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Donald Trump signs executive orders in the Oval Office of the White House on January 20, 2025. The Trump administration will publish a new rule expected to price many H-1B visa holders and employment-based immigrants out of the U.S. labor market. (Photo by Anna Moneymaker/Getty Images) Getty Images The Trump administration will publish a new immigration rule expected to price many H-1B visa holders and employment-based immigrants out of the U.S. labor market. The White House included the plan in the proclamation announcing a $100,000 fee on many H-1B visa holders. The new Department of Labor rule will likely be similar to the two attempts in Donald Trump’s first term to raise the salaries of high-skilled foreign nationals beyond what most employers can afford to pay. A significant body of research indicates that H-1B visa holders are paid the same or higher salaries than U.S. workers with comparable levels of education and experience. H-1B temporary visas are often the only way for high-skilled foreign nationals to work in the United States long term. When companies recruit at U.S. universities, they find that international students account for 73% of full-time graduate students in electrical and computer engineering. The H-1B annual limit is 65,000, with an exemption of 20,000 for individuals with master’s degrees or higher from a U.S. university, or about 0.05% of the U.S. labor force. In addition to government fees that can exceed $6,000, employers must pay the higher of the actual or prevailing wage paid to U.S. professionals with similar experience and qualifications. An Immigration Directive To Make H-1B Visa Holders Too Expensive To Employ Trump administration officials understood that the $100,000 fee to hire new H-1B visa holders contained in the Sept. 19 presidential proclamation would be prohibitive for employers, effectively blocking many high-skilled foreign nationals from ever working in the United States. They also knew it could not stop all H-1B professionals because the relevant section of U.S. law only allowed the proclamation to prevent the “entry” of H-1B professionals. U.S. Citizenship and Immigration Services released new guidance on Oct. 20 clarifying that the $100,000 fee would not apply when people change from one visa category to another without leaving the country, such as moving from F-1 student status to H-1B status. However, that did not mean the Trump officials directing immigration policy hoped to encourage a shift toward more international students. (The U.S. Chamber of Commerce has filed a lawsuit against the H-1B fee. That followed an earlier lawsuit from a diverse group of plaintiffs filed on Oct. 3.) The Trump administration has enacted several measures that make it less likely that international students will view the United States as the best place to pursue an education and launch a career. In August, DHS proposed a rule to limit international students by replacing the current “duration of status” policy with fixed admission periods. In September, Trump administration officials proposed a new immigration rule to change the H-1B selection process to favor senior-level candidates over recent international students. An upcoming rule is expected to restrict H-1B visa eligibility for all types of foreign nationals. MORE FOR YOU The proclamation included a section that would affect every H-1B visa holder and applicants for employment-based green cards. The section called for the Department of Labor to publish a new rule to “revise the prevailing wage levels.” Revisiting The First Immigration Rule To Raise H-1B and Employment-Based Immigrant Required Salaries Although the publication date remains uncertain, the Trump administration’s new DOL wage rule is expected to be similar to the rules published in 2020 and 2021. Those rules, which did not go into effect, inflated the salaries that the federal government requires employers to pay for employment-based immigrants and H-1B visa holders. Three courts blocked the first DOL rule, published on October 8, 2020, because it violated the Administrative Procedure Act by taking effect immediately as an interim final rule without adequate justification. The second version, published as a final rule on January 14, 2021, also did not take effect. The Biden administration did not support the rule’s substantive changes to DOL regulations. Under the law, an employer petitioning for an H-1B professional must pay “at least- (I) the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question, or (II) the prevailing wage level for the occupational classification in the area of employment, whichever is greater.” (Emphasis added.) When sponsoring an individual for an employment-based green card through the DOL PERM process, employers must also pay at least the prevailing wage for the occupation in which the employee will work. The two DOL rules published during Donald Trump’s first term ignored the definition of prevailing wage that appears on the Department of Labor website, which states, “The prevailing wage rate is defined as the average wage paid to similarly employed workers in a specific occupation in the area of intended employment.” “By requiring H-1B visa holders and employment-based immigrants to be paid well above the market wage for their services, the final rule makes it much more difficult for employers to sponsor high-skilled foreign nationals, including recent international students,” according to a 2021 National Foundation for American Policy analysis. “As economists know, when you raise the price of something, you get less of it. Given the substantial contributions made by employment-based immigrants, if the final rule goes into effect, it will mean America will get fewer jobs and startup companies, and less innovation.” Currently, to determine the prevailing wage, which is the minimum an employer can pay a foreign national, DOL gathers data from the government’s Occupational Employment and Wage Statistics survey and uses a mathematical formula to create four wage levels for each occupation and location. “The Department of Labor’s OEWS wage levels are designed as a job classification tool that reflects the amount of experience, supervision and responsibility required for a position,” said Vic Goel of Goel & Anderson in an interview. “A Level I role is simply an entry-level version of the occupation, while Level IV is a senior-level position requiring greater judgment and independence.” Level II is “qualified” and Level III is “experienced.” To raise wage requirements, Trump officials changed the formula to calculate the required minimum wage for permanent residence and temporary visas. In practice, the two DOL rules pushed the current minimum required salaries for Level I to or beyond the equivalent of the current Level II and raised the other levels as well. The result distorted what