American fruit and vegetable growers face familiar challenges, including extreme weather, water scarcity, global competition and supply chain issues. Providing fresh, healthy food is no easy task. Adding to the industry’s woes, the rising cost of labor may worsen. A recent U.S. Department of Labor (DOL) proposal for the national H-2A visa program, which is for temporary agricultural workers, threatens to increase costs and bureaucracy. There is widespread concern that these additional expenses will erode the competitiveness of U.S. produce and force many growers out of business.
The H-2A program, established in 1986 as part of the Immigration Reform and Control Act, addresses labor shortages by allowing foreign workers to perform tasks like planting, cultivating and harvesting in the United States. The program has grown significantly over the years due to rising labor demand. In the 2022 fiscal year, the DOL approved approximately 370,000 H-2A positions, a substantial increase from around 50,000 in 2005.
Annually, the DOL determines the minimum hourly wage rate, known as the Adverse Effect Wage Rate (AEWR), for each state. This rate is typically set above each state’s minimum wage and is designed to prevent the wages of domestic workers from being negatively impacted by the employment of H-2A workers. The DOL also imposes various other regulations on agricultural employers who hire these workers.
On Sept. 12, the DOL released a new rule “to strengthen protections for temporary farm workers.” A 60-day public comment period was held, coming to an end in mid-November. In brief, the government department says the proposed changes would add new protections for worker self-advocacy — including allowing union representatives onto employer-provided housing — clarify when a termination is “for cause,” and make foreign labor recruitment more transparent.
In addition, it says the proposed rule would make wages more predictable by making new wage rates applicable immediately upon their publication in the Federal Register rather than weeks later, improve workers’ access to safe transportation and enhance enforcement to improve program integrity.
Acting Secretary Julie Su in September said, “Farm workers are vital to our farmers, our food supply and our communities. This proposed rule would strengthen protections for H-2A farm workers who are particularly vulnerable to labor abuses, empower them to advocate for fair treatment and ensure that their employment does not depress labor standards and undercut domestic farm workers. The administration is committed to protecting all workers, and this proposal would significantly advance that effort.”
Problems Abound for Employers
Agricultural labor specialists with whom Vision Magazine recently spoke strongly agree that seasonal farm workers are vital to the produce industry. But there was little to no support for any other part of Su’s statement.
Rob Roy, president and general counsel of the Camarillo, CA-based Ventura County Agricultural Association (VCAA), is concerned with DOL’s proposed changes because “none are really that good for agriculture — it just creates more work for the farmers in making sure that they are dotting their i’s and crossing their t’s.”
“In a nutshell, I would say that virtually all of these proposed changes by the U.S. Department of Labor are not going to change the working conditions of H-2A workers in any significant way,” notes Roy. “Rather, they’re just putting more restraints on the employers that utilize this program and adding much more cost and administrative work in order to comply with all these restrictions.”
Jason Resnick, senior vice president and general counsel for Western Growers Association, based in Irvine, CA, thinks the proposed rules are “going to cause lots of problems for employers who are just simply trying their level best to grow and harvest food for Americans and do it in a way that is compliant and protective of U.S. and foreign workers.”
Meanwhile, David Scaroni, partner and senior vice president of Heber, CA-based Fresh Harvest, an employment agency that helps growers access legal labor, says the new H-2A rules indicate that the DOL thinks the people who are picking crops need to be making more money. Scaroni says this premise is “roughly, vaguely correct.” But he adds that the H-2A program “is driving a significant amount of cost into this program. We are constantly battling against that. You have to have an economic reality. You cannot just keep throwing in the cost increase of rulemaking and have wages that keep shooting up 8% to 9%. That is not sustainable. Eventually, you are going to break the economic model of producing specialty crops.”
The H-2A program is critical from the perspective of Michael Marsh, the president and CEO of the Arlington, VA-based National Council of Agricultural Employers (NCAE), which is the only national association focusing exclusively on agricultural labor issues from the agricultural employer’s viewpoint. Since taking the NCAE post in 2017, Marsh, who is well-versed in all related national legislation, has toiled in Washington, DC in an effort to preserve reasonable farm worker wages.
“For me, as a recovering CPA [Certified Public Accountant], the arithmetic is pretty easy — and it is devastating to family farmers throughout the United States having to compete [with foreign growers],” says Marsh.
‘Extraordinarily Inflationary’
The DOL rulemaking has progressively pushed wages upward. Marsh emphasizes this is not a simple matter of flat wages. He says the root cause that is shaking American agricultural employers is the DOL’s insistence that H-2A wages have no adverse effect on the domestic workforce.
Marsh says the NCAE shares that goal, but he says that the U.S. workforce has almost no interest in these farm jobs. In 2020, the NCAE sent a survey to agricultural associations in 50 states, asking how many domestic workers had applied for jobs that might be filled by H-2A workers. Out of 97,691 jobs available, 337 domestic workers had applied, representing a mere 0.34% of the total. Marsh adds that those 337 applications don’t reflect who actually accepted these positions or stayed on the job. He says this underwhelming number consistently reflects Americans’ uninterest in agricultural field work. He adds that the average wage for these positions is typically twice the federal minimum wage.
Roy agrees with this notion, saying the DOL argument is that the H-2A program in effect discriminates against domestic agriculture workers by taking jobs away from them. “I don’t understand the nature of that argument,” he says. “Secondly, overall, this industry has been suffering labor shortages for the last few years. There are not enough workers, evidenced by the number of H-2A workers that came to the United States this past year.”
Similarly, Resnick also notes that “in most cases, the number of U.S. workers who apply for the H-2A jobs is, or is close to, zero.”
