Immigration: The Labor Market Effects of a Guest Worker Program for U.S. Farmers

Immigration: The Labor Market Effects of a Guest Worker Program for U.S. Farmers

Order Code 95-712 E
Updated February 20, 2004
CRS Report for Congress
Received through the CRS Web
Immigration: The Labor Market Effects of a
Guest Worker Program for U.S. Farmers
Linda Levine
Specialist in Labor Economics
Domestic Social Policy Division
Summary
Temporary alien worker programs are meant to assure employers, including
growers, of an adequate supply of labor when and where it is needed without adding
permanent residents to the U.S. population. Guest worker programs are not supposed
to harm the wage and job opportunities of U.S. workers while they alleviate spot labor
shortages. President Bush’s proposal of a broad guest worker program has reignited
interest in legislation introduced during the 108th Congress that relates specifically to the
agricultural industry. According to the few economic analyses available concerning the
Bracero program — the largest, longest-lived guest worker program for U.S. growers
— it appears to have fulfilled its purpose of expanding the farm labor supply. But, the
lower labor costs of bracero-using farmers seemingly came at the expense of U.S.
workers. If a new guest worker program for the agricultural industry were initiated or
if it became easier for growers to import labor under the current H-2A program, the
effects of the Bracero program might be instructive: an increase in total agricultural
employment, a decrease in domestic farm worker employment, and a decrease in farm
wages. Although the magnitudes might differ today depending upon how much the U.S.
farm labor and product markets have changed over time, the direction of the wage and
employment effects likely would remain the same.
Policy Issues
Although the U.S. Commission on Agricultural Workers reported in the early 1990s
that there was a surplus of farm labor due partly to illegal immigration, it noted that crop-
specific local labor shortages persisted which indicated a temporal and spatial mismatch
between the supply of and demand for farm labor. Consequently, the Commission
recommended that the U.S. Employment Service (ES) take steps to improve the matching
Congressional Research Service ˜ The Library of Congress

CRS-2
of available domestic workers with farm jobs.1 It also recommended that the Congress
examine the H-2A program — the only legal means growers currently have to temporarily
import foreign workers — in light of other countries’ guest worker programs “with the
goal of having the same program available to agricultural and nonagricultural employers,
both in law and regulation.”2
In the mid-1990s, the U.S. Commission on Immigration Reform reported to the
Congress “that an agriculture guestworker program, sometimes referred to as a revisiting
of the “bracero agreement,” is not in the national interest.” The Commission reached this
conclusion because its members believed proponents of such a program had not proved
that a farm labor shortage existed at that time or was likely to develop in the immediately
following years. Whether or not there is an adequate supply of farm labor, either on a
national or local basis, remains an ongoing matter of debate.3
Unsuccessful attempts were made during the past few Congresses to amend
immigration law to include a new temporary alien worker program for the agricultural
industry. President Bush’s proposal for a broad guest worker program has reignited
interest in legislation already proposed in the 108th Congress that relates specifically to
agriculture. These bills include H.R. 3142/S. 1645 (the Agricultural Job Opportunity,
Benefits and Security Act) and H.R. 3604 (the Temporary Agricultural Labor Reform
Act).4
Arguments for and Against an Agricultural Guest Worker Program. The
debate about whether temporary alien worker programs have adversely affected the labor
market outcomes of domestic farm workers has changed very little over time. Growers
of perishable, labor-intensive crops (e.g., fruits, vegetables, and horticultural products)
whose demand for workers intensifies during the harvest season have argued that they
need access to foreign labor because domestic workers are unavailable in sufficient
numbers. They have asserted that importing foreign workers does not harm domestic
workers because the two groups do not compete. In other words, they contend that
domestic workers are largely unwilling to perform the type of farm work in question even
if higher wages were offered them. Domestic workers, it is claimed, have more attractive
alternatives to farm employment (i.e., nonfarm jobs arguably are less strenuous and dirty
as well as more stable and prestigious). Without access to foreign labor, grower
advocates have maintained that their crops could not be harvested, consumer prices would
rise, and imports from low-wage countries would increase.
Others have contended that were growers to raise wages and improve working
conditions, more domestic workers would be willing to accept seasonal farm employment.
1 For information on the U.S. Employment Service in this context see Refugio I. Rochin, “Farm
Worker Service and Employment Programs,” in Robert E. Emerson, ed., Seasonal Agricultural
Labor Markets in the United States, (Ames, Iowa: Iowa State University Press, 1984).
2 Report of the Commission on Agricultural Workers (Washington:,GPO, 1992).
3 For information on farm labor shortages see CRS Report RL30395, Farm Labor Shortages and
Immigration Policy, by Linda Levine.
4 For additional information on guest worker legislation see CRS Report RL32044, Immigration:
Policy Considerations Related to Guest Worker Programs, by Andorra Bruno.

