California Just Passed a $1 Billion Tax on the Whole Country That No One Noticed

Douglas A. McIntyre

So we took a stab at calculating what that means for California farm wages, assuming aggregate labor hours have to remain the same, and turns out it’s about $1 billion.  Of course, all of these changes (including minimum wage levels) get phased in over time but $1 billion is the rough impact in the long-run.

Now, some people will suggest this calculation overestimates that impact of AB 1066 because farmers will simply hire more workers to cut down on their overtime exposure.  But, anyone who has experience in or around California farming will know that the ag labor markets are extremely tight.  Therefore, the idea of finding an extra 100,000 seasonal employees during peak harvest is not really feasible.

California Farmworker Overtime Pay

What this really means, of course, is that capital projects aimed at minimizing labor just become even more attractive to farm owners (something we also discussed here: “As Robots Replace Farm Workers, Why Payback Is A Bitch“).  It also means that agriculture will continue to migrate to cheaper production areas like Mexico and South America which probably isn’t the greatest thing for America’s food safety and security…but that’s a topic for another time.

And speaking of labor-reducing capital projects, this week in Iowa, Case unveiled their first autonomous tractor complete with cameras, radar, GPS and tablet remote control but it’s missing 1 key thing…a seat for a driver.

So good luck, California, with your latest round of meddling in the labor markets.  We suspect in the long-run you’ll get a lot more of these autonomous tractors and higher unemployment for your efforts.