HONOLULU CIVIL BEAT
What Will The New Minimum Wage Mean For Hawaii’s Farmers?
Reporter: Thomas Heaton with Honolulu Civil Beat
Posted: May 2, 2022
With Hawaii’s minimum wage now all but set to lift to $18 by 2028, agriculture industry groups are concerned that they will have to absorb the extra cost of skilled labor — if they can even find the workers they need.
It comes as Hawaii’s farmers are facing increased costs for farm supplies like fertilizer, competition with imported food and supply chain issues.
The bill to raise the minimum wage passed through conference committee on Friday, lifting it from $10.10 to $12 in October, then gradually to $18 over the next six years. It awaits a final vote Tuesday by the House and Senate and then the governor’s approval.
While the state’s average farm laborer earns more than the minimum wage, lifting it as a benchmark means raising the existing wages to continue competing with other industries.
Hawaii Farm Bureau Executive Director Brian Miyamoto says farmers have little power over how much is paid for their produce by customers in hospitality and retail markets.
“Farmers are price takers rather than price setters,” he said.
Farmers are largely at the whim of the hospitality and retail markets, who essentially tell them how much they will pay for their product. In Hawaii, that is complicated by the availability of comparatively cheap imported food products.
And if farmers were to insist on taking higher prices for their goods, Miyamoto says, they might be simply unable to compete with imports from the mainland, where there is more labor, land and technological availability to make cheaper food.
Farmers received 16 cents for every consumer dollar spent on food in retail, U.S. Department of Agriculture data shows. The remaining 84 cents went to marketing.
But things like fertilizer and pesticide cost 40% more for Hawaii’s farmers when compared to the mainland, while farms generate half the sales and are two to three times smaller, according to a 2021 University of Hawaii Economic Research Organization report.
“What is a $1.90 an hour increase? Almost $4,000 per employee, based on a 40-hour week,” Miyamoto said. “And that’s just this (coming) year.”
Notwithstanding, the gross wage rate for Hawaii’s 5,000 farm laborers in October last year was $18.82 for a 37.6-hour work week, according to USDA data. In 2019, in the same month, farm laborers were earning $16.62 per hour in a slightly shorter work week.
A Department of Business, Economic Development and Tourism report this year found a single adult living on Oahu needs to earn $18.63 an hour to meet their basic needs. It was $14.78 for Hawaii County, $17.84 for Maui and $19.33 for Kauai.
Agricultural economist Matthew Loke, of the state Department of Agriculture, says that agricultural workers may simply just need more incentives to stay, which some farms have already recognized.
“In talking to some of our local farmers who want to expand and have to expand, they are always looking at ways to expand their labor pool,” Loke said. “And one of the ways they do that is by providing housing.”
Some had already started giving health and dental insurance, 401(k) plans, housing — which is difficult to obtain — and travel.
But not all farms might feel wage increases the same: larger outfits will be able to absorb it better, but small farmers might not be able to bear it.
“The farmers that I work with are predominantly small family farms,” said Emilie Kirk, a University of Hawaii extension agent. “None of them have the ability to provide those comprehensive benefits.”
In one farm Kirk works with, its owners were willing to pay up to $25 per hour for skilled workers, but were unable to find them. For unskilled workers, who might start at about $15 per hour, the tiring work could be less preferable than hospitality jobs that pay more, as retail outfits increase their wages to recover after the pandemic.
But given the choice between a construction job, which pays more, or retail, which might pay the same and not require the physical strain, farming often loses out, she says. Recently, a farm she works with lost two laborers to construction, where they were going to earn up to three times more.
“What I’ve heard from farmers is that they just can’t compete with other industries,” Kirk said.
Saleh Azizi, of Kahumana Farm Hub in Waianae, says family farms and small farms are not necessarily against the hike. They see the value in a living wage.
As policy and legislative committee chair for Hawaii Farmers Union United, the wage conversation comes up every year, with the group always supporting a livable wage but also wanting to increase local food production, which is expensive.
“The farmers that we work with in the farmers union believe that the minimum wage is not a burden that should be carried by the farmers alone,” Azizi said.
This is where Azizi believes the state should step in, with a subsidized apprenticeship-like program that trains new recruits until they can be fully productive, over the course of one or two years. Once the program is over, the farmer takes up the full cost of paying their workers.
The fate of a bill that tasks Hawaii’s Department of Agriculture with creating and implementing the mentorship program, with a current allocation of $300,000, will be decided when it goes to a vote by the full House and Senate on Tuesday.
“Farmers can’t increase food production unless skilled labor is available,” Azizi said.
And that skilled labor has to be diverse in nature, as most of Hawaii’s small farms have multiple crops that grow year-round and require specific skills.
While many farms pay more than the minimum or are willing to, many still rely upon volunteer labor and help from the family. Some farmers have no hired labor to help them, Kirk says.
“Then there’s the question: Are they paying themselves a livable wage?” Kirk said.
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