Philip Martin: plmartin@ucdavis.edu

! !!

California Farm Labor: 2016 !!

-10%

-5%

0%

5%

10%

15%

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4

2010 2011 2012 2013 2014 2015

Percent Change in Real Wages From Year Ago, Crop Workers, CA, FL, US

CA FL US

Highlights • Hired workers do 90% of farm work in CA FVH

commodities (fruits, veggies, & hort)• Most CA hired farm workers = Mexican-born

(90%) & not authorized to work in the US (60%)• Slowdown in Mexico-US migration &

employer 4 S responses–  Satisfy current workers: wages, super training—growers

think not much effect of wage incs with inelastic supply–  Stretch current workers: mechanical aids, change

production practices to make work easier; older & women–  Substitute for workers: labor-saving mechanization–  Supplement: H-2A workers, but need to provide housing–  Most employers do all 4—no one knows best combination

!!!

FVH ag = 3 Ss: Sales, Labor’s Share, Seasonality!

!!

• Farm sales = CA $43 bil (2012); IA = $31 bil– CA = 12% of US $395 billion in farm sales– US farm sales: 54% crops, 46% livestock

CA farm sales: 70% crops, 30% livestock– CA $26 bil of $30 bil crop sales or 87% =

FVH commodities• FVH: labor’s share: 30% of prod costs• Seasonality: Ave CA farm employ 414,000

(2014). Peak 471,000 Aug; low 344,000 Jan. Peak-trough ratio = 1.4, & up as geography down; 100 to 1 on a farm (standby workers).

CA Shares of US FVH Production

Fruits Vegetables

Lemons ..

Artichokes

... \, Broccoli

Grapes 88% .,l l) Leaf Lettuce -

85%

.•1 ''

Apricots 86% Carrots 83%

~ Avocados 86% Spinach 70%

Peaches 73% Bell Peppers 60%

·., , Raspberries 56%

' Asparagus 46%

Definitions suggest solutions •  Seasonality: demand for workers flucuates. Who

covers non-work time? •  Farmers: seasonal farm labor problem is how to get

sufficient workers when they are needed at affordable cost. –  Solution: open border gates to workers who are eager to

earn 5-10x more in US• Worker advocates: seasonal farm labor problem is

low hourly and annual earnings for people who work hard to produce essential food–  Solution: help farm workers to help themselves (unions),

top-up low farm earnings & help children (UI & MSFW programs), help workers move up ag job ladder or out of ag

!Farm Labor: 3 C’s

•  Concentration: 900 CA ag ers hired 100+ ees in 3rd quarter of 2014, & they hired 2/3 of all ag workers

•  Contractors: intermediaries who recruit & deploy crews. Win-win specialization OR risk-absorbers in labor markets with violations?

•  Conflict: Exit versus voice: easier to exit a “bad” job (ag & fast food) than to organize & voice demands to change wages and conditions–  Exits of “best” workers = hard to sustain unions in ag,

fast food & other high-turnover industries–  Top-down unions: without local unions, it is hard for

workers to gain leadership experience

-

50,000

100,000

150,000

200,000

250,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Average Employment by California Ag Region, 2004-2013

San Joaquin Valley Central Coast South Coast

Half of ag emp in SJV; 1/6 each in Central & South Coast

2-1 ratio between unique workers & average jobs

2007

2012

2014

• Unique Workers

Average Ag Employment

0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000

Who hires? CA since 2007: more workers brought to farms by crop support (FLCs) than hired directly. Gap is widening

CA: Average Crop & Crop Support Employment, 1993-2012

~Crop

- support

3,000 US FLCs; 1,200 in CA

FLCs: Increase efficiency of worker-job

matching or risk absorbers?

Common crop support: harvesting tree fruits

CA strawberries: 90% of US 3 billion pounds 40,000 acres, 60,000 to 70,000 workers

Vegetables: both direct-hire & workers via crop support firms

Nursery & dairy Big 5: crop

support, FVH, & dairy = 95% of CA ag employment &

wages

CA Hired Crop Workers

• Men born in Mexico: 90% = born in Mex, 60% unauthorized. V-shape legal status–  Fewer newcomers (workers in US less than 1 year).

