and 26 (2) crops which require relatively more physical exertion. Of the first type, raspberries, blueberries, and grapes require less upward reaching or downward bending in the act of harvesting. Consequently, these crops have been more amenable to the work of women and children, especially from local sources. The second group, and by far the major share of the work, requires more physical exertion. Of this group, some crops are of the "reaching-up" class and others of the "bending-down" class, almost conveniently splitting fruits and vegetables. Cherries and apples are the major examples of the first class. The work requires toting a ladder around a tree as well as from tree to tree and then climbing up and down and reaching out, often precariously, to gather fruit. The fruit is then placed in a bag hooked over the shoulder or around the waist. The work becomes less pleasant and more dangerous when done in poor weather, which easily can plague the 1 late apple harvest, but may also affect cherry work. Bending down work, the second class, is commonly known as "stoop labor" and characterized as the least desirable of all types. Whether in the harvesting of asparagus, strawberries, pickles, or tomatoes the worker must bend over— or crawl— to pick the York: ^See Myrtle Reul, Where Hannibal Led TJs (New Vantage Press, 1967;, Chapter *41. 27 fruit.1 Unlike the reach-up type in which the con­ tinuity of the work Is somewhat broken, stoop labor work is very monotonous, as laborers slowly move along long rows only to turn around at the end and start again. The degree of undesirability connected with work in each crop would be difficult to establish. Ecpnomic theory would suggest, that other factors being equal among crops, wage rates would be an index of undesir­ ability. But other factors have not been equal. Pickle and sugar beet growers had braceros available until 1964. In addition, pickle work provides more continuous employment than most other crops. Finally, pickle and beet workers are employed by large companies while workers in most other crops are employed by individual growers. As a result, wage rates do not act as an index of undesirability among crops. In general, however, workers do characterize stoop labor tasks as more un­ desirable . Inter- and intra-state migrants have worked pri­ marily in the second general grouping of crops. Hence the main migrant streams to and through the state start in strawberries, move north to cherries, and then south to pickles and tomatoes in Ohio, Indiana, and Michigan. ■^These crops remain the major employers of "stoop labor" in Michigan. Previously greater amounts of this work existed, e.g., topping onions, digging potatoes, pulling and topping sugar beets. 28 From pickles and tomatoes many workers return to their home base, especially those with children of school age. Others remain through the end of the apple harvest. Since some of the major studies of this labor market have been drawn from California agriculture,^ and the conceptualization of the workings of the market may be tempered by this, a brief discussion of the agricultural organization of Michigan and how it differs from other areas may be instructive. The "firm11 of Michigan agriculture is more in the traditional mold of the family farm than that of the corporation farm of California. Though the employer side of the market is nowhere near a homogeneous o n e , many of the individual growers in Michigan contract their own labor and manage the workers on their own farms. More and more, however, the growers who do their own labor contracting are the larger ones, a few of whom have incorporated; however corporations in Michigan generally involve brothers, or a father and son, and are not of the size of some in other states. Probably the closest approximation to the cor­ poration farms would be the sugar beet and pickle ■^See Lloyd H. Fisher, The Harvest Labor Market in California (Cambridge: Harvard University PreBS, 1953^, and Varden Fuller, Labor Relations In Agriculture (Berkeley: Institute of Industrial Relations, University of California, 1955)* The popular press also has used California as a backdrop, e.g., John Steinbeck's The Grapes of Wrath. 29 companies of Michigan, the primary employers^- of foreign labor during the tenure of PL-7 8 . These companies remain the largest employers of domestic migrants in the state. Workers are transported, housed, insured, and often supervised by the companies for the growers who contract with them (see Appendix I). Here the relation­ ship between company employer and worker is far more impersonal than on farms where the owner is the primary employer. However, the analogy is not complete, since many workers hired by the company are housed and super­ vised on small farms, and hence traces of the tradi­ tional farm are not entirely dissolved. Migrant Wage Package Each labor market possesses its own unique alloca­ tors, generally the wage rate and specific prerequisites of employment. The agricultural labor market is some­ what different from many other markets due to its highly unstructured nature, as will be discussed in Chapter III. It Is Instructive, therefore, to view institu­ tionally the allocation mechanism, termed the "wage 1The meaning of "employer" may be questionable here since legally the nationals were employed by grower associations. For the most part, however, these associa­ tions were established and administered by the companies with which the growers of the association were contracted. See Lloyd Gallardo, "An Evaluation of U.S. Dept, of Labor Policy Regarding Wages Paid Mexican Nationals: Michigan Pickles, A Case Study" (unpublished Ph.D. dis­ sertation, University of California, Berkeley, 1962), 9 6 . 