Retaining Farm Workers: Are Non-Wage Benefits a Determining Factor?

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Evidence suggests that improving labor conditions on Mexican export farms might make it more difficult for U.S. farms to find workers. Rural Migration News reported that 6.5 million workers are currently employed in Mexico’s agricultural sector, and farm wages on export farms are rising. Mexican export farms began improving labor conditions shortly after the Los Angeles Times reported a series of articles illuminating harsh labor conditions on Mexican farms that export fruits and vegetables into U.S. consumers’ kitchen tables. In a survey of 2,700 workers on export farms in the spring of 2019, most workers reported earnings 2 to 3 times the Mexican minimum wage ($5.25 per day), and fewer than 5 percent reported earning less than the minimum wage. Furthermore, 90 percent of workers reported that their employers enrolled them in the Mexican healthcare and pension system.

This implies that U.S. farms will have to increase wages and raise employee benefits to compete with employers in Mexico. Although farm wages in the United States are still much higher than those in Mexico, this wage gap must be large enough to offset the costs and risks of immigration. Costs of migration include, not only the physical costs, but also the psychological and emotional costs associated with moving to a distant location in a different country. Analysis of trends in the Mexican farm labor supply suggests that real U.S. farm wages will have to rise by about 10 percent over 10 years to retain a constant farm labor supply from Mexico. At an inflation rate of 1.9 percent, this means that nominal wages will have to rise by a little more than 30 percent. In fact, the Adverse Effect Wage Rate (AEWR), which is the wage employers are required to pay H-2A agricultural guest workers, rose in Montana, Idaho, and Wyoming from $11.63 per hour in 2018 to $13.48 in 2019, indicative that farm wages are in fact rising.

Employers can attract more workers not only by increasing wages, but also by improving living conditions and providing non-wage benefits. For example, FirstFruits Farms in Prescott, Washington provides matching benefits programs, housing, continuing education programs, healthcare benefits, and childcare for its employees. English education appears to be an important factor for many farm workers considering migration to U.S. farms. According to conversations with North Carolina’s Migrant Education Program (MEP) staff, many Mexican youth come to U.S. farms on H-2A nonimmigrant guest visas so that they can take advantage of opportunities to learn and improve their English language skills. They believe that these skills will give them access to better job opportunities in Mexico in the future.

In short, recent improvement in wages and employee benefits on Mexican farms implies that U.S. farm employers will have to raise wages and provide more employee benefits if they want to continue to attract more farm workers in the future.

(Photo by USDAgov is licensed under CC BY 4.0)

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About Author

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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