Apr 2, 2019

Farm Bureau: H-2A wage adjustments hitting fruit and vegetable growers

The increase in mandated wages as part of the H-2A Seasonal Guestworker program means farmers must pay more for labor, presenting a challenge to farmers who are already facing tight margins.

Veronica Nigh, American Farm Bureau Federation economist, says the number of certified positions under the program increased 10 percent in the first quarter of this year compared to 2018. She says that’s helping to drive up the H-2A Adverse Effect Wage Rate (AEWR).

“AEWR is the wage that employers through the H-2A program have to pay their employees,” Nigh explained. “It’s a regional weighted-average rate, but it’s basically the minimum you have to pay workers through the H-2A program.”

For Michigan farmers using H-2A in 2019, the AEWR will require a minimum of $13.54 per hour, compared to the state-level minimum wage which just increased to $9.45 per hour in March. According to Nigh, the national average AEWR is $12.96, which is up six percent compared to 2018 figures, with the largest increases are found in the western United States.

“In the western part of the United States, there were eight states that saw increases that were between 15 and 23 percent. Missouri, Iowa and Florida saw small declines,” Nigh said. “But, the other 39 states saw increases between two and nine percent.”

Nigh says the increase represents a challenging economic environment for farmers, especially on the fruit and vegetable farmers, where labor is their largest cost.

“As we look at net farm income being down 44 percent compared to 2013, we’re all feeling those squeezed margins. So, when you start seeing increases of six percent, it starts really pulling at the margins for those farmers who are already experiencing a pretty challenging economic time.