From 20% to 2% today. Result: average age (38) & weeks of farm work (35) up

–  50% of all crop workers, & 2/3 of foreign-born farm workers, are unauthorized. CA has > % unauthorized because more CA farm workers are foreign born

•  Employ and earns: more weeks, higher wages–  Average $9.31/hour across US; $9.22 in CA in 2012–  35 weeks of farm work + 7 weeks of nonfarm work: 42

weeks, or close to 48 weeks full-time work–  Annual earnings average $15,000-$17,000/year

•  Farm work like nonfarm work: live off the farm, commute to work, have 1 farm employer/year

!Farm Work: from job to career?!•  Best way to raise farm worker earnings is to

move to nonfarm job. More hours, more potential for upward mobility

•  Farm workers of tomorrow: growing up today outside the US. Will they enter US legally or illegally?

• Guest worker debates: how many hurdles between US employers and foreign workers? Recruitment, housing, & AEWR

• Government: how much support for MSFWs & families: MEP, MHS, MH, JTPA. Purpose is to raise worker earnings—how?

CA experiment: 50% increase in min wage over 6 years

Comparing minimum wages

$=1=6 ========= California: $15.00 on Jan. I, 2022 14 @

12

10

8

6

4

2

¢ Planned increases

U.S. federal: Currently $7.25

0 ---I Ii 9~0 1111 :50 I I I I I I :60 I I I I 'I :70 I 111 I I :so I I I I I I :90 111I11200011 I I :iO' I I I I 'I :20

Source: Labor Department (U.S.); California Department of lndustriial Relations (Calif.)

Variance in median earnings: $18,000 Delano, $108,000 Los Altos. Windfall or job losses in SJV?

Eureka $23,949 Redding

$28,846

Chico $25,305

Sacramento $33,751

S.Lake Tahoe $26,266

-Folsom $62,363

Median annual earnings, by city California cities with at least 10,000 workers have median annual earnings of widely varying amounts, according to the most recent census data, rangingfrom more than $108,000 in Los Altos to less than $18, 000 in Delano.

CA Cilitt (Rank oul or 387 l:S MelroT Jobltts Rale,llocal Salary Equhalenl 101 SIS an Hour SF :\linimum Wace Areas for Jan. Jobltts Rain) j Jan. 2016 Sl00,000 in San Francisco Adjusled for Local Cosl or Lhin&

El Centro (#387) 19.2°0 S4 l ,921 S6.29 Merced (#384) I2.8°o S42,993 S6.45 Visalia-Porterville (#383) 12.3°o S43,652 $6.55

l, Los Altos~ .:...a e • $108,543 .-.

Fresno / $26,534

Hanford-Corcoran (#382) 11.4% S40,684 $6.10 Salinas (#38 1) 1 l.2°o S52,638 S7.90 Yuba City (11379) 10.900 S45,589 $6.84

Delano _.,.........$17,786

Bakersfield (#378) 10.7°o S42,869 $6.43 Fresno (#377) 10.6~o S43,199 $6.48 Madera (#376) 10.2°o S42,457 S6.37 Modesto (#375) 9.4~o S44,724 S6.71

$17,786 $108,543 • • • Bakersfield $32,294

• Manhattan Beach $85,855 r

Rancho Palos Verdes $68,512

Sources: Employment Development Department's Occupational Employment Statistics and Wages report and U.S. census' 2010-2014 American Community Survey

San Bernardino ,_-$24,822

Calexico $21,883

J SHARON OKADA sokada@sacbee.com

SB 3: min wage from $10 to $15 by 2022-23. Median wage = $20

Ratio of minimum wage to median wage in 2022

Rough consensus among economists sympathetic to minimum wage increases:

BELOW 50% (mostly beneficial)

50% to 60% (may create difficulties)

