Conference Report

Summary

Farmers fear shortages of water and labor. Both have been in short supply in recent years due to drought and reduced Mexico-US migration. California agriculture may be at a crossroads on both issues, facing higher costs and more uncertainty about the availability of two critical inputs.  

Water

California's last "normal" water year was 2011, when farm sales were $43 billion. Table 1 shows that during the 2012-15 drought, farm sales rose to $47 billion in 2012, $51 billion in 2013, and $53 billion in 2014. In some cases, smaller volumes of produce can result in higher prices. However, for the state’s major fruit crops with over a million tons of production in 2011-13, there were few significant changes in 2014: the production of oranges fell nine percent, the production of grapes fell four percent, and the production of strawberries rose two percent. The production of most major vegetables rose in 2014 compared with the 2011-13 average, including a 15 percent increase in processing tomato acreage.

California has nine million irrigated acres of farm land, and agriculture normally uses 33 million acre feet of water. About 500,000 acres were fallowed in 2014 and 2015, resulting in up to 10,000 fewer farm jobs. In normal water years, 60 percent of agricultural irrigation water is surface water and 40 percent is ground water. In dry years, these ratios are reversed, as groundwater pumped from underground aquifers replaces surface water. California in 2014 became the last western state to regulate groundwater pumping, enacting laws that created local groundwater sustainability agencies to register private wells, monitor the water-measuring devices that must be attached to pumps, and regulate groundwater pumping to avoid depleting groundwater.

The 2015-16 water year was normal. The state’s 154 major reservoirs on April 1, 2016 held almost 22 million acre-feet of water, 85 percent of normal, so that federal and state farm water contractors are likely to get half or more of their contracted water. Each water district contracts for a specific share of the surface water available to the federal Central Valley Project and the State Water Project, and CVP and SWP managers provide a percentage of each district’s contracted water based on availability.

Three factors shape the longer term outlook for water and agriculture. First, most climate-change models expect warmer winters that are less suited to California’s water storage and transport system. If more precipitation falls as rain rather than snow, the capacity of dams and reservoirs to store water for summer irrigation is reduced. Agriculture could cope by changing seeds and farming practices to use less water, but such changes could lower yields and increase labor costs. Alternatively, lower value forage crops such as alfalfa for dairy cows could be grown outside California, freeing up water for higher-value crops.

Second is the hardening of the demand for water, as trees and vines that must be watered for 20 to 30 years replace annual crops on land that can be fallowed in dry years. For example, the acreage of almonds, which normally receive three to four acre feet of water a year, more than doubled over the past three decades to 900,000 acres, while cotton declined from 1.6 million acres in 1980 to 160,000 acres in 2015.

Third is water marketing to shift water around the state. Governor Brown has endorsed twin-tunnels to move fresh water from northern California around the delta and into reservoirs and groundwater recharge aquifers in the San Joaquin Valley, which could allow some of the farmers who grow rice and other water-intensive crops in the Sacramento Valley to fallow their land and sell their water to farmers who grow high-value crops in the San Joaquin Valley. If farmers were to acquire property rights in ground water, they would have incentives to buy water and recharge aquifers in wet years.

Labor

The average employment of hired workers in California agriculture rose 12 percent over the past decade, reaching 415,000 in 2014. Average employment is a measure of full-time equivalent jobs, not unique farm workers. Some 829,000 unique workers filled these jobs, a ratio of two workers per FTE job, reflecting seasonality, as employment rises 20 to 30 percent in the summer months, and turnover, as many workers are employed only a short time on farms.

Average employment has been rising because the expansion of some labor-intensive crops such as berries more than offsets jobs lost to labor-saving mechanization in others such as raisins. Figure 1 shows the shift from crop farmers hiring workers directly, an average 175,000 in 2014, to relying on crop support firms to bring an average 205,000 workers to farms, that is, 54 percent of those employed on crop farms are there by nonfarm employers rather than being hired directly by the farmer where they work. Almost 70 percent of crop support employment is with farm labor contractors (FLCs).

