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ACA will raise cost of farm labor–and therefore food

Wednesday, August 21, 2013 21:14

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The New York Times reported today about the consequences of the Affordable Care Act (ACA) for the cost of farm labor and, in turn, the cost of food. Sarah Varney’s story is set in California, where farm laborers are typically employed year round rather than seasonally, as they are in many other places. This means that farm labor contractors, who operate on very small margins–around 2%–will have to raise the prices they charge farms, which will in turn raise food prices. It also means that they cannot easily put the “workers on a 28-hour workweek like Starbucks, Denny’s and Walmart are considering” to avoid the ACA mandate. Varney writes:

Insurance brokers and health providers familiar with California’s $43.5 billion agricultural industry estimate that meeting the law’s minimum health plan requirement will cost about $1 per hour employee worked in the field.

The minimum health plan under the new law will cost about $250 a month in California’s growing regions, a premium which includes a high deductible–$5K a year–for medical care. Further, the story touches on why it is not feasible to pass insurance costs onto the workers:

On a recent morning, Jose Romero pulled weeds from a row of lush tomato plants. Mr. Romero, 36, arrived at the field around 5 a.m. and worked until sunset. Like many of the other workers in the tomato field, he was surprised to learn that his employer, Mr. Herrin at Sunrise Farm Labor, would have to offer him health coverage, and that he could be asked to contribute up to 9.5 percent of his wages to cover the costs.

“We eat, we pay rent and no more,” Mr. Romero said in Spanish. “The salary that they give you here, to pay insurance for the family, it wouldn’t be enough.”

There seems to be widespread agreement among agricultural employers, insurance brokers and health plans in California that low-wage farmworkers cannot be asked to pay health insurance premiums.

On this point, Varney quotes a labor contractor, Chuck Herrin, the owner of Sunrise Farm Labor in Huron, California:

He’s making $8 to $9 an hour, and you’re asking him to pay for something that’s he’s not going to use?

One of the fascinating things about that quote is the “something that he’s not going to use” part. Are Mr. Herrin’s assumptions cultural? based on the age and perceived health of the workers and their families?

Varney also notes the complication that immigration status poses for many of the workers because they may be in the country without papers. As one farm labor contractor in Napa Valley noted, the workers are

Nervous they’ll be tracked and then somehow the possibility of being identified, and the fear of being deported or not being allowed to work. It comes up all the time in conversations when we outline the choices.

Cross-posted to Legal Ruralism.

Source: http://aglaw.blogspot.com/2013/08/aca-will-raise-cost-of-farm-labor-and.html

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