The Consequences of Alabama’s New Immigration Law: Welcome to Economics 101

Alabama's tough new immigration law (2011)Since the passing of Alabama’s tough new immigration law several months ago, two major things have happened:

1. Many immigrant workers have left the workforce.

2. Employers – especially agricultural operations – have found it nearly impossible to replace the lost workers.

In retrospect, neither development seems particularly surprising. Many immigrant workers, whether they’re here in the United States legally or not, fear the heavy hand of government and will opt to find a more inviting environment than the one in Alabama today. For now at least, that environment is better in nearly all of the other 49 states.

And while the jobs no longer being done by immigrants may now be sought by American citizens – after all, the ~9.9% unemployment rate in Alabama is higher than the overall U.S. rate – the appetite for doing many of these jobs dissipates quickly when people are confronted by the reality of what is required to perform them.

Alicia Caldwell, an Associated Press reporter, spoke last week with some Alabama farmers to find out what has happened since Americans were hired to replace immigrant workers.

“Most show up late, work slower than seasoned farm hands and are ready to call it a day after lunch or by mid-afternoon. Some quit after a single day,” Caldwell reported in her AP article published last week.

As a result, farmers are opting to leave crops in the field rather than harvesting them.

What we have here is a classic Economics 101 lesson. If workers aren’t willing to do the jobs at a labor cost that will enable the products to be sold at a competitive price, the crops won’t be brought to market.

If agricultural operations in the whole world faced the same situation as Alabama farmers, it’s possible that a new labor/price equilibrium could be established. But not only is Alabama competing against other states where immigrant labor continues to be used, it’s also competing against other countries that produce the same crops.

The result? No one is winning. Not the farmers … not the immigrant workers … nor the unemployed Americans who have decided that ramaining unemployed is preferable to working a difficult or unpleasant job.

The Alabama state government is attempting to support the transition away from immigrant workers. A program started recently seeks to pair Alabamians interested in jobs with the state’s farming operations that need replacement labor.

So far, the results of this effort haven’t been encouraging, with only ~260 people registering interest in temporary agricultural jobs.

Out in the field, reporter Caldwell has found ample anecdotal evidence that underscores the disconnect between the “theory” versus “practical reality” of unemployed Americans taking advantage of these new job opportunities:

Tomato farmer Wayne Smith said he has never been able to keep a staff of American workers in his 25 years of farming.

“People in Alabama are not going to do this,” said Smith, who grows about 75 acres of tomatoes in the northeast part of the state. “They’d work one day and then just wouldn’t show up again.”

At this farm, field workers get $2 for every 25-pound box of tomatoes they fill. Skilled pickers can make anywhere from $200 to $300 a day, he said. Unskilled workers make much less.

A crew of four Hispanics can earn about $150 each by picking 250-300 boxes of tomatoes in a day, said Jerry Spencer of Grow Alabama, which purchases and sells locally owned produce. A crew of 25 Americans recently picked 200 boxes – giving them each $24 for the day.

Years ago, an old Russian emigré professor of Slavic history and literature at Vanderbilt University advised us students, “As you grow older and wiser, you’ll come to realize that the great issues of the day can’t be debated in black and white. Because the two sides aren’t black and white; they’re really shades of gray.”

Those words could well be applied to the immigration debate and its socioeconomic consequences. Certainly, one “black and white” issue that should be banished from the discussion is the notion that if all of the jobs done by illegal immigrants were to become available to Americans, our unemployment problem would be magically solved.

Mini Cooper and Tata Nano: Two Sizzling Cars that are Just Smokin’!

Mini Cooper car on fire.
The Mini Cooper: Not exactly "sizzling" in the way their owners would like.
Tata Nano vehicle on fire.
Tata Nano: One smokin' vehicle.
The news that the National Highway Traffic Safety Administration is investigating complaints of engine fires in Mini Cooper “S” auto models from 2007 and 2008 reminds us that the “explosive” popularity of small cars is sometimes accompanied by “smokin’” performance of a completely different nature.

The Mini Cooper’s engine fires have resulted in blazes that can destroy the entire car … and some of those fires happened after the vehicles had been shut off. Owners of the Mini Cooper, Cooper Clubman and Cooper Convertible, you’ve been fairly warned!

Hopefully, the findings from the NHTSA investigation won’t be as crippling for the Mini Cooper as similar investigations of the Tata Nano car in India. That vehicle burst on the scene in 2009 to breathless praise from all quarters, ranging from top industrial designers to leading consumer advocates.

