Recent Trends in the Market for Hired Farm Labor in the United States

Recent Trends in the Market for Hired Farm Labor in the United States Steven Zahniser, U.S. Department of Agriculture, Economic Research Service, 1800 M Street NW, Rm. N5134, Washington, DC 20036-5831, tel. 202-694-5230, fax 202-694-5793, e-mail: zahniser@ers.usda.gov. Prepared for delivery at the 2001 meeting of the Latin American Studies Association, Washington, DC, September 6-8, 2001. The author thanks Bill Kost for his helpful comments and suggestions. Opinions expressed in this paper are those of the author and do not represent the views of the U.S. Department of Agriculture or the Economic Research Service. 1. Introduction Hired farm labor is a major input to U.S. agriculture. According to the most recent U.S. Census of Agriculture, expenditures for hired farm labor totaled $14.8 billion in 1997, accounting for 10 percent of total farm production expenses. In three sectors of U.S. agriculture, hired labor accounts for an especially large proportion of production expenses: greenhouse, nursery, and floriculture (40 percent); fruit and tree nut farming (27 percent); and vegetable and melon farming (23 percent). To fulfill its labor requirements, U.S. agriculture relies heavily on foreign-born workers, most of whom come from Mexico and many of whom lack legal authorization to work in the United States. According to the U.S. Department of Labor s National Agricultural Workers Survey (NAWS), persons born in Mexico made up 78 percent of all U.S. farmworkers in crop agriculture in Fiscal Year (FY) 1998, up from an annual average of 68 percent during FY s 1993-95. 1 NAWS data also indicate that the proportion of farmworkers who are undocumented appears to have increased in recent years. In FY 1998, 57 percent of Mexican-born farmworkers were undocumented, compared with an average of 51 percent during FY s 1994-95. Similar proportions apply to all foreign-born farmworkers in U.S. crop agriculture. Given the economic importance of hired farm labor and the significant presence of undocumented workers in U.S. agriculture, some policymakers have expressed interest in expanding the job opportunities legally available to foreign-born workers in U.S. agriculture. During the last several sessions of the U.S. Congress, lawmakers have considered but not acted upon a number of proposals of this type, ranging from immigration amnesties to new guestworker programs. In addition, the governments of Mexico and the United States are engaged in formal discussions regarding a variety of border issues, including ideas on regularization of undocumented Mexicans in the United States and possible alternatives for temporary workers (U.S. Department of State, 2001). Although these discussions have yet to produce a formal proposal for a new guestworker program, many observers anticipate that the 1 Crop agriculture is defined to include nursery products, cash grains, field crops, and all fruits and vegetables. NAWS covers field workers, field packers, and supervisors, but does not include secretaries or mechanics employed by farm operations or workers in the H2-A Program. 1

Bush and Fox Administrations will unveil a framework for continuing negotiations on this subject sometime in September. In the context of this debate, this paper aims to provide a clearer understanding of recent trends in the U.S. market for hired farm labor. Although an evaluation of the existing proposals for a new guestworker program let alone the overall desirability of such a program is beyond the scope of this paper, developing a better understanding of this important market should provide a sounder basis for these discussions. The paper is organized as follows. Section 2 describes the main characteristics of the market for hired farm labor, including the number of workers, the average wage, and the earnings differential between farm and non-farm employment. For the most part, this analysis relies upon published data from the U.S. Department of Agriculture (USDA) and the U.S. Department of Labor (DOL) and builds upon previous work by Zahniser and Treviño (2001), who utilized the data available in late 2000. Section 3 offers basic information about the H-2A Program, the primary Federal program for admitting temporary agricultural workers from abroad. Section 4 summarizes the main findings of the paper. 2. Characteristics of Hired Farm Labor Number of Workers. In 2000, U.S. agriculture employed an average of 890,300 hired farmworkers, according to quarterly data from USDA s National Agricultural Statistics Service (NASS). The number of workers fluctuates seasonally, from roughly 800,000 in January to 1 million in July (fig. 1). Focusing on the high point of this cycle (July), the data indicate an increase in the number of farmworkers from 1996 to 1999, followed by successive reductions in 2000 and 2001. This recent decline does not necessarily mean that fewer farmworkers are available. Instead, it more likely reflects changing market conditions for farm output, as well as efforts by farm operators and food processors to restrict production of certain commodities in order to reduce stocks and raise prices. Wages. In July 2001, the average wage for field and livestock workers in the United States was $7.75 per hour (USDA/NASS, 2001). 2 Although this average is less than the average wage outside agriculture ($14.35 per hour), it is above the Federal minimum wage ($5.15 per hour) and has kept pace with the cost of living since 1996 (fig. 2). Like the number of workers, the average wage for hired farm labor fluctuates seasonally, but the pattern is reversed. Wages are generally at their highest (nominal) level in January and their lowest level in July. Although the average wage of farmworkers exceeds the Federal minimum wage, the distribution of wages extends below this standard. Based on an in-depth analysis of the Current Population Survey s reports of weekly earnings, Runyan (2000) calculates that 25 percent of hired farmworkers in 1998 earned less than the Federal minimum wage. The fact that a farmworker is paid less than the Federal minimum wage does not necessarily indicate a violation of Federal law. Some farm operators are exempt from this requirement, including those employing 500 or less person-days of labor in a [calendar-year] quarter and those employing workers primarily in the range production of livestock (Runyan, July 2000). 2 These amounts do not reflect the housing and food benefits that some farmworkers receive from their employers. 2

