The National Council of Agricultural Employers has petitioned the U.S. Department of Labor to change its “fatally flawed method” of determining minimum wages for H-2A-visa foreign agricultural guestworkers.
In an April 30 letter to Labor Secretary Alexander Acosta, Michael Marsh, president and CEO of the NCAE, said methodology the department uses “bypasses statutory requirements for finding an adverse effect” of foreign guestworkers’ wages on domestic worker wages “and is thus contrary to law.”
The result is an “unsustainable wage spiral” that “jeopardizes” U.S. farms and ranches, Marsh said.
The letter follows NCAE’s appeal April 18 of a federal judge’s ruling that a six-year statute of limitations to challenge DOL’s rule for calculating increases had expired, Marsh said.
The Adverse Effect Wage Rate, or AEWR, is the minimum wage for H-2A guestworkers. It is intended to ensure they are not hired at less than the market wages for domestic workers.
Law requires the Labor Department to determine if there is an adverse effect, but it has never done that, Marsh said. It assumes there is one and sets “an arbitrary premium minimum wage (AEWR) based on USDA wage surveys,” he said.
Growers who hire H-2A workers are required to pay domestic workers the same minimum, so the net effect of the AEWR is to push wages upward, he said.
The 2019 increases average 6.3% nationwide and 22.8% in Nevada, Utah and Colorado. They rose to $15.03 per hour in Oregon and Washington.
Meanwhile, hourly earnings for all U.S. employment is up 2.8% and crop prices are level or decreasing, Marsh said.
“Every time you make the new minimum the average of the prior year you throw it into a wage spiral,” Marsh told Capital Press. “Think about this: Say the minimum wage is $10. You have two employees. One barely works enough to keep his job. The other works hard and earns piece rate plus a bonus pushing their pay to $15. The average, which becomes next year’s minimum, is $12.50.”
The law is “intended to protect against wage depression, not guarantee wage inflation in every year,” Marsh wrote to Acosta.
From 2015 through 2018, the Employment Cost Index rose an average of 2.53%. But the AEWR increased an average of 4.21%, defying “logic and economic reality,” Marsh wrote.
“This suggests that the increase in agricultural wages contrived by this scheme massively outpaced the wage increases in the balance of the economy,” Marsh wrote.
The cumulative AEWR increases in six regions of the country were between 14.27% and 18.44% while the cumulative increase in the Employment Cost Index, or ECI, for the same period was 7.79%, he wrote.
“Since 2010, the AEWR has grown at a rate of 3.3% per year. The ECI has only grown at a rate of 2.08% per year and the Consumer Price Index has only mustered growth of 1.78% per year,” he wrote.
The AEWR is skewed even further by taking into account bonuses paid for exemplary performance and holidays, he said.
With the bonuses calculated in, the AEWR exceeds the median wage by 8.1% in California, 9.1% in the Northwest and “an astonishing 20% in the Appalachian 1 region,” he wrote.
“We ask the secretary to annually measure and publish specific findings as to whether the admission of H-2A workers the previous year had an adverse effect on domestic workers and to demonstrate how the proposed remediation, whether wages and or training, etc., would protect from that effect,” Marsh wrote.