With a base price of just $2,200 – lower than any other car in the world – along with noteworthy styling that had the design world abuzz, it was an irresistible story of the confluence of value engineering and design chic.

Until the car’s engines starting catching on fire.

Tata Motors has been frantically working on the problem in recent months, adding new safety features to the Nano (now dubbed the “Tata No-No” by more than a few industry observers). The manufacturer has also extended the car’s warranty to four years and is offering big discounts and cheap financing to maintain sales levels.

Nevertheless, the company has seen monthly unit purchases slide by more than 80%. It’s certainly a far cry from the heady days of 2008 when the Tata Nano won the prestigious Innovation Award in the Transportation category and was the toast of the design world.

Will the Mini Cooper follow the Tata Nano into automotive ignominy? Likely not. But it’s a huge black eye for a car brand that’s been nearly immune from criticism – at least until now.

One thing’s for sure: Before this week, no one would have expected the Mini Cooper and Tata Nano to be spoken about in the same breath. Now they’re the Bobbsey Twins. And that has to be really bad news for the Mini Cooper.

Pew Monitors Changing Views about the News Media

News media organizations losing luster with Americans
News organizations are losing their luster with Americans, according to the Pew Research Center.
The Pew Research Center for People and the Press has been surveying American adults since 1985 about their views of the news media.

A new comprehensive report, incorporating results up to and including field surveys conducted in 2011, finds that negative opinions about the performance of news media are higher than ever on nine of twelve key measures studied.

Here are some sobering stats from this year’s consumer pulse:

 ~66% of respondents believe that news stories are often inaccurate
 ~77% think that news organizations tend to favor one side over another politically
 ~80% believe that news organizations are influenced by powerful people and organizations

The findings on the accuracy of news reporting are particularly striking. As few as four years ago, ~39% of respondents felt that news organizations “mostly get the facts straight” while ~53% believed that the news stories were “often inaccurate.”

Today’s those numbers look more depressing: Only ~25% say that news organizations tend to get the facts straight, while ~66% contend that news stories are often inaccurate.

[Of course, when it comes to respondents’ own preferred news outlets, the figures don’t look nearly as dismal. In fact, nearly two thirds of the respondents believe their preferred news sources get the facts mostly correct.]

Who does the public see as the leading “news media” these days? Cable TV organizations clearly lead in the rankings, with network news now pushed down the list:

 ~43% named CNN as a “news organization”
 ~39% named Fox News
 ~18% named NBC News
 ~16% named ABC News
 ~12% named CBS News
 ~12% named MSNBC
 ~10% named local TV news

It’s been a long fall for CBS News in particular, which was once considered the ace news broadcast network in the United States.

In general terms, who do people trust most as a source of news? The answer may be surprising to some: Top-ranked are local news organizations:

 Local news organizations: ~69% of people have “a lot” or “some” trust
 National news organizations: ~59%
 State government: ~51%
 Presidential administration: ~50%
 Federal government agencies: ~44%
 Business corporations: ~41%
 U.S. Congress: ~37%
 Political candidates: ~29%

And as far as where people go for news, TV and the Internet continue to be the top two sources. But consider how those rankings have changed. Five years ago, TV was cited by 74% of survey respondents as one of the two top news sources … but that figure has now declined to ~66%.

As for the Internet, it’s grown from ~24% saying it’s a top-two source for news in 2007, to ~43% today.

Meanwhile, newspapers are staying on the decline … so that today, only ~31% of respondents place them among the two top sources of news. Newspapers continue to have their partisans among the over-65 age segment, but younger than this, it’s just a lost cause.

But there’s one bright spot for newspapers: They continue to be recognized as a leading source of local news. This helps explain why many small-town and local papers have been better able to navigate the choppy waters of newspaper publishing better than their big-city counterparts.

There are many more interesting findings outlined in the latest Pew news organization survey. For more details, click here.

Drama and Danger in the World of Social Media

Drug cartels in MexicoI’ve blogged before about how social media has had a major (positive) impact on political and social movements, such as the “Arab Spring” uprisings and the democracy movement in Moldova. But recent news out of Mexico shows how the same social media can contribute to additional fear and violence in a society that already has more than its share of drama and danger.

