Jan 2, 2020Ag employers urge lower Adverse Effect Wage Rate
Following on the heels of a government-mandated increase in farmers’ labor costs, the Agriculture Workforce Coalition (AWC), a diverse group of organizations representing the needs of agricultural employers across the country, on Jan. 2 urged the U.S. Senate to take up legislation to solve the agricultural labor crisis by calling attention to the dire labor situation facing our nation’s agricultural producers.
The Adverse Effect Wage Rate (AEWR) is the required wage rate for farmers who use the H-2A program and the Department of Labor today mandated an increase that will average 6% across the nation. The AWC told the Senate that the increase will make it difficult for some farms to continue operating, coming after a year of natural disasters, trade disruptions, low commodity prices and declining farm income.
In its letter, the AWC called on the Senate to take action to address critical agricultural labor issues. The coalition urges the Senate to consider the impacts of the AEWR on U.S. farmers and is asking for an alternative that will ensure a level playing field for farmers and ranchers making them more competitive with foreign producers.
Farmers who use the H-2A program to procure legal workers from other countries must comply with a complicated and expensive application process to assure that domestic workers are not displaced, though few U.S. workers are willing to take jobs on farms. Farmers are also required to provide free certified housing and transportation to and from guest workers’ place of residence. The AEWR implemented today will immediately increase farmers’ labor costs by an average of 6% while revenues for agricultural goods continue to diminish due to an influx of cheaply produced imports flooding American markets.
Over the last five years the AEWR has increased nationwide by 17% on average while revenues for fruits and nuts have increased only 3% and vegetables and melons have seen no revenue increases. While American farmers are required to pay their H-2A employees more and more each year, the U.S. continues to import more and more produce from Mexico and Central and South America, where workers are paid a fraction of U.S. wage rates.
The Agriculture Workforce Coalition is asking the Senate for a legislative solution that ensures the competitiveness of America’s farmers and ranchers, stabilizes the current U.S. agricultural workforce and provides guest worker program access to year-round agriculture sectors such as dairy, livestock and mushrooms.
The full text of the AWC letter is available here and below.
The Agriculture Workforce Coalition (AWC) brings together organizations representing the diverse needs of agricultural employers across the country. AWC serves as the unified voice of agriculture in the effort to ensure that America’s farmers, ranchers and growers have access to a stable and secure workforce. For more information, please visit www.agworkforcecoalition.org.
The Agriculture Workforce Coalition sent a letter to the U.S. Senate on Jan. 2 urging action on H-2A and other labor matters, including a reduction in the impact of the Adverse Effect Wage Rate (AEWR) on agricultural employers.
Addressed to Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer, the letter read as follows:
“We write to you today concerned by the dire labor situation facing our nation’s agricultural producers. In recent years America’s farmers have been hampered by catastrophic weather events, faced headwinds and retaliatory tariffs in our top export markets, and experience lower cost of production imports negatively impacting American markets. All of these factors have resulted in commodity prices and farm incoming falling significantly from just a few short years ago.
A devastating labor shortage is impacting farmers today and jeopardizes the future success of U.S. agriculture. We must address this labor crisis harming farms across the United States so our producers can continue to feed, clothe and fuel our nation. Doing so requires key changes to the H-2A program, the visa program farmers use to hire legal workers to supplement their U.S. workforce, and stabilization of existing workers.
Farmers who use the H-2A program are required to go through an expensive, complicated application process to ensure no domestic worker is displaced by the hiring of a guest worker, even though there are few U.S. workers who are willing to fill these jobs. H-2A employers must also provide certified housing and transportation to guest worker employees for free.
In addition to free housing and transportation, H-2A employers are required to pay workers and those in corresponding employment the Adverse Effect Wage Rate (AEWR), an inflated wage rate produced using flawed survey data that does not take into account the value of other expensive benefits provided to the workers. The Department of Labor also fails to consider the agriculture industry’s capacity to absorb additional costs when it implements annual changes to the AEWR. Each year the Department of Labor publishes the new AEWR to be implemented for the next calendar year.
Today, the new AEWR goes into effect, and farmers’ labor costs will suddenly increase by an average of 6% while revenues for agricultural goods continue to diminish. This 6% increase is just the nationwide “average” for 2020. In many parts of the country, farmers will be forced to absorb increases of nearly 10%, and some of those same farmers experienced increases of more than 22% last year.
These AEWR increases far outpace the average wage growth experienced across the broader U.S. economy during the same two-year span. Many farmers who utilize the H-2A program grow the fresh fruits and vegetables that are vital to a healthy diet. Over the last five years the national average AEWR has increased by 17% while revenues for fruits and nuts have only increased 3%, and revenues for vegetables and melons have not increased at all.
