Shrimp processors fighting proposed H2-B pay raises

September 30, 2011

Business

Shrimp processors along the Mississippi Gulf Coast have filed for injunctive relief in federal court in an effort to block a proposed rule change by the U.S. Department of Labor in determining wages paid under the department’s H2-B guest-worker program.

A late September decision by the Labor Department to delay the new wage-determining rule has the Biloxi-based American Shrimp Processors Association’s (ASPA’s) court action in limbo, but processors are still angry over the proposal and the impact it would have on the industry.

The H2-B guest-worker program allows U.S. companies to contract for foreign, seasonal workers for jobs that cannot be filled with American workers.

In some cases, the new rule would cause pay increases as high as 104 percent, according to the Biloxi-based American Shrimp Processors Association (ASPA).

David Veal, executive director of the ASPA, said roughly half of his 40-plus members use H2-B workers, and said the seasonal workers are essential to their operations.

“I find it utterly amazing that the Department of Labor did not consider the effect of the rule on our companies,” said Veal.

Tossed by storms and crippled by a range of issues – from the dumping of foreign imports to the recession and the BP oil spill – 50-year shrimping veteran Richard Gollott said the industry is currently at its lowest point in his professional lifetime. The new rule could be a business-killer.

“It would cost jobs for everybody – American and seasonal workers,” said Gollott, who runs Golden Gulf Coast Packaging and sister company Gollott Ice House and Oil Dock, both of Biloxi. “Why is the federal government trying to run us out of business?”

Gollott employs roughly 100 workers between his two companies. He said approximately 33 percent of those workers are contracted seasonal help under the federal H2-B guest-worker program.

Gollott said just a decade ago, H2-B workers were not a big part of the shrimp-processing workforce. However the introduction of gaming casinos took many of the domestic workers the shrimp-processing industry had relied upon, and relatively low unemployment on the Coast left the industry little choice but to contract H2-B workers.

He said the H2-B workers have been successful, and that his American workers look forward to their arrival each year.

Thus, the shrimp processors, which in addition to wages must cover H2-B workers’ transportation costs and provide them with housing, voiced concerns when the Labor Department first proposed the new rule, which was originally to become effective Jan. 1, 2012. But, the department subsequently bumped up the effective date to Oct. 1, 2011.

That would have made the new wage rule effective during the shrimping season and while the H2-B workers were still on the job. The current group of H2-B workers in the shrimp-processing industry work through December.

Veal said if the Oct. 1 date had stood, many of his members would have found the wage hike impossible to meet, and some would have been forced to send their H2-B workers home early.

For some, that would have meant shutting their doors.

“The federal government is gutting the H-2B program at a time when shrimp businesses are already on their knees,” said Veal. “There is simply no way these businesses will be able to pay these increases, which will as sure as I’m standing here cause them to let go not only guest workers, but also American workers.”

Domestic shrimp processors operate on “razor thin margins and will not be able to pass this cost on to the consumer in a market that is governed by low-priced imports.”

Veal is at least somewhat relieved by the Labor Department’s latest action.

Last month, the department agreed to a 60-day delay in implementing the new rule, meaning shrimp processors will get through this season without having to pay the increased wages.

Also, the U.S. Senate Appropriations Committee, on which Sen. Thad Cochran (R-Miss.) serves as ranking member, inserted legislation that would prevent the use of federal funds to implement the new rule.

Veal said this has left his association’s court action filed in federal court in Louisiana up in the air. He said he wasn’t sure if the judge would rule on an injunction with the rule-implementing process on hold.

But, he remains adamant that the new rule, if implemented, would affect his members, which process more than 70 percent of all shrimp taken from the Gulf of Mexico.

He said his members, in essence, have four choices – pay the increase, invest in equipment to replace the labor, reduce the size of their operations or close.

When asked which of these options he would choose, Gollott paused, then said, “I don’t know.”

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