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July 2000, Volume 6, Number 3

Guest Workers H-2A to H-2C?

Farmers have been trying for most of the 1990s to secure Congressional approval of an alternative to the H-2A program, which allows US farmers anticipating too few workers to request that the US Department of Labor certify their need for foreign farm workers. DOL normally provides certification only after a US farmer tries to recruit US workers by offering them at least the minimum or prevailing wage in the area and free housing. Once certified as needing foreign workers, farmers can recruit them in any country.


The number of H-2A workers certified by DOL as needed to fill vacant farm jobs has almost tripled between FY95 and FY99, from 15,117 to 41,827, largely because of the growth of H-2A admissions in North Carolina and Georgia. The number of employers requesting certification has risen much less, from 2,027 to 2,948- DOL cautions that, in some cases, an association files for a group of employers, so that in FY99, DOL estimated that H-2A workers were employed on 4,400 US farms. About 55 percent of the certifications were for Region 4, which includes North Carolina. Farm employers paid $1 million in fees, or an average of $24 for each worker certification.


There are about 2.5 million persons employed for wages on US farms in a typical year, so about one percent of US farm workers are H-2A workers. Some 650,600 US farms reported farm labor expenditures in the 1997 Census of Agriculture, meaning that less than one percent of US farm employers were certified to employ H-2A workers.


DOL has a web site that explains how farmers can be certified to recruit and employ H-2A farm workers http://edc.dws.state.ut.us/h2a.htm ) as well as a 26-item checklist for farmers employing H-2A workers to ensure that they are in compliance with regulations. For more information: http://www.dol.gov/dol/esa/public/regs/compliance/whd/H2A.htm)


Farmers dislike the H-2A certification procedure for several reasons, including the uncertainty about whether DOL will certify their need for foreign workers. Many farmers do not have housing to offer workers, and some dispute the wage that DOL finds to be prevailing. Under current wage-setting procedures, US farm employers must recruit US workers by offering them the higher of: (1) the federal or state minimum wage; (2) the local "prevailing wage," as determined by state agency wage surveys; or (3) the H-2A "adverse effect wage rate (AEWR), the regional average hourly earnings of field and livestock workers as reported by farm employers to USDA.


Two former DOL employees have established a firm to help US farmers hire H-2A workers http://www.agristaff.com), and they apparently helped Farm Fresh Produce of Americus, Georgia to obtain H-2A workers. In FY96, there were fewer than 200 H-2A workers certified to work in Georgia; in FY98, 5,300 were requested, and 3000 were certified.


Farm organizations have been advocating a non-certification foreign worker program, one that would allow them to hire foreign workers without certification. However, the Clinton administration is strongly opposed to the growers' proposal and Congress has failed to approve it: the House rejected a grower backed bill on a 242-180 vote in 1996. Some grower groups would like to attach their proposal to the bill that would raise the annual quota on H-1B visas.


Growers testified in June 2000 that there were few farm labor shortages, but there were shortages of "legally authorized" farm workers, and that farmers have been made aware of how many unauthorized workers they employ by letters from the Social Security Administration informing them of "mismatches" between the names and Social Security Numbers they provided. Farmers say that, when they inform their workers of the mismatches, the workers quit.


Representative Cal Dooley (D-CA) predicted in June 2000 that a new guest worker program for agriculture would be too controversial to be approved in 2000, despite grower payments in 1998 of $340,000 to farm labor consultants at McGuiness and Williams and significant contributions to political action committees. Dooley says that it is unlikely that Congress will "be able to develop a consensus this session" on a new guest worker program for agriculture. Dooley opposes the provision in the Senate bill that requires currently unauthorized farm workers who receive probationary immigrant status to continue working in agriculture for five years in order to earn an immigrant status.


Senate Hearing. The Senate Judiciary subcommittee on May 4, 2000 held a hearing on S1814, The Agricultural Job Opportunity Benefits and Security Act of 1999 and S1815, the Farmworker Adjustment Act. For more information: http://www.senate.gov/~judiciary/wl542000.htm)


S1814 was introduced by Senators Gordon Smith (R-OR) and Bob Graham (D-FL): the Center for Responsive Politics reported that "agribusiness" donated $877,000 to Smith between 1995 and 1999, and $209,000 to Graham. Under S1814, unauthorized foreigners who can prove that they did at least 150 days of US farm work within the past 12 months can became temporary legal US residents and workers. If they do at least 180 days of farm work a year in five of the next seven years, they would be eligible to apply for legal permanent residence.


