According to the American Farm Bureau Federation, the recent H-2A adverse effect wage rate final rule, which changes the index farm wages are based upon, will help provide producers predictability in labor costs. AFBF Congressional Relations Director Allison Crittenden said this data proves farmers will have more predictability and stability when it comes to their wage rates.
“What we’ve seen using the old methodology that’s based on the survey is there are very unpredictable increases in random years. And what we experience using an ECI Index wage methodology is a predicable increase from year-to-year, which helps farms make important planning decisions.”
The final rule no longer uses USDA’s Farm Labor Survey for workers who fall under core farm occupations. Instead, the rule will base wages on the Employment Cost Index.
“For 97% of H-2A workers, their wages will be frozen for the first two years, so for 2021 and 2022. In 2023, the wages paid to those individuals will be indexed based on the Employment Cost Index. So, the wages will increase based on however much the Employment Cost Index increased in the preceding 12 months.”
Crittenden went on to say in labor-intensive states, labor makes up more than 20% of the total expenses of the farm, making predictability important for the Ag community. You can find the complete analysis by checking out the Department of Labor’s Website.
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