CIRS Blog about Rural California
By Gail Wadsworth and Elizabeth Henderson
The goal of fair labor standards is to achieve decent and humane working conditions for all employees. The Fair Labor Standards Act (FLSA) is a federal law which establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in federal, state, and local governments. Agriculture in the U.S. is exempt from several of the FSLA requirements, such as overtime pay and child labor laws.
Many consumers are not aware of these legal exemptions but are aware of poor working conditions for workers on farms. Several organizations are working within the U.S. to improve standards on farms for laborers.
The Fair World Project recently examined some of the key challenges facing farmworkers and analyzed seven of the eco-social certifications that appear on our food. They found two programs with strong standards and good enforcement to help ensure workers are well treated: the Fair Food Program and the Agricultural Justice Project.
Only one of these recommended certifiers actively operates in California, the Agricultural Justice Project (AJP). We recently contacted AJP to get some questions answered for consumers in California who are interested in eco-social justice certification.
In 1938 the federal government passed the Fair Labor Standards Act (FSLA). This act guarantees most workers a minimum wage and overtime pay—requiring time and a half over 40 hours in a work week. It also requires employers to keep records of payroll receipts. (Among FLSA's many provisions were those allowing child labor in agriculture. In addition, it created the wage and hour division of the U.S. Department of Labor to enforce all provisions of the law. Additionally, all other federal laws governing benefits to workers (Social Security, unemployment insurance, etc.) also excluded agricultural workers, but later were amended to include some agricultural workers. Women were also excluded from protections under the law because they were employed part-time or seasonally and were not considered part of the workforce.)
Farmworkers were excluded from minimum wage under the FLSA until 1966 at which time the federal minimum wage and record keeping were applied to farmworkers as well as all other members of the work force. Now even farmworkers paid by the piece are entitled to the minimum wage. But overtime provisions are not applicable to farmworkers and farms with a very small work force (11 or fewer) are exempt from minimum wage and all other provisions of the FSLA. The large majority of farms that hire farm labor directly have fewer than 10 employees (just 40,661 out of 566,469 farms have more than 10). In fact, 46 percent of all hired farm labor jobs are exempt from the FSLA.
Four states in the U.S. have enacted more progressive overtime policies for farmworkers than the FLSA. California has the largest agricultural economy in the U.S. All farm employers are required to abide by minimum wage laws in the state. Additionally, farmworkers are paid overtime after 10 hours in one day or 60 hours in a week. Minnesota pays overtime for farmworkers who are paid hourly after 48 hours in a week. Hawaii pays overtime for farmworkers after 40 hours in a work week but allows employers to select up to 20 weeks a year for which they do not have to pay overtime until 48 hours in a week is accumulated. And finally, Colorado includes farm labor in all labor laws including overtime pay after 40 hours in a week.
In 2016, New York, Oregon and California passed new minimum wage laws with the goal of raising the minimum wage to $15 an hour in a step wise manner over a number of years. All three laws have a differential standard for raising the wage. New York and Oregon schedule wage increases regionally while California’s is based on business size.
New York, Oregon and California—Comparison of new wage laws
There is a three tiered minimum wage schedule in New York. The state has separated its minimum wage increases by region in the following way.
1.New York City
2.Nassau, Suffolk and Westchester Counties
3.Everywhere else in the state
In New York City, businesses with 11 or more employees will have to raise the minimum wage to $11 an hour at the end of 2016. The minimum wage will increase by $2 every year until it reaches $15 an hour by the end of 2018. For businesses with 10 or fewer employees, the minimum wage will increase to $10.50 an hour by the end of 2016 and then increase $1.50 an hour every year until it reaches $15 an hour by the end of 2019.
For workers in Nassau, Suffolk and Westchester Counties, the minimum wage will increase to $10 an hour by the end of 2016, then will go up $1 an hour every year until it reaches $15 an hour by the end of 2021.
