Estimates of the Potential Costs and Benefits of Extending Overtime Pay Eligibility to All Farmworkers in Massachusetts

Abstract

A 2019 Massachusetts Supreme Judicial Court (MSJC) ruling expanded the types of workers who would be entitled to overtime premium pay rates as set out by the state’s Minimum Fair Wage law to include some agricultural workers. This research brief estimates the potential economic impact of this recent MSJC ruling. Although the MSJC ruling is meant only to extend overtime protections to workers engaged in post-harvest activities, all of the analyses in this brief assume that overtime protections would be expanded to cover all farmworkers. The brief finds that: (1) for the average Massachusetts farmworker, the current pay rate of $13.75 per hour is inadequate to support a decent standard of living; and (2) expanding overtime protections to include Massachusetts farmworkers can be expected to increase the average farm’s annual production costs by less than 2 percent of overall revenue. These findings suggest that the large body of research on the impact of strengthening a similar labor standard—the state minimum wage rate—could be instructive with regard to how farm owners could continue to operate successfully while absorbing cost increases of this size. This is because the average cost increase to Massachusetts farm owners from expanding overtime protections is in line with the cost increases that other low-wage businesses, such as restaurants, have experienced from past minimum wage rate increases. Past minimum wage hikes have largely produced the intended positive consequence of raising the income of low-wage workers by increasing their pay rate and imposing only modest cost increases on low-wage employers. The findings of this brief, therefore, suggest that entitling Massachusetts farmworkers to overtime pay rates will have the desired public policy consequence of improving the living standards of farmworkers without being overly burdensome to the farm owners who employ them.