Submitted here via the Federal Register.
Brian D. Pasternak,
Administrator, Office of Foreign Labor Certification,
Employment and Training Administration,
Department of Labor,
200 Constitution Avenue NW,
Washington, DC 20210
RE: Department of Labor, Employment and Training Administration, Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, Interim Final Rule DOL Docket No. ETA-2020-0006, RIN: 1205-AC00
NOTE: This EPI report on H-1B prevailing wage levels, published May 2020, was annexed to these public comments and is referenced throughout.
Dear Brian Pasternak:
The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank established in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers—regardless of immigration status—and assesses policies with respect to how well they further those goals. EPI submits these comments on the Department of Labor’s (DOL) Interim Final Rule (IFR) regarding the updated four-tiered wage structure for H-1B, H-1B1, and E-3 nonimmigrant workers and DOL permanent labor certifications for employment-based permanent immigrant visas (i.e. green cards). EPI has researched, written, and commented extensively on the U.S. system for labor migration, including in particular, the H-1B program and other temporary work visa programs. EPI recently published a lengthy piece of research detailing the need to improve the way DOL sets the H-1B wage levels,1 which I coauthored with Professor Ron Hira at Howard University. The report is annexed to these comments and referenced throughout them.
It must be noted that the timing and procedural aspects of the IFR have raised concerns, including among legislators who support reforming the wage levels of the H-1B program.2 President Donald Trump campaigned on reforming the H-1B program and immediately promised to do so after winning the presidency. Yet, virtually no substantive action was taken until just weeks before the 2020 election, and despite the fact that DOL has the requisite legal authority it needs to make this regulatory change—the public was not given an opportunity to comment—thereby making the IFR susceptible to procedural legal challenges.
Nevertheless, EPI generally supports the main substance of the IFR and believes it improves the current four-tiered wage structure for H-1B, H-1B1, E-3 nonimmigrant visas and for permanent labor certifications, because it will better ensure that migrant workers are not underpaid according to U.S. wage standards while protecting the wages of U.S. workers. As a result, the rule helps address a major critique EPI has long held about the program, and which Members of Congress from both major parties have attempted to address through repeatedly proposed legislation beginning over a decade ago. Nevertheless, the rule could go further to protect wage standards, and avenues should be explored to phase in the rule for the current workforce of H-1B, H-1B1, and EB-3 workers so that they suffer no harm—but in the meantime, the IFR should only apply to new workers in those temporary work visa programs with DOL labor condition applications (LCAs) submitted after the IFR took effect—because of the potential to discourage renewals and petitions for lawful permanent residence by employers unwilling to pay market wage rates.
It must also be noted at the outset of these comments that recent actions taken by DOL with respect to wages for migrant workers in temporary work visa programs have been inconsistent and confusing. While DOL has taken action in this IFR that will raise wage rates for migrant workers in the H-1B, H-1B1, and E-3 visa programs, just days ago DOL issued a new wage rule for the H-2A program that will cut wages for the migrant farmworkers in that program3—whom the Department of Homeland Security has determined are part of the U.S.’s critical infrastructure workforce, and whom the Department of State has designated “a national security priority”—because of their contribution to stabilizing the food supply chain during the Coronavirus pandemic. DOL should issue regulations that lead to improved labor standards and higher wages for all work visa programs, and not treat workers differently based on their education levels, occupations, and nationalities. All temporary migrant workers deserve to be paid fairly for their work and no work visa programs should operate as loopholes that allow employers to legally underpay migrant workers.
The first major section of these comments addresses the flaws in the current H-1B program, and the second section specifically addresses elements of the IFR.
I. The H-1B program is an important avenue for attracting skilled, talented workers from abroad—but is deeply flawed and in desperate need of reform
The H-1B program provides temporary, nonimmigrant U.S. work visas for college-educated workers and fashion models from abroad. While no one can deny the importance of attracting skilled, talented workers to the United States, the reality is that some of the biggest beneficiaries of the H-1B program are outsourcing companies that have hijacked the system—using it to pay low wages, replace thousands of U.S. workers with much-lower-paid H-1B workers, and to send decent-paying technology jobs abroad. Outsourcing companies, however, are not the only abusers of the system: The vast majority of employers that use H-1B are legally allowed to pay their H-1B workers at wage levels that are below the local average for the occupation.