In recent weeks, CNN has reported that social media is causing citizens living in the regions of Mexico beset by dangerous drug cartel activity to be injured – or even killed. In the border city of Nuevo Laredo, the bodies of a man and a woman were found hanging from a highway overpass, with threatening notes nearby promising a similar fate to other so-called “Internet snitches.”

According to the CNN news story, the two people were killed for messages they had posted online pertaining to drug violence in areas of Mexico where the professional news media are no longer able to do their job.

Because drug trafficker threats have essentially silenced reporting activity in these border regions, the local citizens have resorted to filling the information gap by using social media like Twitter and Facebook to convey the latest information to their fellow citizens.

The notes affixed to the dead bodies in Nuevo Laredo appear to have been left by members of two notorious drug cartels that are intimately engaged in the region’s bloody turf wars.

The killings point to a dangerous new front that’s opened up in the drug wars: In the absence of credible news reporting, many residents of the borderlands have turned to social media platforms for learning and sharing information. Using #hashtags that tie Twitter posts together has become an important “sorting” mechanism by which postings from individual Twitter accounts can be bundled into a sort of jerry-rigged news service. Many examples of “news report bundling” exist, such as for cities like Monterrey, Veracruz, Saltillo and Reynosa.

Andrés Monroy-Hernández of MIT’s Media Lab has studied this phenomenon, and declares that these ad hoc news bureaus have been effective.

“Most of the information is reliable, and the information that is not often goes ignored … [these bureaus] serve as curators and do a decent job at it,” the Mexican native asserts. He also points out that about half of the Twitter messages are actually retweets, meaning that people are cooperating with one another in spreading the information.

But the startling events of last week remind us that local residents who are using social media to navigate the chaos of the drug wars are themselves becoming targets in the drama.

Even the Mexican government is in on the action. Recently, it charged two Veracruz citizens with “terrorism and sabotage” for passing along rumors of a pending cartel attack on a school that resulted in an outbreak of panic at the school property.

The Mexican government’s action set off a wave of criticism from all sides. Amnesty International went on record stating that the drug war “creates a climate of distrust in which rumors circulate on social media as people try to protect themselves, because there is no reliable information available.”

The chaos that is enveloping Mexico – and the tragic consequences that stem from it – seem hard to imagine happening so close to the U.S. border. It’s also a reminder that the “brave new world” of social media can harbor grave dangers in addition to great promise.

And in this case, it can even get you killed.

Are e-Readers Changing our Reading Habits?

e-reader products available todayE-readers have become the rage. That’s clear from how many people are now using them.

A Harris Interactive survey of ~2,180 consumers in July 2011 has found that ~15% of Americans over age 18 are using an e-reader device. That’s about double the percentage compared to last year’s poll.

Beyond this, another ~15% reported that they’re likely to buy one within the next six months.

The Harris research found some interesting regional differences in e-reader usage. I was quite surprised to learn that e-readers haven’t taken off nearly as strongly in the Midwest as compared to the other three regions of the country:

 Westerners: ~20% have an e-reader
 Easterners: ~19%
 Southerners: ~14%
 Midwesterners: ~9%

What are the characteristics of those who own e-readers, besides where they live? It turns out they’re far more active readers than the rest of the population.

For example, about one third of all survey respondents reported that they read more than 10 books during the year. But for those who own an e-reader, that percentage was nearly 60%.

And just because someone owns an e-reader doesn’t mean they’re stopped purchasing actual books. While one-third of all the survey respondents reported that they haven’t purchased any books in the past year … that percentage was only 6% of those who use e-readers.

The criticism commonly heard that e-readers may be the death knell for traditional books because cause people to download fewer books than they would purchase in physical form may not carry much weight, if the Harris survey results are to be believed.

On the contrary, the e-reader phenomenon appears to be making some people even more voracious readers than before. About one third of the e-reader respondents in the survey reported that they read more now than before – and not just on their e-readers.

Clearly, e-readers represent a phenomenon that’s taken firm hold and is here to stay. But whether it’s radically changing the reading habits of its users … that remains an open question. The early signs suggest “no.”

What about your experience? Have your habits changed with the advent of e-readers? How so?

Air, Water, Food … Internet

Fundamental importance of the InternetIs the Internet today as important to people as the very air they breathe? That’s what the results of a survey of ~2,800 college students and young professionals seem to be telling us.

Market research firm InsightExpress fielded the survey for Cisco Systems, a consumer electronics, networking, voice and communications technology/services company.

