Monday, June 28, 2010

Importing workers or food supplies

A significant portion of the US food supply is produced by workers here illegally. A Google search for the phrase "ice raids" will produce numerous accounts of large food processing operations having to shut down for weeks because a large number of their workers were caught using fake SSN's. If this labor went away food prices would have to rise significantly to cover the higher pay that would be required to attract workers to the agriculture industry.

One puzzle is how the suppliers of fake identification determined that there was a market for social security numbers among migrant farmworkers. There had to be some communication with employers because it wasn't that long ago that I-9 files (employer proof that they asked for proof of legal work status) weren't being checked regularly by federal authorities. Now, when a business gets raided by ICE the employer acts shocked and complains to the press that they have no workers.

I think that agriculture is a good example of the classic labor/capital value issue. Without workers, most farmland is virtually worthless. Some crops can be produced with heavily mechanized systems, but most require workers to supply the freshness and quality that US consumers expect.

Historically fresh vegetables and fruit were something you grew yourself or went without for the average person.

It would easily be possible to source fruits at vegetables overseas and eliminate the pull for illegal farm labor; but that would cause economic distress for farmland owners, who are politically powerful. California is a state where agricultural interests have a strong influence.

In one of the early waves of globalization, English landowners suffered significant economic losses when cheap food could be imported profitably to England due to improved transportation systems that allowed land that was cheaper overseas to be used for agricultural purposes.

It might be possible to block labor flows, but that would invite increased imports of food products. Closing all borders would invite smuggling. Having a balance of some immigrants and some food imports is probably realistic.

The same capital-owners are driving both of the negative forces that are causing the enduring high employment and leading to other negative economic outcomes. If there were
a little less capital income, and a little more labor income that would result in a better distribution of resources to restore economic circulation.

One thing the US could do is drop subsidies for foreign food aid. This would increase both the cost of food and labor globally while allowing virtuous cycles based on local agriculture to develop in foreign countries.

Also, consumers could save themselves a lot by purchasing food in bulk and doing the processing at home; i.e. cooking. Heavy processing and marketing is where a lot of the price of grocery store food comes from.

US agricultural policy should favor crops that can be sown, grown, and harvested by mechanized processes. This would result in higher-skill jobs maintaining the equipment and operating it.

Sunday, June 20, 2010

Out-migration as a solution to high unemployment

In a recent piece, Understanding Society discusses Jobs and people in Michigan and provides an unorthodox but logical outline of a solution for high unemployment rates. There are two components: job creation and out-migration.

This is based on research showing that when unemployment rises rapidly in a particular state (in the USA), a lot of people leave the state permanently to find jobs. Essentially a local economy of state size doesn’t seem to be able to generate enough new jobs in a short enough time to allow laid off workers to simply stay put and wait for new jobs to appear.

In the case of Michigan, the number of unemployed now is so great that the prospect for the creation of enough new jobs to absorb these unemployed is remote. The author of the linked piece suggests that a reasonable target for the state is to have the unemployment rate adjust to the national rate by 2020, based on a forecast that the national rate will drop to 6% by then. The unemployment rate in Michigan now is 14%.

Based on the state’s demographics, this would take

“150,000 new jobs and 250,000 out-migrants from the labor force. And assuming that each worker has one dependent on average, this means a loss of about 500,000 people from Michigan’s current population of about 9.9 million–for a total population of 9.4 million in ten years.”

That’s a large number of people leaving; but over ten years that amounts to shrinkage of 0.5% per year, which is in the range of what the state has been experiencing recently.

Overall, this line of thinking implies that the state benefits from significant out-migration, when a major economic crisis occurs. In Michigan’s case the crisis has been the auto industry restructuring triggered by the national financial crisis. It seems unlikely that public officials in any state would explicitly encourage out-migration as a solution to high unemployment rates, as economic sectors secondary to the one at the center of the crisis would be affected negatively.

Friday, June 11, 2010

On international migration and Québec

Le Devoir, arguably Québec's leading newspaper of record, yesterday uploaded an article by Benoît Dubreuil, ("Impact de l'immigration - Dépasser la pensée magique", "The Impact of Immigration: Getting Past Magical Thinking") that deconstructed some of the myths behind immigration in Québec.

