Consideration of Farm Worker Wages –
December 2, 2015
Michael Rassweiler, North Slope Farm
When I began to formalize my concept of a Training Program, in 2006, the question of how much to pay a Trainee, and what costs are associated with providing Training were the hardest to resolve.
I began by utilizing the NJ State Minimum Wage as the Entry level rate, for an untrained worker. Then established a slightly higher rate, from $8.25 (Min rate in 2015) to $8.75 if a Trainee had some relevant work experience.
There were small increases; $1.25 per hour for Trainees as they moved from the First year to the Second year and an additional $.50 per hour for Third Year Trainees. With a final $1 bump to $11/hour for any Graduates of the Training.
Providing Mentoring and Training for Farm Workers can be associated with a Wage Rate that is lower than the rate paid to a Trained or Experienced Laborer. The Trainee can expect that precious FARM Time will be dedicated to allow them Time to:
- Be exposed to Explanations of Activities and Plans
- Be Introduced to New Concepts and Equipment
- Research their Questions and Concepts, and pursue Special Projects
- Develop a Focus that will assist in their Professional Development
- Participate in Policy and Strategy Discussions to expand their Conceptual Horizons
- Participate in Administrative Tasks to improve their Understanding of Business Mngt.
Three Primary Factors have weighed heavily on me over the years;
- What is a Reasonable Minimum Wage?
- What is a Reasonable Wage for an Experienced Farm Worker?
- How can a Small Farm be Profitable with High Labor costs?
A Reasonable Minimum Wage: I believe that a worker should not expect to work at the minimum wage for long – it is a wage rate set to ensure that no one is taken advantage of (Youths, Seniors, Immigrants, Developmentally Challenged or otherwise new to workforce) . The minimum wage should allow someone who is working full time to; rent housing, maintain health insurance, maintain a heathy diet and some Quality of Life – for a year. A worker needs to invest themselves in their Employment such that they contribute to the success of the Business – at which time they should be able to request and receive wage increases that reflect true “Cost of Living” and “Contributed Productivity.”
So a reasonable State Minimum wage must reflect the estimated annual cost of Housing, Health Insurance and Food. This is a difficult number to establish, and it changes, sometimes dramatically. Local Counties should be regularly preparing estimated “Cost of Living Assessments” and publishing the information to assist Government in Planning, Businesses in tracking worker needs and Citizens to assess if they are paying too much for services compared to their earning potential.
There has been many broad Political Statements about “$15 minimum wages” from restricted application’s (for instance: “Government Contractors”), to regional actions, for instance, Cities requiring a higher than average Minimum wage to account for Urban, High Costs of Living.
The topic that Small Scale Farmers need to be vocal about, is that Wages take up a large portion of our budgets, cutting into “at risk” profitability. Establishing an arbitrary and high minimum wage makes it very difficult to bring untrained workers into the Industry, to say the least. Discussions of Minimum wages should lead to research into minimum “Cost of Living” – which leads into discussions of the Cost of Local Housing, effective Public Transportation and cost of / Access to Health Care and Food.
Don’t Mess around with Minimum Wages too much – Highlight and Invest in, Sustainable Communities, that foster environments for viable Businesses and Workers.
Most Important – What is a reasonable Wage for an Experienced Farm Worker? In questioning Farmers and Managers that I consider to be running Viable, established businesses, the rates paid to workers vary according to the Workers. Some Workers are very productive, are ready to work early and keep working late, without complaining, losing or degrading equipment. These workers tend to be offered “high” rates of pay ($13-18/hr), sometimes with benefits like housing and overtime (which is not a requirement for Agricultural labor, though it is for most other workers). These workers tend to be long term employees, coming back year after year, often associated with Government Programs to allow Farmers to bring in Seasonal workers from other countries. The highest wages tend to be with businesses estimating a Million Dollars Gross Sales, and Small Farms, like North Slope Farm, struggle to compete for workers.
Some workers are productive sometimes and not so productive other times. They are quite often distracted and even disgruntled. This requires careful monitoring and intercessions by their managers, often leading to creative solutions, but just as often leading to the termination of employment. Small Farms experience high levels of turn over, often benefiting from productive workers for only a portion of a season.
I am very aware that if I hope to retain a good worker from Year to Year, I will need to provide enough opportunity to earn, that they will be able to find a nice place to live, and cover the costs associated with a simple lifestyle. The Wage will need to be competitive to other opportunities, but it also needs to be realistic from the prospective of what the Worker will Produce or Contribute to. This is the challenge of attracting good Labor to Perennially Struggling Small Scale Operations.
My top wage needs to be relevant to my Business Earnings and Viability. Since 2006 North Slope Farm has published Seasonal Summaries, including Profit and Loss and Worker Hours. In that data, there is a relationship that can be associated between the number of hours we worked and our actual productivity, in the form of earnings. From that relationship a realistic hourly rate might be teased out, though it will be complicated by the age old – how much should be profit? – and how much should the first year Trainee be paid, compared to the Farm Manager and experienced staff?
In 2015, we achieved our Gross Earning Goal of $150,000. Gross wages paid were about $66,000 including Employer contributed Taxes. So, wages consumed about 44% of our gross income Not including myself, as owner and Farm Manager (my payment comes from any Profit). I have always used 30% as a maximum goal for how much Payroll should consume of the overall Earnings, so we do not quite make it this year. Also, as an employer, I feel I should increase my worker’s pay, to account for a renewed assessment of Cost of Living, and to endeavor to retain workers whom I have invested years into Training.
North Slope Farm will be applying a general Wage increase for 2016, not as a reflection of our Business Viability, but to try to retain good workers, in a competitive labor market. It will force us to increase our Gross Earnings by a minimum of 10% from $150,000 to $165,000+/-, according to a rough estimate of how much we’d have needed to earn this year, if everyone was at the New Rate of Pay..
I expect 2016 to be unprofitable as we grow into higher wages, but I expect that continued focus on productivity and professionalization of Workers, will lead to a stronger business over time. I don’t have a whole lot of optimism though, for new Small Scale Farms, trying to get started with high wages. As a Society – that cares about eating good food, and fostering sustainable communities – We need to be aware of the Bigger Picture – its not just about Wages – Its about Viability. If you can afford to invest in the Community – You Should.
North Slope Farm is committed to investing in its Workers, increasing wages and fostering an environment that is livable. We encourage our workers to keep their eyes and minds open, to learn and contribute. We are investing in Wages beyond our immediate profitability, and Time for our workers to learn and grow, hoping they will be more able to contribute to our community. We will strive to grow our production and sales capacity. In a few years, I hope we will catch up with these increases, at least we will restructure to keep the farm productive, even if production and focus might change.