Mar 13, 2019Study: Farm bill to cost NY farmers $300M more in labor costs
New York Farm Bureau highlighted a new report March 5 that detailed the extreme costs facing the state’s family farms should the farmworker labor bill (S. 2837/A. 2750) pass this legislative session. Farm Credit East, a credible financial organization that works directly with farmers, analyzed economic data and determined overtime on a 40-hour work week and beyond an eight-hour day will increase labor costs on farms by $299 million or more than 17 percent.
The additional labor costs would also take a significant bite out of net farm income, especially at a time when the farm economy is suffering. The report says, when combined with the rising minimum wage, net farm income will drop by 23 percent. Some of the state’s more labor-intensive commodities would take an even bigger hit financially. Vegetable growers will see net farm income decline by 43 percent. Greenhouse and nursery operations will have a 58 percent drop. Fruit growers will take a 74 percent hit. And dairy farms, will see net farm income completely wiped out with a 101 percent drop. These numbers are based on a five-year average of financial results.
New York Farm Bureau (NYFB) spoke about the report during a press conference at the Capitol in Albany as part of its annual lobby day. More than 200 farmers from across the state visited with their representatives and adopted lawmakers from New York City.
The average farm wage is more than $14 an hour, well above minimum wage. Farms compete for labor, and they could not attract or keep workers if employees did not earn a fair wage. Many also earn other benefits including free housing, transportation, utilities, and paid time off. In addition, it is a myth that farms do not pay workers’ compensation or unemployment insurance. Based on state formulas virtually all farms with employees meet these standards and pay workers’ comp and unemployment insurance.
During the press event, NYFB President David Fisher said the repercussions of this legislation based on economic analysis will be felt far beyond the state’s family farms and extend to the further decline of the rural economy both upstate and on Long Island. Already, according to the USDA, New York has lost nearly 20 percent of its dairy farms in the past five years. Undoubtedly, this legislation would make that dire situation worse. Fewer farms means fewer jobs on the farm and off as farm spending supports other rural businesses in their local areas.
“We understand supporters of this bill mean well. We also mean well. We greatly appreciate the contributions our farmworkers make to our farms and our food supply, but these numbers demonstrate that it will be incredibly difficult for farms to meet the proposed labor mandates. It would be difficult for farms to compete in the marketplace when they can’t control their prices and must take what the markets demand,” Fisher said.
Judi Whittaker, of Whittaker Farms in Broome County, has a dairy farm that has been in the family for more than 100 years and she fears her grandchildren will not be able to continue the tradition. She said the overtime provision would force payroll up on her farm by more than $200,000, from the current $500,000 payroll.
“We value our employees greatly. We house our employees and pay them everything they need free of charge. Having the payroll go up by that much will put us out of business. We haven’t paid ourselves in pretty much a year. We are trying to do what is right and paying our employees and paying our bills. My family is at the bottom of the list. There needs to be a more workable number to keep those of us family farms here for the future. You all eat. You need us,” said Whittaker.
Sarah Dressel, of Dressel Farms in New Paltz, said during the event that as an apple grower who utilizes the federal H-2A guest worker visa program, this bill would bring income on her family’s farm to record lows. The H-2A rate for this year for New York will be over $13 per hour. With a 40-hour overtime, she would be forced to pay employees over $20 per hour, plus room and board at no cost to the employee, in addition to increased employment taxes.
“Workers that come through the H-2A program want to work as many hours as they can within their contract dates, and I’m seriously concerned that we will lose some help that has been coming for years when we have to cut the amount of hours they can work so that we can be economically sustainable. I’m the fourth generation to work my family farm, and I have serious concerns about the future of our orchard, and agriculture in general. Regulations and rising costs of doing business in New York are contrary to the prices that the national and global markets will allow,” said Dressel.
Brian Reeves, of Reeves Farms in Baldwinsville, has a 350-acre vegetable farm growing both conventional and organic crops. With labor costs already making up 40% of his expenses, overtime after 40 hours per week would cost his farm an additional $133,137 in wages per year, or approximately a 15% increase, based on 2018 numbers. This does not include the additional cost for taxes and workers compensation which would also increase with the higher wages.
Reeves added that an eight-hour per day restriction is a high overtime burden, especially considering this is not current law for other employers in New York. His employees may work six hours one day because of poor weather conditions and need to work 10 hours the next day to make up for lost time. It is conceivable that a farmworker may only work 40 hours in a week yet have several hours of overtime because all the hours occurred in four days due to weather restrictions.
“As our costs increase and we have no ability to recoup that increased cost, our future as a viable business is put into jeopardy. The next generation of our family has to seriously consider if they can continue to operate a profitable fresh market vegetable farm in New York State,” said Reeves.
“New York Farm Bureau will continue to have positive conversations with lawmakers, including the bill’s sponsors,” NYFB said. “The organization has repeatedly asked for hearings, both upstate and on Long Island, where Senators and Assembly Members can hear from the people who will be directly impacted by the bill. We are pleased that the chairs of both the Labor and Agriculture Committees in the Senate and Assembly are working to make this happen.”
“If supporters of this bill don’t take the farm community’s concerns seriously, the face of New York agriculture as we know it will change. Rural New York matters. Local food production matters. We need to make sure farms have the opportunity to not only survive but thrive for the sake of their families and employees,” said Jeff Williams, New York Farm Bureau Public Policy Director.
The full Farm Credit East Report can be found here: https://www.farmcrediteast.com/knowledge-exchange/Reports/the-economic-impact-of-overtime-nys