The major structural, programmatic flaws in H-1B are:
U.S. employers do not have to recruit U.S. workers before hiring H-1B workers
Employers and corporate lobby groups claim that they use the H-1B primarily to bring in the “best and brightest” workers from abroad to fill labor shortages in science, technology, engineering, and math fields (STEM). But despite this widely held belief, the contrary is true:
- Employers are not required to recruit U.S. workers or prove they are experiencing a labor shortage before hiring H-1B workers.
- “H-1B-dependent” employers—those filling 15% or more of their U.S. jobs with H-1B workers—are required to recruit U.S. workers first, but they get around the requirement with a cheap and easy loophole: they can hire an H-1B worker who holds a master’s degree or pay the H-1B worker an annual salary of over $60,000. For comparison, $60,000 per year is $24,560 lower than the national median wage for all workers employed in computer occupations.4
U.S. employers can legally underpay H-1B workers
For years, corporate lobbyists and other H-1B proponents have claimed that H-1B workers cannot be paid less than U.S. workers because employers must pay H-1B workers no less than the “prevailing wage.” That is true in theory, but:
- Before this IFR, employers had the option of paying the prevailing Level 1 “entry-level” wage or Level 2 wage, both of which were well below the median wage (Level 3) that local employers pay workers in similar jobs.
- As Professor Ron Hira from Howard University and I have shown in the annexed report, in 2019, 60% of H-1B jobs were certified by DOL at the two lowest wage levels, both of which are set below the local median wage.
- While the wage level is supposed 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 check unless a lawsuit or a complaint is filed by a worker.
H-1B workers are often exploited and arrive to the United States in debt after paying hefty recruitment fees
H-1B workers often pay large fees to labor recruiters, which means that many arrive virtually indentured to their employer, fearing retaliation and termination if they speak out about workplace abuses or unpaid wages. And widespread abuses have been documented—even human trafficking and severe financial bondage.5
H-1B workers do not have sufficient job mobility between employers and are not allowed to self-petition for lawful permanent residence
The H-1B visa itself is owned and controlled by the employer; an H-1B worker who is fired or laid off for any reason becomes instantly deportable. This arrangement results in a form of indentured servitude.6 Thus, H-1B workers have good reason to fear retaliation and deportation if they speak up about wage theft, workplace abuses, or other working conditions like substandard health and safety procedures on the job. While H-1B workers have the ability to switch jobs if they can find another employer willing to petition for a new visa for them, and have 60 days to find a new employer if they are fired, these avenues are not straightforward enough and inadequate to mitigate the power that employers have over the right of their H-1B workers to remain employed in the United States. These protections should be improved upon.
In addition, the ability of H-1B workers to become lawful permanent residents and remain in the United States is entirely up to the whims of their employers. Even after working for an employer for six years in H-1B status, the employer has the power to decide if an H-1B worker can remain in the country—in many cases after an H-1B worker has established firm roots in the United States. That power keeps H-1B workers from complaining and asserting their employment rights. As a result, H-1B workers should be allowed to petition on their own for permanent residence after a short provisional period—no longer than 18 months—and without the involvement of their employer.
Outsourcing companies are using the H-1B program to underpay H-1B workers, replace U.S. workers, and send tech jobs abroad
As detailed in the annexed report, 15 of the top 30 employers of H-1B workers in 2019 were not innovative high-tech firms like Apple and Google.7 Some of the biggest users of the H-1B visa are staffing firms that specialize in information technology (IT) and accounting and that pay H-1B workers the lowest wages legally allowed, and outsource their H-1B employees to third-party firms. Some of those firms also have a business model dependent on sending jobs offshore where labor costs are cheaper.
