U.S. Agriculture Labor Expenses Forecast To Increase More Than 4 Percent in 2023

Total labor expenses (both hired and contract labor expenses) for the U.S. agriculture sector are forecast to be $42.09 billion for 2023, based on the February 2023 forecast by USDA, Economic Research Service. This would be an increase of $1.78 billion, or 4.4 percent, over the 2022 level of $40.31 billion (in inflation adjusted 2023 dollars) and the highest annual growth rate in percentage terms since 2016. However, inflation-adjusted labor expenses for 2023 are projected to remain below the high set in 2017.

Labor expenses are an important component of agricultural production costs. For every $100 spent on production expenses, almost $10 goes toward labor. These labor expenses include contract and hired labor payments but exclude non-cash employee compensation.

Generally, the animal production sector uses less hired and contract labor than the crop sector. In 2021, the animal production sector accounted for about one-third of total hired and contract labor expenses, with the remaining roughly two-thirds incurred by the crop production sector. This is because some large specialty crops (fruit, vegetables and melons, and nursery and greenhouse crops) are more labor intensive than most industries in the animal sector.

ERS’s Farm Income and Wealth Statistics data product shows which States use more hired and contract labor than others. For example, hired and contract labor expenses for California accounted for almost 30 percent of total farm labor expenses for the U.S. in 2021 (the latest year for which State-level data are available). Other States with higher labor costs were Florida (7 percent of total U.S. labor expenses) and Washington (6 percent of total U.S. labor expenses). Producers in these States tend to be engaged in labor-intensive enterprises. For example, in 2021, California’s agricultural producers had cash receipts from fruit and tree nuts that amounted to $24.37 billion, or 43 percent of the State’s $56.28 billion in agricultural cash receipts in inflation-adjusted 2023 dollars. Similarly, Washington’s apple producers had cash receipts of $2.4 billion, which was 22 percent of the State’s total agricultural cash receipts of $11.12 billion. In Florida, cash receipts from vegetables and melons were $1.44 billion, 17 percent of the State’s $8.50 billion in farm cash receipts.