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Employee Rosters Rise; Wages Climb More Than 50%

National Hog Farmer - June 1, 2000

As the average size of pork production units increased and multiple-site production gained in popularity, the number of full-time employees edged upward.

The percentage of employees working in operations with two or fewer employees has fallen significantly (Table 6). In 1990, more than half (54.6%) were the lone employee or worked with just one other employee. By 1995, only 34% worked in operations with one or two employees. This declined further to 22.8% in 2000.

The percentage of employees that reported working in operations with more than three employees increased between 1990 and 2000. The increase was most dramatic in operations with more than 10 full-time employees, slightly more than one in four indicating that as their head count. In 1990, only 5.9% worked for an operation with more than 10 employees; that percentage more than tripled to 19.4% in 1995.

On average, the number of full-time workers reported by employees increased from five in 1990 to 12.5 in 1995 and 14.1 in 2000 - almost a 200% increase.

The considerable difference in the number of producers reporting one or two employees is partially explained by the weighting of employees toward larger operations.

Employees in the Southeast and West reported more full-time employees than their counterparts in the Midwest and Northeast on all three surveys. This difference increased between 1990 and 1995. But, for the 10-year period, the gap between the Midwest and Northeast and the Southeast got smaller while the gap between the Midwest and Northeast and the West got bigger.

Larger staffs translate to an increased demand for employees. This greater demand puts added pressure on employers to offer competitive salaries, incentives and fringe benefits. Larger staffs also require greater people skills and better employer-employee communications.

Distribution of Wages The wages of employees rose between 1990 and 2000 and wage discrepancies widened.

A general increase in employee wages between 1990 and 1995 was equitably distributed. But, between 1995 and 2000, the general increase continued and the wage disparity grew wider. Almost two-thirds (63.2%) of employees earned between $10,000 and $25,000 in 1990, and between $15,000 and $30,000 in 1995 (Table 7). In 2000, 56.3% of employees earned between $20,000 and $35,000. The percentage of employees reporting wages below these ranges was 14.1 in 1990, 12.9 in 1995 and 15.3 in 2000. Those reporting wages above these ranges was 21.6 in 1990, 22.9 in 1995 and 28.3 in 2000.

Factors Affecting Wages Level of education, gender, experience, job tenure, employer size and regional location affected wage rates. To better understand the impact of these factors on wages, statistical techniques can be used to compare the average wages of employees that differ only by the factor of interest, such as gender.

Table 8 shows how various factors affect wages using these statistical comparisons. For example, the difference in wages for a woman versus man in 2000 was -23.7%. In other words, a woman with the same education, experience, and tenure working in the same type of operation as a man earned 23.7% less on average.

In 1990, a woman earned 30.9% less on average than a man did. In 1995, women still earned less than men, but the difference narrowed. By 2000, women's wages were more equal to men when compared to 1990, but the gap between 1995 and 2000 widened again.

Another example, the difference in wages for a high school graduate versus high school dropout was 29.9% in 2000. This comparison assumes the same gender, same amount of experience and tenure and same size of operation in the same region. The only difference is a high school diploma.

These differences in wages across employees in the pork industry are consistent with findings in other industries. In the labor market as a whole, women earn less than men. Employees with more education, tenure and experience earn more. Employees working for operations with more full-time employees or higher levels of production also earn more.

The wage advantage for high school graduates versus dropouts was greater in 2000 (29.9%) than in either 1990 (25.7%) or 1995 (12.3%). The value for having a two-year college degree versus a high school diploma increased from 8.6% to 9.6% in 1995, but it declined to 8.3% in 2000. The increase in wages from having a four-year versus two-year college degree slipped from 21.5% to 11.4% in 1995 and only partially recovered to 14.6% in 2000. When compared to high school graduates, the increase in wages from obtaining a four-year college degree slipped from 30.1% to 22.9%.

As experience and tenure increase, the value in wages levels off. The increase in wages from one more year of experience for an employee with average experience declined from 1.9% to 0.8% between 1990 and 2000. The increase in wages from one more year of tenure for an employee with average tenure also slipped during this time from 0.8% to 0.5%.

For each additional full-time employee hired by an operation, an employee's wages increased by 0.4% in 1990 and 0.3% in 1995 and 2000. In 2000, employees working for operations producing between 5,000 and 10,000 hogs annually could have earned 23.2% more if they had worked in an operation producing more than 10,000 hogs annually on average. This difference has increased compared to either 1990 (10.7%) or 1995 (8.7%).

On average, an employee working for an operation that produced fewer than 1,000 hogs annually would have earned 49.8% more in 1990, 29.9% more in 1995, and 39.7% more in 2000 if he or she were to switch to a 10,000-plus head operation.

In 2000, the average worker in the Midwest would have earned 2.6% less in an identical operation in the Northeast, 2.1% less in the Southeast and 9.2% less in the West. This reverses the geographic distribution of wages for equally skilled workers from a decade earlier. In 1990, the average employee in the Midwest would have earned 11.7% more in the Northeast, 3.1% more in the Southeast and 0.2% more in the West.

Wages and Wage Growth In the first pork industry employment survey conducted 10 years ago, the average wage in the pork industry was substantially less than that of the average civilian worker in the U.S. But, due to strong wage growth between 1990 and 2000, the average wage paid pork production employees is now almost comparable to the average wage of civilian workers.

The average wage in the pork industry increased by 25.4% from $19,192 to $24,069 between 1990 and 1995 and by another 23.5% to $29,726 in 2000. The total increase was more than 50% in just under 10 years. During this same period, the average civilian wage, as measured by the Bureau of Labor Statistics Employment Cost Index, increased by only 32.7%.

In 1990, the average civilian worker in the U.S. earned about $23,074, which was 20% higher than the average wage in the pork industry. In 2000, the average civilian worker earned about $30,617, which is only 3% higher than the average pork industry wage.

Wages by Gender Men in the pork sector have enjoyed stronger than average wage growth, attributed to higher education levels, working for larger operations and having more experience.

Women in the pork sector have enjoyed even stronger wage growth, again because they are better educated and work for larger operations.

Between 1990 and 2000, the average wage of men grew by 56.7% from $19,476 to $30,513, while the average wage of women grew by 61.3% from $15,217 to $24,542.

Wages by Education Employees with a two-year college degree had stronger than average wage growth. While high school dropouts, high school graduates, and four-year college graduates also saw wages grow, the growth was less than the industry average. The growth in wages was primarily attributable to an increase in the size of operations for which employees worked.

Between 1990 and 2000, employees with a two-year college degree had a 61.2% increase in wages from $18,544 to $29,884. Wages for employees with a high school diploma grew by 54.1% from $17,876 to $27,552, while those with a four-year college degree increased 46.2% from $22,993 to $33,607. High school dropouts enjoyed a 54.6% increase from $14,064 to $21,745.

Wages by Annual Production Comparing wages by annual hog production in the 2000 survey shows a vast disparity. The average wages earned by employees in operations producing fewer than 1,000 and between 5,000 and 10,000 are within about $2,000 of each other. The average wages earned by employees in operations producing more than 10,000 are more than $8,000 higher than those producing between 5,000 and 10,000 and $10,000 higher than those producing fewer than 1,000.

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