Critique of H-1B Visa Program Stirs Controversy

Since President Trump took office on January 20, 2025, the tech industry has seen layoffs affecting hundreds of thousands of white-collar workers. Meanwhile, major companies continue to argue that they are facing significant labor shortages, which they claim necessitates increased access to the H-1B visa program.

This situation has led to rising skepticism about the H-1B system. A growing number of Americans are questioning whether the program genuinely addresses labor shortages or if it is being used by companies to reduce costs and undermine domestic workers.

This backlash has prompted the U.S. Department of Labor to propose a new regulation regarding H-1B wages, which is being presented as a much-needed reform aimed at better safeguarding American workers.

However, a closer examination of the proposed changes reveals that many of the same financial incentives that contribute to the system’s issues may remain intact. Central to this debate is the concept of the “prevailing wage,” which is the minimum salary that employers must pay H-1B workers. It might be reasonable to assume this means foreign workers should earn close to what Americans in similar positions make, but, unfortunately, that’s not the case.

The government categorizes wages into four levels. Historically, Level I wages were around the 17th percentile of the wage scale, meaning employers could legally pay H-1B workers less than what over 80% of domestic workers in the same field earned. The new proposal would raise Level I to about the 34th percentile, a seemingly helpful change until you realize that companies could still pay H-1B workers less than most of their counterparts.

Companies often claim H-1B workers possess specialized skills that are crucial for maintaining American competitiveness. If that’s true, one must wonder why employers are still permitted to fill such roles at below-market rates.

The current wage structure tends to encourage businesses to gravitate toward the lower-paying classifications. Since Level II wages are already set around the 34th percentile, many H-1B applications are filed at this level. Raising Level I to the same percentage might not effectively change employer practices; they may simply shift more roles to this newly adjusted Level I classification, continuing to pay below the market rate. The classifications may change, but the wage gaps persist.

Imagine the real-world implications: in San Jose, the average salary for a software engineer is about $140,000 annually. Under the proposed regulation, an employer could classify an H-1B worker as Level I and pay approximately $95,000, all while still telling Congress there aren’t enough qualified Americans available. That $45,000 difference isn’t just a minor detail; when applied across numerous positions, it signifies a huge structural subsidy undermining American wage standards.

The issue runs deeper than just numbers. Setting a wage floor below the median inherently ensures that H-1B workers will cost less than their American counterparts in similar roles. The proposed 34th percentile fails to represent a fair compromise; instead, it’s essentially a built-in discount dictated by federal regulations.

There’s also the matter of private wage surveys that can yield significantly lower estimates based on their design. While the federal government collects extensive wage data, businesses are still allowed to use these private surveys, which can lead to considerable labor-cost savings for larger companies hiring thousands of workers.

If the federal government truly aims to protect American workers while upholding a targeted high-skilled visa program, the solutions are quite straightforward. Level I wages should be closer to the local median—perhaps starting no lower than the 75th percentile for the relevant occupation in the area. Additionally, there should be tighter restrictions on private wage surveys that lower wage estimates artificially, and the Department of Labor should enhance enforcement with more rigorous audits.

The authority to implement these changes already exists; the real question is whether the department is willing to utilize that authority decisively enough to challenge the interests that benefit from the current system.

As we are now in 2026, countless Americans are paying attention. They were promised an immigration system that prioritizes domestic workers—not one that merely offers platitudes while quietly maintaining the same business advantages behind the scenes.