CRS-3
Farm worker advocates have asserted that government programs that add to the supply of
agricultural labor depress wages, reduce employment of domestic workers, and weaken
incentives to improve working conditions as well as to improve efficiency through
mechanization of harvesting operations. More specifically, they have claimed that the
government’s fairly unique treatment of one segment of the agricultural industry —
assuring it access to workers at a given wage level — perpetuates less efficient production
and personnel practices than would otherwise be the case. They further have declared that
growers prefer foreign over domestic workers because the former are not covered by the
same laws as domestic workers (e.g., Migrant and Seasonal Agricultural Worker
Protection Act, Unemployment Insurance, and Social Security), are less demanding due
to the lower wages and poorer working conditions in their home countries, and are easier
to control as they cannot work for another U.S. employer if the grower terminates them.
The Labor Market Effects: Economic Theory
Fundamentally, the debate over the temporary importation of foreign labor centers
on whether an increase in the supply of labor reduces domestic workers’ wage and
employment opportunities. Economic theory can help to clarify this debate. The
essentials are shown in Figure 1.
Before the entrance of alien workers to the U.S. labor market, the amount of labor
that domestic workers are willing to supply to employers is represented by the curve
labeled S . It is upward sloping because workers are willing to supply more labor services
1
in response to higher wages. Employers’ demand for labor is represented by the curve
labeled D, which slopes downward because employers are willing to employ more
workers at lower wages. Equilibrium in this labor market occurs at point A, where those
willing to work for wage W equals employer willingness to hire at that wage. Before the
1
importation of foreign labor, then, total employment is equal to E and domestic workers’
1
wage rate is equal to W .
1
Figure 1. The Effects on Domestic
Workers of an Increase in the Supply of
Foreign Workers

CRS-4
The addition of alien workers expands the total quantity of labor offering its services
at any given wage rate. This is represented by the rightward shift of the supply curve to
S , with the additional foreign workers represented by the difference between S and S .
2
1
2
This increase in the labor force will only find employment if the wage falls, for only at a
lower wage will employers be willing to hire more workers. Thus, equilibrium after the
importation of alien workers occurs at point B, where the wage of domestic and alien
workers drops to W and total employment expands to E .
2
2
In summary, supply/demand theory predicts that the wage rate for all workers falls
from W to W after the entrance of foreign workers to the U.S. labor market. As a result,
1
2
total U.S. employment expands from E to E , domestic employment contracts from E to
1
2
1
E , and alien worker employment is equal to E minus E .
3
2
3
Because the lower post-program wage (W ) makes, in this example, farm work less
2
rewarding, some domestic workers likely will find other activities more attractive which
will cause employment of domestic farm workers to decline (from E to E ). While the
1
3
total employment of foreign workers (E minus E ) expands, some portion is at the
2
3
expense of the farm jobs formerly held by domestic workers (E minus E ). This is called
1
3
the “displacement effect.” The size of the displacement effect and of the wage effect
depends on the shape of the labor demand and domestic labor supply curves.5
Along with decreasing domestic agricultural employment, an alien worker program
reduces the amount of wages that accrues to domestic farm workers. Since an alien
worker program also expands output, agricultural prices are expected to fall, thereby
benefitting U.S. consumers.
Estimated Effects of the Bracero Program. Few studies have tried to
empirically estimate the labor market impact of the Bracero program, which allowed the
temporary importation of farm workers from Mexico. The Bracero program ran from
1942 to 1964. At its peak in 1956, about 445,000 Mexican workers were admitted for
employment in the U.S. agricultural industry.6
Morgan and Gardner examined a 7-state area, in which more than 90% of braceros
had been employed, to estimate the impact of the program on the wage and employment
levels of hired farm labor. Its effect was found to be consistent with economic theory:
the Bracero program was estimated to have increased total farm employment, reduced
domestic farm workers’ employment, and lowered farm wages. Morgan and Gardner
concluded that the wage loss to all nonbracero farm workers was 6% to 7% of total wages
paid to farm workers in the bracero states between 1953 and 1964, or some $139 million
per year (in 1977 dollars). U.S. farmers were found to have gained from the program by
being able to hire about 120,000 more workers at 15-20 cents less per hour than they
would have in the program’s absence. Such a large employment response (about 26%)
to a much smaller decrease in wages (less than 9%)
5 In the lexicon of economists, their “elasticity” or responsiveness to a change in the wage rate.
6 For more information on the Bracero program see U.S. Congress, Senate, Committee on the
Judiciary, Temporary Worker Programs: Background and Issues, committee print, 96th Cong.,
2d sess. (Washington: GPO, 1980).