30 package." As here conceptualized the package consists of (1) the wage rate, and (2) non-wage provisions of employment. As the labor market adjusts to changing demand and supply forces, both components of the wage package act as allocators. The wage rate denotes the rate directly connected with the work exerted, for example an hourly rate like $1.25 per hour or a piece rate like $.20 per bushel or $12.00 per acre. of payment. These are by far the most common methods A more unique method is one of the payment systems found in pickles where workers receive a per­ centage of the gross value of the crop (see Appendix I). When payment systems other than hourly rates are used, a comparison of wages for different crops becomes difficult. On a piece rate basis an individual worker might be able to tell what his hourly equivalent would be: two and one-half bushels an hour at $.90 per bushel would give him $2.35 an hour, assuming the same picking conditions continued. However, to formulate an average hourly wage rate for all workers of a crop or for workers in different crops is more difficult.^ 1 Fortunately the Rural Manpower Center at Michigan State University has conducted studies of productivity rates, both for different types of workers (good, poor) and different field conditions, and piece rate systems can be converted into hourly equivalents by uBing their results. The studies are available from the Rural Manpower Center of the Agricultural Economics Department, Michigan State University (East Lansing). Obtaining an hourly equivalent from a system based on the percentage of crop value (e.g., 5035) is par­ ticularly difficult because of the number of varying factors which affect the hourly rate: the prices set out in the contract to the grower for the different grades of pickles; the condition of the field; the gross yield as well as size distribution of the yield; the weather; the conditions of the pickle market determining whether processors accept or reject larger grades or are touchy about the quality of regular grades. The U.S. Department of Labor fought this battle yearly with the pickle industry in trying to police a minimum contracted wage for Mexican nationals under PL-7 8 . The only way to obtain a suitable figure was to match post-season earnings with total hours worked for each worker, a lengthy and sometimes impossible task. The second component of the wage package, non-wage provisions of employment, is comprised of a relatively well defined core of employment conditions with a large marginal set of employment conditions which apply or do not apply depending upon how scarce the supply of labor becomes. Formal contracts of employment are infre­ quently used in the migrant labor market, the substitute usually being loose verbal agreements.^” Hence very few -*-The contract used for employment of braceros was written, however, and contained numerous specific con­ ditions governing their employment, including a minimum wage and work guarantee. 32 non-wage forms of remuneration have become standard conditions of employment. The fairly standard core of the non-wage provi­ sions is made up of social security, housing, and trans­ portation and loan money. social security.^ By law employers must provide Housing is probably the most expensive of the core provisions, but the type of housing varies greatly by farm. The specific facility could be a comfortable lodging with indoor toilet facilities and electric stove and refrigerator, or a poorly insulated shack with a wood stove and bare springs. For the workers, housing is a necessity and becomes an enjoyable extra when pleasant, but since their purpose in the state is to make money, poor housing can be endured. In 1965* the Michigan legislature passed a law to establish minimum requirements for migrant housing, and this law has improved the standard of housing somewhat. 2 To finance the trip from the place of dwelling to the location of work, contracted migrants are usually ■^Migratory workers have had social security coverage since 1956. 2 This law, Public Act 289, requires inspection and licensing of all housing in which migratory workers dwell. Like so many laws of this type complete enforce­ ment has been limited due to inadequate staffing and funds, but considerable progress has been made. For a report on employer compliance see the Annual Progress Report for the Agricultural Labor Camp Licensing Program, available from the Michigan Department of Public Health, Lansing, Michigan. 