Figure 1: Number of Hired Workers in U.S. Agriculture Quarterly Data, January 1994-July 2001 1,500 1,400 Employment (in thousands) 1,300 1,200 1,100 1,000 900 800 700 600 Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Apr-95 Jul-95 Oct-95 Jan-96 Apr-96 Jul-96 Oct-96 Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Source: U.S. Department of Agriculture (USDA), National Agricultural Statistics Service (NASS), Hired Farm Labor, various issues. Off-farm Employment and Differential Wage Rates. Because of the seasonal nature of agricultural work, off-farm employment supplements the agricultural earnings of many farmworkers. Farmworkers in U.S. crop agriculture were employed for an average of 34 weeks in the United States during FY 1998 31 weeks in agriculture and 3 weeks in non-farm employment, according to NAWS data. An additional 8 weeks were spent outside the country. U.S.-born farmworkers devoted a greater portion of the year to non-farm employment, while the foreign-born, not surprisingly, spent a greater portion of the year abroad. Among foreign-born farmworkers, time spent abroad averaged 11 weeks in FY 1998, up from an average of 8 weeks during FY s 1993-94. As was mentioned above, non-farm jobs tend to pay substantially more than hired farm work. In 2000, median weekly earnings for full-time workers engaged in farm work and fulltime workers in all occupations differed by $275, as measured in July 2001 prices. Over the past decade, the differential has varied substantially, to the point where it is difficult to determine whether the gap is actually widening or narrowing over the long term (fig. 3). Between 1991 and 2000, the farm/non-farm differential (in July 2001 prices) ranged from a low of $249 in 1991 to a high of $275 in 2000. 3

Figure 2: Nominal and Real Average Wage of Field and Livestock Workers, January 1994-July 2001 8.50 8.00 7.50 Dollars per hour 7.00 6.50 6.00 5.50 5.00 Jan-94 Apr-94 Jul-94 Oct-94 Jan-95 Apr-95 Jul-95 Oct-95 Jan-96 Apr-96 Jul-96 Oct-96 Jan-97 Apr-97 Nominal Real wages were calculated using the consumer price index. Jul-97 Oct-97 Jan-98 Real (July 2001 prices) Apr-98 Jul-98 Oct-98 Jan-99 Apr-99 Jul-99 Oct-99 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Sources: For wage data, U.S. Department of Agriculture (USDA), National Agricultural Statistics Service (NASS), Hired Farm Labor, various issues; for consumer price index, U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers (CPI U), U.S. City Average, August 16, 2001.. The wage differential narrows considerably when earnings of farmworkers are compared with workers in non-farm occupations that require little or no advanced education (fig. 4). While drywall installers, construction laborers, and butchers and meat cutters earn substantially more than farmworkers, the earnings of janitors and cleaners and textile sewing machine operators are comparable to those of farmworkers. Moreover, these figures may misstate the actual earnings differential since they do not account for regional differences in the cost of living. However, in contrast to many agricultural jobs, non-farm employment tends to offer year-round employment, employee benefits, and more predictable working conditions. Where workers have a choice, these attributes draw some prospective farmworkers away from agriculture, including both U.S. natives and persons born abroad. 3. The H-2A Program The employment and wage statistics cited in the previous section do not include participants in the H-2A Program, a small agricultural guestworker program operated by the Federal government. Under this program, U.S. employers may hire temporary, nonimmigrant 4

Figure 3: Weekly Earnings Differential between Full-time Farmworkers and All Full-time Workers, 1991-2000 (July 2001 prices) 280 275 275 270 269 267 265 264 Dollars per week 260 255 255 257 255 254 261 250 249 245 240 235 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Real earnings were calculated using the consumer price index. Sources: For earnings data, U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings, January 2001; for consumer price index, U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers (CPI U), U.S. City Average, August 16, 2001. farmworkers from abroad, provided that they can obtain the following certifications from the U.S. Department of Labor (DOL): (1) that sufficient laborers are not available in the United States, and (2) that the employment of these workers will not adversely affect the wages and working conditions of U.S. workers. The Immigration and Naturalization Service (INS) makes the final determination on the employer s application, and it rarely if ever approves an H-2A application without the DOL certification. In FY 1999, 32,372 persons were admitted under the program, 26,069 of whom were from Mexico (U.S. Department of Justice, Immigration and Naturalization Service, August 2001). If we add these individuals to the number of workers counted by NASS for 1999, participants in the H-2A Program constitute some 2 to 4 percent of hired farm labor. Some farm operators and agricultural trade organizations have complained that the H-2A Program is too cumbersome to negotiate easily. In response, the DOL and INS have worked to improve the application process, as well as the accompanying regulations governing labor 5

