Volume 6, Number 1, Winter-Spring 1997

Crew Workers Divide Evenly in
Views on Hourly vs. Piece-rate Pay

Gregory Encina Billikopf

This is an abridged version of "Crew workers split between hourly and piece-rate pay," published in California Agriculture, Volume 50, Number 6, November-December 1996. Copies of the original version, as well as other articles by Billikopf published in California Agriculture, are on-line at: http://www.CNR.Berkeley.EDU/ucce50/research/7rsearch.htm.

Piece-rate pay is the most common incentive offered to crew workers. It can result in higher wages for crew workers and increased productivity for growers. These gains are not always achieved, however. Many farm employers are concerned that quality suffers when workers are paid by the piece. Even when quality concerns can be overcome, there may be other challenges. Why is it, for instance, that some workers do not seem motivated by piece-rate work? Do worker attitudes about the pay basis affect their productivity?

Despite the potential benefits of piece rate, crew workers often prefer hourly pay. I personally interviewed 211 workers in 1995 who were evenly divided between those favoring hourly pay and those preferring piece rate. The most common reason for preferring piece-rate pay was increased earning potential. Workers could earn more in fewer hours of work, even though it took more effort to do so. Workers also liked being able to work at their own pace without being externally pressured. One said that piece-rate work was more exciting and less boring. But many crew workers expressed concern about how piece rates are determined.

Workers preferring hourly pay spoke of three general reasons (from most to least frequently mentioned): (1) the piece rate is unfair, (2) the pace of hourly paid work is better; and (3) other benefits are associated with hourly pay.

While growers feel that workers are generally pleased with incentives, they are often disappointed in or frustrated by the quality of work that results, the lack of any change in worker performance, and even their own difficulty in setting standards. These factors are closely related. The main reason workers prefer piece-rate pay is a desire to get the work done quicker and earn more. A secondary reason is to escape the nagging or carrilla that sometimes accompanies hourly work. Another reason cited in one case was the use of "rabbits" -- that is, the practice of paying a couple of workers under the table to work faster in an effort to get more out of an hourly crew without having to pay more.

But workers are hesitant to give their all when they fear that piece rates are not firm. "If I knew what I was being paid by the tree thinned, I would have already finished this row," a crew worker explained in an earlier study (California Agriculture, January-February 1995). Complicating the task of setting fair rates is the variability of crop conditions from year to year. Employers who fail to do their homework in setting piece rates sometimes ask workers to go ahead and work for a rate that will be announced later, or they have workers perform by the hour for a couple of days and then set the piece rate. In either case, workers soon learn that the faster they perform during these initial periods, the lower the rate will be for the rest of the job.

At times, employers make a mistake in gauging pay standards and end up paying more than they think they should. Some have reduced the piece rates after realizing this. In doing so they lose employees' trust and make workers hold back, fearful that superior performance will bring down their wages -- if not immediately, maybe next season. Other employers set piece rates too low to begin with, so crew workers don't think the work is worth their effort.

Workers who prefer hourly pay like to avoid the games associated with piece-rate pay and feel more comfortable in slower paced hourly working conditions. Laboring by the hour can be substantially calmer, and breaks can be more enjoyable. Although in theory piece-rate workers can take a break whenever they want, in practice they often forgo breaks because they are not compensated for break time.

Worker differences accounted for some of the variance in workers' desire for piece rate or hourly pay. Both gender and age were somewhat related to preference; males and younger workers were more likely to prefer piece rate. However, it is important not to generalize about either gender or age in terms of individual employee abilities.

Recommendations

Here are a few recommendations for farm employers who would like to consistently achieve higher worker performance under piece-rate pay:

• Think more in terms of how much it should cost to do a job, rather than how much to pay a worker per hour. In a properly constructed incentive pay system, the more the worker earns, the better off the employer is as well.
• Set standards carefully and inform workers of the piece rate ahead of time. Fair piece-rate formulas can be developed taking into consideration crop density and (where records exist) labor costs.
• Once a pay level is set, it should not be reduced.
• Provide training and performance appraisal early on, when workers change from one task to another. Even better, crew workers should earn the right to work on piece rate when they have proven their full understanding of expected quality, and not before.
• Add quality incentives to piece-rate pay to reward employees who consistently achieve high quality. Additional training or corrective action can be implemented when employees consistently perform below quality standards.
• Where weather and crop conditions permit, hire fewer workers, so they can work over a longer season.
• Encourage workers to take breaks. This may take some creativity, such as bringing in warm bread or cold sodas.
• Make sure that workers are paid regularly.
• Consider offering health insurance for year-round employees, whether they are paid on an hourly or a piece-rate basis.
• Where possible, provide hourly paid jobs for workers who prefer hourly pay over piece-rate pay.