Louisiana Mudbugs Entangled in Muddy Waters of H2B Regulation

by / Newsroom Ink on February 22, 2015
Randols Craw 2

Problems for Louisiana’s crawfish processors rest in the federal government’s handling of how H2B guest workers enter the U.S. and are paid for seasonal work. Louisiana’s seafood processing and hospitality industries depend upon these workers who come mostly from Mexico and Central America. Photo: Ed Lallo/Newsroom Ink

by Ken Stickney, Lafayette Advertiser and Ed Lallo/Gulf Seafood News Editor

With the Ash Wednesday kick off of the prime mudbug season, crawfish fanatics are in for a roller coater ride on whether peeled crawfish will be available for etouffee and other favorite dishes served across the state in famous restaurants and at home, according to Gulf Seafood Institute (GSI) founding member Frank Randol.

Randol Craw 4l

“We’ve survived freezes and floods and the Deepwater Horizon oil spill,” said the Lafayette seafood processor and owner of Randol’s Restaurant. “But this is a government-made disaster, on two fronts.” Photo: Ed Lallo/Newsroom Ink

“This is a government-made disaster, on two fronts,” said the Lafayette seafood processor and owner of Randol’s Restaurant about an industry that has face hurricanes, floods and manmade disasters.

Problems rest in the federal government’s handling of how H2B guest workers enter the U.S. and are paid for seasonal work. Louisiana’s seafood processing  depend upon these workers who come mostly from Mexico and Central America.

“These workers provide the labor at seafood processing plants,” he explained about the program. “Such guest workers are necessary because local workers won’t take the jobs.”

H2B in Turmoil

The H2B visa program has been in turmoil since last year when the Department of Labor decided workers would be paid according to national — not regional or local — standards. Due to the rural location of many processors, the Department has historically accepted state or local private wage surveys (PWS) for H2B workers brought into the country for temporary seafood industry work.

Eunice Crawfish_0672l

The H2B visa program has been in turmoil since last year when the Department of Labor decided workers would be paid according to national — not regional or local — standards. Temporary worker visas are used by the Gulf seafood industry from harvesting crawfish, to processing alligator, shrimp, oyster, crab and crawfish. Photo: Ed Lallo/Newsrooom Ink

When the rules changed in December, the U.S. Department of Labor said employers must change how they pay visiting workers. Since the 1990s employers have compensated visiting workers based on wage surveys done by the employers in the local labor market. The LSU AgCenter has also done private wage surveys to provide a more unbiased view of what comparable jobs were paying in the area.

“Without the acceptance of local private wage surveys our rate is going up from about $7.35 an hour to approximately $12.35 an hour,” Randol explained. “That reflects about a $3 per pound increase on crawfish tail meat that has to be borne by customers. We feel this is going to drive the price of crawfish beyond what consumers are willing to pay. Some restaurants may resort to the use of imports and the public may stop buying.

Randols_ll

“Without the acceptance of local private wage surveys our rate is going up from about $7.35 an hour to approximately $12.35 an hour,” Randol explained. “That reflects about a $3 per pound increase on crawfish tail meat that has to be borne by customers.” Photo: Ed Lallo/Newsroom Ink

In addition to H2B worker compensation, Randol explained there is a more pressing problem that is leaving a majority of the state’s mudbug processing plants idle. In late January the congressionally mandated H-2B visa cap for the first half of fiscal year 2015 was reached, leaving most of the state’s seafood plants without workers.

“We got sideswiped,” said Randol. “While we were in Washington working on the restoration of private wage surveys, the cap was reached for the first half of Fiscal 2015.”

The cap is 66,000 guest workers per year, or 33,000 permits issued twice a year. Those first permits have been issued to other industries using H-2B guest workers, like forestry and landscaping, which hire the bulk of H-2B workers. “That means Louisiana processing plants missed their opportunity to hire a workforce for March, April and May, when crawfish is generally harvested,”Randol explained. “The second wave of 2015 guest workers won’t be available to the plants until the season is largely over.”

Randol's Craw 6l

“A challenge facing seafood companies relying on H2B visa workers is the cap of workers allowed into the country under this program every year while demand for these workers continues to rise,” said Margret Henderson, Gulf Seafood Institute executive director. Photo: Ed Lallo/Newsroom Ink

“A challenge facing seafood companies relying on H2B visa workers is the cap of workers allowed into the country under this program every year while demand for these workers continues to rise,” said Margret Henderson, Gulf Seafood Institute executive director. “Unfortunately, the 33,000 worker cap for the first half of Fiscal 2015 was reached on Jan. 26th leaving many small seafood businesses without adequate labor. GSI is working to see that Congress addresses this issue legislatively by renewing a “returning worker exemption” meaning that temporary foreign workers previously admitted to the U.S. under the H2B visa program would NOT count toward that 66,000 person maximum.”

According to GSI’s Jenifer Jenkins, who is deeply involved with H2B issues for Gulf seafood processors, crab, shrimp and oysters processers across the Gulf are following the situation in Louisiana closely.

“Crab and shrimp processors will be the next two groups expecting H2B workers to arrive in June. They are not worried about the cap at this time because their workers will be counted under the second group of numbers. Oyster H2B workers approvals for 2016 fiscal year will start again in September for October arrivals. For all three groups PWS remain the pressing issue, as well as passage of a returning worker exemption program,” said the manager of Crystal Seas Seafood in Pass Christian, MS.