Figure 4: Median Weekly Earnings of Full-time Workers in Selected Occupations (in July 2001 prices) Farm workers 319 Vehicle washers and equipment cleaners 356 Textile sewing machine operators 312 Butchers and meat cutters 427 Drywall installers 478 Janitors and cleaners 360 All full-time workers 594 0 100 200 300 400 500 600 700 Dollars per week Real earnings were calculated using the consumer price index. Sources: For earnings data, U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings, January 2001; for consumer price index, U.S. Department of Labor, Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers (CPI U), U.S. City Average, August 16, 2001. conditions in the program. For example, on June 1, 2001, the INS unveiled an expedited, feebased system for the processing of various immigration forms, including employer applications for H-2A permits (U.S. Department of Justice, INS, June 2001). Moreover, employers participating in the H-2A Program have found ways to more effectively complete the application process. For example, it is not uncommon for farm operators to file a joint application for H-2A workers. In FY 2000, 3,700 applications were submitted on behalf of 5,900 farm operators. In addition, during the 1990 s, several former DOL employees formed consulting firms that specialize in assisting farmers with the H-2A application process. These efforts by the public and private sectors appear to bearing fruit, as the number of farm jobs certified as needing to be filled has grown from 15,100 in FY 1995 to 44,000 in FY 2000 (Migration Dialogue, July 2001). 4. Conclusions An examination of published government data reveals several important trends in the U.S. market for hired farm labor. First, U.S. agriculture continues to employ comparable numbers of hired farmworkers as in previous years. Although the precise number of workers 6

fluctuates from one year to the next, it is difficult to determine at this point in time whether recent changes constitute a long-term development or a short-term response to market conditions for agricultural commodities. Over the last 2 years, the number of workers employed at the height of the annual employment cycle has declined, but these reductions follow a period of expansion that lasted some 3 years. Second, U.S. agriculture continues to rely on foreign-born workers, many of whom lack legal authorization to work in the United States. This phenomenon, which appears to have increased in recent years, may partially explain the sector s success in hiring similar number of workers as in years past. However, a third trend the ability of U.S. agriculture to provide significant wage increases to farmworkers must also be credited. This accomplishment is particularly noteworthy in light of the fact that U.S. labor markets were relatively tight until the recent economic slowdown. Nevertheless, substantial differences remain in the wages, benefits, and working conditions associated with agricultural and non-agricultural employment. Fourth, temporary agricultural workers admitted through the H-2A Program still constitute a small fraction of hired farm labor in the United States. However, there are signs that farm operators seeking to employ H-2A workers are learning how to negotiate the application process better, and that the Federal government is facilitating these efforts by making changes to the administration of the program. These developments provide additional evidence that many farm operators have continued interest in legally employing farmworkers from abroad. References Migration Dialogue, University of California, Davis. H-2A, H-2B. Rural Migration News, Vol. 7, No. 3 (July 2001), <http://migration.ucdavis.edu/mn/archive_mn/jul_2001-12mn.html>. Runyan, Jack L. Profile of Hired Farmworkers, 1998: Annual Averages. Agricultural Economic Report No. 790 (AER-790), U.S. Department of Agriculture, Economic Research Service, November 2000.. A Summary of Rules and Regulations Affecting Farm Employment: 2000. AH-719, U.S. Department of Agriculture Economic Research Service, July 2000. U.S. Department of Agriculture (USDA), National Agricultural Statistics Service (NASS). Farm Labor, various issues, < http://usda.mannlib.cornell.edu/reports/nassr/other/pfl-bb/> (may also be accessed via the NASS web site at <www.nass.usda.gov>). U.S. Department of Justice, Immigration and Naturalization Service (INS). INS Announces Premium Processing Service for Employers. News Release, June 1, 2001, <http://www.ins.usdoj.gov/graphics/publicaffairs/newsrels/prefeenr.htm>.. Table 38: Nonimmigrants Admitted as Temporary Workers, Exchange Visitors, and Intracompany Transferees by Region and Country of Citizenship: Fiscal Year 1999. In 7

1999 Statistical Yearbook of the Immigration and Naturalization Service (forthcoming), <http://www.ins.usdoj.gov/graphics/aboutins/statistics/99yrtemp.htm>, August 13, 2001. U.S. Department of Labor (DOL), Bureau of Labor Statistics (BLS). Consumer Price Index, All Urban Consumers (CPI U), U.S. City Average, <ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt>, August 16, 2001.. Employment and Earnings, various issues. U.S. Department of State. Joint Statement of the US-Mexico High Level Working Group on Migration. Press statement, Richard Boucher, spokesman. Washington, DC, April 4, 2001, <http://www.state.gov/r/pa/prs/ps/2001/index.cfm?docid=2013>. Zahniser, Steven S., and Florencio Treviño. Hired Farm Labor: Comparing the U.S. & Mexico. In U.S. Department of Agriculture, Economic Research Service, Agricultural Outlook, AGO-278 (January/February 2001), pp. 14-18 <www.ers.usda.gov>. 8