Labor outlook
Will the next farm laborer please stand up?By Elliott Dennis
The lack of labor has been a major concern for producers over the last 10 to 15 years. Some producers have pointed the finger at reduced rural populations and the lack of ability and desire of people who remain in rural communities to engage in agricultural production.
Technology and efficiency have been touted as at least part of the solution to the industry's labor needs. While some of the new technologies will require little or no additional labor other technologies merely swap labor needs from low-skill to high-skilled technical labor.
As operations grow the need for labor grows with it. The hope is that labor will reduce the demand for labor relieving upward pressure on wages. At the same time, ongoing consolidation is reducing the need for more general labor towards more specialized labor.
The number of workers and nonmetropolitan/rural production areas has decreased. Wages, worker safety and immigration policies have all impacted this available supply of agricultural labor.
As the number of workers entering the labor force rises, so does the available supply of workers. These workers could come in the form of individuals graduating from a technical school or university, individuals again searching for jobs, and foreign nationals, among others.
Most of the demand for agriculture labor is for technical skills (i.e. spraying, feeding livestock, driving tractors, etc.) and more manual labor (i.e. fence building). Increased education at technical schools and community colleges is helping to develop a more skilled domestic workforce. More stringent immigration laws have greatly restricted the number and quality of foreign nationals entering the U.S. to work on agriculture operations or agribusiness.
Agriculture production is inherently seasonal. So is the need for agricultural labor. Cow-calf producers need help during calving and weaning but not as much during the summer months. Feedlots need labor help during the fall calf run and less during the early summer months. Given these competing supply and demand factors, let’s review some of the statistics on U.S. farm labor and the potential options producers can use to address labor needs in the short and long run.
Rural labor The lack of labor is a major concern for producers. Figure 1 shows the number of unemployed workers per job opening. The number is approximately 0.70 in 2023. What that means is that for every job opening, we can expect to hire 70% of a person.
Besides the great recession in 2007-08 and the COVID-19 pandemic in 2020-21, the labor market has been very tight for the last five years – the tightest it has ever been since it began being tracked in 2001. People are classified as unemployed if they do not have a job, have actively looked for work in the prior four weeks, and are currently available for work.
One of the issues is that the labor force participation rate (defined as the percentage of the population that is either working or actively looking for work) has decreased over time for people in their working years, ages 25-64 (see Figure 2).
Approximately 76.4% of these individuals in nonmetro/rural areas were working in 2007 compared to 72.5% in 2021, approximately a 4% decrease in the labor participation rate. These individuals may not be participating in the labor market for a variety of reasons such as staying at home to watch kids, in school or seeking other training, or retired.
Wage ratesThe demand for agricultural labor and the supply of this type of labor from individuals in rural areas is ultimately cleared by the wage rate. One market that incentivizes labor to switch jobs is the wage rate. There remains a large gap between what different types of farming operations are willing to pay.
For example, in Ohio in 2022, livestock workers earned on average $15 per hour, crop workers earned $16.50 per hour and ag equipment operators earned $22 per hour (see Figure 3). The “effective minimum wage” is $15 per hour which all low-skill jobs are compared to.
There is a definite skilled labor pay gap between laborers and equipment operators as well as a significant difference between what livestock and crop operators are willing to pay. These production systems also compete for key personnel during the same periods: planting/calving in spring and harvest/weaning in fall.
Wages for agricultural labor also differ depending on the quality of the worker. As the quality of work goes up, so do the wages (see Figure 4).
Over the last several years, the gap between what high-quality workers and low-quality workers got paid narrowed. However, in 2022, the gap has once again increased.
Foreign workers in agricultureEven with higher wage rates, there may not be enough domestic individuals who are willing or able to fill available jobs. In these cases, workers immigrating from other countries to the U.S. for work is one possible solution. One of the concerns is that employers may want to hire international workers at lower (i.e. cheaper) rates than domestic workers. By so doing, this could lower the wage for domestic farm laborers.
To ensure this does not occur, the federal government requires employers to pay the regional farm wage as determined by the USDA NASS Farm Labor Survey (FLS).
For fiscal 2023, this minimum hourly wage ranged from $13.67 (in Alabama, Arkansas, Georgia, Louisiana, Mississippi, and South Carolina) to $18.65 (in California) and $20.33 (in the District of Columbia). In the Northern Plains, wages were $17.33 per hour (see Figure 5).
Another concern is that rural populations could become heavily populated with foreign-born individuals. These concerns stem from differences in how communities are built, and social and political beliefs, among others.
Figure 6 shows the percentage of the population that was foreign-born in a U.S. county. This figure supports the idea that nonmetro/rural counties tend to have a larger share of foreign-born individuals than metro areas and tend to be clustered around major manufacturing in rural areas such as meat processing plants, sugar beet plants, ethanol plants, etc.
For companies hiring foreign nationals, the ability to verify and get appropriate/valid documentation without violating labor laws is difficult. This leads to the last common concern from rural communities: the illegal farm laborers in the U.S. The USDA Economic Research Service shows the percentage of crop farmworkers by legal status from 1991-2021 (see Figure 7).
What they find is that the percentage of foreign-born individuals that are unauthorized (i.e. illegal) has stayed relatively stable over the last 20 years at about 48% ± 4%. In the last five years, there have been more U.S.-born and foreign-born U.S. citizens in crop production. Thus, the concern about increased unauthorized workers in rural communities appears to be a non-issue, at least for those engaged in crop production.
Non-permanent work authorization available to U.S. livestock producersSome producers have been interested in finding foreign workers as they cannot find or retain domestic workers. Agencies are generally used to find eligible workers or by word of mouth for other producers or immigrants. If a foreign national is found, there are several different programs they can enter the U.S. It greatly depends on the labor skill and what the sponsor is willing to pay to bring an individual over.
The Center for Agricultural Profitability at the University of Nebraska – Lincoln recently hosted a webinar where immigration lawyers provided an overview of visas available to livestock and crop producers. Table 1 shows some of the major non-permanent immigration visas available. People interested in seeing a full listing of these as well as an explanation of the programs can re-watch the webinar here.
Dennis is an assistant professor and livestock Extension economist with the University of Nebraska – Lincoln.
