CHOICES
A publication of AAEA
The Adverse Effect Wage Rate (AEWR) regulation of the H-2A Visa Program for temporary farm workers establishes a “minimum hiring wage” metric for H-2A employment decisions (CRS, 2025). This compensation guideline was conceived with logical, practical intentions that safeguard the welfare of both foreign workers hired under the H-2A program and domestic workers seeking farm employment (CRS, 2025). On one hand, AEWR ensures that H-2A workers are paid at just, fair wage levels that ideally should meet living wage standards. On the other hand, the AEWR policy averts any possibility that H-2A wages could “adversely” affect US farm labor market conditions if actually paid at very low levels that consequently depress market farm wage rates received by potential domestic farm workers.
Workers’ welfare protection, however, only captures half of the entire policy balancing predicament. While upholding AEWR’s social equalization principle, policymakers are also compelled to devote equal attention to the business side of the H-2A-AEWR equation. This intricate and challenging goal of balanced policymaking has gained greater attention in recent years, when several regional and state AEWR levels registered a sustained rate hike trend (Escalante et al., 2025; Escalante, Ghimire, and Acharya, 2025).
Since 2023, while worker welfare advocates have been applauding notable increases in certain regional and state AEWRs exceeding historical growth trends (Escalante, 2023; Mercer, 2024; Escalante, Ghimire, and Acharya, 2025), the farm business community and its supporters were airing their concerns that such hikes were abrupt, unreasonably high, and could threaten farms’ economic and financial sustainability. Several organized collective appeals calling for reforms in the AEWR policy were launched. Farmers in Michigan, North Dakota, and Georgia demanded that the Department of Labor (DOL) freeze AEWRs to pre-2023 levels (Georgia Farm Bureau, 2024; Cramer, 2024;Sloup, 2024; Vegetable Grower News, 2023a). The American Farm Bureau (AFB) supported the petition filed by the Georgia Fruit and Vegetable Association (GFVA) and the National Council of Agricultural Employers (NCAE) demanding the modification and repeal of existing DOL methodology for setting regional and state AEWRs (Georgia Farm Bureau, 2024; The Fence Post, 2023). These proposals were bolstered by legislative support as Senators Ossoff (D-GA) and Tillis (R-NC) sponsored the Farm Operations Support Act in early 2023, calling for the rollback of 2023 AEWRs to their 2022 levels (Vegetable Grower News, 2023b). In 2024, Congressman Moolenaar (R-MI) introduced HR 7046 (Supporting Farm Operations Act), which proposed a 2-year freeze on AEWR levels (Shike, 2024).
In August 2025, the farm business community scored a couple of big wins in its drive to overhaul the AEWR-setting mechanism. After a Louisiana court’s controversial decision to abandon the Department of Labor’s AEWR methodology rule, the USDA announced its intention to discontinue the Farm Labor Survey (FLS), which—along with the Occupational Employment and Wage Statistics (OEWS) data collected by the US Bureau of Labor Statistics (BLS)—has provided the primary bases for setting each year’s AEWR for nonrange farm jobs (Sauls, 2025; Thompson, 2025). These events could serve as catalysts for significant H-2A reforms.
The farm industry received this news with long-awaited relief after complaining about spuriously inflated H-2A wage rates, which—according to farm industry leadership—are “disconnected from the marketplace for agricultural wages… making U.S. employers non-competitive … (and eroding) market shares (of the industry) every year” (Thompson, 2025). All of these narratives were conceived based on a sweeping assumption that AEWRs universally make H-2A labor more expensive than domestic labor (Simnitt and Castillo, 2021; Hall, 2024; Rowe, 2024).
This article addresses the contention on the costlier nature of the H-2A labor sourcing alternative relative to domestic labor. Our analyses validate such presumption through more localized comparisons of prevailing AEWRs and domestic wage rates for farm workers using annual OEWS survey data (BLS, 2024). In order to understand local farmers’ labor hiring predicament, we employ a more disaggregated approach in our analyses that departs from commodity and regional wage data aggregation techniques currently used by the Department of Labor (DOL) in setting annual AEWR levels.
