August I974 Extension of s Agriculture Economic Impact from the loyment Insurance to Tetxa to} REQUHWEWSLAFYl a 8*1W¢@¢¢“* l a Worn Out ; oaaa@m * Ljnbtmziamfiu = n" “J urec o I) College Situation, Texas 11:. amuler, gfAAéMUniversity System, The Texa's» Agricultural Experiment Station, Acknowledgments This report is a contribution to the Regional Re- search Project, NE-58, ”The Impact of Extending Un- employment Insurance to Agricultural Workers.” The project was jointly funded by the participating land grant university experiment stations and the Unemployment Insurance Service, Manpower Ad- ministration, U.S. Department of Labor, adminis- tered by the Employment Security Division of the Connecticut State Labor Department. The University of Connecticut served as the prime contractor. The study was conducted in Texas by The Texas Agricultural Experiment Station in cooperation with The Texas Agricultural Extension Service. Also par- ticipating in the study are the agricultural experiment stations in Massachusetts, Vermont, New Hamp- shire, Connecticut, New York, Pennsylvania, New Jersey, Ohio, Delaware, Maryland and Florida. Data were also gathered for Maine, Rhode Island and West Virginia, with work in these three states coordinated by Connecticut and Delaware. The study was under the direction of the NE—58 Technical Committee and its Project Committee consisting of: *Raymond O. P. Farrish University of Connecticut (to August 1972) University of Connecticut (after August 1972) University of Delaware Delaware State College University of Florida University of Florida A. Stewart Holmes University of Maryland Jack Wysong University of Maryland *Stanley K. Seaver *]oachim G. Elterich Richard F. Bieker Robert D. Emerson Leo Polopolus *]ames S. Holt Cornell Universi Ohio State Univeq The Pennsylvania.‘ The Pennsylvania‘ Conrad F. Fritsch Texas A&M Univ David C. Ruesink Texas A&M Univ Raymond H. Tremblay University of Ve f“ C. A. Bratton Bernard L. Erven Rex H. Warland *Members of the Project Committee The authors are indebted for the ef Project Committee in directing the stud ~ wish to acknowledge the assistance p Roger Rossi, Unemployment Insurance S Department of Labor. Ed Ney of the T ‘i ment Commission provided backgroun concerning Texas unemployment insura sions. The authors are especially appre constructive reviews and comments j v members of the Department of Economics and Rural Sociology, Texas A sity. During the initial stages of the study, j ton, Roy M. Gray, Charles Baker, Micha and Gordon Powell of the Department of Economics and Rural Sociology, Texas 4-2; sity, supervised data collection and edi Hartley, director, Institute of Statistics, University, provided statistical advice at crucial stages of the study. Statements and interpretations con j I report are those of the authors and do no Bradford D. Crossmon University of Massachusetts Edmund F. Jansen George F. Luke _ _ _ represent the official position or policies‘: Unlverslty of New Hampshlre Department of Labor, the Texas Emplo r’ RutgerS'The State Unlverslty mission, The Texas Agricultural Expe " (New Ielsey) . or the Texas Agricultural Extension Se Economic Research Service i j, USDA, Cornell University (New York) *Ward W. Bauder Contents Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 Texas Agriculture . . . . . . . . . . . . . . . . . . . . . . . . . .. 5 Unemployment Insurance Legislation . . . . . . . . . 7 Agricultural Exclusion . . . . . . . . . . . . . . . . . . . . . .. 8 Definition of Terms . . . . . . . . . . . . . . . . . . . . . . . . . 8 Employer Participation . . . . . . . . . . . . . . . . . . . . . . . . 9 Employer Participation by Economic Class . . . . .10 Employer Participation by Type of Farm . . . . . .11 Economic Implications of Extending Unem- ployment Insurance to Agriculture . . . . . . . . . . . .12 Costs to the Unemployment Insurance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Employee Participation . . . . . . . . . . . . . . . . . .15 Costs to Texas Agricultural Employers . . . . . . . .17 Earnings Received by Agricultural Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Cost Incidence for Benefits Received by Actual Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 " Benefits Received by Interstate Seasonal Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Benefits Received by Employees With Texas Agricultural Employment Only . . . . . . . . . . . . . . . . . .20 Conclusions and Discussion . . . . . . . . . . . . . . . . . . . . . .20 Limitations of the Study . . . . . . . . . . . . . . . . . . . . .22 Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Literature Cited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Appendix A, Methodology . . . . . . . . . . . . . . . . . . . . . . .24 Employer Survey . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Worker Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Post Stratification for Worker Sample . . . . . . . . .24 Summary The economic impact from the extension of un- employment insurance to Texas agriculture was ex- amined using universal coverage and four other plans that would provide increasingly restricted coverage. The results of these alternatives are pre- sented in this report and summarized here. 1) Agricultural employers with agricultural product sales of $40,000 or more in 1969, paid out two-thirds of the total agricultural wages. These employers were less than one-third of the total agricultural employers in the state and about 6 percent of all farmers. 2) Livestock operations paid out 30 percent of total agricultural wages in 1969, cash grain operations 27 percent and cotton operations 19 percent. 3) Legislation bringing agricultural employers with 4 or more workers for 20 or more weeks or meeting a high quarter payroll of at least $5,000 under the provi- sions of the Texas Unemployment Compensation Act would have included less than 3 percent of all Texas farmers in 1969. These farmers paid out over 60 per- cent of total wages and hired 92 percent of total work- ers. 4) Including agriculture under provisions of the Texas Unemployment Compensation Act in 1969 would have had only a moderate impact on the state unemployment insurance system. Taxable covered payroll would have increased by less than 2.5 per- cent, total benefits paid out by 14 percent and eligible workers receiving benefits by about 25 percent. 5) Estimated benefits which would have been paid out to beneficiaries as a result of extending unem- ployment insurance to agriculture would have been about 3.5 percent of total taxable wages paid by ag- ricultural employers. (Taxable wages include only the first $4,200 of annual wages paid to an employee). 6) About one-third of the employees working for subject Texas agricultural employers would have been eligible to receive benefits. Average weekly benefits received would have been about $35. These workers would have received about $300 over a dura- tion of 8 to 9 weeks. By comparison, actual ben- eficiaries employed for subject non-agricultural em- ployers received’ average weekly benefits of $39.52 over a period of 11.2 weeks for an average total of $443 each. 7) Costs to subject agricultural employers would range from a minimum of $6 per thousand dollars taxable payroll to a maximum of $45 per thousand dollars taxable payroll. The maximum increase in hourly labor costs assuming a base wage of $1.75 per hour would be about 8 cents. INTRODUCTION ployment insurance programs are used by dustrialized nations t0 maintain the in- in of workers who are temporarily unem- ig result of industry induced employment » s. In the United States, Federal-State fment Insurance programs have been ' include all major economic sectors except I- an amendment to the 1970 Federal Un- tTax Act, research funds were allocated g of the economic feasibility of extending in the agricultural sector. This report is a ysis of the results of the study as applied to f‘ ture. Special reference is made to the ‘ a employer costs and extent of participation ative coverage provisions, to the effects K structure of the Texas Unemployment “f Trust Fund and to the amount of income ~ to eligible workers. special surveys were conducted as part of “tudy: 1) A random sample of agricultural “s selected to obtain income and em- t data for calendar year 1969; and l selected for interviews on a subsample of _ s. Detailed employment, unemployment e data were obtained from these workers '0d ]une 29, I969 to Iune 27, 1970.1 I ' A for a more detailed description of the survey } "vely, formerly assistant professor, assistant profes- i - ly research associate, The Texas Agricultural Exper- - and the Departments of Agricultural Economics and - ; , Texas A&M University. I The Economic Impact from the Extension nemployment Insurance to Texas Agriculture Conrad F. Fritsch, David C. Ruesink and Karen I. Nergart* Texas Agriculture Agriculture is a dynamic and expanding industry in Texas (4). Although the total number of farms has declined from 1939 to 1969, the reduction has oc- curred in farms with total sales less than $2,500. Over the same period, farms with sales in excess of $10,000 ' per year have increased in both absolute and relative terms (Table 1). Gross returns to Texas agriculture, including government payments and value of home food con- sumption and property rental, was $3. 7 billion in 1969 with estimated net returns of $1.2 billion. The Texas Agricultural Extension Service and The Texas Ag- ricultural Experiment Station have estimated that cash receipts from all commodities in Texas during 1969 were $3.1 billion, with livestock product receipts totaling $1.9 billion and crops making up the remain- der of $1.2 billion. Table 2 gives the estimated receipts from major commodity groups in Texas in 1969. In 1970 Texas ranked third in the nation in total crop and livestock receipts. It is the leading producer of cotton, grain sorghum, beef cattle, sheep and wool, and goats and mohair. It produces 31.6 percent of the total cotton in the United States. An estimated $203,363,207 in wages was paid by farm employers in Texas in 1969. The three largest income producing commodities, livestock, grains and cotton, also paid out the largest amount of wages. Comparison of Tables 2 and 3 illustrates that meat and livestock accounted for 45 percent of total Texas cash receipts in 1969 and paid approximately 30 percent of Texas agricultural wages. Cash grain and other field crops accounted for 21 percent of Texas 5 TABLE 1. COMPARISON OF THE SIZE OF TEXAS FARMS IN 1939 AND 1969 BY VALUE OF PRODUCTS SOLD TABLE 3. TOTAL WAGES PAID BY TEXAS AGRI EMPLOYERS BY COMMODITY GROUP 1.? 