Board of Supervisors should abandon minimum wage proposal

Pete Aiello

In May, Supervisor Dave Cortese proposed raising minimum wage to $10 per hour in unincorporated areas of the county. Gov. Brown has since signed legislation to increase California’s minimum wage to $9 per hour on July 1, 2014 and to $10 per hour on Jan. 1, 2016.
 Nonetheless, the Santa Clara County Board of Supervisors is still considering a county specific minimum wage which would threaten the competiveness of local farmers and other small businesses.
The county’s proposed increase could take effect before Gov. Brown’s and is poised to include an annual cost of living increase tied to the Consumer Price Index, guaranteeing that our local businesses would be disadvantaged by this proposal for years to come.
My father and I raise peppers, sweet corn, pumpkins, strawberries, dry beans, and Napa cabbage. Our farm is headquartered in Gilroy and we provide jobs to 257 employees. We provide healthcare, paid vacations, and bonuses for our employees and our wages range from $9 to $72 per hour. During our peak season, we employee another 400 people in Santa Clara County for about four months.
The vast majority of our competition is located outside the county. Produce buyers can get peppers from several counties in California and if our crop costs more to grow we would be forced to shoulder those costs. It’s a burden I don’t think we can sustain.
For every dollar increase in wages, our costs go up by about $1.25 due to increased workers’ compensation, payroll taxes, and other costs. In a good year, we spend 95 cents of every dollar we earn. By my estimation, a $10 per hour  minimum wage would increase our labor costs by about 27 percent and would reduce our profit margin to 1 percent.
Labor is our largest expense, typically amounting to about 49 percent of our annual expenditures.
Over the last few years, it has been increasingly difficult to hire the crews we need to help us farm. Increased border enforcement, rise in deportations, and an improved economy in Mexico have all contributed to fewer farm workers looking for work here. We have not had a full crew for a single day this season.
As we scramble to maintain our staffing levels to avoid abandoning produce in the fields, we are competing with our friends and neighbors for too few employees. As a result, we’ve raised our starting wages for all our crews. This market driven increase is consistent across California, but having a higher minimum wage only in Santa Clara County would put us at a competitive disadvantage.
In agriculture we work for pennies. We get paid about $330 per ton of bell peppers, or $16.5 cents per pound. It’s a balancing act to remain economically viable, engage in our community, and steward our environmental resources. Every time our costs increase, it limits our ability to invest in our business, manage risk, and protect our sustainability.
I urge the Santa Clara County Board of Supervisors to reject this proposal, which would threaten our competitiveness and our viability. We are always cognizant of the hundreds of employees and their families who depend on us. We care about our employees, we respect them, and we treat them fairly. We couldn’t do it without them.
District 1 Supervisor Mike Wasserman has indicated his opposition to the increase in the minimum wage because of the negative impact on agriculture and small businesses in the unincorporated area. We need the support of our entire Board of Supervisors so that we, in turn, can continue supporting these great folks who help put food on millions of tables around the world.
Pete Aiello is owner and general manager of Uesugi Farms in Gilroy. He is a second generation farmer and serves as President of the Santa Clara County Farm Bureau. Anyone interested in penning a guest column can contact Editor Mark Derry at [email protected]