WASHINGTON, May 27, 2015 – Ranchers and farmers who raise sheep and goats in the Western U.S. are up in arms over a Labor Department (DOL) proposal that would in many cases triple the wages of the foreign workers who tend to their livestock on the open range.
To soften the impact, DOL is proposing a five-year “phase-in” period for the new wage levels with employers paying 60 percent of the new rate in 2016, increasing by10 percent each year until the full increase is reached in 2020. Employers in most states are currently required to pay a minimum of about $750 a month to the shepherds, as well as provide their food, equipment and mobile housing for the long months the workers spend on the open range with their flocks. The minimum in California is around $1,600 a month and in Hawaii, $1,422. With the increases proposed by DOL, the wages in most of the 19 large sheep-raising states would jump to over $2,400 by 2020.
"It is highly unlikely that sheep producers could absorb the proposed extra costs and many, if not all, of them will be forced out of business, meaning the end to family farms and the loss of thousands of U.S. jobs throughout the American West," Peter Orwick, executive director of the American Sheep Industry Association (ASI), said in an interview.
The proposed wage increases would apply to about 2,500 non-immigrant workers – mostly from Mexico and Peru – with special H-2A visas employed as sheepherders, goat herders and for the production of livestock on the open range. But Orwick said the end of those jobs would have a cascading effect on others, pointing to studies showing that each H-2A herder position creates eight U.S. full-time jobs.
While the Labor Department acknowledges that the proposal will have “a significant economic impact on a substantial number of small entities,” Orwick said the agency seems to be disregarding the businesses that supply those employers or process their products.
Orwick points to the recommendations provided to DOL by Julie Shiflett with Juniper Economic Consulting, commissioned by ASI. Her paper examined a feeder-lamb operation in Idaho with an H2-A herder caring for a flock or “band” of 900-1,200 sheep, an operation that she said was typical of Western sheep operations with animals grazing on federal lands.
Shiflett concluded that tripling labor costs, which account for 40 percent of total operating expenses, would reduce income above operating costs for a 1,000-head ranch selling feeder lambs from over $83,000 to less than $17,000, or by $66,167 (about 80 percent).
“An estimated loss of $66,167 per rancher means that not only is the rancher suffering a debilitating loss, but his or her local economy is losing as well," Shiflett said, resulting in estimated losses up and down the supply chain of almost $230,000. "Given an estimated 598 operations employ herders, the total local loss is an estimated $137.1 million in rural communities across the West,” Shiflett found.
DOL justifies the proposed wage increases by noting that except in California and Oregon, where pay for the sheep and goat herders is linked to state minimum wage rates, wages for these occupations have virtually stagnated since 1994.
“In the vast majority of states, sheep and goat herder wages have increased only $50 per month in the most recent 20 years of the (H2-A) program,” DOL said in its filing in the Federal Register.
DOL reviewed the wage rates and other provisions of the H2-A program as the result of a 2011 lawsuit filed by four former herders who alleged that the “special procedures” that informally govern the program had been arrived at without proper rule-making. The special procedures covered workers who were needed on the job 24 hours a day, seven days a week for months at a time, conditions that were unacceptable for most American workers. The court dismissed the lawsuit, but an appeals court reversed the decision and directed DOL to put the special procedures through the rule-making process. The proposed rule went into the Federal Register April 15, with a comment period that has been extended until June 1.
Clint Krebs, a former ASI president who runs three bands of sheep from his ranch in eastern Oregon, defended the prevailing wages and rebutted allegations by farm-worker activists, including the Catholic Migrant Farmworker Network, who charge that the pay scale and working conditions amounted to “indentured servitude.”
“I can provide thousands of stories from men who are proud of what they do and what they can do for their families in their home countries,” he said. While acknowledging that the wages may seem low, some workers have been known to put their kids through medical school in Peru, or build houses for their relatives.
Krebs feels the DOL has failed to take into account the sheep industry’s proposals on wages, which were based on the federal minimum wage and government nutrition programs, along with updated costs estimates for the food, housing, transportation and other costs that the employer covers.
“They either didn’t read it, or they ignored it entirely,” Krebs said. “Their proposal doesn’t include any of our suggestions. Unless this changes, it’s going to have an enormous negative affect on the industry,” he said.
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