33 advanced transportation money— generally $.01 per mile per worker. In the middle 1960's the supply of workers became relatively scarce. Under these conditions growers were providing return transportation money to insure that workers would be available for the following season.1 In addition workers often request funds to pay off debts incurred during the winter months, the amounts to be deducted from wages they will earn in Michigan. 2 The value of these non-wage provisions on an hourly basis as a supplement to the wage rate is not easily obtained. Social Security is reported on an hourly basis, but the other two provisions are not except in very infrequent cases. The state of Michigan placed a maximum of $.08 per hour as the amount that could be deducted for housing under minimum wage provisions passed in 196*1. Studies which have estimated the gross amount of non-wage provisions received by Pickle companies operating in the Saginaw area and contracting workers in sourthern Texas reported transportation costs at $35 per worker. 2 One company field man planned on- loans of $2,000 to $**,000 per family over the winter. Almost unani­ mously, employers testified to the reliability of Mexican-American workers in repaying these informal loans. Even if the workers failed to report they often would Bend the money from other parts of the country. q JThe maximum housing deduction is $.08 per hour for a single worker occupancy and $.0** per hour for multiple worker occupancy of the same room. Other deductions are possible for such items as meals, heat, toilet, etc. For a current listing of the allowable deductions contact the Wage Deviation Board of the Michigan Dept, of Labor. 34 farm work srs have found the value of the provisions to be less t ban that commonly received In non-farm employments. In addition to receiving lower wages, hired farm-workers generally receive fewer fringe benefits than do nonagricultural workers. A substantial proportion of farm wageworkers do rebelve some perquisites, such as room and board, housing, meals, transportation, and use of garden space. But, in general, the value of these items does not equal that of heklth and medical Insurance, paid vaca­ tions, and other fringe benefits received by industrial workers. The quality of housing, sanitkry facilities, and other housing equipment provided for farm wage workers is very often substandard.! Though these three non-wage provisions generally are standard, an abundant supply of workers will weaken the willingness of growers to provide all of them. If an abundance of workers develops, transportation money and loans become harder to obtain, and housing is repaired less frequently. Non-wage provisions beyond the standard core are included within the wage package only as the supply of labor becomes scarce. For example, during the 1966 and 1967 seasons, the pickle companies assured workers of a complete Seasonal work pattern from late May through the r end of pi ikle work in September if they would contract Economic Development Division, U.S. Dept, of Agriculture, Rural People in the American Economy. Agricultural Economics Report No. 101, USDA, Economic Research Service (Washington, D.C.: Government Printing Office, l66), 48. See also Elterich, Johnson, Call, Perspective on Michigan's Farm Labor Problems. 30-39. 35 to pick pickles. * To carry through, the companies arranged employment in asparagus and strawberries prior to the pickle harvest. In 1967* however, when the labor supply was not quite as scarce as in the previous year, companies were not as hard-pressed to find employment for workers since there were numerous "freewheelers" willing to replace contracted workers who left. In addition to the continuity of work pattern the major other non-wage provisions are: number of family members employed and wages received; field conditions; and extra services performed. Supplementing these economic conditions would be the personal relationship between the employer and the workers. In contrast to many stag crews of southern white and black workers, most Mexlcan-American laborers travel as families, and members of the families often work with the parents in the field. In markets of scarce supply an additional inducement to a family is that the children can all work and earn regular wages. In addi­ tion, employers often take pains to provide extra services like free gas for a weekend trip, quick repair of a broken refrigerator, free food, and numerous other amenities of this type. Weeds can slow workers and make work less desirable, and non-availability of field con­ tainers does the same; both field conditions can be remedied when the supply of workers Is scarce, thus 36 enhancing worker productivity and earnings. The many forms these non-wage provisions can take are numerous. The point is that in this unstructured market there exists room for considerable non-wage variability in the provisions of employment. If one expands the coverage of these provisions to include societal services like health care then agri­ cultural workers fall further behind their urban counter­ parts. The President's Commission on Rural Poverty concluded, in part, that the availability of such services to rural individuals fell far below that for urban dwellers.1 Mention should be made also of some of the amenities of rural living, for example the absence of congestion and smog and other sociological conditions of urban areas. Worker Costs: Bracero vs. Domestic To provide some additional background information for an understanding of this labor market, as well as speak to a question raised in the research, the following discussion of the labor cost per worker of braceros versus domestics is undertaken. A glance at Figure 4 will indicate that wage rates for hired agricultural workers Increased significantly following 196*1. However, President's National Advisory Commission on Rural Poverty, The People heft Behind (Washington, D.C.: Government Printing Office-, 1967), Chapters 5 and 6 . 37 Hourly Wages 1 . 60-1. 50. 1.40-1 .30.- 1 . 00-- + - + - H — 1--H— h -H— H — 1— oo o CM VO =f in in in in in CT\ CT\ but then discriminate between workers in terms of attitude or physical appearance. The worker in this case receives fewer non-wage provisions and the effective wage package lies at w2 . One grower contacted was known to pay $.10 to $.15 per hour more than other growers in his area, but he also reserved the freedom to dismiss workers when they gave him a hard time .■*" A concerned citizen may complain about w2 being too low and Join with other citizens to enact a legal minimum wage at what they believe to be w^. Having to pay a wage rate this high, growers may simply reduce the remainder of the wage package and pay an effective wage package of w 2 . If the concerned citizens continue to protest and achieve minimum standards for housing, health care, and most of the other non-wage provisions, and the effective minimum wage package actually becomes Wg» then employment will be cut to n2 , creating a surplus of n^-n2 . This surplus will exist either to exert a downward pressure on the wage package in the geographic area of the minimum wage, for example workers living in ■^The tautological danger here is recognized. The research also turned up examples of growers and/or grower associations which paid more, both in terms of wage and non-wage provisions, than the observed marketclearing wage package. This observation, more in line with the broad "range11 of roughly equivalent wages found in R e y n o l d ^ study, seems to be the exception in this labor market. a condemned shack even though the grower warns them about the law, or will find workers spilling over Into other job markets or other areas of the agricultural Job market and depressing the wage package there.1 As noted, the market-clearing wage package w 2 is a moving package reflecting changes among both labor demand and supply forces. For many non-agricultural labor markets, the wage package (however defined) has been moving up, oft-times quite rapidly. This phenomena can come about from a rightward shift in the demand schedule for a given supply schedule, a leftward shift in the supply schedule for a given demand schedule, or the demand schedule shifting to the right faster than the supply schedule shifts leftward. In the agricultural labor market there is concern that the market-clearing wage package has not been moving up quickly enough. Studies have shown that the supply schedule has been shifting leftward reflecting a decreasing number of workers participating in the market, though the rate of this shift is highly dependent upon the Job opportunities in the non-agricultural labor market. But the indications are also that the demand 1Examples of such cases can be cited. Most recently the implementation of the federal minimum wage law in 1967 may have created a wage package of w-. in several southern supply states and pushed workers north into Michigan in a search for work. 75 schedule has been shifting leftward at a rate roughly equivalent to the rate of change In the supply schedule, due to changes in agricultural technology. If one could construct a long run demand schedule for agri­ cultural hired labor, it might resemble that in Figure 8, where , Dg, and are short run (within season) demand schedules and DD is the long run (between season) demand schedule. wage package Employment Fig. 8.— Short run and long run labor demand curves for harvest labor. The speed of adjustment in a given labor market from one market-clearing wage to another as a result of some supply or demand schedule shift will turn largely on the "fixity" of the conditions underlying the separate 76. schedules.