CRS-5
is consistent with the informal observation that braceros were a substitute for
mechanization, notably in High Plains cotton, and that the end of the program
substantially accelerated the mechanization of Texas cotton. This is also the period
in which the tomato harvester came into widespread use in California.7
Wise examined the experience in California for two heavily bracero-dependent crops
to determine whether domestic workers would accept farm jobs if wages were raised. He
estimated that a small increase in wages would bring about a larger increase in the supply
of domestic farm workers: in winter melon production, a 1% increase in wages was
associated with a 2.7% increase in the domestic supply of labor; in strawberry production,
a 1% increase in wages was related to a 3.4% increase in the domestic labor supply.8
Mason also found that a small increase in wages paid by the Michigan pickle industry
(which had been bracero-dominated) induced a larger increase in domestic workers
willing to pick the crop.9 At least for the mid-to-late 1960s, then, these findings appear
to refute the notion that increased agricultural wages would not have prompted many
more domestic workers to accept farm employment.
Wise additionally found that termination of the Bracero program led to a decrease
in total employment, an increase in domestic employment, and an increase in wages in
strawberry and melon farming in California. More precisely, he estimated that without
bracero labor from the mid-1950s to mid-1960s, domestic farm worker employment in
California would have been between 51% (in strawberry production) and 261% (in melon
production) higher, and wages would have been between 12% (in strawberry production)
and 67% (in melon production) higher.10
While Mason estimated that shortly after the Bracero program’s demise farm wages
rose significantly in Michigan, he was unable to determine how much the absence of
bracero labor or other variables contributed to the increase.11 In contrast, Jones and Rice
found that the trend in farm wages did not change significantly in four southwestern states
between the 1954-1964 bracero period and the 1965-1977 post-bracero period.12 It would
thus appear that the Bracero program’s end did not have an impact on farm wages;
7 Larry C. Morgan and Bruce L. Gardner, “Potential for a U.S. Guest-Worker Program in
Agriculture: Lessons from the Braceros,” in Barry Chiswick, ed., The Gateway: U.S.
Immigration Issues and Policies, (Washington: American Enterprise Institute, 1982). Note: The
wage loss associated with the Bracero program was incurred by both domestic farm workers and
illegal immigrants since both groups were included in the labor supply estimate.
8 Donald E. Wise, “The Effect of the Bracero on Agricultural Production in California,”
Economic Inquiry, v. XII, no.4, Dec. 1974. (Hereafter cited as Wise, The Effect of the Bracero
on Agricultural Production in California.)
9 John D. Mason, “The Aftermath of the Bracero: A Study of the Economic Impact of the
Agricultural Hired Labor Market of Michigan from the Termination of Public Law 78" (Ph.D.
diss., Michigan State University, 1969). (Hereafter cited as Mason, The Aftermath of the
Bracero.)
10 Wise, The Effect of the Bracero on Agricultural Production in California.
11 Mason, The Aftermath of the Bracero.
12 Lamar B. Jones and G. Randolph Rice, “Agricultural Labor in the Southwest: The Post
Bracero Years,” Social Science Quarterly, v. 61, no. 1, June 1980.

CRS-6
however, the lack of a discernible wage effect might be explained by the replacement of
braceros with illegal immigrants, which effectively would have left the supply of labor
little changed.
Estimated Effects of the H-2A Program. The program began in 1952 and
remains in effect today. It was authorized under the Immigration and Nationality Act
(Section 101(a)(15)(H)(ii)(A), hence its name). The program was modified by the
Immigration Reform and Control Act of 1986 (IRCA, P.L. 99-603).
After decreasing between FY1989 and FY1995, the U.S. Department of Labor
certified 41,827 seasonal farm jobs for the admission of foreign workers in FY1999.13
Despite the increase in certifications during the second half of the 1990s, the number of
workers brought into the United States under the H-2A program remains quite small
compared to the nation’s 1.2 million hired farm and agricultural service workers in 1999.
It is likely that the markedly fewer workers who have entered the United States under the
H-2A program than under the Bracero program is due, in part, to the stricter requirements
of the current program14 and to the continuing availability of illegal immigrants.15
Given the limited use that growers have made of the program, its aggregate wage and
employment effects on domestic farm workers likely have been minimal.16 However,
because of the reliance on the H-2A program of tobacco, vegetable, and apple growers in
some states (e.g., Kentucky, New York, North Carolina, and Virginia), it might have had
a more substantial impact on domestic farm workers in certain local labor markets.
13 For additional H-2A program information see CRS Report RL30852, Immigration of
Agricultural Guest Workers: Policy, Trends, and Related Issues, by Ruth Ellen Wasem and
Geoffrey K. Collver.
14 Victor J. Oliveira, Trends in the Hired Farm Work Force, 1945-87, Agriculture Information
Bulletin # 561 (Washington: GPO, 1989). (Hereafter cited as Oliveira, Trends in the Hired Farm
Work Force.)
15 Philip L. Martin, Seasonal Workers in American Agriculture: Background and Issues
(Washington: National Commission for Employment Policy, 1985).
16 Oliveira, Trends in the Hired Farm Work Force.