[Federal Register Volume 86, Number 9 (Thursday, January 14, 2021)]
[Rules and Regulations]
[Pages 3608-3674]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00218]
[[Page 3607]]
Vol. 86
Thursday,
No. 9
January 14, 2021
Part IV
Department of Labor
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Employment and Training Administration
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20 CFR Parts 655 and 656
Strengthening Wage Protections for the Temporary and Permanent
Employment of Certain Aliens in the United States; Final Rule
Federal Register / Vol. 86 , No. 9 / Thursday, January 14, 2021 /
Rules and Regulations
[[Page 3608]]
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Parts 655 and 656
[DOL Docket No. ETA-2020-0006]
RIN 1205-AC00
Strengthening Wage Protections for the Temporary and Permanent
Employment of Certain Aliens in the United States
ACTION: Final rule.
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SUMMARY: In this final rule, the Department of Labor (the Department or
DOL) adopts with changes an Interim Final Rule (IFR) that amended
Employment and Training Administration (ETA) regulations governing the
prevailing wages for employment opportunities that United States (U.S.)
employers seek to fill with foreign workers on a permanent or temporary
basis through certain employment-based immigrant visas or through H-1B,
H-1B1, or E-3 nonimmigrant visas. Specifically, the IFR amended the
Department's regulations governing permanent (PERM) labor
certifications and Labor Condition Applications (LCAs) to incorporate
changes to the computation of wage levels under the Department's four-
tiered wage structure based on the Occupational Employment Statistics
(OES) wage survey administered by the Bureau of Labor Statistics (BLS).
The primary purpose of these changes is to update the computation of
prevailing wage levels under the existing four-tier wage structure to
better reflect the actual wages earned by U.S. workers similarly
employed to foreign workers. This final rule will allow the Department
to more effectively ensure the employment of immigrant and nonimmigrant
workers admitted or otherwise provided status through the above-
referenced programs does not adversely affect the wages and job
opportunities of U.S. workers.
DATES: This final rule is effective March 15, 2021.
FOR FURTHER INFORMATION CONTACT: For further information, contact Brian
D. Pasternak, Administrator, Office of Foreign Labor Certification,
Employment and Training Administration, Department of Labor, 200
Constitution Avenue NW, Room N-5311, Washington, DC 20210, telephone:
(202) 693-8200 (this is not a toll-free number). Individuals with
hearing or speech impairments may access the telephone numbers above
via TTY/TDD by calling the toll-free Federal Information Relay Service
at 1 (877) 889-5627.
SUPPLEMENTARY INFORMATION:
I. Background
The Immigration and Nationality Act (INA or Act), as amended,
assigns responsibilities to the Secretary of Labor (Secretary) relating
to the entry and employment of certain categories of immigrants and
nonimmigrants.\1\ This final rule concerns the calculation of the
prevailing wage for job opportunities in the PERM, H-1B, H-1B1, and E-3
programs for which employers seek labor certification from the
Secretary.\2\
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\1\ There are two general categories of U.S. visas: Immigrant
and nonimmigrant. Immigrant visas are issued to foreign nationals
who intend to live permanently in the U.S. Nonimmigrant visas are
for foreign nationals who enter the U.S. on a temporary basis--for
tourism, medical treatment, business, temporary work, study, or
other reasons.
\2\ 8 U.S.C. 1101(a)(15)(E)(iii), (H)(i)(b), (H)(i)(b1).
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A. Permanent Labor Certifications
The INA prohibits the admission of certain employment-based
immigrants unless the Secretary of Labor has determined and certified
to the Secretary of State and the Attorney General that (1) there are
not sufficient workers who are able, willing, qualified and available
at the time of application for a visa and admission to the United
States and at the place where the alien is to perform such skilled or
unskilled labor, and (2) the employment of such alien will not
adversely affect the wages and working conditions of workers in the
United States similarly employed.\3\
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\3\ 8 U.S.C. 1182(a)(5)(A). Although this provision references
the Attorney General, the authority to adjudicate immigrant visa
petitions was transferred to the Director of the Bureau of
Citizenship and Immigration Services (an agency within the
Department of Homeland Security) by the Homeland Security Act of
2002, Public Law 107-296, 451(b) (codified at 6 U.S.C. 271(b)).
