Friday, July 31, 2009

Dairy industry demonstrates how cheap, pliable labor and technological innovation are at odds

++Addition++Expanding on a post by OneSTDV, Randall Parker looks at specific examples of mechanization adoption among dairy farmers in the US, modelled on the actions of their counterparts in Europe.


A couple of paragraphs from a WSJ article on the putative labor shortage (which should actually be thought of as a shortage at the desired wage rates of producers) the US dairy industry faces caught my attention:
Dairy farmers in Europe have begun to use robotic milkers to reduce dependence on manual labor. But due to the high capital investment required, adoption in the U.S. is likely to be slow, Mr. Maloney says.

Phil Martin, an agricultural economist at the University of California, Davis, believes if labor gets much more expensive in the dairy sector, those higher wages could spur investment in technology -- "although it's not clear at what wage," he says. Currently, the average hourly wage for dairy workers in California, for example, is $11.38. Even though minimum wage is lower, he says, "I would suspect a whole lot of 18-year-olds prefer to work at McDonald's for minimum wage than milk cows."
This brings to mind the timeless Platonic adage, "Necessity, who is the mother of invention."

It is difficult to get information on the economic situation of the industry nationwide, presumably because most dairy is produced 'locally' (within 100 miles) and consequently it is less centralized than many other agricultural industries are (if any readers are aware of such data, please share it in the comments--I would ideally like to look at this in more quantitative detail). But if $11 an hour is the going rate in a state with a minimum wage of $8 an hour and economic viability requires it not increase beyond that, even swith as little knowledge of the industry as I have it is clear that if the monetary standard of living is presumed to increase in the US going forward, this is not sustainable without greater mechanization. Yet the availability of cheap labor inhibits this from being adopted.

Low wages and first world status do not mesh. According to a study led by the Heritage Foundation's Robert Rector, low-skilled households created an average net fiscal deficit of more than $22,000 in 2004. Nine percent of natives are classified as low-skilled, as are 25% of legal immigrants and 50% of illegal immigrants. The per family deficit has likely increased during the current recession, as the unemployment rate for immigrants is now, as of the beginning of 2009, higher than it is for natives.

Why subsidize the labor costs of dairy farmers if doing so will retard long-term increases in domestic productivity? I do not see why our immigration policy should encourage the perpetual search for an ever larger, cheaper labor pool at the expense of per capita productivity increases. As Steve Sailer tersely articulates, the inverse of such a formula has led to the historically high living standards Americans have enjoyed:
America's proud history as a middle class country rests fundamentally on two advantages of settling a mostly empty continent: a small supply of labor and a large supply of land.

This meant relatively high wages and low land prices, so Americans could afford to buy their own farms and homes.

In turn, this virtuous cycle encouraged Americans to invent labor-saving devices
like the reaper, the washing machine, the assembly line, and the semiconductor.

Which made Americans even richer and more independent.

Sadly, immigration has created a wasteful abundance of cheap labor and contributed to a shortfall of cheap land.


Anonymous said...

Yup, hit the nail on the head...

P.S. Im suprised more college students aren't willing to do some weekend work for 11 bucks an hour. I mean damn, you can wear gloves while you milk cows. Thats not bad money for something very simple. Perhaps many of them simply dont know about those jobs.

Half Sigma pointed out a woman with a BA from Robert Morris who is 120K in student loan debt , but making only $7.25 an hour (the minimum)in this job market.

One thing that people constantly miss is how a relatively unified country ethnically (few "ethnic" neighborhoods) ends up keeping housing costs low. The more barrios and hoods', the more whites/asians will outbid each other to live away from all of that, bidding up housing prices. Lower housing prices would mean we could pay labor less than what we might think, but they could enjoy a better standard of living anyway due to their rent/mortgages being cheaper than what they are now.

I think long term, nations that are ethnically divided against themselves (like ours will be if we keep letting the whole world in), have a distict disadvantage against unified ethnic populations in countries like China and India. The Chinese and Indians will be patriotic to their country, and will not have the "diversity hassles" attendent to our nation. They will be on the same page, while we will be squabbling over "disparate impacts" of tests and scholarships, business contracts, profiling and all of that jazz.

Jokah Macpherson said...

From what I've been able to learn from my father, who grew up on a dairy farm, it's almost a 24-hour-a-day job. The milking alone has to be done nearly constantly and that's before you even get to the feeding and other necessary chores. While I'm sure the industry has changed since his childhood, I doubt there will be many who are sorry to see the labor requirements for dairy reduced by capital investment.

Anon, this is the reason why I don't think college students milk cows on weekends. It is not just a weekend commitment. Furthermore, I doubt many colleges have large dairy industries close by except for the agricultural state schools.

AE, Reading Chesapeake by James Michener this spring, which deals heavily with the topic of slavery, I got to thinking that slavery itself may have held the South back technologically in the long run in a similar way to what you discuss here. The endless supply of nearly free labor probably greatly reduced the need for innovation. The most industrious characters in the novel are the Quaker family who forswears slavery early on and ends up building a well-respected shipyard.

Audacious Epigone said...


Ahem, your mind is diseased. Let us begin administering the antidote. Repeat after me:

"Diversity is strength!"
"Diversity is strength!"
"Diversity is strength!"


I've thought of making a similar analogy between restrictionists as northerners (higher wages, more social equality, industrialization) and the open borders crowd as southerners (lower wages, greater inequality, more manual labor), but have stopped short because my grasp of history is hit-or-miss and those sorts of analogies seem to me too easily thrown around. Nonetheless, I definitely share your sentiment.

Anonymous said...

1st Anonymous, until this mass immigration, people could make s decent living at manual labor. Not sybaritic luxury, but not starvation wages either. People used to put their kids through school meat packing, landscaping, etc...And the work was quality, not the gabage you see today. You get what you pay for.
I was glad to get $12 an hour under the table shoveling coal on my off hours while in school over 10 years ago. Not back breaking, but not soft work either. It did me good and gave me some persepctive on life that it wasn't all fun and games.
You are correct how an ethnically unified country is better. Life isn't all about how cheap you can get your lawn cut. Our elites don't give a fuck about that, so you get what we have today.
And not to get all NSDAP, but the whole germanic attitude toward manual labor is overall positive.

JGP said...

Outsourcing seems to be having the same effect on computer programming. Model Driven Architecture (MDA) is an advanced technology for systems development that greatly increases the productivity of developers yet is being adopted, if at all, much slower in the US than in Europe and Japan probably because they face greater restrictions on outsourcing development than the US.

ENwhiten said...

Eventually, milk will probably be manufactured from its component parts (or some version of it)using vats of microbes. Most food could be made this way. The power source may be the sun or perhaps chemical. I can envision fields of transparent, microbe-filled tubes covering the deserts, requiring no loss of water (which is mainly used just to draw nutrients from the soil by evaporation). You might even grow them in seawater. See also:

Anonymous said...

One thing this article reminded me of immediately was the eb5 investor visa. This visa requires that, in order to enter the country, you put a half a million dollars into the economy and create at least 8 jobs. Even when immigrants are taking advantage of this visa, we are seeing them pad their workforce with illegals...often their own family. The practice of 'uner the table' payment, that involves no insurance or retirement, is often too tempting, even for immigrant founded companies, to resist.

Audacious Epigone said...


Yes, I am a big fan of the EB-5 visa program.