H-1B visa wages: Is US comparing foreign workers with Americans unfairly?

Proposed rule may raise H-1B salaries by up to $14,000 as US seeks pay parity between foreign and domestic workers

The Donald Trump administration on Friday proposed a new wage structure for H-1B visa workers that, if implemented, would require employers to pay more to hire skilled overseas workers in the United States. One of the key reasons cited for the move is to protect US workers and wages.

 

The US Department of Labor said current wage levels for H-1B workers are lower than market benchmarks, adding that some companies hire foreign workers at reduced salaries, which can affect wages of American workers in similar roles.

 

“This proposed rule will help ensure that employers pay foreign workers wages that reflect the real market value… and protect… American workers,” the Labour Department said.

   

Trump admin comparing young foreign workers with older Americans wrongly

 

However, David J Bier, Director at the Cato Institute, said the comparison used by the government may not be accurate.

 

“DOL makes an apples-to-oranges comparison between the average pay for H-1B workers, who are mostly young, relatively recent college grads, to average pay for the entire occupation, which is older and more experienced. INA 212(p)(4) explicitly outlaws this fraudulent comparison,” he said in a post on X.

 

“How does it prove wage suppression to say, ‘Older Americans are making more than younger H-1B workers’? You could just as easily argue that the Americans are still making more BECAUSE OF the younger H-1B workers working with them,” he wrote.

 

“The staggering level of economic ignorance in this administration is just pathetic. If you want to restrict immigration because immigrants ‘pollute the blood’ as Trump says, just argue that in your regulations. Don’t make garbage economic arguments,” Bier added. 

Interestingly, a recent study by economist George Borjas, titled The H-1B Wage Gap, Visa Fees, and Employer Demand, found that while an average H-1B worker earns about 16 per cent less than a US-born worker in the same locality and with similar education, age, gender and occupation, the gap varies across employers.

 

At large American technology companies such as Meta, Apple, Amazon, Google, Microsoft and Tesla, the difference is minimal. At Meta and Tesla, the wage gap ranges from about minus 1 per cent to minus 3 per cent and is statistically indistinguishable from zero. In these firms, H-1B workers, many of them highly skilled Indian software engineers, earn salaries close to $150,000 on average.

 

What the US government plans

 

The Labour Department’s Employment and Training Administration plans to update the way prevailing wages are calculated under the permanent labour certification, H-1B, H-1B1, and E-3 visa programmes.

 

As part of the proposal, annual pay for foreign workers could rise by $14,000 across the four wage levels.

 

“The updated methodology would use statistically grounded percentile thresholds derived from the US Bureau of Labor Statistics’ Occupational Employment and Wage Statistics survey to bring wages paid to foreign workers in line with those paid to similarly employed American workers. This much-needed change aims to curb abuse of certain visa programmes by reducing the incentive to replace American workers with low-wage foreign visa holders and to establish parity between wages paid to US and foreign workers entering the country on employment-based visas,” the agency said in a news release.

 

Under the proposed changes:

• Workers at Level I may see their prevailing wage rise to $97,746 from an average offered wage of $82,607

• Wages at Level IV could increase by 7.8 per cent to $175,464

 

The move comes alongside a proposal by the US Department of Homeland Security to introduce a weighted selection system that would favour higher-skilled workers over the current lottery process when applications exceed the annual cap.

 

“The department is proposing this rule because the current methodology for setting prevailing wages often allows employers to pay alien workers significantly less than similarly qualified US workers for the same jobs in the same area of intended employment. This not only results in unfair competition for US workers, particularly in high-skill sectors such as STEM, but also affects domestic wages and undermines the integrity of the immigration system by incentivising the use of lower-paid and lower-skilled alien workers over available domestic talent,” the agency said.

 

What this means for applicants and employers

 

• Prevailing wage minimums for H-1B and PERM workers are set to increase across all four wage levels

• Employers sponsoring foreign nationals under H-1B, H-1B1, E-3, or employment-based green cards may face higher hiring costs

• The 60-day public comment period closes on May 26, 2026

• Changes will apply to new filings once the rule is finalised

• Employers may need to review existing applications and plan for higher wage commitments

 

Impact on Indian professionals and firms

 

Indian IT companies have historically filed a large share of applications under wage Levels I, II, and III.

 

“Any sharp increase in prevailing wage thresholds will fundamentally change the accessibility of US work visas for Indian professionals. For employers, especially in sectors like technology, consulting and engineering where a large proportion of H-1B hiring is concentrated, higher wage floors directly raise the cost of hiring foreign talent. This could lead to more selective hiring, fewer entry- to mid-level approvals, and a stronger preference for candidates with niche or high-demand skill sets,” said Varun Singh, MD, XIPHIAS Immigration, told Business Standard.