Adding additional work off-the-farm*
As farm families consider adjustments to their cost of living for 2017, they may also be considering additional off-the-farm employment. A recent newsletter article, "Why have farm family living expenses been identified as a problem?" provided resources for taking a closer look at living expenses. If a careful analysis of the farm finances determines living expenses to be a concern, the simple answer is to either cut back on expenses or create more income. The decision on what to do next isn’t that simple. If cutting excess expenses isn’t enough, it is important to consider the costs as well as benefits in taking on additional work away from the farm operation.
Some costs such as travel and clothing expenses, childcare, etc. have obvious monetary value. Other costs have a subjective value and vary with each family’s situation. The costs and benefits of the job, such as salary, health insurance, psychological boost, social contacts, and time away from family and farm work need to be analyzed and discussed by those affected before deciding on a second job. In today’s work environment, there may be opportunities for telecommuting or part-time work done through a home office that fits into a farm family’s routine without creating major disruption.
Job related expense vs. income and benefits
Job related expenses and the income and fringe benefits for each employment opportunity should be considered in a potential multi-income household. Which person has the greater net earning potential due to special skills or past training also must be considered. The balance of physical labor skills of each party and management contribution will be different for each family.
Some expenses such as lunches or household help may be reduced when working only part- time. Other expenses such as travel, special clothing or tools often take a larger proportion of the income from a part-time job. Parents with young children usually have higher work- connected expenses than parents with older children. If work hours can conform to the child’s school day or at a time when the other spouse can do the childcare, working part-time may reduce or eliminate the need for childcare. Another thing to consider are the employee benefits such as paid vacation, health insurance, and pension credits that are not extended to part-time employees.
Access to employer based health insurance coverage may be as important as a salary. Examine multiple health insurance options, including different levels of coverage through private plans, employer plans, and market place plans. Discussing the effects of private health insurance on farm expense categories versus employer provided plans with a tax professional may bring up deductions or cost savings beyond the cost of the plans.
The accompanying worksheet helps you focus on whether taking a job away from the farm will be worthwhile. It encourages you to gather information and provides a basis for discussion before taking any off-the-farm job. By using it, you will have an estimate of the net gain or loss from an additional off-the-farm job. It can be used to compare the costs and benefits of alternative full-time and part-time job opportunities.
The total economic, social, and psychological changes to the family environment need to be part of the worksheet exercise and discussion.
The human conflicts that can result when time is divided among the farm, family, other personal responsibilities, and the job activities need to be discussed with all family members.
Questions to stimulate discussion
The following questions can provide direction for the family’s discussion concerning the costs and benefits of the second job.
1. Will the amount of money made or the job itself satisfy the reasons for going to work?
2. Will the amount of money earned meet individual or family expectations? Consider the opportunities that are available including:
- working full or part-time, including opportunities that might allow telecommuting,
- starting an entrepreneurial business from home or another location and,
- short-term "gigs" or freelancing.
3. What adjustments will other family members need to make if one person accepts employment in the non-farm labor force? Examples of personal and farm responsibilities are:
- increased household tasks, care of other family members,
- increased farm tasks, especially for seasonal farm needs, and
- more responsibility for religious, educational, social and civic activities.
4. Will the money or other job benefits compensate for the necessary family adjustments?
5. Would additional education or training be beneficial or necessary to obtain employment?
6. Are there long-term benefits that have not been evaluated; for example, increased Social Security benefits, retirement income, improved insurance protection, improved job skills obtained, or training for independent living? Gained skills may contribute to the farm operation as well (i.e. improved computer skills).
Going to work for the first time, adding a second job, or starting over again nearly always provides special personal meaning. As the new worker’s earnings increase, the family unit may begin to show increased financial gains, increasing the family’s sense of security and personal comforts. With some financial pressures lessened, couples may be able to plan their lives more creatively and feel in control of their future.
The 2012 Census of Agriculture reported that 62 percent of farm operators worked at least some days off the farm. That statistic includes the 52 percent of principle operators who consider their primary occupation something other than farming. Off-farm employment is common. An important first step, before making significant changes, is a close look at how additional employment impacts the farm operation and family responsibilities.
Further resources for looking at farm business and family finances, visit the Iowa State University Extension and Outreach Ag Decision Maker Financial page or the Human Sciences Family Finance website.
The worksheet on the following pages is also available as AgDM Decision Tool, Computing Benefits from Adding Additional Off-farm Work.
* This article is a revision, the original, written by Gary Vogt, former extension farm management specialist, appeared in the October 1999 Ag Decision Maker newsletter.