DOL Changes AEWRs and PWRs

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April 7, 2023

DOL revised its Adverse Effect Wage Rate (AEWR) methodology in regulations issued February 28, 2023. Instead of one AEWR per state based on USDA’s Farm Labor Survey (FLS) of farm employers who hire workers directly, there will be five to 10 AEWRs in each state based on the wage associated with a particular job title determined by DOL but drawn from the employer’s description of the job to be performed.

Under the new AEWR methodology, DOL will first look to the FLS to determine the AEWR for a particular job title. If the FLS does not provide earnings data for that job title, DOL will use the Occupational Employment and Wage Survey (OEWS) database to establish the AEWR.

AEWRs based on the FLS range from less than $14 to more than $18 an hour in 2023

Some farm employers sued to block the new AEWR methodology, arguing that it complicates an already bureaucratic H-2A program and will raise the AEWR for H-2A workers who fill “nonfarm jobs” on farms, including construction worker, van and truck driver, and supervisor. Some farmers argue that DOL should first determine that the presence of H-2A workers has adverse effects on US workers before establishing an AEWR, that is, they want the AEWR abolished unless DOL can prove that the presence of H-2A workers hurts US workers. Farm employers also complained because a worker who both drives a van or bus of workers to fields and then works alongside them could be considered a van or bus driver entitled to the higher OEWS wage.

The US has over 100,000 farm employers who employ an average 1.5 million farm workers. However, due to seasonality and turnover, some 2.5 million unique individuals are employed for wages on US farms sometime during a typical year, a 1.7 to one ratio of workers to year-round equivalent jobs. Some 10,000 or 10 percent of US farm employers employ H-2A guest workers, including some migrants who fill several farm jobs while they are in the US. Some 300,000 H-2A workers are in the US for an average six months each and fill a sixth of the average year-round equivalent jobs on US crop farms.

Fewer than 100,000 jobs were certified to be filled with H-2A workers in FY13, but certifications rose rapidly and topped 372,000 in FY22. The number of H-2A visas issued is typically 80 percent of the number of jobs certified, about 300,000 in FY22.

The number of H-2A jobs and workers tripled over the past decade

H-2A Program. The H-2(A) program has since 1952 allowed US employers who anticipate too few US workers to be certified by the US Department of Labor (DOL) to recruit and employ guest workers to fill seasonal jobs; the program was changed by the Immigration Reform and Control Act of 1986 to H-2A for seasonal agricultural jobs and H-2B for seasonal nonfarm jobs. In order to receive DOL certification, farm employers must satisfy three major criteria.

First, DOL must certify that the employer tried and failed to recruit enough US workers to fill the vacant jobs. Second, after being certified, employers must recruit workers abroad, pay worker travel expenses, and offer free and approved housing to H-2A workers while they are employed in the US and daily transportation between this housing and the work place. Out-of-area US workers receive the same housing and transportation benefits as H-2A workers, and US workers employed on a farm with H-2A workers in similar positions or corresponding employment are to receive the same wages.

Third, the employer must offer and pay the higher of the federal or state minimum wage, the prevailing wage rate, the wage in an applicable collective bargaining agreement, or the AEWR to H-2A and US workers in similar employment. The AEWR is normally the highest of these wages, and AEWRs in 2023 range from almost $14 to over $18 an hour across states.

Three federal agencies (1) determine whether employers need H-2A workers and enforce H-2A regulations (DOL), (2) whether the employer petition for H-2As is accurate and check incoming workers with H-2A visas (DHS), and (3) issue H-2A visas to foreign workers abroad (DOS).

DOL certification of an employer’s need for H-2A workers means that DOL agrees with the employer (1) that US workers are not available to fill seasonal farm jobs and (2) that the presence of H-2A workers will not adversely affect similar US workers. DHS ensures that the employer is legitimate and that H-2A workers did not pay for their jobs, and DOS determines whether the workers recruited by the employer are eligible for visas.

