"Victory" for migrant farm workers?

A friend and I recently had a discussion about a boycott of Taco Bell restaurants that was staged by several workers' rights groups in protest of the plight of migrant farm workers...specifically, farm workers who pick tomatoes for a number of growers in southern Florida. The boycott was over the wages the workers were paid and the conditions under which they worked. The workers' rights groups believed that refusing to patronize Taco Bell would force the company to pay higher wages and improve the conditions of "virtual slavery" on the farms.

This article from the NPR website, reports that the boycott has done just that. An agreement has been reached with Yum Brands, Inc. (Taco Bell's parent company) that stipulates higher wages and better working conditions for migrant workers. Many who read the article will indeed consider it a great victory for the workers, but how many will consider the effects beyond the immediate and obvious? Is this agreement an all-around good thing? I, for one don't believe so...simply because the money to pay the higher wages has to come from somewhere.

Under the agreement, Taco Bell can buy tomatoes "only from growers who pay farm workers almost double the current going wages...without raising prices at its restaurants." This presents a number of problems to Yum Brands, Inc.

First, paying more for tomatoes without raising prices at the restaurants means less profit. The typical response to this is probably something along the lines of, "So what? They could stand to make less profit. They make enough already!" In fact, the article sites an increase in profits at Taco Bell restaurants, apparently in an effort to enforce this line of thought. The problem is that less profit means lower stock prices, which means less money invested in the company, which puts us right back where we started. The "extra profit" has just been eaten up by reduced investment. Still, there are several other ways the higher tomato prices could be compensated for.

Maybe they could just put fewer tomatoes on the food, thereby reducing the amount of tomatoes needed and bringing the overall costs back to where they were previously. It might work, but there is yet another unseen effect to this plan as well. Fewer tomatoes needed means fewer tomatoes purchased from the very growers who are overpaying their workers. As a result, the grower must lay off workers or cut benefits to maintain a profit margin.

Perhaps some of the "corporate fat cats" that run the company could just take a pay cut. But why should they? They're being paid what the company has agreed to pay them in return for their services. Furthermore, their salaries are determined largely by market forces and the success of the company (as reflected by profit/loss, and therefore stock prices), much as the workers' wages were.

Another option would be for Yum Brands to increase prices at other restaurants it owns in order to make up the difference for Taco Bell's overpriced tomatoes. In this case, consumers bear the cost of the workers' increased wages. Unless, of course, consumers decide to eat elsewhere as a result of the higher prices...putting us back at square one.

Labor, like any resource used in any industry, is part of the cost of production. It is subject to the laws of supply and demand just like any material good or consumer product. Forcing an employer to pay more for labor than the market will bear invariably increases costs for everyone, often costing jobs as well.

As for the abuse of workers the article speaks of, there is a question that needs to be answered...Did the workers agree voluntarily to work under those conditions? Since the word "migrant" is used instead of "immigrant", one must assume that the workers are illegals, and so there is probably no binding employment contract between the workers and the growers. In my own opinion, there should be no such thing as "illegal aliens". Our borders should be open to anyone who seeks gainful employment and a better way of life. I therefore feel that there should always been a written employment contract executed by both parties, thus removing any ambiguity about the nature of employment or any claims made by either party. The growers are able to get away without it because the workers are not American citizens.

I also don't believe that any company should be required to provide worker's compensation in the event of an on-the-job injury, unless it is a term of the employment contract between employer and employee. Risk should be assumed voluntarily, along with the responsibility for the consequences of such risk.

In What is Seen, and What is Not Seen Frederic Bastiat writes of the consequences of failing to look beyond the immediate visible effects of any action and examine the unseen damage that action may cause. This agreement may bring about slightly better conditions for the workers in the short run, but others within the organization, consumers, and quite probably the workers themselves will bear the cost.