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Seafood Industry Braces for New Guest Worker Rules

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(This article was published in The Louisiana Weekly in the April 16, 2012 edition)

Louisiana seafood processors -- already threatened by inexpensive imports -- say their operating costs are about to rise because of new U.S. Department of Labor rules. Two months ago, the feds issued 575 pages of regulations for guest worker visas, and processors are worried about what they've read.

The state's crawfish, shrimp and oyster plant owners hire skilled workers, mostly from Mexico and Central America, under H-2B visas -- which are good for up to 10 months and differ from the H-2As that apply to agriculture. Plant owners say they can't find enough workers near the coast. They're opposed to guest labor requirements that go into effect later this month, and wonder how they'll meet rules for higher H-2B wages on October 1.

Mike Voisin, chief executive of Motivatit Seafoods, Inc. in Houma, La., said "Louisiana's seafood community is just beginning to rebound from the 2010 oil spill, and we can't afford to comply with new regulations that will further limit our access to needed labor."

Seafood leaders predict that prices of processed crawfish and crabs will rise and plants will go out of business as higher costs leave them uncompetitive.

Gary Bauer, owner of processors Pontchartrain Blue Crab Inc. in Slidell, La., said "the DOL's original logic in developing rule changes was to raise wages to a level that would create interest among American workers" to take jobs filled by foreigners under the visa program. The new rules also apply to landscaping services, forestry, hotels, food service and amusement parks but seafood processing is the biggest employer of H-2B guest workers in Louisiana. Bauer said locals have shown little interest in working in seafood plants.

At Bayou Shrimp Processors, Inc. in Delcambre, La., operations manager Kory Echelard said he can't find American workers, at least any that will stick around. "We're more than 20 miles southwest of Lafayette in a low-density population area. We're a fairly big plant and there are other seafood plants nearby." Locals can work in the oil and gas industry. But he said "year after year, we get many of the same foreign workers, often driving across the Mexican border" to Louisiana. They set up households with roommates in trailers on the plant's grounds.

"They're happy to be here and we are so jolly, happy to have them," Echelard said. "We treat them well." The plant employs 90 to 100 U.S. and foreign workers, and its busy season is May to December.

Bauer discussed the new rules that start this month and also in October. Rule One, which increases the prevailing wage, was adopted last year but won't go into effect until Oct. 1, he said. The prevailing wage is an hourly rate paid to the majority of workers within a particular area and exceeds the $7.25 an hour minimum wage.

Prevailing wage rates in the state's seafood processing industry surpass $8 an hour now and would rise to more than $10.50 under the new regulations, according to a recent Louisiana State University study.

Paying the higher wages, required by the DOL starting this fall, will force crab processors to raise wholesale prices by a minimum of $2.50 a pound, Bauer predicted. "That will give the imported product an advantage and will cause many buyers to look overseas to fill their crab meat orders."

Rule 2 goes into effect much sooner, on April 23, and changes the way payrolls are calculated, how workers can enter the country and how jobs are advertised, Bauer said.

Voisin said the industry's immediate concern is Rule 2, which overhauls the H-2B program. "Among its most egregious provisions, Rule 2 will require that each guest worker receive a minimum of 75% of his offered wage, even if they are unable to work 75% of the time due to weather or other unforeseen factors," he said. Under that rule, guest workers must be paid for at least three-fourths of the workdays in a 12-week span even if an event like a hurricane or oil spill disrupts operations.

And Voisin said "Rule 2 requires employers to pay transportation and subsistence costs to and from the workplace for those hired under the H-2B program and for American workers that DOL considers to be corresponding workers" or locals with the same jobs. Moreover, he said, "Rule 2 mandates that businesses continue recruiting American workers up to 21 days prior to the H-2B workers' start date, even when employers have already offered the job to H-2B workers and paid thousands of dollars in processing and application costs."

Voisin said the industry would gladly employ American workers. "However, U.S. workers are unavailable or unwilling to perform the most labor-intensive tasks needed to process our seafood," he said.

