Economic and Marketing Information
FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana    
MEETING FARM LABOR NEEDS
FARMERS ARE FACED with a very short labor
supply that isn't likely to improve in the foreseeable
future. Farm wage rates seem high but are almost
sure to go higher. Top grain and livestock farmers
can't afford to use other than high calibre labor
which also provides considerable management ability along with labor. This type of labor has many
alternative opportunities, and it will take many inducements to attract and hold it on the farm. Wages
competitive with industry, good labor relations and
modernized fringe benefits are a must. Incentive
agreements offer opportunities but certainly are no
panacea for solving the labor problem. Bringing one
or more high calibre young men into the business
as operating partners is worthy of consideration.
Since 1950 the U.S. farm labor force and the man-
hours of labor used for farm work have been reduced by about one-half. Most indications point to
a continued rapid decline in farm labor in the years
immediately ahead.
Percentage decrease in the farm labor force of
Indiana in recent years has been somewhat greater
than the national average. In the first half of 1967
the total farm labor force of Indiana was 134,000 of
which 124,000 was family labor and 10,000 hired
labor. Compared to the 1961-65 average, Indiana's
family labor force has declined 27 percent, and the
hired labor force has declined about 38 percent.
Why the rapid decline in the farm labor force?
Good off-farm employment opportunities with high
off-farm wage rates account for most of the decline.
Table 1 shows the average U.S. farm wage rate and
industrial wage rate for selected years. Farm wages
have averaged 36 to 39 percent of industrial wages
since 1950 and the gap hasn't narrowed. The hired
farm labor force does include a higher percentage
of unskilled, marginal workers than would be true
Table   1.    Farm  wages as  a   percent of  industrial
wages and average hourly wage rates in the U.S.
Year
Hourly wage rate
Farm wages as	
percent of
industrial      Farm workers
wages
(dollars)
Industrial
workers
(dollars)
Difference
(dollars)
1950
39
.56
1.44
.88
1960
36
.82
2.26
1.44
1965
36
.95
2.61
1.66
1966
38
1.03
2.69
1.66
*The   Farm   Cost   Situation   1967   Outlook   Issue,   USDA.
November 30, 1967
ii m nTTrrm rrrm
INDIANA  FARMERS
Paul R. Robbins, Agricidtural Economics
of the industrial work force which accounts for part
of the wage difference. But, it seems clear that off-
farm employers have been winning the competitive
battle for the workers' services.
Some farmers realizing the keen competition for
labor have been not only pushing up wage rates but
also improving working conditions, updating fringe
benefits, etc., in an effort to attract and hold competent employees. All indications point to a continued
very short farm labor supply in the foreseeable future. Farm operators will have to put forth even
greater effort if they are to attract and hold the
calibre of labor needed.
How To Meet Labor Needs
Following are some of the ways that Indiana
farmers are attempting to meet labor needs.
1. Substitution of capital for labor has been occurring at a rapid rate. The three-plow tractor and
two-row corn picker is rapidly being replaced with
the six- or eight-plow tractor and four-row or larger
corn combine. There has been a rapid shift to confinement production of swine, with the shortage of
labor being a very important factor stimulating
this change. Many opportunities for substituting
capital for labor will be presented as labor costs
continue to rise and new technology becomes available. Up-to-date technical information on capital-
labor substitution rates for various enterprises is
badly needed to guide farmers in making investments.
2. The purchase of labor as a package along with
other inputs to help meet the tight labor problem.
Custom applications of fertilizers, custom harvesting, off-farm processing of feeds and bulk delivery
of feeds to the feeders are examples of labor purchases along with the purchase of a product or the
services of machinery and equipment. Such labor
purchases will permit greater output with a fixed
farm labor supply and may help greatly in meeting
peak labor requirements.
3. The hiring of part-time labor offers real possibilities, especially near industrial areas. There are
many non-farm workers with farm backgrounds;
some have had considerable experience with machinery and equipment. What incentive would be
required to induce more of these people to work
part-time on the farm? A relatively few days of
very high cost hired labor to meet peak requirements is often less costly than a full-time employee
who isn't really needed full time.