1939a 1969b Value of Number Number products sold of farms Percent of farms Percent $10,000 or more 4,728 1 51,227 37 $ 2,500-$9,999 28,820 7 69,391 51 Less than $2,500 383,112 92 16,223 12 Total 416,660 100 1 36,841 100 a. U. S. Census of Agriculture, 1940. Washington, D. C.: U. S. Bureau of the Census, 1940. Volume ll, Part 2, p. 818. b. U. S. Census of Agriculture, Texas, 1969. Washington, D. C.: U. S. Bureau of the Census, 1970. agricultural cash receipts and paid 27 percent of ag- ricultural wages. Cotton, which received 12 percent of total cash receipts, paid 19 percent of agricultural wages. Together these products accounted for 78 per- cent of Texas agricultural cash receipts and paid out 76 percent of Texas agricultural wages in 1969. The Lower Rio Grande Valley of Texas is the home base of many migrant workers (41 percent of Texas interstate seasonal workers in 1968 (6). Analysis of survey data indicates that fruit and nutz and vegetable farms, which are located primarily in the Lower Rio Grande Valley, paid only 8.5 percent of total Texas agricultural gross payroll in 1969.3 The 1969 Census of Agriculture also indicated that the A TABLE 2. ESTIMATED 1969 CASH RECEIPTS FROM TEXAS COMMODITIES AND PERCENT OF TOTAL CASH RECEIPTS 1969 Estimateda Percent Commodity cash receipts of total (thousands of dollars) Livestock $1,385,087 45.4% Cash grain and other field crops 644,844 21.1 Cotton 362,131 11.9 Poultry and eggs 227,563 7.4 Dairy products 195,924 6.4 Vegetables 127,460 4.2 Other 83,187 2.7 Fruit and nuts 27,340 .9 $3,053,536 100.0% All commodities a. Texas Food and Fiber Facts, 1972. College Station: Texas A&M University, Texas Agricultural Extension Service and Texas Agricultural Experiment Station, 1972. zAlthough nuts are not produced in the Lower Rio Grande Valley, they cannot be separated from the total fruit and nut classification. The discrepancy introduced is not felt to alter the conclusions drawn. 3This figure can be compared to 1969 Census of Agriculture figures showing dollar expenditures for agricultural labor in the Lower Rio Grande Valley (Starr, Hidalgo, Willacy and Cameron Coun- ties) to be $16,865,789 or 8.3 percent of total wages paid to agricul- tural employees in Texas. 6 1969 Wages pa‘ ~ aricultural em Commodity Amount Livestock $ 50,490,415 Cash grain and l; other field crops 54,526,188 Cotton 39,171,552 Poultry and eggs 5,630,657 Dairy products 15,088,333 Vegetables 10,317,236 Other 11,155,132 Fruit and nuts 6,983,694 All commodities $203,363,207 a. Figures are from employer portion of the Farm four Lower Rio Grande counties (Starr, Hi lacy and Cameron) hired only 6 percent of A seasonal hirings in the State. i Table 4 indicates that most of the Texa .1 labor force is composed of local residents. Inf monthly percentages of local seasonal ranged from 83.7 percent to 99.8 percent y‘ sonal workers. Intrastate seasonal worke I from 0.2 percent to 15.7 percent of all sea h. ers, while interstate seasonal workers from O to only .5 percent. The Lower Valley, however, is not able to completely: ' resident labor force. The lack of alternative employme “I tunities for seasonal agricultural workers ‘I the Lower Rio Grande Valley is emphas' q Texas Employment Commission: ”Needl " the employability problems brought on by ; cation, language barriers and cultural d“ which burden the seasonal farm worker" sified by the weak economic environme i» most of them reside. The intensity of the e i,’ problems of seasonal workers is better un vi} light of these facts: 1. The rate of decline in the number A farm jobs in the heavily agricul g Lower Rio Grande Valley area sin p»; percent compared to a statewide cline of 58.5 percent. 2. More surprising, regular year-r jobs have declined at the rate of 2. that area while increasing sta ‘f; percent as farm units have incre f 3. Rather than taking up slack cau mally rapid decline in farm job o - ; nonfarm jobs increased by only)‘ since 1962 in the Lower Rio G - area compared to 42.6 percent sta -‘ slightly one-half the statewide ‘ STRIBUTION OF 1969 SEASONAL TEXAS AGRI- _EMPLOYMENT BY LOCAL, INTRASTATE AND ‘u: BY MONTHa I Total Localb lntrastateb lnterstateb 100% 99.8% .2% 0 % 100 99.8 .2 0 100 99.6 .4 0 100 98.4 1 .5 0 100 97.6 2.4 0 100 92.7 6.9 .4 100 84.0 15.8 .2 100 87.0 12.8 .2 100 95.1 4.8 0 100 94.0 5.6 .4 100 94.1 5.4 .5 100 90.6 9.2 .1 A Employment Commission, Texas Farm Labor Annual ‘ in, Texas: TEC, 1970, p. 7. It should be noted that .» in this table is referenced from the point of origin g - = employer. A worker hired by an employer in his 0'_ considered a local worker in this table even though 'rse of a season he may be employed by an out of state lkewise if he is hired by a Texas agricultural employer ‘on is outside of the worker's home base, the worker '- m as an intrastate worker. Only if an employee is not ~ Texas is he considered an interstate worker on this seasonal workers do not "leave home overnight to do iirk." Intrastate workers take up temporary residence e county other than their home county while engaged agricultural employment. Interstate seasonal workers _.- rary residence in a state other than their home state ed as seasonal farm workers. y employment Insurance Legislation I ‘I. ployment insurance in the United States instituted in the 1830's on a voluntary basis ' unions to maintain the income of unem- orkers. Between 1916 and 1932 some 38 rimented with company plans (1). At that I increase in unemployment and the great an evinced industry's inability to deal with i- m and stimulated the need for some form of f- unemployment insurance. 'ke Europe, where strong paternalistic -employee relationships reinforced the so- i‘? for unemployment compensation, income nce provisions for American workers ex- ‘ g periods of involuntary unemployment j= ated from an economic rather than a social or nal base. The American worker was con- n asset whose productive powers needed to - in order to maintain production efficiency Federal Government established minimum k ents for participation under the unemploy- s. pensation provisions in the Social Security 5 and later the Federal Unemployment Tax A). Individual States are encouraged to gislation within the Federal guidelines through the provision of a ”tax credit" to employers. This tax credit is conditional upon certification of the state law by the U.S. Secretary of Labor. All em- ployers with employment covered under FUTA are taxed at a rate of 3.2 percent on the first $4,200 paid to each employee. Only the first $4,200 paid by an em- ployer to an individual is taxable. No tax is paid on wages in excess of this amount. Employers in States passing legislation meeting the minimum require- ments of the FUTA receive a Federal tax credit of up to 2.7 percent. The remaining .5 percent is paid to the Federal fund by all subject employers to cover costs of administering both the Unemployment Insurance Program and a part of the U.S. Employment Service. The Texas Unemployment Compensation Act requires participation by all subject employers having one or more workers for at least a portion of each of 20 weeks or who pay wages of at least $1,500 in a high quarter in a calendar year. An employing unit which becomes an employer under the Act for the first time during the calendar year 1972 is charged a rate of 1 percent of his taxable payroll until an ”experience” rate can be assigned. However, an individual who became liable for the first time in 1972 (because he acquired the business of a subject employer) is not eligible for the 1 percent rate. The employer's experi- ence rate is a ratio of the sum of benefits charged against his account to the sum of his taxable payroll for the most recent consecutive three year period, adjusted by a State replenishment ratio. The re- plenishment ratio increases the rate when the State fund falls below a legislated minimum level and de- creases it when an excess of funds exists. If no unemployment was experienced during the previous three years, the rate may fall as low as .1 percent of his current taxable payroll. The maximum State experience rate is 4 percent. The minimum and maximum rates are subject to increase through the influence of the replenishment ratio if the overall level of the State fund is low. An unemployed worker may receive benefits in Texas if he has had wages of $500 in a base period consisting of the first four of the last five quarters. These wages must be earned in at least two quarters and must equal one and one-half times the high quar- ter earnings. Weekly benefits are 1/25 of the high quarter earnings with a maximum of $63 per week. Normally benefit payments do not extend longer than 26 weeks and must not be more than 27 percent of total wages earned in the base period. Benefits received by a worker are charged to sub- ject employers for whom he worked during the base period in proportion to the wages paid him by these employers. Benefits are charged to out-of-state em- ployers relative to wages earned out of State. These benefits are apportioned among the several em- ployers, if more than one, according to the formula existing under legislation of the respective State or States. 7 To qualify for benefits, the unemployed worker of a subject employer must establish his ability and willingness to work and must register for work and continue to report at any employment office in ac- cordance with regulations prescribed by the Texas Employment Commission (TEC). He must accept jobs within his skill and occupation range when they become available. An individual will not be denied benefits if he is in a job training program receiving the approval of the TEC. Agricultural Exclusion Agriculture was excluded from the Unemploy- ment Insurance program enacted in 1935. The special characteristics of agricultural labor use, including fac- tors such as seasonality of employment and the large number of very small employing units, raised ques- tions concerning the feasibility of coverage. At that time there were no foreign industrial nations with compulsory coverage extended to the agricultural sector. Experience could not serve as a guide. Agricultural labor was defined as "services per- formed on a farm in connection with cultivating the soil; harvesting crops; or raising, feeding or manag- ing livestock, bees and poultry." The definition also included "processing services incidental to ordinary farming operations performed for the farm operator who raised the produce" (9). In 1939 the definition of agricultural employment exempt from unemploy- ment insurance coverage was expanded. Agricultur- ally related industries such as nurseries and greenhouses, research farms, certain agricultural cooperatives, fur farms, stables and certain landscap- ing firms were excluded from coverage. Definition of Terms Agricultural employment is currently defined by the Texas Unemployment Compensation Act as all services performed: 1. On a farm, in the employ of any person, in connection with cultivating the soil, or in connection with raising or harvesting any ag- ricultural or horticultural commodity, includ- ing the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife; 2. In the employ of the owner or tenant or‘ other operator of a farm, in connection with the operation, management, conservation, im- provement, or maintenance of such farm and its tools and equipment, or in salvaging timber or clearing land of brush and other debris left by a hurricane, if the major part of such service is performed on a farm; 3. In connection with the production or harvest- ing of any commodity defined as an agricul- tural commodity in Section 15 (g) of the Ag- ricultural Marketing Act, as amended( 1550, 3; 12 U.S.C. 1141j), or in co __ with the ginning of cotton, or in c0 i‘ with the operation or maintenance of {p canals, reservoirs, or waterways noto j operated for profit, used exclusively f plying and storing water for far i‘ poses; 3' 4. a. In the employ of the operator of a i; handling, planting, drying, packin aging, processing, freezing, grad‘ ‘ ing, or delivering to storage or to j to a carrier for transportation to m its unmanufactured state, any a J or horticultural commodity; but {I such operator produced more th__' half (1/2) of the commodity with r .5 which such service is performed; b. In the employ of a group of op farms (or a cooperative organ' . which such operators are membe 7 performance of service described? paragraph (a) above, but only operators produced more than (1/2) of the commodity with which such service is performed; c. The provisions of subparagraphs; (b) shall not be deemed to be ~7 with respect to service performedf nection with commercial canning. mercial freezing or in connection agricultural or horticultural co after its delivery to a terminal m) distribution for consumption. 