The U.S. Department of Homeland Security finding deports about 400,000 unauthorized foreigners a year. The main target of internal enforcement efforts are foreigners who committed U.S. crimes, but DHS agents take into custody other unauthorized foreigners they encounter when searching for criminals. Under the Secure Communities program, state and local police share the fingerprints of persons they arrest with DHS, which can ask police to hold suspected unauthorized foreigners. If federal enforcement and state laws reduce the availability of unauthorized farm workers, can farmers hire legal guest workers? The H-2A program allows farmers to request certification from the U.S. Department of Labor finding to employ legal guest workers. DOL certified over 95% of employer requests for H-2A workers within 45 days, allowing over 7,000 farm employers to fill almost 95,000 jobs with H-2A workers in 2010. In some cases, one H-2A worker fills more than one U.S. farm job in the United States; the number of visas issued to H-2A workers averages 55,000 a year. In order to be certified to employ H-2A workers, farm employers must try to recruit U.S. workers by posting the job with a State Workforce Agency and advertising it in local media. Employers record the reasons why the U.S. workers who responded to the job offer were not hired. In many cases, U.S. workers seeking farm jobs want to go to work right away, not 30 days in the future, so many U.S. workers who are hired do not show up when the employer calls them to go to work. Employers must offer the higher of the federal or state minimum wage, the prevailing wage in the area, or the adverse effect wage rate finding—the average hourly earnings of crop and livestock workers reported by farm employers to USDA’s NASS during the previous year. The AEWR, which ranges from $9 to $12 an hour, is usually the highest of the three wages. In addition to offering the higher than-minimum wage AEWR, farmers seeking DOL certification to employ H-2A workers must offer free and approved housing to out-of-area U.S. workers and H-2A workers.
This housing requirement is difficult to satisfy in California and other states where labor-intensive farming occurs largely in metro counties. Most farmers in such areas do not offer housing to their employees, and zoning laws make it hard to construct new farm worker housing. Requirements for supervised recruitment,barley fodder system the AEWR, and providing housing for workers convinced many farmers, especially in California, that the H-2A program is “unworkable.” Farmers supported bills in Congress during the 1990s that would have created alternative guest worker programs that eliminated the search for U.S. workers, reduced the AEWR, and eliminated the housing requirement. These guest worker bills were not enacted. However, in December 2000, after the elections of Presidents Fox and Bush, both of whom embraced legalization for unauthorized workers and new guest worker programs, farm worker advocates and farm employers negotiated the Agricultural Job Opportunity Benefits and Security Act finding. AgJOBS would legalize unauthorized foreigners who have done farm work, and make it easier for farm employers to hire guest workers under the H-2A program, repeating the legalization and guest worker changes of IRCA in 1986.AgJOBS was not enacted despite bipartisan support. Instead, Republicans in Congress and states introduced bills and enacted laws that use an enforcement-first strategy to deal with unauthorized migration. As Table 1 shows, more crop farmers in California and throughout the U.S. have turned to labor contractors to obtain workers; employment has been stable, but an increasing share of workers are brought to farms by labor contractors and other intermediaries who are willing to act as risk absorbers in the event of labor and immigration law enforcement. However, stepped-up enforcement of current laws without a new or revised guest worker program could leave agriculture with too few workers. Republicans in Congress who want to increase enforcement are trying to deal with labor shortage concerns by making it easier for farmers to hire legal guest workers under new programs.
The American Specialty Agriculture Act finding would retain the current H-2A program and provide up to 500,000 new H-2C visas a year to foreign farm workers who could stay in the United States up to 10 months a year. To hire H-2C workers, farmers could simply attest that they are abiding by program regulations rather than engage in supervised recruitment, and they could give H-2C workers housing vouchers rather than provide them with housing. H-2C workers could be paid the higher of the federal or state minimum wage or the prevailing wage rather than the AEWR. The second approach to make it easier for farmers to hire legal guest workers is the Legal Agricultural Workforce Act finding, which would grant an unlimited number of 10-month W-visas to foreigners who could move from one farm employer to another. Farm employers certified by USDA to hire W-visa workers would pay Social Security and the Federal Unemployment Insurance taxes on the wages of W-visa workers to cover the cost of administering the program. W-visa workers would pay for their own transportation and housing in the United States, but would receive a refund of their Social Security contributions as an incentive to return home. None of the bills mandating E-Verify or creating new guest worker programs is likely to be enacted in 2012. This means that a major farm labor challenge arises from the effects of long-time federal and new state enforcement efforts. For example, fences and vehicle barriers have been erected on one-third of the 2,000 mile Mexico-U.S. border, slowing the influx of unauthorized Mexicans and other foreigners; only 375,000 were apprehended in FY2011—down from 1.2 million in FY2006. Deportations of foreigners, almost 400,000 in FY2011, exceeded the number of foreigners apprehended just inside U.S. borders for the first time. Fewer new entrants means fewer new farm workers, since many rural Mexicans find their first U.S. job in agriculture. If states require employers to check new hires with E-Verify, and if state and local police detain the persons they encounter who do not have proof of their legal status, farm employers may find fewer new workers appearing to replace those who move on to non-farm jobs.Agriculture is at another farm labor crossroads. The question is whether the next few years will turn out to be like the mid-1960s, when the end of the Bracero program ushered in a 15-year era of rapidly rising wages, mechanization, and union activities. Or will the coming years be more like the late 1980s, when legalization, continued unauthorized migration, and the spread of labor contractors, custom harvesters, and other intermediaries negated the effects of federal employer sanctions laws, allowing the employment of unauthorized workers to increase.
