Why prevailing wage reform matters for H-1B visas

Undocumented aliens are welcomed by unscrupulous employers who take advantage of their illegal status to hire them for wages which are lower than the employers would have to pay American workers.

This doesn’t just happen with undocumented aliens. Employers are using the H-1B visa program to do the same thing with aliens who come here lawfully, which is causing problems for American workers who are not willing to accept lower wages to remain competitive.

President Donald Trump is taking action to deal with this problem, but there isn’t much time left in the first term of his presidency, and he may not get a second one.

The H-1B program

Section 1101(a)(15)(H)(i)(b) of the Immigration and Nationality Act (INA) makes H-1B visas available to aliens entering the U.S. to perform services “in a specialty occupation.”

Section 1184(i)(1) of the INA defines “specialty occupation” as an occupation that requires “theoretical and practical application of a body of highly specialized knowledge” and the “attainment of a bachelor’s or higher degree in the specific specialty (or its equivalent).”

The H-1B classification has an annual cap of 65,000 new visas per fiscal year, but the cap does not apply to every alien who comes to the United States for employment in a specialty occupation. An additional 20,000 visas are available for H-1B employees who have a master’s degree or higher from a U.S. institution of higher education. Also, H-1B workers who are employed at an institution of higher education, a nonprofit research organization, or a government research organization may not be subject to the cap.

As of the end of fiscal 2019, approximately 583,420 aliens were authorized to work in the United States in the H-1B program. Most of these visas were held by aliens from India and China.

Wages

Employers must pay the H-1B worker a wage which is no less than the wage paid to similarly qualified workers or, if greater, the prevailing wage for the position in the geographic area in which the H-1B employee will be working.

The Department of Labor (DOL) has determined that changes are needed in the way it calculates prevailing wage rates to more effectively eliminate any economic incentive or advantage to hiring H-1B foreign workers instead of American workers.

DOL’s concern appears to be well-founded.

A May 2020 report from the Economic Policy Institute (EPI) finds that 60 percent of H-1B positions certified by the DOL are assigned wage levels well below the local median wage for the occupation.

DOL, therefore, has promulgated an interim final rule (IFR) that changes the way it determines prevailing wages to more accurately reflect the actual wages earned by similarly qualified American workers who are doing similar work.

An interim final rule?

Rules ordinarily are published initially as proposed rules, and then, after a public comment period, they are promulgated as final rules.

Interim final rules go into effect immediately but are subject to being changed if public comments warrant a change. Agencies need good cause to publish a new rule this way.

DOL has stated two reasons for publishing its rule this way.

First, the widespread unemployment resulting from the coronavirus public health emergency has created exigent circumstances that threaten immediate harm to the wages and job prospects of U.S. workers.

Second, advance notice of the intended changes would have created an opportunity for employers to attempt to evade the adjusted wage rate requirements.

If opponents of this rule challenge the good cause justification in the same courts that flouted precedent to block Trump’s travel ban, they won’t have any difficulty getting an injunction to prevent Trump from implementing it.

Biden’s H-1B policy

According to Biden’s published immigration plan, he strongly supports the solutions in the immigration reform bill that the Senate passed in 2013, the Border Security, Economic Opportunity, and Immigration Modernization Act, S.744.

S.744 would have more than doubled the 65,000 cap on H-1B visas, raising it to between 115,000 and 180,000 visas a year, depending on market conditions.

This is not surprising: H-1B employers have great influence in the Democratic party.

California employers had more H-1B visa approvals (80,849) in fiscal 2019 than any other state, and key members of the Democratic party represent California, including:

• Biden’s running mate, Kamala Harris is a U.S. Senator for California;
• Speaker of the House Nancy Pelosi represents California’s 12th District; and
• Immigration Subcommittee Chair Zoe Lofgren represents California’s 19th District, which is the capital of Silicon Valley.

The Biden plan won’t help American high-tech workers competing with H-1B employees who accept lower wages.

In fact, increasing the cap on the basis of market demand for H-1B employees could transform the H-1B program from being a way to supplement the American tech workforce into being a way to cheaply replace it.

On the other hand, although Trump’s approach would help hi-tech American workers, it is not a complete solution.

We also need a program to encourage more Americans to get the education and training needed to do high tech jobs. America can’t break away from dependence on high-tech foreign workers until there are American workers who are willing and able to take their place.

Nolan Rappaport was detailed to the House Judiciary Committee as an executive branch immigration law expert for three years. He subsequently served as an immigration counsel for the Subcommittee on Immigration, Border Security and Claims for four years. Prior to working on the Judiciary Committee, he wrote decisions for the Board of Immigration Appeals for 20 years. Follow him on Twitter @NolanR1 or at https://nolanrappaport.blogspot.com.