5. On a farm operated for profit if such A’ not in the course of the employer's y business or is domestic service in a? home of the employer. 1. As used in this subsection, the term "3 cludes stock, dairy, poultry, fruit, fur-bea '"_ mals, and truck farms, plantations, ranches; ies, ranges, greenhouses or other similar s‘ used primarily for the raising of agricultur, ticultural commodities, and orchards. ' The stated reasons for the exclusion of ture from unemployment insurance wer economic and administrative in nature. Iti that the spatial diffusion of the mostly sm tural employing units would result in higher trative costs per covered agricultural empl. for nonagricultural employees. Additional f‘, trative costs would also have been incu o dollar value of food and shelter received b tural employees were to be accurately det l It was felt that the administrative task‘: mining worker qualification would pre, tional problems. Many housewives and‘) ,. i‘. v u" ineligible for coverage due to insufficient (‘to the labor force, nonetheless are mem- ‘farm labor force during part of the year. , orkers are self-employed 0r tenants and if s the rest of the year. The existence of ~ s, crewleaders and labor contractors A i more difficult to maintain accurate rec- .1 ' gs and employment patterns of the workers associated with these organiza- It was agreed that small farmers also ‘ w payroll-related records. itional problem existed in labor supply fas Texas. Texas is one of the three main iithis country's interstate migrant labor _- other two are Florida and California). of availability for work is often dif- ‘work performed and skill requirements ( jobs held during the course of the year. j j e mobility patterns of these workers also 'tional interpretive questions when at- determine eligibility for work. For exam- employees whose normal work activities iloyment in two or more states be eligible p‘ nefits if no local employment is available? jitional factor influencing the decision to “j agricultural sector from coverage was the i, employers of regular workers that they - ying for benefits received by workers jamounts of seasonal unemployment. The Iof benefits received by workers to taxable them will be very small for employers Q ers experience little or no unemploy- i’ yearly experience-rated State unem- insurance contributions may be less than fegular employee. (The Federal tax of .5 jemployee taxable payroll would be paid in this State minimum.) On the other hand, benefits to taxable wages for employers of ployees may be greater than the current f. um tax rate of 4 percent. Under normal itions the employers of such seasonal I only be charged at this maximum rate. (@- remaining benefits received by his work- * indirectly spread over all employers re- industry through adjustment of the re- q_ tratio. a,‘ I es in agricultural organization and knowl- - from over forty years experience with ent insurance have reduced many of the It between agricultural and non agricul- loyment. Recofrd keeping by farmers has since 1935. All employers who would be the unemployment insurance program sting legislation are now maintaining '_j ords for Social Security purposes. Farm ‘n has decreased the number of poten- le agricltural employing units thus reduc- fa- administrative problems. To facilitate distribution of benefits and costs for workers with wage credits in several states, all states now participate in interstate wage combining ar- rangements. These permit orderly transfers of costs to employers and receipt of benefits by workers. The successful experience of the unemployment insur- ance program in the construction, garment and food processing industries, which are characterized by highly seasonal employment patterns, further serves as a guide for the inclusion of the agricultural sector. In fact, because of the high risk of seasonal unem- ployment, workers in the garment trades were in- cluded under some of the earliest private company and union plans (1). . Finally, a factor often overlooked in discussions of farm firm growth and consolidation is the influence on the tenure and security of the agricultural em- ployee. In the past, as an informal member of the farm family, a farm worker was assured of food and lodging, often commensurate with that of the farm owner or operator. This implicit responsibility of the employer was especially crucial during seasonal periods of non-work. With the growth of large scale agriculture, organized either on a family or a corpo- rate basis, the employee-employer relationship often becomes more formal; security provisions for em- ployees may also require a more formalized ap- proach. Unemployment insurance benefits, which are based directly upon previous work experience and earnings, may be viewed as a means of restoring, in part, the informal employee income maintenance arantees which were existent under the older in- onnal relationships. EMPLOYER PARTICIPATION The Unemployment Insurance (U.I.) fund is maintained by taxes levied on subject employers. Currently all employers in industries covered under the Federal Unemployment Tax Act (covered indus- tries) employing one or more workers for 20 or more weeks or who meet a high quarter payroll of at least $1,500 in a calendar year are considered subject em- ployers. The extent of agricultural employer participation will be discussed with respect to the above coverage provision in addition to four additional provisions in order to provide a perspective for decision making. These five alternative provisions are: 1. One or more workers anytime (universal coverage) 2. One or more workers for 2O or more weeks or at least $1,500 in any calendar quarter 3. Four or more workers for 20 or more weeks or at least $5,000 in any calendar quarter 4. Four or more workers in 20 or more weeks 5. Eight or more workers in 26 or more weeks. 9 Provision one is a bench mark representing com- plete coverage of all agricultural employers. Provi- sion two conforms to current Texas U.I. legislation as well as the 1970 Employment Security Amendments to the Federal Unemployment Tax Act and would exclude employers who hire only a small quantity of seasonal labor. Provision three is also a possible coverage criterion designed to exclude employers with only intermittent labor needs. Provisions four and five conform to the ”large farm" concepts em- bodied in the recent Congressional proposals.‘ Employer Participation by Economic Class Under provision five, the most exclusive cover- age provision, only three percent of all farm em- ployers would have been subject. However, 34 per- cent of total payroll would have been covered (Table 5). ‘H. R. 12625 introduced by the Nixon Administration during the First Session of the 91st Congress provided the most inclusive coverage (criterion 4). H. R. 14705, as amended by the Senate Finance Committee, would have extended the more restrictive provisions of provision 5. TABLE 5. DISTRIBUTION OF SUBJECT TEXAS FARM EMPLOYERS AND GROSS PAYROLL WITHIN EACH ECONOMI ; UNDER FIVE SELECTED COVERAGE PROVISIONS, 1969 Subject employers would have increasg percent and 13 percent under provisions f‘ three, respectively, including 53 and 59 pe i, total payroll. Ninety-nine percent of total pa t‘ 92 percent of the employers would have been g under criterion two, the one currently in effe nonagricultural industries. Coverage of employers and gross pa Economic Classes III and IV decreases con from provision two to provision three. The -_ age of subject employers in Class IV declines } percent under provision two to 2 percent un vision three. It remains at 2 percent under g declines to less than .5 percent under five. Ec Class IH coverage was 91 percent under two, cent under provisions three and four and less percent under five. " Similarly, coverage of gross payroll dec ' each more exclusive coverage provision—96 19 percent, 15 percent and 2 percent under prf: two, three, four and five for Economic Class p 99 percent, 9 percent, 8 percent and 2 percent Economic Class III. ; Coverage provisions 1 2 3 4 1 worker in 20 4 workers in 20 "‘ 1 worker weeks or $1500 weeks or $5000 4 workers 8, Gross sales Totals anytime in high quarter in high quarter in 20 weeks i e percent $40,000 or more (Economic class ll Employers 7,481 100 99 38 32 Gross payroll $132,979,696 100 99 79 73 $20,000-$39,999 (Economic class lll Employers 6,465 100 93 8 5 Gross payroll $ 34,594,864 100 98 28 16 $10,000—$19,999 (Economic class llll Employers 5,665“ 10o 91 1 1 Gross payroll $ 18,319,568 100 99 9 8 Under $10,000 (Economic class lVI Employers 1482b 10o s4 2 2 Gross payroll $ 17,467,920 100 96 19 15 All classes Employers 27,o93'° 10o 92 13 11 Gross payroll $203,362,048 100 99 59 53 a. Less than .5 percent. b. This number is an underestimate since the population is based on employers filing Social Security Wage Statements. l‘ employers with payrolls less than $150 per year and non-reporters. Most of these employers have annual sales less than $20,000. x exclusion has very little effect on total payroll. 