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An issue that has been greatly debated over the past decade is the impact of immigrant farm workers on the U.S. and local economies. Concerns that increases in immigrant farm workers may lower domestic wages are of interest to U.S. policy makers, however farm owners argue that insufficient labor supply has negatively affected farmland and lowered profits. The H-2A temporary agricultural program is a way for agricultural employers who anticipate a shortage of domestic workers to bring nonimmigrant foreign workers to the U.S. to perform agricultural labor or services of a temporary or seasonal nature.
The objective of this study was to compare the benefits received by U.S. citizens under welfare programs to the income earned by a typical H-2A worker. The study also analyzed the impact of the H-2A program on local employment and economy. With this in mind, the following framework was developed to meet the objectives of our study.
• Compare the benefits to recipients of social welfare programs to the income of current H-2A workers
• Estimate effects of H-2A program on farming productivity and profits
• Estimate effects of the H-2A program on local employment opportunities
• Estimate the direct and indirect effects of the H-2A program on the local economy
• Validate methodology and results of the study with key players in the local agricultural industry
• Provide final recommendations for future policymaking
In the first step in the analysis we compared the income received by a U.S. citizen/resident in Arizona under typical social welfare programs against the income earned by an H-2A worker during a growing season. Our results suggest little incentive for the local worker with below poverty income to enter the agricultural labor force, which limits local availability of farm labor. The potential yearly benefits of typical welfare programs in Arizona can range from $1,503 to $11,902 per year. Any individual receiving the benefits of two or more programs will easily exceed $5,667/year. The average earned income for an H-2A worker is $6,900 per season in Yuma County. These figures suggest little incentive for the local worker with below poverty income to enter the agricultural labor force, which limits the availability of farm labor.
An agricultural planning tool was developed to estimate the labor force needed to maximize the region’s fresh produce profits. The tool was used to assess the economic impact of varying the size of the H-2A program, including its current contribution, its potential benefits/costs to the farmer’s profits, and areas of opportunity for improving the program, such as streamlining the application process to increase the flexibility of farmers. The framework of the model depends on simple inputs, such as farmer’s profits, that dictate the environment of agricultural production.
Using the developed planning tool, we sought to determine the program’s impact on the region’s productivity and profits. An increase in the number of H-2A workers from the current level of 3,000 workers to an unconstrained amount of 6,233 workers would result in a 33.7% increase in the region’s agricultural profits. While a reduction of the number of H-2A workers to zero would result in a 30.0% drop in agricultural profits.
We then sought to determine the direct and indirect effects of H-2A program on the local economy. The total economic impact as measured by the direct effect on farmers’ profits plus the indirect effect on local economic activity less the change in net social costs resulting from expanding H-2A policy to unconstrained hiring is estimated to be $63.79 million. Expanding the program would reduce the number of local seasonal worker weeks in labor intensive crops by 11,480. In addition, it would create a total of 217 additional full-time jobs in the region resulting from increased activity in sectors of the Yuma economy that provide inputs to these farmers as well as from increased worker income being spent on goods and services. Eliminating the program would result in 265 jobs being lost in the region.
Based on our analysis of Yuma County’s agricultural industry, several conclusions were made. The H-2A program has a significant economic impact on the agricultural profits of the Yuma region. Low income citizens eligible for social welfare programs have little incentive to enter the agricultural labor market due to the comparable benefits received under welfare, and as the enforcement of immigration policies become more rigorous, the dependence on foreign work programs will increase.
*This project is funded by The Howard G. Buffett Foundation