Labor_Market,_Wages,_and_Income_Inequality

Labor Market, Wages, and Income Inequality Introduction The use of immigrant labor is becoming increasingly popular in the United States. As a result of this occurrence, it has had a significant impact on wages, labor supply, and labor demand. On a microeconomic scale, some individuals benefit for the increased prevalence of immigrants and low-skilled workers. Others, however, have experienced negative microeconomic impacts as a result of this occurrence. A recent article that supports these findings is titled “The Immigration Cops go after a Dairy Farm” by Post (1). This article will analyzed with some microeconomic concepts and theories discussed in class. Article Summary The article titled “The Immigration Cops go after a Dairy Farm” by Post discusses how many farmers benefit from the use of immigrant, low-skilled labor (1). Simply, in the article, Post reveals that due to the nature of work in agriculture, many low-skilled Americans are not able to handle the job responsibilities or choose not to work in an agriculture environment (1). This places farmers in a precarious situation. Although there is demand for the labor, the labor supply is not available to them unless farmers make the decision to hire immigrant, low-skilled labor (Post 1). This is the primary reason as to why farmers, like the dairy farm discussed in the article rely so heavily on immigrant, low-skilled workers. As an added bonus, these farmers have experienced reduced labor costs when utilizing immigrant, low-skilled workers. As the government places a stronger emphasis on outlawing immigrant labor, farmers fear it will have negative implications on a microeconomic and macroeconomic level. In addition to putting farmers at it disadvantage, reductions in immigrant workforces will have a negative impact on wage equilibriums, labor demand, and labor supply within the agriculture industry (Post 1). Analysis Who Benefits from Immigration of Low-Skilled Workers' One microeconomic concept that can be applied when analyzing this article is determining who benefits from the immigration of low-skilled workers. According to Post, on a microeconomic level, the primary individuals that benefit from the use of immigrant, low-skilled labor is the farmers/employers and the immigrants themselves (1). However, it can also be argued that on a macroeconomic level, consumers also benefit from this process. There are some individuals that do not benefit from the dairy farm’s use of immigrant low-skilled labor. These individuals include low-skilled American workers and the government. According to a report written by Nickell, when the dairy farmer in the article or any employer rely too heavily immigrant, low-skilled labor, it will have a negative impact on unemployment and equilibrium wages (Nickell, 56). What Explains Differences in Wages' In the article by Post, it mentions that in addition to a vast labor supply, using immigrant labor has reduced labor costs because of the lower wages that are demanded (1). There are several explanations that exist for the differences of labor that is are experienced in this situation. One explanation is that when labor supply suddenly increased in a specific market, it will have negative effect on wages (Nickell, 56). Some additional factors also influence the differences that are experienced in labor between immigrant workers and American workers. These factors include the desirability of working conditions; the skill-level needed to complete the job, labor supply, and labor demand. Equilibrium Wage Another concept or theory that can be applied to this article when conducting the analysis is the equilibrium wage when labor supply is low relative to demand. This concept or theory posits that when labor supply is low relative to demand within a market, increases will be experienced to labor hours and the equilibrium wage (Nickell, 56). This is demonstrated in the graph below. The opposite will occur if labor supply suddenly increases relative to labor demand (Nickell, 56). This has occurred in the situation involving the use of immigrant, low-skilled workers in the article by Post (1). Because the supply of immigrant labor has increased to match the labor demand within the agricultural industry, it has caused the equilibrium wage to decrease (Nickell, 56). This shift has also created negative trends in unemployment for American low-skilled workers (Nickell, 56). Conclusion The article titled “The Immigration Cops go after a Dairy Farm” by Post sheds new light on the microeconomic impact that the agriculture industry has created when relying so heavily on immigrant, low-skilled labor (1). After analyzing this article with concepts and theories covered in class, it has been concluded that the use of immigrant labor has a positive impact on employers and the immigrant workers. This is mostly because it has created a balance between labor supply and labor demand. However, it has also been concluded that this practice has had a negative impact on American workers that are considered to be low skilled, the equilibrium wage, and the unemployment rate in the United States. Works Cited Post, Marv. “The Immigration Cops go after a Dairy Farm”. June 29th, 2012. Web. 30, June 2012 http://online.wsj.com/article/SB10001424052702304870304577488973455967032.html'mod=googlenews_wsj. Nickell, Stephen. “Immigration: Trends and macroeconomic implications”. N.d. Web. 30, June 2012 http://www.bis.org/publ/bppdf/bispap50f.pdf.