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January 1999 Volume 5 Number 1
Midwest, IBP, Rogers, Subsidies
The INS, which estimates that one-fourth of the 24,000 employees in 103<< back
meat packing plants in Nebraska are not authorized to work in the US, launched
"Operation Prime Beef" in November 1998 (renamed "Operation Vanguard" after
meatpackers charged that the INS was trying to shut down their plants). The
INS says that, beginning in January 1999, Social Security numbers and A-numbers
of employed workers will be compared to national databases and employers will
be asked to tell workers to fix or explain discrepancies between INS employer
records. In March 1999, the INS plans to visit meat packing plants and arrest
unauthorized workers, and in April, launch another round of computer checks.
The INS believes that quarterly checks of employee data in the
high-turnover meat packing industry will be more effective than periodic raids
that shut down production. Farmers, as well as a lawyer for the meat packers,
Carl W. Hampe of Paul, Weiss, Rifkind, Wharton & Garrison, urged INS to
find ways to enforce employer sanctions laws without shutting down meatpacking
Immigration control groups attacked IBP after an October 1998 Wall Street
Journal article reported about how the largest US meatpacking company recruits
workers in Mexico and still avoids INS raids at its US plants. IBP runs radio
ads in Mexico, offering workers authorized to be employed in the US $8 an hour,
bus fare to the US and medical and dental insurance.
No IBP plant has been raided by the INS since the company joined the Basic
Employment Verification Pilot in October 1997; six IBP plants were raided
between 1994 and 1997. This means that workers hired by borrowing genuine
documents, or those with fraudulent documents that have real names and SSNs,
can be reasonably confident that, once hired, they will not be arrested in a
workplace raid. IBP has 38,000 employees in 41 plants; 14 of the plants are
unionized. Turnover in meatpacking is high; the United Food & Commercial
Workers union estimates annual turnover at 40 to 80 percent.
Pork. Pork prices reached their lowest levels in 50 years in
November-December 1998, reflecting record 1998 production of 19 billion pounds,
or two million hogs a week, prompting hog farmers to request, and the US
government to offer, relief. Pork producers asked the INS to suspend Operation
Vanguard so that pork processors can continue slaughtering the record number of
hogs. USDA announced that, to reduce excess capacity, it would temporarily
stop lending money for new pork production plants.
The US pork industry, with farm sales of $13 billion in 1998, is growing
and changing. An estimated one-third of US hogs are raised under contract,
suggesting that the pork industry will come to resemble the poultry sector, in
which the processors who tell farmers how and when to raise hogs become the
central organizing firms in the industry. These processors prefer to deal with
a handful of large farmers--the largest one percent of US hog farms--each
selling 50,000 or more hogs a year-- account for about 40 percent of
Six companies account for 75 percent of US pork processing -- Smithfield,
IBP, Swift, Excel, Farmland and Hormel Foods. IBP and Hormel reported record
profits in 1998, reflecting shifts in the division of pork dollars between
farmers, processors and retailers. In the mid-1990s, retailers received about
47 percent of the average dollar spent on pork, farmers 37 percent, and
processors 16 percent. In 1999, these percentages were 60, 18, and 22.
In 1998, the Iowa State University Department of Economics issued a report,
Iowa's Pork Industry, that included a section called "Dollars and Sense," an
analysis of the community and economic impacts of the hog industry. The report
noted that the real earnings of slaughterhouse workers were 40 percent lower in
1997 than in 1980 and that about 10 percent of the slaughterhouse workers in
1990 were immigrants.
Environmental and labor factors have encouraged some of the largest new hog
operations to open in states such as North Carolina and Utah. These same
factors may push the industry north and south, to Canada and Mexico, in the
Rogers, Arkansas. The northwestern Arkansas city of Rogers has been
touted as the city that welcomed Hispanic immigrants to sustain its poultry
processing plants. However, in November 1998, 17-year incumbent Mayor John
Sampier was defeated by Steve Womack, who got 56 percent of the vote on a
platform that called for "zero tolerance" toward illegal immigrants and
insistence that legal newcomers "speak the language" and conform to community
norms. Immigration was the issue listed first in Womack's campaign literature.
Sampier was seen by some voters as a representative of "Big Poultry." Tyson
Foods Inc., headquartered in neighboring Springdale, Arkansas, donated money
and office space for Sampier's campaign headquarters.
