A U.S. District Court in California has upended the new U.S. Department of Labor wage calculation methodology for the H-2A visa program in the United States. The judge ordered DOL to create a new methodology while leaving the current wage structure in place.
Under the H-2A visa program, which allows U.S. agricultural employers to hire foreign ag workers for up to 10 months a year on contract, employers must pay an Adverse Effect Wage Rate (AEWR) to H-2A visa holders. The AEWR has historically been $2-$3/hr. more than a state’s minimum wage to discourage utilization of the program by making it cost-prohibitive for employers to hire people from outside the United States to work here. Even so, agricultural employers in the U.S. have turned increasingly to using the H-2A visa program for employees as the legal U.S. ag labor force has dwindled.
The current AEWR methodology created a tiered system for visa-holding employees based on experience and the type of work being performed. Most “Tier I” jobs were considered “entry level” work or jobs that did not require special training or long-term experience, making them worth less in hourly wages whereas “Tier II” jobs were those that required special training, took into account long-time experience, or involved a supervisory role for the individual on farm.
In addition to the creation of “tiers,” DOL considered the cost of living in H-2A housing. Under the new wage methodology, the cost of rent was from the overall compensation of H-2A visa holders who are providing housing at no cost, whereas local employees are paying for housing off-site. The reasoning from DOL for both changes was to create more parity for both local and H-2A workers.
The DOL was sued by the United Farm Workers Foundation (UFWF) for a change to how the AEWR was calculated. The UFWF argument was DOL was stealing wages from ag workers and giving those funds to “big ag” after a year of “record profits.”
What UFWF failed to provide was the other side of the profit story. Farmers in numerous states may have had record profits but they also had record expenses, drought, power concerns, water access issues, the closure of numerous meat processing facilities, and more to contend with. The change in AEWR methodology was projected to save agricultural employers approximately $17.3 billion in wage overpayments during the next 10 years.
The court’s ruling sends DOL back to the drawing board on four major points in the AEWR methodology: wage tiers, the housing adjustment, the wage survey used to determine base wage rates, and how wage rates are applied. The DOL will have to address each of these items in its revamping of the AEWR methodology before the court makes a final ruling in the case.
There is one piece of the puzzle that remains ambiguous for ag employers and farmworkers until the new AEWR methodology is settled: backpay. In the court’s ruling, the judge left the door open for potential backpay to be assessed, making up the difference between the previous pay structure of the AEWR and the new one currently in place. If ag employers are ordered to pay the difference between the two, there is an estimated $2.4 billion in wage savings that could be doled out in farmworker backpay.
It would be an egregious error on the part of the court to award backpay. Punishing ag employers for following the AEWR, as implemented, is an absurd option and puts many farms in jeopardy of collapse at a time when farms are facing catastrophic circumstances. Better to rework the AEWR methodology to the satisfaction of the court and move forward with a wage structure that works for both sides of the discussion; keeping farmworkers gainfully employed and farms and ranches open to employ them.
Pam Lewison is a fourth-generation farmer, Pacific Research Institute fellow, and ag research director for Washington Policy Center.