California Raises Wage Costs on Farms

OMAHA (DTN) -- Farm groups in California are expressing frustration over the prospect of higher labor costs next year after Democratic Gov. Gavin Newsom signed a bill into law this week setting a higher minimum wage rate for agricultural workers in the state.

Newsom on Wednesday signed Assembly Bill 2646, which sets a new minimum wage for agricultural workers in California at $19.75 an hour, starting in January. Following that, the minimum agricultural labor wage in the state will increase by the same cost-of-living adjustment rate applied for Social Security benefits.

The new minimum wage for farmworkers in California comes as farmworker groups are suing the Trump administration for lowering the Adverse Effect Wage Rates (AEWRs) for H-2A workers nationally. The Labor Department lowered the wages, leading to a lawsuit seeking to overturn the rule. Under the H-2A rule, the minimum H-2A wage in the state was $16.90 per hour.

AB 2646 effectively raises the floor to $19.75 an hour for H-2A and other farm laborers covered by the legislation.

California farmers employ about 35,000 farmworkers under the H-2A program out of roughly 850,000 people who perform work on a farm in the state at some point during the year. The state averages more than 400,000 full-time equivalent workers on farms.

Thirty farm and business groups representing a range of crops last summer had urged Newsom to veto the bill, citing it would result in a 14% wage increase. The legislation would increase farm labor costs by hundreds of millions of dollars, and likely lead to an increase in the price of food.

Western Growers, which represents produce farmers in Western states, criticized Newsom for signing the bill into law.

"California families are burdened by the nation's highest cost of living, and yet we now have another new economically stupid mandate imposed on the state's farmers in the form of AB 2646," said Western Growers President and CEO Dave Puglia. "None of our state's farmers can simply absorb this new higher wage mandate. Some larger family farm businesses may be able to pass along this new labor cost to their grocery chain customers, who will pass it on to consumers already struggling with affordability challenges.

"Most farmers, however, cannot absorb or pass along this dramatic wage increase. They have been beaten down by California's higher operating costs and watched their grocery chain customers choose farmers in other states and countries where the same fresh foods can be grown at a lower cost."

Puglia added, "Next time you hear people in Sacramento talk about their love of California's farms and the wonderful food we grow here, remember that we have lost nearly 30% of our family farms in the last 25 years. That is because of the economic injuries that have been caused by foolish public policies. Californians are proud of our state's farmers. They deserve better from Sacramento."

In an email to DTN, the California Farm Bureau Federation stated: "At a time where 86% of farmers have second jobs, AB 2646 will make it more expensive to farm in California. Farmers can't pass along cost increases like other industries."

The bill was sponsored by the United Farm Workers, which argued the bill safeguards farmworkers against wage depression. Other groups such as the California Rural Legal Assistance Foundation also backed the bill.

Chris Clayton can be reached at Chris.Clayton@dtn.com

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