Nebraska Feedlot Labor Survey Finds Higher Costs, Labor Supply Issues Amid Rising Inflation

The Nebraska Feedlot Labor and Management survey, conducted by Nebraska Extension and Nebraska Cattlemen, reveals notable changes in labor costs and compensation within the state's feedlot industry. From 2015 to 2021, total employee compensation across all feedlots nearly doubled, highlighting significant financial shifts in the sector. Despite this increase, wages have not kept pace with inflation, indicating ongoing economic challenges. The survey, which also sheds light on hiring difficulties and management practices, provides a crucial benchmark for feedlot operators to navigate labor costs and industry trends effectively.

Study PDF

 Highlights

• The total dollars paid to employees across all feedlots had increased from $862,636 in 2015 to $1,573,885 in 2021.
• The average salary for employees across all feedlots reported an increase from $47,841 in 2015 to $50,531 in 2021.
• The average value of benefits for employees across all feedlots also increased from $7,224 in 2015 to $10,541 in 2021.
• Thinness in the responses from feedlots impacted the ability to report estimates for several positions by feedlot one-time head capacity.

Abstract

University of Nebraska Extension and Nebraska Cattlemen, Inc., conduct The Nebraska Feedlot Labor and Management survey roughly every five years. The survey started in 1990 to collect data on general management practices within feedyards as a national flagship for management and labor costs. The results of the survey are intended to provide information on the current labor costs for Nebraska feedlots and allow comparison with the past benchmark surveys to show how costs have changed over time by feedlot capacity. Participants were invited to fill out the survey if they were alumni of the University of Nebraska-Lincoln (UNL), attended a Nebraska Extension-sponsored feedyard program, or were current members of Nebraska Cattlemen, Inc. The 2021 survey was mailed out to participants and participants were able to either complete the form and return it by mail or submit the responses online.

This current labor report received responses from 93 feedyards total, however only nine responses were sufficient to use for data. The data came from Nebraska feedyards that range in size from as small as 18 head capacity to as large as 93,000 head capacity. Labor costs are broken down by job title per size of the yard. Yard sizes are divided by max capacity size into three categories: less than 4,000 head, 4,000-12,000 head, and greater than 12,000 head. The average maximum capacity of the responding feedyards was 23,190 head with an average head-to-employee ratio of 114-to-1.

The average total compensation (total wages, bonuses, and benefits) across all positions reported was $62,330.47. When compared to the previous 2015 survey the average total compensation was $60,590.59, which is an increase of a rate of 2.8% over 5 years. This change in wages was below the inflation-adjusted total compensation rate of $66,152.14, indicating that the total compensation in feedyards has not kept pace with general inflation measures.

Introduction

The University of Nebraska and Nebraska Cattlemen surveyed Nebraska feedyards in the spring of 2021 to evaluate labor costs and current management practices. The survey asked feedyard managers for general information regarding feedyard operation characteristics, capacities, cattle management, pricing, risk management, and investment in technology. The overall purpose of the labor and management survey was to provide the Nebraska feedyard industry with general information on practices and provide a benchmark for the type and cost of labor being used.

The largest portion of the survey focused on labor costs. This section asked feedyard managers for information on employment types, compensation, hiring challenges, job descriptions, performance reviews, and salary adjustments. Employee and manager labor costs have a significant impact on the productivity and profitability of feedyards. Wages, benefits, and bonuses are a few mechanisms to attract and retain employees. This is particularly important in a small employment market where wages and benefits should reflect the skills and technical ability of workers.

This report focuses on reporting the wages/salaries, bonuses, and benefits by position and feedyard size in Nebraska. Respondent confidentiality is required to be maintained so wages/salaries, bonuses, and benefits are only reported if there were three or more respondents. Due to the thinness in responses for certain positions, an asterisk (*) denotes the positions that did not have at least three responses but for which responses were received. However, the information is still used to calculate the averages across total yards for each position. Only feedyards that responded for a specific position are reported. Blanks indicate that no response was received. The results of this survey are intended to be used as a benchmark for feedyard operators to compare their labor and wages.

