El Dorado Probably has Labor Issues, Too

March 19, 2019

Well, if it sounds too good to be true, it probably is at least a little bit less true than you originally thought.  After asking for feedback in my last blog post, I got some.  I was wondering why government data showed that, corrected for inflation, labor rates in El Dorado looked to be steady - or maybe even falling - while total grape sales rose.  I also pondered the meaning of fewer reported businesses employing vineyard workers.  The mystery is not completely solved, but I did get some great information.

 

First, I received a couple of e-mails from Herbert Mason, a retired agricultural economist who lives in El Dorado.  Bert pointed out the now-obvious to me.  He explained that the reason the number of establishments employing vineyard workers has gone down is likely that more vineyard owners are turning to farm labor contractors.  I feel like I just noticed the big truck in my blind spot while driving. 

 

It makes sense.  As labor has gotten tighter and regulations have become more onerous, many California farmers are opting to outsource their labor issues to specialists.  And those farm labor contractors often list their employees as general farm workers, not necessarily as vineyard workers.  How strong this effect is I don't know, but it definitely backs me off of drawing any conclusions on the matter.

 

Bert also mentioned that many seasonal workers are brought in from other areas and we can't know where their reported place of employment is.  A local grower e-mailed to echo that.  He stated that El Dorado is certainly seeing labor rates rise and that maybe this is masked by the fact that so many workers commute from other areas.

 

So, the data is certainly messy.  Still, regardless of these confounders, local vineyard workers' weekly pay has been basically flat, in inflation-adjusted terms, during a time that prices have risen.  It is possible that these local workers represent a skewed, small sample.  It is also possible that the interpolated weekly rates are not representative of hourly rates.  I think there's a bit more to the story, though.

 

As I have presented at El Dorado Wine Grape Growers' meetings before, my research indicates that they have done a better job than most areas of containing cost growth.  At the same time, prices have risen slowly, but steadily, at a faster pace than costs.  This fuzzy data point is yet another (weak) indicator supporting that conclusion.

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