New H-2A wage rule set to crush family farms
At the end of March, the Department of Labor’s new formula for H-2A wages, the Adverse Effect Wage Rate or AEWR, took effect. Now farm families across the country, small farms especially, are taking a hard look at their balance sheets, and many may find it hard to stay afloat. Although the administration says it supports farmers, its agency’s actions are having the opposite effect. The AEWR is long overdue for a fix, but this wasn’t it.
"DOL largely ignored input from across the agricultural community. Instead of addressing inconsistencies and fixing its flawed wage formula, they actually managed to make it even worse. Rather than bringing the consistency and fairness that we called for, the 2023 AEWR impacts small farmers disproportionately and is wildly unpredictable. What’s more—it doesn’t factor in the already competitive wages farmers pay to ensure we have enough hands to plant, tend and harvest crops, or care for animals," said American Farm Bureau President Zippy Duvall.
Duvall says the 2023 AEWR has some states facing wage increases well over 10%, outpacing inflation and jumping dramatically from previous years. Take Michigan for example. In 2022, H-2A wages increased 3.5%, but in 2023, the increase will be nearly 13%. Traveling to the Southeast, take a look at Florida’s H-2A wages, which increased 6.5% in 2022. With the 2023 increase, Florida’s farm wages are now increasing another 15.5%.
John Kran, Michigan Farm Bureau national legislative counsel says the rule takes no steps to incorporate market realities or the capacity of the American agricultural industry to absorb increasing labor expenses.
"Keep in mind that those two examples are average increases," Duvall pointed out. "The 2023 AEWR increase gets even higher when you take into account that the new rule requires the adjusted wage to match the highest-skilled duty performed on the farm by a given worker. As farmers and ranchers know, we wear many hats on the farm and the same goes for our employees, especially on smaller farms.
"Let’s say one of your employees is responsible for driving other employees to and from the farm every day. Well, under the new AEWR rule, that employee would be paid a higher “chauffeur rate,” not only for the hours spent driving but also for every other task they complete on the farm, regardless of the level of skill involved. Depending on your state’s wage rate, you could wind up paying that employee an extra 30% overall. Our economists have dug into the impact these changes could have on farms of all sizes in a recent Market Intel. If you’re not already fired up, I guarantee you will be after seeing our analysis," he added.
With farm wages running as high as 40% of farm operating costs, Duvall says this new AEWR rule cannot stand.
"And at Farm Bureau, we are not just standing by and hoping for a better outcome. Getting reasonable H-2A reform that works for all has long been a priority across our organization, and stopping the 2023 AEWR is at the forefront of our efforts in Congress," he said.
Farm Bureau is calling on Congress to deliver a fair and reasonable solution to the 2023 AEWR–one that does not exchange one problem for another or enshrine a fundamentally flawed process into law. Thanks to efforts by the Georgia and North Carolina Farm Bureaus, a bill has already been introduced in the Senate to provide a stopgap. The bipartisan Farm Operations Support Act (S.874) led by Senators Jon Ossoff (D-GA) and Thom Tillis (R-NC) would temporarily reset the AEWR at 2022 levels.
"The 2022 levels were not ideal, but this bill is critical to help our farms stay in production while we find a workable, permanent solution. We also have joined with nearly 600 farm organizations and agribusinesses to urge Congress to support a resolution of disapproval under the Congressional Review Act. We need Congress and the administration to deliver certainty and fairness to the farm economy," Duvall said.
Duvall says farmers value their employees, and are committed to paying competitive wages.
"On my family farm, some of my employees have been with me for decades and they are like family. I know that the same can be said on farms across the country," he said. "These new wage increases only make it harder for farmers to remain competitive."
Kran says the issue may have far reaching effects not only for rural economies but for consumers nationwide.
“Ultimately, we need Congress to step in and help us find a long-term solution to address our workforce challenges or we’re going to be dependent on foreign countries to produce our food, which hurts farmers, local communities, and families who purchase food in grocery stores,” Kran said.