A Trump administration rule in 2020 designed to price H-1B visa holders and employment-based immigrants out of the U.S. labor market offers clues to U.S. immigration policy if Donald Trump wins in November. Although blocked on procedural grounds, the rule alarmed companies by boosting the required minimum salary for foreign-born professionals far beyond the pay of similar U.S. employees. The rule may give pause to those who expect a second Trump administration to be different from the first one on business immigration.
How The Trump Rule Aimed To Price Immigrants Out Of The U.S. Labor Market
On October 8, 2020, the U.S. Department of Labor published a rule that significantly raised the minimum wage required for employers to pay H-1B visa holders and employment-based immigrants. Currently, the law requires employers to pay H-1B professionals the prevailing wage or actual wage paid to similar U.S. workers, whichever is higher. Employment-based immigrants need a prevailing wage determination for employers to sponsor them for permanent residence. Despite no change in the law, the Trump administration wrote a regulation that caused the salaries required to be paid to foreign-born scientists and engineers to skyrocket.
After the rule was published, immigration attorneys discovered Trump officials had directed DOL to “hijack” the mathematical formula used to determine prevailing wages. After changing the formula, the rule required employers to pay high-skilled foreign nationals far higher than the market wage. That became clear when private sector salary surveys were compared to federal government wage determinations under the Trump rule.
The prevailing wage is “the average wage paid to similarly employed workers in a specific occupation in the area of intended employment,” according to the DOL website. “That means statistics, not politics, should control the prevailing wage,” said Kevin Miner of Fragomen when the rule was published. “The new DOL regulation artificially pushes the prevailing wage well above what the data shows it to be.”
Close examination found many cases under the rule when hiring an H-1B visa holder or sponsoring a foreign national for permanent residence would likely become impossible.
A National Foundation for American Policy analysis found that under the DOL rule:
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- The required salary for a petroleum engineer increased by 100% at Level 1. (DOL uses data from the Occupational Employment Statistics wage survey to create four levels of wages for each occupation based on broad pay band information, a method many companies found led to inflated salary requirements even before the Trump rule.)
- Computer research scientists would have needed to be paid up to $55,000 more annually under the rule.
- Minimum annual salaries increased by 200% or more for common occupations, such as a computer and information systems manager in East Stroudsburg, Pennsylvania.
- The new DOL wage system required employers to pay $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.
- Employers were required to pay all software developers $208,000 a year, regardless of skill level, in many U.S. cities, including Battle Creek, Michigan and Reno, Nevada.
- An employer would need to pay a financial analyst in New York more than three times the market wage ($208,000 vs. the market wage of $66,428).
“The new DOL wage rule appears designed to inflate the salaries of H-1B visa holders and employment-based immigrants to price their services out of the U.S. labor market,” according to an NFAP analysis. “The Department of Labor has created a new wage system that requires employers to pay well above market wages to employ a foreign-born professional in H-1B status or sponsor an individual for permanent residence.”
Why A Judge Blocked The Rule
The Trump administration published the DOL wage rule as “interim final,” which meant the rule went into effect immediately without the usual public comment period under the Administrative Procedure Act. That made the rule more vulnerable to litigation.
On December 1, 2020, U.S. District Judge Jeffrey S. White, in a written order, vacated and set aside the DOL wage rule and a separate Department of Homeland Security rule that restricted the H-1B visa category. The judge’s action was considered a significant victory for businesses and universities in U.S. Chamber of Commerce v. DHS.
“Defendants [the Trump administration] failed to show there was good cause to dispense with the rational and thoughtful discourse that is provided by the APA’s [Administrative Procedure Act] notice and comment requirements,” according to Judge White. The opinion was binding nationwide, , the lead counsel for plaintiffs in the U.S. Chamber of Commerce lawsuit.
Hughes argued at a court hearing that DHS and DOL failed in their rules to connect the H-1B visa category to the coronavirus-related economic problems. He cited an NFAP analysis that showed the U.S. unemployment rate for individuals in computer occupations had not changed significantly from the 3% unemployment rate in January 2020 (before the pandemic spread in the United States).
In his opinion, Judge White wrote, “The statistics presented regarding pandemic-related unemployment still indicate that unemployment is concentrated in service occupations and that a large number of job vacancies remain in the areas most affected by Rules: computer operations which require high-skilled workers.”
Judge White cited the large number of job vacancy postings in computer occupations and the Trump administration’s lengthy delay in publishing the regulations, which belied assertions there was an emergency that required officials to issue the rules.
What happened next showed Donald Trump’s immigration team’s commitment to restricting high-skilled immigration. On January 14, 2021, the administration tried to salvage the DOL regulation by moving directly to a final rule before Donald Trump left office. (Trump officials also tried to save the DHS H-1B rule.) The DOL final rule was similar to the original and retained its central objective: to price H-1B visa holders and employment-based immigrants out of the U.S. labor market.
On March 19, 2021, the U.S. Chamber of Commerce and other organizations filed an amended complaint for declaratory and injunctive relief with Judge White. The plaintiffs argued the DOL final rule went against the statutory language by, among other things, “rendering H-1Bs available only to those individuals that are paid commensurate with skills equivalent to a master’s degree,” according to the complaint. “This is a naked attempt to substantially raise the eligibility criteria for H-1B visas.”
The Biden administration did not oppose vacating the rule and delayed the DOL regulation until November 14, 2022. That meant the Department of Labor would have to engage in a new rulemaking process to change the prevailing wage process for high-skilled foreign nationals.
In April 2021, the Department of Labor requested information from the public on calculating the prevailing wage for H-1B visa holders and employment-based immigrants. The information the DOL received may have encouraged it to put off indefinitely changing the system.
In June 2023, SHRM reported, “The Department of Labor has moved its proposal to raise prevailing wage rates for the H-1B visa and PERM programs to its long-term agenda, historically the first step to a proposal being shelved permanently.” DOL has taken no other action on the rule.
Lessons From The DOL Wage Rule
Employers can take several lessons from the Trump administration’s wage rule. First, although critics of H-1B visas sometimes say they prefer foreign nationals to receive green cards rather than temporary visas, the DOL wage rule would also have priced many employment-based immigrants out of the labor market. The DOL prevailing wage rule applied to PERM applications used in the employment-based immigration process.
Second, analysts point out that Trump officials were not attempting to solve an existing problem. Academic research has concluded that H-1B professionals are paid the same or higher than comparable U.S. workers. Beyond current wage requirements, government and legal fees could add $30,000 to employer costs for filing an initial H-1B petition and an extension, not counting $10,000 to $15,000 for sponsoring an H-1B visa holder for a green card. The latest data from USCIS show the average salary for an H-1B visa holder in computer-related occupations in 2023 was $132,000, and the median salary was $122,000.
Finally, Donald Trump’s political appointees included many individuals who wanted to restrict high-skilled immigration. Up to the final days of Trump’s presidency, they tried to salvage rules restricting H-1B visa holders and employment-based immigrants. There is reason to believe the same or other like-minded individuals will fill the immigration policy ranks of Donald Trump’s administration in a second term and will try again to price foreign-born professionals out of the U.S. labor market.