A large U.S. flag is seen on the facade of the Department of Labor headquarters building in Washington D.C., on September 8, 2025. The Trump administration’s proposed rule to require higher prevailing wages for H-1B visa holders and employment-based immigrants is likely unlawful, according to a new report. (Photo by Celal Gunes/Anadolu via Getty Images)
Anadolu via Getty Images
The Trump administration’s proposed rule to require higher prevailing wages for H-1B visa holders and employment-based immigrants is likely unlawful, according to a new report. The report finds private wage surveys, considered by experts to be the best indicator of market wages, closely match the current prevailing wage system, which means the Labor Department’s proposed rule would compel employers to pay many H-1B professionals up to 33% more than the market wage for similar U.S. professionals. Attorneys note that U.S. immigration law does not allow the Labor Department to require employers to pay H-1B visa holders a premium over the salaries paid to comparable U.S. professionals.
H-1B temporary visas are often the only way for high-skilled foreign nationals to work in the United States long term. Employers must pay the higher of the actual or prevailing wage paid to U.S. professionals with similar experience and qualifications. Companies recruiting at U.S. universities find that international students account for approximately 75% to 80% of full-time graduate students in AI-related fields, such as computer and information sciences.
The proposed rule could price many high-skilled foreign nationals out of the U.S. labor market. The rule is one of several Trump administration policies placing restrictions on even the most highly educated people in the world. In Sept. 2025, Trump officials imposed a $100,000 fee on the entry of new H-1B visa holders. On May 21, U.S. Citizenship and Immigration Services issued a memo that may prevent most applicants from obtaining permanent residence in the United States by forcing them to apply for green cards at understaffed U.S. consulates. USCIS denial rates increased significantly in the fourth quarter of FY 2025 for an alien with extraordinary ability (in the employment-based first preference, or EB-1, green card category) and for national interest waivers (in the employment-based second preference, or EB-2, green card category).
An Immigration Rule That Significantly Raises Required Salaries
In March, the Labor Department published a proposed rule that would require employers to pay H-1B visa holders and employment-based immigrants far higher than under the current system and well beyond the salaries paid to comparable U.S. professionals. However, new research has found significant flaws in the proposed rule that likely make it vulnerable to a legal challenge. In June 2024, the U.S. Supreme Court ruled in Loper Bright Enterprises et al. v. Raimondo: “The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous.”
“A Department of Labor proposed rule violates U.S. immigration law by requiring employers to pay H-1B visa holders and employment-based immigrants far above the levels stipulated by the statute,” according to a new National Foundation for American Policy analysis.
According to the analysis, “NFAP examined private wage survey data, the best indicator of market wages, and discovered that the current prevailing wage system is remarkably accurate. NFAP found an average wage difference of only 1% between the current DOL prevailing wage system and Willis Towers Watson private wage surveys for a sample of major H-1B occupations in large metropolitan areas for entry-level positions.” NFAP compared the current DOL Level I and Willis Towers Watson comparable level, P1, for 55 city-occupation combinations in common H-1B categories, such as software developer and computer system analyst, in 10 major metro areas, including New York, Los Angeles and others.
Willis Towers Watson provides labor market surveys for employers to set employee salaries. DOL allows employers to submit private wage surveys when applying for H-1B visas. The proposed rule invited comments on restricting such surveys.
In New York, the current DOL wage system for Level I and the private wage survey from Willis Towers Watson for the comparable level, P1, are within 2.2% to 3.6% of each other in the salaries for accountants/auditors, computer system analysts and operations research analysts, while the current DOL prevailing wage level is actually 7.9% higher than the private wage survey at P1 for a financial analyst and 11.4% higher for a data scientist. In Philadelphia, the difference between the current DOL wage system and Willis Towers Watson for Level I and P1 is only 2% or 3% for a financial analyst or operations research analyst. The current DOL prevailing wage Level I is 11.5% higher for a data scientist and 12% higher for a software developer than the private wage survey at the P1 level in Philadelphia.
Immigration Rule Uses Questionable Assumptions to Justify Higher Salaries
Analysts say the DOL wage rule relies on disputed premises, including that H-1B visa holders are underpaid relative to comparable U.S. professionals, the current prevailing wage system is flawed and that required minimum salaries should be boosted by up to 33%. However, the private wage survey cited above shows the current prevailing wage system fairly approximates market wages, and many studies have found that H-1B visa holders earn the same or more than comparable U.S. professionals.
