Trump Minimum Wage For H-1B Visa Holders Could Reach $250,000 A Year

Published: 05/22/2020

Source: https://bit.ly/2WUOYkd

The Trump administration is considering a proposal to require companies to pay foreign-born scientists and engineers in H-1B status a minimum wage of $150,000 to $250,000 or more a year, depending on the job title and location. Several sources have confirmed that individuals most opposed to immigration in the administration view the coronavirus pandemic – and a 30-day review of temporary visas contained in the April 22, 2020, presidential proclamation – as their best chance to prevent the vast majority of high-skilled foreign nationals from being allowed to work in America.

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The H-1B restriction under discussion is to prevent, at minimum, the entry of H-1B visa holders who are not paid at the highest wage level – Level 4 – under the U.S. government’s prevailing wage criteria. Employers already consider the federal government’s system not to reflect market wages, and are concerned it will prevent them from employing the tech talent needed to work on digital transformations for U.S. companies and assist in the country’s economic recovery. 


Table 1: New York Level 4 Wages For H-1B Visa Holders

Type of OccupationAnnual Salary Required For Level 4
Financial Manager$254,405
Marketing Manager$227,406
Software Developer (Systems)$144,976

Analysts have identified several problems with the proposal. First, White House adviser Stephen Miller said in 2017 that only about 5% of current H-1B visa holders are paid at least Level 4 wages. In reality, the percentage is higher, but the statement is most important for what it means – that the goal of the current proposal is to eliminate up to 95% of H-1B visa holders from working in the United States.

Second, under the law an employer must pay whichever is greater,” the “prevailing wage” or “the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question.” When possible, employers use private wage surveys to satisfy the prevailing wage requirement and in many cases pay a market wage above those detailed in private surveys. The government prevailing wage system for foreign-born scientists and engineers often inflates the required wage and fails to reflect the salaries in private wage surveys. 
 

Table 2: San Jose Level 4 Wages For H-1B Visa Holders

Type of OccupationAnnual Salary Required For Level 4
Computer and Information Systems Manager$241,696
Software Developer (Systems)$172,640
Electrical Engineer$159,162


Third, requiring every H-1B visa holder to be paid as if they have worked years in the field will exclude many talented younger people – and make H-1B visas primarily for mid- or late-career professionals, many of whom may not want to move to the United States at that stage in their careers. The proposal would inflate salaries employers must pay H-1B visa holders, while keeping in place an estimated $3,400 to $16,560 in legal costs and government-imposed fees for an initial H-1B petition. Companies would be mandated to pay foreign nationals much higher wages than U.S. workers doing similar jobs or likely send the work out of the country.

Table 1 shows that requiring all H-1B visa holders to be paid at least Level 4 wages would mandate a minimum wage of more than $254,000 a year for a Financial Manager in New York City and the surrounding area, according to a National Foundation for American Policy (NFAP) analysis of the government’s Foreign Labor Certification Data Center Online Wage Library. For a Marketing Manager the minimum wage would be over $227,000 annually and approximately $145,000 a year for a Software Developer (Systems).


Table 3: Chicago Level 4 Wages For H-1B Visa Holders

Type of OccupationAnnual Salary Required For Level 4
Computer and Information Systems Manager$171,642
Biochemist and Biophysicist$144,165
Information Security Analyst$117,125

The story is similar in Silicon Valley. In San Jose and the vicinity, a company would need to pay a federal minimum wage for an H-1B visa holder of $241,696 a year for a Computer and Information Systems Manager, $172,640 for a Software Developer (Systems) and $159,162 annually for an Electrical Engineer.

In Chicago, companies hoping to hire a Biochemist or Biophysicist on an H-1B visa would need to pay a government-mandated minimum of $144,165 annually. It is difficult to envision many post-docs securing a first job in the private sector if they must be paid the highest wages in their fields. Employers that would like to hire an Information Security Analyst would need to pay at least $117,125, and a Computer and Information Systems Manager in the Chicago area must be paid an annual salary of $171,642.
 

Table 3: Chicago Level 4 Wages For H-1B Visa Holders

Type of OccupationAnnual Salary Required For Level 4
Computer and Information Systems Manager$171,642
Biochemist and Biophysicist$144,165
Information Security Analyst$117,125


The salary picture for Level 4 wages would be similar for employers in the Los Angeles area. To hire a Computer and Information Research Scientist in H-1B status would cost a minimum wage of at least $147,576 annually, a Software Developer (Systems) would have a minimum salary of $145,870 and an Electrical Engineer $133,328.


