If farms were truly struggling to find enough workers, their labor costs would be skyrocketing. But that isn’t what’s happening.
The costs of workers hired directly by the farms didn’t grow at all between 2010 and 2011, according to the latest data from the Department of Agriculture. It contracted 3.8 percent, from $23.5 billion to $22.6 billion. Next year it is forecast by the Department of Agriculture to shrink by another 2.1 percent. In light of the rising revenues and profits of farms, this is not a labor market experiencing a worker shortage.
What’s more, the total cost of hired labor on farms nationwide is still below pre-crisis levels, while farm profits are well above pre-crisis levels. This implies that far from farms seeing a labor shortage, there’s something of a farm labor glut going on.
I would imagine that the Housing Bubble in California lured many farm laborers into construction work who have since gone back to the fields.
In California last year, despite all the talk of a farm labor shortage, hired labor costs dropped from $6.2 billion to $5.4 billion—a 12 percent fall. This isn’t what happens in a labor shortage.
There has been some wage inflation in a far smaller segment of the farm labor market: the contract labor market. This is the market for workers employed by third-party operators who supply labor to farmers, mostly for seasonal work such as harvesting.
Farms nationwide saw contract labor costs rise from 3.9 billion in 2010 to 4.5 billion in 2011, a rise of 15 percent. That might put some farmers off a bit, having to pay the guy supplying workers 15 percent more. But revenues were rising even faster, which is why profits grew so explosively.
In California, contract labor costs grew 19 percent. While that seems astounding, it growth pales in comparison with the growth of profits at California farms. There may be fewer laborers than farmers would like, but this isn’t a crisis by any means. The farm owners are doing quite well for themselves and shouldn't be shocked that the migrant laborers are also demanding to share in the bounty.
(This is an apparently difficult point for journalists churning out crops-rotting-in-the-fields articles to grasp: that the phrase "a good year for whatever" usually has two opposite meanings: it can be a good year for a particular crop climatically or it can be a good year for a particular crop economically, but quantity grown and market price are usually negatively correlated. So, it's not some unique and tragic irony that the government Must Do Something About when a good growing season leads to too much product to be harvested economically: it's just normal supply and demand at work.)
Or, with a particular crop, you might just do one sweep through the field, and then the timing of when to pull the trigger to start the harvest is crucial. If you start a little ahead of your competitors, you'll likely get a higher price per pound, but leave a higher percentage of the crop to rot in the fields. Or if you go late, you'll get a higher percentage yield but a lower price per pound. An interesting decision, no?
Farming is kind of a fun gambling-like business if you are a big grower who spends a lot of time playing around with models in Excel spreadsheets. It's like fantasy football, except you get real money when you make smart decisions. (If you are a stoop laborer, farming is, eh, less fun.)