Wednesday, July 7, 2010

Farm Worker Overtime Bill Goes to Governor

It will be very interesting to see whether Governor Schwarzenneger signs SB1121, a bill that would apply the same overtime rules to farm workers that apply to other workers in California. Except for agriculture, California law requires 1.5x regular pay for hours beyond 8 in a day, and 40 in a week. In agriculture, overtime does not apply until 10 hours in a day, and 60 in a week.

Opponents argue that the bill will hurt farm workers, because employers will reduce hours (using larger crews) to avoid paying overtime. I have no doubt that some of this will occur, especially when there is a lot of unemployed labor like there is now, but I don't think that farmers will be able to or want to completely avoid overtime. Thus, the law will increase the total income and reduce poverty in farm workers in the Valley, and will decrease the net income of farms in the Valley. This will be true in total, even if some workers experience a reduction in hours and income and farmers make adjustments to minimize the cost of the law.

The change will probably accelerate the current trends toward less labor intensive production through mechanization, crop choice, advanced irrigation, etc. But this change will not occur overnight, it will occur over years and decades. It will reduce agricultural jobs, but it should increase average wages either through overtime pay or by increasing the productivity of workers in higher-skill, more capital intensive positions. In the long-run, the Valley Economy will be better off if the wage level and quality of agricultural jobs increase, even if the number of farm jobs decreases as a result.

I have listened to the agriculture industry's arguments of why they are different and should be exempted, and I find it unconvincing. Lots of industries have these same characteristics of seasonality, competition from cheaper states/countries, and are family owned businesses with thin profit margins.

I appreciate the economic argument that minimum wage, overtime and other labor regulations can reduce jobs and increase unemployment, although the argument is often over-simplified and exagerrated. It is true that you can't legislate higher average incomes and regional prosperity, and too much government redistribution can reduce total income and prosperity.

There is a case to be made for California to be more like other states and loosen up it's labor-friendly employment regulations, but if it does, it should do so for all industries. Why not reduce overtime rules for industries with higher base pay or have a sliding scale? Shouldn't we be more worried about the international competitiveness of high-wage industries that aren't tied to the land? I can think of other industries and occupations that might have a better argument for exemptions from minimum wage and overtime rules than agriculture.

Although I certainly see the potential downsides, I am in favor of the farmworker overtime bill and hope the Governor signs it. My support is primarily based on equity, and I think it will encourage some long-run changes in the industry and culture that are good for the Valley economy.

If California farmers feel this puts them at a competitive disadvantage with other states, I recommend that they lobby to remove agricultural exemptions at the federal level. If they feel that it makes them less competitive with other countries and increases the costs of business too high, then I recommend they join with other business interests in California and lobby to change state law for all industries.


  1. I am a grower, and this bill will cost me money. Nevertheless, I think it is probably a good idea, for the reasons you mention. There is an irreversible trend toward fewer workers in agriculture. That is a good thing, because many of the jobs are pretty menial (picking vegetables or hoeing weeds, for example). Even though I don't pay minimum wage anyway,(and provide many fringe benefits like decent housing, vacations and health insurance), a lot of other growers are able to get away with--let's face it--underpaying some easily exploited people. I would far rather pay ten people $20 per hour than twenty people $10 per hour. It's better for everyone. But it means the Luddites out there need to accept modern agriculture.

  2. Mr. Kurtz:

    Nice comment. Too bad it has to be 1.5x for overtime regardless of the base pay. If you pay $12 an hour and another grower pays $8, you would have to pay $18 for overtime and the other grower $12. Some sort of sliding scale would be nice, but a bureaucratic nightmare for sure - just like classifying positions as exempt and non-exempt is for many employers now.

    If overtime is foreseeable, I suppose an unintended effect could be to lower base time wages for those growers who currently pay above minimum. That isn't the norm, so it isn't a point to get hung up on.


  3. That occurred to me, too. It will probably put a damper on raises. As you point out, mandating markets into behaving differently is always a hopeless task. The benefits I see in this particular bill are twofold. First, it will accelerate the elimination of the most menial jobs, either by sending them to other countries or by replacing them with technology. Second, it will harm those of my competitors who skirt rules, have low productivity, and owe their continued miserable existence to agricultural subsidies. At least it will hurt them more than me.