For workers in the rest of the state, the minimum wage would increase to $9.70 an hour by the end of 2016, then will increase by 70 cents an hour every year until it reaches $12.50 an hour by the end of 2020. From 2020 on, the minimum wage in these rural counties will continue to increase to $15 an hour on an indexed schedule that will be set by the director of the Division of Budget in consultation with the Department of Labor.
The map below shows the areas of the regions of New York as designated by the minimum wage increase. It is clear that the minimum wage increases are most beneficial to a very small area of the state.
In March 2016, Oregon passed a progressive minimum wage law. Like New York, Oregon has a three tiered regionally-based minimum wage schedule. The state is divided in the following way:
1.Portland Area Counties—employers located within Portland’s urban growth boundary
2.Frontier Counties – employers located in “frontier counties”
3.All remaining counties – employers located in all the remaining counties
Increases in each of these regions are scheduled differently as well. Below is a graph showing the timed phase in of wage increases by region. This graph shows that by July 2022 workers in the Portland urban region will be making $14.75 per hour, followed by those in the frontier regions at $12.50 per hour and all the workers in the remaining regions will be paid $13.50 per hour by 2022. From July 1, 2023 onward, the rate will be adjusted annually for inflation in Portland counties but the increase must be no less than $1.25 per hour more than the rest of the state. The frontier counties will receive annual rate increases at no less than $1.00 per hour and the remaining counties will receive increases annually based on inflation.
“Frontier areas are the most remote and sparsely populated places along the rural-urban continuum, with residents far from healthcare, schools, grocery stores, and other necessities. Frontier is often thought of in terms of population density and distance in minutes and miles to population centers and other resources, such as hospitals.” Rural Health Information Hub
On April 4, 2016, Governor Jerry Brown of California approved Senate Bill 3 to raise the minimum wage across the state. The bill includes all industries with an adjusted implementation schedule for small businesses.
“This bill would require the minimum wage for all industries to not be less than specified amounts to be increased from January 1, 2017, to January 1, 2022, inclusive, for employers employing 26 or more employees and from January 1, 2018, to January 1, 2023, inclusive, for employers employing 25 or fewer employees, except when the scheduled increases are temporarily suspended by the Governor, based on certain determinations. The bill would also require the Director of Finance, after the last scheduled minimum wage increase, to annually adjust the minimum wage under a specified formula.”
Under the new plan, the state's hourly minimum wage would increase from the current $10 to $10.50 an hour on Jan. 1, 2017, then to $11 an hour in 2018. It would then increase by $1 an hour annually until it reaches $15 an hour in 2022. However, if the state experiences an economic downturn or budget crisis, the governor has the power to slow the implementation of minimum wage increases.
The schedule for implementation across the state is as follows. As can be seen in the chart below, businesses with 26 or more employees (blue) achieve $15 per hour faster than businesses with 25 or fewer employees (gray). By 2023, all businesses in California will be required to pay $15 an hour at the minimum.
All three of these state plans for raising the minimum wage are more progressive that other states. See the map below for minimum wages in all states in the US from the Department of Labor.
While there is much debate about the impacts of raising the minimum wage, with economists weighing in on both sides of the issue, no research has been done on the impacts of raising the minimum wage on agricultural workers.
Economists Daniel Aaronson and Eric French at the Federal Reserve Bank of Chicago and Sumit Agarwal of the University of Singapore find that increasing the minimum wage boosts the consumption of affected workers. And a battery of other research shows that raising the minimum wage does not reduce local employment and reduces employee turnover. The U.S. Department of Labor has an entire page dedicated to “mythbusting” around raising the minimum wage to $12 an hour. You can see it here.
Nonetheless, there are some arguments against raising the minimum wage. According to economists at the Federal Reserve Bank of Chicago, minimum wages can disrupt the economy driving some operations out of business. However, even this upset can be offset by upsurges in new businesses and jobs.
MINIMUM WAGES BY STATE IN USA
View the state minimum wages map online.
