The new two-tier AEWR system will cut H-2A farmworker wages by up to $5.4 billion annually while allowing employers to deduct housing costs from paychecks for the first time

In October 2025, the Department of Labor replaced the single Adverse Effect Wage Rate (AEWR) with a two-tier "skill-based" system that drops the minimum hourly wage for lower-skilled H-2A farmworkers from an average of $17.43 to as low as $13.70, and for the first time allows employers to deduct housing costs from paychecks, pushing effective wages as low as $11.78 per hour. The Economic Policy Institute estimates H-2A workers alone will lose over $1.7 billion in 2026, with total farmworker losses of $4.4 to $5.4 billion annually. This matters because the AEWR was specifically designed to prevent guest worker programs from depressing wages for all farmworkers, not just H-2A holders. When the H-2A floor drops, domestic farmworkers lose bargaining power too: growers can credibly say "we can get someone from Mexico for $12 an hour." The 40% wage gap between farmworkers and comparable non-agricultural workers, already documented by EPI in 2022, will widen further. At $11.78 per hour, a farmworker doing back-breaking harvest labor earns less than a fast-food worker in most states. The housing deduction is particularly insidious. Employer-provided housing for H-2A workers has historically been a program requirement, not a benefit. Now it becomes a wage-reduction mechanism. A worker living in a converted trailer with six bunkmates sees their paycheck shrink for the privilege. Workers cannot refuse the housing and rent their own place because they lack transportation, local knowledge, and the immigration status to sign leases. This persists structurally because growers, through the American Farm Bureau Federation and commodity groups, have lobbied for decades to lower the AEWR, arguing it makes American agriculture uncompetitive. The DOL under the current administration was receptive. Meanwhile, farmworkers have almost no political power: they cannot vote, they are geographically dispersed, and the labor movement in agriculture has been declining since the United Farm Workers' peak in the 1970s. A patchwork of preliminary injunctions across 17 states has created regulatory chaos where farms in different states operate under different rules, making compliance and enforcement nearly impossible.