Friday, February 26, 2016

Farmers React to Proposed $15 an Hour Minimum Wage Proposal

From Empire Farm & Dairy magazine:

Empire Farm & Dairy

Dairyman Jeffrey Murrock said a robotic milking system was recently installed at his farm, a move made to offset the potential impact of the governor’s $15-an-hour minimum wage proposal.

The co-owner of Murrock Farms, in the town of Pamelia, Jefferson County, is among thousands of farmers statewide who are concerned about Gov. Andrew Cuomo’s wage proposal. 

The New York Farm Bureau, for example, recently announced that its number one legislative priority this year is to oppose the proposal (see page 12).

The plan would gradually raise the current $9-an-hour minimum wage to $15 in 2019 in New York City and in 2021 for the rest of the state.

To cut down on its payroll, Murrock said his 220-cow farm plans to soon lay off two of its 10 employees. Fewer employees are needed as a result of the new automated milking system, in which cows enter robot stations to be milked. The system went into operation about three weeks ago.

“We’re looking to the future, and we put the robotics in because they’ve been talking about raising the minimum wage for over a year,” said the 31-year old, who co-owns the farm with his younger brother, Dillon, and father Darryl.

Murrock said he believes hiring employees will become increasingly difficult if the wage proposal is approved, as retail and hospitality jobs would become more attractive.

“You’re putting in a lot more hard work on the farm,” he said, adding that entry-level employees at the farm are paid the state’s minimum wage.

The farm bureau has determined the average agricultural wage in the state is $12.39 an hour.

Collectively, the bureau calculated the proposal would increase labor costs of the state’s farms by roughly $500 million per year.

The prospect of a sharp payroll hike is daunting for farms because they’re already combatting low milk prices, said John Ferry, co-owner of Milk Street Dairy in the town of Rutland, Jefferson County. 

His farm is staffed by 27 employees and has about 1,700 milking cows. Employees at the farm start out making $9 an hour.

“It’s not just the people below $15 an hour who would be raised,” he said. “The people above that are going to expect similar raises, and you’re adding $6 across the board.

“We have a payroll of more than $1 million a year, and this payroll increase would be in the range of five times what our profit was last year.”

Ferry said the farm can’t afford to lay off any of its employees, and it would be challenging to find new ways to cut costs. Without an increase in milk prices, he said, it would be difficult to survive such a steep wage increase.

“In the existing situation, we’d be out of business,” Ferry said. “No dairy farm has cash flow. I would hope to survive the wage increase longer than others, hoping that a shortage of milk would bring the price back up.”

Investing in a robotic milking system to reduce the number of workers could be an option to cut costs, Ferry said.

“But that would be a huge capital investment,” he said, “and I’d be very uncomfortable to take on the risk.”

Michael Hill, owner of Hillcrest Farms in the town of Ellisburg, Jefferson County, said he doesn’t believe the wage proposal would significantly impact his 950-cow operation. The farm is staffed by 15 employees.

“Half of the employees are at $15 or more now, and the other half make $10 to $12,” he said. 

Hill said he is worried, however, about his ability to hire new workers under the wage-increase scenario. His employees work an average of about 60 hours per week.

“I’m worried about the labor pool getting smaller,” he said, adding that he already has difficulty attracting new workers. “People will want jobs where you don’t get dirty and get holidays and weekends off ... But these cows don’t take a day off.”

For more on this issue, read more stories on this blog ..... 

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