Under 6 U.S.C. 557, references in federal law to any agency or
officer whose functions have been transferred to the Department of
Homeland Security shall be deemed to refer to the Secretary of
Homeland Security or other official or component to which the
functions were transferred.
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This ``labor certification'' requirement does not apply to all
employment-based immigrants. The INA provides for five ``preference''
categories or immigrant visa classes, only two of which--the second and
third preference employment categories (commonly called the EB-2 and
EB-3 immigrant visa classifications)--require a labor certification.\4\
An employer seeking to sponsor a foreign worker for an immigrant visa
under the EB-2 or EB-3 immigrant visa classifications generally must
file a visa petition with the Department of Homeland Security (DHS) on
the worker's behalf, which must include a labor certification from the
Secretary of Labor.\5\ Further, the Department of State (DOS) may not
issue a visa unless the Secretary of Labor has issued a labor
certification in conformity with the relevant provisions of the INA.\6\
If the Secretary determines both that there are not sufficient able,
willing, qualified, and available U.S. workers and that employment of
the foreign worker will not adversely affect the wages and working
conditions of similarly employed U.S. workers, the Secretary so
certifies to DHS and DOS by issuing a permanent labor certification. If
the Secretary cannot make one or both of the above findings, the
application for permanent employment certification is denied.
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\4\ See 8 U.S.C. 1153(b)(2), (3), 1182(a)(5)(D). Section
1153(b)(2) governs the EB-2 classification of immigrant work visas
granted to foreign workers who are either professionals holding
advanced degrees (master's degree or above) or foreign equivalents
of such degrees, or persons of ``exceptional ability'' in the
sciences, arts, or business. To gain entry in this category, the
foreign worker must have prearranged employment with a U.S. employer
that meets the requirements of labor certification, unless the work
he or she is seeking admission to perform is in the ``national
interest,'' such as to qualify for a waiver of the job offer (and
hence, the labor certification) requirement under 8 U.S.C.
1153(b)(2)(B). Section 1153(b)(3), governs the EB-3 classification
of immigrant work visas granted to foreign workers who are either
``skilled workers,'' ``professionals,'' or ``other'' (unskilled)
workers, as defined by the statute. To gain entry in this category,
the foreign worker must have prearranged employment with a U.S.
employer that meets the requirements of labor certification, without
exception.
\5\ 8 U.S.C. 1154(a)(1)(F), 1182(a)(5)(A) and (D).
\6\ 8 U.S.C. 1153(b)(2), (b)(3)(C), 1201(g).
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Under the INA, the EB-2 classification applies to individuals who
are ``members of the professions holding advanced degrees or their
equivalent or who because of their exceptional ability in the sciences,
arts, or business, will substantially benefit prospectively the
national economy, cultural or educational interests, or welfare of the
United States.'' \7\ United States Citizenship and Immigration Services
(USCIS) regulations, in turn, define an ``advanced degree'' as any
United States academic or professional degree or a foreign equivalent
degree above that of baccalaureate. A United States baccalaureate
degree or a foreign equivalent degree followed by at least five years
of progressive experience in the specialty shall be considered the
equivalent of a master's degree. If a doctoral degree customarily is
required by the specialty, the alien must have a United States
doctorate or a foreign equivalent degree.\8\ The regulation goes on to
define ``exceptional ability'' as ``a
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degree of expertise significantly above that ordinarily encountered in
the sciences, arts, or business.'' \9\
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\7\ 8 U.S.C. 1153(b)(2)(A).
\8\ 8 CFR 204.5(k)(2).
