The economic impact of the new prevailing wage rate increase for H-2B-temporary non-agricultural workers could put some Louisiana processors out of business, according to LSU AgCenter economist Mike Salassi.
The H-2B program, which covers non-agricultural employment, is one of two programs that govern the hiring of foreign workers. The second program, H-2A covers farm workers.
The program allows foreign workers into the United States when qualified United States workers are not available and when the employment of foreign workers will not adversely affect the wages and working conditions of similarly employed United States workers.
Last year, Congress passed the law to increase the prevailing wage for these non-agricultural foreign workers.
The law, which goes into effect this October, is designed to keep foreign workers from displacing American workers by taking jobs at lower wage rates.
Industries in Louisiana ranging from sugarcane mills to meat processing plants use these workers to do the work that is not attractive to local citizens.
“Some of these small crawfish-peeling plants are already operating on tight profit margins, and this increase will not be good for them at all,” Salassi said.
Some of the smaller processing plants may decide they can’t afford to pay this increased wage and just close. Wages will increase by 32 percent with labor already their biggest expense.
“The prevailing wage is like the minimum wage, but it’s different for each industry. There are lots of different job classifications or job types and each have a different prevailing wage.
“An example in Louisiana is a person working in the rice processing industry. There are 30 workers in the state now making $8.48 per hour. The new wage is $12.84, which will be a 51 percent increase. For sugar boilers, their rate will go from $10.05 to $14.35, a 42 percent increase.
“In the past, there have been small increases in the prevailing wage, but I don’t think they’ve had such a large increase at any one point in time.”
This change emerged in urban areas and very little thought was given to what this will do to the profit margin of many rural companies.
“For a lot of these places, the increase in wages is going to be more than their profit margin,” Salassi said. “There seems to be too much concern for the minute part of business, like how much a foreign worker should be paid, and not realize if you force businesses in rural areas to close, then you’ll hurt economic activity in those areas.”
Areas like Mamou, Gueydan and Kaplan primarily are supported by rice and crawfish, and if they lose those industries, nothing will take their place.
Salassi said every year there are fewer and fewer people in the nation and in Congress who understand agriculture and why it’s important.“We need to think of what is best for the community and the state.”