Growers have tried to enlist the support of migrant advocates for S1814 by saying it offers an amnesty for unauthorized workers, as demanded by many organizations, including the AFL-CIO. Some migrant advocates counter that S1814 would make quasi-legal farm workers "indentured servants," subject to removal if they did not do the requisite days of farm work.


Advocates attacked S1814 because, they say, it would weaken the farm worker protections in the current H-2A program, which requires farmers seeking temporary foreign farm workers to provide them with free housing that meets minimum standards. The Smith-Graham proposal would allow farmers to provide a housing allowance of $4 a day or $150 to $170 a month and workers would have to find their own housing. After three years, if sufficient housing is not available, the Smith-Graham proposal allows the governors in each state to mandate that employers provide housing to foreign farm workers.


Farmers having been making the case for guest workers in many venues, including before agricultural committees considering new farm legislation. For example, at a May 2000 hearing of an agricultural subcommittee in California, one farmer testified that agriculture needed low-cost labor because the prices farmers receive for their commodities are set in global markets: "It is widely recognized that US farmers are held to much higher standards than our foreign competitors in areas such as crop protection alternatives including pesticides, work protection standards, food safety issues and worker wage rates. However, our markets, and hence the prices we receive for our products, are driven by global factors that usually do not reward us for the added costs we incur in meeting these standards."


House Hearing. The House held a hearing June 15, 2000 on HR 4548, the Agricultural Opportunities Act introduced by Representative Richard Pombo (R-CA), who called the proposed three-year pilot "bipartisan and compromise legislation as a starting point to begin negotiations and move the process of finding a solution." Section 301 of HR 4548 calls for studies of agricultural labor standards, child labor, housing, and field sanitation. For more information: http://www.house.gov/judiciary/6.htm


The major features of the Pombo approach include:

o a computer-based worker registry that shifts the burden of proving that US workers from farm employers to the Employment Service- there is no limit on the number of H-2C foreign farm workers who could be admitted;

o substitution of the prevailing wage rate plus five percent for the current Adverse Effect Wage Rate (which is the average hourly earnings of field and livestock workers as reported by farmers to USDA);

o allowing farm employers to provide a housing allowance rather than free housing to foreign farm workers.


The Clinton administration opposed HR 4548, threatening to veto it if enacted, saying that it will increase illegal immigration while depressing wages and increasing unemployment for US farm workers. The administration noted that it is making the current H-2A program more user friendly via regulatory changes by, for example, reducing the time employers need to request H-2A workers (and begin trying to recruit US workers) from 60 to 45 days before workers are needed. The Clinton administration requested $10 million in the FY 2001 budget to support the creation of America's Agricultural Labor Network (AgNet), which aims to create a privately run employment service.


DOL's testimony stressed that FVH agriculture has been expanding, but the real value of farm worker earnings has been declining, and employment security for many workers has decreased, resulting in more newly arrived and unauthorized workers in the farm work force. DOL concluded that HR 4548 would not: (1) provide growers with a stable labor supply, but would shift responsibility for finding workers from employers to the government; (2) protect US workers from unfair labor market competition, because US workers would have to be hired only if they were referred by the newly created registry; (3) provide H-2C workers with the same labor protections they enjoy under the H-2A program; and (4) reduce illegal immigration. Instead, the H-2C program could create new migratory networks and increase illegal immigration.


The GAO testified that "a sudden, widespread farm labor shortage requiring the entry of large numbers of foreign workers continues to be unlikely now or in the near future, although localized shortages could emerge for specific crops or geographic areas." When there are shortages, employers seeking workers through the H-2A program are almost always certified to bring them into the US. GAO repeated recommendations made earlier to get DOL to meet its timelines for dealing with employer applications, to remove INS from the H-2A approval process, and to streamline housing inspections.