Typically in this scenario, H-1B workers do computer and engineering work at the office of a U.S. employer but are employed by an outsourcing company, some of which are based abroad or have major operations abroad.8 The many reported cases of U.S. workers being laid off and replaced by H-1B workers have all been facilitated by this arrangement. In multiple incidents, the H-1B workers have been hired with annual wages of around $30,000 to $40,000 less than the workers they have replaced. Before they are laid off, the U.S. workers are often forced to train their own H-1B replacements as a condition of their severance packages; this is euphemistically known as “knowledge transfer.” Major, profitable U.S. employers like Disney and Toys “R” Us—as well as public employers and institutions like the University of California and Southern California Edison—have laid off thousands of U.S. workers who were forced to train their own replacements. Eventually, many of the outsourced jobs filled by H-1B workers get moved offshore.9
Contrary to the popular narrative proffered by corporations that support expanding and deregulating the H-1B visa program—the staffing firms that use H-1B visas are not using them to keep technology jobs in the United States—instead they are using them precisely to facilitate the offshoring of as many of those jobs as they can. That is in fact, the business model of those firms. News reports, including from the New York Times, have shown that outsourcing companies “game the system” in order to obtain a high share of H-1B visas, which leaves fewer available for the firms that directly employ H-1B workers.10
Allowing outsourcing companies to hire H-1B workers lets employers utilize the immigration system to degrade labor standards for skilled workers—as a result, they should be barred from obtaining H-1B visas
The outsourcing/staffing model of employment generally may increase the incidence of labor law violations by separating the main beneficiary of the labor provided by H-1B workers—the third-party firm that hires the outsourcing firm, i.e. the “lead” employer—from the H-1B workers who perform the work. Firms that rely on outsourced H-1B workers are a textbook (if extreme) example of what former DOL Wage and Hour administrator David Weil calls a “fissured” workplace, where the relationship between the worker and the lead employer is fissured, or broken, via the use of a temp agency or subcontractor11 (in this case the H-1B outsourcing firm). Research shows that fissuring leads to a wage penalty for workers who are subcontracted, employed as temps, and work for staffing firms,12 in part because the subcontractor keeps a percentage of the wages earned by the workers. It is also common knowledge that employers use this model to avoid paying for benefits like health care, retirement funds, and to avoid liability for labor violations. Because the staffing and outsourcing model contributes to the fissuring of the labor market, it should not be allowed as part of the U.S. immigration system—not in H-1B or in any other temporary or permanent immigration programs.
II. Analysis of the IFR: “Strengthening wage protections for the temporary and permanent employment of certain aliens in the United States”
I will now turn to specific issues related to the IFR. In general, the rule improves upon the current wage structure but should be further enhanced and DOL should explore ways to phase in the rule for the current workforce—in the meantime it should not apply to current migrant workers in the impacted work visa programs because of the potential that employers may penalize those workers. The principal change made by the IFR is to update the four prevailing wage levels required in the H-1B, H-1B1, and E-3 visa programs—temporary work visa programs for college-educated migrant workers—to higher levels that more adequately reflect market wage rates in the U.S. labor market. The IFR also applies the new wage rates to the permanent labor certification requirements for employment-based (EB) green cards in the EB-2 and EB-3 preferences.
The previous and new wage levels are as follows:
|Previous wage percentiles (pre-IFR)|
|New wage percentiles|
As detailed in the annexed report, the two lowest wage levels in the pre-IFR wage rule are both below the local median wage according to the occupation and local area based on DOL wage survey data in the Occupational Employment Statistics (OES) survey, allowing employers to undercut U.S. wage standards. The IFR sets the lowest wage level at the 45th percentile, just below the local median wage, thereby continuing to permit employers to pay H-1B workers at below-market wage rates—but not at the absurdly low levels allowed by the previous wage levels.
