We are in midst of a talent struggle in agriculture. With the national unemployment rate at an all-time low, we are not the only industry that's facing challenges finding and attracting top quality candidates. Over three quarters of hiring managers and recruiters say they are struggling to find hires across all industries. The compensation we have historically paid on farms is no longer bringing in the quality of hires needed for strong performance.
There are two primary reasons driving the big disconnect between what we are looking to pay today and what you get at that pay range.
The first reason is wages have been increasing at a faster pace than in the past due to low unemployment. This year alone we have seen a 2.8% increase in wages across all sectors. Since November 2016, the two biggest job gainers across all industries are mining and logging followed by the construction industry at number two spot, according to the Bureau of Labor Statistics.
With a multitude of available jobs and only so many great hires to go around, the pay levels we have seen in the past just don't align with the market.
A quick snapshot of what we are up against: Walmart's base wage for a general labor employee is $11 per hour. We have a local manufacturing site near us in Indiana with starting pay for general labor on the line at $16 per hour. PayScale reports the average manufacturing wage at $14.99 per hour and the average construction equipment operator earning over $19 per hour on average, with wages ranging from $15 to $28 per hour. Both of those positions have the advantage of paid time and half when employees work more than 40 hours.
Last week was reflective of what the data is telling us. I interviewed a candidate who is a construction foreman, with a strong skill set in operating equipment and performing repairs, and due to some required travel and leading a small team, he averages $90,000 per year with no formal education. I also interviewed a 24-year-old diesel mechanic who is already making $25 per hour at truck dealership working on diesel trucks and trailers and is just a couple years out of his tech school.
At AgHires, we've seen a significant increase in wages the past 5 to 7 years. According to the Bureau of Labor Statistics, the mean annual wage for those listed as farm, ranch and other agricultural managers, (not first-line supervisors/assistant manager roles) in 2017 was $80,310. Agriculture has seen wage increases depending on the sector within the industry of 3% to 3.5% on average the past ten years. This aligns with what we are seeing with our clients. Depending on the operation's size, complexity and diversity of crops, salaries for farm managers that are leading operations range from $75,000 to six figures.
The second reason driving up wages on farms is due to the fact that what we are looking for in employees has changed. We aren't looking for just a driver or a farm hand anymore. We are looking for thinkers that can add value, understand technology and solve problems. Technology enables us to work with leaner teams, but to stay competitive those hires need to come with higher level competencies. To attract someone at a higher level that brings the behaviors, mindset and experience we want, we need to increase the hourly rate to attract and retain those candidates.
During these current down ag market times, I realize every dollar spent needs to be justified. When you consider paying a $16-per-hour employee that isn't bringing to the table what you are looking for compared to a $20-per-hour employee that adds more value, you are looking at a $12,000 cost differential (estimating 2,500 hours/year and taxes). If the higher candidate was more efficient, made fewer mistakes, wasn't as rough on equipment and cared more about every bushel, could the additional cost be covered through their performance and then some? We often look at the cost of just the employee, but what other costs are incurred when you hire the sub-par candidate?
What are we to do with this information? As farmers we can do what we do best: Be innovative. When it makes sense, adjust the wages to align better with the market. When we need to stick to a budget, think outside the box with younger candidates or individuals from other industries that can be trained. Look to hire relatable skills in individuals with the right characteristics that can get up to speed quickly. You could also develop an incentive program to increase the overall compensation package without having to increase the base wage.
We have a lot to offer in agriculture. In general, the candidate pool is looking more for cultural fit and family-owned companies than ever before. We can offer that on the farm. We are in an industry where individuals see their impact and spend time outside. Use that as an advantage point to attract talent.
Editor's note: If you're interested in learning more about ways to attract the best talent, craft competitive compensation packages and get the most out of the labor you have, DTN's HR Coach Lori Culler will host several sessions at the DTN Ag Summit. For registration and event details, visit https://www.dtn.com/…
Lori Culler grew up on a vegetable and grain farm and is the founder of AgHires (https://aghires.com/…), a national employment recruiting service and online ag job board based in Temperance, Michigan. Email firstname.lastname@example.org and find other labor management tips under Resources at www.dtnpf.com.
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