Van Cott: ‘Starvation’ Wages

May 20, 2019

by T. Norman Van Cott, Ph.D.

Whether one is a . . . churchman or a heathen, it is useful to know the causes and consequences of economic phenomena. — George Stigler (Nobel Prize in Economics, 1982)

“Forgive us, Lord, for we eat food harvested by people working for starvation wages.” So spoke the leader of the congregational prayer at my church. Taken literally, it meant that each congregant’s mealtime bounty (including mine) traces to the harvesters’ agonizing deaths.

Figuratively, it meant that we were contributing to the harvesters’ grinding poverty. Literal or figurative, they were serious words.

The influx of immigrant farm labor into the United States, like virtually all U.S. immigration with the exception of African slaves, can be traced largely to communication among families and friends. So however desperate the migrants’ plight, it apparently beats their alternatives. It is the latter that my forgiveness-seeking church elder and guilt-tripping university colleagues ignore.

Should we be surprised that migrant workers’ earnings, however low, beat their alternatives?

Not at all. Think about it for a moment — with your head, not your heart. If landowners-farmers offer migrants less than they can earn in their alternatives, migrants won’t accept the jobs. The same terms of employment must also benefit landowners-farmers. Otherwise, landowners-farmers don’t want to hire the migrants. The necessity of mutual gains to sellers and buyers is a simple, powerful proposition that escapes guilt-trippers’ thought processes.

Instead, guilt-trippers argue that Americans should either: 1) boycott migrant-harvested food, thereby shutting down the source of migrant starvation; or 2) urge the government to enact laws requiring landowner-farmers to pay migrants higher wages.

Both, it turns out, worsen the plight of migrants. Boycotts shut down employment opportunities for migrants, consigning them to their previously next-best opportunities. Guess what? Next-best is precisely that — next best. The next-best living standard is lower.

That mandating higher migrant wages also worsens the position of migrants is more subtle. It traces to the aforementioned mutuality that underlies market transactions, however, for mutuality involves more than just the wage. A myriad of non-monetary dimensions to jobs — workplace safety, for example — are also subject to mutually beneficial agreement. It is somewhere between naïve and stupid to think that a higher wage can be mandated without negative consequences for things like workplace safety.

The surplus of labor that emerges at the mandated wage leads employees to compete among themselves on various job-safety margins for the now-reduced number of jobs. The safety-erosion process continues until the surplus is eliminated, at which point the combination of wages and safety will be inferior to the initial combination for both employees and employers.

In the final analysis, people’s incomes measure how much they help others, not how much others help them. The more you help other people, the more these same people will pay you to help them.

From this perspective, migrants’ living standards are relatively low because they help others little. Guilt-trippers try to reverse this causation with their calls for boycotts and wage hikes and end up violating the “first-do-no-harm” maxim. That many of these folks are well-intentioned, including my church elder, is not good enough. How can there be a bright side to reducing everyone’s mealtime bounty?

Alas, introspective censure like this was also a regular part of my professional life. That’s because I was a university professor. Guilt-tripping tales about haves having because of have-nots having not are common in capped-and-gowned circles, and not just with regard to dinner table bounty and “starving” agricultural workers. University-types have a seemingly inexhaustible list of examples of Americans enjoying economic plenty because plenty’s producers, both domestic and foreign, suffer. Migrant farm labor, however, has long been one of the have-nots’ poster children.

T. Norman Van Cott, Ph.D., professor of economics and adjunct scholar of the Indiana Policy Review Foundation, was formerly chair of the Ball State University Economics Department. A version of this article, an update of an earlier paper that appeared in the Indiana Economic Digest, was published by the Foundation for Economic Education.


Leave a Reply