The DOL currently sets AEWRs for nonrange occupations in each year based on average wage data obtained from two surveys conducted in each preceding year: FLS from the National Agricultural Statistics Service (NASS) and OEWS from the BLS (CRS, 2025). The intention of this scheme is to produce “market-determined” AEWRs that reflect or approximate the previous year’s market wage equilibrium rates and farm local labor market conditions. It follows then that in periods of rising AEWRs, the higher cost of H-2A labor is the result of the previous year’s aggressive farm labormarket, where domestic farm workers were paid higher wages.
The more contentious element in the existing AEWR-setting methodology is its aggregation approach. The following sections lay out the aggregation schemes used by DOL (CRS, 2025).
The wages of almost all (more than 96%) H-2A hires are guided by a single annual AEWR level that remains unchanged even if the farm labor market experiences radical swings within the year. Only AEWRs for range occupations (i.e., farms engaged in herding or livestock production operations performed on a range) are allowed to vary monthly.
Notes: The regional groupings are Northeast I
(Connecticut, Maine, Massachusetts, New Hampshire,
New York, Rhode Island, Vermont), Northeast II
(Delaware, Maryland, New Jersey, Pennsylvania),
Appalachian I (North Carolina, Virginia), Appalachian II
(Kentucky, Tennessee, West Virginia), Southeast
(Alabama, Georgia, South Carolina), Lake (Michigan,
Minnesota, Wisconsin), Cornbelt I (Illinois, Indiana,
Ohio), Cornbelt II (Iowa, Missouri), Delta (Arkansas,
Louisiana, Mississippi), Northern Plains (Kansas,
Nebraska, North Dakota, South Dakota), Southern
Plains (Oklahoma, Texas), Mountain I (Idaho,
Montana, Wyoming), Mountain II (Colorado, Nevada,
Utah), Mountain III (Arizona, New Mexico), Pacific
(Oregon, Washington).
Source: USDA-NASS
In each year, 18 distinct AEWRs are determined for 15 Farm Labor Regions and three states. Figure 1 defines the regional boundaries as set by NASS on the bases of geographic proximity and the types of agricultural commodities (crops and/or livestock) produced that determine the nature of the regional labor demand (USDA-NASS, 2024). Only three states (California, Florida, and Hawaii) can use more localized AEWRs, as they are not assigned to any of the 15 regions (Figure 1).
A single state/regional AEWR is applied to all nonrange field and livestock H-2A workers. The aggregated rate is derived as the average of wages collected for farm jobs falling under six Standard Occupational Classification (SOC) codes. Based on the summary in Table 1, more than 83% of certified H-2A workers were categorized as SOC 45-2092 workers (in crop, greenhouse, and nursery farms) in 2024. SOC 45-2091 (equipment operators) and SOC 45-2093 (farm, ranch and aquaculture workers) accounted for 8.29% and 4.70% of all certified H-2A workers, respectively.
Farm employers commonly adopt piece-rate incentive payment structures to attract and recruit highly productive workers and maximize output, especially for employers in the specialty crop sector. The H-2A program clarifies that, even while farm employers can choose to pay piece-rate wages instead of hourly wages, DOL regulations oblige H-2A employers to supplement their H-2A workers’ pay when their earnings under the piece-rate system fall below the AEWR base hourly floor. Notably, DOL’s Wage and Hour Division (WHD), which is tasked with monitoring employers’ compliancewith wage regulations, uncovered and apprehended “wage ducking” schemes employed by H-2A employers where piece-rate payments were never upgraded to the AEWR hourly level and instead were set low enough so that H-2A workers’ take-home wage earnings fell below the contractual wage rate (Escalante and Taylor, 2024; Newman, 2011).
The H-2A program also enforces a three-quarters work guarantee for workers, which requires employers to pay each worker for at least 75% of the total hours promised in the job order over the contract period. This guarantee begins on the worker’s first workday after arrival or the employer’s advertised start date, whichever is later, and continues through the contract end date.
