With Los Angeles having recently voted to raise its minimum wage to US$15 per hour by 2020 and the California state minimum also set for a boost next year, an industry head has warned the increases could have negative implications for the agricultural sector. 

The increase from the current US$9 per hour was approved on Tuesday by the Los Angeles City Council, which voted 14-1 in favor. Meanwhile, the state-wide minimum wage is set to go up from US$9 to US$10 in January 2016

California Fresh Fruit Association (CFFA) president Barry Bedwell told www.freshfruitportal.com even though seasonal farmworkers were already paid on average US$2-3 more than the state minimum wage, all agricultural categories would likely move up incrementally.

"Having approximately 70-80% of our variable costs tied up in labor for these very labor-intensive, permanent fresh fruit crops like tree fruit and table grapes, these wage increases have potentially major impacts," Bedwell said.

He also said the agricultural sector was in a 'worldwide market' where it was currently one of the highest cost producers.

"The reason we stay successful is because of our efficiencies and innovations, and though the issue of minimum wage is really more of a general economic issue it does have ramifications eventually for agriculture," Bedwell said.

On the subject of industry competitiveness, the CFFA head pointed out that workers in the Mexican state of Baja California where there have been violent protests over recent weeks were pushing to receive around US$13 per day, which would be in line with what many California farmworkers soon earn per hour.

"So when you look at the competitive factors you have to understand that yes we can be efficient, yes we can be technologically advanced, but at some point the idea of competing with some of these lower cost imputs becomes very challenging," Bedwell said.

"I think the point is we’re never going to be the low cost producer, and yet we understand that there are still limitations as to what can be paid and still remain competitive on a worldwide basis, and I think we ave to be realistic with that."

Another major Californian city, San Francisco, will also boost its minimum wage to US$15 per hour by 2020, having approved the increase last November, and Bedwell said he wouldn't be surprised if the wage boosts there and in Los Angeles lead to higher levels of unemployment in the future.

"I think that we’re going to see ramifications in that the amount of the people that are going to be hired at entry positions begin to decline, because a lot of small businesses will not be able to function," he said.

"I think there’s a lot of wishful thinking that we can wave a magic wand and make everybody able to receive a so-called living wage, I think the reality of economics says that changes how many people you can hire at these entry-level positions."

Photo: www.shutterstock.com

www.freshfruitportal.com