*1. The factor generally considered least variable in the short run is the capital stock underlying the labor demand schedule. On the supply side, the accumula­ ted skills at any one job, as well as vested economic and social interests in an area and/or job, determine the willingness or unwillingness of workers to move quickly. Thus the adjustment process of workers employed may respond 2 only slowly to wage package changes. In the agricultural labor market the rate of response appears to be more rapid than in other markets. For many growers the plant (or firm) is fixed only for one season, the plant being the field in which the labor-using crop lies. Fixed capital beyond this, perhaps tractors, plan­ ters, cultivators, or irrigation rigs, can be transferred to the production of other crops and would not retard an adjustment away from a high labor-using crop. Thus if the supply of labor were scarce one season then adjustment could be achieved easily by the following one. o be the case for many Michigan pickle growers. This would For some J . R. Hicks, The Theory of Wages (New York: Martin's Press, 19637^ 18-22. 2 St. In addition there are often institutional con­ straints retarding the adjustment process, e.g. unions may slow down the laying-off of workers following a decrease in product demand. o JThe pickle processors of Michigan have much greater fixed investment, however, which would seriously retard the adjustment mechanism: to the extent though that acre­ age could not be transferred efficiently to other areas within the U.S. (see Chapter V below). 77 growers there is a larger fixed investment in given crops. Fruit and berry growers have fixed land investments, and often specialized machinery applicable to certain crops may build in fixity. Among agricultural workers there evolves far fewer "job rights" than in other labor markets due both to a lack of high skill requirements and a lack of legal pro­ tection to organize. Even if workers were to gain social and/or economic interests in a given area, the lack of Job protection would prevent these factors from retarding the employment response to a changing market-clearing wage package. Also absent from the agricultural labor market are the many and diverse institutional intrusions to the mar­ ket mechanism which slow down adjustment. workers possess less legal coverage. As noted these In addition to exemptions from the NLRA, numerous other federal and state laws are less demanding concerning agricultural labor, for example, local welfare residency requirements. Unions are notably absent from this labor market, and few job security provisions have grown up in their absence. One final characteristic of this labor market lends to Its rapidly adjusting nature. In the day to day work­ ings of the market there are numerous opportunities for hiring and firing to occur: a worker gets drunk or messes up the field; a family may not show up Saturday morning 78 as requested; chronic sickness often plagues some of the workers and there may be a number of sick calls; the grower may have his buying source terminated. Much of this Is due to the lack of institutional rigidities in the market. Much is also due undoubtedly to sociological and psychological factors: the culture of poverty mentality seemingly would create less responsible workers, and pov­ erty conditions would prevent them from more productive involvement. In addition, when the remuneration is so low, opportunity costs need not be very high to encourage worker turnover; workers may not feel the wages require holding back complaints or being overly careful about behavior. As a result of these characteristics, a rightward shift in the supply schedule, say from a surge of freewheelers into an area, can push the wage package down within a few weeks or even days. Conversely, a scarce supply of labor will find growers pirating other growers In their area and especially In near-by areas, and will fin’d workers Jumping commitments with other growers, and the wage package will be bid up quickly to the new market clearing level. Higgling in the Market Others have written extensively on the rather infam­ ous nature of the exchanges in this market. The 7 9 • early-morning "shape-up" probably is most familiar.1 Ano­ ther more informal exchange occurs during the winter months in the southern supply states, as recruiters circulate among workers. 2 The aspect of the higgling process between workers and growers least discussed is the day to day, highly informal and unstructured exchange operating throughout the season. To illustrate this exchange, two hypothetical market situations are assumed, one of abun­ dant labor supplies and one of scarce labor supplies dur­ ing the Michigan migrant season. The abundant market: Assume the seasonal labor mar­ ket begins in equilibrium, and then into the season a number of free-wheelers appear and seek work. Initially growers are satisfied with their work force and schedule the production process accordingly. In that the in-coming free-wheelers receive no great fanfare, their presence may not be known by most growers. Slowly, however, growers realize labor is not quite as scarce as earlier: the Farm Labor Service may call wondering If more work is available; workers may call from other parts of the state wondering If there is work, or they may knock on a grower's door requesting work; or employed workers may report they have ^See Fisher, The Harvest Labor Market in California, Chapter 3, for a discussion of examples from California. Reul, Where Hannibal Led U s , Chapter 26, has a similar discussion taken from Florida. 