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The H-2A Program and AEWRs: FLS and OES
September 9, 2019
The H-2A program allows farmers who satisfy US recruitment, housing, and wage obligations to employ guest workers in seasonal jobs, generally up to 10 months. The wage obligation is to offer and pay US and H-2A workers the higher of the federal or state minimum wage, the prevailing wage for the commodity and area, the collectively bargained wage, or the Adverse Effect Wage Rate (AEWR).
The AEWR is usually the highest of these wages. Since June 1, 1987, the AEWR for the current year has been the average hourly earnings of non-supervisory field and livestock workers for the state or region during the previous year, as determined by the USDA NASS Farm Labor survey. AEWRs for 2019 range from $11.13 an hour in AL, GA, and SC to $15.03 in OR and WA.
The FLS collects data on earnings and hours worked from a sample of about 6,000 US farm employers for the week that includes the 12th of the month for January, April, July, and October (about half of the 12,000 farms contacted provide data). Employers report total wages paid and the number of hours worked by type of work, and NASS divides these numbers to calculate the average hourly earnings of field workers, livestock workers, and all hired workers.
DOL published regulations July 26, 2019 that “establish separate AEWRs by agricultural occupation to better protect against adverse effect on the wages of similarly employed workers in the US” (p36171). Under the new methodology, employers are to specify the job title or occupation to be filled by H-2A workers. DOL then looks to the FLS and, if the FLS reports an hourly wage for that occupation, the FLS wage for the past year becomes the AEWR for the current year.
For example, the FLS reported that the average hourly earnings of US crop farm workers (45-2092) were $13.45 in July 2018 and $13.65 in October 2018. The FLS collects data for January and April as well, so DOL would use state and regional estimates by occupation from the FLS for the previous year to determine the AEWR for the occupation in the following year.
If the FLS does not generate an hourly earnings estimate for a particular occupation, DOL would turn to Occupational Employment Statistics (www.bls.gov/oes/home.htm) to generate an AEWR. The OES surveys 200,000 nonfarm firms twice a year to obtain employment and wage data by job title or occupation, and uses three years or six surveys with data from 1.2 million establishments to generate wage estimates for 800 occupations at the MSA, state, and US levels. The OES has mean and median wages and wages at the 25th and 75th percentile of the distribution to distinguish the wages of entry-level from experienced workers.
The OES does not collect data from farms, only from firms that provide services to farms, such as farm labor contractors.
DOL’s July 26, 2019 proposed regulations include Appendix A (p36249) to illustrate the current and the new AEWR methodology for 2016-18. The current AEWR methodology generates wage estimates for 18 states and regions, and creates a small table. The new methodology results in a 10 page table, providing a wage for up to 10 occupations and specifying the source, the FLS or OES.
For example, for California crop workers (45-2092), the FLS regional wage was $11.49 in 2016, $12.33 in 2017, and $12.92 in 2018, compared with the AEWRs of $11.89, $12.57, and $13.18, that is, the new AEWRs by job title are up to 3.5 percent lower than the old statewide AEWRs. However, the new AEWR for first-line supervisors (45-1011) would be $19.48, $20.38, and $22.11 or 65 to 68 percent higher than with the current statewide AEWR.
Wages for all of California’s on-farm occupations are derived from the FLS. The major effect of changing from one statewide AEWR to occupation-specific wages is more volatility in wages. California’s statewide AEWRs rose six percent between 2016 and 2017, and five percent between 2017 and 2018. Wages by job title are derived from a smaller sample, and they fluctuate much more from year to year.
Florida illustrates the volatility. The AEWR rose four percent between 2016 and 2017, and two percent between 2017 and 2018. The FLS regional estimates are more volatile. FLS crop workers’ wages (45-2092) rose three and two percent in these years, but graders and sorters rose one percent and then fell 15 percent.
Wage changes based on the OES were even more volatile, rising 11 percent for FL equipment operators (45-2091) between 2016 and 2017 and falling 19 percent between 2017 and 2018. OES wages for other agricultural workers (45-2099) rose eight percent between 2016 and 2017, and then fell 37 percent between 2017 and 2018.
DOL will presumably publish detailed tables with AEWRs by region or state and occupation. There are two likely effects. First, the AEWRs for supervisors and equipment operators are likely to rise, sometimes significantly, while the AEWRs for crop workers and graders and sorters are likely to fall slightly as equipment operators and other higher wage workers are removed from the sample.
Second, there may be more year-to-year variance in OES than in FLS wages. For example, the OES-state wage for first-line supervisors (45-1011) in California was $19.48, $20.38, and $22.11 in 2016, 2017, and 2018, respectively, a 2017-18 jump of 8.4 percent. The 2017-18 increase for California crop workers (45-2092) from the FLS was 4.8 percent.
In the Cornbelt I states of IL, IN, and OH, the FLS regional wage for crop workers (45-2092) went from $11.93 to $12.80 to $11.52 between 2016 and 2018, that is, first up almost a dollar an hour and then down over a dollar an hour. There was similar volatility in wages for Cornbelt I equipment operators, $15.83, $16.60, and $14.76 in 2016, 2017 and 2018.
H-2A workers are likely to accept hourly wages that go down from one year to the next, but US workers may be discouraged if they are offered wages that are $1 an hour or more lower than they were paid during the previous year.
DOL used the FLS regional wage to determine AEWRs for crop workers (45-2092) and graders and sorters (45-2041) in most regions and states, while OES state wages were often used to determine AEWRs for supervisors (45-1011) and equipment operators (45-2091). If OES data are used to determine the AEWRs for SOC 45-2092 crop workers, they may be lower than the FLS, since the OES collects data only from nonfarm firms that supply services to farmers such as FLCs.