WAPATO, Wash. — The minimum wage for H-2A-visa foreign guestworkers in Washington and Oregon increases 5.32% on Jan. 2, from $15.03 to $15.83 per hour, making it the highest in the nation.
The national average is $13.99 per hour, up 5.58%.
Rob Valicoff, president of Valicoff Fruit Co., in Wapato, is mad about it and says all the other growers he talks to aren’t happy either.
He blames his own congressman, Rep. Dan Newhouse, for not getting more wage and housing relief for growers in the Farm Workforce Modernization Act, H.R. 5038. The bill passed the House on Dec. 11, and Newhouse and Rep. Zoe Lofgren, D-Calif., are the chief sponsors.
“Newhouse didn’t do his job. He started his compromise too low. He wants to give workers already here amnesty and a free ride. I’m OK with some of that, but he didn’t do squat on H-2A,” Valicoff said.
The bill’s one-year freeze on the H-2A minimum wage, known as the Adverse Effect Wage Rage, or AEWR, isn’t enough and subsequent annual increases of 3.25 to 4.25% are too high, Valicoff said.
Jon DeVaney, president of the Washington State Tree Fruit Association, said the $15.83 per hour will “be a challenge for many growers who are already operating below the break-even point.”
AEWR increases “are unsustainable” and that’s why the Lofgren-Newhouse bill addresses it, DeVaney said.
Growers should be able to pay the state minimum wage or prevailing wage and recoup some housing costs from workers, as is allowed in the non-agricultural H-2B program, Valicoff said.
Valicoff and most growers pay piece rate equivalent to $20 per hour or more for a lot of the fruit harvest. They use the AEWR for non-harvest tasks.
Washington state’s minimum wage increases from $12 to $13.50 per hour on Jan. 1. Oregon’s minimum wage is $11.25 an hour in rural areas and $12.50 in the Portland metro area. Idaho’s minimum wage is $7.25 per hour.
“We can’t sustain these wage increases. There’s going to be some real shake out and I hope I’m not one of them. They might as well end up just owning the farm,” Valicoff said. “I like Dan, but we are not real happy. Growers here I talk to think he’s pretty weak.”
DeVaney and Mike Gempler, executive director of Washington Growers League, are also ineffective in fighting for growers, Valicoff said.
“They try to get a one-year freeze. Big deal. We need to have growers losing money talk. We need to put it on the table and get the best deal. Think more like Trump,” Valicoff said.
Labor is about 60% of a grower’s costs and continual annual AEWR hikes are squeezing everyone, large and small, he said.
Valicoff hires about 200 H-2A workers annually but said he will try to reduce that this year and won’t keep up on replanting but will let some acreage sit idle because “it loses less money.”
Others are making similar economic decisions and the industry as a whole will probably let more ground sit idle, he said.
East Coast pension funds that recently bought some Washington tree fruit companies already are reselling because they don’t want to lose money, Valicoff said.
“And we have Little Cherry Disease running rampant in cherries, peaches and nectarines. It might take out a good share of the cherry industry this year, like a third,” he said.
The 2020 AEWRs were announced by the U.S. Department of Labor Dec. 19 and take effect Jan. 2. They are not part of the Farm Workforce Modernization Act, but the bill addresses them.
The Senate likely will write its own bill that is “far more employer friendly,” said Michael Marsh, president and CEO of the National Council of Agricultural Employers. Chances for a Senate-House compromise are probably best in May or after the fall election, he said.
NCAE still has an appeal pending of the lawsuit it filed last January. The 2019 AEWR hikes hit 23% in Nevada, Colorado and Utah and averaged 6.3% nationwide. No date has been set for oral arguments.
NCAE tried, to no avail, to get the AEWR reduced in congressional continuing resolution budget bills a year ago and last week. It is seeking AEWR relief in DOL’s H-2A rule changes that are still pending and there is a provision to end the AEWR in 2029 in the Farm Workforce Modernization Act.
Marsh said he does not know the administration’s position on AEWRs, which annually increase more than double the rate of all U.S. hourly employment.
While as a businessman President Trump might see inequity in AEWR increases, he also champions America First, a preference for jobs for Americans over foreign guestworkers.
NCAE petitioned DOL Secretary Alexander Acosta for direct AEWR relief last April but was declined. The matter was deferred to the H-2A rule change process.
Eugene Scalia became Labor secretary on Sept. 30. Marsh said he will meet with Scalia or his staff after the first of the year to again petition for a hearing to develop a regulatory record for direct relief.