There are legislative proposals right now, both at the federal and state level, to make farm employees eligible for overtime pay. Farms have long been exempt from paying overtime due to the seasonality of farm work. Consideration needs to be given to the impact this change would likely have on farm workers.
Overtime is paid at the rate of 1.5 times the regular rate, so a worker who earns $12 per hour regular wages would earn $18 per hour on overtime. Obviously, if hours worked remain the same, then the worker will earn a lot more under overtime. Overtime was originally adopted for some industries in the 1930’s, during a time of high unemployment, the policy was designed to reduce the long workweeks of employed workers and encourage employers to create more jobs for the many unemployed people. Overtime is designed to force employers to reduce workers’ hours in order to avoid overtime. It is likely that farm employers will respond to new overtime requirements by reducing farm employee hours. This will shrink the income of many current farm workers. Let’s do the math using realistic farm employee wages and assuming a decline in hours for an entry level worker, an experienced worker, and a farm supervisor.
Entry Level Farm Employee
- Under current law, works 60 hours per week at $11.50/hour. Weekly earnings of $690, annual earnings of $35,880.
- Under overtime, works 40 hours regular time at $11.50, and 5 hours of overtime at $17.25. Weekly earnings of $546.25, annual earnings of $28,405.
- Difference, under overtime rules the employee’s earnings are reduced $143.75 per week and $7,475 per year.
Experienced Farm Employee
- Under current law, works 60 hours per week at $14.00/hour. Weekly earnings of $840, annual earnings of $43,680.
- Under overtime, works 40 hours regular time at $14.00, and 5 hours of overtime at $21.00. Weekly earnings of $665.00, annual earnings of $34,580.
- Difference, under overtime rules the employee’s earnings are reduced $175.00 per week and $9,100 per year.
Farm Supervisor
- Under current law, works 52 hours per week at $18.00/hour. Weekly earnings of $936, annual earnings of $48,672.
- Under overtime, works 40 hours regular time at $18.00, and 5 hours of overtime at $27.00. Weekly earnings of $855.00, annual earnings of $44,460.
- Difference, under overtime rules the employee’s earnings are reduced $81.00 per week and $4,212 per year.
Many New York farm employees happily work 50 to 70 hours at one farm and are able to take home a good living, cutting worker earnings by $4,000 to $9,000 per year will destroy that lifestyle. Overtime may have the unintended consequence of substantially reducing their income, forcing them to leave farm employment, or to seek additional part-time employment to supplement their income. This simple analysis only considers actual earnings but employee benefits will also reduce as employees work less and earn less.
Farm employees’ quality of life may be further harmed by the need to work an additional job, juggle a more complex schedule, and actually get less rest than when they had one farm job of 50 to 70 hours per week. Policy makers should consider the effects of a change in farm overtime carefully and what the impacts will be on all affected parties.
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By Richard Stup, Cornell University. Permission granted to repost, quote, and reprint with author attribution.
The post Overtime? Farm Employees May Be Seriously Hurt appeared first on Cornell Agricultural Workforce Development.
This post was meant to be an illustration of simply working through the math for different farm employees. The point is that we need to consider the impact on individuals if hours worked changes. I did base the wages roughly on the Compensation Benchmark, just rounded to the nearest whole dollar to make the math clearer. Note carefully that the wage rate I’m using is “wages per hour” not “total compensation per hour.” Total compensation per hour includes bonus and benefits, both of which are not directly dependent on hours worked. I drew from Table 8 for the experienced employee and Table 7 for the farm supervisor. The entry level worker is current New York state minimum wage for upstate areas just rounded up to $11.50.
The assumptions for the “under overtime” illustration is the most common scenario of 40 hours per week of “regular time” and any hours over 40 per week paid at overtime (1.5x). I used 5 hours of overtime because the U.S. Bureau of Labor Statistics indicates that manufacturers in recent years pay on average about 4.5 hours of overtime per week to employees. Obviously, if hours worked remain the same under overtime as under current law, employees will earn a lot more money. My point is that employers will be strongly incentivized to reduce hours worked by any means possible under an overtime scenario.
I was wondering if you might be able to give any additional info on how the wage and hour numbers used in these calculations were chosen. Are they based on research that the Cornell team has done?
I’d thought the “under current law” wage and hour numbers might have been taken from the 2017 Farm Employee Compensation Benchmark report that the team just published, but at first glance the wage rates used above seem to be lower than the numbers in that report (see https://cpb-us-e1.wpmucdn.com/blogs.cornell.edu/dist/7/8192/files/2019/02/2017-Farm-Employee-Compensation-Report-1uksiuz.pdf).
If possible, it would also be great to know what the “under overtime” predictions were based on – i.e. what research, assumptions, or experiences informed them. Thank you!
Most farm work is seasonal, other than dairy operations. Very few farm workers work 60 hours per week for the full 52 weeks in a year. For many seasonal farm workers, they work as many hours as possible in a short amount of time because of the seasonal nature of farming. This industry cannot be compared to all others.