A study by George Mason University economics professor Michael Clemens found H-1B visa holders earn salaries up to 6% higher than comparable U.S. professionals. University of Maryland researchers Sunil Mithas and Henry C. Lucas, Jr. concluded, “[C]ontrary to popular belief, non-U.S. citizen IT professionals are not paid less compared to American IT professionals.” Studies by Glassdoor, the Government Accountability Office and others have reached similar conclusions.
In attempting to impose higher salaries on employers via regulation, analysts say Trump Labor Department officials invented facts and a questionable methodology. “To justify increasing prevailing wage levels, DOL officials contrived or reverse-engineered a salary ‘gap’ by comparing H-1B applicants, mostly early-career professionals, to all U.S. workers in the same occupations, who have more experience, greater job tenure and have reported income, such as bonuses and second jobs, that cannot be included when employers submit salary information for foreign nationals on H-1B applications,” according to the NFAP analysis. “In sum, DOL first invented or contrived a ‘gap’ between the wages of H-1B visa holders and the wages of average U.S. workers in the same areas and occupations, and then chose numbers or percentiles to eliminate the gap.”
The NFAP report explains that DOL asserts there is a wage gap by using data from Labor Condition Application files, known as LCAs, and the BLS Occupational Employment and Wage Survey, or OEWS: “For each occupation, state and year, DOL calculates an average salary for H-1Bs (using LCA data) and all workers (using OEWS). The average difference between these two numbers is $10,191, which is the amount DOL asserts H-1B visa holders are paid less.”
NFAP notes that “all workers” in the DOL methodology include people with far more experience than most H-1B applicants, and DOL’s “all workers” category also includes bonuses, second jobs and other compensation that cannot be used when employers submit H-1B applications.
According to Mark Regets, a labor economist and senior fellow at the National Foundation for American Policy, DOL is not making a valid comparison. “The wage measures are not comparable, and the workers are not comparable.”
Regets said in an interview that he considers it “nonsensical” that the goal of the proposed rule is to equalize average salaries between mostly newly hired H-1B visa holders and individuals with significantly more experience. DOL notes in the Federal Register that the “majority” of H-1B applicants are at Levels I and II, meaning they have little experience and differ from the average U.S. worker.
DOL also does not account for the difference in tenure at an existing company between H-1B visa holders and the average U.S. worker, notes NFAP. Economist Michael Clemens writes in his recent study that “comparable U.S. natives have over six years of tenure on average, and commensurately higher wages for this reason alone . . . but almost no new H-1B employees have such tenure at the sponsoring firm.” USCIS notes in its annual statistical report that the mean salary for H-1B professionals approved for continuing employment, usually with the same employer, is 25% higher than for petitions for initial employment (i.e., new workers).
Another type of error in the proposed rule’s comparison is that the prevailing wage listed on the Labor Condition Application is the minimum salary employers are required to pay, but the offered wage is often higher. Exhibit 5 of DOL’s proposed rule shows that employers pay H-1B visa holders an offered wage between $9,328 and $18,605 (or 10.6% to 12.7%) higher than the prevailing wage listed on the Labor Condition Application.
“The H-1B wage data DOL uses is not the actual wage people are paid, and the data are overrepresented by early-career professionals and inappropriately compared to all workers in an occupation,” said Regets. “DOL has invented a gap and then selected percentiles to eliminate the average gap,” he said. “That’s bad because it is not a real gap and it produces a required wage requirement well above DOL’s definition of a prevailing wage.”
After altering the formula to compute prevailing wage salaries at various levels, DOL reports that its proposed rule raises the required salary for H-1B visa holders and employment-based immigrants by an average of 33% for Level I, 24% for Level II, 21% for Level III and 22% for Level IV.
NFAP calculated that an employer in San Francisco petitioning for a software developer would pay a required prevailing wage for Level I that rises from the current $135,699 to $181,009 (+$45,310) and for Level IV from $213,512 to $259,801 (+$46,289), based on average percentage changes for each level reported by DOL in its proposed rule. In San Jose, an employer applying for an electrical engineer would see the required prevailing wage for Level I increase from the current $131,019 to $174,767, and for Level IV from $217,630 to $264,813.
“A significant concern with the proposed wage rule is that it would force employers to either increase their pay scale to well above market and what current economic conditions allow or leave critical positions unfilled because they are unable to tap into the high-skilled foreign national workers they need to supplement their U.S. workforce,” said Kevin Miner of Fragomen in an interview.
Comments on the proposed immigration rule were due by May 26. A final version could take effect before the next H-1B electronic registration period, which begins in March 2027.
