House vote imminent on the bipartisan Farm Workforce Modernization Act—which would lower wages for migrant farmworkers: Hearings and assessments of impacts still needed
On October 30, Representatives Zoe Lofgren (D-Cal.) and Dan Newhouse (R-Wash.), along with dozens of other bipartisan cosponsors, introduced the Farm Workforce Modernization Act (FWMA), a compromise bill negotiated between representatives of agribusiness, farmworker advocates, and unions that would legalize unauthorized immigrant farmworkers, make major reforms and expansions to the H-2A temporary work visa program, and require farm employers to use E-Verify, an electronic employment verification system, to verify whether newly hired workers are authorized to be employed in the United States. The FWMA could legalize hundreds of thousands of unauthorized farmworkers while restructuring the landscape for farm employment. The House of Representatives looks set to vote on the FWMA as early as this week.
The FWMA would solve an important farm labor issue—perhaps the most important issue—legalizing unauthorized farm workers and their families. But it would also change the rules of a problematic temporary work visa program, H-2A, where migrant workers are indentured to their employers, often abused and exploited in the fields, paid low wages and robbed of their wages, sometimes live in substandard housing, and have at times been victims of human trafficking.
The H-2A rule changes in the FWMA would expand the H-2A program to year-round occupations, prohibit wage growth that might otherwise occur in the free market, and codify into law most of a new H-2A wage regulation that was recently put into place by the Trump administration—which is geared towards lowering the wages of most migrant workers in the H-2A program—and which many worker advocates opposed publicly. These provisions should raise concerns about the impact of the FWMA on the H-2A program and the future farm labor force but have not yet been explored in any congressional hearing focusing on the FWMA or through the publication of any government reports, or even credible research by non-governmental organizations.
Considering the large and emerging role of H-2A in farm labor, perhaps the single biggest question about the FWMA from a labor standards perspective is: what will happen to H-2A wage rates under the bill? The FWMA updates and codifies a new H-2A wage rule—known as the Adverse Effect Wage Rate or AEWR. In the absence of any existing credible analysis of the FWMA, I offer some comments below outlining my concerns with some of the H-2A wage provisions in the bill. In order to understand its possible impact however, a brief discussion of the current AEWR and the recently proposed Trump H-2A wage rule is needed because the FWMA mostly incorporates the proposed Trump H-2A wage rule.
The Trump AEWR is overly complicated and likely to lower wages for most migrant farmworkers with H-2A visas
The current rule governing the minimum wage that employers must pay their H-2A employees states that “an employer must offer, advertise in its recruitment, and pay a wage that is the highest of the AEWR, the prevailing hourly wage or piece rate, the agreed-upon collective bargaining wage, or the Federal or State minimum wage, except where a special procedure is approved for an occupation or specific class of agricultural employment.” Since the vast majority of farmworkers are not covered by a collective bargaining agreement and many State Workforce Agencies have been too underfunded to complete prevailing wage surveys, the AEWR ends up being the required minimum wage for H-2A workers in most cases.
The Code of Federal Regulations at 20 CFR §655.103 defines the AEWR as “The annual weighted average hourly wage for field and livestock workers (combined) in the States or regions as published annually by the U.S. Department of Agriculture (USDA) based on its quarterly wage survey.” The quarterly wage survey referenced in the definition refers to the Farm Labor Survey (FLS) that is regularly conducted by USDA, and the AEWR for 2019 is the average hourly earnings of nonsupervisory field and livestock workers in 2018 for the corresponding state or region. In recent years the FLS has begun breaking out the average wages for a few occupational classifications, in addition to what is already published on field and livestock workers and for all hired agricultural workers combined. (The current AEWRs in each state for 2019 can be viewed here.)
In late July 2019 the Trump administration proposed a new methodology to set the AEWR, citing their “concern that the current AEWR methodology may have an adverse effect on the wages of workers in higher-paid agricultural occupations,” in part “because that category aggregates the wages of workers performing significantly different job duties, such as agricultural equipment operators and crop laborers.” The new Trump AEWR introduces an additional data source, the Occupational Employment Statistics (OES) survey, which the Bureau of Labor Statistics (BLS) in the U.S. Department of Labor (DOL) collects and publishes. The OES publishes wage data for over 800 occupations that are grouped by Standard Occupational Classification (SOC) code. However, the OES has not typically conducted extensive surveys for agricultural occupations—thus, many of its sample sizes are very small for agricultural occupations, making the wage rates less reliable. The OES also includes the wages of workers who are not directly hired by farms, but by farm labor contractors (FLCs) and other support services. Workers employed by FLCs generally earn lower wages than direct hires, which can result in lower average wages in agricultural occupations.
