[A 40% increase in pay would cost just $25 per household]
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HOW MUCH WOULD IT COST CONSUMERS TO GIVE FARMWORKERS A SIGNIFICANT
RAISE?  
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Daniel Costa and Philip Martin
October 15, 2020
Economic Policy Institute
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_ A 40% increase in pay would cost just $25 per household _

A masked farm worker carries harvested cilantro to a nearby truck. ,
M. Scott Mahaskey/POLITICO

 

The increased media coverage of the plight of the more than 2 million
farmworkers who pick and help produce our food—and whom the Trump
administration has deemed to be “essential” workers for the U.S.
economy and infrastructure during the coronavirus pandemic—has
highlighted the difficult and often dangerous conditions farmworkers
face on the job, as well as their central importance to U.S. food
supply chains. For example, photographs
[[link removed]] and videos
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farmworkers picking crops under the smoke- and fire-filled skies of
California have been widely shared across the internet, and some data
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that the number of farmworkers who have tested positive for COVID-19
is rivaled only by meat-processing workers. In addition, around half
of farmworkers are unauthorized immigrants and 10% are temporary
migrant workers with “nonimmigrant” H-2A visas; those farmworkers
have limited labor rights in practice and are vulnerable to wage
theft
[[link removed]] and other
abuses
[[link removed]] due
to their immigration status.

Despite the key role they play and the challenges they face,
farmworkers are some of the lowest-paid workers
[[link removed]] in
the entire U.S. labor market. The United States Department of
Agriculture (USDA) recently announced that it would not collect the
data on farmworker earnings that are used to determine minimum wages
for H-2A workers, which could further reduce farmworker earnings
[[link removed]].

This raises the question: How much would it cost to give farmworkers a
significant raise in pay, even if it was paid for entirely by
consumers? The answer is, not that much. About the price of a couple
of 12-packs of beer, a large pizza, or a nice bottle of wine.

The latest data [[link removed]] on consumer expenditures
from the Bureau of Labor Statistics (BLS) provides useful information
about consumer spending on fresh fruits and vegetables, which, in
conjunction with other data, allow us to calculate roughly how much it
would cost to raise wages for farmworkers. (For a detailed analysis of
these data, see this blog post
[[link removed]] at Rural
Migration News [[link removed]].) But to calculate
this, first we have to see how much a typical household spends on
fruits and vegetables every year and the share that goes to farm
owners and their farmworker employees.

The BLS data show that expenditures by households (referred to in the
data as “consumer units”) in 2019 was $320 on fresh fruits and
$295 on fresh vegetables, amounting to $615 a year or $11.80 per week.
In addition, households spent an additional $110 on processed fruits
and $145 on processed vegetables. Interestingly enough, on average,
households spent almost as much on alcoholic beverages ($580) as they
did on fresh fruits and vegetables ($615).

Data
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the U.S. Department of Agriculture’s Economic Research Service show
that, on average, farmers receive less than 20% of every retail dollar
spent on food, but a slightly higher share of what consumers spend for
fresh fruits and vegetables. FIGURE A shows this share over time for
fresh fruits and vegetables: Between 2000 and 2015, farmers received
an average 30% of the average retail price of fresh fruits and 26% of
the average retail price of fresh vegetables (2015 is the most recent
year for which data are available). This means that average consumer
expenditures on these items include $173 a year for farmers (0.30 x
320 = $96 + 0.26 x 295 = $77).

According to studies [[link removed]] published
by the University of California, Davis, farm labor costs are about a
third of farm revenue for fresh fruits and vegetables, meaning that
farmworker wages and benefits for fresh fruits and vegetables cost the
average household $57 per year (0.33 x $173 = $57). (However, in
reality, farm labor costs are less than $57 per year per household
because over half of the fresh fruits and one-third of fresh
vegetables purchased in the United States are imported.)

To illustrate, that means that farm owners and farmworkers together
receive only about one-third of retail spending on fruits and
vegetables even though most, and in some cases all, of the work it
takes to prepare fresh fruits and vegetables for retail sale takes
place on farms (the exact share of the price farmers receive varies
slightly by crop
[[link removed]]).
For example, strawberries are picked directly into the containers in
which they are sold, and iceberg lettuce is wrapped in the field.
Consumers who pay $3 for a pound of strawberries are paying about $1
to the farmer, who pays one-third of that amount to farmworkers, 33
cents. For one pound of iceberg lettuce, which costs about $1.20 on
average, farmers receive 40 cents and farmworkers get 13 of those 40
cents.

