New Report Shows Evidence of Tightening Farm Labor Supply

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The government shutdown continues into its second week, and one of the primary issues is contention over the proposed border wall. Immigration and border security have long been complex issues facing the United States. The agricultural sector perhaps feels the strains of immigration policies more than other sectors. According to the National Agricultural Workers Survey (NAWS), about two-thirds of farm workers in the United States are foreign-born and one-half unauthorized. A record 44 million immigrants resided in the United States in 2016, a rise from only 10 million in 1970. Nevertheless, few immigrants work in agriculture, and a recent USDA Economic Research Service (ERS) report suggests that the farm labor supply is getting tighter. Here are five indicators of a tightening farm labor supply:

  1. There are increasing reports of farm labor shortages. A labor shortage occurs when employers desire to hire more workers than are willing and able to work at market wages. Typically, wages rise until the market equilibrates. However, rising wages may not resolve a shortage in industries that have large seasonal swings in labor demand with uncertain timing and magnitudes.
  2. Farm wages are rising. The figure below, from the report, indicates that farm wages are rising faster than nonfarm production and nonsupervisory wages.
  3. Increased employment through the H-2A non-immigrant agricultural guest worker visa program. Demand for H-2A workers rose rapidly the past ten years despite the complexity of applying for H-2A positions and complying with regulations. H-2A employers bear some risk since yields and weather are unknown at time of contracting workers, but the contract also ensures that workers will be present during the contract period.
  4. The number of unauthorized workers residing in the United States has been declining since 2007.This is concerning for the agricultural sector because, unlike U.S. citizens and Green Card holders, unauthorized workers are less likely to leave farm work when employment conditions in competing nonfarm industries improve (Luo and Escalante, 2017).
  5. Evidence suggests that rural Mexicans are transitioning out of farm work. Responsible factors include rising education in rural Mexico, declining birthrates, and rising employment in Mexico’s industrial and service sectors.
Real Farm Wages Are Rising
Figure from: Zahniser, Steven, J. Edward Taylor, Tom Hertz, and Diane Charlton. “Farm Labor Markets in the United States and Mexico Pose Challenges for U.S. Agriculture.” USDA ERS Economic Information Bulletin Number 201.

Farm employers operate with limited profit margins to raise farm worker wages, so what is the future of farm work in the United States? Martin (2017) suggests 4 S’s:

  1. Supplement the current farm workforce with guest workers. 
  2. Substitute machines for workers. (This would change farm jobs from primarily hand labor to higher-paying machine labor.)
  3. Stretch the current supply of labor through mechanical aids that make workers more efficient.
  4. Satisfy current workers with benefits, bonuses, and improved working conditions, to help retain workers.

Evidence suggests that farm worker supply will continue to tighten, and wages rise. Agricultural work will become more technological, and the agricultural sector will reduce its dependence on unauthorized workers as working conditions and benefits improve to attract and retain qualified workers.

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About Author

Diane Charlton

Diane Charlton is an assistant professor in the Department of Agricultural Economics and Economics at Montana State University. She received her Ph.D. in agricultural economics from the University of California, Davis. She has done research on agricultural labor markets in Mexico and the United States along with researching the determinants of migration. She never tires of talking about agriculture with her sister and brother-in-law from their almond orchard in the Central Valley of California, and she is looking forward to learning more about and researching agricultural production in Montana and the northern Great Plains.

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