On March 29, U.S. Citizenship and Immigration Services (USCIS) announced it had received more electronic registrations for fiscal year 2023 H-1B “temporary” white-collar workers than the statutory cap. As a result of the surplus demand, the agency ran lotteries for the 85,000 H-1Bs subject to numerical limitation. While USCIS failed to disclose how many registrations it received or any information about who was selected to apply for these cap-subject H-1Bs, it is highly probable that most will go to alien workers at the two lowest prevailing wage levels. It didn’t have to be this way.
The H-1B temporary foreign worker program is highly popular, especially with Big Tech, because it allows employers to legally underpay the foreign workers compared to true market wages. By statute, employers are required to pay the higher of the “actual wage” or the “prevailing wage level” for the job based on the geographic area. The definition of “actual wage” has rendered it essentially meaningless so the prevailing wage level is controlling. Congress required there to be at least four prevailing wage levels but did not set them at particular percentiles. Instead, the law includes a lobbyist-written provision that provides a formula to create four wage levels if an existing survey only has two. Not so coincidentally, the survey at the time had two levels, thus creating the current standard of the 17th, 34th, 50th, and 67th percentiles as the respective wages levels.
As you can see, the first three wage levels are at, or below, the median wage, and the highest one is just slightly higher. Accordingly, by law, employers are allowed to underpay these foreign workers compared to what a true market wage would command. Because of this ability to keep payroll costs artificially low, employers for many years have requested more H-1Bs than the 85,000 cap set by Congress (20,000 of which are reserved for aliens' with a U.S. advanced degree).
Because employers apply at the same time for these H-1Bs, USCIS cannot properly denote the order in which the requests were received. Purely out of administrative convenience, USCIS utilizes a lottery to allocate the cap-subject H-1Bs. The result is that most of the H-1B visas are issued to foreign workers at the two lowest prevailing wage levels.
Toward the end of the Trump administration, I oversaw a rulemaking that would have made H-1Bs more merit-based. Under this rule, USCIS would revise the H-1B selection process so the agency would first select registrations based on the highest occupational employment statistics (OES) prevailing wage level that the proffered wage equals or exceeds for the relevant standard occupational classification (SOC) code and area(s) of intended employment. In other words, H-1B visas would be allocated based on salaries offered rather than at random. Notwithstanding the substantive flaws of the H-1B program, this revised selection process was truly merit-based and ensured that lower-skilled foreign workers did not take cap numbers away from the highest-skilled.
The final rule was published before President Biden’s inauguration but was not set to go into effect until mid-March 2021 under the requirements of the Administrative Procedure Act (APA). Upon taking office, the Biden administration delayed the effective date of the rule until December 31, 2021, with the sole justification being that USCIS needed more time to properly implement the rule. This made sense as I had heard misgivings from the career leadership responsible for overseeing H-1B adjudications and it is possible we would have delayed the effective date if the Trump administration had continued.
Throughout most of 2021, the Biden administration defended the rule in court against a challenge brought by the Chamber of Commerce. This also made sense to me because the Biden campaign essentially endorsed the rule in its platform calling for a more merit-based immigration system. Then, abruptly, they stopped defending the rule, allowing a judge to kill it by judicial decree instead of adhering to the notice and comment requirements under the APA.
Reading the tea leaves here, it is apparent that the H-1B merit-based selection rule met its demise for purely political reasons. It is almost like the Biden political team spiked it for the sake of removing a “Trump rule” even though the policy neatly aligned with the president’s campaign. As a result, the H-1B program will once again be inefficiently administered by allowing the lowest qualified foreign workers to capture the majority of the visas. USCIS does not appear to be working on a different H-1B rule so perhaps the merit-based immigration platform of the Biden campaign was another hollow promise.