So, what would it cost to raise the wages of farmworkers? One of the
few big wage increases for farmworkers occurred after the Bracero
guestworker program ended in 1964. Under the rules of the program,
Mexican Braceros were guaranteed a minimum wage of $1.40 an hour at a
time when U.S. farmworkers were not covered by the minimum wage. Some
farmworkers who picked table grapes were paid $1.40 an hour while
working alongside Braceros in 1964, and then were offered $1.25 in
1965, prompting a strike. César Chávez became the leader of the
strike and won a 40% wage increase in the first United Farm Workers
table grape contract in 1966, raising grape workers’ wages to $1.75
an hour.

What would happen if there were a similar 40% wage increase today and
the entire wage increase were passed on to consumers? The average
hourly earnings of U.S. field and livestock workers were $14 an hour
[[link removed]] in
2019; a 40% increase would raise their wages to $19.60 an hour.

For a typical household or consumer unit, a 40% increase in farm labor
costs translates into a 4% increase in the retail price of fresh
fruits and vegetables (0.30 farm share of retail prices x 0.33 farm
labor share of farm revenue = 10%; if farm labor costs rise 40%,
retail spending rises 4%). If average farmworker earnings rose by 40%,
and the increase were passed on entirely to consumers, average
spending on fresh fruits and vegetables for a typical household would
rise by $25 per year (4% of $615 = $24.60).

Many farm labor analysts consider a typical year of work for seasonal
farmworkers to be about 1,000 hours. A 40% wage increase for seasonal
farmworkers would raise their average earnings from $14,000 for 1,000
hours of work to $19,600. Many farmworkers have children at home, so
for them, going from earning $14,000 to $19,600 per year would mean
going from earning about half of the federal poverty line for a family
of four ($25,750 [[link removed]] in
2019) to earning about three-fourths of the poverty line. For a
farmworker employed year-round for 2,000 hours, earnings would
increase from $28,000 per year to $39,200, allowing them to earn far
above the poverty line.

Raising wages for farmworkers by 40% could improve the quality of life
for farmworkers without significantly increasing household spending on
fruits and vegetables. If there were productivity improvements as
farmers responded to higher labor costs, households could pay even
less than the additional $25 per year for fresh fruits and vegetables.

If average farmworker earnings were doubled (rose by 100%) through
increased spending on fresh fruits and vegetables, a typical household
would see costs rise by $61.50 per year (10% of $615). That extra
$61.50 per year would increase the wages of seasonal farmworkers to
$28,000 for 1,000 hours of work, taking them above the poverty line
for a family of four.

_DANIEL COSTA is an attorney who first joined the Economic Policy
Institute in 2010 and was EPI’s director of immigration law and
policy research from 2013 to early 2018; he returned to this role in
2019 after serving as the California Attorney General’s senior
advisor on immigration and labor. Costa’s areas of research include
a wide range of labor migration issues, including governance of
temporary labor migration programs, both high- and less-skilled
migration, worksite enforcement, and immigrant workers’ rights, as
well as farm labor, global multilateral processes related to
migration, and refugee and asylum issues._

_Costa has testified on immigration before the U.S. Congress and state
governments, been quoted and cited by many major news outlets, and
appeared on radio and television news. His commentaries have appeared
in publications like The New York Times, Roll Call, Fortune, La
Opinión, and others, and he was named one of “20 Immigration
Experts to Follow on Twitter” by ABC News. Costa is currently a
visiting scholar at the Global Migration Center at the University of
California-Davis, and was previously a visiting scholar at U.C. Davis,
School of Law (2019-2020) and an affiliated scholar with the
University of California-Merced (2015-2017)._

_Prior to his tenure at EPI, Costa worked on developing the legal and
normative framework for disaster response and humanitarian relief
operations with the International Federation of Red Cross and Red
Crescent Societies in Geneva, Switzerland, and completed the
International Law Seminar with the UN International Law Commission. He
was also a policy analyst at the Great Valley Center, a former
University of California think tank, where he managed an immigrant
integration program._

_PHILIP MARTIN is Professor of Agricultural and Resource Economics
[[link removed]] at the University of California, Davis.
He edits Rural Migration News [[link removed]], has
served on several federal commissions, and testifies frequently before
Congress. He is an award-winning author who works for UN agencies
around the world on labor and migration issues. His latest book
is Merchants of Labor: Recruiters and International Labor Migration
[[link removed]],
a pioneering analysis of recruiters in low-skilled labor markets
explaining the prominent role of labor intermediaries, from Oxford
University Press._

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