April 1996, Volume 2, Number 2
Minimum Wages/Workers Comp
The US minimum wage of $4.25 has fallen to its lowest-ever in
relation to average wages. The US Senate held a vote on raising the
minimum wage over two years to $5.15 per hour in March 1996, and 55
senators voted for an increase. The Clinton administration supports
increasing the minimum wage.
The US DOL reports that there are about 14 million Americans who
earn less than $5 per hour, including two million in California, and
that raising the minimum to $5.15 might eliminate 100,000 of these
Many cities and states are beginning to raise the minimum wage in
their jurisdictions. Cities including Baltimore, Milwaukee, and Gary,
Indiana have approved ordinances that require businesses with city
contracts to pay a "living wage," typically about $7.50 per hour, so
that a worker working 50-40 hour weeks would have earnings about
equal to the federal poverty line for a family of four, $15,600. The
current $4.25 hourly minimum wage generates $8,500 annually for a
Ten states require employers to pay workers more than $4.25 per
hour, and in California, the Livable Wage Coalition qualified a
measure for the November 1996 ballot that would raise the California
minimum wage from $4.25 per hour to $5.75 per hour within two years.
Economists traditionally believed that higher minimum wages lead
to significantly fewer jobs, especially for unskilled workers.
However, a study of how the New Jersey fast-food industry adjusted to
higher minimum wages suggested that the wage-jobs tradeoff at the
bottom of the labor market was less than previously believed, lending
support for raising the minimum wage in 1996.
The Targeted Industries Partnership Program (TIPP), a
federal-state effort to improve compliance with labor--not
immigration--laws in the California agriculture and garment
industries--announced that, in 1994, there were 589 wage and labor
standards inspections, and 580 OSHA inspections of farms. About $1
million in civil penalties were assessed for e.g. underpayment of
minimum wages, and another $367,000 for OSHA violations.
As part of the TIPP program, a database of farm labor contractors
is being established-- it appears that over 90 percent of the FLCs
licensed in California--about 1,000 to 1,100-- are also licensed by
DOL. However, there are still three federal FLC licenses issued for
every California FLC license.
The Idaho House on March 5, 1996 approved by a vote of 41-29 the
governor's proposal to require farm employers to provide workers
compensation coverage for the estimated 29,000 hired farm workers in
the state on January 1, 1997.
Idaho's 10,000 farmers who hire labor are expected to pay about
$25 million in annual workers' compensation premiums--about 800 have
voluntarily covered their workers under workers' compensation. About
70 percent of Idaho's farm workers are Hispanic, and they earn an
average $6,500 annually--most hourly wages range from $4.25 to $5.25.
The Idaho Migrant Council is the state's largest employer of
Hispanics, with 420 employees and a $10 million budget to serve 3,000
members, farm workers, and their children, primarily by administering
federal programs that provide services to farm workers. The Council
estimates that Idaho had 119,000 migrant and seasonal workers and
dependents in 1990, about 75 percent of whom were Hispanic.
Workers' compensation is no-fault on-the-job accident
insurance--if a worker is injured at work, he receives benefits
according to a schedule established by the legislature. Farm
employers pay experience-rated premiums that can range from five to
20 percent of farm worker earnings--the highest rates are typically
paid by employers who hire workers to climb ladders, where falls are
Some 36 states require their farm employers to provide workers'
compensation. The states of Nevada, New Mexico, North Dakota,
Nebraska, Kansas, Arkansas, Indiana, Kentucky, Tennessee,
Mississippi, Alabama, South Carolina, and Rhode Island do not require
it. Many of the states that do require farmers to cover their hired
workers under workers' compensation, including Texas, South Dakota,
Wyoming, Oklahoma, and Iowa, limit the coverage to workers employed
on larger farms.
In states that require workers' compensation, workers'
compensation is the only remedy-- MSPA was amended in November 1995
by PL 104-49 to make workers compensation the exclusive remedy for
farm worker injuries IF workers are covered by workers' compensation
In states without workers' compensation coverage, injured workers
can sue their employers, and courts then determine who was at fault,
and how much the employer must pay.
The Idaho press covered the debate over extending workers'
compensation to farm workers extensively--Idaho farmers have blocked
mandatory coverage seven times since it was first proposed in
1971. Some Idaho farmers first learned about workers'
compensation when they hired foreign workers through the H-2A
program, which requires insurance for on-the-job injuries.
Examples of workers' comp premiums paid by employers who joined
the system voluntarily included an employer with 500 acres of apples,
apricots, and, peaches who hired 125 workers to pick and pack them,
and paid $95,000 in workers' compensation premiums.
The US Labor Department on March 18 published a notice in the
Federal Register seeking comments on implementing amendments to the
Migrant and Seasonal Agricultural Worker Protection Act that make
workers' compensation the exclusive remedy for injuries or death
suffered by a farm worker in states where workers' compensation
exists, the so-called repeal of the Adams Fruit decision. The
amendments, inter alia, seek to reduce insurance premiums so that
more of those who transport farm workers have insurance.
Clay Carpenter, "Migrant council marks 25th birthday with win,"
Post Register, April 7, 1996. Michelle Cole, "Farmer sold on workers'
comp," The Idaho Statesman, February 21, 1996.