Immigration is a particularly controversial issue in Québec compared to the rest of Canada because of the intersection of language with immigration. Traditionally, for a variety of reasons including the homogeneity of the Francophone community and the superior economic weight of the English language, most immigrants to Québec assimilated into the Anglophone community. As the birth rate among francophones dropped while the levels of immigration remained high, the post-Second World War generation of Francophones feared that French might become a minority language, especially in Montréal. As a consequence, Québec's post-1960 reforms saw immigration- and language-related issues placed under the control of its provincial government, with the Canada-Quebec Accord giving Québec basically its own immigration policy and the erection of a whole complex system of educational and workplace policies aimed at recruiting immigrants particularly likely to assimilate to the Francophone community.

In its overall demographic profile, with its combination of an advanced economy and a relatively small population, Québec isn't wildly different from Sweden. (Wikipedia provides good overviews of Québec's issues in English and French, with a rapidly aging population and ongoing population decline in its peripheries.) Unlike Sweden, where (as I blogged last September) the lack of an obvious cultural hinterland makes finding immigrants difficult, Québec's wealth and use of the widespread French language lets it attract large numbers of immigrants: from Francophone Europe; from Francophone countries and territories, formerly Belgian or French, in Africa, Asia, and the Caribbean (1% of Québec's population is of Haitian origin); and, from "Francotrope" countries, countries where the French language is widely spoken (Romania, Portugal) or countries where other Romance languages are spoken (Colombia, Brazil). Consequently, the list of the top sources of immigrants to Québec looks quite different from the list of the top sources of immigrants to Canada as a whole: consistently, China is the top source of immigrants but is very closely followed by France, followed by Morocco, Algeria, Romania, Haiti, and Lebanon, with Colombia along with Mexico and the Philippines also standing out. To the extent that Québec's government has been trying to use immigration to promote the use of the French language, anecdotal reports seem to suggest that it's working, with growing fluency in French (thanks in no small measure to mandatory French-medium education) and the gradual creation of what's basically a multicultural Francophone community. Thus one potential source of ethnic conflict was--painfully, slowly--dealt with.

Québec has had a fairly open immigration policy for the past decades. Although Québec's share of Canada's immigrant intake is well below its weight in the Canadian population, in absolute numbers, relative to the size of Québec's population, and relative to immigrant inflows in polities of comparable size, it's still signfiicant. This is often presented as a positive thing, as a phenomenon that rejuvenates aging populations and provides plenty of new workers and consumers. Dubreuil superbly points out the myths relating to immigration, and the new problems associated with it. Let me quote five paragraphs, translated thanks to Google Translate with a little help from me.

Landed immigrants in Québec are, on their arrival, younger (27 years) than the Québec average (40 years). One might think that more immigrants could significantly rejuvenate the population of Québec. Ten thousand more immigrants in a year, for example, reduces the average age of Quebec that year by 0.02 years. In a recent article in the Cahiers québécois de démographie, demographer William Marois has calculated that it would take 200,000 immigrants per year, four times more than now, to prevent the population of age 65 and over from exceeding 25% of the total population during the twenty-first century.

The low impact of immigration is explained by the amounts at stake: the 45,000 immigrants received each year is equivalent to about 0.6% of the population of Quebec. This is clearly insufficient to reverse the trends at work in 99.4% of the population. This does not mean that immigration has no impact on demography. On the contrary, it has a significant impact on the total size of the population. More people, however, does not allow itself to face the problem of aging. The latter is related to the age structure of the population, in turn only slightly affected by more immigrants.

Another misconception is that immigration helps to rejuvenate the population through higher fertility of immigrant women. While the fertility of immigrant women is slightly higher than that of native women, this gap is not likely to reverse demographic trends nationally. The demographer Ayéko Tossou assessed the fertility of immigrant women in Quebec had varied between 2.2 and 2.8 children per woman between 1976 and 1996. The difference with the fertility rate of native women is real, but immigrant women increase the fertility rate of Québec by only 0.1.

In recent years, the government insisted on the tremendous opportunities created on the labour market by the aging population. According to Emploi-Quebec, nearly 700,000 jobs to be filled in the coming years. These evaluations are frequently used to justify our policies and recruiting candidates for immigration. But immigration can really meet the needs of Quebec labor? This is doubtful.

