The Impact of $15/hr Minimum Wage on Farm Labor

The Fight For Living Wages

This article originally appeared in the May 27 Local Harvest Newsletter by Rebecca Thistlethwaite.

I need to preface this discussion by pointing out my – and LocalHarvest’s – longstanding commitment to social justice, fair trade, and living wages. Yet, as a recovering farmer who had a business large enough to have employees, I also understand the invisible math that most people never get to see. In the December newsletter we spoke to some of the challenges that US farmers face when competing with cheaper, imported food. If a retailer or a consumer can get a cheaper organic tomato grown for a 10th of the labor costs as a US organic tomato, they just might do that. Now imagine if those US labor costs were to go up 50%?

Building on the momentum of the Fight for $15 minimum wage campaigns around the country, mainly in big cities such as New York, San Francisco, Seattle, and Los Angeles, there is now a growing movement to raise minimum wages to between $12 to $15/hour at the state level in places such as New York, Oregon, California, and Massachusetts. Some states are talking about establishing different wages around their state based on the relative costs of living. So in more rural counties, the wages won’t go up quite as high or quite as fast. California, however, is talking about $15 across the state, regardless of location, cost of living, or industry.

Without diving into some of the really hot-button issues around employment, wages, and farm labor, I am just going to share a couple stories and quotes from various people thinking about how a substantial increase in wages (30-60%) may affect the viability of small and mid-scale farmers, particularly those growing more labor-intensive crops like fruits and vegetables. Will farmers have to drop growing specialty crops, the very same ones that we are supposed to be eating for optimum health? For example, winter wheat uses a lot less labor than cherries, but do we need to be eating more wheat?
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I know that if our farm had a 50% increase in labor costs that we would have probably scaled down to hire less labor or we would have invested in better equipment such as Spikes Rotors that would have required one person to work it rather than two. Either way we would have employed less people. That may be an unintended consequence of steep wage increases- less employment opportunities.

New York State is talking about an increase to $15, after just implementing a new $9/hour minimum wage last December. That represents a pretty staggering 66% increase in minimum wages. A central New York farmer Tony Emmi was quoted in the paper saying that a $15 wage would cost his 300-acre farm in Lysander almost $200,000 extra a year, a burden that would cause him to hire fewer workers. Another Tony, this one Tony LaPierre of Rusty Creek Farm in Coopersville, has a dairy with 500 cows with a crew of eight full-time and four part-time employees. He said that if the NY governor’s plan to hike the minimum wage comes to fruition, some farms will need to cut back on their workforce and in some cases look to technology to do so. For those farms that can’t invest in modern technology, he said, there is a possibility they will go out of business. Will these large increases in labor costs further disadvantage small and mid-scale farmers because they don’t have the capital to invest in expensive labor-saving technology? For example, an Iowa State University study showed that a robotic milker (called Automated Milking System) cost around $210,000 each. A dairy farmer, unless they bottle and market their own milk, can’t usually pass increased production costs onto their consumers. Farmer LaPierre said that, unlike some other businesses, dairy farmers can’t simply charge more for their milk to make up the difference. Milk is a commodity, with prices set by the market and the federal government.

Another negative impact a large wage increase like those proposed or being implemented could cause is discouraging farms from hiring young people or inexperienced workers. That will not only close another industry from hiring young people (whose unemployment rate hovers around 15%) it will also inhibit new, inexperienced folks who want to get started in agriculture.

“My workers are all worth 15 bucks an hour because they’ve been around,” said Duane Chamberlain, who also sits on the Yolo County Board of Supervisors in California. “Starting people out, it would be nice to hire kids at lower wages because they’re not worth it. They don’t know what they’re doing.”

Farmer Sarah Wiederkehr of Winter Hill Farm in Freeport, Maine whom I interviewed for this article felt similarly. She said “We definitely would NOT be hiring young, inexperienced labor if we were mandated to pay a much higher minimum wage. We already decided to stop hiring apprentices because we simply cannot afford the time it takes to train newbies. We decided last fall to only hire hourly employees, and ones with experience.”

Another nuance to consider is that farms often provide other forms of compensation, such as free or reduced cost housing, transportation, food, and sometimes child care, health care, or other services. None of these things are taken into account when a city or state passes new wage laws. Although agriculture has a long and sordid history of not providing the best compensation and working conditions compared to many other industries, it also has a history of providing housing of some sort, often due to the rural location of the farms. Will farms be able to afford to continue to offer housing or to fix up and improve their housing if wages go up 30-60%? Farmer Wiederkehr of Maine says that she would also like to offer benefits beyond workers compensation insurance (mandated by her state), but currently she cannot figure out how do so and likely could not if she had to pay a mandatory higher wage.

