US H1B visa wage increase requested by Department of Labor

Comments by Sanwar Ali:

H1B visas are already difficult to obtain.  Some people say that H1B visa holders are underpaid.  Is that really true?  You currently have to obtain a “prevailing wage” from the Department of Labor for H1B visa workers to show that you are paying a high enough salary.  Then for most employers to employ a new worker you have to come under the 85,000 visas a year quota.  If you are lucky enough to be able to apply, then there is a considerable risk under Trump that the petition will be refused anyway.  On top of that in most cases for new employees, you can only apply in April each year for the employee to start work in October that year.

There are a number of reports that suggest that H1B visa employees increase employment and opportunities in the US.  The suggestion by Trump that further restricting work visas will help reduce unemployment is somewhat overly simplistic, and surely wrong.

The US Department of Labor has proposed a steep increase in H1B visa wage levels, making it more costly for firms to hire H1B workers. The move is likely to hit Indian IT firms hardest as the Trump administration attempts to dissuade companies from employing overseas workers, and outsourcing their workforce. The proposal was submitted to the Office of Management and Budget (OMB).

It’s the latest blow to Indian IT firms and other companies that rely on H1B visa workers as Trump attempts to solidify his ban on US work visas and push his ‘buy American, hire American’ policy in the wake of the coronavirus pandemic, which has cost millions of Americans their jobs.

Increasing H1B visa wage levels means that the cost of hiring overseas workers will rise, and it is claimed that the measure will stop firms from bringing in workers to do jobs that can be done by Americans, and reduce current unemployment rates.

Other US visa categories targeted

Wage rises have also been proposed for the H1B1 visa – a variant of the H1B visa, which is reserved for nationals of Chile and Singapore – and the E3 visa, which is reserved for citizens of Australia.

Those opposed to the proposal argue that mid-sized and start-up companies would suffer, as well as the bigger firms.

The main beneficiaries of H1B visas include Indian IT giants such as Tata Consultancy Services (TCS), Infosys, Wipro and HCL, who would be forced to pay H1B visa workers a higher salary, increasing their operating costs. The majority of H1B visas are awarded to Indian IT firms with branches in the United States.

Based on data published by moneycontrol, a level 2 employee in California is paid approximately $120,000 per year, while in Texas, level 2 employees are paid $80,766 a year, but IT firms are understood to comply with wage requirements on both counts.

Moneycontrol said: “An HDFC report shows that average H1B wages increased sharply over the last two years for IT services companies. From a median salary of $78,120 in FY17, it has increased to $90,730 in FY19.”

Indian IT firms turn to local workforce

With US visa and immigration rules becoming ever more restrictive, most Indian IT firms have increased local hiring over the last 12 months. While reporting its quarter one earnings, Infosys said that it has recruited more than 13,000 US nationals as part of a local recruitment drive.

Infosys said: “We want to build local talent structures in all the locations that we operate in.”

The proposal submitted to the Department of Labor is reportedly being fast-tracked and will redefine what is classified as a ‘speciality occupation’ under the H1B visa category, which is likely to reduce the number of skilled workers that are eligible for the popular visa.

Changes may happen before the presidential elections

Although official details of the proposal have not yet been made public, there’s speculation that it could be passed by the Trump administration ahead of the presidential election on November 3.

A report published by India’s Economic Times said: “If given the go-ahead, it will be implemented immediately without public comment, unlike the case with most other rules.”

The Department of Labor determines wage levels in every state for each occupation. For H1B workers, there are four wage levels with level one being entry level workers and level 4 being workers with years of experience.

Workpermit.com can help with US employment-based visas

If you would like to apply for a US work visa – including L1 visas, E2 visas, O1 visas and H1B visas - Workpermit.com can help. 

Workpermit.com is a specialist visa services firm with over thirty years of experience dealing with visa applications. We can help with a wide range of visa applications to your country of choice. Contact us for further details.  You can also telephone 0344 991 9222.