The new methodology for calculating the Adverse Effect Wage Rate, which takes effect today, will take a toll on farms that rely on H-2A workers, particularly small farms. American Farm Bureau Federation economists analyzed the new AEWR in their latest Market Intel report.
Among concerns with the new methodology is how worker responsibilities are determined. For example, a worker who spends most of the day in the field, but also drives fellow workers to the farm will be required to be paid as a chauffeur. In the state of New York, that represents a 30% increased wage rate. According to the Market Intel, “applying the above changes to the sample farms would have a significant impact on the wage outlays of each farm, but particularly the small farm. Across a national average, on the small farm the new methodology would have increased wage outlays by 15.1%, 13.6%, 12.8%, 12.7% and 12% in 2018, 2019, 2020 and 2021, respectively, and an estimated 12.6% in 2023.”
The new rule will also make the H-2A program even more difficult to administer by introducing two dates for wage increases throughout the year instead of the current single date.
“We are disappointed in DOL’s final rule on the AEWR methodology,” said AFBF President Zippy Duvall. “This administration says it wants to help family farms, but its agency largely ignored industry input in favor of a new calculus that will hurt small farms the most. Labor already accounts for almost 40% of total production costs on some farms, and the final rule will certainly continue to raise costs for farm families. Congressional action is the only way to deliver needed certainty and fairness to the farm economy.”
Lawmakers recognize the negative impact the new AEWR methodology will have on America’s farms. Nearly 600 farm organizations and agribusinesses, including AFBF and many state Farm Bureaus, have urged Congress to support a resolution of disapproval under the Congressional Review Act. It is expected to be introduced in the coming weeks. In the Senate, the bipartisan Farm Operations Support Act (S.874) would temporarily reset the AEWR at 2022 levels.
Read industry letter here.