DOL Regulations Allow Employers to Pay H-2B Workers Below National Averages

To benefit both American and foreign workers, the Biden administration should make this reform immediately

By Elizabeth Jacobs on February 17, 2023

The U.S. Department of Labor (DOL) needs to reform its regulations that allow employers to legally undercut the wages of U.S. workers by paying H-2B workers lower than national-average wages. The Biden administration has the authority to issue this reform today — and should suspend its plan to nearly double the availability of H-2B visas until it can ensure U.S. workers’ opportunities are protected and foreign workers are not exploited.

For the purposes of an H-2B temporary labor certification, regulations require that, in the absence of a wage set in a valid and controlling collective bargaining agreement, employers must pay H-2B workers the prevailing wage for the occupation in the pertinent geographic area of the job. The prevailing wage is usually derived from the Bureau of Labor Statistics’ Occupational Employment Statistics (OES) survey. Employers are required to recruit U.S. workers, however, before they can claim there is a nation-wide labor shortage and access the H-2B program.

Because the H-2B statute is clear, however, that H-2B workers can only be hired if “unemployed persons capable of performing such service or labor cannot be found in this country” (emphasis added), and specifically not merely the geographical area where the job is located, current regulations do not accomplish the goal of the statute and legally allow employers to underpay H-2B workers below national averages.

In fact, DOL data analyzed and reported by the Economic Policy Institute (EPI) showed that, as a result of the current regulation, H-2B workers are underpaid in nearly all of the top 15 H-2B-employing industries when compared to national wage standards for those industries. These industries accounted for 84 percent of all certified H-2B jobs in 2019 and remain major H-2B employers into 2023.

Notably, EPI uncovered that H-2B cement masons and concrete finishers were subject to the largest pay differential, making approximately $8.00 per hour less than the national average wage. Construction laborers on H-2B visas made over $4.00 less per hour than the national average wage for that occupation. Based on this data (and some rounding), my colleague David North calculated that the current regulation allows employers to save approximately $26 million in six months — in just these two industries — if employers choose to hire an H-2B worker over a U.S. worker for full-time employment.

Accordingly, DOL should amend its regulations to properly determine whether there are unemployed persons in the United States capable of performing such temporary labor (as the statute requires) by requiring employers to offer at least the local, state, or national average wage for the occupation, whichever is highest. Raising the minimum amount an employer can pay an H-2B worker to a level that is more likely to attract an available U.S. worker benefits both U.S. workers, who may be seeking an adequate employment opportunity, and H-2B workers, by ensuring those who are selected are paid well.

DOL could set the wage floor even higher (at a percentile above the prevailing or average national wage) if it truly intended to encourage employers to seek out unemployed U.S. workers before seeking out H-2B workers. A higher minimum wage rate would also more effectively negate wage suppression caused by artificially inflating the supply of available workers for these jobs.

All workers, U.S. and foreign, deserve fair pay and a temporary worker system that supports the domestic labor market. Current regulations are inconsistent with statute and allow employers to legally undercut national wage standards.