Farms that use H-2A workers will be allowed to pay them significantly lower wages under a sweeping overhaul of the program’s wage regulations announced by the Labor Department on Monday.
For most H-2A workers, annual increases in the minimum wage after 2022 will no longer be determined by the Agriculture Department’s annual survey of farmworker wages but will instead be based on a national average measure of wages known as the Employment Cost Index, as reported by the Bureau of Labor Statistics.
For those workers, H-2A wage rates for 2021 and 2022 will remain at the 2020 levels, which were based on the 2019 USDA survey. USDA announced earlier this fall that it was discontinuing the Farm Labor Survey but was ordered by a federal judge last week to resume conducting it.
The change is a victory for farm groups that have been lobbying the Trump administration to change the way the department calculates the H-2A wage minimums, known as the “adverse effect wage rate,” or AEWR.
The Labor Department, which made the changes in a final rule made public on Monday, estimates the wage cuts will save employers $148 million in 2023 and $158 million in 2024.
The AEWR was intended to ensure that farmers can't undercut domestic workers by importing cheaper foreign labor, although in its economic analysis of the rule, the department acknowledged that the wage cuts would encourage farms to rely more heavily on foreign workers imported under the H-2A program. Most H-2A workers are Mexican.
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Wages for supervisory employees hired under the H-2A program will be calculated not on the ECI but on the average hourly wages for the occupational classification reported by the BLS Occupational Employment Statistics Survey program.
In announcing the rule, the Labor Department said the final rule "improves the consistency of the AEWRs, provides stronger protections for workers, and establishes better stability and predictability for employers in complying with their wage obligations."
The new methodology will “address stakeholder concerns about the potential for significant and unpredictable wage changes from year-to-year associated with the Department’s prior AEWR methodology, while ensuring better wage protections for United States workers similarly employed in higher-skilled agricultural jobs," the department said.
The wages in USDA’s Farm Labor Survey increased annually by 4.5% from 2015-2019, while the ECI rose by an average of 2.5% a year over the same period, according to data economist Stephen Bronars provided to the National Council of Agricultural Employers.
In a statement, Ag Secretary Sonny Perdue said the rule will help producers by "delivering lower costs when they need it the most."
“Over the past several years farm wages have increased at a higher pace than other industries, which is why this DOL rule could not come at a better time," he said. "This is an example of good government that will ensure greater stability for farmers and help them make long term business decisions rather than facing uncertainty year after year.”
For 2020, the H-2A rates rose 6% on average to $13.99, and some states saw increases of up to 10%. The AEWR for Ohio, Indiana and Illinois rose 10% to $14.52 an hour and 9% in Missouri and Iowa to $14.58 an hour.
More than 220,000 H-2A positions were approved through the first three quarters of fiscal 2020, including 21,000 in California, according to DOL's quarterly report. Florida leads the nation with 28,005.
Zippy Duvall, president of the American Farm Bureau Federation, welcomed the rule.
“Farmers are committed to paying their employees a fair wage, but the existing system sets unpredictable rates that make it hard for farmers to remain competitive. The Department of Labor’s decision to maintain current pay rates for the next two years for the majority of H-2A employers provides stability during the uncertainty created by the pandemic and trade imbalances," Duvall said.
"While this decision does not solve all of the wage issues, it is a step in the right direction. We look forward to continuing our work on meaningful agricultural labor reform through the regulatory or legislative processes.”
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