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Produce Prices Are Going Up and the Sky is Falling

By Chef_Loco
OP-ED Contributor
Wednesday, October 5, 2011 | 7:10 AM

Produce prices are going up. So, there are more than 200,000 illegal aliens harvesting produce in Alabama? You see, that's the approximate number of Alabamians without a job right now. Seems to me some of them might like to have a job about now. I, however, digress.

There are only two reasons the price of produce will rise because of the new Alabama Immigration Law: (1) Historically, prices always rise when consumers believe prices will rise; this is what economists call 'the self-fulfilling prophecy' and to understand it requires an entire semester or two of microeconomics; or (2) This will require the entire next paragraph and then some ….

Prices for produce will rise because the majority of those who harvest produce are aliens (whether legal or not) who the farm owners pay less than minimum wage. Therefore, because of rampant disregard of the Fair Labor Standards Act which mandates a minimum wage of $7.25 per hour, produce prices are currently artificially deflated, and have been for a … well, since forever.

As illegal aliens move out of Alabama (the goal of the new law) one of two things will happen: (1) farm owners will “suck it up” and hire “real Americans” to do the “picking” and pay them minimum wage (as required by law, NOTE: a la John Locke), thus causing an increase in produce prices; or (2) farm owners will do as the did in the early 20th Century and let their crops “wither on the vine” rather than have to pay “exorbitant” wages and/or suffer losses, thus causing a decrease in supply and an increase in produce prices.

The good news for farmers is that some federal subsidy or the other, or perhaps insurance, will cover their losses this year. Next year is a completely different story.

As you can see, produce prices are going up. Welcome to America, Americans. Will this mean hyperinflation, or, worse yet, stagflation? To get a straight answer on that, you need to ask a one-armed economist!

The opinions of Chef_Loco are not necessarily those of the publisher.

Posted in Opinion