The research effort collected responses from the USA and 13 other countries in the developed world plus emerging powerhouse economies (Australia, Canada, the U.K., France, Germany, Italy, Spain, Russia, India, China, Japan, Brazil and Mexico).

What did the survey discover? More than half of the respondents said they couldn’t live without the Internet – it’s that vital to their lives.

In fact, for many the Internet is more important than dating, partying, and wheels.

Intriguing findings from the survey include:

 ~55% of college students and ~62% of young professionals believe that the Internet is such an integral part of their lives, they could not live without it.

 If forced to make a choice between access to the Internet and access to a car, ~64% of the respondents would choose having the Internet connection.

 “Virtual” relationships are gaining on face-to-face interaction. More than one quarter of the college respondents reported that staying updated on Facebook is more important to them than partying, dating, listening to music, or visiting with friends.

 Smartphones are on the cusp of eclipsing desktop computers as the most prevalent means of connecting with this segment of society … which then makes it not much of a stretch to learn that ~60% of these same young professionals feel that “having an office” is unnecessary for being competitive.

And here’s another thing: These respondents are used to constant interruptions. ~80% report being interrupted by instant messaging and social media updates at least once per hour … and over 30% reported having five or more such interruptions hourly.

To me, this sounds more like disruption than interruption.

Marie Hattar, Cisco Systems’ marketing vice president, concludes that the survey findings “should make businesses re-examine how they need to evolve in order to attract talent and shape their business models.”

She also noted that “CIOs need to plan and scale their networks now to address the security and mobility demands that the next generation workforce will put on their infrastructure … in conjunction with a proper assessment of corporate policies.”

As the survey makes clear, at the rate things are evolving, the office environment will look and feel nothing like it did just a few short years ago. And it may be the biggest single transformation in the business world we’ve yet seen.

Gallup Sees Deterioration in Americans’ Perceptions of Major Industry Sectors

Decline in perceptions of U.S. industriesThe past decade hasn’t been kind to the image of most industries in the United States. And given the economic and sociopolitical upheavals experienced by nearly every strata of society, it’s not hard to understand why.

This isn’t just conjecture, either. For years, the Gallup polling organization has surveyed Americans’ opinions of 25 major industry sectors every August to determine if their overall opinion of each of them is positive, neutral or negative.

The results of the 2011 survey of 1,008 respondents (age 18 and over) have now been released, and they show that a majority of Americans view just five of the 25 industries in a positive light:

 Computer industry: ~72% rate positive
 Restaurant industry: ~61%
 Farming and agriculture: ~57%
 The Internet: ~56%
 Grocery industry: ~52%

Interestingly, when comparing these results to ten years ago (August 2001), just two of these five sectors have improved their positive ratings: the Internet and the computer industry.

At the other end of the scale, seven of the 25 industry sectors scored 30% or lower in positive ratings:

 Banking industry: ~30% rate positive
 Airline industry: ~29%
 Legal field: ~29%
 Healthcare industry: ~27%
 Real estate industry: ~23%
 Oil and gas industry: ~20%
 Federal government: ~17%

The remaining 13 industries in Gallup’s survey came in between 30% and 50% on the scale – hardly stellar ratings, but not in the basement like the hapless sectors listed above.

Over the past decade, Gallup has observed that a clear majority of the industries – 19 of the 25 – have seen declines in their positive scores.

The most precipitous ones include the usual suspects, led by – you guessed it – the federal government:

 Federal government: Down 24 percentage points since 2001
 Real estate industry: Down 23 points
 Banking: Down 17 points
 Educational field: Down 15 points
 Accounting industry: Down 11 points
 Healthcare industry: Down 10 points

It’s little wonder why we’re seeing these six industries striking out so badly with the American public; they’re precisely the ones associated most with various political or economic problems.

By contrast, the positive views about the computer industry and the Internet reflect the continuing innovation and financial success of many businesses in this sector.

This can’t be lost on consumers – many of whom have directly benefited through the steady stream of new products and services introduced by companies in these sectors over the past decade.

And as for agriculture, groceries and restaurants … well, we all have to eat, no matter what the economic situation! Besides, there’s been little controversy seen in these categories, and they’re mature sectors have been smooth-running in this country for years.

One hopes the next decade will witness a reversal in the downward trajectory of the public’s perceptions of American industries. In at least a few of the cases, it’s hard to imagine how they could sink any lower!