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Going wages

Employers say the Obama administration's attempt to increase pay for temporary, legal foreign workers will lead to large layoffs

Issue: "Border bandits," Dec. 3, 2011

ST. MARTINVILLE, La. - A 22-year-old legal mexican guest worker at a Louisiana sugar cane mill spends 12 hours a day during processing season as a "table cleaner," keeping mud, dirt, and leaves from collecting around a metal belt that grinds sugar cane.

It's a dirty job, but the worker-to whom WORLD granted anonymity-said the job is "very important" to him and the 11 family members he supports. He makes $7.90 per hour and can make about $660 per week during the three-month sugar cane season. In Mexico his temporary job in cooler manufacturing would pay $150 per week.

The mill here where he works, Louisiana Sugar Cane Cooperative, Inc. depends on 100 such guest workers who come to the country legally under the federal H-2B program to help it process more than 800,000 tons of sugar cane each season.

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The H-2B nonimmigrant program permits employers to hire foreign workers to come temporarily to the United States. The program will accommodate up to 66,000 non-agricultural workers annually; about 36,000 foreign workers have gained H-2B visas so far this fiscal year. Under the program's rules, the employer must request a temporary labor certification from the Secretary of Labor indicating that (1) U.S. workers are not willing and able to do the work at the time and place specified by the employer, and (2) the employment of the foreign worker will not adversely affect the wages and working conditions of similarly employed U.S. workers.

That last clause is creating a three-way conflict. The worker at Louisiana Sugar said he'd like to get paid more, but he doesn't want to risk not having a job. The U.S. Department of Labor has decided he's not paid enough. Employers like Louisiana Sugar say they can't afford to pay more and will lay off workers if the wage increases become effective before their season ends in early January.

In January the Department of Labor mandated increases in H-2B wages beginning Sept. 30. Groups in Louisiana and Florida sued to stop the measure, and the effective date has been postponed to Nov. 30. Seafood processors escaped the wage increases this year, but foresters, whose season begins at the end of November and continues through the spring, are worried.

The mandated increases differ from state to state and even among counties within the same state, as the Department of Labor requires employers to use several formulas for calculating the "prevailing wage" in an area, and then select the highest. Officials originally imposed the designation to prevent large government works projects from destabilizing local construction markets.

Randy Courville, human resources director for the Louisiana Sugar Cane mill, told me that if the Labor Department has its way, wages that range from $7.50 to $8 per hour will rise to about $13 per hour. Foreign and domestic workers will have to be laid off, Courville said: "The salaries would jump to $1 million more than what we're paying."

The Louisiana Forestry Association is the lead plaintiff suing U.S. Secretary of Labor Hilda Solis in Louisiana District Court. The suit says wages for reforestation workers in that state will increase by 70 percent if the rule becomes effective. A worker formerly paid $9.60 per hour will make $16.31 per hour after Nov. 30.

Scott Poole, chief operating officer of Roy O. Martin Lumber Company in Alexandria, La., uses almost 90 percent H-2B labor annually to plant trees on his company's 600,000 acres. Each spring Poole's company usually signs a contract with a labor contractor who provides the guest workers. These contracts typically lock in the price of labor cost per acre. If the wage increases become effective, he predicts, "Either the contractor is going to go out of business, or the landowner will decide not to plant. ... You're talking about an increase in labor cost that is greater than the trees cost that we're planting."

The Louisiana lawsuit also claims North Carolina H-2B forestry wages will rise by as much as 129 percent, increasing a wage of $7.36 per hour to $16.86 per hour. Mike Kelly, owner of Forestry Service, Inc. in Troy, N.C., said the key word in the H-2B situation is uncertainty. A forestry contractor for 25 years, Kelly uses around 20 guest workers to plant approximately 3 million trees per season.

Contractors like Kelly have to be certified for a prevailing wage each year by the Department of Labor. Kelly already received his certification under the old rules but worries that the Department might later rule he has to pay workers the higher wage retroactively. He believes the wage increase punishes honest business owners and gives an advantage to those operating illegally: "A 129 percent spike at one time is a bit much considering the economy the way it is now. I've already had some people say, 'I can get my work done cheaper somewhere else.' And I know how that's going to go. They're going to get a crew that's not H-2B legal."

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