Average Employment, California Crops and Crop Support, 1990-2014

Source: Quarterly Census of Employment and Wages, California Employment Development Department

Farm employers face labor challenges, including paying the statewide $15 minimum wage by 2022. The federal minimum wage was $7.25 an hour in 2015, which was 42 percent of the $17.40 median hourly earnings of all US workers, while the California minimum wage of $9 was 47 percent of the state’s $19.15 median wage. Median wages vary within California. Figure 2 shows that the $15 an hour minimum wage in 2022 is projected to be 70 percent or more of the median wage in the San Joaquin Valley, which includes half of the state’s farm workers.

The real average hourly earnings of California farm workers peaked in the mid-1970s, reached a low in the 1990s, and rose to almost $12 an hour in 2015, below their $14 an hour equivalent of mid-1970s wages. Poverty persists in farming areas, with 20 percent or more of San Joaquin Valley residents living in families with incomes below the poverty line. Will higher minimum wages reduce poverty and preserve jobs as the expansion of labor-intensive crops continues, or will uncertain water and higher minimum wages curb expansion, spur mechanization, and increase poverty?

Minimum and Projected Median Wages, 2022

Source: Projected 2022 Wages

The major short-term farm labor challenge is fewer Mexican newcomers, almost all of whom arrive as unauthorized workers. Farm employers are responding with 4-S strategies: satisfy current workers to retain them longer in the farm work force, stretch the current work force with mechanical aids that increase productivity and make farm work easier, substitute machines for workers, and supplement the workforce with H-2A guest workers. 

About 90 percent of California farm workers were born in Mexico and 60 percent are not authorized to work in the US. Most crop workers are men (75 percent), settled, and aging, giving California a more unauthorized, less educated (average seven years) and older workforce than the rest of the US. Farm work is very much like nonfarm work, with workers living off the farm where they work, commuting to work in carpools, and living in families that include US-born children. Many farm worker traits such as years of US farm work experience have a V-shape. For example, California crop workers had an average 11 years of US farm work experience in the early 1990s, nine years in 2000, and 16 years today.

Immigration

The US has 20 percent of the world’s 250 million international migrants, almost 44 million, including a quarter who are not authorized to be in the US. About eight million of the 11 million unauthorized foreigners are in the US labor force, including at least a million employed in agriculture.

The US has been debating what to do about unauthorized foreigners employed in agriculture for the past three decades. Most farm workers are employed seasonally, doing 100 to 200 days of farm work a year.

California’s seasonal farm labor market has been a revolving door for over a century, with newcomers normally staying in the seasonal farm work force a decade or two and their children educated in California shunning farm work. California farm labor history is a story of waves of newcomers, Chinese, Japanese, Filipinos, Dust Bowl farmers, and Mexicans, who filled seasonal farm jobs until they returned home or found better nonfarm jobs in the US.

In the early 1980s, up to a quarter of California crop workers were unauthorized. The farm labor compromise included in the Immigration Reform and Control Act of 1986 legalized unauthorized farm workers and made it easier to hire legal guest workers under the H-2A program. With IRCA introducing sanctions on employers who knowingly hired unauthorized workers, farm labor costs were expected to rise as farmers raised wages to retain newly legalized workers or built housing to hire guest workers.

IRCA backfired, and illegal immigration surged in the 1990s. Farm wages fell and unauthorized workers spread to all commodities and states as H-2A guest worker admissions dropped to less than 20,000 in the mid-1990s. As the unauthorized share of crop workers surpassed 50 percent, farmers asserted that there was a shortage of legal US workers to harvest their crops, that H-2A program requirements to provide housing were too cumbersome, and that agriculture needed an E-Z guest worker alternative. Congress considered several such programs, but President Clinton threatened a veto and none was enacted in the 1990s.

The 2000 election of President Fox in Mexico and Bush in the US spurred farm employers and worker advocates to negotiate AgJOBS, an IRCA-like effort to legalize unauthorized farm workers and make it easier to hire guest workers. AgJOBS was not enacted, but in November 2014 President Obama issued an executive order to create the Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) program. If implemented, DAPA could legalize four million unauthorized parents with legal US children, including up to 500,000 farm workers, giving them three-year work permits.

