What are Adverse Effect Wage Rates?

Local industry sources have voiced concern about issues with the H-2A visa program, and many do not know how the minimum wage rates paid to H-2A workers, called the Adverse Effect Wage Rates (AEWRs), are calculated. In this article, we provide information about how the AEWRs are calculated and additional insights to help local agricultural stakeholders better understand how these minimum wage rates are determined.

The United States Department of Agriculture (USDA) administers the Farm Labor Survey (FLS), which serves as the basis for the AEWRs paid to seasonal agricultural guestworkers working under the H-2A visa program. The AEWRs were originally implemented to help prevent wage depression that might occur from foreign workers being employed by domestic farm employers. The original purpose of the FLS was to provide “the basis for employment and wage estimates for all workers directly hired by U.S. farms and ranches (excluding Alaska).” The FLS was not designed to establish wage standards for the H-2A program. Additionally, the FLS does not survey farm labor contractors or other types of indirect hire farm employees, such as those that may be hired by a farmer to perform tilling or custom harvesting.

The wage estimates are calculated using a weighted average of the data values that survey respondents provide as a method to correct for bias that could result from non-response. For example, suppose there are 1,000 farms in a region and the FLS intends to receive a completed survey from 200 of them. If all 200 of those farms complete the survey, each response would represent 5 farms (200 x 5 = 1,000). However, if only 100 farms answer the survey, then each farm that responds would get a weight of 10 in the sample (100 x 10 = 1,000). Thus, when the response rate is only 50%, the farmers who respond to the survey get twice the initial weight they would have otherwise received before other adjustments are made. Survey responses are also subject to a second “calibration” weighting algorithm to adjust to control metrics, which are supposed to account for farm type and economic class.

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