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Farm Labor Shortages
February 14, 2019
There are many complaints of farm labor shortages; Google returns over nine million links for “farm labor shortage.” Most are media reports quoting farmers who say they cannot recruit enough workers to harvest perishable commodities before they lose value. Surveys find that a third of growers would like to hire more workers.
Some labor shortage articles quote farmers asserting that, even if they offered higher wages, US workers could not be induced to harvest perishable crops. Farmers say this means that the US faces the choice of importing workers to pick fruits and vegetables or importing fruits and vegetables from abroad.
Shortage is not an economic concept. In a market economy, changes in prices and wages bring supply and demand into balance. For example, if storms or disease reduce the supply of apples, the price of apples rises, some consumers switch to bananas, and the supply of and demand for apples is balanced at a higher price.
Labor markets adjust in the same fashion. If farmers want more workers, economics predicts they will raise wages, offer more benefits, and take other steps to attract and retain workers. The result of higher labor costs include (1) reductions in the demand for labor as farmers mechanize and switch away from labor-intensive crops, and (2) maintains the supply of farm workers as older workers remain in the farm workforce rather than leaving for nonfarm jobs. Historically, the major response has been a reduced demand for farm labor, explaining why the US went from 95 percent of people in agriculture in 1790 to two percent today.
The slowdown in unauthorized Mexico-US migration since the 2008-09 recession has increased agricultural labor costs and set in motion the adjustments predicted by economic theory, viz, a reduced demand for labor and increased supply that is manifested in an aging farm workforce as current workers stay in the farm workforce.
The average hourly earnings of California field and livestock workers have been rising by about the same five percent a year as the state’s minimum wage, which rose from $10.50 to $11 an hour January 1, 2018, and to $12 an hour January 1, 2019. Labor costs are also rising due to 2019 requirements to pay overtime premium wages to farm workers and mandates to provide health insurance coverage.
Farm employers often try to bring labor supply and demand into balance with non-wage measures. Most farmers believe that the supply of labor inside US borders is fixed or inelastic, so that higher wages simply shuffle workers between farms rather than attract more US workers into farm work. Higher wages may encourage some workers to stay in farm work longer.
The major employer adjustments to fewer unauthorized newcomers include 4-S strategies, viz, satisfy current workers, stretch them with mechanical aids that increase productivity, substitute machines for workers where possible and switch to less labor-intensive crops, and supplement current workforces with H-2A guest workers. Satisfying and stretching are short-term responses to fewer newcomers, while mechanization, switching crops, guest workers, and produce buyers turning to imports are longer term responses.
Hiring new workers is difficult when newcomers do not show up looking for jobs, making it important to satisfy and retain current workers. Surveys find that many workers resent being seen as interchangeable members of crews that range in size from 20 to 60, with crew leaders favoring some workers over others and harassing women. Training first-level supervisors, and developing mechanisms to reduce favoritism and harassment, can satisfy current workers and keep them on one farm longer.
Stretching workers means increasing their productivity. Most fruits and vegetables are over 90 percent water, and harvest workers spend much of their time carrying harvested produce down ladders to bins or to the end of rows to receive credit for their work.
Three major changes can increase worker productivity. First, management changes such as better scheduling and coordination between sales and production teams can reduce worker waiting time and maximize hours of work. Second, repicking fields twice instead of three times so there is more produce to pick on each pass through the field can raise piece rate earnings, while dwarf trees mean smaller ladders and faster picking. Third, slow-moving conveyor belts in front of workers reduce the need for harvesters to carry bags or trays of harvested produce, enabling them to pick faster.
Substitution replaces workers with machines. Many fresh fruits and vegetables are fragile, and human hands are gentler than mechanical fingers on fresh table grapes or peaches. Machines are fixed costs and workers are variable costs, so that farmers of commodities with uncertain futures may be reluctant to invest in machines, as with smaller raisin grape growers. When there are profitable alternatives to labor-intensive crops, some farmers switch from hand-harvested to more mechanized crops, as from raisin grapes to almonds in the San Joaquin Valley.