Texas and 25 other states sued and blocked the implementation of DAPA, arguing that DAPA was an unconstitutional overreach of executive power. Meanwhile, the H-2A program is expanding, quadrupling in California to over 10,000 jobs certified to be filled with guest workers in the past five years, although H-2A workers remain less than five percent of the state’s average farm employment. If there is no DAPA or other immigration reforms, the farm labor stage could be set for a return to the 1950s, when some farmers built housing on their farms and others joined labor cooperatives that housed Bracero guest workers and moved them from one farm to another as needed. Instead of coming from Mexico, 21st century guest workers may come from Asia and elsewhere, especially if they are allowed to stay in the US more than the usual maximum of 10 months a year.

ALRB

The Agricultural Labor Relations Board administers the 1975 Agricultural Labor Relations Act, which was enacted “to bring peace and justice to the fields” by giving farm workers the right to organize into unions and bargain over wages and working conditions with their employers. There were an average three elections a day on California farms in 1975, but since then there have been far fewer, and none in the past several years.

The ALRA had several unique features, including quick elections and a makewhole remedy for workers if employers fail to bargain in good faith with a certified union, that is, employees can receive the additional wages and benefits they could have expected if their employer had bargained in good faith. These provisions, as well as the access regulation that gives union organizers the right to go unto farms and talk to workers, made the ALRA controversial, with farmers complaining that the state was unfairly supporting unions.

Over the past two decades, the dominant United Farm Workers union has switched the focus if its activities from the fields to the Legislature. The UFW argued that it was hard to organize farm workers because farm employers delayed bargaining despite the makewhole remedy. The ALRA was amended in 2002 to provide for mandatory mediation, a process that should guarantee workers a first contract within eight months after a union is certified to represent them. The UFW has pushed unsuccessfully for card check, a procedure that would allow the ALRB to certify a union to represent farm workers without a secret-ballot election.

The ALRB has undertaken new initiatives, creating a worker education unit to make non-Spanish speaking and other farm workers aware of their rights under the ALRA. The Board issued seven decisions in 2015 that involved four farm employers, and cleaned up “old cases,” including some dating from the early 1990s. Most ALRA activity today involves protected concerted activities, as when two or more workers complain about wages and working conditions and suffer retaliation as a result.

California was a pioneer when it enacted the ALRA, and the ALRB may be a pioneer to develop effective remedies for unauthorized farm workers. Under the US Supreme Court’s 2002 Hoffman Plastics decision, unauthorized workers who are fired unlawfully do not get back pay because they were not eligible to be employed in the first place. However, the California Supreme Court in 2014 allowed Vincente Salas, who used another person's Social Security number to get hired and was not recalled by Sierra Chemical after filing a worker's compensation claim, to recoup unpaid wages for the period between his first attempt to return to work and the date that Sierra learned that he was unauthorized. The ALRB may use the Salas decision to require farm employers who unlawfully fire or refuse to rehire workers to pay them for time not worked until the employer knows they are unauthorized.

Conclusions

California farm sales have been rising despite more costly water and labor, reaching record levels as farmers expand production of high-value fruits and nuts, vegetables and melons, and horticultural specialties such as nursery (FVH) commodities. Many FVH commodities are labor intensive, explaining why the employment of farm workers is rising. Over half of the workers employed in FVH commodities are unauthorized, and they are aging, living away from the farm where they work, and settling with families that include US-born children.

If the DAPA program were implemented, over half of the 400,000 unauthorized farm workers in California could obtain three-year work permits, which may encourage them to stay in agriculture and assert their labor rights or move on to nonfarm jobs, which could further expansion of the H-2A guest worker program. Farm sales have risen despite drought and declining migration, demonstrating the adaptability of California agriculture.

Further Info

The papers and presentations on which this report is based are at: http://gifford.ucdavis.edu/events/2016-04-15-california-agriculture-water-labor-and-immigration/