Immigration reform could cost you
With nationwide protests set for Monday, a look at what restrictions on immigrant labor could cost Americans.
By Jessica Seid, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - Ready to pay more for a loaf of bread or your morning corn flakes?

That could be one effect of immigration reform, according to farm economists and other experts.

Immigration reform
Small business owners are sweating over Congress' debates because they fear a future without 'guest workers.' (Full story.)

The subject of much recent debate in Washington and across the country, immigration reform could push up wages if it makes it harder for U.S. businesses to hire lower-wage workers for low-skilled jobs. That would raise costs for farmers and other producers, who could then try to pass the costs along to consumers.

"In the absence of immigrant labor, wages might be a bit higher, particularly in sectors that hire lots of low-skilled labor, which could potentially show up as slightly higher prices," said Jared Bernstein, economist at the Economic Policy Institute, a left-leaning think thank in Washington.

Pat O'Brien, an economist at the American Farm Bureau, said that if immigration reform severely restricts the labor pool, wages for farm workers - and costs for farmers - could rise sharply for everything from wheat, corn and soybeans to dairy products, red meat and poultry.

He said that crop and livestock farmers, for example, would be forced to boost prices to compensate for more expensive labor. "We're estimating that wages could go up to $14.50 an hour," he said, from the current average of about $9.50 an hour.

In that case, "prices would go up possibly 5 to 10 percent as farmers try to pass along the higher cost of labor."

A big rise in labor costs could also have a devastating effect on many of the nation's farms.

"If labor shortages forced costs to rise, it would be hard to pass those costs along," said Jack King, manager of national affairs for the California Farm Bureau, an association of farm owners in the state with a $27.5 billion agricultural industry.

"We can't pass the costs along. We can't control the market. We don't really have any place to go if wages spiral out of control," said Luawanna Hallstrom, general manager of Harry Singh & Sons, a California tomato farm.

Hallstrom predicted that a reform bill limiting the availability of workers could force small and mid-sized farms to suffer, or even shut down altogether. "Some (farmers) are already choosing not to grow this year because they didn't know what will happen," she said.

Prices for other goods and services might rise as well, though that seems less clear.

Patricia Cortes, a graduate student at MIT, studied the effect of low-skilled immigration on the prices of things like cleaning and landscaping, and also found that less immigrant labor would bid up the price of low-skilled jobs, which she says could lead to higher prices.

Apples and oranges

But not all farm products would end up costing more.

Consumers would probably see little impact on prices of fruits and vegetables, for example, because "displaced American production would be replaced by production in countries like Mexico," said O'Brien at the American Farm Bureau, referring to the North American Free Trade Agreement (NAFTA) from January 1994.

"The consumer would see the same head of lettuce at the same price," he said.

Still, farmers would take a hit because, historically, they haven't been as successful passing along wage increases.

Without migrant labor, "We would see up to a third of the fruit and vegetable sector go out of business almost right away," said Austin Perez, a labor expert at the American Farm Bureau.

The political debate

The Senate was supposed to take up its stalled immigration reform bill this week, but that got put on hold as lawmakers turned their attention to rising energy prices. (For more on President Bush's meeting with key senators on the issue, click here).

The issue of reform could have a huge impact not only on the estimated 11.5 to 12 million unauthorized immigrants living in this country, but also on farms, since up to 40 percent those immigrants work in agriculture, according to World Perspectives, an agricultural consulting firm.

If the Senate manages to pass a bill, it would have to be reconciled with the House bill passed in December that includes neither a guest-worker program nor any legalization process for illegal immigrants already in the country. Both those provisions are in the stalled Senate legislation.

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For more on the May 1 immigration rally, click here.

Are there really jobs that Americans just won't do? Click here.

Immigration reform threatens to cripple some industries, click here for more. Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.