Immigration and Economic Impact
What happens to the agriculture sector if the United States population plateaus? Developing the answer will take you on a winding road through millennial mindsets, technology advances, and immigration policy.
Why is the Population in the United States Decreasing?
The trends of the last ten years confirm a national population decrease. Whether it is good or bad remains to be seen. Some scientists believe a smaller population supports a more economically and biologically harmonious country. Economists tend to forecast an economic decline as population numbers dip. With fewer people using fewer goods and services, our consumption based economy would come to a standstill. Declining populations bring their own food security issues. Already the agricultural sector is facing labor shortages which impacts productivity.
The scenario isn’t as simple as saying there are just fewer and fewer people in America. Picture an upside down pyramid where a very large and aging baby boomer generation of people is being supported by an ever shrinking younger generation. The question of how to feed the population becomes more defined with this image. Instead of can we grow enough food the question becomes who will plant, harvest, process, and transport all the agricultural products when the population age structure becomes this top heavy?
A decreasing future workforce is also driven by a popular trend among younger generations opting not to have children. Dual-income, no-kids, or DINKs as they are commonly referred to, have very different spending habits. The trend doesn’t lead to less spending; rather, these couples generally prioritize travel, spontaneity, and leisure. If these population trends remain the same, there will be fewer people entering the workforce in ten years, but consumer demands will stay relatively the same.
If consumer demand remains high, as it has shown to do in other affluent countries experiencing population decline, while labor forces are low, then we will have three options for meeting demand; rely on imported agricultural goods, leverage technology to fill labor gaps, or bring workers into the country. Most likely, we need all three.
Imports, Innovation and Immigration
Imported Goods
Relying too heavily on imported goods causes a trade deficit. Economically, importing more than you export isn’t bad, but deficits can have geopolitical and national security implications. For many commodities, we are importing more and domestic production is declining. As an example, in 2000, 75% of avocados consumed in the U.S. were also produced in the U.S. Today only 10% of avocados consumed are domestically produced. Americans are eating more avocados than a decade ago and competition from lower priced imports is fierce. More imports can make for less secure agricultural supply chains. Though the United States has been in a trade deficit since World War II, banking too heavily on foreign production is risky for food security.
Agriculture and Technological Innovation
To address labor shortages and reduce labor costs, many agricultural businesses are adopting technological innovations. The grain industries are leveraging technology to decrease the need for a large workforce. These days, most large scale farms use a single piece of equipment to do a job that previously required 50 laborers. With millions of dollars of crops lost yearly due to labor shortages in the U.S, farmers are increasingly willing to invest in high dollar drones and robots. In many instances these technologies work more efficiently and with less environmental impact than if the jobs were done by their human counterparts. Also less likely to have labor abuses or poor working conditions. But not all problems can be solved by technology yet…
Meat and produce industries have faced particularly difficult challenges pertaining to labor shortages. As experienced at the height of the pandemic, livestock processing is time sensitive and even minor hiccups to operations can create a world of problems in supply chain dynamics. The same holds true for produce. Produce loss is a reality felt globally. If there are not enough workers to harvest produce when it is ripe, much of the food is lost to bugs or passes its prime and is left to rot. There is plenty of room for innovation in the meat and produce sectors. These industries are likely to see a shift towards artificial intelligence technology as well.
Agriculture and Immigration Economics
From sheep herding, to feedlots, to apple orchards, agriculture has relied heavily on migrant labor. Since 1891 the U.S. government has enacted a number of policies to generate short term contracts for migrant workers and provide the necessary infrastructure to support the influx of non- domestic laborers. The most recent of these is the H2A program, immigration work permits built to protect workers, reward documented laborers and secure employees for farms and ranches.
Policies have shifted with the times. The post World War era allowed for millions of migrant workers to travel the country following harvest seasons, while the post 9-11 policies verifying documented workers put many immigrants on edge. Currently, immigration is a hot topic once again and many economists believe it is the single most important factor defining population rise or decline. Though the topic is certainly multi-faceted, for agriculture, a surge in laborers could generate additional momentum and revive many shorthanded farm operations.
Until recently American farmers and ranchers have had a difficult time finding domestic laborers willing to take on less desirable, labor intensive positions. In fact, most meat processing facilities in America are fully dependent on foreign born employees. Even during the height of the pandemic when immigration numbers were extremely low and these industries incentivized potential employees with signing bonuses and insurance policies, there were few domestic takers. Jobs such as these are physically demanding, involve undesirable tasks and are found in very rural areas. They are not appealing enough jobs to prompt young people to apply or urban populations to relocate. Historically these jobs have been filled by non domestic laborers.
How many immigrants work in agriculture? It's hard to identify exactly how many people are currently employed in the U.S. agricultural sector now than there were just two years ago. Economists are taking note of increases in production and unemployment rates. Fed policymakers have shifted their economic growth forecast predicting 2.1% growth, a notable difference from their initial 1.4% estimation. And for now it appears that agricultural industries are benefiting from immigration as they did in the 1950s.
Could current immigration policies change come November? Will current policy undermine programs like H2A? How do we find balance? Businesses, especially ag businesses are struggling to find labor. Fewer workers are raising consumer prices and increasing the amount of technology we interact with daily. Yet, Americans want less immigration, or at least better policies, and desire healthy domestic commodity production. These are important scenarios to consider as we continue to build best practices for secure supply chains in the U.S.
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