Under this rule, farm employers must pay the guaranteed hours even when there is not enough work available, whether due to weather delays, crop disease, market disruptions, equipment breakdowns, slower harvesting cycles or other conditions beyond the employer’s control. For hourly workers, employers are required to pay at least the AEWR for 75% of the promised hours. For piece-rate H-2A workers, the guarantee is converted into an hourly equivalent, and employers must pay the higher of the worker’s average hourly piece-rate earnings or the AEWR when calculating what is owed under the guarantee.
Domestic farm workers generally do not receive guaranteed minimum hours, making the three-quarters rule a significant additional cost and financial risk unique to H-2A employment. The three-quarters guarantee provides income stability for H-2A workers but can substantially increase the effective per-hour cost of H-2A labor in unpredictable or low-production seasons.
Beyond the AEWR mandate, H-2A employers are also required to provide their workers with a comprehensive package of fringe benefits that includes safe, sanitary, and acceptable housing arrangements, daily meals or kitchen facilities where workers can prepare their own food, transportation to and from the worksite, inbound and return transportation from and to the workers’ home countries, and other workers’ compensation (especially injury-related) benefits (FLAG, 2025). It is important to clarify that domestic farm workers do NOT usually enjoy these additional employment benefits.In comparing the complete H-2A compensation package and domestic wages, Calvin, Martin, and Simnitt (2022) provide estimates for the nonwage components of the total H-2A remuneration package. In their calculations, the mandated additional H2A fringe benefits (including housing, meals, transportation, and insurance) could collectively add $2.55/hour to hourly farm wages. The authors qualify that the gap between H-2A and domestic farm wages could be narrower when certain tax duties are considered (such as H-2A employers’ exemption from the payment of workers’ Social Security and unemployment taxes).
This article settles the issue of comparative costs of hiring H-2A and domestic farm workers by determining wage differentials between their labor costs. The results of our analysis reveal the effects of existing AEWR commodity/industry and geographic aggregation schemes in masking more localized discrepancies between domestic and H-2A labor costs.
We compiled wage data from the BLS for three categories of workers: SOC 45-2091 (equipment operators), SOC 45-2092 (crop, nursery, and greenhouse workers), and SOC 45-2093 (farm, ranch, and aquaculture workers). These are the farm positions held by 96% of certified H-2A workers in 2024. AEWRs are adjusted to include a 15.9% wage premium to account for the mandated H-2A fringe benefits package that H-2A workers receive over the AEWR. The adjustment factor (wage premium) is derived from the calculations of Calvin, Martin, and Simnitt (2022) for an average H-2A worker whose base wage (AEWR) of $16.00/hour is upgraded to $18.55/hour when nonwage benefits are factored in. This wage adjustment factor produces pre-tax wage comparisons and excludes any tax-related effects on the H-2A-domestic farm wage gap. This factor, which is used in this analysis, also approximates the results of a separate estimation of the wage premium based on available per-hour housing costs from DOL and consideration of other mandated fringe benefits. Table 2 presents a regional summary of these wage data.
Regional wage differentials are calculated by subtracting mean (domestic) farm wages from the adjusted AEWR levels. A relatively more expensive H-2A labor scenario is depicted by a positive wage differential result (green cells, Table 2); red cells show negative wage differentials with relatively costlier domestic labor alternative.
The limitations of the AEWR’s geographic and commodity aggregation schemes are evident in the results reported in Figure 2 and Table 2. Specifically, the plots in Figure 2 (for all six SOC categories used in AEWR determination) validate the absence of homogeneity and consistency in the trends of H-2A-domestic labor cost differential results across regions and through industry- and job-specific employment decisions. In two of the six job categories (SOC 45-2091 and SOC 45-2099), 11 of the 15 regions registered negative wage differentials, indicating that domestic workers are more expensive to hire than H-2A workers. Conversely, in all regions, H-2A workers are costlier to hire in several SOC job categories, with at least one job category in each region deviating from the trend.