\9\ Id.
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The EB-3 program consists of three discrete classifications:
``skilled workers,'' defined as aliens who are ``capable . . . of
performing skilled labor (requiring at least two years training or
experience), not of a temporary or seasonal nature, for which qualified
workers are not available in the United States;'' ``professionals,''
defined as aliens ``who hold baccalaureate degrees and who are members
of the professions;'' and ``other workers,'' defined as aliens who are
``capable . . . of performing unskilled labor, not of a temporary or
seasonal nature, for which qualified workers are not available in the
United States.'' \10\
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\10\ 8 U.S.C. 1153(b)(3); 8 CFR 204.5(l).
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B. Labor Condition Applications
The Secretary must certify an LCA filed by an U.S. employer before
the employer may file a petition with DHS on behalf of a foreign worker
for H-1B, H-1B1, or E-3 nonimmigrant classification.\11\ The LCA
contains various attestations from the employer about the wages and
working conditions that it will provide for the foreign worker.\12\
Most importantly, for the purposes of this final rule, the INA requires
employers to pay H-1B workers the greater of ``the actual wage level
paid by the employer to all other individuals with similar experience
and qualifications for the specific employment in question,'' or the
``the prevailing wage level for the occupational classification in the
area of employment.'' \13\
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\11\ 8 U.S.C. 1101(a)(15)(E)(iii), (H)(i)(b), (H)(i)(b1); 8 CFR
214.2(h)(2)(i)(E).
\12\ See generally 8 U.S.C. 1182(n), (t); 20 CFR part 655,
subpart H.
\13\ 8 U.S.C. 1182(n)(1)(A).
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The H-1B program allows U.S. employers to employ foreign workers
temporarily in specialty occupations. ``Specialty occupation'' is
defined as an occupation that requires the theoretical and practical
application of a body of ``highly specialized knowledge,'' and a
bachelor's or higher degree in the specific specialty, or its
equivalent, as a minimum for entry into the occupation in the U.S.\14\
Similar to the H-1B visa classification, the H-1B1 and E-3 nonimmigrant
visa classifications also allow U.S. employers to temporarily employ
foreign workers in specialty occupations, except that these
classifications specifically apply to the nationals of certain
countries: The H-1B1 visa classification applies to foreign workers in
specialty occupations from Chile and Singapore,\15\ and the E-3 visa
classification applies to foreign workers in specialty occupations from
Australia.\16\
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\14\ See 8 U.S.C. 1101(a)(15)(H)(i)(b), 1184(i).
\15\ 8 U.S.C. 1101(a)(15)(H)(i)(b1).
\16\ 8 U.S.C. 1101(a)(15)(E)(iii).
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C. The Permanent Labor Certification Process
The Department's regulations at 20 CFR part 656 govern the labor
certification process and set forth the responsibilities of employers
who desire to employ, on a permanent basis, foreign nationals covered
by the INA's labor certification requirement.\17\ The Department
processes labor certification applications for employers seeking to
sponsor foreign workers for permanent employment under the EB-2 and EB-
3 immigrant visa preference categories. Aliens seeking admission or
adjustment of status under the EB-2 or EB-3 preference categories are
inadmissible ``unless the Secretary of Labor has determined and
certified . . . that--(I) there are not sufficient workers who are
able, willing, qualified . . . and available at the time of application
for a visa and admission to the United States and at the place where
the alien is to perform such skilled or unskilled labor, and (II) the
employment of such alien will not adversely affect the wages and
working conditions of workers in the United States similarly
employed.'' \18\
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\17\ The current regulations were issued through a final rule
implementing the streamlined permanent labor certification program
through revisions to 20 CFR part 656. The final rule was published
on December 27, 2004, and took effect on March 28, 2005. See Labor
Certification for the Permanent Employment of Aliens in the United
States; Implementation of New System, 69 FR 77326 (Dec. 27, 2004).
