
The US farm sector has historically relied heavily on foreign workers to fill its seasonal unskilled labor positions. This trend persisted even when stricter immigration control laws were enforced at the federal and state levels (in certain states) beginning in the early 2000s. Interestingly, during the late 2000s recession, immigration control policy arguably served as a logical solution to impending unemployment conditions as positions vacated by evicted undocumented immigrants created job openings for unemployed documented residents. However, the farm sector’s actual employment trends defied such logic: The deportation of undocumented immigrants only created many unfilled positions in farms. Farmers experienced frustrations in attracting local workers even after employing costly advertising and aggressive hiring strategies, including higher wage offers (Luckstead, Nayga, and Snell, 2021, 2022; Pena, 2023; Escalante, Perkins, Santos, 2011).
Tight labor markets and shortage of willing domestic farm workers led US farms to increasingly rely on the H-2A Agricultural Guest Worker Program as a legal hiring alternative for sourcing much-needed contractual foreign workers over the years. The H-2A program allows US farmers to temporarily hire nonimmigrant foreign workers to perform full-time, short-term (seasonal) farm work when domestic workers are unavailable (GAO, 1997; Pena, 2023). The H-2A program is governed by regulations designed to protect the interests of the foreign laborers while ensuring that such employment decisions do not deprive any able, qualified domestic workers of an employment opportunity. The program sets a minimum, guiding wage requirement called the adverse effect wage rate (AEWR) and mandatory minimum standards for provision of housing, transportation, meals, workers’ compensation, and other benefits (Mayer, Smith, and Skinner, 2008).
Since 2023, inflationary and other macroeconomic pressures have led to higher equilibrium market wages, which subsequently were reflected in significant increases in the H-2A program’s AEWR levels. Given the program’s mandatory compensation package that involves more than just the AEWR component, the affordability of H-2A labor becomes an urgent concern for farm employers. This article discusses possible profitability repercussions of increasing AEWRs through a case study of Georgia’s specialty crop producers’ cost and returns during the last two years. Our study applies a value of farm production (VFP) approach to provide estimates of profit margin squeezes for Georgia’s fruit and vegetable farms and reconstructs enterprise budgets for selected specialty crops to show net farm income conditions under several H-2A employment scenarios.
The H-2A program has expanded rapidly since 2010, which suggests that agricultural employers are having difficulty finding domestic workers. This expansion of the program is noteworthy because H-2A workers are relatively more expensive for employers than domestic workers (Caraway, 2023; VGN, 2023a; Georgia Farm Bureau, 2024). Between 2013 and 2019, the proportion of H-2A visa approvals to total employment in farming, fisheries, and forestry grew from 7.69% to 17.72%. The H-2A employment rate has continued to grow steadily in more recent years (Escalante, Luo, and Taylor, 2020). Notably, even when strict entry restrictions were enforced at the height of the global COVID-19 pandemic, legislative concessions were made to ensure the steady supply of H-2A workers needed to sustain the operations of the farm sector (Escalante, Luo, and Taylor 2020; Escalante, Cowart, and Shonkwiler 2023).
The geographic distribution and growth of H-2A employment have been quite uneven. Recently, the Southeast posted larger swings in H-2A patronage than other regions (Castillo et al., 2021; Gutierrez-Li, 2024). In 2007, about a third (34%) of H-2A workers were hired in just five states—California, Florida, Georgia, North Carolina, and Washington—which now account for more than half (52%) of all H-2A jobs (Escalante, 2023).
Based on H-2A utilization trends over the past 2 decades, H-2A employment has grown more significantly in farm sectors that are more labor-intensive and with high demand for seasonal labor. Specifically, these sectors include fruit, tree nuts, vegetables, melon, nursery, and greenhouse farms. H-2A patronage statistics across farm enterprises indicate that crop farms accounted for 80%–90% of H-2A workers hired since 2010 (Castillo et al., 2021).
