Question

BROWNSVILLE, Tex., May 9—The 35 women who sort and box shrimp at TexMex Cold Storage Inc. are quick with their hands. With the help of machines, they can grade and package for freezing about 6,000 pounds of shrimp an hour. Their base pay is $2.30 an hour; their take‐home pay: $2.12 an hour. The 160 women who peel and devein shrimp at Camarones Selectos S.A., just across the border in Matamoros, Mexico, are also quick with their hands. Without machines, they can remove the shells and back veins from about 2,000 pounds of shrimp an hour. Their hale pay: 99 cents an hour: their take‐ home pay: 65 cents an hour. It is that basic disparity in wages that both lures Mexican workers into the United States and propels United States labor intensive industries into Mexico. United States labor union officials charge that both movements are costing United States workers jobs at a time when unemployment rates remain high. Hundreds of United States companies have closed factories in other parts of the country over the last decade and set up new plants along the border to take advantage of low labor costs on the Mexican side and abundant minimum‐wage labor on the United States side. The border, in fact, has become an open sore in the Carter Administration's efforts to put Americans back to work, formulate a new immigration police and deal with pressures for trade embargoes. Although many companies have simply moved their labor intensive jobs to such places as South Korea. Taiwan and Hong Kong. American union officials have focused much of their attention on Mexican workers, saying that they in particular are stripping jobs away from American workers. But a look at the shrimp industry around Brownsville, which calls itself “Shrimp Capital of the World,” shows a different picture. Virtually all the jobs requiring labor are performed by men and women of Mexican origin. Some are United States citizens. Many are Mexican citizens living legally on this side of the border. Some are Mexican citizens who live in Mexico and commute to jobs here or work in factories set up in Mexico by United States companies. Shrimp boat owners and shrimp company processors contend that they simply cannot find many United States citizens who are willing to work at jobs, which are often part time, for wages at the Federal minimum of $2.30 an hour or slightly higher. But for the most labor‐intensive chores of peeling and deveining shrimp, processors avoid even United States minimum wages by trucking their shrimp across the border into Mexico. Wages of 99 cents an hour seem paltry by United standards, but they are above average for workers in Mexico. Americans and Mexicans who run processing plants, as well as a variety of other factories on the Mexican side of the border, contend that these plants actually save jobs in the United States. Without them, they contend, many American companies would be forced to move their entire operation to foreign soil in order to remain competitive. To illustrate how this works, one can follow the circuitous path of a load of shrimp caught the other day in the Gulf of Mexico. With a permit that costs $2,006 a year, United States shrimp boats can net shrimp in Mexican waters. The boats have three‐man crews of a captain, rigman and header. Many of the rig men are Mexican‐ Americans. Most of the headers, who remove the heads from shrimp and clean the boats, are Mexicans. Page 4 of 5 Shrimp Processor's View Lawrence Touchet, manager of Gulf Shrimp Processors, hires 50 to 60 Mexicans in the peak season to unload the boats, ice the shrimp and load them onto trucks. “I don't care how many people are supposed to be out of work, you just can't get Americans to do this work,” he said. The shrimp are then trucked to TexMex Cold Storage for sorting, sizing, boxing and freezing. Ed Walker, the company's production manager, agrees with Mr. Tochet. “What with welfare, food, stamps, unemployment checks and so on, people don't want to work over here,” he said. The 35 women on his sorting and packaging line work odd hours, depending on the amount of shrimp caught. All of them are of Mexican origin, and about a dozen are Mexican citizens holding United States work permits. If the shrimp buyer wants his shrimp shelled and deveined, he might get in touch with Robert and Michael Reynolds, a father and son, who run a trucking company out of Brownsville. Their trucks pick up the frozen boxes of shrimp and carry them across the border bridge into Matamoros to Camarones Selectos, which they also own and operate. There, the shrimp are unloaded and thawed, then placed on large stainless steel tables where 160 women remove the shells and veins at a rate of eight shrimp a minute. The women, all Mexican citizens, work eight hours a day, five or six days a week. They are paid 175 pesos a day, or $7.95 at the current exchange rate. That figure includes most benefits. The cleaned shrimp are then bagged and trucked back across the border into Brownsville. Large numbers of them then go to a breading plant that also employs hundreds of Mexican‐American and Mexican women. After breading, the shrimp are frozen again and packaged. The label on the package most often reads, “Product of U.S.A.” Sometimes the shrimp travel a route that appears to have been choreographed by Mack Sennett. For example, shrimp caught by Mexican shrimp boats out of Tampico, are trucked north into the United States for sorting, freezing and storage in Brownsville. But if the buyer wants them cleaned, they are loaded back onto trucks and carried back across the border to Matamoros. Then they are trucked back across the border into the United States for final packaging. Again, the label most often reads, “Product of U.S.A.”

Q1. How is the marginal product of the last shrimp peeler hired in the U. S. firm, different from the marginal product of the last shrimp peeler hired in the firms on the Mexican side of the border? Justify your answer with the evidence given in the article

Q2. Illustrate any example from your company/firm/work experience where the company’s management has taken similar measures to optimize its resources. (Construction company point of view)

Answer 1

Answer 1

Marginal product is the change in output when a change in input is made, like the effect on production of a hand made fabric when workers are increased from seven to eight.and this is done assuming that the quantities of other inputs are kept constant. Here we are dealing with the marginal product of labour . The marginal product of the last peeler hired in U.S. Is different from that hired in Mexico. In USA there are existing 35 women workers who are paid a bad wage of $2.30 per hour so the last hired peeler will add to the production of peeled cleaned shrimps because the labour in this company is low and prices are bette than Mexico . In the firm of Mexico 160 workers are existing and with the increase in the no. of labour the output does not increase indefinitely and with the low wages of 99 cents the workers will not be very enthusiastic about their work hence the last hired peeler will actually lead to diminishing marginal returns.

A company that manufactures women garments and is situated in Paris and has a hyoer up brand name and makes expensive clothes and has outlets globally actually does not manufacture the drapes and silhouettes in Paris even though the label reads them as made in France. They buy fabric of silk and cotton their main staples from India because of the low price in which the fabric is available then they have hired women from villages to do the detailed handwork embroidery. Indian women who are poor but skilled at this work for much lower wages than a person in France would be willing to work and then it gets the product stitched in France and the finished products are sold globally . The company earns much more than the input it has provided in the manufacturing