Dairy Farms Can’t Support Prevailing Wage Mandates
Pennsylvania’s picturesque countryside is home to roughly 6,200 dairy farms. While the road trip through Pennsylvania is idyllic—the business climate for these farmers is far from ideal.
Rynn Caputo of Caputo Brothers’ Creamery says it’s tough work, and prevailing wage mandates from state grants make her job even tougher. Every state offers grants for agriculture, but only around half the states have prevailing wage strings like Pennsylvania does.
The Pennsylvania Dairy Investment Program issues grants between $50,000–500,000 for either research & development, transitioning to organic farming, value-added processing, or marketing. To secure the grant, a farm has to pay workers a prevailing wage, which compared to the Pennsylvania average rate is significantly higher.1 For example, the prevailing wage for a carpenter was $30 per hour while the state average was only $26. Small changes in hourly rates add up for farmers.
The profit margins2 for PA dairy farms are thin, so mandates like these cause frustration for farmers who are limited in how many jobs they can create. Rynn says that these “prevailing” wages end up being higher than the farmers’ own income.
Inflating labor costs works against the core purpose of the Pennsylvania Dairy Investment Program, which is to help dairy farmers in Pennsylvania. Not to mention, prevailing wage is responsible for driving up school repair and construction projects and road improvements. It forces Pennsylvanians to do less with more.
Ultimately, agricultural grant programs are like any state business subsidy: a form of corporate welfare that prevents authentic competition. But at the very least, they should be restructured to stop hurting Pennsylvanian dairy farmers like Rynn who make our state beautiful and delicious.
1. Prevailing wages are provided by the Department of Labor and Industry. At the time of writing the department had provided prevailing wages for two PA Dairy Investment projects/grants. These wages are used in the comparison.
Salaries are calculated by averaging the wages for both prevailing and market rates in the respective categories.
2. Value of production less costs.