employers would pay when hiring or sponsoring a high-skilled foreign national. An NFAP analysis found that, on average, the first DOL wage rule would have raised the required minimum salary level by 39% to 45%, likely making it prohibitively expensive for employers to hire H-1B visa holders or sponsor high-skilled foreign nationals for permanent residence. Employers found increases under the rule in individual areas and occupations to be exorbitant. NFAP found, under the rule, that companies would be required to pay software developers $208,000 a year, regardless of skill level, in San Jose, San Francisco and many other U.S. cities, including Battle Creek, MI, Cape Coral-Fort Myers, FL and Reno, NV. Almost 40% of all approved PERM labor certifications for employment-based green cards are for software developers. The new DOL wage system under the rule required employers to pay precisely $100 an hour, or $208,000 a year, for over 18,000 combinations of occupations and geographic labor markets, regardless of skill level and position. The required minimum annual salary for a computer and information systems manager at Level I in East Stroudsburg, Pennsylvania, increased 207% under the wage rule, while a hospital employing a pediatrician in Wichita, Kansas, at Level I would need to pay 177% more a year. In New York, compared to a private wage survey, an employer needed to pay a financial analyst more than three times the market wage ($208,000 vs. $66,428) to comply with the DOL rule. In the Los Angeles area, under the DOL wage rule, employing H-1B visa holders as software developers (system) would have cost companies 62% more than the market wage at Level I. On January 14, 2021, Trump officials shrugged off the judicial decisions that blocked the October rule and published a final rule instituting a new DOL wage system. The final rule represented only a slight improvement for employers. To comply with the rule, companies would have needed to pay employees, on average, far more than under the current system: 24% higher for Level I positions, 23% higher for Level II, 27% higher for Level III and 25% higher for Level IV. Being required to pay a salary premium of $30,000 to $40,000 or more annually for an H-1B visa holder or green card recipient would likely lead employers to hire individuals outside the United States or not at all. The U.S. Department of Labor headquarters building is seen at dusk on June 21, 2024. (Photo by J. David Ake/Getty Images) Getty Images A Weak Justification For An Immigration Rule If history repeats itself, analysts expect the Trump administration to offer a weak justification for inflating the salaries of H-1B visa holders and employment-based immigrants beyond market wages. Madeline Zavodny, an economics professor at the University of North Florida and a former economist at the Federal Reserve Bank of Atlanta (and Dallas), analyzed DOL’s October 2020 interim final rule for a lawsuit and found the agency could not support its assertion that H-1B temporary holders are paid less than similarly employed U.S. workers. “Indeed, I believe this claim is not true,” wrote Zavodny. “This claim appears to form much of the basis for the Department’s proposed changes to the prevailing wage determination process for the H-1B nonimmigrant visa program and the EB-3 permanent resident visa program. . . . [E]mpirical evidence compiled by economists and other academic researchers indicates that workers who hold an H-1B visa are typically paid at least as much as similarly employed U.S.-born workers.” Among the examples of past research concluding H-1B visa holders are paid the same or more than similar U.S. workers: - The Government Accountability Office found H-1B professionals generally earn the same or more than their U.S. counterparts after comparing the median reported salaries of U.S. workers and H-1B professionals in the same fields and age groups. - University of Maryland researchers Sunil Mithas and Henry C. Lucas, Jr. examined the skills and compensation of over 50,000 IT professionals in the United States and found foreign-born professionals in information technology earned more than their native counterparts. - Economists Magnus Lofstrom and Joseph Hayes with the Public Policy Institute of California concluded, “We find that overall H-1B workers in STEM occupations have higher earnings than their otherwise observationally similar U.S.-born counterparts.” Economists criticized the evidence presented in the Trump administration’s proclamation to justify a $100,000 fee on H-1B visa holders, particularly the claim that “one study of tech workers showed a 36 percent discount for H-1B ‘entry-level’ positions as compared to full-time, traditional workers.” The study reached that conclusion only by comparing individuals with little to no labor-market experience to people who have worked for many years in the same occupation, a comparison economists consider invalid. “What does the 36 percent number compare those wages to?” asks George Mason University economics professor Michael Clemens in an analysis for PIEE. “The study tells you, right in the same table: It’s comparing the entry-level wage for H-1B workers to the average wage for everyone in that occupation, at all levels of experience, seniority, degrees, and technical knowledge. That reasoning would not pass muster in even an introductory economics course.” Clemens writes that “of course” entry-level computer programmers earn a lower wage than people with years or even decades more experience, connections and seniority. “That 36 percent entry-level wage gap, which the White House cites as clear evidence that H-1B workers undermine wages, suggests nothing of the kind,” he writes. “It is similar to the wage gap we should expect between all entry-level wages and all average wages—for all kinds of workers, in every firm, in every country, in all of modern history. More experienced workers have more tacit knowledge, have better outside options, and have proven their worth to the firm.” According to the U.S. Chamber of Commerce, the two versions of the DOL wage rule were among the costliest in the history of modern regulation. The first version of the rule imposed a $165 billion transfer cost on employers over 10 years, and the final rule would have cost employers $105 billion over 10 years. The Trump administration appears determined to price H-1B visa holders and employment-based immigrants out of the U.S. labor market through immigration policy. Section four of the proclamation requiring the $100,000 fee on H-1B visa holders states, “The Secretary of Labor shall initiate a rulemaking to revise the prevailing wage levels to levels consistent with the policy goals of this proclamation…” (Emphasis added.) By imposing a $100,000 fee, the proclamation aimed to make it too costly for employers to hire high-skilled foreign nationals. Editorial StandardsReprints & Permissions