10 s‘ . participation under Economic Class II E slowly from provision two (93 percent i and 98 percent of gross payroll) to pro- (8 percent and 28 percent respectively) j”- four (5 percent and 16 percent). How- provision five, coverage declines to a par- , onomic Classes III and IV (less than .5 r ployers and 2 percent of gross payroll). ~=- ation of Economic Class I employers who j» k of total payroll remains higher than in the remaining classes. Coverage of ll would have stayed at 100 percent under o and declines to 79 percent under three, I under four and 51 percent under five. j ass I employers would have been subject Q t, 38 ercent, 32 percent and 12 percent, y: , un er provisions two, three, four and yer Participation by Type of Farm l; e major products-—cash grain, livestock ranches, and cotton—accounted for 72 i exas farm gross payroll and 85 percent of 3 employers under provision one (Tables 6 3 ever, this predominance would have di- with the more exclusive coverage provi- f)» provision three, the percentage of total W ll represented by the three major products 3 61 percent and 69 percent of Texas farm _ PE o|= FARM, 1969 employers. It declines to 58 percent and 65 percent, respectively, under four and 53 percent and 56 per- cent under five. Participation of employers in the three major products decreases under the more exclusive criteria (Tables 8 and 9) because these product groups are made up of a very large number of small employers who do not hire sufficient labor to remain covered under the more exclusive provisions. Under provision three, the gross payroll of the three major products combined would have been covered at only 49 percent while all other products would have been covered at 82 percent. Only 11 per- cent of employers in the three major products, but 29 percent of those employers in other products would have been subject. With provisions four and five, respectively, 43 percent and 25 percent of the gross payroll of the three major products and 8 percent and 2 percent of employers would have been subject, while 78 percent and 57 percent of gross payroll and 26 percent and 11 percent of employers in other products would have been included. Vegetable and fruit and nut operations, on the average, are organized into larger labor-using units than are the three major product groups, and would have had the greatest coverage of any of the products. Provisions one and two would have provided univer- sal coverage of employers and gross payroll in these A"? STRIBUTION OF GROSS PAYROLL OF SUBJECT TEXAS EMPLOYERS UNDER FIVE SELECTED COVERAGE PROVI- Coverage provisions 1 2 3 4 5 1 worker in 2O 4 workers in 20 1 worker weeks or $1500 weeks or $5000 4 workers 8 workers anytime in high quarter in high quarter in 20 weeks in 26 weeks - percent 23 23 16 15 9 30 30 29 29 31 19 19 16 14 13 72 72 61 58 53 4 4 4 4 3 5 5 8 9 12 3 3 5 6 5 3 3 4 4 5 7 7 1 1 12 13 1 1 a a a 5 5 7 7 9 28 28 39 42 47 f ucts 10o 100 10o 10o 10o Y. r n .5 percent. 11 TABLE 7. DISTRIBUTION OF SUBJECT TEXAS EMPLOYERS UNDER FIVE SELECTED COVERAGE PROVISIONS BYil FARM, 1969 ,‘ Coverage provisions 1 2 3 4 1 worker in 20 4 workers in 20 1 worker weeks or $1500 weeks or $5000 4 workers Type of farm anytime in high quarter in high quarter in 20 weeks percent Cash grain 27 27 27 27 Livestock 35 35 24 23 Cotton 23 23 18 15 Subtota|—three major products 85 85 69 65 Other field crops 4 3 3 3 Vegetables 1 1 4 4 Fruit and nuts 1 2 5 6 Poultry 1 1 4 5 Dairy 4 4 1 1 14 General 1 1 a a Miscellaneous 3 3 4 3 Subtotal—other products 15 15 31 35 Total—a|l products 100 100 100 100 a. Less than .5 percent. products. Provisions three, four and five would have included 54 percent, 40 percent and 28 percent of employers in vegetables and 95 percent, 90 percent, and 78 percent of gross payroll. In fruits and nuts, 43 percent of employers would have been subject under provisions three and four and 11 percent under five, while 91 percent of gross payroll would have been covered under three and four and 49 percent under five. ECONOMIC IMPLICATIONS OF EXTENDING UNEMPLOYMENT INSURANCE TO AGRICULTURE Economic effects resulting from the inclusion of the Texas agricultural sector under the provisions of the Federal Unemployment Tax Act will be reviewed from the perspective of the employee, the employer and the effect on the Unemployment Insurance Sys- tern. Costs to the Unemployment Insurance System Benefit/taxable wage rates (the ratio of the sum of the benefits received by workers to the sum of taxable wages paid by employers) are presented in Table 10. The percentages presented in Table 10 can be interpreted from the three perspectives stated above in the following manner: 1) Employees—the rates associated with the row identified as Total is the ratio of 12 2 §I 3) benefits/taxable wages from all cov ployment. This is the proportion of? received by actual beneficiaries i; wages received by all workers. Agricultural employers—the avera j 4 unemployment insurance coverage l, a proportion of taxable wages paidfj workers. The percentages associate - row identified as Industry reflect th’ of benefits allocated to agricultural e accounts as a proportion of taxa_ paid by these employers. Benefits I cated in direct proportion to the i. of the beneficiaries total covered ea Q tween agricultural and nonagri I ployment. The Unemployment Insurance Sy percentages associated with the tified as Added relate to the ratio of benefits resulting from the inclus' agricultural sector as a proportion _ wages paid by agricultural employ benefits are defined as total benefi by actual beneficiaries minus ben on nonfarm covered earnings o agricultural wages is the same fi " calculate the Industry rate. A RIBUTION OF SUBJECT TEXAS EMPLOYERS UNDER FIVE SELECTED COVERAGE PROVISIONS BY TYPE OF Coverage provisions 1 2 3 4 5 1 worker in 2O 4 workers in 20 g g 1 worker weeks or $1500 weeks or $5000 4 workers 8 workers m anytime in high quarter in high quarter in 20 weeks in 26 weeks percent 100 93 13 1 1 2 '1 00 92 9 2 100 80 10 7 3 ' »- major ' 100 92 1 1 8 2 100 69 9 9 2 100 100 54 40 28 100 100 43 43 1 1 100 100 40 40 22 100 100 42 41 13 100 99 1 1 1 100 100 28 18 12 100 91 29 26 1 1 »-- in Table 10, the ratio benefits/taxable uite uniform over all five coverage provi- ’ cost to agriculture (Industry rate) ranges . rcent to 3.56 percent, with no consistent rging. The Added cost rates vary from 3.08 F asing slightly under the two most exclu- provisions. This indicates that on the p4 workers that would remain covered ‘more exclusive provisions would have re- PE OF FARM, 1969 ceived more benefits under nonfarm coverage than the workers covered under the more inclusive provi- sions. The ratios presented under the Total heading are consistently higher than those for the industry or added rows since they include all benefits and all taxable wages earned from all taxable employment of workers in the Texas agricultural labor force, both agricultural and nonagricultural. These rates are re- lated to the Added rates in that they measure the p‘ TRIBUTION OF GROSS PAYROLL OF SUBJECT TEXAS EMPLOYERS UNDER FIVE SELECTED COVERAGE PROVI- ‘t Coverage provisions 1 2 3 4 5 1 worker in 20 4 workers in 20 1 worker weeks or $1500 weeks or $5000 4 workers 8 workers anytime in high quarter in high quarter in 20 weeks in 26 weeks percent 100 99 40 34 13 100 100 57 53 36 100 97 49 38 22 = major ~ 100 99 49 43 25 l’ - s 10o 99 54 54 29 * " 100 100 95 9O 78 100 100 91 91 49 100 100 82 82 63 100 100 86 84 59 100 100 26 26 26 100 100 81 71 62 _r C 100 100 82 78 57 13 TABLE 10. BENEFIT/TAXABLE WAGE RATES UNDER ALTERNATIVE AGRICULTURAL COVERAGE PROVISIONS FORD, INDUSTRY AND ADDED COST CRITERIA, 1969a ,. Coverage provisions 1 2 3 4 1 worker in 20 4 workers in 20 1 worker weeks or $1500 weeks or $5000 4 workers Type of rate anytime in high quarter in high quarter in 20 weeks percent Total 4.10 4.00 4.15 3.94 Industry 3.47 3.41 3.54 3.50 Added 3.73 3.60 3.72 3.44 a. Calculated as (Sbenefits/Etaxable wages) X 100. relationship of total benefits to total taxable wages and, hence, reflect the importance of benefits re- ceived as a result of nonagricultural earnings. Similar to the Added ratios, the Total ratios, with but one exception, decrease as coverage provisions become more exclusive. The difference between the Total and the Added rates increases as coverage provisions be- come more exclusive. This supports the conclusion suggested by the direction of change of the Added cost ratios, namely, that on the average the workers cov- ered under the more exclusive provisions will have a greater proportion of their benefits charged against the accounts of nonfarm employers. Table 11 presents alternative benefit/taxable wage rates by coverage provision for workers with varying proportions of taxable earnings within the Texas agricultural sector. Earnings received from employment in the Texas agricultural sector as a proportion of total earnings, is a measure of attach- ment to the State's agricultural labor force. Workers with all of their earnings in the Texas agricultural labor force—those whose rates are represented in row A—would have all benefits charged against em- ployers in the Texas agricultural sector. The benefit/taxable wage rates for this group range from 3.23 percent for universal coverage to 3.8 percent for the most exclusive coverage of eight workers in 26 weeks. It is also seen from Table 11 that workers with TABLE 11. BENEFIT/TAXABLE WAGE RATES FOR THE TEXAS AGRICULTURAL SECTOR UNDER ALTERNATIVE l, PROVISIONS AND AMOUNT OF WAGES EARNED BY BENEFICIARIES FROM TEXAS AGRICULTURE, 1969a three-quarters, but less than 100 percent, p-I earnings from Texas agricultural employm‘ relatively lower cost rates than did the other f The reason for this is not readily apparent, an require more thorough analysis of the data. I reasonable that the cost ratios for groups C, l‘; that is workers who earn smaller amounts of T ,_ earnings from Texas agricultural employmen, have higher ratios of benefits to taxable wa for beneficiaries who earned all of their ea ' Texas agriculture. Most of the interstate I workers will fall into categories C, D and E. ’ J the workers for which the higher rates I expected. To gain an appreciation for the relative ' f extending Unemployment Insurance to riculture, a comparison of the estimated agricultural gross and taxable payrolls to i‘ actual covered gross and taxable payrolls g during the same period is presented in Ta i‘, Based on figures for actual covered n_ tural workers in 1969, extension of covera riculture in that year would have resulted in; tional $209,097,000 of covered taxable pa ] would have amounted to 2.4 percent of i? covered taxable payroll. An estimated $223, covered gross payroll (total agricultural. Coverage provisions 1 2 Texas agricultural 1 worker.in 20 3 4 4 workers in 20 earnings as a percent 1 worker weeks or $1500 weeks or $5000 4 workers of total earnings anytime in high quarter in high quarter in 2O weeks Industry rate in percent A 100% 3.23 3.28 3.44 3.46 B 75%— 99.9% 1.79 1.83 1.88 1.82 C 50%— 74.9% 6.65 6.29 6.52 6.36 D 25%— 49.9% 5.02 4.64 4.78 4.82 E .01%— 24.9% 5.68 5.42 5.63 4.88 a. Calculated as I! benefits/E taxable wages) X 100. 