While American farmers are required to pay their H-2A employees more and more each year in addition to already receiving free housing and transportation, the U.S. continues to increase produce imports from Mexico, and Central and South America.
The U.S. even has significant wage disparities compared to Canadian agricultural operations where farm workers are paid between $8.72 and $11.55 per hour for their work on fruit and vegetable farms, while in Mexico workers are paid a fraction of that amount. Comparatively, the national average for the 2020 H-2A AEWR is $13.99 per hour.
Furthermore, there are entire sectors of agriculture that cannot access the H-2A program due to its seasonal requirement. Thus, farmers who produce healthy foods year-round – such as dairy farmers or mushroom producers – have no method for hiring guest workers once they have exhausted domestic labor options.
Regardless of whether their crop is seasonal or grown year-round, America’s farmers face the same labor crisis. They need access to a guest worker program that will allow them to build the workforce required to continue to feed, clothe and fuel America. American farmers and ranchers are innovative, and they continue to become more productive and efficient, but with these crippling financial realities, our producers are struggling to stay in business.
As evidence, Chapter 12 family farm bankruptcies over the previous 12 months were up 24% compared to prior-year levels. American farmers of all sizes, but especially small- and medium-sized growers, are at a critical juncture, and many do not see a future in labor-intensive agriculture as the margins between profitability and loss grow thin due to the federal government’s misguided policy. This is not only a matter of keeping American farms open for business, but also ensuring the vitality of rural economies which rely upon agriculture as a primary economic driver.
Without farmworkers there are no farms, and without farms, businesses that provide services to farmers and rural communities will suffer too. Excessive labor costs in the U.S. put domestic producers at a competitive disadvantage and factors into decisions to move more food production abroad, an important national security issue.
As the new AEWR goes into effect today, we ask the Senate to recognize the urgent need for legislation that improves H-2A for all farms and ensures a level playing field for America’s farmers and ranchers making them more competitive with foreign producers. While addressing the AEWR is a critical part of agricultural labor legislation, we also ask that you seek solutions to stabilize the current workforce and provide guest worker program access to year-round agriculture sectors such as dairy, livestock and mushrooms.
As representatives of agricultural organizations throughout the United States, we stand ready to help you craft legislation that addresses the needs of American farmers, by stabilizing the current workforce, providing access to a program for year-round producers, and in particular implementing an alternative to the flawed Adverse Effect Wage Rate.
American Farm Bureau Federation, AmericanHort, Florida Fruit and Vegetable Association, National Council of Agricultural Employers, National Council of Farmer Cooperatives, National Farmers Union, National Milk Producers Federation, National Potato Council, USAFarmers, U.S. Apple Association, United Fresh Produce Association and Western Growers Association.”
In conjunction with the AWC letter, Western Growers President & CEO issued the following statement:”
In an era where many family farms are struggling to make ends meet, labor remains one of the most pressing – and expensive – challenges jeopardizing the future viability of U.S. agriculture. Today’s AEWR increase by the U.S. Department of Labor further strains the ability of American farmers to access and afford a legal, stable supply of labor to harvest our fruits and vegetables, and perform many other tasks on the farm.
“In Arizona, California, Colorado and New Mexico – which combine to produce two-thirds of all fresh produce grown in the U.S. – our farms have now experienced an average AEWR increase of more than 23% over the past two years; the AEWR already substantially exceeds the minimum wage rates set by these four states. As any business owner can attest, it is difficult to remain profitable in the face of such significant and repeated surges in labor costs.
“This unsustainable rise in AEWR costs has been remedied in a bi-partisan bill that passed the U.S. House of Representatives last month. The product of months of cooperative negotiations between representatives of major stakeholders, including both agricultural employers and farm workers, the House bill limits future AEWR increases, providing relief and certainty for American family farmers.
“Beyond the AEWR, the House bill also addresses two other key elements of the agricultural labor crisis: providing an earned pathway to legalization for existing workers and modernizing the existing H-2A system, making the program available for the year-round needs of certain agricultural businesses, including dairies, nurseries and mushroom producers.
“As the AWC letter states, the onus is now on the Senate to craft a companion bill that addresses the core components of the agricultural labor crisis and levels the playing field for American farmers. To be clear: There is no tomorrow, there is no next month, there is no next year. The time to act is now. In this spirit of urgency, we look forward to engaging with the Senate and producing a legislative solution that is mutually agreeable to Congress and the Administration.”