Extension education: Rising H-2A Wages Have Impact on Wyoming’s Sheep Industry

By: University of Wyoming Extension Educator Rob Ziegler

Agriculture is Wyoming’s third largest sector in the state’s economy following energy and tourism, with the sheep industry serving as an important contributor. According to 2024 U.S. Department of Agriculture data, Wyoming was ranked fourth in the country in terms of sheep inventories, with a value of nearly $80 million. 

Adverse effects to the sheep industry, such as increasing input costs, will have rippling effects across Wyoming’s economy. Growing concerns regarding labor and related costs exist in the sheep sector.

Labor shortages and rising input costs

One of the biggest challenges in agriculture is labor shortages and rising input costs resulting in reduced margins. Several agricultural industries, including sheep production, rely on skilled temporary workers to fill voids in seasonal labor shortages. 

The new year has brought on several changes to the temporary agricultural program, commonly referred to as H-2A. 

For many producers, the most concerning change is the continued increase in wages paid to employees. Adverse effect wage rates (AEWR) in 2025 have increased approximately 3.6 percent over 2024 levels for range occupations, which includes herders.

Livestock producers are typically “price takers,” meaning the product they sell is only worth as much as the market will offer. In other words, sheep producers are not able to pass off rising input costs, such as labor, to the next buyer of their product. 

Both sheep shearers and sheep producers rely on H-2A workers. However, unlike sheep producers, shearing crews can offset rising input costs by increasing rates charged to their clients. An increase in wages paid to shearers could result in increased charges to the sheep producer, further increasing input costs and reducing margins. 

Changes in H-2A wages paid to shearers could also result in production inefficiencies which may further complicate the situation. 

Rising input costs, coupled with an unstable lamb and wool market, both contribute to thinning margins for the sheep industry.

Impact of increasing H-2A wages

Over the past decade, research from the University of Wyoming’s Department of Agricultural and Applied Economics has evaluated how increasing H-2A wages may impact the sheep industry. 

Approximately 10 years ago, the H-2A program proposed phasing in increased wages from $750 to $2,400 per month over a five-year period. 

One study suggested sheep producers would be profitable approximately 40 percent of the time prior to the increase in wages. After the proposed increase in wages, producers would only be profitable eight percent of the time under their assumptions of a “typical” operation. Visit bit.ly/4haUdT9 to learn more. 

Current H-2A wages are not at $2,400 per month, but they’re inching closer and it’s safe to assume the probability of sheep producers being profitable is decreasing. 

In 2020, UW Extension Associate Director Bridger Feuz used the “U.S. Baseline Lamb Cost of Production Analysis: 2018 Update” to evaluate the impacts of increasing H-2A wages on a per ewe basis. Visit bit.ly/4hegSy9 to learn more. 

Results from the analysis indicated, prior to increasing input costs, returns per ewe were $28. After factoring in increased wages, producers experienced losses of up to $15.67 per ewe and an average loss of $4.87 per ewe over a three-year period.

In short, both studies demonstrated increases in H-2A wages make profitability in the sheep industry very difficult, threatening economic viability.

Relationship between H-2A wages and lamb values

Figure one shows the relationship between H-2A wages and the value of an 80-pound feeder lamb over time. The monthly H-2A wage increased 3.6 percent in 2025 from 2024 and is now $2,058 per month for range occupations. 

Looking back over the past 10 years, 2015-24, AEWR has gone up 165 percent. 

During this time, the value of a feeder lamb between 60 and 90 pounds has fluctuated. However, on average, feeder lamb values have only increased 31 percent over the same time period. Thus, increases in AEWR are outpacing potential feeder lamb revenues. 

Figure two shows how many 80-pound lambs would need to be sold to generate enough revenue to cover an annual AEWR salary, not including additional costs such as meals and housing for H-2A workers. 

Fluctuations in the lamb market, for better or worse, influence how many lambs would need to be sold to cover AEWR salaries. From 2013-24, it took approximately six additional lambs each year to cover increases in AEWR salaries when only considering revenues generated from feeder lamb sales. 

This figure does not include annual increases in housing and meal costs H-2A employers are required to provide to employees. Therefore, it will likely take more than six additional lambs to cover an AEWR annual salary. 

Range production is constrained by resources. Therefore, increasing flock size to offset rising labor costs is not always a viable option for producers.

Increases in AEWR wages over time will certainly affect the sheep industry and may potentially force some operations out of business. Practices to optimize efficiency and manage human resources will become increasingly important in the future.

Rob Ziegler is the University of Wyoming Extension livestock production and marketing specialist and can be reached at rziegle3@uwyo.edu.