The proposed salary level for H-1Bs will discourage companies from hiring them.
The Donald Trump administration is planning to increase the base salary of foreign workers coming to the US on H-1B visas so that they cannot be easily hired instead of Americans. Bloomberg reported that an entry-level software engineer in Silicon Valley, San Francisco would have to pay $162,000 a year to qualify for an H-1B visa, while the salary would be $113,000 in Dallas and $132,000 in New York. Experts are cautious not to immediately call this good news for foreign workers, although their wages will increase, because it will cost companies more to hire them — and they may become demotivated. Additionally, there remains a $100K visa fee for hiring anyone on the H-1B visa program from outside the country.The report cites analysis from immigration data companies Lolly and Threshold and says it will cost the largest employers of white-collar foreign talent a loss of at least $18 billion in the first 12 months. Within three years – when most existing H-1B visas would have to be renewed at the higher level – the annual cost could reach $43 billion.The salary increase is awaiting final approval from the Labor Department.“There has to be a way to make sure you’re not distorting the labor market,” said Ronil Hira, an associate professor of political science at Harvard University. “The simplest way to do that is to make sure that the people being brought in really have specialized skills, and the way to signal that is through wages.”The Department of Labor issued an NPRM (Notice of Proposed Rulemaking) in March proposing new pay levels. As part of the H-1B, H-1B1, and E-3 visa sponsorship processes, employers are required to receive a Certified Labor Condition Application (LCA) from the DOL. The LCA must contain the employer’s verification that it will pay the foreign worker a higher actual wage level than that paid to all other similarly situated employees, or the prevailing wage level for the occupational classification in the area of intended employment.Similarly, an employer who sponsors a foreign worker in the second or third preference employment-based green card processes (EB-2 or EB-3) through the PERM labor certification application must generally obtain a prevailing wage determination (PWD) for the job opportunity from the National Prevailing Wage Center of the DOL’s Office of Foreign Labor Certification (OFLC).