MANTON — A new federal rule on how wages for migrant farm labor are calculated is expected to significantly reduce labor costs for northern Michigan farmers.
The change may lead to lower grocery store prices and cheaper Christmas trees, say agricultural leaders.
The Oct. 2 rule impacts the Adverse Effect Wage Rate (AEWR), which is the Department of Labor’s wage floor for migrant workers approved to work in the U.S. through the H-2A visa program. It was introduced in 2008 to ensure hiring guest labor would not undercut wages of U.S. workers.
The change in methodology could save agricultural employers more than $24 billion over the next decade, according to the Department of Labor’s analysis. In Michigan, federal reports suggest a potential drop from about $18.15 to as low as $13.78 per hour for certain H-2A job categories, assuming the rule is made permanent.
Under previous methodology, wages climbed over 60% in Michigan since 2015. The new calculation incorporates adjustments based on the position’s required skill level and benefits like housing accommodations, among other things.
The rate change was pushed in part by the Cadillac area’s U.S. Representative John Moolenaar (R-Caledonia). Moolenaar introduced the Freeze AEWR and Restore Monetary Sense (FARMS) Act to Congress in September, which would allow the Department of Labor to pause AEWR increases for two years if there is no valid method to calculate the wage rate.
“The Department of Labor’s new rule is an answer to the prayers of Michigan farmers who have struggled for over a decade to keep up with the rising cost of AEWR,” Moolenaar said in a statement.
“The H-2A program helps our farmers maintain a reliable and legal workforce and provide the food we rely on. However, previous calculations of the AEWR resulted in unsustainable increases that would bankrupt family farmers. Today’s rule is a step in the right direction to provide these farmers long overdue relief.”
The temporary rule comes after the prior AEWR calculation method was struck down in federal court for being “arbitrary and capricious.” In its ruling, the court required that AEWR calculations revert to the earlier 2010 Farm Labor Survey methodology. The Department of Agriculture simultaneously cut Farm Labor Survey funding, leaving the Department of Labor with no valid way to determine the AEWR.
Locally, growers are hopeful. Beth VanDrie, general manager of Dutchman Tree Farms in Manton and a leader of local migrant labor contracting firm Arlene Farm Management, said the change is a “huge win” for growers that had to shut down operations due to high labor costs. She projects that cheaper labor costs could translate to lower prices for Christmas trees, if the rule is sustained.
“It is likely a decrease in ag wage payouts, but they were unsustainable at the rate they were growing,” she said. “With the wage increases year after year, we had to raise our prices. This is a reset, a balance, so we’ll be able to grow again.”
The rule was temporarily approved pending further adjudication and public comment through Dec. 1. The rule is not official and may face pushback from labor groups, VanDrie added, but it is largely supported by growers.
“This new rule is a great first step in giving farmers more certainty for the future and we look forward to continuing our partnership and protecting Michigan farms,” said Michigan Farm Bureau National Legislative Counsel Jacob Smith in a statement from Moolenaar’s office.
What’s also unclear is what impact, if any, the rule will have on H-2A visa application rates, VanDrie said.
“If you’re 18 and coming across the border to work in the U.S., the question is whether you’re going to take a $5 decrease to do the same work,” she said. “Our guess is ‘yes’ because the pay rates in Mexico are like $3 an hour…. It’s still a great opportunity for their families, but we really won’t know that until the next season.”
Although the rule is in effect right now under Department of Labor policy, VanDrie added the ongoing government shutdown may block its processing temporarily.
Daniel Schoenherr’s position is funded through Report for America and local fund-raising. To help continue local reporting please consider contributing to the Cadillac Area Community Foundation’s Local Journalism Fund at www.justgiving.com/cadillacareacommunityfoundation.