H-1B Salaries Rising Under DOL Rule Could Impact Tech in Big Way

The Department of Labor (DOL) has announced its Final Rule that resets wages for workers on the H-1B, H-1B1, and E3 visas. The agency insists that the move will translate into stronger wage protections for U.S. citizens, including technologists.

That the DOL intended to reset wages isn’t a shock; back in October, the agency released its Interim Final Rule and solicited public comment. “After an extensive review of the comments received, the Department has determined that the existing wage methodology undermines the wages and job opportunities of U.S. workers, and that it is in tension with the governing statute,” reads the DOL’s press release breaking down details of the Final Rule.  

The goal of the Final Rule, the press release added, is to “improve the accuracy of prevailing wages paid to foreign workers by bringing them in line with the wages paid to similarly employed U.S. workers.” The Rule’s text is available on the DOL website (PDF), and it’s worth reading (or at least skimming), because there are some changes from the Interim Final Rule, including some wage adjustments.

As proposed by the Interim Final Rule, the lowest possible wage that a company can pay an H-1B worker would rise from the 17th percentile of a profession’s income distribution to the 45th percentile. Meanwhile, the uppermost tier would increase from the 67th percentile to the 95th percentile. In the Final Rule, those numbers take a little bit of a haircut, with the Level 1 wage rising to the 35th percentile and the Level IV wage to the 90th percentile. 

The DOL also plans on phasing in the wage changes, presumably to limit the amount of disruption for employers. “For many job opportunities, the new wage rates will phase in through two steps over a year and a half period,” the report reads. “For job opportunities that will be filled by workers on track to become lawful permanent residents, and who therefore have greater reliance interests in the old wage methodology, the new wage rates will phase in through four steps over a three and a half year period.”

This wage adjustment has its critics. “There are many problems with the H-1B program, including that there are instances where H-1B workers are replacing U.S. workers,” Sarah Pierce, a policy analyst at the Migration Policy Institute, told CBS News when the Interim Final Rule was published. “And that’s a problem that needs to be dealt with… But the Trump administration is dealing with it by punishing all H-1B workers, and especially those that are working in third-party worksites.”

Indeed, if the wage changes stick, it could have a huge impact on business-services and consulting firms that apply for lots of H-1B workers, who are then subcontracted to other companies (including some of tech’s largest giants). Those consulting firms would end up paying substantially higher wages, negatively impacting their bottom lines. The biggest tech companies, which also heavily lean on the H-1B, would be forced to reconsider how they spend on talent. 

But will the Biden administration allow this DOL Final Rule to stand? That’s an open question, especially since the incoming government will have a lot of other issues to tackle in the interim, including the COVID-19 pandemic and its economic effects. 

13 Responses to “H-1B Salaries Rising Under DOL Rule Could Impact Tech in Big Way”

  1. Jake_Leone

    This isn’t going to affect Big Tech. But it will affect Offshore Outsourcing companies.

    The main reason why Big Tech wants H-1b visas is because they can tie a worker to their company, forever, until Green Card day. This is so valuable, that Facebook perjured itself 2600+ times (over just a 1.5 year period), on Federal forms, in order to get workers (now completely illegal workers) into the Green Card cue.

    Facebook protected foreign workers from local competition. Facebook’s own data, provided to Federal investigators under threat of felony obstruction, shows that Facebook finds 29+ better qualified local STEM candidates for every STEM job they post openly. But the jobs posted for the PERM process are kept only in 2 print ads on the Sunday Chronicle. Facebook never forwards the resumes, of what they admit are better qualified local candidates to the hiring managers in the PERM process.

    This protectionism, creates and illegal and indentured foreign workforce at Facebook, that keeps its mouth shut about company internal problems. Forever until Green Card day.

    Don’t believe anything Big Tech says about a worker shortage, it is all lies. The truth was obtained by the Justice Department as part of DOL investigation. The Facebook employee knew they could not lie to Federal investigators like they lie to Congress and the Public about this issue.

    Just read the DOJ indictment of Facebook, it is online.

  2. H1B needs are a sham. There are many qualified Americans to take any and all of these jobs. It’s simply a way for employers to keep salaries artificially low. The government needs to make companies do a better job of proving why there is a need for an H1B over an American.

    I’ve worked on many large successful projects but you have never worked on a project until you are in a daily standup where the VP is yelling at the offshore developers and QA team members because everyday bugs are fixed which introduce new bugs and the dates keep slipping. I will never work in that kind of situation again. It was truly ridiculous.

    • Chandler

      Actually, this is not enough. while the American youth is stuck with huge debts, people from India spends 2 dlls in education and they have no debt and a brilliant future. Thanks Amazon, Facebook, Apple, Google for ripping off our youngsters future. Still many companies have people remotely connected doing local U.S. work, companies should be obliged to report this and whistleblowers incentivize to report abuse, companies need to pay tax on this practise to compensate to the American an society. Big tech complains that there is no enough students to cover the companies needs, well, not everybody can pay thousands of dollars for a degree, spend some of your billions in educations for the American people, it is the American people who has given you success, without us your companies are nothing.

  3. Standing on the corner

    H1-B cost me my job. Working for the big banks one of the biggest abusers including major brokerages. Very difficult finding another one.

    Indian managers hiring Indians via Indian consulting firms. If you are non Indian you couldn’t get a job or you were laid off. Also they outsourced quite a lot.

    Checkout IBM (International Business Machines) and jobs they hiring overseas. Maybe now they should be called Indian Business Machines.

    I recommend to young Americans to NOT go into IT as a career. Be doctor or lawyer because thy are protected industries. It is a big mistake.

  4. Jade Ivy

    Companies always use the sham excuse we need a h1b. I worked for a company which hired a lot of them as the CIO was Indian at the time, I would go through and interview 6 or so candidates and 9 times out of 10 they would side step my hire recommendation and hire a H1B that I did not even interview. So glad not to deal with that atm. There are just way too many BS reasons that are given for needing workers from offshore, when there are lots of qualified personal looking mostly now of all times.

  5. Tim Langan

    Biden administration scares the hell out of American IT workers right now. It’s real.
    People are may get replaced because of cheap labor. And Internet ( Google , Facebook etc ) censor the US Citizen IT worker comments.