Workforce shortage a challenge for ag industry

Workforce shortages in the Aberdeen area are fueled by the inability of businesses to find workers who can pass drug tests and the failure of those same businesses to offer higher wages.

The shortage was one of the topics discussed during Thursday’s open forum with Neel Kashkari, president and CEO of the Federal Reserve Bank of Minneapolis. Kashkari discussed the economic state of the area at K.O. Lee Aberdeen Public Library.

He stressed the need for business owners to raise wages in order to attract quality workers.

“Businesses and farmers are always telling me that we have a historic worker shortage. They’re not raising wages,” Kashkari said.

“Typically, if you want more of something, you have to pay for it. If the price of corn goes up and it’s an input to your business, or the price of oil goes up, or the price of steel, businesses shrug their shoulders and go, ‘Yeah, the market price went up, but I’ll pay it.’ But if I can’t find workers at prices I’m used to paying, it’s a historic worker shortage. I don’t know why the reaction is so different,” he said.

During the forum, Chris Pearson, CEO of Agtegra, said the agriculture industry is struggling because of an assortment of pressures.

He said that even if tariff and trade issues are resolved with China — one of the state’s leading consumers of soybeans — the damage will be evident in the future.

“Our primary market is exports to the West Coast. Even if we get China fixed, will their demand for soybeans, especially from the West Coast, be as it was before, and I don’t think so. It’s going to take a while,” Pearson said.

“What do we do when there’s uncertainty in the industry? We don’t spend money,” he said.

Concerning the agricultural workforce, Pearson said that even when labor isn’t easy to come by, it’s tough to raise wages.

“Labor is certainly tight, but in tight times how do you raise wages? So the only way we can combat that is to have fewer people if we’re going to raise wages. We’ll be very challenged in our business this year. That’s just the way it is,” he said.

Kashkari had little advice to offer when Pearson said the worker shortage is also caused by the lack of potential workers who can pass a drug test.

In many cases, Kashkari said he advises business owners to forego drug testing if that’s what holding them back from having a full workforce. But in the agriculture, construction and manufacturing industries, being under the influence of any substance is not acceptable since many workers might be operating heavy machinery.

In a phone interview on June 11, Hugh Dahme, operations manager of Dahme Construction, echoed Pearson’s comments about being unable to find drug-free applicants.

“With insurances being tougher, you don’t get those people as much anymore that have a clean record or are drug-free,” Dahme said.

He said young workers can move up the scale pretty quickly if they show they are reliable.

“The problem, to some extent, is the hours get long, and nowadays people don’t want to put in a lot of hours. Some days it’s out of town,” Dahme said. “I have some young kids that are going to school, and they’ll make enough through this summer that they won’t have a school loan through the rest of the year.”

When asked his opinion about raising the minimum wage to $15 an hour, Kashkari said that local governments should make that decision. The best time to raise the minimum wage is when the unemployment rate is low, he added.

A lack of available workers shouldn’t be the main concern when a business is checking out a potential location, Kashkari said.

Mike Bockorny, CEO of the Aberdeen Development Corp., said he’s often asked by businesses whether Aberdeen has enough workers to justify a new business coming to town.

“Whenever we talk to new businesses coming into our market, the first thing everyone refers to is do you have enough workers,” he said.

Kashkari said what those businesses should focus on is whether the area has a strong workforce to begin with.

“I’ve never heard someone say, ‘I grew my business in Austin, but I’m going to move it to Detroit because they have so many unemployed people’,” Kashkari said.

“I think it’s the opposite. Are your people working? If people are working, they have skills, are gainfully employed,” he said.

That, he said, means any new business would have to compete to attract those workers from existing companies.