Feb. 27, 2025
One reason Oregon struggles to attract business investment is the state’s political culture, which undervalues the private sector. In the Legislature, this culture is manifested frequently as a willingness to shrug when businesses warn about the likely effects of proposals that would harm them – and often their employees, too.
Case in point: The 2022 Legislature’s passage of House Bill 4002, which initiated a multi-year phase-out of Oregon’s longstanding agricultural overtime exemption. In 2023 and 2024, employers were required to pay overtime to agricultural workers after they’d worked 55 hours in a week. The threshold is now 48 hours per week and will become 40 hours per week in 2027.
At the time lawmakers were considering HB 4002, the Oregon Farm Bureau submitted a report explaining the bill’s likely effects. Because farmers in Oregon compete with those in other states and countries, they can’t easily pass along increased costs to buyers, who can shift purchasing to lower-cost suppliers. Meanwhile, Oregon’s mix of high-labor crops, including tree fruits and berries, makes many of the state’s farmers particularly vulnerable to policies that ramp up labor costs.
For many specialty crop farm sectors, the report predicted, “an overtime rule could result in very high pay rates that may exceed the economic means of growers.”
While proponents of HB 4002 may have assumed that agricultural workers would continue to work the same number of hours and earn a lot more money, such an outcome is simply at odds with economic reality.
Instead, the report concluded, three things were likely to happen:
- Employers would reduce farm labor hours.
- Employers would hire additional workers to reduce overtime pay.
- Some employers would reduce standard wage rates to partially offset the effects of mandatory overtime.
The Legislature passed HB 4002 anyway.
To assess the law’s effects, economists at Oregon State University collected anonymized payroll data covering 2022 and 2023 from several dairies, nurseries and cherry farms. Beginning in 2023 – the first year of the overtime threshold – per-hour pay went up for many workers, but overall pay went down. In other words, farmers adjusted to the new law by limiting workers’ hours, just as the Oregon Farm Bureau’s report predicted they would.
The OSU economists, who reported their findings in a Jan. 31 blog post, noted that farmers controlled labor costs in other ways as well. Some operations have reduced year-end bonuses. Others “report feeling less pressure to increase the base-wage rate of employees that now earn overtime pay.”
Reducing overall pay for farm workers hardly seems like the sort of outcome HB 4002’s backers were hoping for. Nor is the following prediction offered by OSU’s economists: “On the employee side, we should expect some farm workers to seek second jobs, which may be with other farms, our outside of agriculture.”
The consequences of HB 4002, which will intensify as the overtime threshold drops, make a compelling case for legislative reconsideration.
Meanwhile, the lesson of HB 4002 – that policymakers should take the input of businesses seriously when proposing to regulate them – is one legislators should apply to several highly destructive bills now under consideration. These include SB 916, which would make striking workers eligible for unemployment benefits (for which employers pay); HB 3062, which would make developing industrial land within UGBs nearly impossible; and HB 2640, which would decriminalize certain types of theft, trespass and criminal mischief.
Oregon needs businesses to create jobs, support philanthropy and generate tax revenue. Dismissing their well-founded concerns about potentially damaging legislation is a surefire way to erode the conditions they need to thrive, harm the people they employ, chase private investment to other states and erode financial support for public services.