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Abstract:
For a number of years, the US agricultural industry has faced challenges attracting and retaining a sufficient farm labor supply. Much of the shortage can be attributed to lower wages and harsh working conditions for farm workers. In efforts to improve wages and working conditions for farm workers, the Fair Food Program (FFP) was established in 2011 by the Coalition of Immokalee Workers (CIW) in Immokalee, Florida. The program operates across eleven states and is expected to expand soon, but to date little is known about the effectiveness of and demand for fair wage programs in the U.S. This study aims to quantify worker outcomes of FFP and measure consumer support for fair wage programs in the agriculture industry. On the supply side, we leverage data from the National Agricultural Workers Survey (NAWS) to evaluate the impacts of FFP on farm worker wages, working hours, and non-wage compensation.

Results show that workers in counties with a FFP participant grower are 4% less likely to be paid a wage below minimum wage, work fewer hours per week, and are more likely to have an employer pay for their healthcare if they are sick or injured on the job. We then investigate consumer demand for the FFP program through an economic experiment to understand whether program participation costs can be offset by premiums for fair wage products. Consumer willingness to pay (WTP) for FFP labeled tomatoes is elicited through a Becker–DeGroot–Marschak (BDM) auction with 323 adult consumers. Participants bid on FFP-labeled as well as conventional tomatoes. Additionally, we explore the role of empathy in consumer decisions. Participants were randomly assigned to a treatment group invoking empathy through an image of a farmworker with an emotional caption or to the control group with the same image but a neutral caption. Results showed that the FFP label increases consumers’ WTP for 1 pound of domestically grown tomatoes by $0.43, representing a 22% increase in market price. The effects of empathy are heterogeneous: consumers with high levels of empathetic concern were willing to pay $0.86 less for the FFP tomatoes. This finding suggests consumers could experience personal distress from learning about farm worker conditions and react negatively in purchase decisions. In summary, the study shows positive supply-side outcomes for FFP and demand-side support for the program. Labeling FFP products could be an effective strategy to garner premiums that offset program costs, however caution should be taken in evoking empathy through marketing plans and policy outreach.