Raising wages for H-1B workers and permanent labor certifications will benefit migrant workers and protect wage standards for U.S. workers, and not reduce the number of future H-1B workers
As discussed in the first section, for years, H-1B employers have been allowed to pay their H-1B workers at wage rates that do not reflect local market rates, by having an option to pay them at the two lowest permitted wage levels. The annexed report coauthored by Professor Ron Hira and I discusses the available data, the mechanics of the rule, and why it is important to modify the H-1B wage levels to adequately reflect market wages and ensure that H-1B workers are paid fairly, and to preserve U.S. wage standards. In the report we recommend that DOL prohibit any H-1B job from being certified at a wage that is below the local median for the occupation and region. In that respect, by setting the lowest wage level (Level 1) at the 45th percentile, DOL’s IFR fails to do enough to protect wage standards in H-1B jobs. In the report we further recommend that DOL put upward pressure on H-1B wages by raising the minimum H-1B wage level to the 75th percentile, and prohibit downward pressure on wages at the national level by requiring that every H-1B job be certified at a wage that is no lower than the national median wage for the occupation.
Many commentators on this IFR, especially from the business community, including universities, will claim that raising wages for migrant workers will harm the U.S. economy and result in excluding migrants from working in the U.S. labor market. Neither of these arguments is supported by the available evidence. What the discussion in the first section of these comments shows, is that the wages of H-1B workers are being kept artificially low. The higher wage levels in DOL’s IFR are based on current wage trends and better reflect market wages in particular occupations and specific geographic regions. In other words, DOL’s proposal will push wage levels toward market wages, meaning it will increase labor market efficiency.
When the misleading rhetoric is stripped away, the H-1B employers who oppose higher wage levels in H-1B are simply claiming, in essence, that employers will only hire H-1B workers if they are underpaid relative to similarly situated U.S. workers, and portray higher wages as an obstacle to migration. Accepting this argument leads to a race to the bottom in terms of labor standards and excuses the co-optation of the immigration system in order to pad corporate profits. Adequate labor standards are never a barrier to migration—instead, they are a prerequisite to fair treatment for the migrant workers who are recruited by employers into the U.S. labor market and similarly situated U.S. workers.
Employer groups have also failed to provide any evidence for the claim that would suggest that higher wages for H-1B workers will lead to fewer H-1B visas being issued. In fact, the available evidence suggests that is not the case. While there are 85,000 visas available for H-1B workers in the private sector every year, the annexed report shows that in 2019, there were over 300,000 H-1B jobs certified on LCAs at prevailing wage levels 3 and 4—the 50th and 67th wage percentiles, respectively, under the previous wage rule. Those applications suggest that there are more than enough H-1B jobs that employers seek to fill at wage rates that are at least as high as the local median wage; over three times as many as the annual H-1B visa cap. Therefore, raising H-1B wage levels so that they adequately reflect market wage rates will not undermine the program, but enhance it so that it requires fair pay and incentivizes recruitment of higher-skilled migrant workers, rather than workers who will fill entry level positions for low pay.
DOL must put measures in place that would prevent employer misclassification of H-1B workers at the wrong wage levels
As noted earlier, the IFR requires that minimum H-1B salaries are set at more realistic wage rates that reflect the local market rates for H-1B jobs. While each 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 DOL does not verify that a prevailing wage is appropriate unless a lawsuit or a complaint is filed by a worker. 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 visa status and ability to remain in the United States. I am unaware of any cases in which DOL has investigated an LCA-stage misclassification of an H-1B wage level,13 but there have been reports of, for example, H-1B employers receiving approval for LCAs that certify they will pay employees at the same prevailing wage level despite having job titles that clearly warrant different wage levels.
A well-known firm received approval for two different LCAs at the same wage level (Level 2) even though one LCA had the job title Senior Software Engineer and the other had the job title Software Engineer.14 The firm, a major employer of H-1B workers, is not accounting for differences in skill levels as evident from its own job titles when selecting the LCA wage level. Both engineers and senior engineers are receiving the exact same salary and wage level, and they are approved by DOL with zero scrutiny. Using the DOL Prevailing Wage Determination Policy Guidance, the LCAs in this case should be instantly flagged by identifying keywords like senior, head, chief, and lead within job titles, and should be checked to determine if the prevailing wage levels are appropriate. This example points to a larger need for DOL to create a more robust compliance system to ensure that employers do not misclassify workers at inappropriate wage levels.