“Still, the uncertainty of the new $15-per-hour world is why even economists relatively sympathetic to minimum wage increases…argue that it makes the most sense to treat cities like New York and San Francisco differently from other parts of their states, to say nothing of less populous states where wages are much lower.” New York Times
The Assumed Impact of Wage Increases on Farm Workers
The new minimum wage law has the power to increase living standards of the almost 4 percent of California’s 19 million working residents who earn minimum wage. In return, there is an assumption that this will increase their buying power and improve the economy.
There is push back from the agriculture industry in California. Both employers and some economists believe that the increased minimum wage will lead to fewer hours for workers, thus reducing their incomes or to more mechanization in the fields, reducing the number of jobs. Some agricultural employers state that raising the wage will limit their ability to compete with low wage workers in other stated and countries, like Mexico.
Joe Del Bosque from Firebaugh stated in the Sacramento Bee, “We’re already at a disadvantage with Arizona, (where farmers) pay their workers $8.05 an hour and we’re at $10. Any further increase is going to put us at a serious disadvantage.” In the same article, Yolo County farmer Duane Chamberlain said his workers, who mostly make well above the minimum wage, are starting to cut alfalfa hay this time of year. He said he wouldn’t mind paying all his workers at least $15 an hour with the exception, perhaps, of those just learning.
“My workers are all worth 15 bucks an hour because they’ve been around,” said Chamberlain, who also sits on the Yolo County Board of Supervisors.
However, farmworkers interviewed for articles in local newspapers are looking forward to a wage increase. Isaias Aguirre, who works for Duane Chamberlain is glad his employer is on board with the wage increase. He sees an increase as a way to help his family through paying for education for his children by continuing his monthly remittances to his family in Mexico.
In the Visalia Times-Delta, Rafael Gutierrez believes the wage increase will allow him to treat his family to dinners out on the weekends and potentially to a family vacation. His last job harvesting peaches paid him $11 an hour and while his girlfriend makes $14 an hour at Target, they still have problems making ends meet.
Reviewing data for farm worker wages over time, it is clear that in constant dollars, farmworkers are making less per hour than they did in 1974. There is compelling evidence that raising the minimum wage statewide has a substantial effect on farm worker wages. In 2014-15 wages rose from $6.75 to $9 an hour and direct hire farmworkers experienced a 30 percent wage increase (Personal communication, Don Villarejo, 2015).
In New York, farmworkers are also covered by minimum wage laws. The phased increases to minimum wages in New York have also been subsidized with $30 million in funding from the state to assist farm employers. Despite the slower phase-in and additional funding from the state, farm employers oppose the raises.
Fight for $15 and Food Chain Workers
In 2012, fast food workers started what would become a national movement to raise the minimum wage to $15 an hour. Moving on to Chicago, fast food workers called for a wage increase and were supported by labor unions and community groups. The Fight for $15 model expanded to more than 300 cities and towns and includes tens of thousands of workers. Industries in the food chain have historically underpaid their workers. More than 86 percent of food chain workers surveyed by the Food Chain Workers Alliance for a report published in 2012, reported earning low or poverty wages. These data include workers in production (farm workers), slaughterhouse and other processing facilities (processing), warehouses (distribution), grocery stores (retail), and restaurants and food services (service).
In order to increase wages for food workers effectively without impacting employers, workers would need to receive a larger proportion of the cost of food paid by consumers. To increase wages to farm workers, consumers would face a fairly small increase in their yearly food bill. The Coalition of Immokalee Workers (CIW), knowing that their direct employers could not afford to pay them more, took their fight to consumers by asking them to pressure large scale buyers like Walmart into paying a penny more a pound for fresh tomatoes that they pick. Field workers directly receive this penny. This has had little impact on consumers.