3 federal agencies are involved in the H-2A program

Source: https://www.gao.gov/assets/gao-15-154.pdf

1. Employer submits a completed application for temporary labor to the Department of Labor (DOL)
   DOL screens and adjudicates employer's labor applications
2. If DOL approves the application:
   Employer files a petition for nonimmigrant workers with the Department of Homeland Security (DHS) along with the temporary labor certification approved by DOL
   DHS screens and adjudicates employer's petitions for workers
3. If DHS approves, employer and state are notified
   Worker can apply for an H-2A or H-2B visa from the State Department (State) at an embassy or consulate abroad
   State reviews employer's petitions, interviews workers, and adjudicates visa applications
4. If appoved, H-2A or H-2B worker arrives and begins work

AEWRs. The AEWR is currently one hourly statewide wage that reflects the earnings of field and livestock workers in the state or multistate region. After April 1, 2023, there may be 10 or more AEWRs in each state, depending on the jobs that employers seek to fill with H-2A workers.

Statewide AEWRs have since 1987 almost always been based on USDA’s Agricultural or Farm Labor Survey (FLS) of farm employers. USDA contacts about 17,000 farm employers twice a year. Less than half respond, providing information on the earnings and hours worked of the various types of farm workers they employed during the week that includes the 12^(th) of the month of January, April, July, and October. Employer response rates are less than 40 percent in California, the Pacific Northwest and the Mountain III states of AZ and NW, and above 50 percent only in the Northeast I states.

Half of the employers contacted to provide FLS wage and employment data respond

Farmers report wage and employment data for 16 types of workers they hire directly

Employers report the total hours worked and the gross weekly wages paid to each type of worker during the survey week, that is, earnings before taxes.

Employers report the number, hours worked, and gross wages of their employees

Section 3 asks questions about peak employment and whether the farm had any H-2A workers during the previous year, while Section 4 collects data on the farm’s sales during the previous year by category, such as over $5 million, the farm’s acres of various crops, and the share of the farm’s sales accounted for by fruits, nuts and berries, vegetables and melons, and corn and grains, but does not collect data on sales of individual commodities. Sections 5 and 6 collect data on farm operators.

Farmers report acres of various types of crops

The FLS publishes average hourly earnings by type of worker for 18 regions, all of which are multistate except CA, FL, and HI. The average hourly earnings of field and livestock workers combined that DOL uses to set the AEWR for 2023 were $16.62 in 2022, and ranged from $13.67 in the Delta states to $18.65 in California.

2023 AEWRs range from $13.67 in the Delta states to $18.65 in California

The sample of employers who provide data to the FLS can be small in some regions, such as the mountain regions that have fewer than 500 respondents, leading to sharp year-to-year fluctuations in average hourly earnings. The coefficient of variation or the ratio of the standard deviation to the mean of sample data is a measure of the reliability of the employment and wage estimates.

Lower CVs indicate less dispersion around the mean or more precise estimates. The CV of FLS average hourly earnings is less than one percent for the US, but over two percent in six of the 18 regions. The CV is also high for wage estimates of some job titles such as packers and packagers.

The CV of FLS wage estimates is over 2% for 1/3 of the 18 FLS regions

DOL’s OFLC, which certifies employers to hire H-2A workers, expects to use the FLS to determine AEWRs for 98 percent of all H-2A jobs because the six FLS job titles account for 98 percent of the farm jobs for which employers seek certification:

• 85 percent of H-2A job certifications in FY 22 were for the job title farmworkers and laborers, crop, nursery and greenhouse workers (45-2092);
• seven percent were agricultural equipment operators (45-2091);
• four percent were farmworkers, farm, ranch, and aquacultural animals (45-2093);
• less than one percent were graders and sorters, agricultural products (45-2041) and all other agricultural workers (45-2099).

OFLC will use the average statewide or national mean wage in the OEWS to set the AEWR for the other two percent of jobs that employers want to fill with H-2A workers, including construction worker and van or truck driver. DOL justified changing the wage survey to set AEWRs for the 30 “nonfarm job titles” in employer applications because these job titles typically have higher hourly wages than field and livestock workers.

Farm employers could save money by calling heavy truck drivers (SOC 53-3032) who move harvested crops over public roads to processing or storage facilities agricultural equipment operators (45-2091), resulting in the lower FLS hourly wage and no overtime pay in most states because farm workers are exempt from federal overtime pay requirements. The OEWS wage for heavy truck drivers is often twice the FLS wage for agricultural equipment operators.

