Oregon minimum wage hike kicks in - tree growers and nurserymen fearful of loss of competitive edge

By MITCH LIES
Capital Press Staff Writer

1/11/03

Christmas tree growers and other producers of labor-intensive crops are facing dramatic increases in payroll costs due to Oregon’s minimum wage increase that kicked in Jan. 1. Bob Schaefer, general manager of Noble Mountain Tree Farm near Salem, Ore.,which employs 52 workers full time and 500 each year at harvest, said his payroll costs will increase more than $100,000 this year. Farmworkers, such as Jose Romero, pictured counting trees at the West Salem farm, are being paid a minimum of $6.90 an hour this year.

SALEM, Ore. - Christmas tree growers and nurserymen are fearful that they have lost a competitive advantage due to the impacts of a wage increase that raised Oregon’s minimum wage to the third highest in the United States Jan. 1.

“We had a competitive advantage because trees grow faster here,” said Bryan Ostlund, executive secretary of the Pacific Northwest Christmas Tree Association, “but by the time you add shipping and now labor costs, it keeps nipping away at that.”

A survey conducted by the Oregon Association of Nurserymen showed that payroll costs for nurseries with annual sales of between $1 million and $5 million will increase $10,000 to $20,000 in 2003 due to the passage of the minimum wage increase in the November general election. The OAN survey showed that increases in payroll costs for nurseries with sales of more than $5 million will average between $80,000 and $114,000 in 2003.

Ballot Measure 25, which Oregon voters passed by just 2 percentage points, increased the minimum wage from $6.50 to $6.90 an hour. The measure also calls for increasing the minimum wage annually, based on the consumer price index.

Bob Schaefer, general manager of Noble Mountain Tree Farm in Salem, said his payroll costs will increase more than $100,000 in 2003 due to the wage increase.

“That is going to come right off my bottom line,” Schaefer said.

Schaefer employs 52 workers full time and 500 at harvest.

In some industries, a business can pass on increased costs to customers, said Stan Low, a Beavercreek, Ore., Christmas tree grower, but not in agriculture.

“Nobody has proposed indexing my Christmas tree prices,” Low said.

Schaefer said the industry had previously decided to hold the line on prices due to the poor economy.

Several growers and nurserymen said they will try to minimize the effects of increased payroll costs through increased mechanization.

“We’re going to look at cutting back on labor-intensive crops and mechanizing more,” said Dan Wells, of D. Wells Nursery in Hubbard, “but there is only so much you can do.”

“I’m a medium-sized grower,” Low said, “so it is difficult for me to spend the kind of money it takes to mechanize to the extent that I can save a lot of money on labor. But I think everyone will do what they can to reduce their labor costs.”

Schaefer said he is “contemplating holding off on certain activities” in order to reduce production costs and said he may ask crews to absorb a percentage of the cost of their benefits.

Labor expenses in the Christmas tree industry peak during November and December, when trees are typically harvested, but other labor costs accumulate year-round. Among labor-intensive activities annually conducted on Christmas tree farms, workers prune trees, prepare ground for planting, plant trees and spot spray herbicides. Douglas firs typically are grown for seven years before they are harvested, while Noble firs are grown 10 years.

“You start layering expenses year after year,” Ostlund said, “and by the time you get to harvest, the cost to produce that tree is significant.”

Most states in direct competition with Oregon work under the federal minimum wage standard, Ostlund said, and some have agricultural exemptions that enable them to pay workers less than the $5.15 an hour federal minimum wage.

For example, Michigan, which is a major competitor for Oregon Christmas tree markets, has an agricultural minimum wage of $4.05 an hour and a youth opportunity minimum wage of $3.70 an hour for workers under 18 years old.

North Carolina, another major competitor, pays agricultural workers $4.25 an hour minimum.

Alaska, which has a minimum wage of $7.15 an hour, has the highest minimum wage in the United States. Washington state is second at $7.01, followed by Oregon and Connecticut, both of which are now paying the $6.90 an hour minimum.

Washington’s minimum wage, like Oregon’s, is tied to the consumer price index.

Oregon produces about one-fourth of the nation’s Christmas trees. Together, Washington and Oregon produce about one-third of the nation’s Christmas trees.