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The H-2A Program and AEWRs

September 9, 2019

The H-2A program allows farmers to recruit and employ foreign workers if there are not sufficient US workers who are “able, willing, and qualified” to fill their seasonal farm jobs, and if the presence of H-2A foreign workers will not adversely affect the wages and working conditions of US farm workers.

Farmers must satisfy several obligations to be certified to employ H-2A workers, including trying and failing to recruit US workers, recruiting, transporting, and housing guest workers at no cost to the worker, and paying H-2A workers and similar US workers the higher of the Adverse Effect Wage Rate (AEWR), the prevailing wage in the area, or the federal or state minimum wage. The AEWR is usually the highest of these wages.

Since June 1, 1987, the AEWR for the current year is the average hourly earnings of non-supervisory field and livestock workers for the state or region during the previous year. These data are from the USDA NASS Farm Labor Survey (FLS), which asks farm employers to report the earnings and hours worked of their hired workers for the week that includes the 12th of the month for January, April, July, and October.

The average hourly earnings of all hired US farm workers were $14.17 in 2018, and ranged from $11.84 in AR, LA, and MS to $15.62 in OR and WA. The average hourly earnings of all private sector workers in 2018 were $27.11, so hired farm workers earned 52 percent as much as private sector workers. Since 1989, average hourly farm worker earnings increased by 3.4 percent a year, above the CPI of 2.3 percent a year, suggesting an increase in real farm worker hourly earnings of over one percent a year.

The FLS reports farm labor data for 18 regions, all of which are multistate except CA, FL, and HI. Average hourly earnings vary across regions, with HI often having the highest earnings and southern states the lowest. The rate of increase in average hourly earnings also varies by region.

Average hourly earnings and thus AEWRs rose at an increasing pace over the past three decades in CA, OR, and WA, as highlighted by the rising trend line in the figures below for CA and the Pacific region. One reason was the significant minimum wage increases in these states. The minimum wage in CA and WA is $12 an hour in 2019, and in OR $11.25, among the highest in the US.

Average hourly earnings and AEWRs rose, but at ever-slower rates, in other states and regions. Most notable is the southeastern region of AL, GA, and SC, where the downward sloping trend line shows that the rate of increase in farm worker earnings slowed over the past three decades. Average hourly earnings rose by at least five percent a year in the southeastern region between 1990 and 1994, fell over five percent in 1995, rose almost 10 percent in 1996, rose one percent a year in 2007 and 2008, and increased by 3.5 percent a year in 2017 and 2018.

Average hourly earnings rise and fall from year to year. If the reason for rising farm worker earnings is labor shortages, increases measured by the FLS should be tied to rising numbers of H-2A workers. However, the comparison of the upward sloping trend lines in the Pacific Coast states and the downward slope in the southeastern states suggests that state minimum wage increases are the most important major driver of increased hourly earnings and thus AEWRs.

Since the AEWR for 2019 is the average hourly earnings of non-supervisory field and livestock workers in 2018, big changes in average hourly earnings can mean big changes in the AEWR. The average hourly earnings of all hired workers in the Mountain II states rose over 20 percent between 2017 and 2018, and 15 percent in the Mountain I states. Between 2014 and 2017, however, the average hourly earnings of all hired workers in the Mountain II states were flat or falling.

The National Council of Agricultural Employers, whose 300 members (including associations) employ 85 percent of H-2A workers in the US, sued DOL to prevent the 2019 AEWRs from going into effect, citing the 20 percent increase. The NCAE said that DOL should not raise the AEWR unless DOL first found that similar US workers are adversely affected by the presence of H-2A workers. Nevada-based Peri & Sons employed 1,768 H-2A workers in 2018 and estimated that the 2019 AEWR would increase its labor costs by $3.7 million. The NCAE-Peri suit failed; Peri is appealing.

The year-to-year rate of increase in AEWRs is rising in the Pacific Coast states (upward sloping trend lines), but rising at a decreasing pace elsewhere (downward sloping trend lines), 1989-2018