Farm Labor News

Farm Business Management Update, April 2002

By Jeffrey Alwang

Those of you who are subscribed to Al French's e-mail list-serve may have seen the recent item entitled: "Report: U.S. relies heavily on illegal workers." The article, first published in the Atlanta Journal-Constitution on March 22, 2002, contains interesting information on the degree of dependence of the U.S. economy on illegal workers. Of course, agriculture leads the way, with estimates showing that some 47 percent of 2.7 million agricultural workers nationally are illegally employed in the U.S. Outside of agriculture, 25 percent of household workers and as much as 10 percent of restaurant workers are illegals. The report went on to discuss other industries that have high proportions of illegal workers and the types of jobs that illegal workers usually fill. Finally, it examined changes in agriculture that might occur if substantial reductions in illegal workers were to occur. An expert discussed increased mechanization that might occur, for example, among grape producers and the Vidalia onion industry.

I bring up this article for two reasons. First, I urge those of you with interest in agricultural labor issues to subscribe to French's list-serve. You can do so by following the link: http://www.usda.gov/oce/oce/labor-affairs/affairs.htm. The second reason, is that the article ended with a quote that I found extremely interesting. Steven Camarota, research director for the Center for Immigration Studies, which favors a reduction in immigration, said the Pew report left out important consequences of the influx of undocumented workers. He said: "The fiscal outcome of illegal immigration is overwhelmingly negative," he said, adding that this group costs more in social services than do other residents. "The reverse is true for [immigrants] with college degrees," he said.

Fiscal Impacts of Illegal Farm Workers

This quotation is interesting because it is loaded with assumptions and is very close to a debate that faces agricultural producers in Virginia. The question of fiscal impacts of different economic activities is a constant topic of debate by localities in Virginia. "Fiscal impact" is generally construed to mean the difference in local revenues (mostly taxes) that accrue to a locality as the result of a land use and local expenditures caused by the land use. In Virginia, the fiscal equation is heavily influenced by K-12 schooling, since the bulk of local expenditures associated with a land use are used for schooling. Camarota, when making a statement about fiscal outcomes, is likely referring to local expenditures on schooling and health care for children of illegal workers. If these expenditures exceed revenues received from the workers, then the fiscal consequences will be overwhelmingly negative.

How does the fiscal equation play out in practice? It depends on which level of government's fiscal situation is of interest. The federal government would have different revenue streams and expenditure obligations than would local governments. Ample information shows that illegal workers pay all their federal obligations (federal income tax and social security) and receive few benefits from the federal government, particularly social security benefits. Local impacts depend heavily on the pattern of family composition of the illegal worker. This family composition affects local service use and the expenditures associated with them. Do farm workers tend to have large families with them who use local education and government-provided health services? The answer varies by type of worker and the type and duration of the job. Are farm workers likely to demand services that other low-income workers are not? The answer to these questions will help determine the local fiscal consequences of illegal farm workers. We cannot assume as a given that these workers, by definition, have a negative effect on the local fiscal balance.

The assumption of a negative local fiscal effect of illegal farm workers must be examined in light of what we know about agriculture itself. Many agricultural advocacy groups argue that agriculture itself contributes heavily to the local coffers because it contributes more in taxes than the industry receives in local benefits. Estimates vary, but most studies show that agriculture requires somewhere in the range of 30-40 cents in services for every dollar it pays in local taxes. Residential housing, on the contrary, receives between 1.2 and 1.3 dollars in services for every dollar paid. This argument is frequently used to justify preserving farmland: it may make fiscal sense to do so. How does this conclusion compare with the statement made about illegal workers? Farm workers provide the low-cost inputs that allow high-value agricultural products to be produced. If the supply of farm workers were to fall, then agriculture itself may be in danger, and land in agriculture may be converted to uses that have dire fiscal consequences for localities.

The point is fiscal impact numbers are extremely difficult to calculate and interpret. Many assumptions are made in making these computations, and numbers can be produced to support virtually any conclusion. It is impossible to conclude that illegal farm workers have "an overwhelmingly negative" fiscal impact. It is likely that the industry they support has an overwhelmingly positive impact. In addition, the difference (for the point of view of this argument) between legal and illegal farm workers is that the latter are less likely to use government-provided services for fear of discovery. The point Camarota is really making is that low-income people tend to use more services than they pay for: it has very little to do with their legal status. But, as we have seen above, low-income farm workers tend to support an industry that provides net fiscal and other benefits. It would be irresponsible to conclude, without much more information, that low-income farm workers have any negative fiscal consequences for a locality.

Contact the author at alwangj@vt.edu

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