Survey Methods

Surveys were mailed out in March 2021 to feedyard managers that were either a) alumni of UNL, b) attended a Nebraska Extension-sponsored feedyard program or c) were current members of Nebraska Cattlemen, Inc. Managers had the option to respond to the survey by either returning the mailed hard copy using a pre-addressed and stamped return envelope or entering their responses online. To encourage more participation in the survey, additional reminders were sent out as postcards in April 2021. The majority of respondents returned the hard copy as their preferred method of completing the survey.

The labor portion of the survey identifies 13 different employment positions within the feedyard. The information requested for each position was as follows: number of employees, number of vacancies, average years of experience, average education level, base pay, benefits, bonus amounts, time off allotted for vacation, holidays, and sick days. New for the 2021 survey is information regarding immigration status, use of H-2As for non-domestic employees and average hours worked per week per type of employee. The total compensation was calculated for each position reported by calculating the base salary, annual bonus and value of benefits. 

Results and Key Findings

Responses

The 2021 labor survey received responses from 93 feedyards total however the data from nine feedyards were sufficient to use for analysis. To ensure data quality and reliability, responses from feedyards were not included if the data was incomplete, had extreme deviations, or data was obviously falsified, which created large outliers in results. In the 2021 survey, feedyards ranged in size from 18-93,000 maximum head capacity with an average capacity of 23,190 head. The survey was originally scheduled to be delivered in March 2020. However, the COVID-19 pandemic halted these efforts. We believe this significantly had an impact on the number of responses received. For example, the nine total useable survey responses in 2021 compared to 29 in 2015. This variation was even greater by feedlot size. Comparing the 2021 (2015) survey, the following differences in responses were noted by feedlot size: 2 (6) in the “less than 4,000 head capacity” category, 4 (14) in the “4,000-12,000 head capacity” category, and 3 (9) in the “greater than 12,000 head capacity” category. Thus, caution should be used when using these results to make generalized claims.

Relative compensation over time

The average total compensation of all employees per feedyard almost doubled from the 2015 survey ($862,636) to the 2021 survey of $1,573,886. The amount of total compensation paid to administrators was 41%, and the remaining was paid to feedyard workers and laborers. Full-time employees were paid 97% of the total compensation. (Table 1).

Openings and Hiring Needs

40 openings were reported across all positions and all feedyards. The average number of full-time employees across all feedlots was 15.8 with an average of 2.2 employees that were first-generation immigrants. The average hours worked per week across all employees was 52.2 hours (Table 2). The 2015 survey averaged 15.3 full-time employees. First-generation immigrants and average hours worked per week were not reported.

Human Resources Employee Review and Compensation Adjustment Program

In 2021 an average of 89% of feedlot employees had written job descriptions for their full-time positions and 94% had annual performance reviews. Wage adjustments were most commonly made across all feedlots every 12 months (Table 2). Compared to the 2015 survey, only 27.6% had written job descriptions and 51.7% had annual performance reviews. Yearly wage adjustments were also the most common practice.

Hiring Challenges

The two biggest hiring challenges that feedlots faced were lack of work ethic followed by higher and more competitive salaries set by other employers (Table 3). In the prior 2015 survey, the competitive salary moved up from the fourth position in hiring challenges. Lack of work ethic was also the biggest challenge reported in the 2015 survey followed by lack of skill set.

Documented Foreign Workers

Responses for the H-2A data were also extremely limited, with only one feedyard reporting employing H-2A workers from January 2020 to December 2020. The feedyard that utilized the H-2A program found the process very difficult to obtain an H-2A visa and verify legal immigration status documents for the hiring processes.

Full-time Salary and Benefits by Job Position and Feedyard Capacity

The 13 full-time employee categories are displayed in Tables 4-16. Each table provides information on the number of employees, number of vacancies, average length of service, average education level, average hours worked, compensation, benefits, and bonuses. The following are some highlights from these tables:

1. Average total compensation for managers across all yards was $81,700. The lowest was $55,000 and the highest reported was $144,000 (Table 4). These numbers are down from the prior survey: the average across all yards was $112,349, with a low of $60,000 and a high of $270,000.
2. Benefits for each position were reported by type and their value in their respective tables. For example: feedyards reported that 100% of managers receive a vehicle, 61% receive health insurance, and 67% receive disability insurance. The average value of benefits for managers was $13,922 (Table 4).
3. Average total compensation for assistant managers across all yards was $81,500. The lowest was $62,500 and the highest reported was $96,000 (Table 5) These numbers are also down from the prior survey: the average across all yards was $84,545.70, with a low of $52,000 and a high of $270,000.
4. The non-administrative average total compensation across all yards ranged $45,416 for general laborer to $73,450 for yard foreman (Tables 4-16). The average total compensation across all full-time employees was $62,330 (Table 21).

