Ag News
Labor department revises AEWR methodology
Posted on Oct 09, 2025 at 12:48 PM
In a development Georgia Farm Bureau leaders say is a significant win for Georgia producers, the U.S. Department of Labor (DOL) addressed the Adverse Effect Wage Rate (AEWR) methodology with an interim final rule (IFR) that went into effect on Oct. 2.
The rule, which governs how H-2A workers’ pay is to be determined, removes the USDA’s Farm Labor Survey and replaces it with the Occupational Employment and Wage Statistics (OEWS) data from the Bureau of Labor Statistics.
This move alleviates the burden of the 30% AEWR increase over the past three years, enhancing competitiveness for family farms.
“As is the case with every regulatory venture there is a chance legal challenges follow this IFR and we will be monitoring any potential hiccups,” said GFB President Tom McCall. “However, this announcement is a fantastic sign that Washington has seen the struggles of American farmers, especially Georgia farmers, and is ready to respond by easing the cost of ag labor.”
The DOL’s IFR updates the AEWR methodology for H-2A jobs such as crop harvesting, livestock care, and equipment operation. Farmers familiar with the H-2A program know AEWRs set minimum wages to ensure hiring foreign workers doesn’t harm U.S. workers’ pay. This rule, effective immediately for job orders submitted on or after Oct.2, changes how these wages are calculated, impacting farm labor costs. NOTE: Contracts are not being approved by DOL until the government shutdown ends.
The IFR introduces two wage tiers and provides a $1.75/hour AEWR reduction for employers that provide housing:
• Level 1 (Entry-Level): Applies to jobs requiring no formal education or specialized training, minimal experience, or brief on-the-job training. Workers follow supervisors, use common tools, and work in crews with closely monitored tasks. The AEWR is set at the average hourly wage of the lowest third of workers in field/livestock Standard Occupational Classification (SOC) codes or some specific non-field SOC codes. Which means for the state of Georgia this wage is $12.27/hour, with the housing reduction this wage drops to $10.52/hour.
• Level 2 (Experienced): Covers jobs needing demonstrated skills through education, training, or experience, performing moderately complex tasks with less supervision. The AEWR is the average hourly wage for all workers in the relevant SOC codes, set at the 50th percentile. For Georgia this comes out to $16.22/hour if housing is not provided. With the housing reduction that wage drops to $14.47/hour.
Additional analysis from American Farm Bureau’s Market Intel:
Occupational Employment and Wage Statistics
The Bureau of Labor Statistics’ OEWS is a randomized survey of employers compiled from state unemployment insurance (UI) databases from over a million nonfarm establishments. Yearly estimates posted each May contain a three-year average of the prior years for wages in each category. Overall, the OEWS has a response rate of 65%, similar to historical responses to the Farm Labor Survey, but the OEWS does not survey farm establishments. Employers who are categorized as support activities for crop production and support activities for animal production – also known as farm labor contractors (FLC) – are included in the possible survey pool if they file UI in their state. This skews OEWS accuracy for areas lacking a heavy FLC presence or in states without agricultural UI requirements. The IFR commits to working with USDA to add direct farm employers to the survey pool, but the business structure of most family farms will likely be major hurdles for incorporating farms into the program. Many farms lack dedicated business administrators, are exempt from state UI programs and differ in business data management from large companies. These factors, as well as farmer survey fatigue, will require a significantly different approach to include direct farm employers in OEWS data samples.
One critical improvement the OEWS dataset makes is getting closer to base hourly wages. The survey does not include information on non-production-based wages or overtime pay, unlike the gross wages included in the FLS. This will especially benefit states without overtime laws that were previously grouped in regions with states that did have agricultural overtime laws. Under FLS AEWRs, overtime inclusion led to increased wages across broad regions.
The Wages
Similar to the output of the FLS, DOL will post standard farmworker AEWRs as a combined field and livestock worker wage covering the most common agricultural SOCs. The combined field and livestock worker wage under this IFR will include Farmworkers and Laborers, Crop, Nursery and Greenhouse (45-2092); Farmworkers, Farm, Ranch and Aquacultural Animals (45-2093); Agricultural Equipment Operators (45-2091); Packers and Packagers, Hand Graders and Sorters (53-7064), Agricultural Products (45-2041) but remove Agricultural Workers, All Other (45-2099). As this wage is not directly reported by the OEWS, it is calculated as the weighted average of the appropriate percentile wage per experience level for each of the five SOC codes in each state. The national average SOC code wage will be used if a state level estimate is not available.