First, it should be noted that immigration does not increase the supply of labor, it also increases demand. Immigrants are not only workers but also consumers. If, for example, immigration increases the population of Quebec by 10% in fifteen or twenty years, it may also increase the manpower needs by more or less 10% in business, health care, et cetera. The reasoning here is similar to that outlined in the case of demography. If immigration increases the total size of the labour market, its impact on the labor market structure is necessarily weak, because the number of landed immigrants is simply too low to reverse the trends in the rest of the population.

Dubreuil notes that for the past generation, the incomes of immigrant workers have declined sharply relative to their native-born counterparts in Québec as in Canada: "From 1980 to 2005, for example, the average income of recent immigrants with university degrees increased from $48,541 to $30,332. It is important to note that this decline occurred despite a higher employment rate among recent immigrants than before." In fact, there's reason to suspect that this problem may be worse in Québec than in Ontario, for whatever reason.

Immigration--like migration generally--obviously plays a role in economic development, and can easily play a positive role. It's just very, very important to keep track of the details. What's working? What isn't? What can be changed? What can't be changed? What, finally, is to be done?

Thursday, June 03, 2010

On population aging and Newfoundland's blood supplies

The aging of populations has any number of consequences in any number of countries for any number of reasons. One consequence that I hadn't imagined at all was a falling number of potential blood donors in Newfoundland and Labrador.

Statistics Canada's latest demographic projection singled out Newfoundland and Labrador as the province with the fastest aging population.

As well, under a low-growth scenario, Newfoundland and Labrador is the only province that could see its population decline over the next 25 years.

"As this demographic shift happens, it will have a two-fold effect on our blood supply," said Sharon Bala, a communications official with the Canadian Blood Services in St. John's.

"First, we'll need more blood and then second, there'll be fewer donors available to donate, so that's why it's really important for us to engage younger people to pick up the torch."

In 2009, the median age of blood donors in Newfoundland was 41, meaning that half of the people who gave blood were older than that.

Bala said Canadian Blood Services has launched a new campaign targeting teens. She said organizers want to recruit donors at a younger age and to foster donation habits that will last for years.

In Canada, as in many other countries, blood is frequently in short supply. Part of this is because (circa 2008)a third of committed donors did not showing up, but as one source notes the demographics of blood donors are become less and less favourable.

Currently, despite the fact that almost everyone will need to use donor blood at some point in their life, less than 4% of eligible donors give blood.

By examining the records from the Canadian Blood Services, several patterns were observed. Firstly, the 15-24 age group showed the strongest likelihood to be donors, whilst those of working age (25-54) were the least likely to be donors. The authors predict that due to an ageing population this reliance on the younger generation will be unsustainable.

The study also showed positive ties between level of education and ability to speak English with donation likelihood, whilst immigrants and the wealthy were less likely to donate. The paper shows that those living in a big city were much less likely to donate blood than those living in smaller cities or towns, coining the phrase "the stingy big-city effect". According to Páez, "The fact that those who possessed a higher level of education were more likely to donate lends weight to the assertion that, with 25% of Canadians thinking there are some risks in donating blood, educating the public would help expand the donor database".

This last may be a consequence of fears dating back to the early and mid-1980s, when many people believed that they could become infected with HIV not only by receiving blood products but by donating blood. Older people with more commitments just find it difficult to set aside the time necessary.

Saberton et al's very extensive and highly recommended study suggests that, in Canada the proportion of blood donors as such doesn't very much by region, with (as noted above) fluency in English and residency in small towns playing more of a role. Newfoundland's very badly off in this regard, with underserviced rural areas and a most unfavourable age pyramid, with low completed fertility compounded by mass emigration of the young and working-age population.

What goes for Newfoundland probably also goes for other countries facing similar demographic issues. Where will the blood needed for surgeries come from in the future? Perhaps the blood could be manufactured. (But how?) Perhaps the blood could be imported. (But the memory of the tainted blood scandals common to most of the developed world will surely prevent this.) It's the sort of conundrum that doesn't seem to have been considered, honestly. Maybe it should.