(Infographic) The U.S. Farm Labor Shortage

The impact of the farm labor shortage on U.S. agriculture and farm financing. 

Paid farm labor accounts for 41 percent of all farm workers in the U.S., with the remaining percentage comprised of principal operators and their families. These hired and contract farm workers perform essential daily tasks needed to keep a successful farm running, such as caring for livestock, working in the fields, and maintaining farm machinery.  

But the farm labor workforce pool is shrinking, and has been for decades. Even so, farm operators have found ways to innovate and enhance food production to offset farm labor loss, increase production, and feed a growing population.  

Did you know?  

According to the USDA ERS database, total farm output almost tripled while total labor hours worked in the farm sector declined more than 80 percent from 1948 to 2017. 

Farmworker Awareness Week is a time to recognize the important contributions of farm labor in the U.S., while also advocating support for the operators who continue to do more with less in a changing world.  

Why is the Farm Labor Workforce Shrinking? 

There isn’t one sole cause of the ongoing issue of farm labor, but rather a combination of attributable factors. 

An Aging Farm Population 

According to the 2022 ag census, the average age of the U.S. farmer is 58.1 years old and has been steadily rising since 2002. In fact, there are four times the number of producers who are 65 years or older than those younger than 35. As more operators reach retirement age, there are fewer young farmers coming in to fill their shoes. It only makes sense that the decline in farm labor would follow a similar trend.  

Contributing factors to the decline of ag youth’s involvement in agriculture include:  

• High real estate and land prices; 
• Steep initial investment cost of machinery and agrotechnology; 
• Volatile commodity pricing; 
• Unpredictable weather; 
• Unequal work-life balance; and 
• The physical demand of the industry. 

The good news is more recent data indicates a shift in the right direction. In 2022, U.S. producers younger than 45 represented 22 percent of total U.S. producers, up from 20 percent in the 2017 ag census. Organizations like Future Farmers of America (FFA) have reported record-high student memberships.  

According to the USDA Economic Research Service, wage and salary employment in agriculture, including support industries such as farm labor contracting, has been on a gradual upward trend since 2010, rising from 1.13 million in 2013 to 1.17 million in 2023, a gain of four percent. 

Farm Labor Wage Requirements  

For farm operators, balancing the need for fair wages while remaining competitive in a global market remains a challenge. U.S. farm labor wages are primarily influenced by the Adverse Effect Wage Rate (AEWR) for H-2A visa workers, federal and state minimum wages, and labor market conditions. As of 2024, the AEWR varies by state, with hourly rates ranging from $14 to over $18 per hour.   

Operators must navigate wage increases, regulatory compliance, and worker shortages simultaneously when securing farm labor for their operations. While fair wages are crucial for attracting farm labor, U.S. operators must also be able to compete globally with countries where wages are significantly lower. This cost disparity makes it challenging to maintain profitability, especially in labor-intensive sectors like fruit and vegetable production.  

Increase in Education and Job Opportunities 

Even with the increase in hourly wages, it’s becoming increasingly difficult for primary operators to find farmworkers due in part to other job opportunities becoming available. As the percentage of immigrants with postgraduate degrees and global literacy rates increase, so do their opportunities to pursue less labor-intensive careers. It’s difficult for the agriculture industry to compete with corporate jobs that offer higher pay and work-at-home options. 

Immigration Policies Impacting Farm Labor 

The growing career opportunities for documented immigrants have pushed operators to rely on alternative farm labor. The percentage of hired farm labor who were not legally authorized to work in the U.S. peaked at nearly 55 percent in 2001 but has since declined to roughly 42 percent.  

Immigration policy reform has historically been (and will likely continue to be) a contentious subject on the political front. Unfortunately, American farmers are all too often caught in the crosshairs of this discourse.  

In 1986, The H-2A program was created under the Immigration Reform and Control Act (IRCA) as an alternative option for operators to hire temporary foreign labor. The program expanded rapidly, with the Department of Labor certifying approximately 317,000 temporary jobs under the H-2A visa program in 2021, more than six times higher than the number certified in 2005. Unfortunately, it is limited in its ability to resolve all farm labor burdens depending on the needs of the unique operation.  