As a result, the H-1B application and petition process should be updated so that DOL reviews the qualifications of individual workers before United States Citizenship and Immigration Services (USCIS), within the Department of Homeland Security, approves an H-1B petition, to ensure that wage levels match up with the age, education, and experience of H-1B workers. While USCIS currently performs this role to some extent, USCIS adjudicators lack expertise in wage and hour issues and do not have the same mandate to protect labor standards as DOL staff. Therefore, these functions should be undertaken by the proper agency. DOL and USCIS already have a mandate to cooperate on H-1B applications and enforcement; a memorandum of understanding between the Secretaries of Homeland Security and Labor could detail a process where DOL plays a prominent role in ensuring that H-1B workers are classified at the appropriate wage levels. Published guidance from DOL on H-1B skill levels that is more detailed, clearer, and more realistic, would also be helpful for everyone involved—employers and adjudicators alike.
To avoid harming migrant workers, DOL should explore ways to phase in the IFR’s new wage levels for current H-1B, H-1B1, and E-3 workers and applications for permanent labor certification for any nonimmigrant workers who were already employed in the United States before the IFR came into effect—in the meantime, the new wage levels should not apply to them
While a significant share of the current H-1B workforce of nearly 600,000 have likely been underpaid since their arrival in the United States and deserve a raise, the IFR’s new wage levels should nevertheless not immediately be applicable to the current workforce of H-1B, H-1B1, and EB-3 workers, because of the potential to discourage renewals and petitions for lawful permanent residence—which will ultimately harm the migrant workers the rule should protect.
The workers with temporary work visas and employers already in an employment arrangement before the IFR took effect contracted under one set of rules and expectations, and it is reasonable to refrain from changing those terms and conditions of employment on them now. While an ideal outcome would be for H-1B employers to voluntarily raise the wages of their current H-1B employees in accordance with the new wage levels set in the IFR, in reality, some employers are likely to balk at higher wages for their workers, leading them to decide not to renew the visas of their H-1B workers and to not petition for lawful permanent residence for them either. As a result, requiring the new wage rates midstream in this way could ultimately hurt the very H-1B workers the rule should benefit.
To balance the interest of employers and current H-1B, H-1B1, and E-3 workers, DOL should immediately work with USCIS to explore possible measures that would prevent harming nonimmigrant workers at the point of visa renewal, such as a phase-in process for higher wages, as well as positive incentives for employers who match the new wage requirements for their existing workforce, and additional worker protections for H-1B, H-1B1, and E-3 workers.
Thus, for now, the IFR’s new higher wage levels should therefore only apply to new workers with LCAs submitted for them after the IFR took effect. Likewise, the IFR’s new higher wage levels for permanent labor certifications for EB-2 and EB-3 green cards should only be required for new applications from abroad after the IFR took effect, and for H-1B, H-1B1, and E-3 workers who did not yet have an LCA submitted for them until after the IFR took effect.
DOL has the requisite legal authority to change the H-1B prevailing wage levels
As discussed in detail in the annexed report, DOL has the requisite legal authority to change the H-1B prevailing wage levels to an appropriate rate that protects wage standards and prevents adverse effects on U.S. workers in H-1B occupations. No analyst or commentator has credibly argued otherwise. For far too long, the H-1B wage levels have been set at an artificially low level that undercuts U.S. wage standards, therefore, it is reasonable for DOL to increase the minimum wage levels so that Level 1 is no lower than the local median wage.
If the new wage levels in the IFR are enjoined, DOL should reissue the rule as a proposed rule with an opportunity for notice and comment
Litigation has been filed that seeks to enjoin the IFR on procedural grounds, due to the fact that DOL issued the IFR claiming that there was an emergency need to issue the rule quickly. DOL claims that the emergency justified its decision to not propose the new wage levels first through a Notice of Proposed Rulemaking (NPRM) that would have allowed the public an opportunity to comment on them. It is possible that the IFR will be enjoined in the near future; if that does occur, DOL should reissue the regulation as an NPRM, allow the public to submit comments, consider the public’s input, and then issue a final rule with the same or higher wage percentiles for wage levels 1-4.