Although live crawfish boils are the heart of the industry, a large part of sales comes from the 70 million pounds that processors peel for institutional sales during the course of the year.

Rapid Economic Analysis

In response to the cap, the LSU AgCenter and Louisiana Sea Grant programs conducted a rapid economic analysis of recent H2B policy changes from the US Department of Labor. Impact calculations were developed in response to potential changes in the cost and availability of labor stemming from a mid-year cap on H2B permits and the Department’s announcement that it would no longer allow PRW surveys.

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“The data in the H2B labor assessment was derived from 10 of the largest crawfish processors in the state,” said Rex Caffey a staff economist for the LSU AgCenter and the Louisiana Sea Grant programs. Photo: LSU/Sea Grant

“The data in the H2B labor assessment was derived from 10 of the largest crawfish processors in the state,” said Rex Caffey a staff economist for the LSU AgCenter and the Louisiana Sea Grant programs. “The processors responded to an H2B labor survey sent by the LA Crawfish Processors Alliance.”

According to Caffey, the assessment brings three important concerns to light:

  • If processors lose their current Private Wage Rate exemption, firms are looking on average at an increased labor cost of between $30,000 to $120,000 in additional wages depending upon the set final wage rate which will be between $10-$14/hr.
  • The State of Louisiana stands to lose between $5.3-$11.3 million in economic impacts from firms indicating they may shut down because of the policy changes.
  • There is a potential for a supply glut in live crawfish as smaller, peeler crawfish are shifted to the live market, which could also depress grade quality and affect harvester income.

In addition to state income loss, there is a real potential for a supply glut resulting from peeler volume being sold on live market. Current crawfish prices are at record levels because of combination of great demand and short supply due to cold weather. “Prices could reach record lows in a short period of time if plants don’t buy peelers,” said the Lafayette processor.

According to him the analysis exposes an even bigger problem, the potential loss of market share as imported tail meat from countries like China fill the void of domestic supply.

Before this year Louisiana restaurants could rely upon a steady supply of crawfish tails for such preferred dishes as etouffee and crawfish stew peeled by the state’s 30 crawfish processors. The plants and restaurants would apply for H2B permits for temporary workers as early as autumn, giving enough time to weather the exhausting federal process of bringing employees to the state in time for crawfish season.

Will Harvest Time Harvest?

Sitting on the banks of Bayou Vermilion in Abbeville, Kevin Dartez, owner of Harvest Time Seafood, says he was told by the Department of Labor he has no chance of getting H2B workers before April.

Kevin Dartez, owner of Harvest Time Seafood, processes Gulf crabs with one his his non-H2B workers. Harvest Time usually hires 40-45 H2B workers each season to process crawfish. Photo: Harvest Time

Kevin Dartez, owner of Harvest Time Seafood, processes Gulf crabs with one his his non-H2B workers. Harvest Time usually hires 40-45 H2B workers each season to process crawfish. Photo: Harvest Time

“I’ve been on this rollercoaster since 2001,” said Dartez whose company usually hires between 40 – 45 temporary workers each year to processes both crawfish and crab. “I’ve learned that I cannot control it and to do the best I can with what is given to me.”

Havest Time custom peels more than two hundred thousands pounds of crawfish tail in a typical year for local restaurants participating in a farm-to-market program. “I am not sure what these restaurants are going to do without local crawfish tails, these customers would sooner go without than buy imported,” he said.

Dartez’s company has approximately ten local workers that he often shares with other processors. If workers were to materialize, the Labor Department has assigned him a wage increase of $3.50 for his area, bringing his hourly payments to workers to $10.70/hr.

“I am keeping my head above water,” he said about whether he will be able to remain in business. “Right now I can’t say that I will, or can’t say I won’t – it’s a toss up.”

Boustany Leads Charge for Change

Alligator Processing

“This is about all seafood, not just crawfish. You have to understand, it also means shrimp, crabs, oysters and alligator, all of which depend upon H2B workers, will also have economic problems during the coming year,” said Randol. Photo: Ed Lallo/Newsroom Ink

On Capitol Hill, U.S. Rep. Charles Boustany of Lafayette led the effort of sending to the Labor Department a letter signed by the Gulf Coast Delegation to reverse its stand on private wage surveys. All Louisiana members, except Cedric Richmond, co-signed the letter or sent their own letter. The letter also included signatures from three members of the important Senate Appropriations Committee: Chairman, Thad Cochran of Mississippi and Senators Richard Shelby of Alabama and Louisiana’s Bill Cassidy.

“Allowing bureaucrats in Washington to determine the fate of an important Louisiana industry like the Gulf seafood processors is unacceptable,” Rep. Boustany told Gulf Seafood News. “This arbitrary decision by the Department of Labor is hurting this industry and threatening permanent closures of processing facilities. I’ll continue pressing this agency to come to reality and reverse this decision.”

“This is a game changer for the price structure,” Randol said. “There will be some turmoil in the marketplace. There is a question if we can get crawfish processed at all.”

According to Randol, the Department of Labor needs to honor the private wage surveys which will allow entry of our seasonal H2B workers at an acceptable rate.  “This is about all seafood, not just crawfish. You have to understand it also means shrimp, crabs, oysters and alligator, all of which depend upon H2B workers, will have economic problems during the coming year,” he said.

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About the Author

About the Author: Ed Lallo is the former editor of Gulf Seafood News and CEO of Newsroom Ink, an online brand journalism agency. .

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