Courtesy of California Strawberry Commission
Minimum wages are on the rise in cities and states across the country, from California to Maine, as workers and businesses charge headlong into 2018.
As of Jan. 1, the minimum wage in Washington state is $11.50 per hour, with planned increases to $13.50 per hour by 2020. In California, the rate is now $11 per hour for companies with 26 or more employees, and $10.50 per hour for companies with 25 or fewer employees. By 2023, all companies will pay at least $15 per hour.
The minimum wage in Oregon is based on a three-tier system established during the 2016 short legislative session. Wages won’t increase again until July 1, when the standard rate goes up to $10.25 per hour, $11.25 in the Portland metro area and $10 in non-urban counties, which include most eastern and southern Oregon.
Farmers, meanwhile, are having to adapt quickly in the face of growing labor costs and slumping markets. Jenny Dresler, state public policy director for the Oregon Farm Bureau, said the issue is make-or-break for some operations.
“These are tough decisions,” Dresler said. “The goal is to stay in business, obviously.”
Unlike other industries, Dresler said, farms and ranches are price takers as opposed to price setters, meaning they are largely dependent on trade markets when it comes to return on product.
Without raising prices, Dresler said, farmers must look to cut costs elsewhere, automating where they can or planting less labor-intensive crops.
“It does make agriculture a special case,” she said.
Clark Seavert, a professor with Oregon State University in the Department of Applied Economics, said the impact of higher minimum wage varies by commodity, but figures the increase in cash costs for cherry orchards may amount to $700 per acre by 2022, when wage increases are fully implemented.
The labor costs for apple growers in Washington may also increase from $24.93 per bin to $35.54, Seavert said.
“The only thing you can do is try to make cropping systems more efficient, or (integrate) technology to reduce labor,” he said. “It’s a fact of life. You know it’s coming.”
For example, Seavert said farmers may turn to growing more hazelnuts, which have less labor demand and more mechanized harvesting systems available in the field.
Mike Doke, executive director of the Columbia Gorge Fruit Growers in Hood River, said most farms already pay over minimum wage, but every time the state makes another increase they are forced to raise everyone’s pay to avoid wage compression.
“It’s another added cost of doing business,” Doke said. “I think the biggest concern is the small growers.”
Dresler, with the Oregon Farm Bureau, said the group pushed for a bill in 2017 that would have created tax credits to help with maintenance of worker housing. The proposal ultimately died in committee.
Agriculture is also facing legislative pressure from a proposed cap-and-trade energy policy looming this session, Dresler said, potentially raising the cost of fuel.
“This issue isn’t in a vacuum,” she said.
Fruit growers in the Columbia Gorge remain concerned about pesticide exclusion zones under the federal Worker Protection Standard, which Doke said may result in orchards having to pull trees and cut deeper into their bottom line.
Across the state in rural Malheur County, farms are competing across state lines for business with neighboring Idaho. Shay Myers, general manager of Owyhee Produce, said the difference in minimum wage does have an economic impact, though worker demand in nearby Boise has so far kept the disparity to a minimum.
“At this point, operating in both states, what we pay in Oregon versus Idaho is nominal in terms of employee wages,” Myers said. Owyhee Produce grows sweet potatoes and asparagus in Idaho, and onions in Oregon.
Former state representative and now Sen. Cliff Bentz, R-Ontario, pointed to the development of a special economic development region in Malheur County which has resulted in a new onion rail reload facility to support Oregon farms.
“That was done in part because I explained if they were going to raise the minimum wage on this side of the (Snake) River, the state needed to invest substantially in infrastructure,” Bentz said.
The future of farming, Dresler said, will lie in continued innovation and technology to solve the industry’s labor woes.
“Farmers are innovative, and they’re always looking at the best technologies to maintain their operations into the next generation,” she said.