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216: The Harsh Truth About Ranch Labor No One Wants to Say Out Loud · CattleUSA Daily

• 0:03
  Welcome to the Cattle USA Daily podcast, your go to source for
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  the latest livestock markets, industry insights and the
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  updates shaping agriculture today.
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  I'm your host Lauren Moylan, a passionate advocate for
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  agriculture, here to keep you informed and connected.
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  Now let's dive into today's episode.
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  Labor on a ranch is a touchy subject.
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  Everyone knows that good help is extremely hard to find.
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  Everyone knows good wages have climbed.
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  And everyone knows that you cannot run an operation cow,
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  calf, stalker, seed, stock, whatever, without people.
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  But here's the tension most ranchers feel and almost nobody
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  wants to say out loud. You know what labor is worth,
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  and you also know what you can realistically afford.
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  And those numbers don't always match.
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  So today we are tackling that head on.
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  The real economics of ranch labor, the hidden costs nobody
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  talks about, and how to make labor decisions that actually
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  fit your operation instead of sinking it.
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  Before we jump into this episode, this is a labor
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  discussion about current labor conditions in the United States,
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  not for foreign work labor restrictions that we are seeing
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  in agriculture. That is a whole nother topic in
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  and of itself. That could be an episode all by
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  itself. So I just want to make that
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  caveat that that that today's labor discussion is about
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  current work labor in the United States, not foreign work
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  restrictions and visas and all of those other things that we
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  could unpack in a completely different one.
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  So let's dive in. Most ranchers are running with
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  one of three problems. 1, underpaid labor that's doing the
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  work of three people. I think we've all been there.
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  Number two, family labor that actually isn't priced into your
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  operation at all, even if you're not paying your family.
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  And #3 hiring decisions based on emotion, not economics.
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  Here's what's real here. Skilled ranch labor, someone who
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  can doctor, feed, fix, manage, ride, operate equipment and not
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  burn your operation down, is worth about 45 to $65,000 per
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  year plus housing in most states.
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  But most ranches don't have the cash flow to support that.
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  So you get in this really weird pressure cooker expectations of
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  a $60,000 employee on a $36,000 budget.
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  And resentment builds on both sides.
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  Not because ranchers are stingy, not because workers don't want
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  to work, but because margins are thin and the economics rarely
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  pencil out cleanly. When you hire a full time hand
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  at $40,000, that's not the actual cost.
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  Your real labor cost includes wages, payroll tax, workers
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  comp, housing and utilities, beef or fuel allowance,
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  equipment use, horse feed if that's part of the deal, time
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  spent training and time spent fixing mistakes.
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  By the time you add it all up, your $40,000 employee cost you
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  easily 55 to $62,000 a year. And here's the kicker, if your
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  ranch isn't generating that in net revenue, not gross, you're
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  not hiring an employee, you're subsidizing one.
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  Good ranch help is worth a lot, and the ones who are worth the
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  money, they know that they're worth it.
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  These are people who can pull a calf and actually save it, Weld
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  the water gap that keeps on breaking, manage 500 plus pairs
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  without burning out, sort doctor, read cattle, and just
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  generally think ahead. Show up early and sober, work
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  without someone breathing down their neck.
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  These people are rare and they should be paid well.
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  The problem is most ranches aren't structured to actually
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  afford them long term. So the labor crisis in ranching
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  isn't a people problem, it's a math problem.
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  If you can't afford what labor is worth, you've got 3 paths.
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  Option one, increase capacity without increasing labor.
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  This is where technology and infrastructure actually pay.
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  Things like automatic waters, remote water monitors, better
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  handling facilities, feed systems that cut labor hours in
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  half, and better pasture design. Anything that reduces repetitive
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  tasks saves thousands of dollars in labor costs overtime.
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  Most ranches don't have a labor problem, they have a system
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  problem. Option 2, outsource jobs instead
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  of hiring full time. Paying a contractor $50.00 an
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  hour for fencing a few days a month is actually cheaper than
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  paying an employee $55,000 a year to do everything else
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  poorly outsourcing the things that don't require full time
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  hands like fencing, welding, trucking, or spraying.
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  Now you've got option 3, Redesign your ranch around what
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  you can actually personally manage.
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  This is 1 very hard pill to swallow, but if your labor
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  budget is breaking your operation, the operation needs
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  to shrink, simplify, or restructure.
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  You can't run a 400 Cal outfit on a 150 Cal budget.
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  The math simply won't let you. Now let's talk about family
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  labor, because family labor is the biggest invisible cost in
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  ranching, and it hides the true economics.
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  If Mom is feeding cows every morning and Dad is fixing waters
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  and the kids are sorting pairs every weekend, that labor still
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  has value. You're just not writing a check
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  for it. For ranches that want to scale,
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  transition, or bring the next generation in, you have to start
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  pricing your labor, even if no dollars actually change hands.
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  Because until you do, you'll never know what your operation
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  actually cost to run, or whether hiring that outside help is even
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  feasible for your operation. Here is the bottom line.
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  You pay people based on two things.
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  Their skill level and the revenue your ranch can
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  realistically generate. If a hand is worth $55,000 but
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  your ranch can only support $38,000, you can't pay them
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  $55,000 just because they're great.
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  You will bankrupt yourself. And if you can only afford
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  $38,000, you're not going to get a $55,000 employee.
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  It's not personal, it's not disrespect, it is simple
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  economics. The right hire is the one whose
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  value matches what your operation can support.
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  Not what the industry says, not what your neighbor pays, what
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  your math says. You can't always compete on
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  salary, but you can compete on some other things.
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  Things like culture, housing quality, which that could be a
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  whole podcast in and of itself of ranches having good housing
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  quality and not putting their people up in glorified shacks.
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  You got flexibility, predictable hours, treating people like
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  humans, you got providing training or certifications, and
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  you've got giving responsibility instead of micromanagement
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  within operations as well. Good people will work for less
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  money if they are treated well, respected and given a good
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  living environment. Bad people will cost you triple
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  no matter what you pay them. So here's the truth about ranch
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  labor. Everyone wants to pay fairly.
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  Everyone wants quality help. But the economics on most
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  operations are tighter than people want to admit.
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  You bridge that gap with systems with efficiency, with clarity,
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  and with honesty about what you can actually afford.
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  Because at the end of the day, paying someone what they're
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  worth only works if your ranch can survive paying it.
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  Thank you for listening to another episode of the Cattle
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  USA Daily Podcast. I'm your host, Lauren Moylan.
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  Thanks for listening to another episode and we will see you all
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  next time.