Forbes Article Makes Mountain Out of an H-1B Molehill

By David North on November 4, 2020

An article in Forbes Magazine carries this alarming headline: "Flaw In DOL Rule Sets H-1B Visa Salaries at $208,000 a Year".

The piece was written by Stuart Anderson, long a devotee of foreign worker programs.

The headline (perhaps not the handiwork of Anderson) seems to suggest that all H-1Bs must be paid at this rate. That is not the case; far from it.

If you read the story carefully, you will find that the default $208,000 a year rate applies to only 4 percent of the jobs and there is a reasonable way for an employer to avoid that wage level if he feels it to be excessive (and many would). Anderson barely mentions the narrowness of what he sees as a problem, and then overstates the cost of the fix.

The new regulations, in an admittedly complex manner, do call for some long overdue increases in salaries for H-1B workers, a move that may cause some current users of these high-tech workers to turn to citizen or green card workers. We explained in two previous postings just how the new interpretation of the "prevailing wage" in the H-1B program will work (see here and here).

In summary, the Bureau of Labor Statistics conducts numerous wage surveys and produces data for specific occupations in specific places and these results are used to set prevailing wages for the H-1B program; in some cases, where BLS has no data to offer on a particular occupation in a particular place, employers may use existing surveys or buy new surveys to set a wage rate. If neither the public survey nor a private survey is offered by the employer, some wage must be set, and it is in these relatively rare situations that the default rate is $208,000 a year, or $100 an hour.

Yes, there has to be a default rate on the books, but this presumably rarely is imposed in practice because the employer can always secure a private survey — this is, to be sure, a one-time cost, but would only be a fraction of the year-after-year cost of the $208,000. Another option for the employer, according to Professor Ron Hira of Howard University, is to ask the DoL to conduct a prevailing wage survey.

The default wage rate would be a factor only in relatively rare situations, where H-1Bs are not typically used. Let's say that the employer wants to hire an alien who is a PhD demographer and who will be assigned to a job in the Alaskan panhandle; BLS, understandably has no data on that occupation in that place, so the alternative solutions come into play.

I think it was a little ham-handed of the Department to use $100 an hour as its fall-back wage, simply on the grounds that it leads to attacks like that made by Anderson. It could have created a default formula that related, say, to 150 percent of the national prevailing wage for a specific occupation. That formula would push employers into using private wage surveys or asking DoL to conduct a survey without the negative impact of big, round numbers.

In this article by Anderson and in other, earlier ones, he refers to findings of the National Foundation for American Policy as if it were distant from him, such as a reference to the work of the Brookings Institution or the Congressional Budget Office. This entity, with its grandiose title, is lodged in an office building a few miles from my house in Arlington, Va. Its executive director is one Stuart Anderson.