U.S. farm sector: unique and separate part of economy

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By Palash R. Ghosh | October 6, 2010 9:55 AM EST

U.S. jobs data that most economists and investors pore over typically exclude the huge agricultural sector, hence the term "non-farm" payroll.

Farms and agriculture comprise a very important, if unique, sector of the American economy which seems to exist in a universe of its own. Farmers and growers are exempt from many labor laws that govern the rest of society -- for example, they are exempt from having to pay overtime to their workers, who, in turn, do not generally have the right to unionize. Agriculture always enjoys certain exemptions with respect to child labor and workplace safety.

Of course, one of the many unusual characteristics of the farm sector is the huge presence of "undocumented" workers, which makes accurate data-collection of the industry somewhat difficult.

Nonetheless, the U.S. Labor Department's National Agricultural Workers Survey estimates that more than half of the country's 1-million farm-workers are undocumented immigrants, primarily from Mexico and Central America.

According to the Migrant Farm Worker Justice Project, 85 percent of farm-workers are immigrants -- and up to 70 percent of them are undocumented.

Illegal immigration has been a contentious political issue, particularly in the Southwestern part of the country. Most prominently, Arizona (where almost half of the million foreign-born residents are believed to be unauthorized) passed a controversial law in April 2010 which essentially made it a crime for undocumented foreigners to be in the state.

Both supporters of tougher immigration laws and the United Farm Workers of America have complained that U.S. employers use cheap, undocumented labor and that if they paid higher wages and made working conditions better, these farm jobs would be increasingly taken by American workers.

However, American citizens appear to be in no rush to grab these agricultural jobs.

A recent newspaper story from Associated Press pointed out that from January to June of this year, farmers in California put up advertisements for 1,160 farm-worker positions open to U.S. citizens and legal residents Only 233 people applied.

Senator Dianne Feinstein of California has testified that U.S. farmers "have tried and tried and tried" to hire American workers, but they find few "who are willing to take the job in a hot field, doing backbreaking labor, in temperatures that often exceed 100 degrees."

Feinstein has cited examples of how U.S. farms and nurseries have sought to recruit American workers by offering apparently high wages and failing to attract many. For example, she noted that lettuce producers in Yuma, Ariz. complained of too few workers in the spring of 2008 despite paying $10 to $19 an hour.

"There is no evidence that Americans are rushing to work in the fields to fill any shortfall of labor" said Keith Cunningham-Parmeter, assistant professor of law at Willamette University College of Law in Salem, Ore.
"The wages are too low and the working conditions are just too brutal."

Philip Martin, a professor of agricultural and resource economics at the University of California at Davis, and the editor of the monthly Migration News, indicated that most Hispanic immigrants remain in their first U.S. farm-related jobs for less than a decade before moving up the U.S. job ladder, usually finding non-farm jobs in construction or services.

"When the U.S. economy booms and unemployment falls, as in 2006-2007, the revolving door that brings newcomers into farm and farm-related jobs turns faster, prompting worries of farm labor shortages," Martin said.

"During the 2008-2009 recession, some ex-farm workers moved down the job ladder, returning to the farm work force after losing construction jobs."

According to a report from Rural Migration News (RMN) from July of this year, in 2007 the Census of Agriculture (COA) reported total farm labor expenditures of $26.4 billion, including $4.5 billion for contract labor.

Farmers reported hiring 2.6 million workers, including 35 percent or 910,000 for 150 days or more on their farms.

However, farmers do not report to the COA how many workers, contractors and other intermediaries were brought to their farms. Still, RMN noted that if total farm labor expenses of $26.4 billion are divided by the annual average earnings of U.S. hired workers in 2007 ($10.21 an hour), the estimated number of full-time equivalent (2000 hours) jobs was about 1.2 million.

The Quarterly Census of Employment and Wages (QCEW) provides another source of employment and earnings data on farm workers.

Between 2001 and 2008, employment in agriculture, forestry, fishing and hunting, averaged 1.2 million and ranged from a low of 1 million in January to a high of 1.3 million in July.

The number of agricultural establishments paying the unemployment insurance (UI) taxes from which QCEW data are drawn fell from about 100,000 in 2001-02 to 95,000 in 2007-08, while total UI-covered wages rose from $24 billion to $30 billion, or 25 percent. Also, average weekly earnings rose from $400 to $500.

In addition, RMN reported, the ratio of average farm to non-farm earnings was about 50 percent in the 1980s and has been almost 60 percent since 2000.

"One reason is that many non-farm workers have substituted employer-paid health insurance and other benefits for wage increases," RMN stated.

"The ratio of average farm earnings to the federal minimum wage fell from 85 percent in the early 1980s to 55-65 percent since the mid-1990s."

In testimony before the House Judiciary Committee's Subcommittee on Immigration, Citizenship, Refugees, Border Security and International Law in late September, Carol M. Swain, professor of Political Science and Law at Vanderbilt University, said that the the unemployment rate for agricultural workers in August 2010 was 7.9 percent, dropping from a high of 10.8 percent in May (citing data from the Bureau of Labor Statistics).

By comparison, unemployment among the non-farm sector remains just under 10 percent.

Cunningham-Parmeter, who has represented migrant laborers, explains that some assumptions about farm-workers are true, while other are myths.

"Farms are not exempt from paying minimum wage, as some mistakenly think," he said. "But farms are generally exempt from paying overtime - this was part of a 'New Deal' compromise reached back in the 1930s with southern growers who didn't want certain employment protections to apply to agriculture."

Cunningham-Parmeter concedes, however, that the commonly held belief that underpaid farm-workers translates into cheap food at the local grocery store is "partly accurate."

"The relatively low wages paid to farm laborers do indeed help subsidize price of fruits and vegetables at the grocery store," he said.

But it's a complete fallacy, he noted, to believe that all agricultural laborers work "off the books."

"Most farm-workers provide documentation at the time they are hired," he said. "And they are paid by checks that show withholding taxes and all other requirements."

Of course, the paperwork submitted by undocumented aliens might be inaccurate or fraudulent.

This is where the culpability of U.S. employers who hire undocumented aliens becomes tricky.

"For one thing, laws against hiring undocumented workers are vastly under-enforced,” Cunningham-Parmeter said.

"Moreover, hiring undocumented workers is against the law only if the employer did so knowingly. If they receive documentation from workers that indicate they are legally authorized to work in the U.S., the employer can't be held responsible if it turns out the paperwork was false."

Not surprisingly, this limbo-like system places the undocumented immigrant worker at great risk and vulnerability.

Cunningham-Parmeter said that based on his experience, many undocumented workers, even if they are paid "on the books" often do not receive their full wages, or are not paid for the actual number of hours worked, or are short-changed by their employers in other ways.

Cunningham-Parmeter points out that undocumented workers actually have the right to receive minimum wage and various other workplace rights and protections. But they find themselves in a Catch-22 predicament, because by reporting abusive practices of their employer, their undocumented status is revealed, placing them at risk for deportation.

It is an extremely difficult and complex problem that defies any easy solutions.

Interestingly, Cunningham-Parmeter points out that the legendary Cesar Chavez, who fought for the rights of farm workers in the 1960s, was opposed to undocumented immigration.

"He knew that unionization could never occur with the presence of undocumented workers," he said. "Because if a unionized worker went on strike, ten other undocumented workers would gladly take his place, thereby undercutting the effectiveness of the union."

In any case, when the monthly non-farm payroll numbers come out every month, it is only telling part of the US employment story.

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