A Michigan State University agricultural economist has been awarded a $650,000 grant from the U.S. Department of Agriculture’s National Institute of Food and Agriculture to evaluate labor challenges affecting the U.S. food supply chain and identify potential policy options to alleviate them.
Zach Rutledge, an assistant professor in the MSU Department of Agricultural, Food and Resource Economics, has studied issues relating to labor scarcity in the agricultural sector over the past several years.
He said as the U.S.-based agricultural workforce — immigrant and nonimmigrant workers settled within the country — continues aging and declining in number, farmers have had to make changes in their production practices, including implementing new technology on farms and contracting workers through third parties.
The key objectives from this project that Rutledge will lead focus on how trends in the U.S.-based workforce have influenced visa programs such as the H-2A program, and vice versa.
The H-2A program allows U.S. employers to temporarily hire nonimmigrants from different countries for agricultural services throughout the year. Rutledge will examine how the decline in U.S.-based workers has impacted the number of workers farms hire through the H-2A program and if the program can serve as a viable substitute for labor shortages in the U.S.-based workforce.
He’ll similarly investigate how the H-2A program’s Adverse Effect Wage Rate (AEWR), the minimum wage paid to H-2A workers, impacts the wage rates of domestic farmworkers not in the program. In 2024, Michigan’s AEWR was $18.50 per hour, an increase from $17.34 per hour in 2023 and $15.37 per hour in 2022.
He said the goal of this project is to provide impartial data highlighting how potential policy decisions shape both sides of the labor market.
“Our overall aim for the grant is to provide context on both sides of the labor market,” Rutledge said. “Employees have their own challenges. They’re often paid low wages and subject to economic disparities. Farmers want to remain profitable and keep wages low enough for it to make sense to stay in business.
“We’re neutral. We’re not saying certain policies would be good or bad. We’re just providing evidence that generates an estimate of what the policy effects would be.”
Additional objectives include understanding if the declining number of U.S.-based agricultural workers shifts the country’s dependance on fruit and vegetable imports, while simultaneously considering how such trends might translate into national or economic security risks.
In an analysis previously conducted, Rutledge will continue looking at how healthcare coverage plays a part in the development of agricultural workforces and prosperity of businesses. He said initial findings from the assessment show there’s a mutual benefit for employers and employees if healthcare coverage is offered.
“Having access to services such as healthcare is important for agricultural workers,” Rutledge said. “We found that it’s profit-enhancing for employers to offer healthcare. When healthcare is offered to employees, they tend to become more productive, and that’s obviously good for farms and makes them profitable.”
Also supported by the grant is Tim Richards, the Morrison Chair of Agribusiness at Arizona State University, who’ll coordinate a study regarding the role imperfect competition in labor markets has on employee welfare and labor supply in the retail grocery industry.
The entire project is funded through 2028. Rutledge said results will be shared in academic journals and through lay summaries published by MSU Extension and industry groups.
This story was originally published on AgBioResearch.
