Labor Department Rule for USMCA Labor Value Content Under Review at OMB
An interim final rule explaining how the Department of Labor will certify how much of a vehicle's production came from workers making at least $16 an hour has been sent to the Office and Management and Budget for review, the final step before issuance. The Office of Information and Regulatory Affairs at OMB received the rule on June 1.
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The labor value content, as it is known, is needed for both cars and light trucks to meet the new auto rules of origin under the U.S.-Mexico-Canada Agreement. For cars, starting July 1, 33% of the vehicle must come from workers making at least $16 an hour in the U.S., $20.91 in Canada, or 304.21 pesos in Mexico, if the company is not granted alternative staging. If it is granted alternative staging, the threshold is 25%. The amounts will not change with fluctuating exchange rates. Benefits and incentive pay don't count toward the hourly rate, but overtime does. The large majority of those wages must come from direct line workers.