The Office of Foreign Labor Certification’s database sometimes generates OES wage rates that are demonstrably too low
Even with the new wage rates required by the IFR, some results for prevailing wages generated by DOL’s Office of Foreign Labor Certification (OFLC)—based on OES data and which are found at the FLC Data Center website—reflect wages that are demonstrably too low to be credible according to other reliable sources of wage data
For example, the FLC Data Center returns a Level 1 wage of $10.69 per hour or $22,235 per year for Electrical Engineers (SOC: 17-2071) in the College Station-Bryan, Texas (Area Code: 17780).15 Entry level salaries for Electrical Engineers are $69,000 per year according to the National Science Foundation’s (NSF) survey of recent college graduates; therefore, a wage of $10.69 per hour is obviously inaccurate and too low.16 Even the Level 2 wage of $25.77 or $53,602 is obviously too low.
Such low wage results can be found in other occupations and geographies. For example, a Software Developers – Applications (SOC: 15-1132) Level 1 wage in Eastern Oregon yields a wage of $17.61 hour or $36,629 year.17 This compares to the NSF survey that finds a median wage of recent graduates with bachelor’s degrees in Computer Science is $70,000.18
These inaccuracies need to be corrected to meet the intent of the programs. DOL should conduct a systematic review of major H-1B occupations to ensure that the OES does not create absurd results that are not in line with other credible sources of salary information like the NSF’s survey of recent college graduates.
DOL has failed to clear up confusion about OFLC’s prevailing wage results that do not generate four wage levels
There is widespread confusion—as evidenced by discussion in the media, among H-1B employers, and detailed in legal complaints filed seeking to enjoin the IFR—with respect to certain FLC Data Center wage search results for wage levels based on OES data.
Some FLC Data Center OES wage searches—such as this one for Software Developers, Applications, in the San Francisco-Oakland-Hayward region—return the following message:
“Leveled wages cannot be provided in Area 41860 for the occupation code 15-1132 due to limitations in the OES data. Employer provided surveys may be considered under the appropriate regulation, unless the provision of a survey is not permitted. The wage data may be at least: $100.00 hour, $208,000 year.”19
In this example of an FLC Data Center result that does not include wage rates at each of the four wage levels, the mean (i.e. average) wage for the occupation and area is nevertheless reported ($69.83 per hour – $145,246 per year).
News organizations and commentators on immigration have been reporting that the OFLC-generated OES wage search results such as these are defaulting to set the prevailing wage at $100.00 per hour or $208,000 per year for the occupation and local area. This appears to be a misreading of the results. It is not clear what the prevailing wage should be in such instances, but neither is it obvious that $100.00 per hour or $208,000 year is the established and required prevailing wage rate.
DOL should therefore act quickly to clarify what the appropriate action is for employers to take in these circumstances. The IFR’s FAQ Rounds 1 and 2 provided by the OFLC do not clear up this confusion whatsoever.20 Is the employer required to use an alternative method to the OFLC-generated OES wage rates in these cases? Or is the employer required to use the mean wage generated, or pay the H-1B, H-1B1, or E-3 worker $100.00 per hour/$208,000 per year? Or can the employer choose between them?
DOL must provide more clarity about alternative sources of wage data, including private wage surveys, to set H-1B prevailing wages, and inform the public about their impact on H-1B wage rates
Under the main prevailing wage regulation language at 20 C.F.R. §655.731, an employer has a number of options at their disposal to determine a prevailing wage for an LCA. In other words, the OES wage levels are just one of the available options. The employer may use one of the following sources to establish a prevailing wage: the “actual wage,” defined as “the wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question;” the OES wage, the wage set in an applicable Collective Bargaining Agreement, an applicable wage set by the Davis-Bacon Act or McNamara-O’Hara Service Contract Act, an Office of Foreign Labor Certification National Processing Center prevailing wage determination, or a wage set by an independent authoritative source or another legitimate source of wage data.