The proposed Trump AEWR has not gone into effect yet, pending the publication of a final rule. In a nutshell, it creates a four-step data hierarchy that varies with the occupation of the worker. The rule states that the AEWR shall be (1) the average hourly wage for the occupation in the state or region according to the FLS; and if the FLS does not report a wage for the occupation, then (2) the statewide average wage for the occupation according to the OES shall be the AEWR; and (3) if only a national wage is reported for both the FLS and OES for the occupation, then the FLS national wage for the occupation shall be the AEWR; and (4) if a national wage for the occupation is only reported in the OES, then that shall set the AEWR.
During the public comment period on the new proposed Trump AEWR, numerous farmworker advocates (including myself) submitted public comments to DOL opposing the Trump AEWR because of its complexity and potential to lower average wages for H-2A workers. However, worker advocates weren’t the only opponents: the Farm Bureau, an influential corporate advocacy group for agribusiness and farm employers, published a detailed analysis of the Trump AEWR, criticizing it by arguing that it “will make estimating wage expenditures more difficult, more variable and more expensive,” mostly because of the lack of good data and its variability.
In the preamble to the proposed Trump regulation, DOL notes that, based on estimates from the National Agricultural Statistics Service (NASS) agency of USDA, 89% of H-2A occupations would continue to be set by the FLS under the new AEWR. That means that the Trump AEWR introduced a large degree of complexity into an AEWR that was relatively simple, all for the sake of more accuracy for 11% of H-2A jobs. Why would Trump’s DOL do this? Their stated reason is to provide more accurate wage data for higher-paying occupations like agricultural equipment operators. One can reasonably speculate an ulterior motive, however: by using a data set that does not include the higher earners in the FLS that slightly pull up the average wages set by the current AEWR, the wage rates for the majority of H-2A workers—i.e., crop workers—will decrease.
The Trump administration makes it seem as if the new AEWR is a more accurate representation of farm wages by introducing additional data sets, but reveals its true intentions by requiring the statewide OES wages for some occupations, when more region-specific average wage rates are available in the same data set. OES wage data for occupations are not just available for the entire country and by state, but also available by local regions or metropolitan statistical areas, which more accurately reflect the average wages paid to workers in those regions. In practice this means that in higher-cost/higher-wage regions, the AEWR wage will be much lower than it should if the state OES wage is used. Take one example: in California, the statewide average OES wage for Agricultural Equipment Operators (SOC code 45-2091) in 2018 was $15.47 per hour. But in the San Jose-Sunnyvale-Santa Clara region, which has a high cost of living, the average hourly wage is $19.18. Similar examples exist in other states that host the most H-2A workers like Florida and Washington, which also have higher-cost areas, and therefore higher local average wages compared to statewide averages.
If additional data sets are going to be included to calculate the AEWR—a reasonable proposition—then a rational AEWR that seeks to fulfill the statutory mandate of preventing against adverse effects on the wages of U.S. workers would require the highest of all available data sets, including the average wage rates in local regions according to OES data. Instead, the Trump AEWR creates a complicated and artificial prioritization scheme for wage data sets, and the results are clear: lower wages for the biggest occupations—crop workers—and higher wages in some cases for higher earners like equipment operators, but sometimes lower wages for them, too.
Another unintended but likely consequence of the new, more complicated Trump AEWR will be a few new job openings for economists, who will work for farm employers and agribusiness associations to examine farm occupations and data sets to allow farmers to set the AEWR as low as possible. Since DOL is perpetually underfunded and understaffed, and according to some reports, deferential to H-2A employers, they’ll be unlikely to review labor certifications for at least 300,000 jobs—likely many more if the FWMA becomes law—per year to determine if the appropriate AEWR was used for each.
The FWMA’s new AEWR will lower wages for most migrant workers with H-2A visas
The FWMA’s new AEWR for H-2A workers is modeled after the new proposed Trump AEWR. While not exactly the same, the results would be similar and codified into statute rather than a regulation that could be modified by a future presidential administration.
The FWMA states that the AEWR shall be (1) the average hourly wage for the occupation in the state or region according to the FLS; and if a wage for the occupation is not reported, then (2) the national average wage for the occupation according to the FLS shall be the AEWR; and if neither wage is reported by the FLS, then (3) the statewide average hourly wage according to the occupation in the OES shall be the AEWR; and if none of the above are reported, then (4) the national average hourly wage reported for the occupation in the OES shall be the AEWR. The only difference between the FWMA wage and the proposed Trump AEWR is that priorities (2) and (3) are switched. As a result, the analysis and critiques of the Trump AEWR offered above also apply to the FWMA’s AEWR.
