The wage-setting methodology for H-2A workers has long been a contentious topic. A Florida judge recently rolled back a 2023 rule that confused that methodology and inflated the Adverse Effect Wage Rate, simplifying how wages are set.
The Adverse Effect Wage Rate (AEWR) is the de facto minimum wage for H-2A workers in the United States. The AEWR is set annually and differs from state-to-state depending upon the prevailing wage of the local agricultural workforce. Because all H-2A workers are in the United States temporarily to work in seasonal agricultural jobs, and employers must prove there is not an ample local workforce before hiring foreign workers, the AEWR is always higher than the local minimum wage. The H-2A program is designed to discourage employers for seeking foreign labor via the inflated cost of wages and the other auspices of the program like employer-provided housing, transportation, healthcare, and administrative fees.
Before 2023, the AEWR was determined by the Farm Labor Survey, which gathered data specifically related to field work to determine wage rates. The annual survey considered how much farmworkers were paid for specific tasks like thinning fruit, picking fruit, pruning, and so on. Those tasks were then aggregated into the AEWR for each state.
After 2023, the AEWR methodology also required consideration of additional on- and off-farm tasks as assigned like driving workers from housing to a worksite or tending to livestock. Those assignments then had to be calculated at a separate rate and in a separate manner on pay stubs and in accounting. So, if an H-2A worker spent an hour each day driving his or her colleagues to and from a worksite, it had to be assigned a different wage code and tracked separately from the rest of their fieldwork duties as assigned.
Returning to the simplified wage system, while not a complete solution to the problem of the AEWR, is certainly a step in the right direction.
Now is the time for the U.S. Department of Labor to step in and revise the AEWR rules further by allowing prevailing wages to drive rates. The H-2A program is already cost-prohibitive before wages are calculated. Employers are required to cover administrative fees that can amount to thousands of dollars per worker application before a worker visa is approved.
In addition to administrative costs, employers must provide and maintain federal- and state-approved and inspected housing, transportation, and health care for H-2A workers. Any “gift” or “incentive,” for example a bag of toiletries or stocking of a pantry in a housing unit is permitted but then, local workers must be compensated with the exact same items or provided monetary compensation of equal value. The least lawmakers and agency leads can do is revise programmatic expectations so that wages are competitive without adding to the overall exorbitant costs of program participation.
In 2020, the AEWR for Washington state was $15.83/hr. This year’s AEWR was set at $19.82/hr., an increase of 25 percent in five years in just H-2A labor costs. Comparatively, Washington state’s minimum wage went from $13.50/hr. to $16.66/hr., or an increase of 23 percent, in the same time period. The cost increases of wages were compounded by decreased commodity prices and increased fuel, state Labor & Industries insurance, taxes, fertilizer, seed, pesticide, and other operating costs. A recent report noted net expenses in Washington state were 76 percent higher than elsewhere in the United States in 2023 alone and trended higher than the rest of the United States in general.
With the rollback of the 2023 AEWR rule, the U.S. DOL has an opportunity to adjust the wage methodology for the benefit of employers as well as local and H-2A workers. By making the wage methodology competitive for the marketplace, employers stand to retain more workers for longer periods and, potentially, turn a profit. A profit benefits workers through renewed visas in successive seasons and with wages commensurate with experience.