2 See Carey McWilliams, "Mexicans to Michigan," Common Ground. 2 (Autumn, 1941), 5* 80 friends or relatives willing to work. be varied. The reaction can Some growers may decide to handweed the field earlier scheduled for machine cultivation, offering a lower wage package than they earlier expected to pay. If it is harvest time then less acreage may be machine har­ vested. In this case the additional workers will be thrown into the field with those hired earlier, due to the expandable nature of the labor demand. As more labor becomes available the growers' work schedules slowly become spread among more and more work­ ers. Some workers may complain, but the growers have little incentive to take notice since other workers are available to replace any that quit. Most growers will hold to winter commitments and keep the early labor force, although there will be some subjective weakening of non1 wage benefits. A few growers will forget earlier commit­ ments and openly play-off their employed workers with the new arrivals for a lower wage package. Drawing from recent experience, probably the most crucial area of dis­ crimination will be a reduction in the completeness of the work pattern, even if hourly wages suffer no change at all. With reduced pressure to retain previously con­ tracted workers, growers will exert less energy to keep 1 Even the sympathetic employer who never would betray his workers must give in some. His competitors will be paying lower labor costs and ultimately be able to undersell him. 81 * these workers busy at all times. And even if a given grower tries to arrange a complete work pattern, say by contacting other growers when his operations are slow, the chance of finding other growers needing labor will be poor. The end result for the workers is a smaller wage package and less Income for the season's effort. The scarce market: Assume again that the seasonal labor market begins in equilibrium, but then the supply of labor becomes quite scarce. variety of reasons: in anticipation This may occur for a growers who did no early recruiting of sufficient free-wheelers will be caught short and Btart to bid for workers; some growers with poor records in worker treatment may find worker com­ mitments falling through; recruiters from other states enter to entice workers; workers remain only until the peak harvest is complete and then leave. Just as before growers slowly gain awareness of this. Their neighboring growers may complain of a short­ age, or workers may tell of better offers elsewhere and wonder what they should do, or the Farm Labor Service may call to see if there are any extra workers to fill needs in other areas of the state. With the knowledge that labor is scarce growers may respond in numerous ways. They may offer a higher wage rate, but more likely will improve the non-wage provisions. The work pattern will quickly fill up to protect against any unrest from idle 82 days, an unrest which might well cause workers to pack-up f and leave overnight for a better opportunity. In this case, the wage package to the worker is enhanced. In both the above hypothetical situations there is one factor working to slow the adjustment process, the dynamic element of discounting for future years. In an abundant market, a grower may want to break his commitment with some workers but be reluctant to do so if a scarce market should be expected in the coming season. In this case he would want to nurture his "nucleus."1 In like manner, workers also want to protect their future Job pattern and may be reluctant to "Jump" a grower in a scarce market for fear a more abundant market the following year may find the grower unwilling to hire them. Historically, in Michigan as well as other areas, the workers have had to discount far more than the growers, since the labor supply each year was relatively abundant. Imperfections in the Market In his microeconomic study, Reynolds dismisses the conception of a "perfect labor market" as a normative model unworkable in practice. 2 Rather, he chooses to •4 X This is the term used in the trade to describe a group of workers upon whom the grower can depend to show up each season and, If necessary, bring other workers. The "nucleus" must be maintained as a security factor when the labor Bupply is scarce. 1 2 Reynolds, The Structure of Labor Markets, Chapter 8. : 83 focus on the imperfections and finds the greatest one to be insufficient knowledge among workers. Thus the per­ fectly designed competitive model of workers flowing to employments on the basis of calculated wage differentials is brought under question. The seasonal labor market of agriculture has been charged with numerous Imperfections, notably poor worker knowledge of the available offerings. This charge brings to mind the Steinbeckian Impression of workers hopelessly wandering from farm to farm, not knowing whether work will be available. Compounding this image is that of the employer greedily advertising for many workers and much work while subtly rubbing his hands in the expectation of a deluge of labor and consequent low wages. Though these