H-2A changes add cost, difficulty
Rules for the guest-worker program have changed significantly each year that McDougall & Sons has participated.
The McDougall & Sons housing camps are made up of manufactured units for 12 people. This camp at Quincy, Washington, has 96 beds.
An increase in the wage rate that employers must pay workers recruited through the H-2A guest-worker program will add well over $1 million to labor costs this year for one company alone.
McDougall & Sons, Inc., in Wenatchee, Washington, has recruited Mexican workers through the H-2A program for the past three years and has built housing for them at five locations in central Washington. Last year, the company hired 190 foreign guest-workers, which met about half its labor needs during harvest.
Employers using the H-2A program are required to pay what is known as the “adverse effect” wage rate, which is set by the U.S. Department of Labor.
Scott McDougall, manager of McDougall’s orchard division, said that the adverse effect wage rate last year was between $8.87 and $9.19 (depending on the county)—not much higher than Washington State’s minimum wage rate of $8.55. For this season, the rate has increased to $10.60, and employers must pay the same rate to domestic workers. In addition, the company raises the wages of its regular employees to maintain a differential over the entry-level employees. As a result, the increase in the adverse effect wage will add well over $1 million to its wage bill.
When hiring foreign guest-workers, employers must advertise for domestic workers in three locations nationally during the first part of the H-2A contract period. Another big change in the program for 2011 is a lengthening of the advertising period from 30 days last year to 50 percent of the contract period this year. McDougall’s contract runs from early June to the end of October, a total of five months.
This means that the company will have to keep its hiring process open until August. If domestic people apply, it must hire them under the same contract as the guest-workers and provide housing for them if they are not reasonably able to return to their homes the same day.
In the past, a number of people have applied for advertised jobs, often through the state employment agency WorkSource, but not many actually came to work, McDougall said.
For example, last year, 1,023 people were referred to McDougall & Sons for jobs, of which 266 accepted the contract and were hired. Of the 266 workers hired, only 39 were still employed after 30 days.
“That’s a pretty good argument that we don’t have a reliable domestic work force,” he said. “But what we’re seeing this year with the change in the adverse wage is we’re probably getting triple the amount of interest because they know that the minimum is $10.60.”
As a result, McDougall will bring in fewer guest-workers from Mexico to leave room in the housing camps for workers it might have to hire at the orchards.
Most of the H-2A guest-workers have returned to work for the company the following year and become experienced. When they’re doing piece-rate jobs during thinning or harvest, most actually earn about $15 to $16 an hour, so the company has rarely needed to make up their earnings to the adverse effect rate. The only job they don’t do piece rate is tying (tree training), which is a filler job between thinning and harvest.
The employer must guarantee them 75 percent of the hours stipulated in the contract, which is 30 hours a week. McDougall said they haven’t had much down time, but it is important when participating in the H-2A program to make sure there is enough work for them to do.
“We try to have a situation where they’re not having to go out and cut dandelions at $10.60 an hour,” he said.
In addition to paying wages, the company faces many other expenses and administrative costs in hiring H-2A workers. It hires people to recruit workers in Mexico, and conducts an orientation program there to explain the contract terms and company policies. It pays a $130 per person visa fee, and provides round-trip transportation for the workers, which costs about $535 per person. Usually they travel by bus, but last year it worked out almost as cheap to fly them back home, which the workers much prefer.
The company has housing facilities at Royal City, Quincy, Bray’s Landing (near Orondo), Monitor, and Mattawa with a total of 290 beds. Each camp has an on-site manager, and each orchard has two human resources personnel.
The camps have manufactured units that house 12 people and cost $70,000 each. Each unit has three bedrooms to accommodate four people each and has its own cooking area. McDougall said he figured they would have fewer problems by keeping the units small and not having a central cook house. The units have phones and satellite television with Spanish programs, and the camps have soccer fields, basketball courts, and barbecues. Common areas in the facilities are cleaned daily.
“We try to keep them happy and comfortable, that’s for sure,” he said.
The company was able to secure a $700,000 zero-percent loan from the state to help pay for the housing. “That was one thing that was attractive to us,” he said, “But we still figure our cost is $11,000 to $12,000 per bed.”
The company has twenty 15-seater vans to transport the workers to the orchards and to take them into town to shop, which are requirements of the H-2A program. Workers are also taken on trips, which are at no charge if within 50 miles. Some of the workers are transported to soccer league games, for example.
Initially, McDougalls used 25-seater buses, but for buses of that size, the drivers must have commercial vehicle licenses, and once the employees had their licenses they were apt to leave for better-paying jobs.
Workers are only allowed to work at orchards covered by the contract. The company can move workers between orchards in the contract, but only within a 50-mile radius. For example, the workers housed at Monitor can be transported to Bray’s Landing to work, but not Mattawa.
The contact also defines job duties, days and hours of work, piece rates for each fruit variety, and sets minimum standards for workers to meet. It also includes a detailed discipline policy.