Finding Solutions To Labor Challenges That Promote Food Supply Chain Resilience In The United States

Investigators:
Zachariah J. Rutledge (Project Director, Michigan State University)
Timothy J. Richards (Arizona State University)

Project Summary:
Labor shortages continue to impair the productivity of firms throughout the American food system. In this proposal, we will conduct five studies that will investigate the economic implications of key labor market challenges facing the American food system and identify a set of market and policy options that can help address these challenges and strengthen the food supply chain. Our studies will cover the following five topics: (i) Did a post-Great Recession structural shift in Mexico-US migration create the recent rise in demand for H-2A visa temporary agricultural guest workers, and is the H-2A program serving as a sufficient alternative to US-based farm employees? (ii) Does the minimum wage paid to H-2A visa farmworkers (the Adverse Effect Wage Rate or AEWR) affect the wages of non-H-2A farmworkers, and what are the economic implications of making changes to H-2A program mandates that are tied to the AEWR? (iii) Is the declining supply of domestic farm labor causing an increase in import dependence, and does such a trend expose the US to significant national or economic security risks? (iv) To what extent does imperfect competition in labor markets reduce employee welfare and reduce the supply of labor in the retail grocery industry? (v) Does the provision of healthcare coverage to farm employees simultaneously increase employee and employer welfare? Our approach will involve econometric and structural modeling techniques that will provide new, data-driven insights into why the US food system is facing labor supply challenges, investigate the consequences of adhering to the status quo, and identify potential market and policy solutions to address some of these challenges.

Funding Information:
U.S. Department of Agriculture; Agriculture and Food Research Initiative