The high cost of agricultural production hinders U.S. competitiveness in the global marketplace, and consequently more than half of the fresh fruit and a third of the fresh vegetables consumed in the U.S. are grown elsewhere, the National Council of Agricultural Employers says.

The cost of labor is a large component of increasing production costs, and it is continually pushed upward by increasing minimum wages — called Adverse Effect Wage Rates or AEWRs — for H-2A-visa foreign guestworkers, according to Michael Marsh, NCAE president and CEO.

His statements were included in comments on the U.S. Department of Labor’s proposed rule changes for the H-2A program. NCAE submitted its 27 pages of comments on DOL’s Sept. 24 deadline. DOL released its 489-page proposal on July 15.

NCAE’s members pay approximately 80% of all agricultural labor payroll in the U.S.

“One of the most significant impediments to ensuring a stable domestic supply of U.S. produced fruits and vegetables is the relative cost of production in the U.S. versus our export-oriented neighbors,” Marsh wrote, adding that the “biggest driver” of those costs is the AEWR.

AEWR increases averaging 6.3% nationally in 2019 and ranging up to 22.8% in Nevada, Utah and Colorado prompted a lawsuit by NCAE that is on appeal.

Instead of setting an AEWR for all agricultural jobs by region, DOL’s proposal sets them by occupation within regions.

That keeps higher wages for certain occupations from being averaged in with entry-level wages and skewing them upward, but it only slows the upward AEWR spiral because piece rates and bonuses are still averaged into USDA Farm Labor Surveys, Marsh wrote.

“We are not convinced the survey can be salvaged as part of the toolbox the secretary (of Labor) employs to satisfy the statutory requirement found in the Immigration and Naturalization act of 1986,” he wrote. “In fact, recognizing this, anti-farmer activists have come to embrace this component as farm and ranch bankruptcies multiply along with farmer and rancher suicides.”

DOL should consider establishing an AEWR as a flat percentage over minimum wage, Marsh wrote. Disaggregation of the AEWR by occupation allows for too many wage categories that could increase volatility, his comments say.

Employer-paid housing, transportation, subsistence and visa costs should be considered in setting the AEWR, Marsh wrote.

“Non-competitive wage rates disconnected from the labor market” required under H-2A have been a factor in driving U.S. companies to establish operations overseas, reducing national food security, he wrote.

As a DOL-set minimum wage for H-2A workers, the AEWR is intended to prevent foreign guestworker wages from being too low and adversely affecting or depressing domestic wages.

But DOL violates the law by never determining whether there is an adverse effect and without that should not be setting AEWRs, Marsh said.

DOL has been sued by Washington state tree fruit and blueberry growers for increasing minimum wages from AEWRs to a higher state prevailing wage mid-season this year.

Marsh wrote that should not happen and that it breaks grower-worker contracts. He says he doubts proposed changes in how states calculate prevailing wages will result in true prevailing wages. He questions if it is possible to reach true prevailing wages independent of the effects of H-2A wages.

NCAE welcomes a change giving growers the flexibility of having workers start work within 14 days after the anticipated first date of need.

NCAE recommends that work in dairy and all other year-round agricultural employment such as pork, beef, mushrooms, poultry and greenhouse be classified as temporary, thus allowing them to hire H-2A workers.

NCAE recommends that the definition of agricultural labor or services include trucking of agricultural commodities from the field to processing facilities and that the definition of ag labor include packing by employees of a farm labor contractor even if the farm operator produced less than one-half of the commodity being packed.

First Fruits of Washington, Snake River Farmers Association, Western Growers Association, Olson’s Greenhouse Gardens, Florida Fruit & Vegetable Association and masLabor assisted Marsh in developing the comments.

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