California farm employers could see their H-2A wage bill fall by more than $100 million this year under a new federal wage rule, according to a new analysis from the Giannini Foundation of Agricultural Economics.
The paper examines the Trump administration’s rule changing how the Department of Labor sets Adverse Effect Wage Rates, the wage floor intended to keep foreign guest workers from undercutting U.S. farmworker wages. DOL shifted from USDA’s Farm Labor Survey to the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics survey and created separate wage levels for entry-level and more experienced H-2A jobs. The rule also allows a lower wage for H-2A workers in employer-provided housing.
The change is especially significant in California, where the 2025 AEWR was $19.97 per hour. The paper estimates California’s 2026 Skill Level I AEWR at $16.45 and Skill Level II at $18.71, with a $3 housing adjustment. But because California’s minimum wage rises to $16.90 in 2026, employers would still have to pay at least that amount. DOL’s own H-2A guidance says employers must pay the highest applicable wage, including the AEWR, prevailing wage, collective bargaining rate, or federal or state minimum wage.
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The authors estimate California H-2A wage costs would drop 15%, from $655 million to $555 million, if employers pay the state minimum wage. Monterey County would see the largest savings, at nearly $30 million, followed by Santa Barbara County at $15.3 million, Sonoma at $7 million, Riverside at $5.8 million and San Benito at $5.1 million.
The rule has sharpened a long-running divide over H-2A costs. Western Growers said the change provides relief to growers facing rising labor expenses, while noting employers still must pay the highest required wage and cannot reduce wages on previously filed job orders. Farmworker advocates argue the rule will suppress wages for H-2A workers and domestic workers in corresponding employment. The United Farm Workers, UFW Foundation and individual workers sued DOL in federal court in November, seeking to block the rule nationwide.
The researchers caution that growers may not immediately cut wages to the minimum. Non-H-2A workers make up about 95% of California’s farm workforce, and many H-2A employees return year after year. Reducing wages, they write, could hurt retention, morale and productivity, while potentially pushing more growers to outsource seasonal work to farm labor contractors.