14 e been added, or about 1.3 percent of the 'ts charged against the accounts of Texas I - employers and first payments attributed 3e of the agricultural sector occur in greater , than would be indicated by the relative g- of taxable payroll. Assuming agricultural uring the period Iuly 1969 through June idata indicate that 14.4 percent of the total hich would have been paid would have utable to agricultural coverage. Twenty- - t of the total first payments would have uted to agricultural coverage. IX ted in the footnote to Table 12, the figures A cultural coverage relate to the coverage force during the period under discussion. ' age provision at that time was limited to fmployed for subject employers having at 1 workers for 2O or more weeks. The data agricultural coverage is for universal are not available to estimate the increase in 3» tural taxable payroll, benefits paid and nts under universal coverage. However, it e to estimate the relative impact under extended to agriculture corresponding to j g in 1969-1970 for the nonagricultural sec- j as. Under the criterion of four workers for Ire weeks, the proportion that agricultural ifiwould have contributed to the total payroll ve been .7 percent. Taxable agricultural ‘ould have been 1.3 percent of total taxable v a ith benefits paid out estimated at 14.4 per- jficiaries with covered agricultural earnings ‘ave been about one-fourth of all ben- 13 presents the net effect to the 1969 Texas ‘fit/taxable wage rate, assuming alternative the agricultural sector. The actual 1969 rate Texas employers was .35 percent. Accept- i’ eviously estimated agricultural rate of 3.47 i the net increase to the state rate would have 5 oximately .075 percent. Inclusion of all ag- ricultural payroll at an average rate of 3.5 percent would have therefore increased the state rate to .427 percent. A benefit/taxable wage rate of 7 percent would have increased the overall rate by .163 percent to about one half of one percent. Of interest to nonagricultural employers is the ability of the agricultural sector to ”pay its own way." Although some individual employer rates would be above the state maximum of 4 percent, the sector as a whole would be self-financing. The change in the overall Texas benefits/taxable wage ratio is so slight that the Texas ratio would change only seven- hundredths of one percent if the agricultural sector ratio changed from 4 percent to 7 percent (.513 per- cent less .449 percent — see Table 13). This minor change in overall rate is due to the small proportion that taxable agricultural wages are of total taxable wages. Employee Participation Extension of unemployment insurance legisla- tion to the Texas agricultural sector would have brought employees into the system under varying degrees of participation. Table 14 presents the esti- mated participation of the Texas agricultural labor force in the unemployment insurance program under alternative definitions of participation status. The most inclusive level of participation is de- termined simply by having been employed by a sub- ject employer. Under universal coverage all workers, by definition, have participated at this level. How- ever, under the most exclusive coverage provision examined in Table 14, the total labor force participa- tion declines to approximately 73 percent. At the in- termediate coverage provision of four workers in 2O weeks or $5,000 high quarter earnings, about 92 per- cent of the labor force would have participated. The next most inclusive level of participation is that of the potential beneficiary. To qualify as a poten- tial beneficiary under Texas legislation, a worker must: (1) have been employed by a subject employer; and (2) have earned at least $500 during the base period (for purposes of the study, the record year) COMPARISON OF COVERED GROSS AND TAXABLE PAYROLL AND ACTUAL BENEFICIARIES UNDER EXISTING Texas covered Texas covered IE AND COVERAGE INCLUSIVE OF THE AGRICULTURAL SECTOR, 1969-1970 Beneficiaries actual gross payroll gross payroll Benefits paid first payments Dollars lthous.) Percent Dollars (thous.) Percent Dollars Ithous.) Percent Number Percent ‘g a $ 223,638 1.3 $ 209,097 2.4 $ 7,625 14.4 34,982 25.0 ~ ralb 17,212,533 98.7 8,407,092 97.6 45,423 85.6 105,021 75.0 A 17,436,171 100 8,616,189 100 53,048 100 140,003 100 i figures for agriculture are based on provision one (universal coverage) while those for the nonagricultural sector are based on 4 20 weeks. First payments due to agricultural coverage exclude beneficiaries previously eligible based on nonfarm earnings. Department of Labor, Manpower Administration, Handbook of Unemployment Insurance Financial Data, 1938-1970. Washington, _: .L., 1971, p. 134. Data are weighted by respective 1969 and 1970 distributions for each item. 15 TABLE 13. EFFECT OF ALTERNATIVE AGRICULTURAL BENEFITS/TAXABLE WAGE RATES ON THE 1969 TEXAS U.l. TRUST FUND Indicated benefit/ Agricultural Actual Texas taxable wage rate benefit/taxable benefit/taxable after agricultural wage ratio wage ratioa coverage Percent ————————————— —— 3.0 .35 .415 3.5 .35 .427 4.0 .35 .449 4.5 .35 .452 5.0 .35 .464 5.5 .35 .476 6.0 .35 .488 7.0 .35 .513 a. Source: U.S.D.L. Handbook of Unemployment Insurance Financial Data, 1938-1970, Washington: 1971, p. 135. spread over two quarters with total earnings at least one and one-half times the high quarter earnings. At this level of participation 82 percent of the labor force would have participated under universal coverage. Under coverage provision five, somewhat less than 60 percent would have participated, with slightly over three-quarters of the labor force participating under the intermediate coverage of four workers in 20 weeks or $5,000 high quarter earnings. Actual beneficiaries are those workers who were employed by a subject employer, met the necessary monetary requirements to qualify as potential ben- eficiaries, and in addition were unemployed and met the subjective tests relating to the involuntary nature of the unemployment and their willingness to accept alternative employment under the prescribed legal conditions. At this level of participation, 34 percent of the labor force would have been involved under uni- versal coverage, somewhat less than a quarter of the TABLE 14. ESTIMATED TOTAL PARTICIPATION OF THE TEXAS AGRICULTURAL LABOR FORCE IN THE UNE INSURANCE PROGRAM, 1969-1970 work force would have participated under provision five. Slightly less than one-th' , work force would have been actual ben under the intermediate coverage provision, three. - The final and most exclusive level of f tion is the benefit exhaustee». The benefit e r the actual beneficiary who receives his to g merit based on previous earnings and attachment during the base period (defin g the record year), and the receipt of weekly i terminated by virtue of exceeding the --_ thorized benefit period. Under universal i. approximately 10 percent of the labor fo y‘ have been benefit exhaustees. Under the sive coverage provision analyzed on Tab proximately seven percent of the labor f have been benefit exhaustees with appro ' percent under the intermediate coverage - four workers for 20 weeks or $5,000 high Table 15 details the net increase in p I. of the Texas agricultural labor force in ployment Insurance program as a result off extended to agriculture. Some workers w ployed by agricultural employers are also I by nonagricultural employers subject to 1f sions of the Texas unemployment ins f, Therefore, the difference between total p __ of the agricultural labor force and net par u" obtained by simply subtracting those pe would have participated under each of the¢ tion status criteria under existing coverage is seen from Table 15 that the net increase in tion is approximately 80 percent of total p under all participation status criteria for -* tural coverage provisions illustrated. A pared against the total estimated agricul f force of 128,843, the data indicate that 65 r1 A 1 ( . Agricultural coverage provisions 1 2 3 4 1 worker in 20 4 workers in 20 Participation 1 worker weeks or $1500 weeks or $5000 4 workers status - anytime in high quarter in high quarter in 20 weeks (Percent of total labor force in parentheses) Total labor force 128,843 128,843 1 28,843 128,843 (100) (100) (100) (100) Number employed by 128,843 125,283 118,961 112,215 a subject employer (100) (97.2) (92.3) (87.1) Potential beneficiaries 105,754 102,969 97,670 91,585 (82.1) (79.9) (75.8) (71.1) Actual beneficiaries 44,002 42,218 40,913 37,908 (34.2) (32.8) (31.8) (29.4) Benefit exhaustees 13,665 12,892 12,726 1 1,030 (10.6) (10.0) (9.9) (8.6) 16 "ESTIMATED NET INCREASE IN PARTICIPATION OF THE TEXAS AGRICULTURAL LABOR FORCE IN THE UNEMPLOY- ‘RANCE PROGRAM, 1969-1970 Agricultural coverage provisions 1 2 3 4 5 1 worker in 20 4 workers in 20 8 workers 1 worker weeks or $1500 weeks or $5000 4 workers ~ status anytime in high quarter in high quarter in 20 weeks in 26 weeks _ (Percent of total participation status in parentheses) neficiaries 83,829 81,359 77,013 72,818 60,295 (79.3) (79.0) (78.9) (79.5) (79.9) iciaries 34,982 33,435 32,336 30,477 25,973 - (79.5) (79.2) (79.0) . (80.4) (84.3) p stees 11,099 10,422 10,256 9,046 ' 7,777 (80.6) (82.0) (84.6) f.» (81.2) (80.9) if d 8.5 percent of the agricultural labor force ~’ participants in the system at the level of "beneficiary, actual beneficiary and benefit e. Under the most exclusive provision the respective percentages are 46.8, 20.2 I; ent. Under the intermediate coverage pro- “a four workers in 20 weeks or $5,000 high I e net addition of potential beneficiaries is t of the estimated agricultural labor force. lneficiaries are 25 percent, and benefit ex- are 8 percent of the Texas agricultural labor s 16 and 17 compare average weekly benefit x" average duration of benefits, and total av- efits received by actual and potential ben- under agricultural coverage. Where data are I,’ comparisons are also made with the respec- I ~ . under existing coverage. 16 shows that average weekly benefit 5" average duration, and average total benefits _~_ i by actual beneficiaries under agricultural are very similar under all coverage provi- 5;»: yzed. Average weekly benefit amounts $34.39 to a high of $35.84 per week with duration of benefits between 8.43 and 8.71 verage total benefits received varies from a , ’ 10 and $311, for universal coverage and the iate coverage provision three, to a low of er the most exclusive coverage provision These figures are consistently lower than .~ 'ch actually prevailed under existing Texas n in the 1969-1970 period (column one, Table (- the values in column one of Table 16, an average figure M’ ed for the years 1969 and 1970 to more closely conform estimates obtained from the sample data. It is recalled I ' 0rd year from which the sample values are calculated is 1969 to Iune 27, 1970. Actual unemployment insurance " ~ ailable for the calendar years 1969 and 1970. (See note at f. of Table 16 for an explanation of the derivation of these The average weekly benefit amount under exist- ing Texas coverage was $39.52, average duration of benefits received was 11.2 weeks and average total benefits received was $443.00. The comparison of these figures with the agricultural sample indicates that the average income of actual beneficiaries under agricultural coverage was lower than the prevailing average of actual beneficiaries. The average total weeks of compensable unemployment was also less. Table 17 provides a comparison of average weekly benefit amounts, duration of benefits, and average total benefits received by benefit exhaustees under agricultural coverage. The only data available from published U.I. sources relating to unemploy- ment insurance coverage in Texas in 1969 and 1970 was average duration of benefits received. Similar to the situation existing for actual beneficiaries, it is seen that duration of benefits received by benefit exhaus- tees under existing coverage was higher than for ben- efit exhaustees under agricultural coverage. It is also interesting to note that while the average duration of benefits received by benefit exhaustees under agricul- tural coverage is higher than the average for all actual beneficiaries under agricultural coverage, the average weekly benefit amount is approximately $3.00 lower. However, duration of benefits received is long enough to increase the total benefits received by ag- ricultural benefit exhaustees by more than $100 over total benefits received by all beneficiaries. Costs to Texas Agricultural Employers Although coverage extended to agriculture would have only a minimal effect on the aggregate fund balance, the cost to the individual employer must also be considered since the employer tax rate is partially based on the unemployment experience of his workers as reflected in benefit charges to his ac- count. A comparison of minimum, maximum and average costs applied to alternative levels of taxable wages is presented in Table 18. (This rate applies only to the first $4,200 of wages paid per employee by each employer. Wages earned in excess of this amount are not taxable.) 