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Trump's H-1B work visa pay hike already in trouble

President Trump proposed raising H-1B wages in 2016 while on the campaign trail but delivered his proposal one month before the 2020 election.

A month before the U.S. presidential election, President Donald Trump issued new H-1B work visa rules that included a significant pay raise to the high-skilled visa holders.

Higher wages for H-1B visa holders narrows the pay gap between foreign and American workers, which the Trump administration believes makes foreign workers less attractive as employees and improves job prospects for U.S. workers. But the administration's salary increase, which employers will be responsible for, faces a legal windstorm and skepticism about its motives.

Business groups are expected to move quickly to seek a court injunction. In the 2016 campaign, Trump championed an H-1B work visa wage increase, but didn't deliver an actual proposal until this week. U.S. House Democrats accused the administration of trying to score political points with the last-minute H-1B work visa changes.

Critics include U.S. Rep. Zoe Lofgren (D-Calif.), chairwoman of the House Subcommittee on Immigration and Citizenship. On Wednesday, she blasted the administration for not first seeking public comment before issuing the rules. "Changes this substantial must not be rushed through without adequate input from the public," she said in a statement.

Raising H-1B work visa wages has bipartisan support in the Senate and House. Indeed, Lofgren proposed a sizable visa wage hike in 2017 for some of the same reasons as Trump. Lofgren's opposition to Trump's new rule may be consequential. If former Vice President Joe Biden wins the election, Lofgren could be giving a new administration reasons to scrap Trump's changes.

Politics and posturing aside, the Trump administration's rule change has an immediate and real impact on businesses, including technology companies that have long relied on the program. The most significant change concerns wages.

Prevailing wage changes

Under prevailing rules, the entry-level wage for computer programmers in Cleveland, for instance, is about $41,000 a year, which is in the 17th percentile of this profession's salary distribution in the Cleveland metro area. The new rule raises the entry-level computer programmer wage to the 45th percentile or $71,000 a year, close to the median wage for this occupation.

Changes this substantial must not be rushed through without adequate input from the public.
Zoe LofgrenU.S. Rep., D-Calif.

Salary increases for the new wage rules will be triggered by a new Labor Condition Application (LCA) employers will have to file with the U.S. Department of Labor. An LCA must be filed for new H-1B employees, changes in their work location or some other action.

The Trump administration released the rule change Tuesday with an effective date of Thursday. Some employers filed LCAs Wednesday to beat the new rule, said Chad Blocker, immigration attorney and partner at Fragomen, Del Rey, Bernsen & Loewy LLP in Los Angeles.

Employers aren't trying to flout the process but need predictability, Blocker said. The H-1B work visa rule change has, "potential impact [on] companywide compensation systems and the methodology they use to set their compensation," he said.

Impacts on H-1B work visa program

The changes will affect the H-1B program in a couple of ways. The 85,000 H-1B visas distributed annually via a lottery have a mix of wages, low and high. But the new requirement for higher wages should increase the quality of visa applicants as measured by wages, said Ron Hira, an associate professor in the Department of Political Science at Howard University.

The higher wages may reduce the number of companies in the visa lottery pool, giving startups a better chance of winning a visa. It may also increase the incentive to hire a U.S. worker if the H-1B worker is being paid close to market wage, he said.

Hira, who has testified in Congress on the H-1B work visa program, said the administration's proposal is serious, with over 100 pages of arguments and rationale in the rule justifying the change. "They have pretty long justifications, so I don't think it was slapdash," he said.

A potential wild card in the future of the visa program may be the impact of COVID-19. Increasingly, businesses are becoming more comfortable with remote work. That can be applied to international occupations as well, which might help businesses such as Globalization Partners, a Boston-based professional employer organization.

The firm enables the hiring of workers in their home countries by handling all payroll, benefits and HR compliance needs. Todd Goffman, the firm's general counsel, believes the Trump administration's rule change may contribute to the remote work trend. "Companies will find a way to hire the employees they need," he said.

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