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How much would it cost consumers to give farmworkers a significant raise?

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The increased media coverage of the plight of the more than 2 million farmworkers who pick and help produce our food—and whom the Trump administration has deemed to be “essential” workers for the U.S. economy and infrastructure during the coronavirus pandemic—has highlighted the difficult and often dangerous conditions farmworkers face on the job, as well as their central importance to U.S. food supply chains. For example, photographs and videos of farmworkers picking crops under the smoke- and fire-filled skies of California have been widely shared across the internet, and some data suggest that the number of farmworkers who have tested positive for COVID-19 is rivaled only by meat-processing workers. In addition, around half of farmworkers are unauthorized immigrants and 10% are temporary migrant workers with “nonimmigrant” H-2A visas; those farmworkers have limited labor rights in practice and are vulnerable to wage theft and other abuses due to their immigration status.

Despite the key role they play and the challenges they face, farmworkers are some of the lowest-paid workers in the entire U.S. labor market. The United States Department of Agriculture (USDA) recently announced that it would not collect the data on farmworker earnings that are used to determine minimum wages for H-2A workers, which could further reduce farmworker earnings.

This raises the question: How much would it cost to give farmworkers a significant raise in pay, even if it was paid for entirely by consumers? The answer is, not that much. About the price of a couple of 12-packs of beer, a large pizza, or a nice bottle of wine.

The latest data on consumer expenditures from the Bureau of Labor Statistics (BLS) provides useful information about consumer spending on fresh fruits and vegetables, which, in conjunction with other data, allow us to calculate roughly how much it would cost to raise wages for farmworkers. (For a detailed analysis of these data, see this blog post at Rural Migration News.) But to calculate this, first we have to see how much a typical household spends on fruits and vegetables every year and the share that goes to farm owners and their farmworker employees.

The BLS data show that expenditures by households (referred to in the data as “consumer units”) in 2019 was $320 on fresh fruits and $295 on fresh vegetables, amounting to $615 a year or $11.80 per week. In addition, households spent an additional $110 on processed fruits and $145 on processed vegetables. Interestingly enough, on average, households spent almost as much on alcoholic beverages ($580) as they did on fresh fruits and vegetables ($615).


Data
 from the U.S. Department of Agriculture’s Economic Research Service show that, on average, farmers receive less than 20% of every retail dollar spent on food, but a slightly higher share of what consumers spend for fresh fruits and vegetables. Figure A shows this share over time for fresh fruits and vegetables: Between 2000 and 2015, farmers received an average 30% of the average retail price of fresh fruits and 26% of the average retail price of fresh vegetables (2015 is the most recent year for which data are available). This means that average consumer expenditures on these items include $173 a year for farmers (0.30 x 320 = $96 + 0.26 x 295 = $77).

Farmers received an average 30% of the retail price of fresh fruit and 26% for fresh vegetables between 2000 and 2015

Farm share of fruit and vegetable retail sales, 2000–2015
DateFruitsVegetables
200026%26%
200128%28%
200229%26%
200328%26%
200425%23%
200528%25%
200630%26%
200730%24%
200827%26%
200928%25%
201029%27%
201133%25%
201236%23%
201335%27%
201435%25%
201538%27%

ChartData

Note: Data for 2015 are the most recent data available from United States Department of Agriculture’s Economic Research Service.

Source: U.S. Department of Agriculture, Economic Research Service, Price Spreads from Farm to Consumer [Excel]. Share Tweet Embed Download image

According to studies published by the University of California, Davis, farm labor costs are about a third of farm revenue for fresh fruits and vegetables, meaning that farmworker wages and benefits for fresh fruits and vegetables cost the average household $57 per year (0.33 x $173 = $57). (However, in reality, farm labor costs are less than $57 per year per household because over half of the fresh fruits and one-third of fresh vegetables purchased in the United States are imported.)

To illustrate, that means that farm owners and farmworkers together receive only about one-third of retail spending on fruits and vegetables even though most, and in some cases all, of the work it takes to prepare fresh fruits and vegetables for retail sale takes place on farms (the exact share of the price farmers receive varies slightly by crop). For example, strawberries are picked directly into the containers in which they are sold, and iceberg lettuce is wrapped in the field. Consumers who pay $3 for a pound of strawberries are paying about $1 to the farmer, who pays one-third of that amount to farmworkers, 33 cents. For one pound of iceberg lettuce, which costs about $1.20 on average, farmers receive 40 cents and farmworkers get 13 of those 40 cents.

So, what would it cost to raise the wages of farmworkers? One of the few big wage increases for farmworkers occurred after the Bracero guestworker program ended in 1964. Under the rules of the program, Mexican Braceros were guaranteed a minimum wage of $1.40 an hour at a time when U.S. farmworkers were not covered by the minimum wage. Some farmworkers who picked table grapes were paid $1.40 an hour while working alongside Braceros in 1964, and then were offered $1.25 in 1965, prompting a strike. César Chávez became the leader of the strike and won a 40% wage increase in the first United Farm Workers table grape contract in 1966, raising grape workers’ wages to $1.75 an hour.

