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California Farm Workers: FTE and Average Earnings in 2016
July 9, 2018
Almost a million workers, over five percent of California's workers, were employed for wages in agriculture in 2016, a sector that accounted for less than two percent of the state's GDP. Despite fears of labor shortages, the number of hired farm workers has been rising, not falling.
Some 16,150 California agricultural establishments (NAICS 11) hired an average 425,500 workers and paid them $13.7 billion in 2016. Average employment is employment each month for the payroll period that includes the 12th of the month summed and divided by 12 months, and is one measure of full-time equivalent (FTE) jobs. However, total wages of $13.7 billion are the wages paid to all workers, including those who were employed at other times of the month but not during the payroll period that includes the 12th
These data suggest that there are many people willing to try farm work. An FTE agricultural worker employed 40 hours a week for 52 weeks would have earned $32,300 in 2016. However, almost a million unique workers were employed in California agriculture in 2016, and they earned an average $20,000 from their farm and nonfarm jobs, only 62 percent of what an FTE worker would have earned. Some 185,000 workers with at least one farm job or 19 percent received unemployment insurance benefits in 2016
All Social Security Numbers reported by agricultural employers when paying unemployment insurance taxes are farm workers, and all of the California jobs of these SSNs were assembled so that workers could be assigned to the commodity or NAICS in which they had their highest earnings. This procedure identified 804,200 primary farm workers, 81 percent of the total 989,500. Primary farm workers, including H-2A guest workers, had their highest earnings from an agricultural employer.
The table below compares the earnings of an FTE worker in a commodity in 2016 with the actual earnings of primary workers in this commodity. For example, an FTE primary farm worker would have earned $32,300 in 2016, but the average annual pay of primary farm workers was $16,100, half as much. The implied hourly wage for an FTE worker who was employed 2,080 hours was $15.54.
The state's minimum wage was $10 an hour in 2016, so the $16,100 earned by primary farm workers reflects both lower wages and fewer hours of work (employers do not report hours worked). A worker employed 2,080 hours in 2016 at the $10 minimum wage would have earned $20,800. Farmers reported to USDA that the average earnings of the workers they hired directly were $13.81 an hour in 2016, which means that a primary worker earning $16,100 would have worked 1,166 hours at $13.81 an hour
Over 40 percent of FTE farm workers were hired directly by crop farms, and their FTE annual earnings were $34,100, equivalent to over $16.50 an hour. The actual earnings of workers whose maximum earnings were with crop employers were $20,500, or 60 percent as much. A FTE worker in animal agriculture would have earned $37,400, while workers whose maximum earnings were from animal agriculture averaged almost $31,000, 83 percent as much
Most workers are employed by nonfarm support service firms that bring workers to farms, such as the farm labor contractors who employed a third of all primary farm workers in 2016. A FTE worker hired by a FLC would have earned $24,600 in 2016, equivalent to $12 an hour. However, workers whose maximum earnings were with FLCs earned an average $9,000, or 37 percent as much, equivalent to 900 hours of work at the minimum wage of $10 an hour or 750 hours at $12 an hour
These comparisons of FTE and average earnings have three major implications. First, except in animal agriculture, FTE pay can be a misleading indicator of what most farm workers actually earn: most primary farm workers earn less than the $32,300 or $15.54 an hour implied by dividing total wages by average employment in various commodities.
Second, the largest categories of workers have the lowest wages and the largest gaps between FTE and actual earnings. FLCs employ a third of all primary farm workers, and their employees have the lowest FTE and average earnings. Fruits and nuts employ almost a quarter of primary farm workers, and they too have low FTE and average earnings.
Third, the table below shows that the ratio of actual earnings to FTE earnings fell between 2015 and 2016. For all workers whose maximum earnings were in agriculture, the ratio of actual to FTE earnings fell from 58 to 50 percent. For workers hired directly by fruit farmers, the ratio fell from 62 to 53 percent, and for workers hired by FLCs from 44 to 37 percent. Such falling ratios suggest that more workers may be trying farm work, but average hours of work may be declining.