The Department published a final rule on May 17, 2007, to enhance
program integrity and reduce the incentives and opportunities for
fraud and abuse related to permanent labor certification, commonly
known as ``the fraud rule.'' Labor Certification for the Permanent
Employment of Aliens in the United States; Reducing the Incentives
and Opportunities for Fraud and Abuse and Enhancing Program
Integrity, 72 FR 27904 (May 17, 2007).
\18\ 8 U.S.C. 1182(a)(5)(A)(i).
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The Secretary makes this determination in the PERM programs by,
among other things, requiring the foreign worker's sponsoring employer
to recruit U.S. workers by offering a wage that equals or exceeds the
prevailing wage and to assure that the employer will pay the foreign
worker a wage equal to or exceeding the prevailing wage.\19\ Prior to
filing a labor certification application, the employer must obtain a
Prevailing Wage Determination (PWD) for its job opportunity from the
Office of Foreign Labor Certification's (OFLC) National Prevailing Wage
Center (NPWC).\20\ The standards and procedures governing the PWD
process in connection with the permanent labor certification program
are set forth in the Department's regulations at 20 CFR 656.40 and
656.41. If the job opportunity is covered by a collective bargaining
agreement (CBA) that was negotiated at arms-length between a union and
the employer, the wage rate set forth in the CBA agreement is
considered the prevailing wage for labor certification purposes.\21\ In
the absence of a prevailing wage rate derived from an applicable CBA,
the employer may elect to use an applicable wage determination under
the Davis-Bacon Act (DBA) or McNamara-O'Hara Service Contract Act
(SCA), or provide a wage survey that complies with the Department's
standards governing employer-provided wage data.\22\ In the absence of
any of the above sources, the NPWC will use the BLS OES survey to
determine the prevailing wage for the employer's job opportunity.\23\
After reviewing the employer's application, the NPWC will determine the
prevailing wage and specify the validity period, which may be no less
than 90 days and no more than one year from the determination date.
Employers must either file the labor certification application or begin
the recruitment process, required by the regulation, within the
validity period of the PWD issued by the NPWC.\24\
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\19\ 20 CFR 656.10(c)(1).
\20\ 20 CFR 656.15(b)(1), 656.40(a).
\21\ See 20 CFR 656.40(b)(1).
\22\ See 20 CFR 656.40(b), (g).
\23\ See 20 CFR 656.40(b)(2).
\24\ 20 CFR 656.40(c).
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Once the U.S. employer has received a PWD, the process for
obtaining a permanent labor certification generally begins with the
U.S. employer filing an Application for Permanent Employment
Certification, Form ETA-9089, with OFLC.\25\ As part of the standard
application process, the employer must describe, among other things,
the labor or services it needs performed; the wage it is offering to
pay for such labor or services and the actual minimum requirements of
the job opportunity; the geographic location(s) where the work is
expected to be performed; and the efforts it made to recruit qualified
and available U.S. workers. Additionally, the employer must attest to
the conditions listed in its labor certification application, including
that
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``[t]he offered wage equals or exceeds the prevailing wage determined
pursuant to [20 CFR 656.40 and 656.41] and the wage the employer will
pay to the alien to begin work will equal or exceed the prevailing wage
that is applicable at the time the alien begins work or from the time
the alien is admitted to take up the certified employment.'' \26\
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\25\ Applications for Schedule A occupations are eligible to
receive pre-certification and bypass the standard applications
review process. In those cases, employers file the appropriate
documentation directly with DHS. See 20 CFR 656.5, 656.15.
\26\ 20 CFR 656.10(c)(1).
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Through the requisite test of the labor market, the employer also
attests, at the time of filing the Form ETA-9089, that the job
opportunity has been and is clearly open to any U.S. worker and that
all U.S. workers who applied for the job opportunity were rejected for
lawful, job-related reasons. OFLC performs a review of the Form ETA-
9089 and may either grant or deny a permanent labor certification.