17 TABLE 16. COMPARISON OF AVERAGE WEEKLY BENEFIT AMOUNTS, DURATION OF BENEFITS AND AVERA‘ BENEFITS RECEIVED UNDER ALTERNATIVE AGRICULTURAL COVERAGE PROVISIONS WITH EXISTING COVERAG 1”“ BENEFICIARIES, 1969-1970 ‘s Agricultural coverage provisions 1 2 3 4 Existing 1 worker in 20 4 workers in 20 1969-1970 1 worker weeks or $1500 weeks or $5000 f4 workers Benefit criteria Texas coveragea anytime in high quarter in high quarter ih 20 weeks Average weekly benefit amount $ 39.52 $ 35.84 $ 35.70 $ 35.52 $ 35.52 X Average duration of benefits received (weeks) 11.2 8.65 8.62 8.71 8.43 Average total benefits received $443.00 $310.00 $307.00 $31 1.00 $299.00 a. Source: U.S.D.L. Handbook of Unemployment Insurance Financial Data, 1938- 1970. Washington: 1971. pp. 324- weighted by the proportion of each year's dollar value of benefits to the sum over the two years. The minimum state employer tax to employers with no benefits charged against their account in the three most recent calendar years is .1 percent. All subject employing units must pay a net federal tax of .5 percent. 6 Hence, the minimum tax rate is .6 percent of taxable wages or $6.00 per thousand dollars of taxable wages. Conversely, the maximum rate under normal fund conditions is 4.0 percent, in addition to the federal rate, or a total of 4.5 percent of taxable wages. An employer subject to the maximum rate would therefore contribute $45 per thousand dollars of taxable wages. ‘Up to 2.7 percent of the 3.2 percent federal tax rate is offset in states meeting the minimum Federal requirements. The remain- ing .5 percent Federal tax rate is levied on all subject employers regardless of the State tax rate. TABLE 17. COMPARISON OF AVERAGE WEEKLY BENEFIT AMOUNTS, DURATION OF BENEFITS AND AVER? BENEFITS RECEIVED UNDER ALTERNATIVE AGRICULTURAL COVERAGE PROVISIONS, WITH EXISTING COVER F EXHAUSTEES, 1969-1970 \ S. ‘. The average cost rate is 3.23 percent versal coverage for workers who are empli“ in the Texas agricultural sector (Group A, ' Employers paying wages of $1.75 per hour q at the average rate would experience an ' labor costs of six and one-half cents per ho i labor costs for employers taxed at the mi ' __ would increase by one cent per hour. La I ' employers taxed at the maximum rate of a would increase by eight cents per hour. Earnings Received by Agricultural Em The operational impact from the e = unemployment insurance to agriculture is a deferred income to qualified workers w unemployed due to industry related causes f Agricultural coverage provisions 1 2 3 4 Existing 1 worker in 20 4 workers in 20 1969-1970 1 worker weeks or $1500 weeks or $5000 4 workers Benefit criteria Texas coveragea anytime in high quarter in high quarter in 20 weeks Average weekly benefit amount — $ 32.43 $ 32.15 $ 32.51 $ 32.88 X Average duration of benefits received (weeks) 17.3 13.32 13.30 13.26 13.29 Average total benefits received —— $432.00 $428.00 $431.00 $437.00 a. Source: U.S.D.L. Handbook of Unemployment Insurance Financial Data, 1938-1970. Washington: 1971. pp. 324- weighted by the proportion of each year's dollar value of benefits to the sum over the two years. 18 r LTERNATIVE EMPLOYER COSTS FROM EXTEN- L EMPLOYMENT INSURANCE TO AGRICULTURE Average cost for workers employed Minimum MGXIITBJITI only in Texas costa cost agriculture‘: $ 6 $ 45 $ 37.30 30 225 186.50 60 450 373.00 Federal tax plus .1 percent State tax. nt Federal tax plus 4.0 percent State tax. I nt Federal tax plus assumed 3.23 percent State tax. ‘vployment). While unemployed, workers 1 efits, the level and duration of which are l? upon their work force earnings and length g ent in covered industries during the first last five quarters of employment prior to A e initial claim. Total benefits drawn may f 27 percent of total wages earned during riod. The weekly benefit amount is equal ,1 ‘ghest quarterly earnings in the base period “benefits payable equal to the lesser of 26 Weekly benefit amount or 27 percent of total ‘- e base period. ‘it 19 shows average earnings of full-time ag- cworkers employed in Texas agriculture _ are compared with earnings of ben- ‘with Texas agricultural employment only hciaries who had agricultural employment as and in agriculture outside the State. ‘_ rs employed full-time (at least 50 weeks ‘ Texas agriculture earned an average of ‘I ' g the record year. Workers employed 4O eeks in Texas agriculture, with no out of tural employment, earned an average of g would have received an average of $251 in F‘ total earnings of $3,606. Interstate agricul- , ers with 40 or more weeks of employment '9 average of $2,941 from all sources of em- and would have drawn an average of $182 for a total of $3,123. figures developed in Table 19 indicate that .= gricultural workers receive on the average k omes than workers with 40 or more weeks 1 ent who, in addition, could have drawn fits. Actual beneficiaries who worked in i "culture for 40 or more weeks received 88 .1 the earnings of full-time workers em- I‘ Texas agriculture. They received benefits of week for an average of 5.88 weeks or a total benefits. The total estimated income of this _ cluding benefit payments received while Q ed, was slightly less than 95 percent of the - eived by full-time workers. yciaries employed for 40 weeks or more as agricultural workers, doing some agricul- tural work in Texas as well as in other states, received an average of $2,941 from all employment. U.I. ben- efits would have been received for an average of 4.69 weeks with an average weekly benefit amount of $38.87. The total income for this group of workers would have been $3,123, or 82 percent of the earnings of full-time agricultural employees in Texas. Workers employed for at least 40 weeks out of the year could be expected to accept full-time employment if it were available. The data presented above indicates that, for the sample studied, unemployment insurance benefits provide a deferred income during periods of unemployment, but do not increase total earnings up to the level of that received by full-time workers. Cost Incidence for Benefits Received by Actual Beneficiaries Employees are divided into two groups to facili- tate a discussion of the employer cost incidence for benefits received. The effects of extending unem- ployment insurance to interstate seasonal workers, and to other workers who have been employed by employers in addition to their Texas agricultural em- ployers (groups B-E, Table 11), will be treated first. The second group includes workers in group A, Table 11, that is, workers employed only in the Texas ag- ricultural sector. Benefits Received by Interstate Seasonal Workers Unemployment insurance, in addition to provid- ing partial income maintenance during periods of involuntary unemployment, can result in income transfers into the state. Under Texas legislation, the cost borne by employers of beneficiaries, if more than one, 15in proportion to total wages received by ben- eficiaries. For example, 50 percent of the actual benefits received by a worker earning half of his taxable wages fromTexas agriculturalemploymentwouldbe charged to his Texas agricultural employers. The other half would be charged to employers outside of the state. This pattern of cost distribution is economically advan- tageous to employers, workers and the local commun- ity. TABLE 19. COMPARISON OF AVERAGE EARNINGS FOR FULL-TIME AGRICULTURAL EMPLOYMENT WITH EARNINGS RECEIVED BY BENEFICIARIES WITH FORTY OR MORE WEEKS OF EMPLOYMENT, 1969-1970 Beneficiaries Full-time Workers workers with 40 or Interstate Texas agr. more weeks agr. employ- only (50 or of work, ment with more weeks Texas agr. 40 or more Income statistic of employment) only weeks of work Average wages $3,806,00 $3,355.00 $2,941.00 Average benefits - 251.00 182.00 Total income 3,806.00 3,606.00 3,123.00 19 An advantage is gained by workers since all wages, rather than only the Texas portion, are used to determine duration and amount of benefits received. Secondly, Texas employers are charged only on that portion of wages earned in Texas, and thirdly, the local community in which the unemployed worker resides receives a positive income transfer equal to the amount of benefits charged to employers outside the community. This latter effect may be quite important in areas such as South Texas, which is a "home base” for a large number of interstate agricultural workers. Many of these workers earn a portion of their income outside this home base area. The weekly U.I. benefits received by them while residing in South Texas will have a positive impact on the local economy.’ Table 20 shows that for each dollar of benefits received by workers earning from 75 percent to 99 percent of their income in the Texas agricultural sec- tor, an additional $.12 was associated with em- ployment outside the sector. The transfer is $.56 for workers earning 50 to 75 percent of their total earn- ings in the Texas agricultural sector, and $1.78 for those earning 25 to 50 percent. For those earning less than one-fourth of their total earnings in the Texas agricultural sector, benefit transfers of $6.40 would have been realized for each dollar of benefits charged to employers in the Texas agricultural sector. While the data suggest that potentially large in- come transfers into the state are possible, it is unlikely that sizeable benefit outflows would occur. Table 4 shows that Texas agricultural employers hire rela- tively few workers from out of state, indicating very few benefit transfers from Texas agricultural em- ployers to out of state residents. Benefits Received by Employees With Texas Agricultural Employment Only The nature of the employer-employee relation- ships for regular workers may be much different from that for interstate seasonal workers. The latter group has very formal and sporadic associations with their employers while the former, especially on smaller farms, may have a very informal association. It is much easier to discuss benefits received by interstate seasonal workers in purely economic terms than for workers who have a stronger noneconomic attach- ment to their employers. It may be quite common for certain employers, such as cash grain employers, to have slack periods of employment during the winter months. Currently these employers may keep workers on their payroll in 7It is possible that some of the benefits would be attributed to local nonagricultural employment and thus not be considered as new income to the community. This is most likely to occur with work- ers earning from 75 percent to 99.9 percent of their income in agriculture. 