Redding

• Chico

Sacramento

San Francisco Stockton San Jose

• Merced

• Fresno

• Bakersfield

CALIFORNIA

Los Angeles

San Diego

60% to 70% (serious concerns)

• ABOVE 70% (potentially disruptive)

MEDIAN WAGE IN 2022 RATIO OF $15 MINIMUM (PROJECTED) TO MEDIAN WAGE

Fresno $20.31

Merced $20.31

Chico $21.23

Bakersfield $21.44

Redding $22.02 68

Stockton $22.77 66

Los Angeles $24.78 61

San Diego $25.38 • Sacramento $26.51 S1

San Francisco $34.18 44

San Jose $37.34 •

April 2016: one way U-Haul rates between California & Texas

a 26- oot -ruck -ental - ate

rom: Lo 1geles Houston

an Franci co Hou ton

Lo Ang l Dallas

an Franci co Dallas

Hou ton Lo Angele

Hou ton an Franci co

Dallas o .. ngele

Dalla 2 6 I 1,-23

'Ratio

2.4

2.2

2.4

2.2

Big change: falling Mexico-US migration (Mex-US = red) The number of Mexican immigrants coming to the U.S. has fallen below the number heading back to their home country.

Migration between the U.S. and Mexico

3 million

I U.S. to Mexico

Estimated Mexican illegal immigrants in the U.S.

8 million

I Mexico to U.S. _6 ____ -,.,_ __ ~..,.. 2

4 2014: 5.6M

1 2

0

1995-2000 '05-'10 '09-'14 lioo6 · I I I I lioio' '

Agriculture: one of first sectors to feel effects of

fewer newcomers

Employers: 4-S responses

•  Satisfy current farm workers with higher wages, improved benefits, & better supervisors. If supply in US inelastic, shift workers between farms?

•  Stretch the current labor force with mechanical aids that increase productivity: conveyor belts in fields, dwarf trees. How much to invest, how fast to deploy?

•  Substitute: labor-saving mechanization in raisins, olives, pre-harvest thinning and weeding, new seeds: high-stalk broccoli. Will wages keep rising to justify long-term investments? Involve seed companies?

•  Supplement the labor force with H-2As. Will expanded H-2 show current OK? Will Congress enact a no-housing guest worker program?

Satisfy: wages, benefits, supervisor training & respect Most farmers: satisfy will not ENLARGE ag workforce

Stretch: mechanical aids to raise worker productivity

Bell peppers: with and without conveyor belt

Substitute: mechanize olives, carrots, tomatoes, nursery

Mechanization

Supplement with H-2As: 75,000 FY07, 140,000 FY15. CA&WA OFFICE OF FOREIGN LABOR CERTIFICATION

H-2A Temporary Agricultural Labor Certification Program - Selected Statistics, FY 2015

A d S I d S f . b W k P "f C rffi d r f R 'PPI 1ea ions ece1ve

YTD Q1 Q2 Q3 Q4

e ecte ta 1st1cs ~ or er os1 ions e 11e

Florida 17,942

7,562 1,570 3,359 1,824 809 North Carolina 17,696

Georgia 14,393

Washington 11,844

A r f p d 'PPI 1ea ions rocesse

Detennlnatlon YTD Q1 Q2 Q3 Q4 California 8,591

Top 10 States Louisiana 7,787

Total 7,568 1,022 3,407 2,124 1,015 Determinations Kentucky 6,722

- Certified 7,195 954 3,298 2,011 932 New York 5,039

- Denied 210 38 57 64 51 Arizona 3,763

-Withdrawn 163 30 52 49 32 South Carolina 3,594 Positions 145,874 22,639 45,480 49,020 28,735 Requested

