The Trump administration proposed a new rule that will increase the costs associated with hiring H-1B visa holders and sponsoring employment-based immigrants by significantly elevating the required prevailing wage. According to experts, the Department of Labor’s rule achieves this by altering the formula in ways deemed inappropriate, aimed at reaching a specific policy outcome, Forbes reported.
According to the DOL, the proposed rule raises the minimum required salaries by 21% to 33%, contingent on a worker’s level of experience. This rule includes a 60-day comment period and may face legal challenges following the publication of a final rule.
Department of Labor releases Notice of Proposed Rulemaking
The US Department of Labor has released a Notice of Proposed Rulemaking aimed at modifying the calculation of “prevailing wages” for foreign workers employed under visa programs including H-1B, H-1B1, and E-3, in addition to permanent immigration routes such as EB-2 and EB-3 via the PERM labor certification process.
The proposed rule is in line with other measures taken by the Trump administration to limit high-skilled immigration, such as the introduction of a $100,000 fee for the entry of new H-1B visa holders. Officials from the Trump administration, including White House Deputy Chief of Staff Stephen Miller, who is the architect of the administration’s immigration policy, have aimed to make it financially unfeasible for many high-skilled foreign nationals to enter the U.S. labor market.
This rule bears resemblance to a final rule issued in January 2021, which did not come into effect due to a transition in presidential administrations. An October 2020 rule intended to increase the required minimum salary even further was halted after judges determined it was published as an “interim final” rule without sufficient justification.
H-1B temporary visas frequently represent the sole means for high-skilled foreign nationals to secure long-term employment in the US. Employers are required to pay either the actual wage or the prevailing wage for U.S. professionals with comparable experience and qualifications. Companies that recruit at U.S. universities observe that international students constitute approximately 75% to 80% of full-time graduate students in AI-related disciplines, such as computer and information sciences.
What the new policy suggests
The department has stated its intention to revise the regulations that govern both the PERM program and Labor Condition Applications, which are essential for the hiring of temporary and permanent foreign workers.
“These proposed revisions aim to better align prevailing wage levels with the wages paid to U.S. workers who are similarly employed in the occupation and area of intended employment.”
The proposal also addresses the exploitation of visa programs by employers who offer reduced wages.
“The Department’s proposed revisions also seek to strengthen program integrity by reducing the incentive for employers to use these programs to replace, rather than supplement, U.S. workers by employing lower-paid alien workers.”
Reasons for potential sharp surge in wages
At present, wages for H-1B and comparable visas are established through a four-tier system that reflects varying levels of experience. The compensation for entry-level positions, classified as Level I wages, is currently set at the 17th percentile for specific jobs and locations.
The proposed changes aim to elevate this to the 34th percentile, thereby aligning entry-level salaries more closely with the earnings of mid-level employees today.
This adjustment would raise the minimum salary that employers are required to offer, particularly impacting recent graduates and those in the early stages of their careers.
Effects on recruitment and entry-level positions
Increased wage thresholds may lead to higher hiring expenses and prompt companies to adopt a more selective approach. Consequently, entry-level foreign workers might encounter a reduction in available opportunities, as employers may prioritize experienced candidates or domestic applicants.
Additionally, the H-1B system is evolving to favor positions with higher salaries, which could further restrict access for entry-level job seekers.
Officials indicate that the existing wage structure has been outdated for several years, enabling certain employers to recruit foreign workers at rates below the market average.
Implications for Indian nationals
Indian nationals constitute the majority of H-1B visa recipients and represent a considerable fraction of applicants in the EB-2 and EB-3 Green Card categories.
Should the proposal be enacted, it may result in increased salaries for skilled Indian professionals, especially those with prior experience. Conversely, it may pose challenges for recent graduates and entry-level candidates in obtaining positions due to elevated wage requirements.
Simultaneously, adjusting wages to align with market standards could mitigate underpayment issues and enhance equity with American workers, ultimately benefiting seasoned Indian professionals in the long run.