In this second in a three-part series on the potential effects of raising the Vermont minimum wage, VTDigger looks at the impact on the agricultural sector of providing the increase. Here is Part 1.
[A]t first look, the employment situation sounds pretty straightforward in Malheur County, Oregon, and Payette County, Idaho, two heavily agricultural areas divided by the slow-moving waters of the Snake River.
In this very rural area, the Oregon minimum wage is $10.50 and set to go up to $11.25 an hour on July 1. Across the river in Fruitland, Idaho, the wage is the federal minimum: $7.25.
But both places have an unemployment rate of about 3.5 percent. Both places rely heavily on immigrant workers. And in both places, companies are having trouble finding people willing to work in agriculture. So for Barry Carlman, who runs a Fruitland employment agency that places 1,000 workers a year, the mandated minimum wage has little impact on his job, which is connecting workers with positions in food processing and farms in the surrounding area. As in Vermont and New Hampshire, there are just too many other variables at work — such as a sales tax in Idaho and not in Oregon — to make it clear how the wage difference comes into play.
Instead, Carlman focuses on trying to figure out how to find people willing to sign on with the agency and go to work every day.
“I honestly don’t know any companies — maybe some restaurants, and maybe some fast-food places — that pay minimum wage,” said Carlman, who works for American Staffing.
That’s the case in many agricultural areas, even those with wages that vary widely from one area to another. Vermont lawmakers are again considering a proposal to raise the minimum wage – now at $10.78 an hour for most businesses — to $15 an hour by 2024. Farmers and business groups have testified against the plan, which passed in the Legislature last year but was vetoed by Gov. Phil Scott. In New Hampshire, the wage is set at the federal minimum: $7.25.
This year, the initiative seems more likely to become law, leading some farmers to question what will happen when they have to pay several dollars more than their neighbors in New Hampshire, where the wage is set at the federal minimum. Agricultural workers are exempt from minimum wage law in Vermont, but farmers expect a mandated minimum wage to increase all pay, including for their workers.
There are no answers to those farmers’ questions, because there are too many other variables at play. Other states that have raised the minimum wage to $15 have done so very recently, meaning there’s no research yet on long-term outcomes.
There are many studies on what happens when a mandated wage increase goes into effect, but there is little agreement on the outcome.
“Many studies find that minimum wage laws reduce employment, and many other studies on the exact same laws find they have little or no effect on jobs,” wrote Dee Gill at the University of California’s Anderson School of Management in October. “Some 60 years and hundreds of research papers from prestigious universities, government agencies and private organizations have created little consensus on the subject, academic or otherwise.”
Impact on agriculture businesses, by county
Share of low wage workers and average hourly wage, 2018
Chart by Felippe Rodrigues. Source: Vermont DOL
Economists who do risk an opinion on the impact say that small farms are particularly vulnerable to wage mandates. These operations are often already struggling with low commodity prices and rising competition from more efficient operations.
“Higher minimum wages may have different effects on different farms based on the crop produced, the size of the farm and the proximity to large metropolitan areas,” said economists Amy M.G. Kandilov and Ivan T. Kandilov of North Carolina State University. The two noted that small farmers are less able to mechanize when human workers are unavailable or too expensive, and less likely than their larger peers to secure financing.
“Farmers call me all the time and tell me if this went through, they would have to think about getting out of business,” said Joe Tisbert, a vegetable farmer in Cambridge who is president of the Vermont Farm Bureau. “It would just be devastating.”
Smaller farms lack some of the economies of scale that help larger operations thrive and handle complex environmental regulation and labor issues. Many are operated by aging owners who don’t have anyone to pass the property to when they retire. They also face pressure from land development and sprawl; the New England Farmland trust says the amount of cropland in New England has declined 11 percent since just 2007.
And, like all farmers, the small operators can’t just raise their prices when their payroll costs go up, Tisbert said.
“You’re controlled by the stores and what they will pay,” Tisbert said. “It doesn’t matter what your bottom line is, it matters what the store will pay, take it or leave it.”
Agro jobs affected in 2024 by subsector
Percent of jobs in NAICS subsectors projected to be affected in 2024
Chart by Felippe Rodrigues.
Source: Vermont JFO and DOL. Analysis by: State economist for the legislature Tom Kavet
In California, which has a patchwork of different minimum wage requirements, farmers in some areas are already paying well above the minimum wage because labor is so scarce, said David Runsten, policy director with the Community Alliance with Family Farmers.
“I have heard $17, $18, different things like that,” said Runsten. “Everybody is kind of competing against one another for labor.”
Some of the agricultural areas near Runsten will see a mandated increase to $15 an hour over the next few years. After several decades of observing agriculture, Runsten said he doesn’t know what will happen.
“Large farming operations seem to be increasing wages, so we haven’t really figured out what is going to be the impact,” he said. “Maybe in a few more years.”
New Hampshire lawmakers, too, were also asked this year to consider a small minimum wage increase. Roger Noonan, president of the New England Farmers Union, said he didn’t think it would harm farms, partly because farmers are paying much more than that now. Noonan has a 30-acre vegetable farm in New Boston, N.H.
“There is such income inequality in this country right now, I would be hard-pressed personally not to support an increase in the minimum wage,” Noonan said. “But we just need to make sure that legislation is crafted with reasonable exemptions and exclusions for very small businesses. You don’t want to give the Walmarts and the Amazon warehouses a pass.”
Carlman, in Idaho, said that raising the wage in Oregon hadn’t hurt agricultural companies there, but had forced Idaho companies on the other side of the river to raise their pay to compete.
“Every company I know still needs individuals,” he said.
Next: The retail sector.
Want to stay on top of the latest business news? Sign up here to get a weekly email on all of VTDigger's reporting on local companies and economic trends. And check out our new Business section here.