One of the most contentious elements of the H-2A program is its AEWR policy designed to ensure that the employment of foreign workers does not negatively impact local wages. AEWR, technically intended as the program’s guiding hiring wage, has risen significantly since 2023. The national average AEWR in 2023 was $16.13 per hour (equivalent to $15.49 per hour, using 2022 as the base year), representing nominal and real growth rates of 7.34% and 3.09%, respectively, over the 2022 rate ($15.03 per hour). In 2024, average state AEWRs rose to $16.98 ($15.84 in 2022 dollars), which is a 5.23% nominal growth from the previous year (withequivalent real growth rate of 2.25%). In 2025, the national average H-2A guiding wage is $17.74 per hour ($16.11 in 2022 dollars), which is 18.01% over the 2022 rate, translating to an annual average nominal growth of 5.68% over the last 3 years (DOL, 2024a; 2024b; 2023). This rate exceeds historical growth trends as AEWRs have grown at an average nominal annual rate of only 3.52% between 1991 and 2022.
The sustained rise in several AEWR levels has been criticized as too abrupt and did not prepare farm businesses for their cost efficiency repercussions (Caraway, 2023; DOL, 2024a). Among several efforts, industry leaders and legislators lobbied for more transparency in AEWR setting methodology (Georgia Farm Bureau, 2024), freezing of state AEWRs at January 2023 levels (Cramer, 2024), delaying the AEWR hike until the end of 2025 (Sloup, 2024), or rolling back rates to 2022 levels (VGN, 2023b).
An important clarification of the H-2A labor affordability issue is that a current year’s AEWR is usually set according to farm wages reported in the previous year’s Farm Labor Survey conducted by the USDA, with some exception for a subset of skilled workers, such as drivers and machine operators, whose rates are determined using the OES Occupational Employment Wage Survey. The observed hike in the AEWR between 2022 and 2023 is not due to these new skilled job wage rates. Thus, higher AEWRs only reflect elevated equilibrium farm market wages in the previous year. The AEWR affordability issue boils down to at least two issues. First, in a period of higher farm wages, farmers have to contend with higher AEWRs that, as mandated under the program, need to be supplemented by fringe benefits (housing, meals, transportation, and other employer-provided benefits), which are not usually incurred when hiring domestic workers (Luo and Escalante, 2017).
The other issue is the more aggregated approach in determining state AEWRs (Rutledge et al., 2025). Currently, the DOL calculated AEWRs for 20 geographic entities, comprising 15 regions, four individual states, and the District of Columbia. The regional approach raises questions on whether a state’s AEWR aptly and adequately captures local labor market conditions that could possibly be differentiated from the rest of the region.
The recent sudden overall rise in state AEWRs did not necessarily slow down US farms’ demand for H-2A labor. As the national average AEWR increased by 1.77% between 2022 and 2024, the number of certified H-2A workers in the country still grew by 12.97%. The plots in Figure 1 indicate that the majority of the top ten
H-2A state employers, which all experienced large swings in their AEWR levels between 2022 and 2024, posted growth in their H-2A employment numbers. Georgia is the most notable case as the state experienced the most significant jump in its AEWR between 2022 and 2024 (at 22.44%) yet also registered the largest increase in H-2A labor certifications (11.52%) in the country. In contrast, the 2-year AEWR growth rates in Michigan and Florida, which were the second and third largest rates in the country, reduced their dependence on H-2A labor by 1.65% and 3.22%, respectively. California and Arizona also posted reductions in H-2A employment numbers while five other states (Washington, North Carolina, Louisiana, Texas, and New York) continued to rely more on H-2A workers, just like the Georgia case (DOL, 2024a,b).
This article provides a more in-depth analysis of the AEWR effect on Georgia fruit, tree nut, and vegetable farms, considering the state’s continued high demand for H-2A labor and focusing on its more labor-intensive farm operations that employ majority of its H-2A workers (as compiled from DOL’s H-2A disclosure datasets). We employ two methodologies in our analysis: the value of farm production (VFP) method (Escalante, Ghimire, and Acharya, 2025) and the enterprise budgeting (EB) approach (Fonsah, Price, and Cantrell, 2022; Fonsah, Shealey and Carlson, 2022).
The VFP method uses a compilation of financial performance indicators from the USDA-ERS to determine the extent of overall farm income and margin declines that can be attributed to deterioration in cost efficiencies due to the sustained increases in AEWR levels in 2024 and 2025. The other method utilizes the EB, which is the university extension’s usual farm business decision tool, to determine the effects on net incomes of certain fruit and vegetable commodities in Georgia given the AEWR hikes after 2022 (Fonsah and Hancock, 2025a, 2025b). We also present information collected from Georgia farms on their actual domestic-foreign employment decisions and strategies employed to cope with the impending AEWR increases.