In the supermarket, increases in farmworker wages may have a direct impact on consumers. Currently, in California, workers picking strawberries (a $4.4 billion industry in Monterey County) receive about 6 percent of the supermarket price. They get paid twenty cents for picking a plastic clamshell of berries that sells for $3.00 in the supermarket. By increasing their pay by five cents, we could increase their wages by 25 percent and not notice much change. To give an example of the impact to consumers from a wage increase to farmworkers, economist Philip Martin from UC Davis predicts that if farmworker wages increase by 47 percent, household grocery bills would increase by a mere $21.15 a year, or $1.76 a month. But that is assuming that the employers pass on the cost of increased wages to consumers.
Rural Urban Wage Equity?
“U.S. ‘rural’ areas have been primarily defined and differentiated from other areas by two methods: nonmetropolitan vs. metropolitan and rural vs. urban residence. The Office of Management and Budget (OMB) designates as metropolitan those counties consisting of or adjacent to core county with a large population nucleus, where its surrounding counties having a high degree of social and economic integration with that core. The counties not defined as metropolitan are, by elimination, termed nonmetropolitan. This is a fairly broad characterization that treats small, densely populated eastern counties the same as large counties with more variable population densities in the west. Federal and state agencies are often required by statute to use metropolitan area designations for ‘allocating program funds, setting program standards, and implementing other aspects of their programs (OMB, 1998).’” Pearlanne T. Zelarney and James A. Ciarlo
How rural regions are defined has huge implications for funding from all governmental agencies and in how municipalities raise their minimum wages. In California, almost all of the most productive agricultural counties are designated as metro counties and even the most remote counties in the state are not considered “frontier” counties. As a result, western counties, particularly those in California, are challenged to define their populations as “rural” and are equally limited in the level of federal funding they receive from rural programs.
Now, let’s examine briefly the “rural urban divide” in the minimum wage structure in New York and Oregon. There is the assumption that rural workers should get paid less because the cost of living in rural regions is lower. According to the Bureau of Labor Statistics, urban households spend 18 percent more than rural households but receive 32 percent more in income, a 14 percent disparity.
According to an article in The Daily Yonder in 2008, “a high school graduate living in a rural county earns 13 percent less than a city dweller with a high school diploma. A rural college graduate, however, earns 23 percent less than a college grad living in the city. And someone living in a rural county who has an advanced degree (law, medicine, doctorate) earns 25 percent less than a person with the same qualifications who lives in an urban county.”
Interestingly, there is an economic model that states that migration from rural to urban regions is actually based on the expected income differentials between rural and urban areas. The Harris-Todaro model states that rural-urban migration in a context of high urban unemployment can be economically rational if the expected urban income exceeds expected rural income. Therefore, migration from rural areas to urban areas will increase if urban wages increase. The model’s main point is that equal wages in urban and rural areas reduce the incentive for rural workers to migrate to urban regions.
In the 2014-15 data analyzed by the USDA Economic Research Service nationwide show that “the total population in nonmetro counties stood at 46.2 million in July 2015—14 percent of U.S. residents spread across 72 percent of the Nation's land area. Annual population losses averaged 33,000 per year between 2010 and 2014, but dropped to about 4,000 in 2015.” This change in the outmigration of residents from rural to urban areas “coincides with a marked improvement in rural employment growth and suggests that this first-ever period of overall population decline (from 2010 to 2015) may be ending.”
Based on these data, doesn’t it make sense to aim for wage equality in rural and urban regions of the country?
If the U.S. wants to maintain a stable work force in the agricultural sector in states like New York and California where the cost of living is high, shouldn’t we ensure that agricultural workers are paid a wage that essentially keeps them on the farm? (According to the MIT living wage calculator, comparing two productive agricultural counties in the state, in Merced County, a living wage is $22.71 for a parent with a spouse and 2 kids, while in Ventura County, the costs are $27.18 for a parent with a spouse and 2 kids).
“Raising the minimum wage for everyone says something profound and profoundly good about the society we want to live in,” said Dan Cantor, national director of the Working Families Party, which has helped secure minimum wage increases in several cities and states across the country. “That all work has dignity and worth, and people deserve a living wage.”