USA Farm Labor, Inc.

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What is the Adverse Effect Wage Rate and How it Impacts Your Farm or Agribusiness?

Matthew Sherdan

A lot goes into running your farm or agribusiness. From sourcing raw materials to maintaining expensive equipment to managing your domestic staff and seasonal H-2A workforce, the challenges of ensuring a successful ag operation seemingly never stop. 

One of the areas of the H-2A program we’re asked about most often by our clients is the Adverse Effect Wage Rate, or AEWR (typically pronounced A-WAR). To help, we’re breaking down the AEWR, how these wage rates are calculated, and what this all means for your farm, farm contracting, or agribusiness now and in the future.   

What is the AEWR? 

The AEWR is essentially a minimum wage for seasonal H-2A farm employees and domestic employees. The AEWR is the minimum wage rate that agricultural employers must pay their foreign, temporary, seasonal H-2A employees to offset the potential impact this workforce has on the domestic, U.S. labor market employed in similar positions. 

Employers must also pay domestic employees performing the same job at least the same amount (or more) as their seasonal H-2A employees, so the AEWR is essentially a minimum wage for the entire agriculture industry. Although the AEWR varies by region, more on that later, the wage rate was designed to protect American workers’ wages from potentially negative impacts caused by the hiring of foreign labor, but this wage policy might actually do more harm than good.   

How is the AEWR Calculated? 

The AEWR is primarily calculated using the biannual (twice per year) Farm Labor Survey (FLS). The FLS was originally implemented to provide “the basis for employment and wage estimates for all workers directly hired by U.S. farms and ranches, excluding Alaska,” but it was never intended to help calculate required minimum wage rates across the agriculture industry. 

Nonetheless, the AEWR is set according to FLS data and statistics.  

How does this methodology work? 

The FLS breaks the country down into regions and compiles data based on the region in which your farm is located.  

The 15 FLS regions are as follows: 

  • Pacific: Washington and Oregon

  • Mountain I: Montana, Wyoming, and Idaho

  • Mountain II: Nevada, Utah, and Colorado

  • Mountain III: Arizona and New Mexico

  • Northern Plains: North Dakota, South Dakota, Nebraska, and Kansas

  • Southern Plains: Texas and Oklahoma

  • Delta: Louisiana, Mississippi, and Arkansas

  • Lake States: Minnesota, Wisconsin, and Michigan

  • Cornbelt I: Illinois, Indiana, and Ohio

  • Cornbelt II: Iowa and Missouri

  • Northeast I: New York, Vermont, New Hampshire, Maine, Rhode Island, Connecticut, Massachusets, 

  • Northeast II: Maryland, Pennsylvania, Delaware, New Jersey

  • Appalachian I: Virginia and North Carolina

  • Appalachian II: West Virginia, Tennessee, and Kentucky

  • Southeast: Alabama, Georgia, and South Carolina

California, Florida, and Hawaii are all considered individual survey regions with Alaska excluded from the total count. 

The FLS was never designed to set wage standards for H-2A workers, but the DOL reaches a bit and uses the survey for this purpose. There are plenty of drawbacks to using the FLS to help determine H-2A program wage rates, but we’ll dig deeper into that in a later article. 

For now, it’s important to understand which region you fall into and if you don’t regularly fill out your FLS, then you should definitely consider participating. Clearly, the data contained in the FLS is used for some fairly serious rulemaking and you’ll help yourself by filling out these surveys every six months or when a new survey is published and circulated. 

The FLS is typically sent out in April and October and includes reference weeks in January, April, July, and October. 

From there, the AEWR is used to set the wage rates for several job codes, also known as Standard Occupational Classification (SOC) codes.