Where OFLC grants a permanent labor certification, the employer must
submit the certified Form ETA-9089 along with an Immigrant Petition for
Alien Worker (Form I-140 petition) to DHS. A permanent labor
certification is valid only for the job opportunity, employer, foreign
worker, and area of intended employment named on the Form ETA-9089 and
must be filed in support of a Form I-140 petition within 180 calendar
days of the date on which OFLC granted the certification.\27\
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\27\ 20 CFR 656.30(b)(1).
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D. The Temporary Labor Condition Application Process
The Department's regulations at 20 CFR part 655, subpart H, govern
the process for obtaining a certified LCA and set forth the
responsibilities of employers who desire to temporarily employ foreign
nationals in H-1B, H-1B1, and E-3 nonimmigrant classifications.
A prospective employer must attest on the LCA that (1) it is
offering to and will pay the nonimmigrant, during the period of
authorized employment, wages that are at least the actual wage level
paid by the employer to all other employees with similar experience and
qualifications for the specific employment in question, or the
prevailing wage level for the occupational classification in the area
of intended employment, whichever is greater (based on the best
information available at the time of filing the attestation); (2) it
will provide working conditions for the nonimmigrant worker that will
not adversely affect working conditions for similarly employed U.S.
workers; (3) there is no strike or lockout in the course of a labor
dispute in the occupational classification at the worksite; and (4) it
has provided notice of its filing of an LCA to its employee's
bargaining representative for the occupational classification affected
or, if there is no bargaining representative, it has provided notice to
its employees in the affected occupational classification by posting
the notice in a conspicuous location at the worksite or through other
means such as electronic notification.\28\
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\28\ 8 U.S.C. 1182(n)(1)(A)-(C), (t)(1)(A)-(C); 20 CFR
655.705(c)(1), 655.730(d).
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As relevant here, the prevailing wage must be determined as of the
time of the filing of the LCA.\29\ In contrast to the permanent labor
certification process, an employer is not required to obtain a PWD from
the NPWC.\30\ However, like the permanent labor certification process,
if there is an applicable CBA that was negotiated at arms-length
between a union and the employer that contains a wage rate applicable
to the occupation, the CBA must be used to determine the prevailing
wage.\31\ In the absence of an applicable CBA, an employer may base the
prevailing wage on one of several sources: A PWD from the NPWC; an
independent authoritative source that satisfies the requirements in 20
CFR 655.731(b)(3)(iii)(B); or another legitimate source of wage data
that satisfies the requirements in 20 CFR 655.731(b)(3)(iii)(C).\32\
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\29\ 20 CFR 655.731(a)(2).
\30\ Id.
\31\ Id.
\32\ 20 CFR 655.731(a)(2)(ii)(A) through (C).
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An employer may not file an LCA more than six months prior to the
beginning date of the period of intended employment. 20 CFR 655.730.
Unless the LCA is incomplete or obviously inaccurate, the Secretary
must certify it within seven working days of its filing.\33\ Once an
employer receives a certified LCA, it must file the Petition for
Nonimmigrant Worker, Form I-129 (``Form I-129 Petition'') with DHS if
seeking classification of the alien as an H-1B worker.\34\ Upon
petition, DHS then determines, among other things, whether the
employer's position qualifies as a specialty occupation and, if so,
whether the nonimmigrant worker is qualified for the position.
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\33\ 8 U.S.C. 1182(n)(1), (t)(2)(C); 20 CFR 655.740(a)(1).
\34\ For aliens seeking H-1B1 or E-3 classification, the alien
may apply directly to the State Department for a visa once the LCA
has been certified.
