Effective Oct. 2, the U.S. Department of Labor (DOL) implemented a sweeping overhaul of how Adverse Effect Wage Rates (AEWRs) are calculated under the H-2A temporary agricultural worker program. The change replaces the long-standing U.S. Department of Agriculture Farm Labor Survey with data from the Bureau of Labor Statistics’ (BLS) Occupational Employment and Wage Statistics (OEWS) program. This shift will have immediate downward impact on agricultural wages in many states, including Michigan.
New Wage Formula
For more than a decade, the AEWR has been linked to USDA’s annual farm labor survey, which generally trended upward each year. The new rule discards that system and instead draws from broader labor market data compiled by the BLS. Because OEWS reflects a wider range of occupations – including lower-paid seasonal or general labor – its averages come in substantially below the USDA figures that drove the previous AEWR increases.
The rule also introduces two new “skill levels.” Skill Level I applies to workers performing basic or repetitive farm labor with minimal experience; Skill Level II applies to more specialized or supervisory roles. Many H-2A positions, such as harvesters and packers, are expected to fall into Skill Level I, where the new formula produces a lower base wage.
Additional Downward Adjustment: Food and Housing
The OEWS wage likely overstates what many employers will actually pay once the new methodology takes full effect, as employers are allowed to make “non-wage adjustments” for employer-provided housing and meals. The DOL will determine the specific adjustment amounts on a state-by-state basis based on average fair market rental values, utilities and standard meal costs.
Limitations
These changes were implemented in an interim final rule (IFR) that became effective on Oct. 2. The IFR is subject to a 60-day comment period. The DOL may modify or withdraw the rule following the comment period. In addition, employers must be mindful of key limitations under the interim final rule:
- No retroactive reductions: Job orders filed before Oct. 2 remain governed by the prior AEWR and cannot be amended downward.
- Skill level documentation: Employers must substantiate which duties justify Skill Level I or II classification. Inaccurate job descriptions could trigger revocation of certification, civil penalties, back wages or higher wages.
- Housing documentation: Any reduction taken for non-wage benefits must be supported by proof of compliant, no-cost housing.
- Highest applicable wage still applies: Employers must always pay the greatest of AEWR, state minimum wage, prevailing wage or collectively bargained rate. For example, if the AEWR, as adjusted under the new formulation for 2026, is $12.74 per hour, a Michigan employer would have to pay the state minimum wage of $13.73 because it is higher.
Employers are currently unable to file new agricultural job orders due to the government shutdown. When the government reopens, employers can benefit from the changes by filing new job orders.
Bottom Line and Next Steps
Many farm employers will see lower costs for H-2A agricultural workers. The combination of BLS data, skill-tiering and housing credits will lower required pay rates – especially for entry level positions. Growers should move quickly to incorporate the new rates into upcoming job orders, seasonal budgeting and bid pricing while maintaining compliance documentation. Agricultural employers should work with counsel to review job orders and be prepared to file as soon as the government reopens to take advantage of these cost reductions in time for the 2026 agricultural season.
