A new Labor Department proposal would raise wages for some foreign workers on H-1B visas above many of their American counterparts, a move meant to discourage employers from tapping overseas talent that attorneys say will likely push companies to explore alternatives to the program.
Under a recent DOL proposed rule, annual wages would increase by $16,000 for an entry-level automotive engineer in Detroit on an H-1B visa. For a software engineer in Silicon Valley sponsored through the program, they would go up by $40,000, based on the agency’s wage survey data.
Attorneys say this will force many employers to rethink their recruiting practices and consider other visa options to fill in-demand roles. Multinational corporations could look to expand operations outside the US.
“Even for companies that pay at a high level, the overall wage inflation that this would force is going to affect everyone,” said Kevin Miner, a partner at Fragomen, Del Rey, Bernsen & Loewy LLP. “That’s real money that hasn’t been planned for by employers.”
The H-1B program, the primary employment pathway for high-skilled foreign workers, has become the focus of a wave of regulations and executive actions by the Trump administration that make hiring foreign workers for specialty occupation roles significantly more expensive—in many cases prohibitively so.
“Everything we see coming out of this administration is to curb foreign workers in the US,” said L.J. D’Arrigo, an immigration attorney and partner at Harris Beach Murtha.
The DOL says it’s prevailing wage proposal, which revives an effort from the first Trump administration, would discourage employers from hiring foreign labor at lower wages than a competitive salary for a comparable US worker. The rule will help ensure foreign workers receive market value wages and protect job opportunities for Americans, said Secretary of Labor Lori Chavez-DeRemer.
“The continued abuse of the H-1B program by certain bad actors will no longer be tolerated,” she said in announcing the proposal.
But, even observers of the program who agree there’s a significant problem of H-1B workers earning less than similar native-born workers say the DOL’s primary proposal doesn’t effectively meet its stated objective.
Alternative Proposal
The DOL has suggesting modifying four “wage levels” that H-1B roles are assigned to based on skill levels and earnings data from the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics survey, the federal government’s mechanism to collect information on workers by mail.
But that framework still allows unscrupulous employers to undercut American workers with H-1B hiring because the wage tiers aren’t based on information about actual education or experience, said Connor O’Brien, a fellow at the Institute for Progress, a Washington, DC think tank.
“They’re just guesses,” he said. “It’s a fundamental shortcoming of the data.”
An alternative framework laid out by the DOL would base H-1B wage levels on earnings by workers with the same education levels and experience in a geographic market. IFP argues that the “experience benchmarking” proposal would halt businesses—mostly IT staffing firms—from hiring foreign workers at lower salaries than Americans with fewer qualifications.
Instead of relying on job descriptions by employers, this framework would set pay rates based on the qualifications for a job. The DOL’s current track would produce “false negatives” by excluding workers who are actually offered higher salaries than comparable Americans, O’Brien said.
An H-1B worker sponsored by tech firm Nvidia with a doctorate in computer science, for example, earned $22,581 above the median research scientist in the San Jose metropolitan area for the Level II wage level. But he would sit below the Level II threshold in the new DOL prevailing wage proposal, O’Brien said.
“The primary proposal is so imprecise there are going to be thousands and thousands of applicants every year who actually do earn a premium over similarly qualified Americans but who are made ineligible,” he said.
Public Comment Road Map
The DOL’s proposal said the agency is open to adopting any of three regulatory alternatives outlined in the March 27 proposed rule.
It’s particularly interested in public comments on the experience benchmarking alternative, the agency said. And that framework would improve the ability to screen for exceptional talent and ability, it added.
Attorneys said it’s unusual for an agency to release draft regulations with such comprehensive alternatives to a primary proposal. D’Arrigo said the DOL is “providing a road map for public comments.”
Most final regulations produced by the Trump administration so far have hewed closely to original draft proposals, however, Fragomen’s Miner said.
Even if the final rule adopts the experience benchmarking framework, employers will still see required wages pushed above market, he said, likely pushing many to explore other visa options for hiring.
“The biggest concern with this proposal is at some point, if it becomes too expensive to employ people in the United States, the jobs just won’t be here,” Miner said.
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