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II. Prevailing Wage Background
A. The Department's Prevailing Wage Determination Methodology
The Department has long relied on BLS OES data to establish
prevailing wage levels. The OES is a comprehensive, statistically valid
survey that, in many respects, is the best source of wage data
available for satisfying the Department's purposes in setting wages in
most immigrant and nonimmigrant programs. The OES wage survey is among
the largest continuous statistical survey programs of the Federal
Government. BLS produces the survey materials and selects the nonfarm
establishments to be surveyed using the list of establishments
maintained by State Workforce Agencies (SWAs) for unemployment
insurance purposes. The OES collects data from over one million
establishments. Salary levels based on geographic areas are available
at the national and State levels and for certain territories in which
statistical validity can be ascertained, including the District of
Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. Salary
information is also made available at the metropolitan and
nonmetropolitan area levels within a State. Wages for the OES survey
are straight-time, gross pay, exclusive of premium pay. Base rate,
cost-of-living allowances, guaranteed pay, hazardous duty pay,
incentive pay including commissions and production bonuses, tips, and
on-call pay are included. These features are unique to the OES survey,
which make it a valuable source for use in many of the Department's
foreign labor programs.\35\
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\35\ Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3463 (Jan. 19, 2011).
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The Department incorporated the wage component of the OES survey
into its prevailing wage guidance in 1997.\36\ At the time, the
Department divided OES wage data into two skill levels: A Level I wage
for ``beginning level employees'' and a Level II wage for ``fully
competent employees.'' Because the OES survey does not provide data
about skill differentials within Standard Occupational Classification
(SOC) codes, the Department established the entry and experienced skill
levels mathematically.\37\ Specifically, under an Memorandum of
Understanding (MOU), BLS computed a Level I wage calculated as the mean
of the lowest paid one-third of workers in a given occupation
(approximately the 17th percentile of the OES wage distribution) \38\
and a
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Level IV wage calculated as the mean wage of the highest paid upper
two-thirds of workers (approximately the 67th percentile).\39\ This
two-tier wage structure was based on the assumption that the mean wage
of the lowest paid one-third of the workers surveyed in each occupation
could provide a surrogate for the entry-level wage, but the Department
did not previously conduct any meaningful economic analysis to test its
validity, or otherwise explain how these levels were consistent with
the INA's wage provisions.\40\
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\36\ Prevailing Wage Policy for Nonagricultural Immigration
Programs, General Administration Letter No. 2-98 (GAL 2-98) (Oct.
31, 1997), available at https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=942.
\37\ GAL 2-98 at 5.
\38\ By way of clarification, the Department notes that, because
the old wage methodology took the mean of a portion of the OES wage
distribution, the precise wage it produced will not always fall at
17th percentile. Rather, the 17th percentile is the midpoint or
median of the distribution for which a mean was produced, and is
therefore only an approximation for what the actual wage rates would
be. The same is true of the old wage methodology for calculating the
Level IV wage, which used the mean of the upper two thirds of the
OES distribution, the midpoint of which is the 67th percentile.
\39\ Intra-Agency Memorandum of Understanding executed by Mr.
John R. Beverly, III, Director, U.S. Employment Service, ETA, and
Ms. Katharine Newman, Chief, Division of Financial Planning and
Management, Office of Administration, BLS (Sept. 30, 1998).
\40\ GAL 2-98, available at https://oui.doleta.gov/dmstree/gal/gal98/gal_02-98.htm. See also Wage Methodology for the Temporary
Non-agricultural Employment H-2B Program, 76FR 3452, 3453 (Jan. 19,
2011); Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, Part 2, 78 FR 24047, 24051 (Apr. 24, 2013).