images possess sufficient historical documentation to have Justified public concern, currently they are somewhat extreme, though limited examples can be found. Workers who have traveled the migrant circuit before often make phone calls to selected growers before driving into an area. And when in the midst of one crop's harvest, they may be calling around to seek the most profitable crop to work next. Another common imperfection in many labor markets is that of immobility. This one does not seem to plague the agricultural labor market internally but surely does externally. Workers are highly mobile among areas and 8H Jobs within an area. To move out of the market and into other employments, however, is more difficult. Most of a worker's sociological reference points are in farm work, and the Jump to steadier non-farm work with the often attendant requirement to live in a city can be quite difficult. This Immobility is lessened when friends or other family members have gone before. Some might consider the unstructured nature of the market an imperfection, for example, the casual regard for verbal contracts. On the basis of low wages to conclude the market must contain numerous imperfections is erron­ eous. A perfectly functioning labor market with an abun­ dant supply will yield low returns. Indeed, the seasonal labor market of agriculture probably is more perfect than many, with a high mobility rate and unusual degree of knowledge.'1’ A perfectly functioning market positively says nothing about its normative acceptability. Unilateral Decision Making Several studies have pointed to the unilateral decision making process in this labor market, with the i Workers and growers can always refer to a Farm Labor Service office where relatively accurate information is available for various regions of the country and areas within those regions. In addition, there is a fairly reli­ able grapevine among migrant workers, supplying crop and wage information. On the efficient nature of the grape­ vine see Harlan Padfield and William Martin, Farmers, Workers. and Machines (Tuscon: University of Arizona Press, 1965)> 22, and Schmidt, "After the Bracero," 78. grower(s) making the wage decisions and the workers respond ing to them. Since, as Fisher notes, the grower faces the harvest as an "all or none" operation with the output fixed and a direct trade-off between wages and grower pro­ fit, there is great incentive for growers to control labor costs. Thus the practice of growers setting wages has become conventional wisdom. In his study of labor rela­ tions in agriculture, Puller notes: "Unilateral activi­ ties are, therefore, the major portion of the meager con­ tent of labor relations in agriculture."'1’ The more notor­ ious forms of wage setting have come disguised under the monopolistic form of grower employment associations. "It Is probable that in no sector of Industry has employer wage agreement begun to approach its development In agrip culture." The professed reason for the formation of these associations has been the efficient obtaining of workers, but it is claimed they provide opportune condi­ tions for discussing the wages growers would find conven­ ient to offer. It should be noted, however, that even without associations growers easily can discuss the wage package they "would like" to pay; almost every farming area has a coffee shop or similar location where growers "hang out," and in addition with mutual Interests, they often socialize together. 1 Puller, Labor Relations in Agriculture. 5. 2 Pisher, The Harvest Labor Market in California, 97. 86 Prom a social standpoint, the only relevant case of public concern over unilateral wage setting is when the wage package established is less than the market clearing wage package, or w-j^ in Figure 9. At this wage package workers are being denied the market clearing wage package Wg.1 However, the analysis also suggests that not as many workers would be available at w.^ as growers would wish to hire, and there would be an upward pressure on the wage package, though perhaps not the wage rate. It is also possible for the grower established wage package to be set at or above Wg, especially since historically the labor supply has been so uncertain and growers acting In concert may have no real knowledge of where the supply schedule cuts the demand schedule when setting wages. wage package Figure 9.