What would happen if there were a similar 40% wage increase today and the entire wage increase were passed on to consumers? The average hourly earnings of U.S. field and livestock workers were $14 an hour in 2019; a 40% increase would raise their wages to $19.60 an hour.

For a typical household or consumer unit, a 40% increase in farm labor costs translates into a 4% increase in the retail price of fresh fruits and vegetables (0.30 farm share of retail prices x 0.33 farm labor share of farm revenue = 10%; if farm labor costs rise 40%, retail spending rises 4%). If average farmworker earnings rose by 40%, and the increase were passed on entirely to consumers, average spending on fresh fruits and vegetables for a typical household would rise by $25 per year (4% of $615 = $24.60).

Many farm labor analysts consider a typical year of work for seasonal farmworkers to be about 1,000 hours. A 40% wage increase for seasonal farmworkers would raise their average earnings from $14,000 for 1,000 hours of work to $19,600. Many farmworkers have children at home, so for them, going from earning $14,000 to $19,600 per year would mean going from earning about half of the federal poverty line for a family of four ($25,750 in 2019) to earning about three-fourths of the poverty line. For a farmworker employed year-round for 2,000 hours, earnings would increase from $28,000 per year to $39,200, allowing them to earn far above the poverty line.

Raising wages for farmworkers by 40% could improve the quality of life for farmworkers without significantly increasing household spending on fruits and vegetables. If there were productivity improvements as farmers responded to higher labor costs, households could pay even less than the additional $25 per year for fresh fruits and vegetables.

If average farmworker earnings were doubled (rose by 100%) through increased spending on fresh fruits and vegetables, a typical household would see costs rise by $61.50 per year (10% of $615). That extra $61.50 per year would increase the wages of seasonal farmworkers to $28,000 for 1,000 hours of work, taking them above the poverty line for a family of four.

This blog originally appeared at Economic Policy Institute on October 15, 2020. Reprinted with Permission.

About the Author: Daniel Costa is an attorney who first joined the Economic Policy Institute in 2010 and was EPI’s director of immigration law and policy research from 2013 to early 2018; he returned to this role in 2019 after serving as the California Attorney General’s senior advisor on immigration and labor.

Philip Martin is Professor of Agricultural and Resource Economics at the University of California, Davis. He edits Rural Migration News, has served on several federal commissions, and testifies frequently before Congress. He is an award-winning author who works for UN agencies around the world on labor and migration issues. His latest book is Merchants of Labor: Recruiters and International Labor Migration, a pioneering analysis of recruiters in low-skilled labor markets explaining the prominent role of labor intermediaries, from Oxford University Press.


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Study: Repeal Of Wisconsin’s Prevailing Wage Law Led To Drop In Wages For Construction Workers

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A new study from the Midwest Economic Policy Institute (MEPI) released exclusively to Wisconsin Public Radio finds the repeal of Wisconsin’s prevailing wage laws has resulted in lower wages for construction workers in Wisconsin, despite having no statistically significant impact on the cost of public construction projects.

Prevailing wage laws set minimum pay requirements for wages paid to workers on public construction projects, like school buildings or highway construction. 

Former Gov. Scott Walker along with GOP lawmakers in the state Legislature repealed Wisconsin’s prevailing wage law for local construction projects in 2015. Two years later, the GOP repealed Wisconsin’s prevailing wage law for state construction projects. 

Using data from the U.S. Census Bureau, the study shows that before the laws were repealed, the average annual income for full-time construction and extraction workers was close to $49,000. After the laws were repealed, average annual income was a little over $46,000, a drop of more than 5 percent. When the study removed factors such as education and age, the average annual income for workers was 6 percent less than income pre-repeal.

“Prevailing wage provided ladders of access into the middle class for Wisconsin construction workers,” Frank Manzo IV, policy director for the MEPI, said, adding that repealing it has had negative consequences for those same workers. 

Two of Wisconsin’s neighboring states with prevailing wage laws in place showed a smaller drop in annual average income between 2015 and 2018. In Illinois and Minnesota, annual incomes dropped by under 2 percent combined.

The study further found that at the same time, construction industry CEOs saw an increase in pay after the repeal of the prevailing wage, worsening economic inequality, according to the authors. Researchers estimate construction industry CEOs in Wisconsin saw slightly more than a 54 percent increase in inflation-adjusted total income after the laws were repealed.

The data also showed that, following repeal, there was a decrease in the likelihood that skilled construction workers had employer-sponsored health insurance. 

“Repeal has lowered wages and reduced health coverage for skilled construction workers, and resulted in less work for local contractors,” Manzo said. “At the same time, repeal has failed to deliver cost-savings on public projects and to increase bid competition — both of which were promised by politicians.”

Kevin Duncan, an economics professor at Colorado State University-Pueblo who was part of the study’s research team, said when construction workers have a lower income and less health insurance coverage, it has broader effects on local economies.