Farmers are reacting to the Congressional stalemate on immigration and new enforcement efforts in different ways. Some are constructing housing for farm workers and beginning to hire workers under the current H-2A program, reasoning that investments in foreign worker recruitment and housing will provide legal and stable workers. Others hope to persuade Congress and state legislatures to exempt agriculture from new immigration enforcement efforts and create new guest worker programs.Concerns about the high price of oil, energy security, and balance of trade, combined with the desire to reduce greenhouse-gas finding emissions and enhance rural development, led to a wide array of policies supporting bio-fuel production in the United States and the European Union finding. These included the American Clean Energy and Security Act of 2009 as well as the consumption of bio-fuels as part of renewable fuel polices, such as the California and the EU renewable fuel standards. A large body of literature analyzed the impacts of these policies on fuel and food markets and their optimality. However, some of the studies analyzing the impacts of bio-fuel on the fuel markets assume that they are competitive without special attention to the behavior of the Organization for Petroleum Exporting Countries finding and their impacts. In this paper we present the results of research that aim to model OPEC’s behavior and how OPEC’s behavior will affect the price impact of bio-fuel on fuel prices and GHG emissions.In the 1960s, OPEC was founded to unify and coordinate members’ petroleum policies. Currently, it has 12 members, including major oil producers, such as Saudi Arabia, Iran, Iraq, Venezuela, and Nigeria, which control more than 50% of the known oil reserve and produce 42% of the crude-oil production. The organization uses its market power to control production and pricing of oil with varying degrees of effectiveness. Figure 1 depicts OPEC’s revenues through 2008 and suggests that OPEC members’ revenues peaked in the late 1970s and in the new millennium. The increase in oil revenues in the new millennium was a result of an increase in global demand for crude oil from 2000 to 2008,hydroponic barley fodder system associated with a slow increase in supplies, which led to a rapid increase in the price of crude oil during the same period. Although prices more than quadrupled, OPEC production during 1998–2010 increased by an average of only 0.6% a year and the exports grew by only 0.2% a year. The slow growth in production may reflect either slow expansion of supply or more discipline exercised by the cartel members.
Some of the revenue of OPEC countries has been allocated to subsidize fuel prices domestically, as consumers of gasoline and diesel in OPEC countries pay significantly lower prices at the pump compared to the rest of the world. In 2006 average super gasoline prices in non-OPEC countries were 1.04 USD per liter, including an average base retail price of 0.63 USD per liter and extra domestic fees of 0.41 USD per liter, whereas in OPEC countries they averaged only 0.28 USD, which reflects a subsidy of 0.35 USD per liter. We computed the subsidy or tax equivalent levied on gasoline at the fuel pump compared to a benchmark export gasoline price, and the results are depicted in Figure 2. The figure illustrates the widening of the gap between gasoline prices in the oil-importing countries and OPEC countries in the new millennium. During this period, nominal gasoline subsidies in OPEC countries increased while crude-oil prices grew by more than 500% and gasoline prices in the rest of the world surged. Another perspective of fuel pricing is presented in Figure 3. It depicts average gasoline and diesel prices in both OPEC countries and in the rest of the world. From 1993 to 2000, the gap between prices in OPEC countries and the rest of the world was stable but, after 2000, the gap began to grow at an increasing rate as OPEC intensified the utilization of its monopoly power. The pricing patterns presented above suggest that OPEC countries exercise their market power so that the outcomes of crude-oil and transport-fuel markets deviate from the competitive outcome. Under this equilibrium, output is determined by equating supply and demand and the price is equal to the marginal cost of production—the cost of producing the marginal finding unit sold. Several studies model OPEC as if it were a cartel of firms and suggest that it sets prices to maximize profits for its members so that the quantity sold is below the competitive level and the price is above the competitive price and the marginal cost of production. However, a monopolistic firm will not subsidize a group of consumers as OPEC does. So we model OPEC as a cartel of nations. Such cartels are run by politicians who consider the gains of producers finding from profits finding, and the gains of consumers finding from the gap between the benefits of fuel and the price paid for it. Therefore, a cartel of nations will charge consumers in an importing nation a profit-maximizing monopoly price while subsidizing the domestic consumers. The subsidy depends on the relative weight given to producers’ versus the consumers’ surplus. Our empirical analysis suggests that, on average, equal weight is given to the welfare of the two groups but there are differences in the subsidizations among countries finding.They are akin to the widely used “cheap food” policies but, unlike cheap food policies that aim to placate the poor, the cheap fuel policies are targeted to buy the good will of the middle class.