The AEWR is used to set the minimum wage rates for the following agricultural SOC codes:  

  • 45-2041: Graders and Sorters, Agricultural Products

  • 45-2091: Agricultural Equipment Operators  

  • 45-2092: Farmworkers and Laborers, Crop, Nursery, and Greenhouse  

  • 45-2093: Farmworkers, Farm, Ranch, and Aquacultural Animals  

  • 53-7064: Packers and Packagers, Hand  

  • 45-2099: Agricultural Workers, All Other

These are considered the six main job codes for agricultural jobs in the H-2A program. When you apply for a Temporary Labor Certificate, we’ll typically use one of these SOC codes for the job descriptions on your form ETA-790 and the jobs you need to fill. 

However, there are also other SOC codes that you may need to use for your labor certificate applications. For all other SOC codes outside of the major six, the DOL will use the Occupational Employment and Wage Statistics (OEWS) survey to establish wages for each individual SOC code outside of the major six SOC codes. 

According to a report published by the DOL (see our digital handout below), the most common H-2A jobs outside of the major six SOC codes are as follows: 

  • 53-3032: Heavy and Tractor-Trailer Truck Drivers

  • 47-2061: Construction Laborers

  • 45-1011: First-Line Supervisors of Agricultural Crop and Horticultural Workers

  • 49-3041: Farm Equipment Mechanics and Service Technicians

  • 45-4022: Logging Equipment Operators

The DOL requires H-2A program employers to accurately list their job duties on the ETA-790 form. Under DOL regulations, H-2A employees are only allowed to perform the tasks associated with their job which is associated with a specific SOC code.

If you choose not to select certain job tasks because doing so would place you in a higher OEWS wage rate, your H-2A workers must not perform those tasks. Such tasks should be reserved exclusively for domestic workers. This approach is essential for protecting your operation from potential fines or complaints related to wages or job duties, which could potentially turn into DOL audits and no one wants an audit. 

If you’re unsure about which SOC code to use or which tasks to list for your farm positions, contact us and we’ll be happy to help. 

Our knowledgeable staff has decades of experience in the agricultural industry and with the H-2A program.

We understand how to match job duties and responsibilities with the proper SOC codes so our clients can get legally certified to hire temporary, seasonal foreign labor for their businesses without worrying about backlash from the government. 

What is Your Region’s AEWR? 

Understanding the AEWR in your region of the country is critical information for complying with the rules and regulations of the H-2A program and for effectively managing your farm or agribusiness. 

The AEWR establishes your payroll and labor costs for you, so it’s always in your best interest to participate in the biannual FLS and accurately report your data in the survey. 

Here are the current 2024 AEWRs: 

  • Pacific: Washington and Oregon - $19.25

  • Mountain I: Montana, Wyoming, and Idaho - $16.54

  • Mountain II: Nevada, Utah, and Colorado - $16.63

  • Mountain III: Arizona and New Mexico - $16.32

  • Northern Plains: North Dakota, South Dakota, Nebraska, and Kansas - $18.32

  • Southern Plains: Texas and Oklahoma - $15.55

  • Delta: Louisiana, Mississippi, and Arkansas - $14.53

  • Lake States: Minnesota, Wisconsin, and Michigan - $18.50

  • Cornbelt I: Illinois, Indiana, and Ohio - $18.18

  • Cornbelt II: Iowa and Missouri - $17.79

  • Northeast I: New York, Vermont, New Hampshire, Maine, Rhode Island, Connecticut, Massachusets - $17.80

  • Northeast II: Maryland, Pennsylvania, Delaware, New Jersey - $17.20

  • Appalachian I: Virginia and North Carolina - $15.81

  • Appalachian II: West Virginia, Tennessee, and Kentucky - $15.14

  • Southeast: Alabama, Georgia, and South Carolina - $14.68

  • California: $19.75

  • Florida: $14.77

  • Hawaii: $18.74

Now you have a clear idea of the hourly wages you can expect to pay an H-2A employee who falls within one of the major six SOC codes. You’ll also notice that these rates vary drastically from region to region across the country. 

Drastically varying wage rates such as these can be problematic for many reasons, mostly as it relates to recruitment. For example, farm businesses in low-wage rate regions might have a harder time recruiting employees than employers in higher-wage regions. Likewise, farm businesses with operations in two or more regions might need to reconsider their locations based on the cost of labor. 