The wage differential columns in Table 2 (for the three SOC categories that account for majority of the H-2A hires) shed additional light on the domestic-H-2A wage comparisons. Among the three farm positions, H-2A can be considered as a generally more logical, practical hiring alternative for equipment operators (given negative wage differential results for 11 regions where domestic labor is more expensive). On the contrary, in H-2A’s most dominant work category (SOC 45-2092) for crop, nursery, and greenhouse farms, all 15 regions have positive wage differentials as H-2A labor’s cost consistently exceeds domestic wages. Interestingly, while the wage gap can be as much as almost $4.00/hour (Pacific), the difference is less than $1.00/hour in five regions, especially in Mountain I ($0.02 differential) and Southeast ($0.41 differential). The last column in Table 2 identifies states in certain regions defying the trend, where domestic workers receive higher wages than H-2A workers.
Table 3 presents more detailed state-level employment situations featuring the 10 highest state employers of H-2A workers in 2024. Among these states, H-2A hiring decisions are economically and financially justified in four states (Florida, Georgia, North Carolina, and New York) hiring equipment operators (SOC 45-2091) where average domestic wages are higher than their adjusted AEWRs. In contrast, in the SOC 45-2092 job category, H-2A employment in the top six states (Georgia, Washington, Michigan, Florida, California, and North Carolina) constitutes more than 90% of total H-2A hires, even when their H-2A wages are higher than the average wage received by domestic workers in their crop, nursery, and greenhouse farms. Livestock H-2A workers (SOC 45-2093) are more expensive to employ than domestic workers in six of the ten states, except in Florida, Louisiana, Arizona, and New York, where domestic livestock workers are paid hourly differentials ranging from $0.41/hour (Arizona) to $2.90/hour (Louisiana) over the adjusted AEWRs.
This article refutes any sweeping statement on the costlier nature of the H-2A employment option. Our results clarify that the contention that hiring H-2A workers can be a greater financial drain relative to hiring local workers is only partially true. The veracity of this assertion depends on the type of farm positions being filled by H-2A workers and the geographic interplay between local farm market wage conditions andaggregated, adjusted AEWRs. In other words, H-2A is only a more expensive hiring alternative in certain regions and only in specific states within each Farm Labor Region, regardless of whether the overall regional wage differential favors domestic hiring.
Among the top H-2A state employers, H-2A hiring decisions for crop, nursery, and greenhouse jobs are made even when H-2A hiring costs exceed domestic wages. These seemingly counterintuitive employment decisions only reflect farms’ desperate need to fill farm work positions at crucial periods of the farm business operation. Farms’ continued heavy reliance on H-2A workers must have been motivated and rationalized more by the labor productivity argument. Anecdotal evidence suggests that the overall labor productivity gains realized from the employment of H-2A workers significantly exceed the combined effects of paying lower domestic wages to workers who can only muster inferior productivity results (Stup, 2022).
This article offers some insights for consideration as policymakers and industry leaders tackle the issue of formulating a more reliable, accurate methodology for setting AEWRs. First, an acceptable AEWR must be fair and just, not only for the contractual H-2A workers but also for domestic workers vying for the same position. This means that an effective AEWR level must not only reflect farm labor market fluctuations and equilibrium conditions but also be defined as part of an overall compensation package with additional fringe benefits that domestic workers normally are deprived of. This ensures equality of compensation for both H-2A and domestic farm workers.
Second, policy formulation must carefully strike a balance of social equity (workers’ welfare protection) and business sustainability goals. In addressing the latter, the ideal is to set multiple AEWRs for more localized commodity and geographic units so that H-2A labor costs can be set at levels in equilibrium with prevailing domestic farm wages. The existing aggregation schemes in setting AEWRs cause disparities between H-2A and domestic farm wages as the repercussions of more localized external shocks in labor and commodity markets on wages are either more cushioned or more magnified in certain farming territories than in others.
Minimizing wage differentials between AEWRs and domestic wages is an important priority as the farm sector navigates through challenging times of inflation, highly competitive global markets, and changing employment priorities of domestic residents. In a sector where many farms, especially those smaller in business scale, are still highly labor-intensive, more considerate wage reforms will help ensure the balancing of two important goals, avoiding the alienation of certain types of farm workers while at the same time allowing farm employers to make more economically logical employment decisions.
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