Since 1980, the population of Rogers doubled to 37,000; Hispanics in 1998
were about 12 percent of the population. Rogers adopted an ambitious plan to
integrate Hispanics, who have come to dominate meat and poultry processing jobs
in rural America, "in all neighborhoods, locations and areas." The largest
bank in Rogers developed a plan that enabled many two-worker immigrant
families, who earn $7 an hour at area poultry plants, to qualify for mortgage
loans, and 40 percent of Rogers' 4,500 Hispanics are living in homes they are
Rental housing is scarce in many small cities attracting Hispanic immigrant
workers. Some meat processors are providing housing for their employees.
ConAgra Inc. (Butterball) provides dormitory-style apartments for turkey
processing workers in Huntsville, Arkansas, deducting the $40 a week rent for
each adult from weekly paychecks--each building has eight bedrooms clustered
around a shared living area with a kitchen. Butterball workers, about half of
whom are Hispanic, start at $7 an hour; the closest apartments, one hour away
in Fayetteville, rent for $100 a week. After two years of employment, ConAgra
provides $500 toward the down payment on a house.
Some immigrant and worker advocates are skeptical of the trend of employers
providing housing for low-wage workers, noting that company towns of the 1800s
turned some immigrant workers into indentured servants. Workers who lose their
jobs, or go on strike, can also lose their housing.
Subsidies. In some cases, cities compete to attract or discourage
the opening of meat-packing facilities. Time magazine on November 30, 1998 ran
a story on corporate welfare and cited the experience of the city of Albert
Lea, Minnesota, where Seaboard Corp. is located, as a cautionary tale. In
1990, the city gave Seaboard a $3 million low-interest loan and reduced sewer
rates to induce it to reopen a Wilson Foods pork-processing plant that had once
been the town's largest employer.
However, Seaboard could not attract enough local workers, in part because
it offered wages in the early 1990s that were $5,000 a year less than in 1983.
Immigrants streamed into the town, and some received welfare, so that,
according to Time, "corporate welfare begot individual welfare."
In 1994, with Albert Lea's sewage treatment plant at capacity, Seaboard
closed the unionized Albert Lea plant, where workers averaged $19,100 a year
and moved to Guymon in Texas County, Oklahoma with $21 million in incentives,
including a new one percent sales tax to pay off a loan used to construct
facilities to attract Seaboard. Meanwhile, Albert Lea residents continued to
pay higher sewer bills to cover the cost of the expanded sewage system in that
According to Time, Seaboard had to recruit immigrant workers to Guymon to
keep the slaughtering plant staffed. Guymon, 500 miles from the Mexican
border, was not on any bus routes, but migrants found their way to the city,
adding limited English proficiency students to schools. Seaboard contributed
$175,000 to the Guymon schools each year. Seaboard and local business leaders
invested in an apartment complex and trailer parks in Guymon to house Seaboard
employees, with the rent automatically deducted from workers' paychecks.
Time's summary: Seaboard's corporate welfare in the 1990s included the
following public payments: Minnesota, $3 million in economic incentives;
Kentucky, $23 million; Kansas, $10 million; and Oklahoma, $100 million, plus
"the financial burdens imposed on other taxpayers by virtue of Seaboard's
presence... tens of millions of dollars. And all this for jobs that pay little
more than poverty-level wages."
Seaboard's stock is traded on the American Stock Exchange, and was $387 a
share in November 1998. About 75 percent of Seaboard, worth $425 million, is
owned by Seaboard Flour Corp., which is owned by brothers H. Harry and Otto
Bresky Jr., their sister Marjorie B. Shifman and family trusts. Seaboard had
10,200 US employees in 1998.
Kirstin Downey Grimsley, "Company Towns Are Back and Booming," Washington
Post, November 27, 1998. Dick Kirschten, "A Melting Pot Chills in Arkansas,"
National Journal, November 14, 1998. Laurie P. Cohen, "Meatpacker Taps Mexican
Labor Force, Thanks to Help From an INS Program," Wall Street Journal, October
15, 1998. Dirk Johnson, "Growth of Factory-Like Hog Farms Divides Rural Areas
of the Midwest," New York Times, June 24, 1998. ISU Department of Economics.
1998. Iowa's Pork Industry. Dollars and Sense. January.