Table 1 presents an overview of the farm cash receipts generated and labor costs incurred by the state’s fruit and vegetable farm operations. Projections indicate thatGeorgia’s fruit and vegetable industries would realize combined VFPs of $1.03 billion and $1.09 billion in 2024 and 2025, respectively. In 2018 dollars, the real VFP for 2024 and 2025 are $827 million and $848 million, respectively. These industries will incur aggregate labor costs of about $458 million and $512 million ($410 million and $453 million in real terms) in 2024 and 2025,respectively. The state’s 43,436 H-2A certified workers in 2024 (2 in the nation and comprising 11.3% of the year’s H-2A labor certifications) will increase to more than 50,000 H-2A workers, if the previous year’s growth trend is sustained (GFVGA, 2023a,b).
The VFP approach focuses on the total factor payments (TFP) component of the state’s VFP statement prepared by USDA-ERS. In this analysis, the parameters of interest are: (1) the ratio of TFP to VFP) and (2) the ratio of labor expenses to TFP given that labor is one of thethree TFP components (with rent and interest). TFP’s proportion to VFP is further adjusted by three factors: (1) labor intensity factor (LIF) to account for higher levels of labor intensity above the base assumption of 50%, (2) the AEWR growth, and (3) the H-2A labor cost differential due to additional fringe benefits. Factors (2) and (3) are applied to the share of labor employed in fruit and vegetable farms to total hired farm labor (72.34% and 79.91% in 2024 and 2025, respectively). An adjusted net income margin is then derived using the newly adjusted TFP in and is then applied to the 2024 and 2025 VFPs to obtain the adjusted net farm income estimates and the resulting net income margins.Our findings indicate a more pronounced negative income effect, given the state’s larger H-2A labor component and sectoral share of its fruit and vegetable farming operations. Based on the results in Table 2, the base farm case will experience 8.05% and 1.69% declines in net income levels and margins, respectively, under the higher 2024 AEWR. Under the most labor-intensive farming scenario (30% increase in labor’s TFP share), business profitability will be more adversely affected as net incomes and margins will drop by as much as 12% and 2.5%, respectively.
Georgia’s AEWR growth contrasts national trends as its annual AEWR increase in 2025 (9.54%) is higher than its 2024 rate (7.39%). Given Georgia’s relatively more labor-intensive farm operations than the average US farm, the 2025 AEWR hike’s effects on income and margin are high at 11.47% and 2.40%, respectively, forthe base farm case (with 60.09% labor share in TFP). For the most labor-intensive farm case in this analysis (30% more labor share in TFP), income and margin effects are estimated at 17.20% and 3.60%, respectively.
The EB approach provides more localized corroborating evidence on the negative net income margin effect of the AEWR hikes. In this analysis, we feature three of the specialty crops grown in South Georgia, namely, satsuma citrus, bell pepper, and tomatoes (Fonsah, Price, and Cantrell, 2022; Fonsah, Shealey and Carlson, 2022; Fonsah and Hancock, 2025a,b).
The EB results summarized in Table 3 present several farm employment scenarios capturing full domestic, fullH-2A, and hybrid H-2A-domestic hiring decisions.Resulting net income margins are calculated for the2022 and 2025 production seasons using the physical and financial estimates produced by a team of agricultural economics and crop scientists in the university’s Tifton campus. These then comprise the EBs’ production and expenditure estimates that Georgia farmers use as business decision tools in formulating production plans for an upcoming growing season (Fonsah, Price, and Cantrell, 2022; Fonsah, Shealeyand Carlson, 2022; Fonsah and Hancock, 2025a,b).
Our EB analysis results confirm the negative income margin effect of the recent AEWR hikes earlier established in our VFP analysis. Between 2022 and2025, these three crop operations are already expected to experience income margin reductions due to elevated input prices in more recent years owing to the pandemic’s residual inflationary effect that the economy and monetary policies have been attempting to curb and resolve. The trends in Table 3 clearly indicate that employing more H-2A workers would further aggravate the net income margin situation as the more expensive H-2A employment alternative led to further declines in net income margins.
