Are Your Wages Competitive?

Business competition is intense these days. Not only are you competing with fellow pork and other livestock producers, but don't forget your other competitors – Wal-Mart, local factories, agribusinesses, construction companies and even McDonald's.

If you have employees, you understand. America's unemployment rate is so low that pretty much everyone who wants a job can have one – and get paid a decent wage. Dairy Queen in Sioux Falls, S.D., has been offering salaries of $8 to $10 per hour and a $1,000 signing bonus.

The job market has been this way long enough that many workers don't remember a time when they couldn't pick and choose from an assortment of jobs. All of this means you are struggling to lure good employees to your operations and keep them there.

One of the more important keys to attracting and keeping good employees is what you pay them. If you're way off base with your initial salary offer, or if you haven't kept wages competitive, good employees are likely to go elsewhere.

So what is the going rate for your employees? Realistically, only you can answer that question. Salaries in the pork production business today depend on the employee's experience, job responsibilities, location, other benefits offered in the package and more. However, surveys from around the country and anecdotal information can give you a range from which you can be competitive.

The numbers game
Start with a minimum. Each quarter, the National Agricultural Statistics Service surveys farm operators about what they pay hired workers. In October 1999, NASS reported that livestock workers earned an average of $7.43 an hour and they worked an average of 42.5 hours per week. That comes to about $315 per week and about $16,420 per year. That wage increased from $7.28 per hour in 1998.

Most of you know right away, however, that offering $16,420 a year will get you few, if any, top-notch employees. In fact, the National Pork Producers Council, reports that the average base salary for a swine herdsman in 1990 was $19,577 a year. NPPC reports the average salary increased to $24,721 in 1995. Since then, the wage inflation has only jettisoned higher.

There are three good reasons why the NASS numbers are low, says Steve Logan, NASS statistician: 1. Wages for part-time and full-time livestock workers are lumped together.

2. Wages for all livestock workers – from cattle ranch hands to llama caretakers – are lumped together.

3. Employees with pork production experience have a specialty, which ups the ante.

Kenneth Webster, manager of AgJobs USA, Garden City, Kan., agrees that pork production employees are among the highest paid in the production agriculture market because of the confined working environment and because their jobs require special skills.

"There is so much technology involved that you can't afford to put someone on the job who can't do it," he says. In addition, pork producers have to compensate somewhat for the employee giving up the "romantic ideal" of, for example, working cattle on the open range. "Employees tell us there's something unromantic about working in shower-in/shower-out
confinement facilities," Webster says.

Add this to an unemployment rate of 3 percent for high school graduates (2 percent for college grads) and Webster says today it usually requires a pay package – salary plus benefits – of at least $30,000 for quality, basic pork production employees. "Five years ago, $25,000 was adequate," he says. "But if you really want to fill your job, be prepared to offer a package of $30,000 or more."

You will have to take into account your location and the employee's responsibilities then adjust the pay package accordingly. If you're next to a factory town, Webster says, you may have to push the package up a bit. If you want someone with a specific skill or a manager, you're probably looking at the mid-$30,000 range or higher.

Employers with Premium Standard Farms in Missouri understand today's employment trends. PSF recently increased its annual salary for entry-level sow production employees by 24 percent to $20,000, the first base salary increase since 1996. Entry-level salaries in the grow/finish operations increased to $19,000. PSFalso offers health, dental and vision insurance and a retirement program. Why the big jump in wages? Wendy Bradley, PSF human resources director,says the company has openings for about 85 people. PSFcurrently employs about 1,200 people.

Sealing the deal
Salaries have increased two to three times faster than inflation, according to Gary Maas, co-owner of AgriCareers, Massena, Iowa, and his annual ag salary survey. He predicts that trend will continue. So expect to have to be competitive with your salary offers, he says. Also expect to "offer the little things that count" to secure the best employees. Benefit packages including bonuses, retirement funds and even profit sharing are trends in ag employee management today.

"The trend is to get out of the housing business and to strengthen insurance," Maas says. "Some owners are offering use of vehicles and even a piece of the operation. This is especially true for small operations."

If your benefits and work environment are good enough, you may be able to entice some employees even with low to average salaries. A farm wage and benefit study from Iowa State University's Department of Economics found that "firms offering better work conditions and benefits can pay lower salaries than competitors who have fewer benefits or inferior work environments."

But if you're hoping that salaries for pork production workers will decline and that quality employees will suddenly become abundant, don't hold your breath. There is an employee shortfall in all areas of agriculture right now. What's more, reports predict a 10 million employee shortfall for the entire United States by 2010. "It's an issue we're just going to have to deal with," says Maas.

Sizing up the Competition

So what is everyone else paying? There are obviously more industries competing for prospective employees than the ones listed here, but these are some of the more common. Keep in mind, that these National Bureau of Labor Statistics numbers are from 1996 – they've gone up since then.

Occupation – Average weekly earnings
Automotive mechanics $478
Blue-collar supervisors $640
Construction laborers $372
Construction managers $1,346
Farm managers (except horticultural) $485
Groundskeepers $300
Machinists $550
Rural postal carriers $673
Sales Representatives $694

Source: National Bureau of Labor Statistics