New York State Minimum Wage Proposal
The Economic Impact of a Minimum Wage Increase on New York State Agriculture
New York State is considering a minimum wage increase from $9.00 to $15.00 statewide. As proposed, the minimum wage of $15.00 would be phased in throughout the state by 2021. To estimate the impact of changes in the minimum wage on agricultural wage rates, we have reviewed agricultural wages and labor costs since 2005. The additional labor costs resulting from this proposal could clearly impact many farms’ financial viability and affect future decisions to expand or modernize facilities. This Farm Credit East Knowledge Exchange report attempts to quantify some of the economic impacts of this proposal on New York farms.
For the full report, click here.
- Using both conservative and historically based projections, we estimate the proposed increase in the New York State minimum wage would result in agricultural labor costs increasing between $387 and $622 million by 2021.
- Without minimum wage adjustments, we believe total labor costs would increase by $50 to $70 million. However the higher wage costs from minimum wage increases will also drive up other costs including payroll taxes and workers compensation and we have not projected these increases in this report.
- Because New York farm businesses deal in global and national markets and are generally unable to pass through costs to consumers, the increase in labor costs is likely to reduce net farm income by between 31.8 percent and 51.1 percent.
- While New York has in excess of 35,000 farms, approximately 10,000 farms actually employ workers and would be impacted by the higher labor cost. We estimate these 10,000 farms generate in excess of 90 percent of New York’s net farm income.
- Farm profitability varies significantly from farm to farm and makes any analysis subject to debate. We anticipate that this increase, without a significant change in farm economic conditions, will place between 1,365 and 1,995 (13 to 19 percent) of farms that are currently profitable in a loss situation.
- The greatest impact of this labor increase will be on dairy, fruit, vegetable, greenhouse and nursery sectors of New York’s agricultural industry. Over time, the impact of a significantly higher minimum wage in New York and not in competing states will shift agriculture in two ways:
- Labor intensive agriculture operations will consider agricultural enterprises that are less labor intensive (such as fruit production shifting to grain production).
- More full-time farms will transition to part-time farms to avoid hiring labor. Overall, this will reduce the size of New York’s agricultural industry.
- If we see a significant decline in production from labor intensive agricultural sectors, this will impact food processing and marketing businesses that are located in New York. While these businesses may seek to transport raw product from other states, over time some of these businesses will look to locate closer to major production areas.
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Contact: Robert Smith