Farmers testified that a combination of the Social Security Administration rejecting tax payments made for workers whose names and SSNs appear to be invalid, stepped up INS enforcement, and low unemployment gave them increasingly unauthorized workers that contributed to rising uncertainty in an industry producing perishables. They emphasized that most other nonimmigrant worker programs use a prevailing rather than an AEWR wage standard.


Farm worker advocates targeted the shift of responsibility to finding US workers, noting that, under the Pombo proposal, US employers would have to apply to the registry 14 days before the farmer believes workers are needed, advertise on behalf of the registry, and make "reasonable efforts" to contact workers employed in the previous season. Under the Pombo proposal, farmers who offer piece-rate wages must ensure only that workers, on average, earn the prevailing wage- individual workers could have average hourly earnings below the prevailing hourly wage so long as workers as a group earned the prevailing wage. H-2C workers would have their transportation costs reimbursed only from the US border to the place of employment and back, not from the place they were recruited.


US employers of H-2A workers are not required to pay FICA and FUTA taxes on the wages of their H-2A employees, which saves the employer about eight percent in Social Security taxes and five percent in UI taxes.


Perspective. Most economics texts do not have sections on shortages of commodities such as peaches or on labor. The central tenet of a market economy is that prices and wages adjust so that supply equals demand: if farmers produce more fruits and vegetables and thus need more workers, then economists would expect to observe rising farm wages unless the increased demand for farm workers is met by an increased supply.


Since over 95 percent of first-year farm workers are immigrants, this means that the most likely place to look for an increased supply of workers is abroad. US farmers would like to increase the supply of foreign workers, and the argument in Congress in summer 2000 is over the terms by which farmers obtain access to these workers.


Some guest worker advocates argue that farmers make investments in orchards and vineyards that are fixed- there is no return to the investor for three to five years- and then are surprised when they learn that there may not be enough farm workers to tend or pick their crops when they are ready to be harvested. Farm wages, they argue, cannot rise too much because the prices farmers receive for their commodities are limited by the low prices Americans expect to pay for food and by imports. These arguments are not new: 100 years ago, farmers argued that they needed Chinese coolie labor because workers with the opportunity to take nonfarm jobs preferred the year-round work, higher wages and career opportunities they found outside seasonal agriculture.


One recent effort attempted to estimate the number of workers California farmers would like to have hired if they were minimizing their production costs between 1974 and 1979. This number, which rose from a low of about 175,000 in the mid-1980s to a high of 275,000 a decade later, was compared to actual average annual employment. The difference was termed a labor shortage, and was interpreted to mean that the "shortage" peaked at about 80,000 workers in 1997. For more information: http://nfapp.asu.edu/



>Michael Doyle, "Growers are lobbying for guest workers," Sacramento Bee, June 4, 2000. Timm Herdt, "Governors call for more visas," Ventura County Star, June 3, 2000. Aurelio Rojas, "Common ground at the border for American, Mexican governors," Sacramento Bee, June 2, 2000. Sam Loewenberg, "The Other Immigration Showdown: Farmers, Labor Clash Over Bill to Add Foreign Workers," Legal Times, May 15, 2000. Michael Doyle, "Congressman may compromise on new guest-worker program," Ventura County Star, May 6, 2000.

The major GAO reports on the H-2A program include:
GAO. 2000. H-2A Agricultural Guestworkers: Status of Efforts to Improve Program Services. GAO/T-HEHS-00-134, June 15.

GAO. 1999. Illegal Aliens: Significant Obstacles to Reducing Unauthorized Alien Employment Exist. GAO/GGD-99-33, April 2.

GAO. 1998. H-2A Agricultural Guestworker Program: Experiences of Individual Vidalia Onion Growers. GAO/HEHS-98-236R, September 10.

GAO. 1997. H-2A Agricultural Guestworker Program: Changes Could Improve Services to Employers and Better Protect Workers. GAO/HEHS-98-20, December

31.

GAO. 1997. Illegal Immigration: Southwest Border Strategy Results Inconclusive; More Evaluation Needed. GAO/GGD-98-21, December 11

GAO. 1992. Immigration and the Labor Market: Nonimmigrant Alien Workers in the United States. GAO/PEMD-92-17, April 28.

GAO. 1988. The H-2A Program: Protections for U.S. Farmworkers. GAO/PEMD-89-3, October 21, 1988.