August 15, 2016

Economic Study Details Harmful Impacts of CA Overtime Bill

An economic analysis conducted by the reputable Highland Economics firm corroborates what farmers already know: The California overtime bill will reduce farmworkers’ incomes, reduce farm production and harm the state’s economy (especially when coupled with the minimum wage increase).

Commissioned by a coalition of agricultural organizations opposing AB 1066 (Gonzalez), the Highland report assessed the potential impact of the proposed overtime changes on farm labor jobs and earnings, as well as other economic consequences.

The study outlines three possible scenarios under which farm employers might respond should the bill become law: reducing agricultural production, expanding the labor force, and paying the overtime wages. It is likely many farmers will choose a mix of these scenarios.

Combined with the minimum wage increase, the results indicate the following significant negative effects:

  • Labor costs as a percentage of operating costs will see a dramatic increase
    • Labor costs for vegetables will increase from 46% to 55%
    • Labor costs for fruits will increase from 58% to 73%
    • Labor costs for tree nuts will increase from 47% to 52%
  • Farmworker income will decline by 16%, or $1.5 billion overall
  • Up to 78,000 jobs and $5.4 billion in crop production will be lost
  • Statewide income will be reduced by as much as $7.8 billion

Read the full Economic Analysis of California Proposed Agricultural Overtime Wages executive summary.

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