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In order to implement the INA's four-tier prevailing wage
provision, the Department published comprehensive Prevailing Wage
Determination Policy Guidance for Nonagricultural Immigration Programs
(2005 Guidance), which expanded the two-tier OES wage level system to
provide four ``skill levels'': Level I ``entry level,'' Level II
``qualified,'' Level III ``experienced,'' and Level IV ``fully
competent.'' \41\ The Department applied the formula in the INA to its
two existing wage levels to set Levels I through IV, respectively, at
approximately the 17th percentile, the 34th percentile, the 50th
percentile, and the 67th percentile.\42\ In 2010, the Department
centralized the prevailing wage determination process for
nonagricultural labor certification programs within OFLC's NPWC.\43\ In
preparation for this transition, the Department issued new Prevailing
Wage Determination Policy Guidance for Nonagricultural Immigration
Programs (2009 Guidance).\44\ This guidance currently governs OFLC's
PWD process for the PERM, H-1B, H-1B1, and E-3 visa programs and will
continue to govern OFLC's PWD process for these programs. No rulemaking
to codify the old wage levels was ever undertaken, nor the public given
an opportunity to comment on them.
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\41\ ETA Prevailing Wage Determination Policy Guidance,
Nonagricultural Immigration Programs 7 (May 2005), available at
https://www.foreignlaborcert.doleta.gov/pdf/policy_nonag_progs.pdf;
See also 85 FR at 63874--63876 for a discussion of the development
of the prevailing wage determination process.
\42\ Id. at 1.
\43\ See Labor Certification Process and Enforcement for
Temporary Employment in Occupations Other Than Agriculture or
Registered Nursing in the United States (H-2B Workers), and Other
Technical Changes, 73 FR 78020 (Dec. 19, 2008); Prevailing Wage
Determinations for Use in the H-1B, H-1B1 (Chile/Singapore), H-1C,
H-2B, E-3 (Australia), and Permanent Labor Certification Programs;
Prevailing Wage Determinations for Use in the Commonwealth of the
Northern Mariana Islands, 74 FR 63796 (Dec. 4, 2009).
\44\ Employment and Training Administration; Prevailing Wage
Determination Policy Guidance, Nonagricultural Immigration Programs
(Revised Nov. 2009) (hereinafter 2009 Guidance), available at
https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/NPWHC_Guidance_Revised_11_2009.pdf.
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When assigning a prevailing wage using OES data, the NPWC examines
the nature of the job offer, the area of intended employment, and job
duties for workers that are similarly employed.\45\ In particular, the
NPWC uses the SOC taxonomy to classify the employer's job opportunity
into an occupation by comparing the employer's job description, title,
and requirements to occupational information provided in sources like
the Department's Occupational Information Network (O*Net).\46\ Once the
NPWC identifies the applicable SOC code, it determines the appropriate
wage level for the job opportunity by comparing the employer's job
description, title, and requirements to those normally required for the
occupation, as reported in sources like O*Net. This determination
involves a step-by-step process in which each job opportunity begins at
Level I (entry level) and may progress to Level II (experienced), Level
III (qualified), or Level IV (fully competent) based on the NPWC's
comparison of the job opportunity to occupational requirements,
including the education, training, experience, skills, knowledge, and
tasks required in the occupation.\47\ After determining the prevailing
wage level, the NPWC issues a PWD to the employer using the OES wage
for that level in the occupation and area of intended employment.
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\45\ Id. at 1.
\46\ Id. at 1-7; see also Occupational Information Network,
available at http://online.onetcenter.org. O*Net provides
information on skills, abilities, knowledge, tasks, work activities,
and specific vocational preparation levels associated with
occupations and stratifies occupations based on shared skill,
education, and training indicators.
\47\ 2009 Guidance at 6.
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B. The Interim Final Rule
On October 8, 2020, the Department published an Interim Final Rule
(IFR) in the Federal Register, 85 FR 63872, revising the methodology
the Department uses to determine prevailing wage levels for the H-1B,
H-1B1, E-3, and PERM programs. As explained in the IFR, the Department
concluded the existing wage levels were not consistent with the
relevant statutory requirement that a government survey employed to
determine the prevailing wage provide four wage levels commensurate
with experience, education, and level of supervision.\48\ The
Department also determined that the existing wage levels were
artificially low and provided an opportunity for employers to hire and
retain foreign workers at wages well below what their U.S. counterparts
earn, creating an incentive to prefer foreign workers to U.S. workers,
an incentive that is at odds with the statutory scheme and causes
downward pressure on the wages of the domestic workforce. Therefore,
the Department revised wage provisions at 20 CFR 655.731 and 656.40 to
adjust the existing wage levels to ensure the wage levels reflect the
wages paid to U.S. workers with similar experience, education, and
responsibility to those possessed by similarly employed foreign
workers.
