Annual Cost Per Sugar Farm Job Saved = $826,000
A few days ago, I posted about tariffs doubling U.S. sugar prices (see chart above) and how those artificially high prices impose huge economic costs on the U.S. economy ($2.5 billion last year). Thanks to a comment from Ron H., I found a research paper "Employment Changes in U.S. Food Manufacturing: The Impact of Sugar Prices," that was published by the U.S. International Trade Commission in 2006. Here is a summary of the findings:
1. Employment in sugar containing products (SCPs) industries decreased by more than 10,000 jobs between 1997 and 2002 according to the BLS. Approximately 6,400 of these job losses can be attributed to confectionery plant closings and relocations abroad, where high U.S. sugar prices were cited as a significant contributing factor. During the same period, non-SCP food manufacturing employment grew by 31,326.
2. Approximately 987,810 people worked in sugar-using industries as of 2002. In contrast, there are 61,000 full-time equivalent jobs involved in the growing and harvesting of sugarcane and sugar beets. Studies suggest that the U.S. sugar program helps to maintain approximately 2,260 of these sugar industry jobs, many of which are growing and harvesting jobs, at an annual cost per job saved of $826,000. Therefore, the total economic cost to the U.S. economy of those jobs saved is about $1.9 billion per year.
3. For each one sugar growing and harvesting job saved through high U.S. sugar prices, nearly three confectionery manufacturing jobs are lost.
4. For the confectionery industry in particular, evidence suggests that sugar costs are a major factor in relocation decisions because high U.S. sugar prices represent a larger share of total production costs than labor. In 2004, the price of U.S refined sugar was 23.5 cents per pound compared to the world price at 10.9 cents.
5. Many U.S. SCP manufacturers have closed or relocated to Canada where sugar prices are less than half of U.S. prices and to Mexico where sugar prices are about two-thirds of U.S. prices.
6. Plant closings and relocations have been accompanied by increasing SCP imports, which have tripled from $6.7 billion in 1990 to $18.7 billion in 2004.