“When income goes down for construction workers they have less to spend in local retail and service industries,” Duncan said. “And then also with a decrease in health insurance … benefits, that results in greater reliance on public assistance. When construction workers are paid less they have to rely more on public assistance — (food stamps), that sort of thing — so that tends to increase the taxpayer burden.”

Fewer Wisconsin Contractors, No Effect On Construction Costs

At the time of the repeal on state construction projects, many Republicans criticized the law, saying itinflated the costs on public projects, and arguing that repealing the laws would save taxpayers money. 

But researchers with MEPI said the data shows repealing prevailing wage had no statistically significant effect on the costs for public construction projects.  

Researchers also found that the Wisconsin Department of Transportation saw fewer bids from Wisconsin-based contractors after the laws were repealed compared to before. Between January 2015 and September 2017, more than 2,600 bids for DOT projects came from Wisconsin contractors. But between October 2017 and December 2019, following the repeal of the laws, that number dropped to a little over 1,700 bids.

The drop meant the share of bids from out-of-state contractors increased from 9 percent to 13 percent in the same timeframe.  

“What that means is … Wisconsin tax dollars that previously went to Wisconsin contractors and construction workers, (are) now being used to pay workers from out of state,” said Duncan. “When that happens, Wisconsin tax money leaks out of Wisconsin and it stimulates economies in neighboring states instead of supporting the local economy.”

The MEPI study also found there was no statistically significant impact on the racial or ethnic diversity of construction workers before and after repeal. The study did find a drop in the share of women working in construction in Wisconsin after the repeal of prevailing wage, despite that number being extremely low prior to the repeal. 

This blog originally appeared at Wisconsin Public Radio on October 2, 2020. Reprinted with permission.

About the Author: Rachel Vasquez is a producer at Wisconsin Public Radio.


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Chicago hotel strike enters sixth day, as workers demand year-round health insurance

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Thousands of Chicago hotel workers continued their strike for the sixth day Wednesday, primarily to demand a year-round health insurance guarantee. The union said workers also want higher wages, more sick days, and more manageable workloads, the Associated Press reported. Their contracts, which covered 6,000 employees, expired on August 30.

The number of hotel workers involved in the strike has only increased since then. On Monday, workers at Cambria Chicago Magnificent Mile joined the strike, which brought the count of hotels affected by the strike to 26. Before the strike, more than 3,000 UNITE HERE Local 1’s members voted on the issue and 97 percent voted to authorize it.

The union told the Chicago Tribune that it is the most widespread and coordinated hotel worker strike ever held in Chicago. It’s the first strike in the city to include all hotel workers, whether they’re dishwashers or housekeepers, according to Crain’s Chicago Business.

As the Tribune reported, there are only four hotels that have expired contracts where hotel workers are not on strike: Hotel Raffaelo, Tremont Chicago at Magnificent Mile, Park Hyatt Chicago, and Fairmont Chicago.

Some fine dining restaurants, including the Ritz-Carlton Chicago’s fine-dining restaurant and Torali Italian-Steak, are closed or offering limited menus. Inside the Palmer House Hilton, long lines await check-in, dirty towels have been piling up, and beds have been left unmade, according to ABC7. One guest, Matt Lissack, told ABC7 that the line for check-in was “literally around the building.”

In the central business, there are 174 hotels, which means travelers could stay somewhere that is not dealing with contract negotiations, but the hotels in the midst of a strike are some of the biggest ones in Chicago, according to Crain’s Chicago Business.

Q. Rivers, who works at Palmer House Hilton, said in a statement on the union website, “Hotels may slow down in the wintertime, but I still need my diabetes medication when I’m laid off. Nobody should lose their health benefits just because it’s cold out. Full-time jobs should have year-round benefits.”

Each hotel or hotel brand does its own negotiation with the union, so management at some hotels and brands could make agreements with the union before others. Hotel groups say it’s too early in the negotiation process for workers to go on strike, and say they have not yet reached an impasse with the union.

Thousands of workers have disagreed. A spokesperson for Hyatt sent a statement to ABC7 saying, “In fact, Hyatt has not received the union’s complete proposals. Colleague benefits and wages remain unchanged as we negotiate a new agreement … Many colleagues are working …”

A Hilton spokesperson told the outlet “More and more of our union Team Members are choosing to return to work and we welcome them to do so,” adding that “It is still early in the negotiations process and Hilton is committed to negotiating in good faith with UNITE HERE Local 1.”

UNITE HERE Local 1 recently helped workers by advocating for a Chicago ordinance that made the city the second in the country to require that hotels have panic buttons. These panic buttons allow hotel workers to request help if a guest is harassing or sexually assaulting them. In 2016, the union put out a survey that showed 58 percent of those surveyed were sexually harassed by guests.

This article was originally published at ThinkProgress on September 12, 2018. Reprinted with permission. 

About the Author: Casey Quinlan is a policy reporter at ThinkProgress covering economic policy and civil rights issues. Her work has been published in The Establishment, The Atlantic, The Crime Report, and City Limits


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