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posted on 14 February 2016

Labor Issues Facing Agriculture And The Rural Midwest

from the Chicago Fed

-- this post authored by David B. Oppedahl

For years the rural Midwest has faced concerns about its falling population, waning work force vitality, and increasing health problems - all of which have contributed to slower economic growth relative to that of the region's urban areas.

The Federal Reserve Bank of Chicago and the W. E. Upjohn Institute for Employment Research held a conference on November 16 - 17, 2015, to address labor-related issues confronting the Midwest's rural economy and, in particular, its agricultural sector.

Experts from academia, various industries, and policy institutions gathered at the conference to discuss trends in rural and farm labor markets; examine policies that affect nonmetropolitan and agricultural employment (including immigration policies); and explore possible strategies to position the Midwest's rural economy and agriculture for prosperous futures.

To frame the conference's conversations, David B. Oppedahl, senior business economist, Federal Reserve Bank of Chicago, pointed out that many midwestern rural communities are jeopardizing their long-term survival by not generating enough well-paying jobs. This reality has prompted new efforts by some of them to broaden and diversify their economic bases (e.g., by transforming themselves into destinations for vacationers and retirees).

Moreover, earnings from farm employment remain a key component of rural income in the Midwest, even though off-farm employment is often vital for the livelihoods of many agricultural families. Households associated with large commercial farm operations derive the vast majority of their incomes from agriculture, but do make some income from nonfarm sources; in contrast, "residence" farm households, whose operations are relatively small, get most of their income away from the farm and actually incur losses from farming operations, on average.

Oppedahl noted that there are many policy issues that are of concern to farming operations of all sizes. For one, the policy debate about immigration is relevant to farmers because many immigrants (whether authorized to be in the country or not) fill agricultural jobs that would otherwise go unfilled. For another, Oppedahl said that improved access to health care resources - particularly effective insurance coverage and health care infrastructure (such as hospitals and clinics) - is critical for the future prosperity of rural areas of the Seventh Federal Reserve District.

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