An H-2B Preview: Our Interactive Tool and Economic Analysis

05.07.2024

INTRODUCTION

The Immigration and Nationality Act (INA) requires that the hiring of a foreign worker will not adversely affect the wages and working conditions of U.S. workers employed in comparable work. To comply with the INA, the Department of Labor (DOL) mandates that a foreign worker must be offered at least the prevailing wage for the occupation and area in which the work will be done. For H-2B visa holders engaged in seasonal work in less-skilled jobs the prevailing wage is the mean wage for the detailed occupation and work location of the job, based on the most recent Occupational Employment and Wage Statistics (OEWS) data.

Each July the DOL’s Office of Foreign Labor Certification (OFLC) produces an online wage library that allows interested parties to search for prevailing wage determinations for visa programs. We have produced a preview of the online wage tool based on OEWS data released in April here. Our preview is possible because H-2B prevailing wages for many jobs in many areas have already been determined. This article summarizes the prevailing wage information that we preview in our wage tool.

THE NEW COST OF H-2B WORKERS

Employers in many industries rely on H-2B visa workers during peak seasons at different times of the year. While landscaping businesses and hotels and resorts employ the most seasonal workers on H-2B visas, other businesses hire H-2B workers in a variety of occupations. A business’s ability to hire foreign seasonal workers if they are unable to hire enough domestic workers during their peak season is limited by the cap on H-2B visas that is typically exhausted early within each visa application period. The incentive to hire workers on H-2B visas, and the benefits of the program to the U.S. economy, are also limited by H-2B prevailing wages that can be inaccurately high.

The OEWS does not calculate a mean wage at the local area if there are too few workers in the occupation and area.^[1] In such cases the DOL sets the prevailing wage based on a more aggregated area such as the state or national level. Our online tool is limited to the top 34 detailed occupations, in terms of H-2B visa requests, with prevailing wage determinations for at least 300 (of 522) labor market areas. Previews of prevailing wages for occupations with fewer local area mean wages in the OEWS would require projections of the level of geographic aggregation that the DOL will use in its wage setting process.^[2] Table 1 shows the range of prevailing hourly wages that employers will face beginning July 1 for the 20 most common H-2B occupations in our online wage tool.

Table 1 illustrates that an employer’s location plays an important role in H-2B prevailing wage determinations within an occupation. For Landscaping and Groundskeeping Workers, the most common H-2B occupation, the 95^th percentile wage is $21.89 per hour in rural Alaska, which is 45% higher than the 5^th percentile wage ($15.06 in New Orleans). The median hourly wage, $18.26 in Austin, TX, is roughly 20% higher than the New Orleans wage and 20% lower than the wage in rural Alaska. Table 1 shows that the 95^th percentile is considerably higher than the 5^th percentile wage in all jobs; in 13 of the 20 occupations the 95^th percentile wage is more than 1.5 times the 5^th percentile wage and for Waiters and Waitresses the 95^th percentile wage is more than twice the 5^th percentile wage.

Table 2 shows how H-2B prevailing wages effective July 1 will differ from current prevailing wages in percentage terms. Across all jobs in our online wage tool, the average percentage increase in the prevailing wage will be 6.80%, and for the 20 most common jobs the average increase is between 5% and 9.38%. The Employment Cost Index (ECI), measuring wages and salaries, increased by 4.26% and the Consumer Price Index increased by 3.48% in the past year.^[4] Due to either supply and demand for these occupations or the manner in which wages are calculated by the OEWS, for the most requested H-2B occupations in most areas the H-2B prevailing wage will increase by more than the average wage in the U.S. Over 74% of the prevailing wage determinations in Table 2 will increase by more than the 4.26% increase in the ECI and about two of three will increase by more than 5%.

The online wage tool can be especially useful for businesses, such as hotels, that request H-2B visas for several top occupations including landscaping workers, maids, cooks, waiters and waitresses, janitors, and dishwashers. In addition, prevailing wages can vary substantially across both occupations and labor market areas even within the same state. For example, in Florida the prevailing wage for Maids and Housekeeping Cleaners will increase by 12.6% in Tampa but by only 0.2% in Jacksonville, and the prevailing wage for Cooks will increase by 12.2% in Jacksonville but will decrease by 6.9% in Vero Beach.

This large variation highlights the importance for employers to monitor upcoming prevailing wage changes for different jobs in specific locations. This is why Edgeworth Economics built a tool which allows employers to search by occupation and location ahead of the July 1^st official release date. While this article describes variation in pay changes for the top 20 jobs, our online tool reports prevailing wage determinations for specific occupation and area combinations.

CONCLUSION

On July 1 nearly three of four H-2B prevailing wage determinations will increase by more than the ECI, an index measuring the average change in wages in the U.S. Mandated H-2B wages for key occupations in some areas will increase even more, making it increasingly difficult for businesses in these areas to rely on H-2B visa workers during their peak seasons. This article provides a preview of the range of H-2B wage increases mandated by the DOL. As explained in a recent analysis volatility in H-2B prevailing wages is caused by the DOL’s methodology and limited sample sizes, especially in less populated labor market areas, and may discourage employers from relying on the H-2B program.

CITATIONS

[1] This is due to limited sample sizes for less common occupations in less populated labor market areas. Labor market areas are defined by the OEWS as either a metro area or a group of counties comprising a nonmetropolitan area.

[2] Some of these occupations, with relatively few domestic workers, still generate a substantial number of H-2B visa requests, such as Forest and Conservation Workers, or Meat, Poultry and Fish Cutters and Trimmers, but are not included in the online wage tool.

[3] This covers Standard Occupation Classification code 53-7062 with the title “Laborers and Freight, Stock, and Material Movers, Hand.”

[4] The Employment Cost Index change is measured from Q4 2022 to Q4 2023 and the Consumer Price Index change is measured from April 2023 to April 2024.

[5] This covers Standard Occupation Classification code 53-7062.