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Why Can't Farms Find More Workers?

Migrant workers weed lettuce seed plants at an organic produce farm near Fresno, California.
Benjamin Lowy | Getty Images News | Getty Images
Migrant workers weed lettuce seed plants at an organic produce farm near Fresno, California.

You might think that the Competitive Enterprise Institute would be smart enough to see through the farm labor-shortage baloney. After all, they spend a lot of time there thinking about market processes and market solutions to social problems.

Surely they aren't going to fall for some farmer claiming that he can't hire farm workers at any price. (Read more: Downgrading the 'Farm Labor Crisis')

Unfortunately, Dan Bier at CEI has fallen for exactly this claim.

From a post on CEI's Open Markets blog:

According to a recent survey of California farmers, 80 percent say they cannot find the workers they need. “The problem is not that the labor isn’t getting paid enough,” noted California wine grape grower Ben Drake last week. “We’re paying $14 to $20 an hour typically for labor. Most average $14 an hour. A good night’s work is sometimes $20 an hour if the wine grape clusters are larger and they can pick faster. The lowest we’ve had on our payroll is $9.50. It’s not a matter of pay – it’s a matter of not having a stable labor pool.”

Does the CEI really believe that there is no price at which wine-grape growers could attract labor? That's would be a pretty serious market failure.

What's really happening is something far simpler. Grape growers like Ben Drake are offering wages too low to attract more workers.

(Read more: Counterpoint - The Farm Labor Crisis—Imagined or Real?)

Grape pickers typically get paid according to the volume of their pick, which is why the hourly rate Drake quotes varies so much. If you can pick quickly and the circumstances are right (large grape clusters, cool weather), you can earn at the higher end of the scale.

But a entry-level picker in the fields for the first time is unlikely to earn anywhere close to the average. Most likely his pick earns him around that $9.50 figure.

That's just too little money.

Drake's wine grape farm is in Temecula Valley, south of Los Angeles. Minimum wage in California is $8 per hour, with time and half after eight hours, and double-time after 12. That means the minimum that a worker in a 10-hour shift in California earns is $8.80 per hour.

And in reality, entry level jobs in nearby Los Angeles pay even higher than that. I spent some time searching Glassdoor.com for job listings in the Los Angeles area. I discovered a listing for a cashier in Sam's Club that pays $9.83 per hour. The stockroom at Target pays $9.60 per hour. A cashier at Bed, Bath & Beyond gets $10.04 per hour.

These are guaranteed wages for indoor work. No heavy lifting involved (possibly excepting the stockroom at Target). No danger of heat exhaustion. If you are a bit slow ringing up customers you might get a lecture from the manager but you still get paid. All are entry-level positions, no experience required.

What the CEI piece reveals is precisely the opposite of what it claims: the problem is that farm labor isn't getting paid enough. As long as wages are this low, of course workers will prefer the comfortable conditions of a retail store. (Read more: 'Bitter Harvest' Watch: Time Magazine Edition)

- by CNBC.com senior editor John Carney

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