WASHINGTON, Nov. 2, 2016 - The tempo of minimum wage increases and new overtime pay requirements is quickening coast to coast, spelling expensive implications for ag-sector payrolls.
The groundswell of legislated and regulated pay hikes occurs despite, and in part a result of, Congress’ firm stand against raising the national minimum since it bumped the rate to $7.25 an hour in 2009. Instead of a new national rate, many northern and West Coast states, along with a growing array of cities and counties, are upping their wage floors. Already, 29 states and the District of Columbia have a minimum wage above the federal mandate, and further boosts are expected or already scheduled.
Carolyn Orr, who tracks such issues for the State Ag and Rural Leaders and Council of State Governments, says the increases are coming mostly in states already above the federal mandate. Generally, “in any state that has much blue” (Democratic political governance), she says.
In Congress, Kristi Boswell, labor issues lobbyist for the American Farm Bureau Federation, says a minimum wage boost “certainly has been discussed more in recent years . . . but there hasn’t been any traction, fortunately, from our perspective.” She is waiting to see how the November elections may alter the odds for a change.
Boswell, instead, is hearing mostly from affiliates in several states about wage legislation and she has her eye peeled, particularly on California, where lawmakers ordered the state’s $10 per hour minimum raised $1 each year to $15 by 2022. What’s more, California is one of the few states (with Hawaii and Minnesota) that requires farmworkers be paid for overtime. (Federal law doesn’t require overtime pay for farmworkers.) And its legislature recently ordered that, starting in 2019, the state will gradually tighten its requirement that farm work beyond 60 hours a week qualify for time and a half wages. By 2022, working more than 40 hours a week wins overtime pay.
California farmers, already beset by a long drought, spiking prices for water and mounting regulatory costs, fought changes in both the base wage and overtime pay because of their certain impact on operating costs. “I don’t know if we know yet how tough it is going to be on who,” said Bryan Little, a labor affairs specialist and chief operating officer for the Farm Employers Labor Service of the California Farm Bureau Federation. “But when you go from a $10 minimum wage to a $15 minimum wage,” he said, “obviously, that is a huge increase in costs, and then you pile an overtime pay increase on top of it, so that by 2025 that added hour of work is going to cost $22.50.”
He points out that labor usually amounts to 40 to 60 percent of farm production costs, “and you can’t have a 50 percent increase in the cost of such an important input for what you produce and not have something have to give someplace.” For farmers, he says, the higher wage rates will mean that “anyone you are paying to do work, the work is going to have to be very important to you, or else it is not going to make sense (financially).”
Besides a direct impact on farmers’ pocketbooks, Little said, a lot of workers will be newly limited to 40 hours a week, so the state’s labor market “will see more job-sharing arrangements spring up . . . people looking for work on a part-time basis.” Plus he expects the higher wage rates will drive farms to shift more production to crops, such as tree nuts, that can be harvested mechanically.
Also on the West Coast, the Oregon Legislature split that state’s minimum wage this year into three tiers – urban, suburban and rural – and set into motion a six-year run-up for all the tiers. They will jump to $9.50 per hour rural ($9.75 urban and suburban) this year, and will range from $12.50 to $14.75 in 2022.
Next door, Washington State tied its wage floor to inflation back in 1998, and its rate will edge up to $9.53 on Jan. 1. But voters there will also decide an initiative on Nov. 8 that would lift the minimum wage to $11 in 2017, $11.50 in 2018, $12 in 2019, and $13.50 in 2020, plus require employers to pay sick leave.
Those West Coast actions are significant, says Bruce Goldstein, president of Farm Worker Justice, who watches farmworker issues nationally. “About 40 percent of the country’s farmworkers work in California, Oregon and Washington State, and all of those states have raised the minimum wage, so farmworkers are benefitting from it,” he says. “States around the country have recognized that the federal minimum wage is not capable of keeping people out of poverty, so they’ve acted to raise the minimum wage.”
USDA surveys show farm laborer wages are averaging near the higher minimums now being set by some states. Its latest report USDA says wages last April averaged $12.75 an hour, up 4 percent from a year earlier and up 17 percent in five years. Those averages vary a lot regionally, from $10.70 in the Mississippi Delta area to $13 in the Corn Belt and West Coast states, to $14 in the Northern Plains, and almost $15 in Hawaii, but they also vary among the types of work.
Goldstein says that, while the farm wages have gone up, the increases need to be put into perspective. “The wage rates they started at were incredibly low,” he says, “and few farmworkers receive any fringe benefits, including paid sick leave, vacation, or health or retirement savings plans.”
On the other end of the country, New England is having a wage-floor-raising fest. Connecticut, Rhode Island and Vermont raised their minimums to $9.60 an hour this year, and Vermont’s Democratic candidate for governor promises a push to $15 if elected. Massachusetts has already ordered its $10 minimum to reach $11 on Jan. 1, and $12 a year later.
New York went regional on its base rate increases last spring, and will lift its current $9 per hour wage floor to $11 in New York City, and $10 on Long Island and Westchester County, on Dec. 31. Then New York City went to $15 at the end of 2019 and Long Island did the same for 2021. In the rest of the state, the base will jump 70 cents at year’s end, then to $12.50 by the end of 2020.
Steve Ammerman, public affair managers for the New York Farm Bureau, says opponents of the big increases did wrestle a compromise to $12.50 from the governor and lawmakers, who threw in a $250 tax credit per farmworker employed in the first year, later rising to $600 per worker. But he calls the credit “a drop in the bucket compared to the overall labor costs that farms will be paying as a result of the climbing minimum wage.” Worse, he said, there are a lot of fruit and vegetable farmers, oyster farmers and fisheries on Long Island, who will take the full brunt of the minimum wage hikes.
Also in New York, another farmworker issue will perhaps have even more long-term impact on farm payrolls there – the right to form unions. Farmworkers’ collective bargaining in California is historic but few other states afford farmworkers organizing rights, fearing that organized disruption of harvests, for example, would put farmers out of business. Now, the Worker Justice Center of New York, the New York Civil Liberties Union and others claim in a suit in state courts that prohibiting workers to organize is unconstitutional, and New York’s Democratic governor, Andrew Cuomo, has decided to not defend the state’s prohibition. However, the judge for the case has ruled the NYFB will be allowed to intervene to defend it. “That will let us defend state law if the governor and attorney general refuse to do so,” Ammerman says.
Meanwhile, minimum wage hikes by cities and counties portend more impact on farm labor costs. First, for example, a big city like Chicago, with its $10.50 minimum wage, exerts pressure on the state rate, which is already a dollar above the federal minimum. But now in the county that includes Chicago, the Cook County Commission is expected to order the same rate as Chicago this fall, but also set it to reach $13 in 2019.
And in Iowa, which has kept its wage base at the federal floor level, Governor Terry Branstad is waving a political white flag, trying to avoid statewide minimum wage chaos. No friend of minimum wage mandates, the Republican governor has watched four counties declare their own. That includes Polk County, which surrounds Des Moines, and where the board of supervisors has ordered the rate up to $8.75 an hour next April, to $9.75 in January 2018 and to $10.75 in January 2019. So Branstad wants lawmakers to look at a possible compromise toward a uniform minimum wage.
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