This adjustment results in nearly immediate savings for producers in every state as any job orders certified after the introduction of this rule will be certified with the new wage rates. However, because H-2A employers must pay the highest of the AEWR, the state or federal minimum wage, the prevailing wage or the collective bargaining wage, many states will now face state minimum wages above the AEWR. This will limit cost savings to farmers in those states.
Skill Level II jobs require prior experience, certifications or technical knowledge that allow them to work with less supervision, such as workers responsible for the first pick of an apple orchard determining if fruit is ripe. These wages will be a combined field and livestock worker wage of the average hourly wages of the “big five” SOC codes statewide. When examining just the new AEWR for Skill Level II employees, an OEWS combined field and livestock worker wage would increase wages for Skill Level II jobs in 26 states; Georgia’s would increase by 1% - 14 cents per hour.
Non-wage costs
Fortunately, the IFR recognizes the substantial nonwage costs to farmer employers for H-2A workers and has taken steps to mitigate some of that burden as well.
Since domestic farmworkers often pay for their own housing, the H-2A program requirement that farmers provide free housing to their H-2A workers is considered an adverse effect on domestic employment. Domestic workers who “are reasonably able to return to their permanent places of residence at the end of each workday” do not have to be provided free employer housing if they are employed in corresponding roles to H-2A workers. As such, H-2A workers generally retain more of their income compared to domestic workers who must spend additional income on living expenses, even if domestic workers earn the same hourly wage.
To account for this nonwage compensation afforded to H-2A guestworkers above domestic workers, the IFR establishes a state-level compensation deduction for H-2A workers. These deductions are based off the U.S. Department of Housing and Urban Development’s (HUD) 50th percentile rents for a four-bedroom housing unit, including utilities except telephone, television or internet. DOL categorizes these as “state average Fair Market Rents (FMRs),” but HUD’s website discloses that these are not FMRs as they are skewed by outlier rental rates in some areas.
The average occupancy of H-2A housing units was seven to eight workers for labor certifications processed from fiscal year 2020 to 2024. As such, the FMR is divided among eight individuals who are assumed to work 40 hours per week to come up with an hourly equivalent of fair housing rates. To ensure H-2A wages are not depressed beyond appropriate income shares for housing, the adverse compensation adjustment may not exceed 30% of the AEWR.
The adverse compensation adjustment for Georgia is $1.75. These adjustments balance wage costs so that most states will see lower hourly costs than under the FLS.
Disaggregated Wages Remain
Despite the recent litigation outcome on the 2023 disaggregation rule, the IFR does not eradicate the potential for wage determinations in additional SOCs. Instead, it implements a primary job duties test. If a worker performs duties reasonably expected to be performed under the five farmworker SOCs – which will be determined by standards in the Occupational Information Network (O*NET) system – for over 50% of their workdays, they will be assigned the combined field and livestock worker wage. However, if they perform duties outside of these expectations for a majority of their contracted time, DOL and state workforce agencies (SWA) may still certify a job order with wages based on nonfarm jobs.
Use of O*NET should allow greater flexibility in job duties classified under the combined field and livestock worker wage. The system contains greater variability in tasks considered reasonable agricultural work, including those tasks that may be less regularly performed that were previously considered “nonagricultural”, like driving a van of farmworkers. The rule commits that SWA and DOL will attempt to assign one agricultural SOC code to job orders whenever possible, using the extended job duties included in O*NET.
Impact to Employers
Farmers and ranchers have long called for reform to the H-2A program, particularly the wage setting methods and nonwage costs of the program, and pieces of this rule begin to recognize and take steps to modernize the AEWR system. While any existing job contracts must continue paying the wages on their job orders — except in the few states where this rule increases wages — any H-2A certification applications submitted on or after Oct. 2 will immediately see relief for most employers.
To read AFBF’s Market Intel in its entirety, click here.
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