As a result of the Department of Labor’s rising H-2A wage floor, U.S. fruit and vegetable growers find themselves again appealing for a bipartisan solution to the farm workforce shortage and temporary fix for the wage rate hikes.
With hopes of comprehensive immigration reform dashed after last year’s lame-duck legislative attempt came up short, the self-inflating Adverse Effect Wage Rate (AEWR) now has producers questioning how they will remain viable.
For Adam Lytch, north Florida regional manager for L&M Farms, the recent AEWR resulted in a 2023 wage rate increase of 15.5% in Florida that he received notice of just 38 days before it went into effect.
“We had workers on the way from Mexico when we found out we had nearly a $2 per hour increase coming,” Lytch told senators during a Senate Judiciary Committee hearing on Wednesday. “At the same time, our crops were mostly all planted, giving us no time to react. When you include the costs of housing and transportation that H-2A employers are required to provide, this year’s minimum wage could account to more than $23 per worker.”
As a result of the AEWR change for this year, Lytch said his company will see a $1.4-million-dollar payroll expense increase over last year. He said his fellow farmers in Florida and Georgia are reporting similar payroll expense increases ranging from $500,000 to $1 million.
Chalmers Carr, owner and CEO of South Carolina-based Titan Farms, said the AEWR last year rose a record 7% nationally and has increased 24% over the last five years. Last year, 10 states, including his own, experienced double-digit increases. He said the trend of soaring wages “will not change unless Congress steps in to address the matter.”
Earlier this month, Sens. Thom Tillis, R-N.C., and Jon Ossoff, D-Ga., introduced the Farm Operations Support Act, which would return the AEWR to the December 2022 rate for the remainder of 2023, which Lytch said he supports. Lytch also called on Congress to pass a Congressional Review Act resolution to nullify the DOL’s new AEWR methodology rule to offer a short‐term solution.
“H-2A wages no longer protect U.S. workers from the adverse effect of foreign labor, as intended. Instead, the H-2A wage system now drives the wage market which, in turn, exacerbates food price inflation,” Carr said. “Under the flawed AEWR methodology this year, our wages increased 14%. This will result in a $2.6 million payroll increase, but more importantly it will raise the cost of our box of peaches by 5%.”
Carr identified several concerns with DOL's new wage methodology, including that in many cases it is based on non-farm wage labor surveys. He said it will drive wages up another 10-15% and add another $2 million to the payroll, as well as require two new full-time employees, one in HR and another in accounting, just to implement the rule. Carr also expressed concerns about the liability of this rule as it is "very vague to how it's going to be applied."
Another concern is that the rule requires new wage codes on different types of jobs performed, but requires employers pay at the highest job level code regardless of the total time spent on that particular task.
There’s also confusion about the classifications of jobs. Carr said someone fixing a tractor might be a "farmworker" or an ''agricultural equipment operator" at the regular AEWR, or, depending on the state or the subjective decision-making of the certifying officer, the worker might be a "farm equipment mechanic” or a “service technician." He said in South Carolina, the decision could result in a 50% increase, from $13.67 to $20 per hour.
With a system designed to ensure domestic workers don't get undercut, Carr said, AEWR instead “adversely affects the U.S. consumer with higher food prices, we are threatening our national security as our increased dependence on foreign imports grows, and yes, we’re affecting the American family farm.”
Leon Sequeira, an attorney who advises employers on immigration issues, testified two years ago before the committee and said the government policy was threatening the viability of labor-intensive agriculture. “Since that time, both government policy and the domestic labor shortage have become worse,” he said.
Sequeira also expressed concern with the DOL’s understanding of farming. “The department seems to assume that every time they increase wages, farmers will just correspondingly increase their prices to recover those costs. But the department is oblivious to a central element of the agricultural economy. Unlike virtually every other business, farmers do not get to set the price of their products,” he said. “The market sets the price and increasingly the market is dominated by low cost imports, especially from Mexico where the required wage rate is the equivalent of 10 to $11 per day.”
He said it’s no wonder there is a $37 billion trade deficit in fruits and vegetables with Mexico. “The Department of Labor is pricing farmers out of the market and out of business,” he said.
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Sequeira said, “We need a future workforce solution that provides farmers access to labor with a fair and predictable cost structure that enables them to remain competitive in the international marketplace. Otherwise, within a generation or even sooner, we will be totally dependent on foreign countries to feed us.”
Diana Tellefson Torres, United Farmworkers Foundation CEO, testified that national estimates indicate that farmworkers’ mean and median personal incomes are in the range of $17,500 to $19,999, with the mean and median total family income in the range of $20,000 to $24,999.
Ossoff and Tillis called for the hearing and Senate Judiciary Committee Chairman Dick Durbin, D-Ill., urged them to continue to work with Sen. Michael Bennet, D-Colo., to push forward in this Congress to find solutions to the ag workforce issues.
Ossoff said the high statistic of 40-50% of farm labor workforce undocumented but lacking any pathway to legal status “puts both farm operators and growers and those workers at risk.”
Ossoff said he’s optimistic, with continued work with Bennet, that Congress is “close to achieving something that has eluded Congress for decades.” Meanwhile, Republican members including ranking member Sens. Lindsey Graham, R-S.C., said other shortfalls in the immigration system need to be fixed.
Graham said the only solution available is to “come up with a win-win for the agricultural community but also deal with the other magnets of illegal immigration and help other parts of the economy that are experiencing the same thing.”
Torres testified that farmworkers have been at the table to support bipartisan agricultural immigration bills that won the majority votes in the House or Senate during the administrations of Presidents Bush, Obama, Trump and Biden.
“We have come so frustratingly close in passing agricultural immigration bills, and we remain ready to partner again,” she said.
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