Therefore, employers do not need to use the OFLC’s OES data to determine a prevailing wage for an LCA. The IFR corrects the longstanding problems in how the prevailing wage was determined using the OFLC-generated OES wage rates, but it remains silent on an employer using an independent authoritative source or another legitimate source of wage data, which include private wage surveys accepted by DOL. Standards for such alternative sources of wage data are described in 20 CFR § 655.731, but it remains unclear how such sources compare to OFLC-generated OES prevailing wages. Table 1 in the annexed report shows that in 2019, at least 9% of all certified wages for H-1B positions on LCAs were set by a private wage survey or other source accepted by the OFLC as legitimate.
In order to promote transparency and comport with the statutory requirement that H-1B employers “will provide working conditions for [H-1B workers] that will not adversely affect the working conditions of workers similarly employed,”21 DOL should conduct a study to benchmark the use of alternative wage data and especially private wage surveys against the OFLC-generated OES prevailing wages, to identify whether there are any systematic biases in such sources. If such biases are found, DOL should propose new rules to ensure that the alternative wage sources are not undermining U.S. wage standards.
The recent history of the use of private wage surveys to set wages in the H-2B visa program—a temporary work visa program for jobs outside of agriculture including in landscaping, forestry, hospitality, and construction—is instructive and should inform DOL’s review of wage surveys and other sources of wage data for setting H-1B wages. The evidence is clear in the H-2B context that when employers use private wages surveys, they primarily use them to pay lower wages than would otherwise be required.
In 2013 when DOL raised the minimum H-2B prevailing wage from the 17th wage percentile to the mean wage for the occupation and local area, H-2B employers immediately and en masse, shifted their business model to use private wage surveys to set H-2B wage rates at below-average wage rates. Evidence revealed in federal litigation clearly suggests that the shift to the use of private wage surveys was a systematic response to higher wage rates, and one that was clearly successful. Specifically, in the nine months beginning soon after the H-2B wage rule was updated—between July 1, 2013, and March 31, 2014—employers increased their submissions of private wage surveys for H-2B prevailing wage determinations by 3,182%, as compared with the 12 months leading up to the federal court decision that invalidated the previous H-2B wage rule. In 21.1% of those prevailing wage determinations set by private wage surveys, the certified H-2B wage was lower than the previous prevailing wage system where the Level 1 H-2B prevailing wage was set at the 17th percentile wage by occupation and local area, according to OFLC-generated OES wage survey data, and 94.4% of the determinations were for a wage that was lower than the Level 2 wage, at the 34th percentile.22 Despite the fact that the H-2B prevailing wage has been set at the local average wage and DOL restricted the use of private wage surveys in 2015, they are still commonly used and successful at lowering wages for H-2B workers. One clear example of this which has been detailed, is a group of H-2B workers employed as crabpickers in Maryland—they earned roughly 25% less per hour than they should have been paid according to the local corresponding OES wage.23
The H-1B visa program is the largest temporary work visa program in the United States and an important pathway into the U.S. labor market for skilled migrants from around the world—but a pathway that has serious deficiencies when it comes to the labor rights of migrant workers and preserving U.S. labor standards. By issuing this IFR, DOL has taken an important first step towards reversing decades of artificially depressed wage rates for H-1B workers. But as these comments suggest, more should be done to improve the effectiveness of the updated prevailing wage rates and safeguards must be put in place so that H-1B workers are not penalized and stripped of the opportunity to eventually become lawful permanent residents.
Director of Immigration Law and Policy Research
Economic Policy Institute
1. Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.
2. Tweet from Senator Richard Durbin, October 6, 2020, 4:35 p.m.
3. Dave Jamieson, “Trump is hoping to deliver a parting gift to the agriculture lobby: an effective wage cut for farmworkers,” Huffington Post, November 9, 2020.
4. U.S. Bureau of Labor Statistics, “15-0000 Computer and Mathematical Occupations (Major Group),” Occupational Employment and Wages, May 2019, Occupational Employment Statistics, U.S. Department of Labor.