Echelard said that American workers can apply for seafood openings at the last minute and fill them, dashing a company's plans to employ a foreigner. "But then the American worker quits, often in the first week," he said. "You can spend lots of time training American workers who quit."

Some of the reasons that seafood processing jobs don't appeal to Americans are workplace conditions, other opportunities, and disincentives created by federal welfare and unemployment compensation programs.

But regarding the plants, Louisiana Agriculture & Forestry Commissioner Mike Strain said "they're kept clean, have ventilation to remove odors and must meet Occupational Safety and Health Administration standards."

What will the new rules cost the industry? LSU agricultural economics professors Kurt Guidry, Matthew Fannin and Michael Salassi completed a study on impacts last month. "For the seafood industry, including crawfish processing, we found the estimated, weighted-average increase in wage rates would be roughly 26 percent," Guidry said. "But, depending on the job title, the average increase in the wage rate could be anywhere from as low as 3 percent to as high as 67 percent."

Based on the number of guest workers employed in Louisiana in fiscal 2010, increases in future wage rates would raise costs to the state's seafood processing industry by nearly $4.5 million in a 36-week or roughly, nine-month period, assuming a 40-hour workweek, Guidry said.

Higher expenses cannot be absorbed by seafood processors operating on thin profit margins. Al Sunseri, president of P&J Oyster Company, Inc. in New Orleans, said "the way business operates, increased costs are inevitably passed on to the consumer."

Bauer said H-2B employers go to great expense to use legal workers. "There are an estimated 11 million to 20 million illegal aliens in this country -- many of them employed by our competitors below the government's radar," he said. "We're being penalized for being a part of the legal system."

But Jennifer Rosenbaum, legal director for the National Guestworker Alliance in New Orleans, said the new DOL rules are intended to reduce current abuses. She said guest workers face exploitation, labor trafficking, cleanliness and safety issues at plants, and retaliation by employers if they complain about conditions to authorities. Some plants use a piecework-payment system that can keep wages below the minimum wage, she noted. "If these jobs don't appeal to American workers, then they need to be constructed so that they do," she said. She noted that the DOL has open complaints now, filed against Louisiana seafood employers, concerning guest workers.

Seafood industry leaders say they value their foreign labor, and that's why the workers keep coming back. Commissioner Strain said "most of the guest workers brought into the state come year after year to work in our crawfish and other plants, often for the same employers." He recommends a different type of visa arrangement, saying "we need to implement a pre-processing system that will be good for five years. Our seafood employers should be allowed to bring workers who were here before and did a good job back into the country without unnecessary delay and expense."

Strain said he's trying to raise awareness about the need for guest workers so the public will pressure Congress not to overhaul the H-2B program.

In September, a group of Louisiana industries, including landscapers, seafood-processors and hospitality firms, filed a lawsuit against the DOL to try to prevent the new H-2B visa and wage rules from being implemented. The case, known as Louisiana Forestry Association, Inc. et al v. Solis, was transferred from Louisiana to the U.S. District Court for the Eastern District of Pennsylvania, and will be reheard there. Hilda Solis is the nation's Secretary of Labor.

Buck Vandersteen, executive director of the Louisiana Forestry Association, last week said "we think we'll hear a decision sooner rather than later" on the case.

Last year, Democratic Senator Mary Landrieu introduced an amendment with Senator Barbara Mikulski, D-Md., in the Senate Appropriations Committee to prevent unintended consequences of new H-2B rules. Representative Rodney Alexander, R-La., sponsored a similar amendment in the U.S. House last year. Under pressure from Congress, new H-2B visa and wage rules were delayed last fall until this year.

Voisin said "a national group, the Coalition to Save America's Seafood Jobs, was created to fight H-2B issues." Members include seafood processors in Louisiana and seven other states.

Seafood processing accounts for 12,000 of the 66,000 H-2B visas issued a year nationally, and employs over 1,400 guest workers in Louisiana yearly.