The FLS interviews only farm employers, while the OEWS interviews only nonfarm employers, including those who bring workers to farms such as farm labor contractors. FLS wages are generally lower than OEWS wages, giving employers an incentive to misclassify nonfarm workers as farm workers.

PWRs. In addition to the AEWR, employers must also offer and pay the prevailing wage rate (PWR) for the job that is actually performed by the H-2A worker if a prevailing wage has been determined. For example, if the California AEWR is $18.65 an hour, an employer may have to pay vineyard workers the prevailing wage of $20 an hour in a high-cost area such as Napa CA. In Washington, employers must guarantee workers at least the hourly AEWR and may also have to offer the prevailing piece rate of $30 to pick a bin of Gala apples.

Workers employed under piece rate wage systems are guaranteed the AEWR. The government-set AEWR and the employer-set piece rate combine to create a productivity standard. For example, a worker who picks six bins of apples in an eight-hour day at $30 a bin earns $180 or $22.50 an hour. If the AEWR increases by 10 percent from $15 to $16.50, but the piece rate remains at $30 a bin, a worker who picks six bins a day would still earn $180 a day or $22.50 an hour, but have less incentive to work fast because his piece rate earnings generate a smaller premium above the AEWR.

If the AEWR continues to rise and the piece rate remains unchanged, workers must work harder to earn more than the AEWR. However, DOL regulations say that, if the employer pays by the piece and requires employees to satisfy a minimum productivity standard, they must specify the productivity standard in their job orders that is the same as the productivity standard required in 1977 unless DOL approves an increased productivity standard.

The methodology to guide the SWAs who survey employers and workers to determine PWRs was laid out in DOL’s Handbook 385, which required SWAs to survey employers of at least 15 percent of total employment in a particular commodity, task, and area. SWAs submitted their PWR determinations to OFLC and, if they were accepted, PWRs were posted to the agricultural online wage library.

DOL provides funds to SWAs to verify and post employer job orders and to inspect worker housing, but not enough to conduct a significant number of prevailing wage and practice surveys. There are few PWRs posted on OFLC’s ag online wage library. PWRs are valid for one year after they are posted.

PWRs are more important in the H-2B program, which allows employers to recruit guest workers to fill nonfarm seasonal jobs. Employers seeking H-2B workers file ETA Form 9141 outlining job duties, education and training requirements, and suggesting a SOC code for the job to be filled by the guest worker. OFLC reviews the employer submission, determines the SOC for the job, and makes a prevailing wage determination, usually from DOL’s OEWS database.

The OEWS database provides wage and employment data for 830 detailed occupations, with the data available for job titles at the statewide level and for 530 metro and non-metro areas within states. The OEWS contacts employers who bring workers to farms such as farm labor contractors, and in May 2021 reported that California had 186,000 Farmworkers and Laborers, Crop, Nursery, and Greenhouse (SOC 45-2092), including 80 percent in the 10 areas with 80 percent of the state’s OEWS crop workers. Mean and median hourly wages in major farming areas were slightly lower than state averages in 2021, when the California minimum wage was $13.

The top 10 CA areas each had 5,000 or more OEWS crop workers and 80 percent of CA crop workers

DOL Analysis. DOL’s analysis of the impacts of the new AEWR methodology reported that 10,000 unique employers (excluding FLCs) were certified to employ H-2A workers in FY20 and FY21. A sample of 2,600 of these farm employers found that 80 percent were small, with an average 11 employees and average annual revenues of $3.6 million.

DOL analyzed a sub-sample of 2,100 farm employers and found that a third were in NAICS 111998, miscellaneous (often seed production) crop farming, 15 percent were nurseries and garden centers (444220) or landscaping services (561730), and 10 percent were fruit and vegetable (retail) markets (445230) or fruit and vegetable wholesalers (424448). This means that two-thirds of the DOL sample had NAICS codes outside FVH agriculture, which encompasses NAICS 1112 vegetables and melons, 1113 fruits and nuts, and 1114 horticultural specialties from greenhouse and nursery crops to mushrooms.

References

DOL. 2022. Temporary Agricultural Employment of H-2A Nonimmigrants in the United States

DOL. 2023. Adverse Effect Wage Rate Methodology for the Temporary Employment of H-2A Nonimmigrants in Non-Range Occupations in the United States

USDA. NASS. Farm Labor.

FLS Farm Labor Regions

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