Prevailing wage law detailed
Mandate places some seafood processors at risk
A federally mandated, double-digit wage increase for thousands of foreign workers in Louisiana could put some seafood processors out of business, according to LSU AgCenter economist Mike Salassi.
The national law, approved by Congress last year, was designed to prevent Americans from losing their jobs to lower-paid foreign workers.
The H-2B program, which covers nonfarm jobs, will increase pay for foreign workers by an average of 32 percent overall in October, an LSU AgCenter report says.
“Any time you have a large cost increase like that it’s going to affect your bottom line,” Salassi said. “In these small facilities, labor is probably their major expense so it’s a pretty significant impact …. Labor is probably going to be more than half of their expenses.”
Labor unions see the new rule as a way to boost American employment during a period of high jobless rates. Employers would have to make jobs available to Americans at prevailing wages, instead of paying near-poverty-level wages to vulnerable foreign workers, proponents say.
The federal law requires employers to pay “guest workers,” foreigners here legally, the prevailing wage, something like the minimum wage for a particular industry, Salassi said. The prevailing wage varies by industry.
For example, for the year ending Oct. 31, 2010, the seafood industry, which includes crawfish-peeling plants, paid foreign workers $8.38 an hour, the AgCenter report shows.
Under the new federal law, those workers will be paid $10.57 an hour, a 26.2 percent increase.
Sugar processors will have to increase foreign workers’ pay from $10.05 an hour to $14.35, an increase of 42.7 percent, the report shows.
Landscaping companies will have to raise foreign workers’ pay from $8.60 an hour to $11.38, an increase of 42.4 percent.
Salassi said implementing the pay increases in Louisiana means agriculture-related businesses will have to pay $13 million more in labor costs.
Ben LeGrange, manager of Atchafalaya Crawfish Processors in Henderson, said the company couldn’t absorb the increased labor costs and would have to pass along that expense to consumers.
“And we’d have to see if the consumer would really want to pay the kind of money they’d have to pay for Louisiana crawfish tails,” LeGrange said.
Instead of a price ranging from $11 to $14 a pound, consumers would be looking at $18 a pound, LeGrange said. Consumers might not think the product is affordable at that price.
LeGrange said Atchafalaya Crawfish Processors, and other seafood processors, already pay more than minimum wage.
“It’s not a deal where we’re looking for cheap labor. We just want reliable labor because we truly are a seasonal business,” LeGrange said. “Without the H-2B program, we could not staff our company on the production side.”
Each year, Atchafalaya hires 50 to 65 guest workers for 10 months of work, LeGrange said. Without those workers, the four Americans working full time would lose their jobs, and the company couldn’t buy crawfish from farmers and fishermen, who wouldn’t buy as much food from suppliers and so on.
Salassi said Louisiana businesses hire the foreign workers to do the jobs that residents don’t want to do.
In some businesses, more than half the work force might consist of foreign workers, he said.
The seafood, landscaping and sugar industries employ the most seasonal foreign workers, the AgCenter report shows. Seafood processors employed 1,415 foreign workers in fiscal 2010, while landscaping firms employed 530, and the sugar industry 416.
Louisiana Agriculture Commissioner Mike Strain said some of rules regulating foreign workers — many of whom return to the same jobs year after year — are overly burdensome.
Among other things, the federal regulations require employers to provide transportation to any foreign worker anywhere in the continental United States who wants to apply for one of the jobs, Strain said. Employers have to guarantee 75 percent of the total value of a foreign worker’s contract even if the workers are laid off.
Five years ago there were more than 360,000 guest workers in the United States, Strain said.
Today there are less than 60,000
Brian Breaux, associate commodities director for Louisiana Farm Bureau, said the wage requirements were originally supposed to go into effect on Jan. 1, but Congress suspended the increase until Oct. 1.
There is a chance that the higher wage rules will again be delayed, he said.
Louisiana’s congressional delegation has joined efforts to block the higher wage requirements, Breaux said. Sens. Thad Cochran and Richard Shelby, Republicans from Mississippi and Alabama, have amended the bill funding the Labor Department to remove the money to implement the new wage requirements.
Strain said a lot of the rules are the result of a fight between unions and the hospitality industry on the East Coast, as well as immigration issues involving illegal aliens.
“It’s just getting very onerous, and we feel that we are pawns on a very big chessboard,” Strain said.
Salassi said if the wage rules go into effect, communities like Mamou, Guedan and Kaplan, which rely on rice and crawfish, could suffer irreparable damage.
If those towns lose the rice and crawfish industries, nothing will take their place, Salassi said.
Strain said the seafood and landscaping companies will be hit first and hardest by the higher wages, where some companies will fold, and the forestry and sugar industries will also suffer.
If the higher wage rules go into effect, industries will begin making the large investments to develop machinery that can perform jobs that now must be done by hand, Strain said.
“You’re going to see the development of a crawfish peeling machine …. You will see mechanization that will result in those jobs going away, and those people will be unemployed,” Strain said.