Sponsored By
Farm Progress

Ag at Large: Will California minimum wage increase hurt farmers?

May 10, 2016

3 Min Read

Farmers and other agricultural enterprises in California will likely be as negatively impacted as any industry in the state if new minimum wage regulations strike next year.

With 500,000 or more farm workers employed in the state’s gigantic agricultural complex, you’d expect the increase by imposed state wage control to be a boon and a boost. However, many farmers and farm employers view it as an impending disaster.

The grass roots cause for their pessimistic view is that the pay demand flies in the face of basic economic principles; no matter how much they, state legislators, bureaucrats or labor union leaders might want workers to take home more money.

Many farmers are convinced that those who crafted the regulation are not on the same page with them, or with the economic system of the country.

For most farmers, the basic tenets of the country’s traditional free enterprise economy prevail. Their incomes are subject to the free market economy. Even when their outputs move as exports, they are subject to the prevailing market. This doesn’t mean they don’t bargain hard, often as groups, for the best price the market will yield.

But allowing the government, especially at the state level, to determine the minimum amount employees are paid simply rubs them the wrong way. Many of them wonder why it doesn’t seem to have the same effect on a large majority of the population.

“Weren’t labor unions supposed to accomplish increased pay for their members?,” they ask.  Two jarring outcomes help to answer that question.

First, labor union membership includes only about 9 percent of American workers in private employment. In agriculture, the utter failure of the United Farmworkers Union is close at hand.  In 50 years it has convinced fewer than 5,000 to join its ranks, less than 1 percent of those working on California farms.        

But packinghouses, canneries, and other processing facilities handling agricultural products do rely on union members. When the wages of those workers rise by demand of state regulation union coffers increase. Most union dues are calculated as a percentage of the wage each member receives. 

Of course, governments benefit as wages increase. Taxes received from individual taxpayers increase as wages, especially minimum wages, go up. While unions traditionally have depended on increased memberships to fatten their budgets, controlled wage schedules now do it for them.

And for governments, a simple regulation is all that is required to bring in additional millions in tax revenue. Is it any wonder why a minimum wage increase such as California’s finds so little opposition? Wage earners hardly need to lobby for increased wages; union lobbyists, legislators, and bureaucrats at all levels become their spokesmen.

So “What’s the harm?, many ask. The harm is to the power and subtle influence of the free market economy - the economic force that has shaped and strengthened the financial backbone of America from its beginning. It has operated faithfully for nearly 250 years to create the economic behemoth that is the United States and made it the envy of the world’s nations.  

California’s enviable farming industry is a direct beneficiary of the country’s free market economy. Farmers seem to understand the basic economic truth, but they see their elected representatives disregard it in favor of regulating wages, a vital step toward a controlled economy. 

Another victim of controlled and contrived salary levels is freedom. Bargaining for wages is severely limited, especially at the so-called minimum level. Skills, dedication, ambition, and responsiveness to instruction tend to take a back seat as employee attributes.

On the farm, disaster is invited when traditional principles are violated. Farmers wonder if tinkering with the traditional economy isn’t an engraved invitation.

Subscribe to receive top agriculture news
Be informed daily with these free e-newsletters

You May Also Like