Farmers eye potential impacts from minimum wage hike

The significant increase to minimum wage recently announced by the provincial government garnered a muted, and in some cases, positive response from Ontario’s agricultural sector.

This is a contrast to reaction from the sector in 2018, when the last major increase occurred.

According to one of the loudest voices of dissent from 2018, Hamilton-area broccoli grower Ken Forth, that doesn’t mean some farm sectors aren’t concerned about the repercussions from the latest increase.

Why it matters: Most agricultural jobs are exempt from Employment Standards Act (ESA) rules surrounding minimum wage but it’s generally accepted that an increase in the legislated minimum has a trickle-down effect on how much farmers pay their workers.

“We’re in an industry where, in most cases, we cannot absorb these increases,” Forth told Farmtario. Forth is chair of the Labour Section for the Ontario Fruit and Vegetable Growers Association, and said “farming has always been a low-margin industry.”

Even if the impact of the minimum wage hike amounts to only a slight increase in costs, it can be challenging if that slight increase comes at a time when other costs are also trending upwards, which has generally been the case in the post-COVID-19 period.

“In our industry, cardboard is a huge one,” Forth explained. “We’re looking at huge increases in the costs for packaging… Farmers cannot be expected to swallow up those input cost increases forever.”

Dave Thompson, coordinator of a recently-released farm labour study from the National Farmers Union’s Ontario region (NFUO), agrees in general that minimum wage hikes do trickle down into sectors that are officially exempt. “If you’re going to get better pay working at Tim Hortons, most people are going to work at Tim Hortons and not work on a farm,” he said.

Forth added that, with temporary foreign workers in particular, the contracts required under updated labour legislation are typically tied to the minimum wage. It’s illegal to pay a different rate to foreign workers doing the same work as their domestic counterparts.

A month before the province’s Nov. 2 announcement, a smaller minimum wage hike had come into effect on Oct. 1 — raising the rate from $14.25 per hour to $14.35 per hour — based on the 2020 annual Consumer Price Index increase. The Nov. 2 announcement outlines an increase to $15 per hour on Jan. 1.

Forth noted this is significantly smaller than the onetime, 28 per cent increase proposed in 2018 by the Kathleen Wynne government, to be followed by smaller hikes in subsequent years. That difference in scale is the main reason, he suggested, why no outcry erupted this time from farm country.

But in the case of the Ontario Federation of Agriculture (OFA), the contrast to the response compared to 2018 was clear. Aylmer-area horticulture producer Mark Wales, OFA director at the time, wrote in 2018 that the Wynne government proposal would “throw a major wrench in the province’s own plans to support the continued growth of the agri-food sector.”

But earlier this month, current OFA president Peggy Brekveld — in her response to the province’s Fall Economic Outlook and Fiscal Overview which contained the minimum wage announcement — wrote that, although “we acknowledge this will impact some of our farm businesses with tight margins and restaurants that are some of our greatest supporters in purchasing local Ontario products… OFA supports the government’s efforts to assist those impacted by this wage to meet a better living standard.”

The NFUO wasn’t among farm groups calling in 2018 to scrap the Wynne government’s proposed hikes. But according to Thompson, that doesn’t necessarily mean they wholeheartedly agree the rate should go up.

A big reason for this lukewarm view is because, in so many cases, financial uncertainty means that farm owners fail to pay even themselves a minimum wage – and sometimes pay themselves significantly less than the minimum.

Speaking to Farmtario, Thompson explained he was hired to lead a study by NFUO into labour practices on small and mid-sized Ontario farms, and the findings and recommendations were released in July 2021. He added he came from a labour union career background and had always supported minimum wage increases as a way to create more stable living conditions for those at the bottom of the wage scale.

Meeting and working with Ontario’s farmers, though, changed that view somewhat.

“I was always thinking about it in terms of people like coffee baristas – where you’re not competing against coffee baristas in Mexico,” he said.

Thompson says NFUO wanted to understand if labour “pinch points” were similar on small and mid-sized farms compared to more widely-publicized challenges faced in larger-scale Ontario agriculture.

“We heard this hue and cry of a labour shortage” in large-scale farming, he recalled.

The study, encompassing 772 farmer surveys and smaller numbers of follow-up interviews and regional focus group meetings, revealed the smaller and mid-sized farmers faced particular challenges accessing human resources expertise and getting connected with potential workers.

Thompson says many would like to grow their businesses through hiring more staff but don’t know how to or don’t have the time to initiate the hiring process, so they continue toiling alone or with family.

Also compared to larger farms, a greater proportion of workers on small and mid-sized farms come from cities or towns instead of from nearby farm families. Information about job opportunities hasn’t traditionally flowed unhindered across rural/urban boundaries so it’s often difficult to make connections with potential employees.

But one thing Thompson believes is the same for large-scale and smaller-scale Ontario farmers is that, when it comes to their lowest-earning non-family employees, they’re already paying above minimum wage. Workers responding to the NFUO survey reported an average wage of $17.50 per hour, and Thompson said this was often boosted by incentives such as housing, food or bonus pay on big harvest days.

It’s to the point, he argued, that the farm labour exemption from minimum wage legislation appears unnecessary. Thompson worries that unscrupulous farm employers can and do take advantage of other aspects of the exemption — including holiday pay, overtime pay and hours of work — even though they continue to pay above the minimum hourly wage.

Forth, who is also president of Foreign Agricultural Resource Management Services (F.A.R.M.S.), agrees that, despite the exemption from minimum wage legislation, farmers are generally paying above the minimum. “Nobody’s going to work for less anyway,” he said, echoing Thompson’s Tim Hortons job comparison.

But he cautions against a blanket removal of all exemptions when it comes to farm work. It takes only a very small increase in what consumers or retailers are asked to pay for their food for them to start looking for an alternative supplier, he argues. And when Mexican farms have a “labour co-efficient” of US$1.25 per hour, said Forth, their Ontario counterparts need access to some legislative leeway to stay competitive.

Without any support, he continued, “I’m concerned about the future of our industry… I believe some of these young, smart (farm owners) are looking at moving” to other jurisdictions instead of staying in Ontario.

The NFUO report also calls for strengthened government support — although it advocates for direct financial help rather than exemptions to labour law.

“Farm labour grants and wage subsidies, improved access to EI, and ideally a Basic Income are urgently required to ensure farm workers and operators are receiving a decent annual income regardless of their hourly wage, farm earnings, or the length of their season,” the report states.