The Immigration Reform and Control Act by xln10969

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									Editor’s note
                                               IRCA’s eflects on large farms
Oneof thegreat concerns about passage          Philip L. Martin   Q   Stephanie Luce
of the Immigration Reform and Control
Act of 1986 was the effect it would have       In August-September 1987, soon after the      seasonal workers in 1987 at slightly
on agriculture in California. There            Immigration Reform and Control Act be-        higher wages than in 1986. Seasonal
were predictions that growers, unable          gan to affect agriculture, we conducted a     worker employment on responding
to hire enough help to harvest their           survey to determine its effects on Califor-   farms decreased 10 percent between 1986
crops, would have to leave them to rot in      nia farm employers. Our farm labor sur-       and 1987; this decrease may reflect both
the fields.                                    vey was mailed to the members of several      IRCA and the fact that not all 1987 hiring
   Two groups of University research-          farm organizations, and the responses         had been done at the time of the survey.
ers tried to assess the reality of the farm    were analyzed by the University of Cali-      The average hourly wages of seasonal
labor dilemma in the fall of 1987 bysur-       fornia, Davis.                                workers rose 4 percent to $4.79 between
veying growers. Although their pur-               Those responding to the survey-a to-       1986and 1987.
                                               tal of 139 farms-were large employers,
poses and sampling procedures were             averaging 213 seasonalemployees in 1986       The farm labor survey
different, both surveys included ques-         and a total payroll of $827,000each. Of the      A one-page farm labor survey was
tions about the impact of IRCA on 1987         respondents, 59 percent reported being        mailed in August-September 1987 to
harvests. A s reported on the following        affected by IRCA; a typical comment was       members of the following organizations:
pages, they both essentially found that        that IRCA increased the farm’s paper-         the Farm Employers Labor Service, a
crop losses due to a labor shortage did        work or affected the timing of farm activi-   Farm Bureau affiliate; the California
 not materialize to the extent predicted.      ties. Only six farms, however, reported       Grape and Tree Fruit League; the Western
 The future impact of IRCA remains to          crop losses caused by labor shortages in      Growers Association; the Imperial Valley
 be seen. Because of the widespread in-        1987. The respondents said that 44 per-       VegetableGrowers Association;and Agri-
 terest in this subject, we have devoted       cent of their 1987 workers were expected      cultural Producers. A total of 2,500 ques-
                                               to apply for amnesty, or 45 workers per       tionnaires were mailed; it is hard to deter-
 extra space to it in this issue of Califor-   responding farm.                              mine an exact response rate because each
 nia Agriculture. Other articles will fol-        The survey also indicated that the 139     organization’s mailing list includes, in
 low in comingissues.                           responding farms hired slightly fewer        addition to farm employers, many people