There are many efforts to develop labor-saving machines in fresh fruits and vegetables. The most common involve precision planting machines that facilitate the use of mechanical rather than hand weeders. GPS devices tell weeding machines where plants are located, enabling the machine to remove weeds between rows and between plants. Similarly, “see and spray” machines apply fertilizers and protective sprays only to useful plants, reducing fertilizer and chemical costs.
Soft fruits such as strawberries pose tougher challenges. Instead of planting two rows in raised beds that are picked by workers wheeling carts between rows, machines need firm row edges to guide them as they pick berries that have been trained to grow over the side to facilitate identification and harvest. Tabletop berry production is best for machine picking, but requires up-front costs of $80,000 an acre, versus $30,000 an acre for conventional strawberries.
Farmers can supplement their workforces with legal guest workers if DOL certifies their failed effort to recruit US workers and agrees that the employment of H-2A guest workers will not adversely affect similar US workers. Receiving DOL certification to employ H-2A guest workers requires employers to satisfy three major obligations: (1) try and fail to recruit US workers, (2) provide free and approved housing to guest workers, and (3) pay the state or regional Adverse Effect Wage Rate, $13.92 in California in 2019.
California farmers shunned the H-2A guest worker program until recently, fearing that they may have to hire US workers sympathetic to unions and would be unable to find affordable housing for guest workers. Many pay lower-than-AEWR wages, especially for non-harvest work.
Instead of the H-2A program, California farmers want Congress to approve a free-agent guest worker program that would allow currently unauthorized workers in the US and workers abroad to receive work permits. These guest workers would be obliged to work in agriculture to maintain their legal status, and farmers could hire them without first trying to recruit other US workers. Farmers would have no obligation to house these guest workers, and would not have to pay them the AEWR. Such a free-agent guest worker program was included in Senate-approved comprehensive immigration reform bills in 2006 and 2013.
Congress’s failure to enact comprehensive immigration reform and the Trump Administration’s focus on reducing unauthorized entries from Mexico has increased the use of the H-2A program. DOL certified almost 20,000 jobs to be filled by guest workers in California in FY18. Although this is less than five percent of the 425,000 year-round equivalent jobs in California agriculture, and most H-2A workers are in the state less than a year, there could be 50,000 jobs certified to be filled by H-2A workers within five years.
There is no doubt that fewer unauthorized newcomers from Mexico, combined with higher state minimum wages and overtime pay requirements, have increased farm labor costs. Farmers are adjusting as economics would predict, trying harder to retain workers and providing them with equipment to increase their productivity. They are also investing in labor-saving mechanization and increasing employment of H-2A guest workers.
Is there a farm labor shortage? Americans are getting an abundant supply of fresh produce from the US and abroad. Average employment in agriculture, and the number of workers who fill farm jobs, have been increasing. There are unpicked fields and orchards every year, but the reasons for “fruits and vegetables rotting in the fields” are often a complex mix of lower-than-average quality, low market prices, and high labor costs.
For example, Imperial vegetable farmer Jack Vessey in December 2018 noted that there was overproduction of broccoli in 2017-18, so that some 10-acre blocks were not harvested because of low market prices. Acreage shrank for the 2018-19 season because, “when you have a 10-acre block that you don't touch [due to low market prices], it's pretty expensive to grow that stuff and not harvest it these days.” (Hecteman, 2018).
Imperial’s Ed Hale complained of overproduction of fresh vegetables: “The guys in Salinas let out the contracts and they hate to get caught short because they [make a] guarantee to their customers that they will have a certain amount. For the guys who are making those contracts, it is a lot easier to over-contract a little bit to be safe.” The result can be over production, low prices, and unharvested fields.
Farmers would like easy access to workers from lower-wage countries who are eager to work in the US. Farmers can adjust to more and fewer farm workers, and these adjustments encompass the 4-S strategies of satisfy, stretch, substitute, and supplement.
The big question is which strategy is optimal, a question that is hard to answer because of uncertainties about how fast machines will improve and whether the government will make it easier or harder to employ guest workers and free up or restrict imports of fresh produce. Imperial Valley vegetable producer Larry Cox is optimistic: “we'll end up figuring out ways … through automation, through mechanization, through innovation, that we'll be competitive. But it's just the transition's a little bit difficult." (Hecteman, 2018)