North Carolina State University has recently evaluated the impact of how the minimum wage increase will affect agricultural businesses and workers.
The federal minimum wage is set at $7.25, but states can create their own minimum wage value as well. According to the National Agricultural Workers Survey, 40% of agricultural workers earn an hourly wage within 10 percent of the prevailing state-level minimum wage. Some states, like California and New York, have demanded a wage increase throughout the next 4 years, to up to $15 an hour. While getting paid more hourly always sounds nice from the outside, there are many repercussions to demanding such an increase in finances, especially for the agricultural community. The economy is directly affected by wages, which can then stretch businesses further than they are willing to go and decrease production and demand.
In states like North Carolina, California, and Washington, the agricultural sectors will be much more vulnerable to negative drawbacks from a rising hourly wage. These states include large areas of vegetables, small nuts, and fruits, which are the most labor-intensive agricultural crops.
In general, a rising minimum wage affects the agricultural industry because it could push workers to more urban centers for jobs that are less physically demanding and have similar pay. This would not only steer workers away from agriculture but also take business away from rural areas. This means that agricultural industries may have to commercialize their products in order to make a living profit.
More specifically, small farm operations will lack the ability to profitably mechanize. This means they will find it harder to not only find workers but to keep up with the expenditures to retain them. If small farms cannot keep as many workers, they cannot produce as many goods effectively.
While there are obvious political choices that can be made to stop the minimum wage from rising too high, there are also things that people within the agriculture business can do to prepare for changes. Downsizing, creating viable business contracts locally, and maximizing proficiency in time used to do labor can all help to create a less vulnerable work environment. At AIT, we strive to keep our customers updated with the latest industry news. We will continue to provide more information as it develops.