26   CALIFORNIA AGRICULTURE, MAY-JUNE 1988
who are not farmers and therefore not ex-
pected to respond. The responses appear
to be most representative of conditions on
the largest farms. For example, the aver-
age survey respondent paid $827,000 in
farm wages in 1986; unemployment in-
surance data for 1984 indicate that only
400 California crop and livestock employ-
ers paid more than $1 million in wages,
but they paid over 40 percent of all Cali-
fornia farm wages.
   The survey obtained data on the effects
of IRCA, employment fluctuations in
1986, major commodity produced, and
payroll taxes and fringe benefits. Many
respondents answered some but not all of
the questions; for example, more respon-
dents answered the questions on immi-
gration than on the cost of fringe benefits.
We have presented the number of re-
sponses (n)for each set of questions.
IRCAs effects
    A central immigration-relatedquestion
is whether and how IRCA is affecting
farm employers.
    The first set of questions asked employ-
ers if their farms were affected; 59 percent
of the 139 respondents said yes (table 1).
Those affected were asked if they had any
crop losses due to IRCA-caused labor
shortages in 1987; only six reported such
losses. A San Diego strawberry grower
who reported that one-third of the farm’s
140 workers were illegal alien workers
earning $3.60an hour lost 10percent of the
1987strawberry crop. The typical effect of
IRCA cited by respondents, however, was
that additional clerical work was neces-
sary to provide documentation to work-
ers seeking amnesty. More farmers said
 that their neighbors lost crops due to
 IRCA-caused labor shortages (12) than
 said that they themselves had IRCA-re-
 lated crop losses (6).
    Respondents reported that 44 percent
 of their current workers45 workers per
 farm-were expected to apply for am-
 nesty. The total farm wage bill reported by
 survey respondents was almost 4 percent
 of statewide crop wages; if the respon-
 dents are representative, then about
 125,000California applicants for legaliza-
 tion should be expected (INS reported
 that 132,000 Special Agricultural Worker
 legalization applications had been filed in    limited sample of mostly large farm em-      sponding farms. Regional wage differ-
 Californiathrough February 1988).              ployers-average seasonal field crop          ences were also as expected: Central and
     Field crop and fruit farms were most af-   employment fell and average vegetable        Southcoast wages were 18percent above
  fected by IRCA, but fruit farms reported a    employment rose (table2).                    the statewide average, and wages in the
  slightly lower than average percentage of       The average hourly wages of seasonal       San Joaquin Valley, southern California,
  workers who would seek amnesty. The           workers reported by farm employers re-       and the SacramentoValley were 6 percent
  field crop and fruit farms were also the      sponding to this survey are consistent       below the statewide average.
  largest employers.                            with other data; that is, vegetable wages
     Farm employers were also asked about       were highest and horticultural-specialty      Payroll and fringe benefits
  their total employment of seasonal work-      wages lowest. Average hourly wages rose          Agriculture has traditionally offered
  ers (all persons employed less than six       2 percent between 1985 and 1988 and 4         easy entry positions with few work-re-
  months on the responding farm) in 1985,       percent between 1986 and 1987; horticul-      lated benefit programs, so that wages and
  1986, and 1987. There were few signifi-       tural wages rose the most and livestock       salaries constituted most of a farm’s labor
  cant changes in employment among this         wages were unchanged on the two re-           costs. Many California farms now find,

                                                                                            CALIFORNIA AGRICULTURE, MAY-JUNE 1988     27
however, that payroll taxes for Social Se-       Only 31 respondents provided com-               Survey respondents reported that they
curity, unemployment insurance, and            plete payroll tax and fringe benefit data.     expected 44 percent of their current work-
other worker benefit programs add 10 to        For these farms, payroll taxes averaged 12     ers to become legalized U.S. residents, or
20 percent to wage costs. We asked farm        percent and fringe benefits 7 percent of to-   an average of 45 per farm. Responding
employers to separate their total 1986         tal payroll. Fringe benefits were a higher     farms had virtually no change in seasonal
payroll into the cost of payroll taxes such    percentageof payroll in vegetablesthan in      worker employment between 1985 and
as Social Security and the cost of vacation    fruits; responses in the other commodities     1987,but their average hourly wages rose
pay, health insurance, and other fringe        are too sparse for generalization. These       slightly.
benefits.                                      percentages are quite different from pay-         The average responding farm had a
   Responses were very uneven: 99 of the       roll taxes and fringe benefit costs in the     1986 payroll of $827,000, suggesting that
139 respondents reported total payroll, of     nonfarm sector: the U.S. Bureau of Labor       the 139 surveyed farms may be most rep-
which 55 reported total payroll and pay-       Statistics reported that payroll taxes were    resentative of the state’s largest farm em-
roll taxes, and 31 reported total payroll,     8 percent and fringe benefits 18 percent of    ployers. On responding farms, payroll
payroll taxes, and fringe benefits (table3).   total payroll costs in the nonmanufactur-      taxes averaged 12 percent and fringe
The 99 responding farms averaged pay-          ing nonfarm economy in 1986.                   benefits 7 percent of total payroll costs, a
rolls of $827,000; they may be representa-                                                    dramatic differencefrom the nonfarm sec-
tive of the 400 California crop and live-      Conclusions                                    tor, where nonmandatory fringe benefits
stock growers who have payrolls of $1            Media reports during the summer of           are typically twice as costly as payroll
million or more annually. Average pay-         1987 suggested that many western grow-         taxes.
rolls of the 99 respondents were highest in    ers were losing crops because of IRCA-
vegetables.                                    caused labor shortages. However, our           Philip L. Martin is Professor, and Stephanie
   Payroll taxes for Social Security, work-    August-September 1987 survey of Cali-          Luce is Research Assistant, Department of
ers’ compensation, and unemployment            fornia farm employers, although limited        Agricultural Economics, University of Cali-
insurance averaged 13 percent of total         in the number of responses received, sug-      fornia, Davis. The authors thank the Califor-
payroll costs for the 55 respondents who       gests that the major impact of IRCA has        nia Agricultural Employment Workgroupfor
reported this information. Payroll taxes       been additional paperwork; only 6 of the        reviewing the questionnaire, the farm organi-
ranged from 12 percent in horticulture to      139 respondents reported crop losses           zations for mailing it, and the farmers who
19percent in vegetables.                       caused by labor shortages.                     completed and returned it.