Among the three specialty crops, bell pepper is expected to experience larger income margin squeezes ranging from 7.04% (when H-2A workers comprise half of the entire farm labor force) to 8.05% (under a full H-2A labor complement). The net income margin situation for satsuma citrus operations is the least severe among the three crops analyzed but still reflects the negativeincome margin effect ranging from margin reductions of 2.78% (50-50 split of H-2A and domestic workers) to 4.35% (100% H-2A workforce).

Table 4 summarizes information collected from five South Georgia fruit and vegetable farms. These farms’ H-2A hiring decisions validate the industry’s heavy reliance on H-2A workers, who make up from about two-thirds to more than 90% of each farm’s labor force.
Our respondent farms also share their strategic adjustments to cope with increasing H-2A labor costs. There is a dominant pattern across all the surveyedfarms of the increased adoption of mechanization to cut dependence on manual labor. In the absence of accurate information on the respondent farms’ actual business sizes, we surmise that they must have financial confidence to afford the mechanization alternative’s capital outlay. While medium- to large-scale farm operations are more likely to be more financially endowed, small farms might write off such strategy due to lack of financial capacity to mechanize their operations.
Other coping strategies include the maximum adoption of available family labor inputs, the recalibration of production plans to consider less labor-intensive crop varieties and farming methods, downsizing of business scale, and the launching of more aggressive efforts in attracting more domestic workers. Notably, the domestic employment alternative has not been the automatic default solution, thus affirming the arguments on thefarms’ increasing reliance on foreign labor earlier laid out in this article.
Our respondent farmers’ strategies are consistent with assertions in other studies on the creation of variableincentives for farms to restructure the operations to be viable (Hernandez and Gabbard, 2019). Risk mitigation strategies, such as mechanization and crop diversification, provide significant strategic responses through their use but are limited by capital intensity and crop limitations specific to some products. However, these changes convey farmer resilience but also underscore the need for supportive policies for easing the labor transition.
This article demonstrates that recent abrupt and unprecedented spikes in AEWRs could have serious farm business repercussions. More labor-intensive farm operations must endure and cope with the deterioration of profits and margins that could threaten business viability. Results of our analysis establishes that AEWR hikes, especially growing at unusually higher rates than historical trends, can clearly lead to serious income and margin squeezes for farm businesses. Georgia’s farming situation presents an interesting case as its relatively higher dependence on H-2A labor (than other states) led to more significant income and margin squeezes as its AEWRs posted sustained, significantly higher growth rates in the last three years.
In many policy discussions on the AEWR issue, some have recommended to depart from the market wage approach and instead allow policy interventions to either freeze AEWRs at status quo levels or allow only gradual annual increases instead of faithfully subscribing to the market equilibrium approach where AEWR is symptomatic of the volatility in farm labor market conditions. Moderate annual rate increases could provide producers with some lead time to lay out coping business strategies over an interim period lasting until the target, equalizing AEWR levels are eventually and ultimately realized.
When policymakers are compelled to increase wages to prioritize worker welfare, they must also deliberately factor in the agribusiness sector’s tolerance and financialendurance to determine a reasonable time frame to implement such a policy. The combined goals of timing and balancing require the determination of an implementation period that is mutually feasible and accept able for both workers and farmers.
In these instances, the government must quickly and promptly introduce mitigating policies to effectively offset any impending negative situations caused by the original policy. In the AEWR issue, for example, several policy ideas benefiting affected farm businesses could be explored. The government could introduce supplementary policies aimed at tempering inflationary pressures, stabilizing prices of other farm inputs, and minimizing margin squeezes caused by more expensive H-2A labor. These would allow farm businesses, especially the more financially vulnerable ones, to realize offsetting input cost effects and at least maintain operating efficiencies and profit margins. Trade-related policies could be aimed at increasing domestic consumer dependence on locally produced commodities, improving local producers’ competitive stance relative to their foreign counterparts, and strengthening global trading relationships. These trade reforms should resolve the local producers’ market stature as they deal with competing foreign producers with access to significantly cheaper labor inputs.
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