USDA report cites rising farm labor costs but also rising productivity

Although farm wages have been rising, a new USDA report says those rising costs have been offset by rising productivity and/or output prices.

The report said that labor costs as a share of gross cash income do not show an upward trend for the industry as a whole over the past 20 years.

For all farms, labor costs (including contract labor and cash fringe benefit costs) averaged 10.4% of gross cash income during 2018 to 2020, compared with 11% during 1998 to 2000.

“However, these trends in labor cost shares differ by commodity,” the report said. “Labor cost shares have fallen slightly over the past 20 years for the more labor-intensive fruit and vegetable sectors, although they appear to have been trending upwards again in the past few years.”

In fact, the report said that according to data from the 2017 Census of Agriculture, wages and salaries plus contract labor costs represented just 12% of production expenses for all farms, but 43% for greenhouse and nursery operations and 39% for fruit and tree nut operations.

According to data from the Farm Labor Survey, real (inflation-adjusted) wages for nonsupervisory crop and livestock workers (excluding contract labor) rose at an average annual rate of 1.1% per year between 1990 and 2022.

“In the past 5 years, however, real farm wages grew at 1.8% per year, consistent with growers' reports that workers were harder than usual to find,” the report said.

In 2022, the farm wage ($16.62) was equal to 60% of the nonfarm wage ($27.56).

“One of the clearest indicators of the scarcity of farm labor is the fact that the number of H-2A (guest ag workers) positions requested and approved has increased more than sevenfold in the past 17 years, from just over 48,000 positions certified in fiscal 2005 to around 371,000 in fiscal year 2022,” the report said. The average duration of an H-2A certification in fiscal 2022 was 5.65 months, implying that the 371,000 positions certified represented around 175,000 full-year equivalents, the report said.

Numbers of farmworkers

The report said that both self-employed farm operators and hired workers saw a long-term decline in numbers from 1950 to 1990 because of increased mechanization. Since 1990, however, the report said employment levels for both groups have stabilized.

According to data from the Farm Labor Survey of USDA's National Agricultural Statistical Service, the number of self-employed and family farmworkers declined from 7.6 million in 1950 to 2.01 million in 1990, a 74% reduction.

Over this same period, average annual employment of hired farmworkers — including on-farm support personnel and those who work for farm labor contractors — declined from 2.33 million to 1.15 million, a 51% reduction, the report said.

The report noted that many hired farmworkers are foreign-born people from Mexico and countries in Central America, with many lacking authorizations to work legally in the U.S.

According to data from the Quarterly Census of Employment and Wages, wage and salary employment in agriculture (measured as the annual average number of full- and part-time jobs) — including support industries such as farm labor contracting — stabilized in the 2000s and has been on a gradual upward trend since 2010, rising from 1.11 million in 2012 to 1.18 million in 2022, a gain of 6%.

From 2012 to 2022, employment increases were highest in crop support services (which added 27,500 jobs, a 12% increase) and the livestock sector (which added 31,400 jobs, a 10% increase).

Demographic measures

Differences in demographics are also evident between crop and livestock workers, the report said. A larger share of laborers in crops and related support industries are female (30% versus 22% in livestock).

Crop laborers are also less likely to be non-Hispanic White (25% versus 48% for livestock) and less likely to have been born in the U.S. (43% for crop workers in manual labor occupations versus 62% for manual livestock workers). Finally, crop laborers have lower levels of educational attainment: 50% lack a high school degree, compared with 32% in livestock, the report said.

For the years 2018 to 2020, survey data shows just 30% of crop farmworkers in manual labor occupations were U.S. born.

Fewer young immigrants are entering agriculture, according to the report.

The average age of immigrant farmworkers rose by seven years between 2006 and 2021, while the average age for U.S.-born farmworkers has remained roughly constant over this period, the report said.