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.
Part of this disparity is attributed to employees working in 10,000-plus operations typically have more education. But even without more education, Table 8 shows these employees would have still earned substantially more. If this disparity remains, smaller operations may find it difficult to attract and retain quality employees.
Wage growth for all categories of annual hog production was lower than the average growth in wages. While this may seem contradictory, it is actually quite revealing. It means that one of the most important factors driving wage growth is that more employees are going to work for larger operations.
Ten-year wage growth was strongest for employees working in operations producing fewer than 1,000 hogs annually. Their wages increased 50.7% from $14,746 to $22,222. Employees in operations producing 1,000-2,000 saw an increase of 26.2% from $16,879 to $21,294, while those in operations producing 2,000-3,000 increased 29.3%, from $18,346 to $23,715.
Wages increased by 28.2% from $18,688 to $23,962 in operations producing 3,000-5,000 and 18.5% from $20,458 to $24,250 in operations producing 5,000-10,000. In units with 10,000-plus annual production, wages increased from $25,179 to $32,470 or 29%.
Regional Wages Wage growth in the Midwest exceeded the average, primarily because education levels rose, as did the size of operations.
In 1990, average wages were highest in the Southeast ($22,133), followed by the West ($20,538), Northeast ($18,732) and Midwest ($18,616). Wage growth shifted between 1990 and 2000, with the strongest growth in the Midwest (59.8%) followed by the West (50.2%), Northeast (49.4%) and Southeast (30.5%).
Wages by Job Title The wage disparity between assistant managers and herdsmen relative to managers has eased. However, a greater disparity has emerged between manager and farrowing manager wages. An increase in the percentage of women placed as farrowing managers and a decline in the number with four-year college degrees are cited as factors.
The average wages of managers have consistently been higher than those of assistant managers, farrowing managers, and herdsmen. In 1990 and 1995, farrowing managers were the next highestpaid employees followed by assistant managers and herdsmen. In 2000, assistant managers ranked second for pay, followed by herdsmen and farrowing managers. Wage growth between 1990 and 2000 was highest for assistant managers (66.2%), followed by herdsmen (57.7%), managers (52.5%) and farrowing managers (44.2%).
Incentive Plans Bonus and incentive plans can serve to augment employee wages and make it easier to attract and retain quality employees. Therefore, it is not surprising to find an increase in the percentage of producers and employees that reported bonuses and incentive pay between 1990 and 2000.
Nearly 10% more employees reported receiving bonuses and incentive pay in 2000 (58.1%) than 1990 (48.6%). Most of this increase appears attributable to more employees receiving incentives based on the number of pigs weaned/sow or for feed efficiency (Table 10). The percentage of employees that reported incentive pay based on pigs weaned/sow increased by 69.5% between 1990 and 1995, while the percentage reporting compensation based on feed efficiency increased by 82.9% for the period. Employees receiving incentives based on death loss decreased between 1990 and 1995, but it rebounded in the current survey.
The producer responses provide similar though less dramatic results. The percentage reporting bonuses and incentive pay increased by 6.2% over the decade. Those indicating incentives were based on pigs weaned/sow increased by 24%. Between 1995 and 2000, the percentage of producers using feed efficiency as an incentive increased 41.7%, probably reflecting the increase in feeder pig finishers and contract finishers in recent years.
Benefits Offered The trend toward providing benefits to employees is mixed, at least when they answered the questions. Employees reporting that their employer provided medical, dental, disability and life insurance coverage fell in 1995 and again in 2000 (Table 11).
Conversely, a larger percentage of employees reported receiving paid vacation, paid holidays, workers' compensation, unemployment insurance, paid sick leave and pension or retirement plans both in 1995 and 2000. The decline in disability insurance was accompanied by an increase in employers providing workers' compensation.
Between 1990 and 2000, 10.3% fewer employees reported receiving medical insurance, and dental coverage fell by 26.3%. The number of employees receiving disability insurance declined 44.6%, and the number receiving life insurance declined 33.1%. While the drop in 1995 was small, the drop in 2000 was not. This decline in medical coverage is troubling because good health care is important and costly.
On a more positive note, employees with coverage report paying a smaller share of the premiums. Between 1995 and 2000, the employee's average share of medical insurance premiums fell from 55.4% to 16.8%. The employee's share of dental insurance premiums likewise fell, from 72.4% to 34.8%. Their share of disability insurance premiums fell from 77.4% to 21.7%, and their share of life insurance premiums fell from 82.6% to 18.2%.
Nearly 90% of employees now receive paid vacations. Almost 70% receive paid holidays, and 60% receive paid sick leave. Between 1990 and 2000, the percentage reporting paid vacations increased by 23.4%. The percentage receiving paid holidays increased by 37.5%, and the percentage receiving paid sick leave increased by 41.7%. During this time, the average number of vacation days declined from about 11 to 10 days, while the average number of sick days declined from about eight to six days. The average number of holidays remained about the same (six days).
The percentage of employees that received workers' compensation increased 22.1% between 1990 and 2000. This was in contrast to a decline in disability insurance, which suggests employers are relying more on government and less on private insurance. Just more than one in four received unemployment insurance in 1990. This increased by 44% to two in five workers in 2000.
More employees are receiving pension, retirement and profit sharing plans. In 1995, 35.7% indicated receiving a pension or retirement plan. In 2000, the p ercentage rose to 48.2% - a 35% increase. Those with a profit sharing plan also increased though not as dramatically (9.4%).
The increased use of pensions and retirement plans is a natural strategy to counteract the increased mobility of the labor force. Because pension contributions need not be fully vested until the employee has been with the firm for five years, pension plans serve to increase the incentive for the worker to stay. Incentive plans also serve to tie the workers' incentives more closely to farm productivity and profitability in a climate in which fewer workers plan to graduate to ownership or management positions.
Employees typically received fewer in-kind benefits in 2000 when compared to 1990. More than 40% received housing in 1990, compared to about 30% in 2000. Almost 30% received paid utilities in 1990, but less than 20% did in 2000.
About 20% of employees received a company vehicle, and just more than 40% received processed meat in both 1990 and 2000. Just more than 20% received continuing education expenses in 1990, while almost 25% did in 2000.
Comparing benefits by the size of operation reveals an important trend. Larger operations offer more generous benefits packages. The only exception to this observation is the provision of housing and utilities. With higher wages and more generous benefits packages, larger operations will find it easier to attract and retain employees.
Producers/employers also were polled on the medical and dental benefits, life insurance and disability insurance offered to employees. Their responses reflected the general trends employees reported here.