According to Marsh, H-2A rules calculate the wages of multi-talented workers — such as those licensed to fill in as truck drivers. He says the wages for these workers then become the standard DOL expects growers to pay all H-2A and domestic workers. The DOL distinctly segregates these very common agricultural jobs because, as Marsh explains, “They didn’t want us to have an adverse effect on a truck driver or a construction worker or a farm or ranch manager.”
These average gross wages are “sadly where the Department of Labor has hung their hat.” This process, Marsh notes, is “extraordinarily inflationary to the wages that farmers have to pay. It just doesn’t make any sense. It is disconnected from agricultural wages. It is a wage rate that is not paid anywhere in the economy for agricultural labor. Unfortunately, the Department of Labor continues to persist in misusing this, even though the Secretary of Agriculture at the time, Sonny Perdue, said it was completely inappropriate to do so. But it continues to use that.
“We could have cleared this up with an economic hearing pretty quick. But of course, so far we have not been successful in getting the Secretary of Labor to grant that simple hearing,” says Marsh.
On top of this, a concern among many is related to rules surrounding unions. Western Growers Association’s Resnick says the DOL “seems to continue to insist that employers provide free access to union organizers on their property for the purpose of trying to solicit employees to join unions. That is troubling. Then the proposed rule also requires that employers have to state on their H-2A application that they will bargain in good faith with the requesting labor organization for a proposed labor neutrality agreement or explain why they will not negotiate with a labor organization.”
So, is U.S. agriculture close to a kind of Labor Armageddon, in which huge numbers of growers go out of business due to prohibitively high labor costs? Roy says that the industry isn’t there yet, but is maybe two or three years out. He says that if these types of change continue, “it’s going to be extremely difficult for growers to survive. Our strategy right now is that anytime these regulations come out, the industry’s going to be challenging them in court. I think that court is the only place that we think we can get a square deal. Looking to the U.S. Department of Agriculture to help out the farmers is not happening.”
Roy adds, “I’ve been on the ground with virtually every major development in agriculture since 1976. This industry is extremely overregulated. As someone who has been here for many years and observed everything, it’s like death by a thousand cuts.”
A Need for H-2A
Despite the myriad issues with it, the H-2A visa program remains essential to the industry, according to Resnick. Because seasonal and migrant farm workers have aged out of agriculture and they didn’t raise their children to be farm workers, he says the alternative is sourcing foreign labor carrying an H-2A visa to be used for a season or more before returning to their home country. “The program is a lifesaver and has been a real stopgap for American agriculture,” he says. “We really could not continue without the H-2A program, which has grown substantially over the last 10 to 15 years.”
Michael Hill, CEO of H&A Farms, a grower-owned blueberry packing facility based in Central Florida, says the current H-2A program “is good as an option for getting us the labor that we need. It is just very expensive — with the housing, the cost of visas and transportation. When that is looked at compared to what our competitors in other countries are paying, we must find other alternatives. Currently, the best alternative is mechanical harvesting.”
Nick Osmulski, president of Traverse City, MI-based North Bay Produce — of which H&A Farms is a shareholder — notes that there are a lot of similarities throughout the world when it comes to farm labor. “Most geographical growing locations are struggling with labor to some degree,” says Osmulski. “Yes, the labor rates may be different between what the U.S. grower has to pay for labor versus what many other areas of the world have to pay, and there may be more red tape we have to deal with in the United States. That leads to more added struggles to get enough help, and navigating wage increases is happening everywhere.”
Osmulski also says, “The farming community around the world will always find ways to adapt and get the produce harvested and to the market for the most part. The question becomes ‘At what cost?’ And how does that translate to what consumers will be paying in grocery stores in the future? There’s already a perception from many consumers that fresh produce is high priced when you compare it to foods in other departments of the grocery store. The challenge becomes making sure produce supplies keep up with demand while keeping the cost perception in check.”
The H-2A program’s rules, according to Marsh, have created “a huge bill for farmers who are just trying to compete with their foreign competition. It just makes no sense today that more than 60% of the fresh fruit and 40% of fresh vegetables we consume in the United States are imported from our foreign competition, primarily Mexico and Canada. Unfortunately, what this administration is doing with these rules is forcing food production to move to our foreign competition. Ask anybody, ‘How do you like relying on somebody else for food?’”
Roy also notes, “If the government doesn’t wake up and change these programs to be more palatable and sustainable for agriculture employers, the ultimate result is going to be growers either moving to foreign lands like Mexico and then exporting crops back — or many employers will go out of business. We’re going to have more and more reliance upon international farmers to grow our foods, which will become a national security issue.”
An additional factor to consider is the indirect impact on food inflation from the constant rises in the H-2A wages. “Inflation is one of the big bugaboos of this administration. So, they are cutting their own throats with this,” says Marsh. “We just simply need to reconnect our wage rates to the marketplace because markets very effectively and elegantly allocate resources to their highest and best use.”
An Uncertain Future
As to the future of farm labor in the U.S., Osmulski thinks “there is always some level of concern.” But he says these concerns vary from year to year and from state to state. “That’s because federal and state regulations, rules and laws are constantly changing. We’ve seen it time and time again — a particular state is doing well on farm labor for a few years and then regulations change for whatever reason, and it changes the labor situation for farmers in that state.”
He continues, “Sometimes an unfavorable change in one state actually increases labor availability and benefits growers in other states. That may sound crazy, but with all the continuous changes in the regulations and laws throughout the U.S. — that is the reality.”
That said, the produce industry continues to be heavily burdened by soaring labor costs, which tend to far outpace increases in the prices of fruit and vegetables at grocery stores, and for many growers is eating further and further into their already meager profit margins. It remains to be seen just how hard these new proposed rules will hit the industry that is already struggling on this issue, and what the knock-on effects could be.