Understanding your wage rate obligations will empower you to make the best hiring decisions for your farm or agribusiness. 

Again, be sure to take the time to fill out your biannual FLS and accurately report the data that the survey is requesting – it’s in your best interest. 

Wage Trends and the AEWR’s Impacts on Agriculture

The AEWR has a significant impact on American farmers and producers. Again, since the AEWR sets the minimum wage for much of agriculture’s seasonal and domestic workforce, these figures dictate a large portion of your operating costs.

When a farm or agribusiness operator hires a temporary, seasonal H-2A employee, they must pay domestic American employees the same rate or more, given they’re all performing the same job. 

Since most producers utilize both the H-2A program and the domestic American labor market to comprise their workforce, the AEWR essentially sets the wage rates for the entire ag industry. 

Although the AEWR is intended to protect domestic wages, these wage rates can have some pretty serious impacts on American farmers, growers, and producers. 

In fact, one of the biggest issues facing American farmers involves a consistently rising AEWR with no clear end in sight. 

For example, the 2024 AEWR for the Northern Plains region is $18.32/hr, which is up nearly a dollar from 2023 when the wage rate in this region was $17.33. 

Likewise, the national average AEWR in 2024 is $17.55, up 5% from 2023. Furthermore, the national average AEWR has risen at least 5% or more every year for the past three years. And, the AEWR has more than doubled since 2005.

As federal minimum wage rates have remained mostly the same, the agriculture industry has seen its federally mandated minimum wage (the AEWR) double in the last 19 years. 

When you couple soaring input costs (equipment, materials, seed) with the rising cost of labor (the AEWR, the OEWS), it’s easy to see why the agriculture industry in America is struggling to keep up. 

Thankfully a group of elected officials is constantly advocating for some relief. 

Senator Kevin Cramer (R-ND) is a proponent of freezing the AEWR at January 2023 rates and he’s not alone. 

In a letter to Senate Majority Leader Chuck Schumer (D-NY), Senator Cramer and Senator Mike Crapo (R-ID) wrote: 

Kudos to these Senators for advocating on behalf of American farmers. 

It’s almost as if these wage rates are calculated and set without considering the impacts it has on our American growers and farmers. 

Simply put, the rising costs of production coupled with the rapidly increasing wage rates have hampered our American farmers’ ability to sustain their businesses. 

Although some of the higher-grossing ag corporations can easily afford higher operating and overhead costs, smaller fixed-site family crop farms across the country struggle to keep up and sustain their businesses. 

Perhaps more importantly, these self-imposed complications put our country at a disadvantage in the global marketplace and increase our dependence on other nations for our food supply. 

**Read the Senators’ full letter here.

Hiring a Skilled Agriculture Workforce is More Important Now than Ever Before

One way to offset the rising costs of labor is to hire extremely dedicated, skilled, and reliable employees for your farm or agribusiness. A skilled domestic and H-2A seasonal workforce helps increase efficiency, supercharge production, and enhance your growing capacity during pivotal times of the crop season.   

You need a trusted H-2A agency in your corner, and that’s where USA FARM LABOR comes in. Our H-2A services are beyond critical for our clients and the employees we source are the difference between a so-so growing season and an epically productive growing season. 

For Farm Labor Contractors (FLCs), the combination of a reliable, skilled domestic and seasonal workforce means you can take on more contracts, provide better services, and increase production.   

USA FARM LABOR is committed to serving our clients with excellence and creating solutions designed to make your life easier. Our affordable offerings combined with our decades of experience make the H-2A program simple and easy to use for our clients. 

Give us a call at 828-246-0659 or fill out a contact form and one of our trusted associates will be happy to assist you with a 100% FREE workforce consultation. We’re confident that we can offer a workforce solution to meet your unique needs, regardless of where you’re located and despite an unreasonably high AEWR.   

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