— Hypothetical supply-demand interaction, In the hird labor market of agriculture. It should be noted, however, when growers meet to establish wages the pegged thing Is the wage rate. It Is far more difficult to peg the non-wage conditions of .the wage package, and this allows growers considerable leeway to vary their offering while maintaining adherence to the pegged wage rate. i 87 The current study has found the case for employer wage setting at w^ an unlikely one. Agriculture is characteristically a competitive industry and such a phenomena as wage setting at w^ seems inconsistent with competitive behavior. For grower A to agree to w^ means he may not obtain the labor he desires, and consequently may suffer a poor harvest. With the psychological and economical importance surrounding the harvest period, it is unlikely that grower A would stand for such a situation (whether previously agreed to or not) and would bid labor away from others to assure his harvest.1 The research turned up good evidence of growers pirating the labor of one another. Examples of established wage "rates" remaining con­ stant over long periods of time and among numerous growers could be explainable if the "pegged" wage rate were set at or above the market-clearing wage rate. There would be an incentive for growers to do this, as noted above, to obtain a choice of workers and thus discriminate on the "With the harvest already underway, when each farm operator is concerned with his own individual situation, each pursues his own strategy of reducing uncertainty. And he does this without much conception of over-all labor supplies or demands in the area and hence of the interacting consequences of one employer's actions upon others." Fuller, Mamer, Viles, "Domestic and Imported Workers in the Harvest Labor Market," 31. 88 basis of non-wage factors,1 This would explain reports of some growers paying less than the pegged wage, since they would be paying a wage "rate" more in line with the p market-clearing wage package. Bracero Program Though employer associations may not have been wholly effective as wage setting bodies directly, they have been able to establish wages indirectly simply by expanding the supply of workers. Thus on Figure 10, if growers want to pay w.^ and obtain n^ efficiency units of 1 Reynolds records a similar phenomena in his study of the New England manufacturing labor market, with some firms paying a high wage and others a low wage for simi­ lar work. He would not accept the concept of a marketclearing wage package as some narrowly defined amount, but rather views a wide band of market-clearing "rates," the width largely determined by immobility and lack of knowledge among workers. Reynolds, The Structure of Labor Markets, 230-40. p "Apart from the issue of whether such wage sche­ dules are fair and equitable, it is obvious that one of the consequences of unilateral wage administration is largely to eliminate wage competition as a factor in labor procurement." Fuller, Labor Relations in Agriculture, 21. The present study takes issue with this observation, based on the recent experience in Michigan. Unilateral wage administration that results in fixed wages over time, the relevant case, is possible only if the established rate is set at or above the market-clearing rate. With the large worker supplies of the past, it is quite conceivable that such could be the case. One way of testing this would be to identify non-wage forms of allocation and observe how much variation there was in these allocators during the period of purported wage setting. If there was consider­ able activity then this could infer that wage rates were set above a market-clearing wage rate and the allocation of workers made on the basis of non-wage discrimination. 89 employment, they can do this by supplementing the exist­ ing supply SS with additional workers, making an effective supply schedule of S ’S*. Quite simply this has been the rationale underlying the Importation of foreign labor. Growers have not wanted to pay the wage requisite to employ domestic laborers and have won political sanction to supplement the domestic work force (SS) with foreign workers. To support their claim they have argued that SS is nearly infinitely inelastic, the stoop labor argu­ ment, and hence paying Wg would reek untold havoc on agricultural production. This analysis is consistent with that of Puller, Mamer, and Viles mentioned above, wage i. package * Employment Pig. 10.— Hypothetical supply-demand interaction in the hired labor market of agriculture showing a shift in supply. 90 with their stress that the presence of braceros gives growers more certainty of labor supply."^ The bracero program has come under other charges as to its effect on the labor market. Mamer suggested it may have stratified the market, isolating selected crops 2 in each area as "bracero work." Hence, domestic workers would avoid these crops in setting up their work pattern due to a social stigma attached to them. Analytically, this would mean the supply of domestic labor available for given "stoop labor" crops, in which large numbers of braceros were employed, would be much more inelastic than for non-bracero crops. The present research suggests that any sociological determination of supply elasticity is quite short-lived. In fact, the more, likely case is Fuller, Mamer, Viles,"Domestic and Imported Workers in the Harvest Labor Market." Graphically, a condition of uncertainty might be as seen below (modification of Figure 10). The crossed area would indicate a range of uncertainty; at w^ the grower could not be certain whether n^ or n2 would be available. He can be quite certain that labor can be obtained up to SS but beyond that uncertainty arises. The presence of braceros removes the uncertainty beyond SS to S'S1, and also maintains wj