The Department of Labor (DOL) published a new final rule this week that will change its process for certifying U.S. farmers to hire foreign guest workers under the H‑2A visa category. DOL initially proposed the rule in 2019 under the Trump administration, but the proposed rule contained a variety of cost-saving and streamlining measures for employers. The Biden DOL went line-by-line removing all those positive aspects leaving only the cost-increasing parts.

This new rule will add to the already sky-rocketing food prices in the United States. In September, food prices had already increased 11.2 percent over last year—the highest amount in over four decades and a sixfold increase over the prepandemic rate. Yet DOL is about to impose even more costs on farmers and U.S. consumers. The rule has several cost-inflating measures, but the most significant would indirectly cause the H‑2A minimum wage for many farmers to go up, increasing the cost for hiring, reducing the number of H‑2A workers hired, and thereby reducing food production.

The new rule inflates H‑2A minimum wage rates.

H‑2A farmers must pay H‑2A workers (and U.S. workers in corresponding employment) the higher of: 1) the Adverse Effect Wage Rate (AEWR), 2) the prevailing wage, or 3) a collective bargaining (union) wage (very rare on H‑2A farms). The AEWR is the regional average wage of field and livestock workers in the U.S. Department of Agriculture’s Farm Labor Survey. Almost always, the binding wage has been the AEWR—which already has several elements designed to inflate wages—but this rule seeks to impose even higher “prevailing” wages.

“Prevailing wages” are established through state or local surveys of workers in a specific type of agricultural activity. Until this new rule, State Workforce Agencies—state entities funded by the DOL—had the sole responsibility for conducting these surveys. However, DOL laid out such rigorous standards for the surveys that they are almost never conducted, and when they are, they are almost never binding on the employer. Just eight states had conducted valid prevailing wage surveys for 2022, and only one such survey produced an hourly wage higher than the Adverse Effect Wage Rate applicable for that state. A few others produced wage rates per unit of production (bins, bushels, etcs) that may be higher, but overall, fewer than 2 percent of H‑2A workers had wages not set by the AEWR in 2022.

Now DOL wants to calculate higher prevailing wages for every H‑2A worker by eliminating the rigorous standards for H‑2A prevailing wage surveys and unleashing a flood of shoddy surveys to inflate worker wages above the AEWR. The new rule makes six significant changes to the prevailing wage survey methodology to increase the frequency of surveys and inflate wage rates:

  1. Surveyors no longer need to interview survey subjects. This removes a major cost barrier to conducting surveys.
  2. Surveyors no longer need to validate employer-provided wages with surveys of workers. This removes another major cost barrier to conducting surveys.
  3. Surveyors no longer need to estimate the population size being surveyed. This means that State Agencies can impose on a huge population a poor estimate based on a small sample without having to estimate the number of affected workers.
  4. Surveyors can be any state entity other than the State Workforce Agency including state universities. This means that any agency interested in higher wages can conduct a survey, which will vastly increase the resources available for these surveys.
  5. Surveys do not need to reflect average wages across the entire year or season, but rather only the peak season. Although this isn’t a change from the current rule necessarily, the new rule explicitly authorizes this practice which biases wages for an entire season based on the week where the shortage is most acute. This means that the surveys will be biased before we even get to the sampling design.
  6. Surveys can be based on sample sizes as small as 30 workers. With a sample size this small, these surveys will have a huge margin of error (about 17% for a population size of 500). Any values lower than the AEWR would be thrown out, while the errors on the high end would be accepted as valid and binding on employers. Table 1 shows the sample sizes, share of workers surveyed, and margin of error under the current and new rule.

We would expect that the survey errors alone would inflate wages by about 3 percent if prevailing wage surveys were conducted in every state for every job. But since the surveys will also likely only reflect the peak weekly wage rather than the average for the season, the effect could be double. Given that total H‑2A wages will be above $8 billion next year and $10 billion the year after, it’s possible that this aspect of the rule could end up costing farmers more than $500 million per year if fully implemented, reducing the number of farm workers employed, decreasing production, and raising prices.

The DOL argues that the Bureau of Labor Statistics (BLS) publishes wage survey data that includes samples as small as 30 workers and that the H‑2B regulations permit employer-provided surveys with samples as low as 30 workers. Yet the H‑2B employer-provided workers are entirely optional for employers, and they can only lower the required wage, not increase it. The BLS data include the margin of error for each occupational classification, so researchers understand its reliability. It is published for informational purposes, not as a mandate for employers. DOL does allow non-H-2A employers to use the BLS data, but again, doing so is optional. The new H‑2A rule explicitly prohibits any other surveys for H‑2A farmers.

The new rule includes other costs and no benefits.

The other cost raising measures in the new rule include:

  1. Prohibiting a reduction in wages (even with contractual agreement of the worker) on the rare occasions when the mandated wage goes down;
  2. Codifying that farm associations which file H‑2A applications on behalf of individual members would be liable for the actions of those members (currently a matter of legal dispute);
  3. Effectively prohibiting many farms from using motels or other public accommodations to house workers to comply with H‑2A’s housing requirement by requiring that they meet totally inapplicable guidelines for temporary farm labor camp standards; and
  4. Massively increase surety bonds for H‑2A labor contractors which are the employers driving most of the growth in H‑2A visas. Increasing costs for H‑2A labor contractors targets the fastest growing group of H‑2A employers. Contractors expressed concern that they might not be able to obtain surety bonds in the massive amounts required under this provision.

DOL asserts that the rule is still balanced by allowing electronic filing or electronic signatures for employers. But nearly all H‑2A applications are already filed online, and the so-called streamlining measures are either just codifying existing practices or are such minor concessions (e.g., e‑signatures) that they do nothing to offset the new costs. DOL carefully went through and removed proposals from the proposed rule that would have reduced costs. The final rule contains:

  1. No ability to stagger the start dates of workers on a single application;
  2. No ability to fulfill any recruitment requirements before filing the application;
  3. No ability to make changes to an application after it is certified;
  4. No two-week transition periods for implementing new mandatory wage rates;
  5. No reduction in the requirement to hire U.S. workers after H‑2A workers have already arrived;
  6. No increase in the certification of employer-provided housing from one to two years;
  7. No ability for previously certified employers to self-certify their housing;
  8. No elimination of the requirement to pay for H‑2A travel to the U.S. consulate; and
  9. No inclusion of pine straw or forestry industries in the uncapped H‑2A visa category.

These changes were relatively minor compared to the sweeping reforms that the overly bureaucratic program requires. The government has imposed more than 200 rules on employers, and this rule does not streamline or reduce any of those rules. The H‑2A visa is one of the few alternatives to illegal immigration and illegal employment, and making it more costly and more bureaucratic is counterproductive to reducing illegal immigration and improving food security in the United States.