OAK BROOK, Ill. – Farm labor costs are skyrocketing as average wages increase, yet fewer farmworkers are available or willing to take on the challenges of farm work. A recent Farm Foundation panel concluded that if the U.S. wishes to remain competitive in producing food to feed the world, both government and private institutions must accelerate their adaptation to farm labor’s rapid evolution.

The panel was moderated by Michael Marsh, president and CEO of the National Council of Agricultural Employers, who said agricultural employers are currently contending with a soaring adverse effect wage rate, or AEWR, the minimum wage that the U.S. Department of Labor (DOL) requires agricultural employers to pay H-2A Visa and other workers.

“One of the biggest things imperiling farmers’ operations are the wage rates they are having to pay on the farm. When you look at it compared to some of our foreign competition, it’s easy to understand exactly what’s transpiring in regard to the exporting of much of our food production to our foreign competition, particularly to Canada and Mexico,” Marsh said.

“When we look at an AEWR in California of $19.75 per hour versus about 300 pesos per day down in Mexico – which would equate to about $1.50 per hour – you can see the arbitrage opportunity that exists for Mexican producers to ship their product into the United States,” he added.

During the November 19 panel discussion, Marsh said he would like to see Congress act on the AEWR issue and looked forward to the selection of a new DOL secretary by President-elect Donald Trump. He noted that Trump had already nominated Marco Rubio for Secretary of State and Kristi Noem as his administration’s secretary for the Department of Homeland Security.

“Both of those agencies impact what happens with the H-2A program and consequently wages,” Marsh said. “However, it appears margins are going to be slim in both the Senate and the House of Representatives, and that makes it extremely difficult to advance any kind of labor reform. We haven’t seen any real ag labor reform legislation since 1986.”

A change must be made in the methodology the DOL employs to determine the AEWR for U.S. agricultural employers to be able to level the playing field by reining in average wage rates, according to Marsh.

Forum presenters included Andrew Padovani, senior research associate for JBS International; Alexandra Hill, an assistant professor at the University of California-Berkeley; and Philip Martin, professor emeritus of agricultural economics at the University of California-Davis. The panelists updated forum attendees on the current U.S. farm wage landscape and presented pertinent farm labor data.

Martin, who has authored several books and papers on immigration and farm labor, explained that while the AEWR has soared in recent years, average farm wages are currently around 60 percent of what employers pay for non-farm employment. The reason for the higher wages, according to Martin, is primarily due to a shrinking supply of available workers.

“If current trends continue, that gap will continue to narrow,” Martin said, adding that 80 percent, or around 2 million of the total 2.5 million U.S. farmworkers are Mexican-born. Of those workers, around 1.7 million are “settled,” though some 50 percent remain unauthorized citizens.

“We don’t yet know what will happen under Trump 2.0, it could be that H-2A is made much easier and cheaper; that is to freeze or modify the AEWR, open up the program to year-round jobs, maybe change the housing requirement. Or, as Project 2025 says, phase out the H-2A program and subsidize mechanization (of farm labor),” he said.

Padovani, who is the director of the National Ag Workers Survey (NAWS), offered further insight on changes in the demographics of the typical U.S. farmworker. “Farmworkers are getting older and there are not a lot of new workers coming into the labor force,” he said. “In the late 1980s or early 1990s about 20 percent of crop workers were aged 19-23, with less than 5 percent older than 49. From about 2006-2009 the younger workers began falling off and we had more older workers. In the last five years that 19-23 year old age group now comprises about 1 in 10 workers.”  

Around 60 percent of all U.S. crop workers were born in Mexico, according to NAWS data, while one-third hail from the U.S. and Puerto Rico. A small percentage hail from Central America, South Africa and eastern Europe. An estimated 40 percent of America’s current crop workers are believed to have unauthorized citizenship status, NAWS data shows.

Hill, an associate professor in Berkeley’s Department of Agriculture and Resource Economics, began her segment by echoing previous panelists’ findings that farm workers are becoming harder to find and more expensive to employ. She stated concern that some large U.S. producers are shifting some of their acreage across the border to Mexico to take advantage of vastly lower farm wages. Either labor costs must be reduced, Hill said, or farm revenue must greatly increase.

“The H-2A program is going to bring in new influxes of workers, but with an increase in (farmers’) costs. If we want to keep production within the U.S., we really need to find ways to make our businesses more competitive,” Hill said. “We really need to increase farm revenue, be it through creating value-added products (or) holding retailers accountable to us for making all these efforts to have better working conditions here in the U.S., and then just buying their products from other countries that don’t have those better working conditions. There is a disconnect there that should be addressed.”

Hill produced U.S. Agricultural Census data revealing that the average farm payroll rose by 236 percent from 2002-2022, while farm sales rose 271 percent. However, those figures varied across geographical areas. Within the Farm World readership area, Indiana payroll costs rose by 252 percent during the time span, while payroll costs rose by 244 percent in Ohio and 231 percent in Illinois.

To view the Farm Foundation panel discussion, “Growing Together: Trends and Transformations in U.S. Agriculture Labor” in its entirety, visit www.farmfoundation.org.