2O TABLE 20. BENEFIT TRANSFER RATIOS FOR THO AGRICULTURAL SECTOR . Benefit transf> (Universal ~-f_c Percentage of total earnings from Texas Agriculture 100% $ .00 "- A B 75%- 99.9% _ .121, c 50%- 74.9% f, .56 n 25%- 49.9% " 1.18, E .o1%- 24.9% 6.40. a. Benefits charged to employers outside the Texas sector for each dollar of benefits charged to Texas employers. : order to tide them over these slack perio_ passage of unemployment insurance, howev may be an increased economic incentive to lay off these workers and save salary costs. I, situation, it is quite likely that the worker wo i an economically disadvantaged position a f sage of unemployment insurance. It is very to accurately assess the extent to which t occur. As can be developed from Table » minimum cost per employer paying tot :; wages of at least $4,200 would be $25.20. employers of full-time workers experiencini ' employment during the year, this would - * tent of the added labor cost charged to the e l c; If the employer elects to lay off the worker d slack periods, his cost would likely increa j; the normal maximum of $189. The differ tween the cost of maintaining the work payroll and $163.80 is the amount that saved by the employer electing this option... In addition to the monetary costs, the y’ would also have to take into consideration; monetary benefits of keeping the work i payroll over the slack period. An added be obtained only if any payments in kind worker receives actually have marketa i Many farm workers receive as part of their * use of a house. If the house remains vacant worker is unemployed, the farmer does rental income from it. Likewise, it may be - impute a market value on the food or other in kind provided the worker. i ’ w. CONCLUSIONS AND DISCUSSI Agricultural employers with sales of “i; more, while accounting for 29 percent of ~ I tural employers in the state, paid out w; the total payroll. At the other extreme, the '1 with sales less than $10,000 made up 28 p f, employers, but paid out less than 10 percev payroll. Moving from universal coverage tural employers to less inclusive covera f employers make up an increasingly larger , _ of total subject employers. Coverage exten_ 4 workers in 20 weeks or having a 5,000 in the high quarter would include ;nt of all farm employers in the state. lese employers pay almost 60 percent of i rm payroll. Of all employers covered " 'terion, over three-fourths would have mic Class I, having sales of $40,000 or g to yet more exclusive coverage provi- workers in 20 weeks and eight workers " e proportion of subject farm employers ‘11 percent and 3.5 percent, while total ’% covered declines to 53 percent and 34 Everall effect on the Texas state ble wages ratio due to inclusion of the ; sector under unemployment insurance ould be minimal. The data indicate that, ge, the agricultural sector would be self- ] though the actual ratio of benefits as a "of taxable wages would be above the 4 Q” um state rate for some employers. the unlikely hypothetical event that all employers would experience _le wage ratios as high as 7 percent, the t0 nonagricultural employers would have n seven hundredths of one percent of es. f5~ of unemployment insurance under fr her than universal coverage would con- ‘ er a greater proportion of payroll than lUnder the most exclusive coverage provi- covering employers hiring at least g for 26 or more weeks, three percent of _ rs and 34 percent of the payroll would § vered. Twelve percent of the employers ver $40,000, accounting for 50 percent of oll, would have been covered under this y comparison, under the intermediate four workers for 2O or more weeks or a quarter payroll, 15 percent of the em- 59 percent of the payroll would have Pd. Concurrently, under this provision ent of the employers with gross sales g0 representing almost 80 percent of the a covered. ‘l; three-quarters of the total payroll and 85 lemployers were associated with either livestock, or cotton operations. The aver- a of workers per operation, however, was iii r than for the remaining 15 percent of the which included dairy, fruit and vegetable i This is illustrated by the very rapid de- proportion of total employers covered lmore exclusive provisions. Under the in- f provision, four workers in 20 weeks or quarter, only 11 percent of the three p-uct group employers would remain cov- _g ting for 49 percent of total payroll. By , almost 30 percent of the remaining em- ployers and 82 percent of the total payroll wouldhave remained covered under the intermediate provision. Under the most exclusive coverage provision analyzed, two percent of the major product group employers representing 25 percent of the payroll would have remained covered. Respective figures for the remaining product groups are 11 percent of the employers and 57 percent o the payroll. The benefits/taxable wages ratio provides a measure of program costs to employers. Benefits re- ceived by workers, as a result of coverage extended to the Texas agricultural sector, would have ranged from 3.47 percent of , taxable agricultural payroll under universal coverage, to 3.56 percent under the provision eight workers for 26 weeks. A rate of 3.54 percent was estimated for the provision four workers in 20 weeks or $5,000 of high quarter earnings. Using the same ratio as a measure of benefits received by workers, the data indicated that benefits paid to workers with only Texas agricultural em- ployment averaged between 3.23 and 3.8 percent of taxable agricultural wages received. Workers receiv- ing from 50 to 74.9 percent of total wages from em- ployment in the Texas agricultural sector received benefits totaling 6.65 percent of taxable agricultural wages. Agricultural wages paid in Texas during the period under study represented slightly over one percent of total wages paid in covered employment assuming agricultural coverage in 1969. An estimated 2.4 percent of taxable payroll would have been allo- cated to agriculture during the same period. How- ever, benefits paid to agricultural workers would have been slightly over 14 percent of total benefits paid. About one-fourth of the first payments would have been paid to agricultural workers. Although the amount of benefits paid to agricultural workers would have been quite disproportionate to the amount of taxable payroll represented by agriculture, the actual increase to the overall state ratio of benefits to taxable wages would have been less than one-tenth of one percent under universal coverage. Under agricultural coverage an additional 35,000 actual beneficiaries, representing approximately 27 percent of the agricultural labor force, would have been added in 1969-1970. Under the intermediate coverage provision approximately 32,000 persons or 20 percent of the agricultural labor force would have been new actual beneficiaries, with approximately 26,000 or 25 percent of the agricultural labor force participating as actual beneficiaries under the cover- age provision eight workers for 26 weeks. The average weekly benefit amount, the average duration of benefits received, and the total benefits received consistently would have been lower for workers receiving benefits as a result of agricultural employment than the averages which actually pre- vailed in Texas during the study period. For the 21 former, the weekly benefit amount was $35, with benefit duration approximately 81/2 weeks and with the range of total benefits received falling between $294-$311, depending on the coverage criteria. By comparison, the prevailing average weekly benefit amount in Texas was $39.52, the average du- ration 11.2 weeks, with average benefits totaling $443. As a group, only agricultural workers receiving their maximum entitlement, and thus becoming ben- efit exhaustees, approached this latter figure, averag- ing between $420 and $432 per beneficiary. Under normal conditions the employer assumes the full cost of supporting the unemployment insur- ance system. Employers paying the current max- imum state rate of four percent and the net Federal rate of .5 percent of taxable payroll would pay a total of $189 for each worker earning at least $4,200. This amount would be proportionally reduced for earn- ings less than $4,200. The minimum employer cost on wages of $4,200 would be $25.20. Full-time agricultural workers with wages from employment in the Texas agricultural sector only earned average wages of $3,806 per person over the record year. Workers employed at least 40 weeks in the Texas agricultural sector only, but who also would have drawn benefits against covered employ- ment, averaged $3,606 per person, of which $251 was from unemployment insurance benefits. Finally, the data indicated that interstate seasonal workers em- ployed over 40 weeks per year received from all sources an average of $3,123 per person, of which $182 was from unemployment insurance benefits. Extension of the Unemployment Insurance Program to the agricultural sector would provide a deferred wage to interstate seasonal workers who reside in the Lower Rio Grande Valley. Agricultural employment opportunities have been declining for these workers in recent years, and nonagricultural employment opportunities have lagged behind those available in other parts of the state. Benefits received by these workers during periods of involuntary un- employment would be based on their non-Texas as well as their Texas employment. Benefits received from wages earned outside the state, or for that mat- ter outside the region, would provide a direct, posi- tive impact to the economy of the Lower Rio Grande Valley. Since unemployment insurance benefits are tied directly to the worker's unemployment history dur- ing the past year, the continuance of the right to receive benefits would be contingent upon the worker's employment during subsequent years. Un- employment insurance benefits, unlike welfare pay- ments or the food stamp program, are tied directly to employment and wage history, and thus have a posi- tive built-in work incentive. The advantages of extending unemployment in- surance to regular workers are not quite so clear cut, 22 however. Employers who face a normal seas _ cline in activity may have a sufficient incenti ' off a worker during this period, allowing '9 lect unemployment insurance benefits, thu normal payroll costs. In this case, the work be receiving a lower income after coverage u __ The extent to which this would occur is very ‘*1 to assess accurately. If the fnoneconomic a the employer-employee relationship outw economic and the employee is not laid off, t ~‘ employer cost would be $25.20 for an annu wage of $4,200, declining proportionately wages. a Coverage of the agricultural sector und sions of the Federal Unemployment Tax A. bring under coverage one of the two maj still excluded in the private sector and afford an insurance and income maintenance p currently unavailable. If viewed from t; economic perspective, a compelling case isi extend coverage to workers on larger farms ' a more formalized employer-employee rel similar to that