The main impact of the new AEWR in the FWMA—namely, that wages will decrease for crop workers who make up the majority of H-2A workers—is confirmed by Rep. Zoe Lofgren’s fact sheet on the bill, which states that “[s]ome workers would see higher wages (machine operators), while others would see lower wages (crop workers).” The higher earners that Rep. Lofgren’s fact sheet highlights—which DOL groups with the Agricultural Equipment Operator, Custom Combine Harvesters, and Logging occupations—accounted for only 3.8% of the certified H-2A jobs in 2019, according to the Office of Foreign Labor Certification’s (OFLC) selected statistics fact sheet. Other possible higher-earning occupations like construction workers and truck drivers represent even smaller shares of H-2A jobs, and none are in the top 10 for H-2A crops or occupations.
In sum, the Trump and FWMA effort to modify the AEWR to get more precise data on some job titles like equipment operators will hurt most H-2A workers by decreasing their wages. Wages for crop workers who have their AEWR set by the FLS will decrease because the data used to set their wage will no longer include higher-paid occupations. While the FLS will continue to determine the AEWR for most crop workers, in states where the OES is used, many of the wages surveyed will reflect crop workers employed by FLCs who earn lower wages, and the AEWR in those states would likely go down as a result. And some of the higher-earning occupations will have AEWRs that are artificially low as a result of the dishonest use of the available data sets.
FWMA’s new wage rules sacrifice future wage growth for farmworkers in order to provide certainty for farm employers
Another aspect of the FMWA’s new AEWR rule that is worth examining are the restrictions on wage growth in the AEWR, and the prospect of removing any wage protections for H-2A workers after a decade. To start, under the FWMA, the AEWR for 2020 will be set at the 2019 level, regardless of whether average wages increase in FLS or OES survey data. Between 2021 and 2029, the AEWR will not be allowed to decrease more than 1.5% relative to the previous year, nor can it increase more than 3.25% compared to the previous year. In cases where the resulting wage is lower than 110% of the applicable Federal or state minimum wage, then the AEWR can increase up to 4.25%.
The fact that the FWMA prevents low-paid H-2A workers from benefitting from the natural wage growth that occurs when there is a tight labor market is troubling and flies in the face of the free market principles that corporations exalt and that are a tenet of the Republican Party’s ideology. H-2A workers are being singled out and treated differently—in other words, being legally discriminated against—and for what purpose? So that farm employers can plan for next year’s wage bill without regard to the broader trends in the U.S. economy?
Furthermore, the FWMA’s AEWR rule directs the USDA and DOL to conduct a study based on the impact of the AEWR and permits them to replace the AEWR with an entirely new AEWR, or to eliminate the AEWR altogether if they deem it no longer necessary. The fact that H-2A workers may have no wage protections whatsoever after 10 years is a frightening proposition; if a Republican administration is in power in 2029, they could eliminate the AEWR. The impact would be significant: the local, state, or federal minimum wage would become the de facto AEWR, which in many cases will mean the minimum H-2A wage could drop significantly. In a small number of states like California—which will have a minimum wage at the time that could be higher than $15 per hour—the AEWR could increase. But in most states it is likely to decrease, and if Congress does not raise the federal minimum wage by 2029, the AEWR would become $7.25 an hour in states that do not have a higher minimum wage. In Florida, the state hosting the most H-2A workers, the 2019 AEWR is $11.24 an hour, but the state minimum wage is $8.46. In North Carolina, the fifth biggest H-2A state, the AEWR is $12.25 but the minimum wage is the same as the federal minimum wage, $7.25.
The House should fully examine impacts of FWMA new wage rule before taking a vote
Considering the significant impact the provisions in the bill will have on farm wages if the FWMA becomes law, the House of Representatives should slow down the legislative process until the committees of jurisdiction have had ample time to properly assess and vet the FWMA provisions, and solicit expert testimony and technical assistance from the relevant federal agencies. At the very least, the officials who worked on the proposed Trump AEWR regulation at USDA’s NASS and Economic Research Service, and DOL’s Office of Foreign Labor Certification, should testify as to their reasoning and rationale for the Trump AEWR rule that undergirds the AEWR in the FWMA, and testify as to possible impacts of the FWMA’s AEWR on H-2A occupations and in key states.
Other major provisions in the bill—the legalization for unauthorized farmworkers, the use of H-2A for year-round jobs, and the E-Verify mandate for agricultural employers—should also be analyzed by independent experts and those at relevant federal agencies, and discussed in an open hearing, before a vote takes place.