Initial efiects of the new immigration law on
Calif o m i a agricu 1ture
Howard R. Rosenberg a Jeffrey M.Perloff

The Immigration Reform and Control Act         required employment eligibility (1-9)          representative of all California agricul-
(IRCA)of 1986 prohibits the employment         form.                                          tural employers, as characterized by the
of persons not legally entitled to work in       Deferred compliance with the new hir-        1982 Census of Agriculture, in terms of
the United States. It imposes on all em-       ing standard also delays nonmandated           geographic and commodity distribution.
ployers new hiring and record-keeping          management adjustments to the expected         Returns from medium-size organizations
obligations,with stiff fines for noncompli-    contraction in farm labor supply. The ac-      exceed their proportionate shares of the
ance. It creates a means of obtaining legal    curacy of predictions about the impact of      population, however, and returns from
resident status, particularly for “special     immigration reform therefore cannot be         small organizations fall short of census
agricultural workers” (SAWS)employed           known until well after December 1,1988.        levels.
during 1985-86 in fruits, vegetables, and      But responses to the law have begun to            For our analysis we used 444 Califor-
other perishable commodities specified         unfold over the past year.                     nia-based responses that provided data
by the Secretary of Agriculture. (See Cali-      In late October 1987, nearly a year after    on work-force size and commodityidenti-
fornia Agriculture, March-April 1987.)         IRCA was signed, we surveyed agricul-          fication (table 1). Geographicalgroupings
   Will this sweeping law fundamentally        tural employers in California to find out      coincided with CDFA reporting areas.
alter the structure of California agricul-     about their initial adjustments to the new     Multi-location employers were counted
ture? Significantparts of the law affecting    law. The California Agricultural Statistics    in the area where they produced output of
agriculture are not yet in effect, and IRCA    Service,Department of Food and Agricul-        greatest value.
defers until December 1, 1988, enforce-        ture (CDFA), drew a random sample of              Respondents were asked to indicate up
ment of employer sanctions for hiring in-      2,000 employers for the study. In both a       to three types of commoditiesfrom which
eligible workers to perform ”seasonal ag-      pre-survey postcard and a letter accompa-      they derived the most revenue. A large
 ricultural services” (in SAW program          nying the questionnaire, we explained to       majority (68 percent) of survey respon-
 commodities).After months of confusion        recipients the purpose of the survey and       dents produced only SAW crops. Com-
 and controversy, the U.S. Immigration         assured them of anonymity.                     modity groups that do not fit in this cate-
 and Naturalizationservice (INS)formally          Of 1,938 employers who received our         gory are dairy, poultry, other livestock,
 stated in January 1988 that this grace pe-    questionnaire, 498 (26 percent) re-            and other crops (mostly silage and cot-
 riod also excuses failure to complete the     sponded. The survey respondents are            ton).

28   CALIFORNIA AGRICULTURE. MAY-JUNE 1988

								
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