How Will Mandatory Overtime Pay Impact Agriculture?

Jay Matteson

Agriculture tends to be a labor-intensive industry. Dairy farms depend upon labor for everything from milking cows to planting and harvesting crops.  Apple Orchards have only a few weeks to harvest apples in the fall.  Vegetable farms need help all season long planting, weeding, harvesting and processing their produce. New York agriculture is second only to California in the cost of farm labor as a percentage of the value of receipts for products sold.   Farm labor is 13.2 percent of the value of farm receipts in New York state. The national average is 9.5 percent

    High risk is part of farming especially when you consider the dependency on natural cycles and Mother Nature.  A cold wet summer or hot dry growing season can equally spell disaster. Diseases and illness can severely impact crops and livestock.  A disease or crop pest can sweep in on the wind unexpectedly and wipe out crops. Livestock herds may be impacted by illness, requiring money and labor to help nurse a herd back to health.

    Most important, when thinking about the impact of labor on agriculture, is the seasonal vulnerability of the farm.  Short windows exist to plant and harvest crops. These periods are intense and workers hired to perform planting and harvest know coming in to the position, they’ll work many hours to get the job done.  This is part of farming and is expected.

    Mix all of this, with slim margins and, for dairy farms, no control on the price they are paid for their product, and you have an industry that is very susceptible to negative impacts from government imposed arbitrary mandates. In New York state minimum wage increases and now a proposed mandate for overtime pay for farm workers could place many farms, or their workers, in jeopardy.

    The New York State Senate and Assembly have introduced legislation to mandate farms pay their employees overtime if they work more than eight hours a day or 40 hours a week. According to a report from Farm Credit East, “The Economic Impact of Mandatory Overtime Pay for New York State Agriculture” (February 2019), estimated farm labor costs would increase 17.2 percent. This is in addition to the impacts of increasing minimum wage.

    Combined together, mandatory overtime pay and scheduled minimum wage increases will cost our farms in New York state $299 million, the Farm Credit East report indicates, as well as driving down net farm income by 23.4 percent.   That is hard to fathom.  New York state is imposing mandates that will drive down net farm income by almost 25 percent, according to Farm Credit East, a respected and well-established financial institution. It is also notable that payroll taxes and workers compensation costs, paid to New York state, will increase.

                It is not hard to anticipate how farms will adjust to these government mandated expenses. In talking with farm owners, there are three common replies. One common response is that they will reduce full time employees to part time workers. Part-time workers do not receive all the benefits paid to full-time employees and the farm will have several part-time workers coming in shifts to do the work of a full-time worker. This allows the farm the ability to avoid mandatory overtime pay.  Another response is to cut benefits paid to workers to make up the difference in overtime pay. A third common response is to shift to less labor-intensive crops and reduce the farm workforce.  In any of these scenarios, it is a lose-lose-lose situation.  The farmworkers will lose, the farm will lose, and New York State will lose. It is that simple. A question for you, how much more are you willing to pay for your food?