Positions 139,832 21,720 43,740 47,092 27,280 Certified

North Carolina Growers 11,767

Association, lnc.J.NCGA_l

Washington Fann Labor Assn. 7,895

• Florida Fresh Harvest, Inc. 3,176

Top States • North Carolina Zirkle Fruit Company 2,889

• Georgia

• Washington

4% • California

Top 10 Rodrigo Gutierrez-Tapia 2,308 Employers

Virginia Agricultural Growers Assn., lnc.J_VAGAl

1,626

• Louisiana R & R Harvesting, Inc. 1,578 3%

• Kentucky Peri & Sons Farms, Inc. 1,565 • NewYork H-2A Complete II, Inc. 1,533

Arizona

• South Carolina Sierra Cascade Nursery, Inc. 1,305

Remaining States Tobacco3 23,291

Berries4 12,358

• Tobacco Top Crops • Berries

Hay and Straw5 6,763

Apples6 6,641

5% 4% 4%3% 3% 3% • Hay and Straw

~ • Apples

• Oranges

• Fruits and Vegetables

Top 10 Crops/ Oranges7 5,733

Occupations Fruits and Vegetables8 5,421

Nursery and Greenhouse 4,997

Workers

AEWRs 2015: $10.32 in NC, $12.42 in WA, $11.33 in CA H-2As concentrated in brown states with lowest AEWRs

FY 2015 Adverse Effect Wage Rates

!!

$10.28 West

Virginia

$11.26 Rhode Island

$11.29 Delaware

$11.61 Indiana

$12.42 Oregon

$11.56 Wisconsin

$13.59 Nebraska

$12.62 Missouri

$11.29 Pennsylvania

$11.26 New Hampshire

$11.61 Illinois

$12.62 Iowa

$11.56 Minnesota

$10.54 New Mexico

$10.00 Alabama

$11.26 Vermont

$11.29 New Jersey

$11.14 Wyoming

$12.98 Hawaii

$13.59 South Dakota

$11.26 Connecticut

$10.35 Oklahoma

$11.14 Montana

$11.26 Maine $13.59

North Dakota $11.26 Massachusetts

$11.29 Maryland

$13.59 Kansas

$12.42 Washington

$11.37

Utah $11.37 Colorado

$11.61 Ohio

$10.54 Arizona

$11.37 Nevada

$10.00 South

Carolina

$10.35 Texas

$11.14 Idaho

$10.18 Mississippi

$10.28 Tennessee

$10.19 Florida

$11.33 California

$10.18 Arkansas

$11.26 New York

$10.28 Kentucky

$10.18

Louisiana

$10.32 Virginia

$10.00 Georgia

$10.32 North Carolina

$11.56 Michigan

$10.00 < State < $11.00

State < $10.00 $11.00 < State < $12.00

$12.00 < State < $13.00

$13.00 < State

CA H-2As: 3,000 in 2012, 8,600 in 2015 •  CA: many vegetable firms operate year-round.

Leafy green vegetables in Yuma, SJV, & Salinas–  Border labor force is legal–  Bring H-2As to Salinas: move from motels to FW

housing? (T&A: $8 million for housing for 800 workers in Spreckels, $10,000 per bed)

–  Largest CA H-2A user: Sierra-Cascade strawberry nursery (1,300 H-2As in Tulelake)

• H-2A expansion: led by coastal vegetable growers, not SJV fruit industry. Half of CA farm labor is in SJV, where fruit industry is concentrated, & there is less grower-shipper integration

•  Some shippers: increase imports, esp of Mexican berries

T&A 800 beds in Spreckels: move away from contractors & return to direct hiring & on-farm housing?

T&A: 800

employees at 145-unit apt in

Yuma, AZ since 2007

Summary

• Average farm employment up as expansion offsets mechanization. Berries up as raisins mechanize

•  Farm workers: fewer new entrants & aging, settled farm workforce

•  Employer responses to fewer newcomers– Satisfy: 40/40 rule: keep current workers longer– Stretch: labor-stretching mechanical aids– Substitute: labor-saving mechanization– Supplement: H-2A workers; try to change rules

to reduce requirements on employers via recruitment, housing, & AEWR

• Which of the 4 S’s takes priority? What variance by commodity and area?