H-2A program limitations include:  

• A lengthy application process requiring requests 60–75 days in advance. 
• Limited long-term extensions, with a three-month waiting period to reapply. 
• High costs for transportation, training, and housing. 
• The Adverse Effect Wage Rate (AEWR), which often exceeds domestic wages. 

Are you a farm operator seeking more information about H-2A program guidelines? Tune in to our free webinar with a national farm labor consultation firm, másLabor. 

Increased Agricultural Efficiency and Education 

Labor productivity in U.S. agriculture has grown primarily due to the adoption of new technologies and input substitution, as farm operators increasingly relied on capital goods, chemicals, and other intermediate inputs like energy and purchased services. 

 While labor input decreased over time, total factor productivity (TFP), reflecting technical change, became the main driver of output growth. Between 1948 and 2017, TFP contributed 1.46 percent annually to agricultural growth, while labor and capital growth was minimal. Although declines in labor hours negatively affected output, improvements in labor quality, particularly education, positively impacted growth. Labor quality accounted for a significant portion of output growth before 1969 but has since diminished as educational improvements slowed. 

Farm Labor Challenges and Solutions  

Lack of access to reliable and affordable farm labor is causing U.S. farm operators to lose their competitive advantage in the global market. 2024 represented the largest trade deficit recorded for the U.S. ag sector. The highest increases in imports included labor-intensive farm commodities like fresh produce and horticultural products.  

It’s an uphill battle farmers have faced for decades, but the widening trade deficit is shining a renewed spotlight on the potential solutions to safeguard our domestic food security.   

Smart Technology Advancements 

The Internet of Things (IoT) industry has exploded as an increasing number of farmers are using innovative precision ag technology to keep up with demand and remain competitive in the global market.

Examples of agrotechnology include: 

• Wireless sensors
• Predictive forecasting models
• Advanced automation
• Farm robotics
• Data analytics 

Smart farming technology allows farmers to work at full or near-full capacity with less farm labor, but not without certain drawbacks. For example, transitioning to smart farming technology requires a high initial cost investment. This is particularly difficult for small to medium-size farms, which are the ones hit hardest by the effects of farm labor shortages.  

Did you know?  

As much as 68 percent of large-scale crop-producing farms utilized precision agriculture technologies, such as guidance autosteering systems, yield monitors, and soil mapping tools. However, only 27 percent of total U.S. farms employed precision agriculture practices overall.  

Despite this drawback, many farm operators are realizing the investment is worth the initial cost. Financial support, implementation resources, and cost-sharing opportunities can help farm operations of all shapes and sizes take advantage of these technological advancements.   

Farm Labor Program Reform 

Farm operations and organizations have been advocating for significant reforms to the H-2A guest worker program and updates to immigration policies that will address the farm labor challenge. 

Key areas of focus for farm labor policy include:  

• Expanded Access to Foreign Labor: With fewer domestic workers willing to take agricultural jobs, the H-2A program must be optimized to streamline the application process, reduce bureaucratic delays, and eliminate unnecessary administrative burdens. 
• Pathway to Legalization for Workers: A proposed pathway to legalization for undocumented farm workers who have been in the U.S. for years could increase farm labor incentives for those who have positively contributed to agriculture. 
• Adjusting Wage Requirements: Many farm operators argue that the current wage rates are prohibitive and need to be more flexible.  
• Increase H-2A Accessibility: There is a push to simplify the H-2A program for small- and medium-sized farms, which often face more challenges in navigating the system. 

Supporting American Agriculture Through Farm Labor Challenges  

While government officials, lobbyists, and farm organizations work to refine legislation that better meets the needs of U.S. farmers, AgAmerica is working hard to provide flexible and innovative financing to support their success and growth.   

As a nationwide lender, we offer agribusiness owners financial support to adopt labor-saving technology, increase their competitive edge, and strengthen their operations for long-term success.  

Contact one of our farm finance experts today to discover the full range of loan options designed to support your agricultural goals.