New Data Shows California Farm Employment Decreased Slightly in 2017, First Decline Since 2009

New data from the Quarterly Census of Employment and Wages (QCEW, shown below) shows total farm employment in California declined 0.5% between 2017 and 2016.  This breaks a streak of seven straight annual increases, which to the surprise of many, persisted through the worst drought in California's modern history.  Interestingly, the decline was entirely due to a sharp 4% year-year drop in the months of January and February 2017, farm employment was unchanged over the rest of the year.  Since these two negative months correspond to President Trump's inauguration, and are also in the low season, increased anxiety surrounding immigration policy may have had an impact.

Average wages paid increased 3.1%, enough to keep pace with inflation, but about half the percentage increase seen in 2015 and 2016 and the smallest gain since 2011.  An increase in the minimum wage from $8 to $10 per hour contributed to higher 2015 and 2016 wage increases, as 2017 brought a smaller 50 cent increase to the minimum wage that only applied to employers with at least 26 employees. 

Farmers are having an increasingly difficult time getting all the workers they demand as immigration has decreased and unemployment in California's farming regions have dropped to record lows.  While farm worker wages have increased somewhat faster than overall average wages, it is still the lowest paying industry in California by far, and farm worker wages have not increased as much as one might expect in response to the combination of reported shortages and the rising minimum wages.  Nevertheless, the farm labor situation is causing more change to California agriculture than water scarcity, as farmers across the state are adjusting crop choices, and exploring and implementing new labor saving technology.

Changing policies are likely to accelerate the pace of this in the coming years.  Between 2019 and 2022, California's minimum wage will rise from $12 to $15 per hour.  Over the same period, the state will phase in new overtime rules that will bring agriculture into alignment with rules governing other industries.  In addition, these increased labor costs will hit at a time that the new federal tax law increases incentives for business capital investment.

Thus, big changes are coming to agriculture labor markets and this data will be very interesting to track over the next 5 years.  While it will be a challenging time for farmers, I am optimistic that the Valley economy will benefit in the long-run from the transition of the industry to a more capital and technology intensive production with higher wages, even if it ultimately means fewer jobs.

Employment
Year	Crop farm	Anim Farm	Ag Services	Total	% change
2007	172,222	29,955	180,454	382,631
2008	174,697	30,283	183,405	388,385	1.5%
2009	170,041	29,157	171,453	370,651	-4.6%
2010	170,068	28,299	181,386	379,753	2.5%
2011	170,333	29,140	186,546	386,019	1.7%
2012	171,501	28,987	195,225	395,713	2.5%
2013	174,776	28,266	205,552	408,594	3.3%
2014	175,127	28,140	209,131	412,398	0.9%
2015	176,537	28,496	213,178	418,211	1.4%
2016	172,847	28,476	219,839	421,162	0.7%
2017	169,252	28,672	221,155	419,079	-0.5%
Total Wages (in thousands)
Year	Crop farm	Anim Farm	Ag Services	Total	% change
2007	$     4,416,340	$        848,165	$     3,680,430	$       8,944,935
2008	$     4,567,919	$        898,979	$     3,841,685	$       9,308,583	4.1%
2009	$     4,452,149	$        877,571	$     3,661,821	$       8,991,541	-3.4%
2010	$     4,526,888	$        860,390	$     3,973,411	$       9,360,689	4.1%
2011	$     4,667,911	$        905,600	$     4,237,943	$       9,811,454	4.8%
2012	$     4,931,875	$        913,074	$     4,634,998	$     10,479,947	6.8%
2013	$     5,274,135	$        913,979	$     5,087,808	$     11,275,922	7.6%
2014	$     5,483,877	$        950,215	$     5,359,878	$     11,793,970	4.6%
2015	$     5,734,489	$     1,021,973	$     5,856,656	$     12,613,118	6.9%
2016	$     5,947,906	$     1,064,181	$     6,541,821	$     13,553,908	7.5%
2017	$     6,024,487	$     1,119,909	$     6,757,423	$     13,901,819	2.6%
Average Wage
Year	Crop farm	Anim Farm	Ag Services	Total	% change	Min wage
2007	$          25,643	$          28,315	$          20,395	$            23,377		$7.50
2008	$          26,148	$          29,686	$          20,946	$            23,967	2.5%	$8.00
2009	$          26,183	$          30,098	$          21,358	$            24,259	1.2%	$8.00
2010	$          26,618	$          30,404	$          21,906	$            24,649	1.6%	$8.00
2011	$          27,405	$          31,078	$          22,718	$            25,417	3.1%	$8.00
2012	$          28,757	$          31,499	$          23,742	$            26,484	4.2%	$8.00
2013	$          30,177	$          32,335	$          24,752	$            27,597	4.2%	$8.00
2014	$          31,314	$          33,767	$          25,629	$            28,599	3.6%	$8.50 (July 1 increase to $9)
2015	$          32,483	$          35,864	$          27,473	$            30,160	5.5%	$9.00
2016	$          34,411	$          37,371	$          29,757	$            32,182	6.7%	$10.00
2017	$          35,595	$          39,059	$          30,555	$            33,172	3.1%	$10.50 (>25 employees), $10 (<26 font="">

Notes:  Employment is the average of monthly payroll employment over the year, and the average wage is just the total wages paid over the course of the year divided by the average number of jobs.  Data on hours worked or the hourly wage are not available from the QCEW.  The QCEW is a census of all employer tax filings and is considered the most reliable data on payroll jobs and wages.  The data includes NAICS codes 111 (crop farms), 112 (animal farms), and 115 (support services which includes a small amount of non-farm jobs but is dominated by farm labor contractors).