Northeast Organic Farmers Association of New York (NOFA-NY) understands the need for farmworkers to be more fairly compensated but also understands that farmers have to earn living wages themselves. The current system does not satisfy either.

With regards to NY governor Cuomo pushing for increase minimum wages, NOFA-NY states: …”Fairness is an important value for NY’s organic farmers, yet the wages farmers pay their workers range from only $9 up to $20 an hour. Most of the farmers are not earning much more, and farmers in the first 10 years of their farming careers often pay their workers more per hour than they earn themselves.”

The minimum wage is not tied to inflation. It should have been indexed to inflation a long time ago, rather than just raised every now and again based on political whims. Had the 1968 floor of $1.60 per hour been indexed to inflation, it would be $10.90 per hour today, more than 50 percent higher than the current federal minimum wage of $7.25. However, should some states be raising their minimum wages by double that $7.25 over a few years to make up for decades of political inaction? What price will our diversified family-scale farms pay for these rapid cost increases? And are you, as consumers, ready to do your part by paying higher prices for your food, particularly the labor-intensive healthy foods you should be eating? Not only will food be more expensive, which is not necessarily a bad thing, some specialty crops will be scarcer because some farms will choose to stop growing them.

-Rebecca Thistlethwaite

Feature Photo: Wrecking Barn Farm courtesy of Local Harvest

Reader Comments:

From Tom Carey:
Food prices are at some of the lowest values as compared to incomes in US history (and even in the history of civilized mankind). Until some appreciation (a small famine scare?) and balance for fresh organic produce is introduced into the equation, the cheap price of imported (including trans-continental) fresh to market produce will prevail. The government’s expectation of the corporate plantation model using undocumented labor will not succeed at our local scaled market gardening in face of inappropriate minimum wage laws.
The invisible qualities of local, fresh organic produce are difficult to translate to car-line moms who only care about costs (they are even in a bragging competition about the cheapest prices they can find). I quit selling at farmer’s markets when a customer waggled a bag of Chinese garlic in my face hollering that organic farming was a fraud. But then again, unless the market has a ‘local’ clause, the other vendors are just selling Kroger seconds. We now offer our fresh picked produce at an onsite Saturday morning farm stand, sell to a local health food store chain, and occasionally provide produce to a few restaurants.

My wife and I have chosen careers that allow us to swap stints at day jobs to supplement our homestead dream. Local suburban sprawl has brought our customer base to us. We offer events, field trips, and other educational experiences to supplement produce sales. Luckily, there are always a few high school and university students willing to work on the cheap for an apprentice opportunity.

That said, I thought federal minimum wage laws exempted farms and restaurants.

From: Anonymous

Thank you so much for sharing your perspectives. You’ve given me a lot to think about and also helped me realize more fully how complex a topic is the simple value of earning a living wage in the US today.

From: Edwin Turnage

I read through the comments and didn’t see one that discussed the primary unintended consequence of a minimum wage increase. It is simple if one is aware of the Austrian School.
When you increase a wage to $15 you will attract more qualified workers to the labor pool. Thus, workers with less experience or skill will be at a competitive disadvantage when seeking jobs, or they will be replaced by new more qualified job applicants. Employers will naturally seek the most experienced, qualified, and reliable workers. It’s not personal. Its business. Thus, a minimum wage law actually negatively impacts the very people that politicians are supposed to be helping.

From: Becky Neilson

Unfortunately most of these folks touting the $15 an hour wage have no clue about the financial impact or what minimum wage means. As a Bookkeeper for several farms, including my own I see the problems this raise incurs.
First off minimum wage, was never meant to be a living wage, but a training wage to help workers get into the workforce and move up as their skills increased.

Second if you raise the minimum wage then the price on all products goes up, and doesn’t solve the issue of a livable wage. It hurts the people most that they wanted to help in the beginning. And it hurts people like the elderly that are trying to get buy on social security. They don’t get a raise.

Third, on all the farms that I do bookkeeping for they do raise the hourly rate as an employee develops more skills and the longer they work for that farm. However in California they have added mandatory sick leave accounts for every 30hrs an employee works. Many of these seasonal jobs can come at high cost to the farmer.

Fourth raising the wage forces employers/farmers to look for ways to automate their business/farm to reduce the labor costs. Thus automated harvesting equipment whenever possible. Fast food restaurants are going to automated ordering and even fully automated food preparation. All this does is totally eliminated entry level jobs and creates skilled labor jobs. Again you hurt those that are at entry level and now they can’t even get trained or started in the work force.

We have to voice our concerns to all our elected officials from local, district, state and federal levels to make them realize raising the minimum wage hurts all of us!

Read the newsletter and all of the comments on the Local Harvest website.

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