Alan Guebert: Worker wages are not the cause of higher food prices

Alan Guebert
Special to the Farm Forum
Columnist Alan Guebert

After my first year at the Big U, I returned to the southern Illinois dairy farm of my youth for a summer of work. The first task, however, was to ask my father to double my hourly pay from 50-cents an hour, the amount I’d been paid through high school, to $1 per hour.

“Well,” Dad said calmly, “a dollar an hour is a man’s wage and I don’t see a man standing in front of me.” Discussion over.

Federal minimum wage that year was $2 an hour but no “hired man" or, evidently, “hired boy," ever received that wage from my father.

I didn’t make the same mistake the following summer. After a month home at, again, 50-cents an hour, I returned to the university to work at its dairy research farms for the fantastic wage of $2.10 an hour. 

And my father? He encouraged it because hired men (and even hired sons) back then were both plentiful and cheap. He also had the law on his side; farmworkers were exempt from federal wage requirements.

Little has changed since. According to a recent U.S. Department of Labor National Agricultural Workers Survey, the “average total income of farm workers is between $15,000 to $17,499 a year for individuals and $20,000 to $24,999 for a family.”

That means, notes the Survey, that “... 25 percent of all farm workers had a family income below the federal poverty line.”

This less-than-a-living wage reality for most farm and food workers points to another central truth in U.S. agriculture: worker wages are not the central component of increased food costs, despite Big Ag’s constant whining that they are.

For example, in early June the fast casual restaurant chain Chipotle announced it was raising menu prices four percent, or about 35 cents per order, to pay for the company’s raising average worker wages from $13 to $15 per hour.

Two months earlier, Chipotle acknowledged that its CEO, Brian Niccol, had earned $38 million in 2020, or 31 times his $1.2 million base salary. 

BusinessInsider.com did the math on Niccol’s pay; it “was 2,898 times more than the median Chipotle worker’s $13,127 salary in 2020 working 25 hours a week in Illinois.”

Moreover, it continues, “A study from California State University San Bernardino found that for a minimum wage increase of 10%, food prices increased by just 0.36%”--or a fraction of the price hike Chipotle instituted because of “higher worker wages.”

The company is simply pocketing the lion’s share of the price increase as profit and blaming it on higher worker pay. Baloney.

If we’re talking baloney, cue Big Meat.

Once again meatpackers are bellowing about how they must have less government oversight and more labor leeway to survive today’s pandemic-squeezed market.

In April, a federal judge told JBS USA, the global meatpacking giant, that it must slow kill floor line speeds at its Ottumwa, IA hog killing plant back to 1,106 hogs per hour. JBS had recently raised line speeds under a U.S. Department of Agriculture Oct. 2019 rule change. That rule, however, was contested in federal court.

More remarkable than the order to return kill speeds to just 1,106 hogs per hour, is how many federal politicians, led by Iowa’s Sen. Charles Grassley, rallied to restore unlimited kill speeds because, as reported by DTN, Grassely claimed “slower line speeds could lead to a $23 per head decline in hog prices.”

Even if true — Grassely cited an Iowa State University source for the number — not even a nickel of the money would flow to most hog farmers since about 85% of all U.S. hogs are raised under contract for (wait for it, yes) meatpackers.

As such most, if not all, of any extra profit made through faster, more dangerous kill speeds would flow to the packers, not the hog farmers or plant workers.

But that’s the way it’s been since, well, too long.

The Farm and Food File is published weekly throughout the U.S. and Canada. Past columns, events and contact information are posted at www.farmandfoodfile.com.