Table 5: New York Level 3 Wages For H-1B Visa Holders

Type of OccupationAnnual Salary Required For Level 3
Financial Manager$208,666
Marketing Manager$189,613
Software Developer (Systems)$123,032

Even if the Trump administration’s proposal was to mandate Level 3 wages, it would require employers to pay well-above market salaries to many potential H-1B visa holders. In New York it would still cost over $200,000 a year to hire a Financial Manager and nearly $190,000 for a Marketing Manager.

Similarly, in San Jose the Level 3 annual salary for a Computer and Information Systems Manager would be over $200,000, about $70,000 more than the Level 1 wage. A Software Developer (Systems) and an Electrical Engineer would still require annual salaries of $147,534 and $132,746 no matter how many years of experience the individuals possessed.
 

Table 6: San Jose Level 3 Wages For H-1B Visa Holders

Type of OccupationAnnual Salary Required For Level 3
Computer and Information Systems Manager$205,650
Software Developer (Systems)$147,534
Electrical Engineer$132,746


The proposal is expected to harm startup companies, smaller firms and companies trying to grow in the United States, according to attorney Kevin Miner, one of the country’s top experts on the government prevailing wage system. “Requiring employers to pay all H-1B visa holders Level 3 or Level 4 wages would be particularly harmful to small and medium-sized businesses that don’t have the ability to pay top-of-market base salaries to critically important engineers, scientists and developers,” said Miner, a partner at Fragomen, in an interview. “Those companies usually offer bonuses, stock options, and other compensation to incentivize employees instead of providing a high base salary, but H-1B wage rules ignore those kinds of compensation. This would effectively shut out small and medium-sized businesses from accessing essential foreign-born talent at a time when those businesses are struggling to survive.”

“Ultimately, it is short-sighted and unfair to determine a foreign national’s worth to the United States solely on the basis of the rate of pay,” said Miner. “There are numerous examples of companies hiring foreign nationals who are early in their careers and then developing those workers – along with their American colleagues – into the next generation of leaders for the company. By allowing H-1Bs only for workers being paid at the very top of the market, this entire system is disrupted and American employers are instead being told by the government who they can and cannot hire, regardless of business needs.”

Remarkably, the government system for determining prevailing wage rates does not actually survey individual employees and gather their salary, education and experience. Instead, the government collects data for a different purpose through the Occupational Employment Statistics (OES) program and then creates four levels of wages based on a formula. “The OES survey captures no information about actual skills or responsibilities of the workers whose wages are being reported,” concedes the U.S Department of Labor. As an NFAP report explained, “By relying on a mathematical formula, rather than actual survey data, OES data can inadvertently skew wages to well above market rates for some occupations.”

A substantial body of research supports more liberalized rules on H-1B visas. “H-1B visa holders do not adversely affect U.S. workers,” according to a new study by economist and University of North Florida Professor Madeline Zavodny for the National Foundation for American Policy. “On the contrary, the evidence points to the presence of H-1B visa holders being associated with lower unemployment rates and faster earnings growth among college graduates, including recent college graduates.”

Research by Britta Glennon, an assistant professor at the Wharton School of Business at the University of Pennsylvania, found new restrictions on H-1B visas are likely to push jobs out of the United States, concluding, “[A]ny policies that are motivated by concerns about the loss of native jobs should consider that policies aimed at reducing immigration have the unintended consequence of encouraging firms to offshore jobs abroad.”

The goal of the proposal is not to ensure H-1B visa holders are paid “fairly” – several studies have shown employers pay H-1Bs the same or more than comparable U.S. professionals. The goal is to price foreign nationals out of the labor market. “When the government rather than private employers decide which workers are valuable and which are not, one begins to question whether we still have a free enterprise system,” said Miner.

Requiring employers to pay H-1B visa holders a government-determined Level 4 wage would set a minimum wage in many places of between $150,000 to $250,000 a year. It would be ironic for a Republican administration to oppose a minimum wage of $15 an hour for U.S. workers but insist on a minimum wage of up to $250,000 a year for foreign nationals. 

In arguing on the House floor last year against a Democratic bill to raise the minimum wage to $15 an hour, Rep. Virginia Foxx, a Republican from North Carolina, said, “In socialist regimes, all decisions are made by a small group of people at a central government. That is not the American way.”

Source: https://bit.ly/2WUOYkd

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