Part-Time Wages by Job Positions and Feedyard Capacity

For part-time employees of all positions, the average total compensation was $33,740 and ranged from $30,000 to $48,700. Average hours worked were not reported for part-time positions. Most positions reported both base salary and base hourly wage, however, the method of pay was not specified on this survey. The average base hourly wage across all positions was $18.72 and ranged from $14.62 to $26.71. The average value of bonuses for those that received them was $500 and the average value of benefits for those that received them was $1000. (Table 17)

Combined (Full-time + Part-time) Compensation

There were 14 part-time positions reported across all feedlots, with an average salary of $32,640. Some part-time positions did receive bonuses (14%). The average value of benefits was $1,000 (Table 17). In 2015, there were 29 part-time positions reported, with an average salary of $7,464. Approximately 28% received bonuses with no part-time positions received benefits.

Historical Trends

Analyzing and comparing the benchmarks, the average base salaries increased by approximately 15%, however, for managers, mill foremen, and office managers, the average base salary did not increase (Table 18). The hourly base pay increased by approximately 16% (Table 19). The average total compensation (base pay plus benefits and bonuses) also increased approximately 15% for eight of the 13 positions. Manager, assistant manager, mill foreman, cowboys, general laborers, and office managers, total compensation did not increase when compared to 2015 (Table 21). Large feedyards offered higher compensation packages in all positions except yard foreman, feed truck driver, head cowboy, and general laborer. When comparing compensation packages in the prior survey, the midsized yards offered higher packages across most positions. This is assumed due to employees in smaller yards having duties and responsibilities that cover more than one specific position or job title.

The data for specific labor costs in 2021 were calculated, recorded, and compared with the previous benchmarks. Tables 18-21 compare the base salary, base hourly wage, value of benefits and total compensation for each position from 1990-2021. The benchmarks indicate an overall increase in compensation and benefits, and only a few positions reported decreases when compared to 2015. Managers, assistant managers, mill foremen, cowboys, general laborers, and office managers showed a decrease in average total compensation. Mill operators and head cowboys reported a decrease in the value of benefits.

A Point of Caution

This survey was conducted during the ongoing COVID-19 pandemic, which significantly impacted feedlot operators. We believe this in turn affected the number of feedyards that responded to the survey. There were relatively fewer individuals who participated. Thus, caution should be used when using this data for benchmarking. There has been a significant increase in inflation since March 2021 – approximately 13% from March 2021 to July 2023. The results from this survey suggest only a 2.8% increase in the average total compensation from 2015. Greater participation in the next survey is vital to accurately report benchmark trends given the recent high inflationary environment.

Conclusions

University of Nebraska Extension and Nebraska Cattlemen, Inc., have conducted the Nebraska Feedlot Labor and Management survey roughly every five years since the start in 1990. Labor costs continue to trend up while difficulty in finding employees also continues to increase, providing additional strain to management’s profitability practices. High inflation percentages for 2021 (7%) and 2022 (6.5%) haven’t been seen during the history of this survey. The highest inflation was seen in 2007 at 4.1% and average total compensation increased across the board by 18% from 2004 to 2010, except for maintenance foremen, which stayed approximately the same.

Tables

To view a PDF of all tables, click here. 

Due to space limitations, some tables below are scrollable and all data may not be displayed at one time on your screen. 

Kimberly J (Rieck) Enger, Graduate Student at the University of Nebraska-Lincoln

Elliott J. Dennis, Assistant Professor at the University of Nebraska-Lincoln

Galen Erickson, Professor at the University of Nebraska-Lincoln

Andrea Watson, Assistant Professor at Concordia University