5. See, for example, “Techsploitation,” Reveal News, The Center for Investigative Reporting, and Farah Stockman, “Teacher Trafficking: The Strange Saga of Filipino Workers, American Schools, and H-1B Visas,” Boston Globe, June 12, 2013.
6. Christopher Lapinig, “How U.S. Immigration Law Enables Modern Slavery,” The Atlantic, June 7, 2017.
7. Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.
8. See for example, Senator Richard Durbin, “How American Jobs are Outsourced,” YouTube.com video, April 16, 2016.
9. See for example, Stef Kight, “U.S. companies are forcing workers to train their own foreign replacements,” Axios, December 29, 2019; Julia Preston, “Pink Slips at Disney. But First, Training Foreign Replacements,” New York Times, June 3, 2015; Julia Preston, “Toys ‘R’ Us Brings Temporary Foreign Workers to U.S. to Move Jobs Overseas,” New York Times, September 29, 2015; Michael Hiltzik, “How the University of California Exploited a Visa Loophole to Move Tech Jobs to India,” Los Angeles Times, January 6, 2017; Patrick Thibodeau, “Southern California Edison IT Workers ‘Beyond Furious’ over H-1B Replacements,” Computerworld, February 5, 2015.
10. Julia Preston, “Large Companies Game H-1B Visa Program, Costing the U.S. Jobs,” New York Times, November 10, 2015.
11. David Weil, The Fissured Workplace: How Work Became So Bad for So Many and What Can Be Done to Improve It, Harvard, 2014.
12. A number of studies show a wage penalty for subcontracted/outsourced workers. For example, see Arindrajit Dube and Ethan Kaplan, “Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards,” Cornell University ILR Review. January 1, 2010); Deborah Goldschmidt and Johannes Schmieder, “The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure,” The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), 2017, pages 1165-1217; Andres Drenik, Simon Jäger, Pascuel Plotkin, and Benjamin Schoefer “Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data,” Econometrics Laboratory, University of California, Berkeley, September 2020.
13. See further discussion in the annexed report.
14. Ethan Baron, “H-1B: Uber snatches up more foreign-worker visas as it lays off hundreds of employees,” Mercury News, October 17, 2019.
15. Link to OFLC OES result: https://www.flcdatacenter.com/OesQuickResults.aspx?code=17-2071&area=17780&year=21&source=3
16. National Science Foundation, National Center for Science and Engineering Statistics, NSF-19-304, Table 9-13, Employment status and median salary of recent science, engineering, and health bachelor’s degree recipients from U.S. educational institutions, by field of bachelor’s degree, sex, race, ethnicity, and disability status: 2017.
17. See FLC Data Center result at: https://www.flcdatacenter.com/OesQuickResults.aspx?code=15-1132&area=4100008&year=21&source=3
18. National Science Foundation, National Center for Science and Engineering Statistics, NSF-19-304, Table 9-13, Employment status and median salary of recent science, engineering, and health bachelor’s degree recipients from U.S. educational institutions, by field of bachelor’s degree, sex, race, ethnicity, and disability status: 2017.
19. See FLC data center result at: https://www.flcdatacenter.com/OesQuickResults.aspx?code=15-1132&area=41860&year=21&source=3
20. See OFLC FAQs at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/H-1B-Prevailing-Wage-IFR-FAQs-20201008.pdf and https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/H-1B-Wage-Protection-FAQ-Round-2-10-29-20.pdf
21. 8 U.S.C. 1182 (n)(1)(A)(i)(II).
22. See discussion of the 2013 Interim Final Rule setting the H-2B prevailing wage methodology in Daniel Costa, The H-2B temporary foreign worker program: For labor shortages or cheap, temporary labor? Economic Policy Institute, January 19, 2016.
23. Daniel Costa, “H-2B crabpickers are so important to the Maryland seafood industry that they get paid $3 less per hour than the state or local average wage,” Working Economics (Economic Policy Institute blog), May 26, 2017.