How the Department of Labor Actively Encourages Displacing US Workers with the H1-B Prevailing Wage

Executive Summary

• The H1-B program is driven not by skills but by accessing indentured and lower-wage labor.
• The Department of Labor promotes the abuse of the program with how it sets wage levels and the H1-B prevailing wage.

Introduction

The H1-B lobby continually proposes that the H1-B program is a good program because it has rules that are designed to protect US workers. However, when analyzed in detail, it turns out that these claims are false, and they are also deliberate lies. The supposed protection and integrity to the H1-B program do not exist, and the program is administered with functionally close to zero quality control. Part of understanding this is to understand the H1-B prevailing wage.

How the Department of Labor Does the Bidding of the H1-B Lobby

However, it is clear that the US government is not spending very much time enforcing the rules of the H1-B program. A study published by Daniel Costa and Ron Hira in the Economic Policy Institute titled H-1B visas and prevailing wage levels found the following.

By setting two of the four wage levels below the median—and thereby not requiring that firms pay market wages to H-1B workers—DOL has in effect made wage arbitrage a feature of the H-1B program. Changing program rules to require and enforce above-median wages for H-1B workers would disincentivize the hiring of H-1B workers as a money-saving exercise, ensuring that companies will use the program as intended—to bring in workers who have special skills—instead of using the H-1B as a way to fill entry-level positions at a discount.

This means that the way the DOL sets wages creates a built-in incentive to pay less than the prevailing wage. This goes on to illustrate how complicit the DOL is with the H1-B lobby. While the companies that hire H1-Bs deny the lower wages that come with H1-B workers, they have the DOL set low minimum wages for the H1-B roles.

our analysis of H-1B prevailing wage levels raises serious doubts about whether H-1B employers, including the top 30 H-1B employers and major U.S. technology firms, use the program solely, or even mostly, to hire workers with truly specialized skills.

This means the researchers question if the reasons given for the H1-B hires are the actual reasons. The employers that use the H1-B program make the argument about skills — however, these researchers point to lower wages as a prime motivating factor, with the skills argument being a smokescreen.

Constant Lying on the Part of the H1-B Lobby on Wage Levels

Corporate lobbyists and other H-1B proponents often cite this prevailing wage requirement in the H-1B law as evidence that H-1B workers cannot be paid less than U.S. workers. However, the reality is that the H-1B statute, regulations, and administrative guidance allow employers wide latitude in setting wage levels.

Rigging the Wages Against the H1-B Worker

Hiring an H-1B worker is an action that occurs outside of the normal operation of the labor market,(empahsis added) with the government setting key hiring and employment rules. As such, setting an appropriate wage level is critical to ensure the program operates in a way that is fair to both U.S. workers in major H-1B occupations and the migrant workers who are hired through the H-1B program.

This is not something that is sufficiently explained or understood. The H1-B visa holder is not trying to work temporarily; they are, in the case of almost all IT workers, trying to exit India and enter the US and become a US citizen. Therefore, not only are US workers paid substantially more than workers in India, but any H1-B visa holder can easily rationalize taking a below-market wage because they are “paying their dues” to get out of India.

Furthermore, as explained by the following quotation, the H1-B worker has little recourse.

As noted above, employers have four wage levels to choose from: They may pay the Level 1 “entry-level” prevailing wage, which DOL sets at the 17th percentile of wages surveyed for the occupation in the local area. This is clearly the bottom of the distribution, with 83% of workers in that occupation being paid more than the Level 1 H-1B worker. Employers may also opt to pay the Level 2 wage, which is at the 34th percentile. The Level 3 wage is at the 50th percentile—the median wage—and Level 4 is at the 67th percentile, the only wage level that is higher than the median.9 While the wage level is intended to correspond to the H-1B worker’s education and experience, in practice the employer gets to choose the wage level and the government doesn’t verify that a prevailing wage is appropriate unless a lawsuit or a complaint is filed by a worker.(emphasis added) Such complaints are unlikely since it would require an H-1B worker to blow the whistle on their own employer, the same employer that controls the H-1B worker’s immigration status and ability to remain in the United States. We know of no cases in which DOL has investigated an LCA-stage misclassification of an H-1B wage level.

Just imagine if your present employer could choose the prevailing wage that is appropriate for your skills and experience?

What would you bet that your employer would set a lower wage than what you are currently being paid if that was the case? However, this is what happens with the H1-B program. The companies decide what to pay — and for Indians, their option is to stay in India, or find another employer who will sponsor an H1-B visa — who will also pay them less than the prevailing wage.

Also, there were no cases where the DOL investigated the LCA stage misclassification of an H1-B wage level.

Hiding the Wage Level Paid to H1-B Visa Holders

Three-fifths of all H-1B jobs were certified at the two lowest prevailing wage levels in 2019 (emphasis added)

Although salary information that corresponds to requested positions on LCAs has been made available by DOL for a number of years through the Office of Foreign Labor Certification’s LCA disclosure data, until recently the prevailing wage levels selected by employers were not readily available. In 2011, the Government Accountability Office (GAO) for the first time (emphasis added) reported what some had suspected and speculated about but to that point were not able to officially confirm: The vast majority of H-1B jobs were being certified by DOL at the two lowest wage levels.

Isn’t it curious that this was hidden from public view for so long? It is almost as if the H1-B lobby did not what the public to know that companies that employ H1-B workers were getting a very substantial price break on wages.

Conclusion

The H1-B program is not administered in a way that meets any of the quality standards that are communicated about the program. Instead, the rules of the H1-B program are designed to create the impression that there are some standards being followed. This is so that US domestic workers do not investigate the program to find out what is really happening and how the program is run for the interests of the H1-B lobby.

References

*https://www.amazon.com/Sold-Out-Billionaires-Bipartisan-Crapweasels/dp/1501115944/

*https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/