California agricultural employers are continuing to adapt to the increasing minimum wage and the rollout of new overtime pay requirements, sometimes by moving away from manual labor to mechanized solutions. The rest of the country is watching closely to see whether these farm labor trends expand.
The first wave of changes for overtime began in 2019 for larger employers (26 or more employees), and this is the last year of the transition period. Overtime now kicks in at 8.5 hours per day or 45 hours per week; at the beginning of 2022, field workers will earn time and a half when they put in more than 8 hours in a day or 40 hours in a week, the same as workers in other industries. For small employers, the rollout period begins in 2022 and runs through Jan. 1, 2025.
The implementation of California’s statewide minimum wage increase also has been different for the smaller and larger ag employers. As of this month, the schedule requires larger employers to pay a minimum of $14 per hour and smaller employers $13 per hour. Next year, the larger employers will hit the $15 per hour mandate while the smaller employers have until Jan. 1, 2023.
Farmworkers are generally exempt from the federal minimum wage and overtime requirements, although President Joe Biden proposed in his campaign to remove those exemptions.
California already had the “most stringent overtime of any farming state" even before the new wage rules, said Roger Isom, president and CEO of the Western Agricultural Processors Association.
Now, a minimum-wage worker tipping into overtime in California will earn $21 per hour, while someone doing similar farm work in Texas might only make $7.25 an hour, the federal minimum wage, even after working more than 8.5 hours in a day.
“It’s not that it’s bad per se,” Isom said, “it’s just we’re the only ones doing it.”
When paying employees becomes too expensive, he says growers switch to less labor-intensive crops. He remembers a Central Valley farm that grew the “greatest peach you would ever have.” But those white-fleshed sugar giants are gone.
“They pulled out 5,000 acres of tree fruits and put in 5,000 acres of tree nuts,” Isom said. “Tree fruit is high labor, and guys just aren’t growing it anymore.”
Across the U.S., fewer peaches are being grown. The number of U.S. acres bearing peaches declined from 102,540 in 2014 to 74,400 acres in 2019, according to USDA’s National Agricultural Statistics Service.
For some, the higher cost of labor makes investing in expensive equipment more practical.
“Some of my almond processors had sorting lines,” Isom said. “They’ve gone to robotic sorters, which are million-dollar pieces of equipment.” He says it took less than four years for the labor savings to cover the cost of the equipment, more than a year less than they expected.
Bryan Little runs Farm Employers Legal Service for the California Farm Bureau Federation and has watched employers trying to adjust to the higher cost of labor.
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“They are struggling to comply with it because it has the effect of increasing their operating costs pretty dramatically,” he said. Recently he spoke with a vineyard employer who was looking into autonomous tractors. He says an articulated handle on a self-propelled tractor could replace a pruning crew of four to five people.
“In some parts of the state there’s very little hand-pruning still going on,” Little said. “They are taking out old vineyards and orchards that require handwork and replacing them with different varieties, different crops that are cultivated and managed in different ways.”
Another trend Isom sees expanding is growing crops in California but processing them elsewhere. He points to two examples: A walnut operation that grows and hulls in California sends the nut meat to Nevada for processing and then ships it back to the Port of Oakland for export. Some almonds that are grown in California are being made into almond butter in Lubbock, Texas.
Isom says a nationwide minimum wage closer to California’s would help keep jobs and employers in the state.
“We might not be actively out there supporting it,” he said, “but we wouldn’t oppose it because it would level the playing field.”
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