Farms in the United States have long depended on Mexico for its supply of agricultural workers. However, in recent years, US agricultural producers have experienced a reduction in the labor supply from rural Mexico. Workers from rural Mexico have shifted away from agricultural work, both in the US and in Mexico, as a result of smaller families, higher educational attainment, and transitions to a service-based economy. However, Mexico remains the primary origin of farm workers in the US (54 percent as of 2021).
In this article, researchers use household survey data from rural Mexico to analyze work histories and average US farm wages from 1989 to 2010. The authors estimate the impact of farm wages on the likelihood of workers from Mexico continuing to work in the agricultural industry in the US. Based on these estimates, the researchers predict how much wages will need to increase to maintain labor supply on US farms.
- If inflation-adjusted farm wages remain constant, the long-term trend suggests that the labor supply from rural Mexico to US farms will decrease by 6 percent over 10 years.
- Inflation-adjusted wages will need to rise by 10 percent over 10 years to retain a constant US farm labor supply from rural Mexico. That is more than a 70 percent increase in the nominal (not inflation-adjusted) wages that farmers pay at current inflation rates.
Policy and practice implications
- Agricultural employers in the US face a worsening labor shortage. Their options for addressing the shortage include
- recruiting a stable supply of farm workers from rural Mexico by raising wages for farm workers by 10 percent over the next 10 years and by hiring through agricultural associations to streamline the process;
- reducing their labor needs by growing less labor-intensive crops or investing in the development and adoption of labor-saving technologies; and
- a combination of technological innovations and wage increases to match labor demand with supply, improve productivity, and decrease physical risks and discomforts associated with traditional farm work, thus improving the quality of the work and workers’ well-being.
- Policymakers can help agricultural employers in addressing the worsening labor shortage by amending and expanding the H-2A agricultural guest worker program for farm workers and recognizing that technology change is key to keeping US farms competitive. WorkRise has identified such changes that may attract foreign workers to the US, including
- continuing to take measures such as this final rule by the Department of Labor to protect temporary workers against fraud and abuse;
- expanding the terms of the H-2A visa to multiyear contracts to minimize annual application and travel costs; and
- achieving a balance between adequately protecting guest workers and minimizing the bureaucratic complexity of the visa program for employers.
The findings from this research study illustrate the increasingly price-sensitive nature of Mexico’s labor supply, as well as the effects that this sensitivity has on US agricultural producers’ wage decisions. Moreover, it underscores the importance of reducing frictions for Mexican farm workers seeking employment in the US, as well as for US producers interested in hiring workers from Mexico.