existing in the nonagricultur‘ The situation is less clear in the case of wo ployed on smaller operations and enjoyin informal association with their employers whole, extension of coverage to these work raise employer costs by a minimum of onj hour and a maximum of eight cents per offer an insurance protection against ind, duced unemployment which can be vie t fringe benefit. ' Limitations of the Study This report provides a partial assessml economic effects resulting from the inclu " Texas agricultural sector under the provisi. Federal Unemployment Tax Act. No a =- been made to analyze the added adminis den placed upon local unemployment ins sonnel as a result of increased claims. U‘ both supply and demand for agricultural occurred since 1969. The implications, changes have not been included in this a f For analysis purposes, it was necessa A the one year period from lune 30, 1969 1970 as both the record year and the base p a; is, this one year period was used both vii compensable unemployment as well as t; received. It is very difficult to estimate ho any, bias was introduced by this techniq Additionally, extension of social volves considerations other than strictly f administrative. The relative importance L political and social values cannot be trea stants over time. Reasonable men reacting t ing goals and ideals may be expected to a H ing weights to each of these factors. a ‘T Relations Counselors, Inc. An Historical Basis for '. ~ t Insurance. Minneapolis: The University of v Press, 1934. p. 66. , Gaston, ”American Social Security in a European ," The American System of Social Security. New raw-Hill Book Company, 1968. p. 219. loyment Commission, Texas Farm Labor Annual _ , Austin, Texas: TEC, 1970. p. 9-10. ' and Fiber Facts, 1971 , The Texas Agricultural Exten- _.;-~" and The Texas Agricultural Experiment Station, tion, Texas, 1971. ~ W and Fiber Facts, 1972, College Station: Texas A&M _ , Texas Agricultural Extension Service and Texas p- l Experiment Station, 1972. ‘sion-state legislated minimum employment or requirements for compulsory employer participa- l’ the unemployment insurance program. “loyment (Covered Industry)—employment for ‘gemployers meeting specified requirements under A... insurance legislation must make contribu- A - State and Federal unemployment insurance funds “'1: em loyees. For ease in presentation, the terms - in ustry" and "covered employment” are used ously since proposed legislation would cover em- ‘_ nt in the agricultural industries treated in this yers—employers of covered employment who meet 4 ' ements of State legislated coverage provisions. : Payroll—total payroll under any coverage provi- the first $4,200 of wages per worker employed by employer. percentage of taxable payroll paid by subject em- ' : to the unemployment insurance State and Federal Unemployment—that type of unemployment for j benefits will be paid to former workers of subject v ers. For purposes of this study, compensable unem- l nt was liberally defined; all weeks of nonwork with -- tion of school attendance, sickness, injury or paid n were considered compensable. The categories of _' -_ house" and "retired" were considered compensa- ‘fi ough they are not so considered under current legis- a Literature Cited A 6. Texas Good Neighbor Commission, Texas Migrant Labor, The 1968 Migration, Austin, Texas: T.G.N.C., 1968. 7. LI. S. Census of Agriculture, 1940, Washington, D.C.: U.S. Bureau of the Census, 1940. Volume II. 8. LI. S. Census of Agriculture, Texas, 1969, Washington, D. C.: U.S. Bureau of the Census, 1970. 9. U. S. Department of Labor, Bureau of Employment Security, Unemployment Insurance for Farm Workers. Washington, D.C., USDL, 1953. p. 8. 10. U. S. Department of Labor, Manpower Administration, Handbook of Unemployment Insurance Financial Data, 1938-1970, Washington, D.C.: U.S.D.L., 1971. Glossary of Terms Base Period-the first four of the last five completed calendar quarters preceding the filing of the initial claim. Potential Beneficiaries—employees who have sufficient covered earnings to qualify them to receive benefits when unem- ployed. Actual Beneficiaries—a potential beneficiary who has one or more weeks of compensable unemployment during the record year. Record Year—the period June 30, 1969-]une 27, 1970 was used for purposes of determining both yearly earnings and benefits received. Benefits-—the money payments received by actual beneficiaries as a result of involuntary unemployment. Benefits/Taxable Wages-—the ratio of unemployment insurance benefits received by workers to the taxable wages paid by employers. The ratio is a measure of program cost when viewed from an employer perspective and a measure of income transfer when viewed from a beneficiary perspec- tive. Taxable wages are defined as the first $4,200 of wages paid by a subject employer to an employee. All Employers—all employers of agricultural labor, including farm employers, nonfarm agricultural employers and crew lead- ers. Benefit Transfer Ratio—the amount of employee benefits charged to subject employers outside of the Texas agricultural sector associated with each dollar of benefits charged to the subject employers within the Texas agricultural sector. U.I.—Unemployment Insurance. 23 Appendix A Methodology Two separate surveys were made to obtain the necessary information to determine the costs to em- ployers from extension of unemployment insurance to the agricultural sector in Texas as well as to deter- mine the impact of benefits received by workers. 1 The first of these was a sample of agricultural employing units. The second survey was a sample of the indi- viduals employed by these employing units. The sample of agricultural employing units was based on the 1969 universe of agricultural employers meeting the minimum qualifications for participation in the OASDHI (Social Security System). To qualify for provisions of this act, an employer must have paid in wages to a worker in his employ at least $150 in a calendar year. Hence, the universe from which the employer sample was drawn is much smaller than the total number of agricultural units in the State. In fact, this universe is a sub-sample (Economic Classes I-IV) of the so-called commercial farms (Economic Classes I-V as defined by the Bureau of the Census). Employer Survey The basic universe listing of the 35,385 agricul- tural employers filing annual reports with OASDHI in 1969 on Form 943 were ranked by size of payroll and ordered into 1O equal payroll strata. The 15,044 employers reporting during the first quarter of 1969 on Form 941 were treated as a separate 11th stratum. A 12th stratum was defined which included those agricultural employers employing 3O or more indi- viduals in 1969, but who were not included on the OASDHI list. These were delinquent reporters, non- reporters and those filing reports from another state, but having agricultural operations in Texas. Finally, a separate strata of crew leaders not included on Forms 943 or 941 was defined. From the above lists, which comprised the total universe from which the sample was picked, a sample of 2,865 employing units stratified by payroll was selected. The sample was selected to yield a mean payroll estimate with less than one percent error at the 95 percent confidence level. Employer survey forms were sent to this group, of which 1,235 or 43 percent returned a completed form. Worker Survey A sub-sample of employers from the employer survey was selected for worker interviews. Em- ployers previously selected for inclusion on the em- ployer survey were considered for inclusion based on the number of wage items as reported on the 1969 OASDHI list, as well as the amount of total agricul- tural sales in their county of reference. Large farms located in counties with very heavy agricultural ac- ‘Some data values presented in this publication may vary slightly from values presented in other reports due to computer rounding discrepancies. 24 tivities were sampled at a higher proportio than were the smaller employing units or thi ploying units located in counties in which a ' contributed a smaller proportion of total in i Standard questionnaires were admi f throughout all 15 states for both the employer ’ worker surveys. The employer question tained information concerning the type of --‘ size of business as determined by gross a '1 sales, total payroll and total number of wor A I ployed on the farm. In addition, a 52-week the weekly employment history of the empl p_ also obtained as well as information con é fringe benefits. The worker survey obtained detailed _ week information concerning the worker's p . type of employment and the amount of ea R ceived. In addition, information concerning unemployment during the record year defin ,j 1, 1969 to Iune 30, 1970 was obtained. Af economic and sociological data pertaining to r patterns, community participation, and de A, formation concerning employment activiti day of interview was also obtained. A more c discussion of sampling methodology can be W. W. Bauder, I. G. Elterich, R. O. P. F i, I. S. Holt, Impact of Extension 0f Unemploym ance t0 Agriculture, Report submitted to U.S. ment of Labor, October 31, 1972. Post Stratification for Worker Sample ‘A The cooperative participation of the State the NE-58 Research Project stipulated an period during the months of October, 1970 to » 1971. Although it was realized that there is a c; range of agricultural production in the state, it} sidered to have been cost-prohibitive to intervie ers at their peak level of employment. The y‘ stratification procedure utilizing population valu 4 from the OASDHI wage item population data ' more accurately estimate the population characte The population of all wage items may if into a two-way table of wage item strata indexi classifying them by s‘ (a) amount of wage item indexed h (b) the number of employers (i) who worker during the calendar year. Denote by Nhi the number of wage items stratum h, i. Unfortunately the OASDHI data o_ the marginal totals Nh = i‘) Nhi. However, for _l the corresponding sample frequencies nhi are? Confining this discussion to a range of i = 1 e y i = 3 employers these frequencies are set out in T 2The authors are indebted to Professor H. o. Hartley ment of the post stratification procedure. 1 ~ LE AND POPULATION FREQUENCIES We now turn to the stratified sampling estimation of OF WAGE ITEMS an item total such as “benefits.” We use as strata the fol- lowing strata of workers: l Sargple 3 Social Security n N TABLE 2. NUMBER OF WORKERS IN STRATA FOR ‘ ‘ OASDHI POPULATION nh_ nh bih # of employers Wage item bracket(s) l 1a,, N; h n N i= 1 a wh ibte the number of wage items in bracket h h,h' rker withi employers by 1 - 3 whh’ lbhxhn (l) i = 3 whhlh" A; - survey number of wage items in bracket h, i. ‘ Denote by bh, bhhr, bhhrhn the benefit sample totals for all efmmate thfinumbe‘ 9f "Y°"‘°‘s with i = l sampled workers in the above strata and by wh, whhw, > a smgle wage (Item) fanmg Into bracket h by whhihr» (as before) the number of sampled workers, then the post stratified estimator of the benefit total would be computed from f. “n1 a —- (2) ‘L nh I b b I bhhfil" v l§=ZWh-h-+E Whh»l‘3-+ Z "whhlhn———— n wn n