---------------------------------------------------------------------------
\48\ See 8 U.S.C. 1182(p)(4).
---------------------------------------------------------------------------
In particular, the IFR amended paragraphs (a), (b)(2), and (b)(3)
of 20 CFR 656.40, codifying the four-tier wage practice and revising
the wage level computation methodology. A new Sec. 656.40(b)(2)(i)
specified the four new levels (Levels I through IV) to be applied.
Paragraph (b)(2)(i)(A) explained the Level I wage would be calculated
as the mean of the fifth decile of the wage distribution for the most
specific occupation and geographic area available, rather than
calculated as the mean of the bottom third of the OES wage
distribution, as was the case prior to the IFR. Paragraph (b)(2)(i)(D)
provided that the Level IV wage would be calculated as the mean of the
upper decile of the wage distribution for the most specific occupation
and geographic area available, rather than using the mean of the upper
two-thirds of the distribution. As a result of these changes, the wage
levels were increased, respectively, from approximately the 17th, 34th,
50th, and 67th percentiles to approximately the 45th, 62nd, 78th, and
95th percentiles. The IFR also made minor technical and clarifying
amendments to sections 656.40 and 655.731, which the Department has
adopted in this final rule with only a minor change to the location of
one of the amended provisions, as explained further in section IV
below.
[[Page 3612]]
The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq.,
authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' \49\ The good cause exception for forgoing notice and
comment rulemaking ``excuses notice and comment in emergency
situations, or where delay could result in serious harm.'' \50\ The
Department published the IFR with an immediate effective date,
bypassing notice and comment due to exigent circumstances created by
the coronavirus public health emergency that threatened immediate harm
to the wages and job prospects of U.S. workers, as well as the need to
avoid evasion by employers of the new wage rates.\51\ However, the
Department requested public input on all aspects of the IFR during a
post-promulgation 30-day public comment period and explained it would
review and consider these comments before issuing a final rule. The
public comment period ended on November 9, 2020, and resulted in
receipt of more than two thousand comments. Most of the comments were
not relevant and/or not substantive, but 148 relevant and substantive
comments were received and are discussed further below.
---------------------------------------------------------------------------
\49\ 5 U.S.C. 553(b)(B).
\50\ Jifry v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004).
\51\ See 85 FR 63872, 63898-63902 (Oct. 8, 2020).
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C. Litigation
Four groups of plaintiffs separately challenged the Department's
IFR. These groups of plaintiffs, which included academic institutions,
businesses, and trade associations, claimed the Department lacked good
cause to issue the IFR without undergoing notice and comment procedures
under the APA and that the IFR was arbitrary and capricious and in
violation of the INA. These plaintiffs further requested that the IFR
be enjoined and the Department prevented from implementing it. In three
of the four cases, the district court approved the parties' stipulation
to convert plaintiffs' preliminary injunction motion to a motion for
partial summary judgment on the notice and comment claim. In Chamber of
Commerce, the district court issued a decision on December 1, 2020,
granting plaintiffs' motion for partial summary judgment on their
notice and comment claim and setting aside the Department's IFR.\52\ In
Purdue University and Stellar IT (which were consolidated), the
district court issued a decision on December 14, 2020, granting partial
summary judgment to the plaintiffs on the basis that the Department
lacked good cause to issue the IFR, and ordered the Department to re-
issue prevailing wage determinations issued under the IFR on a mutually
agreeable schedule.\53\ In the fourth case, ITServe Alliance, the
district court issued a preliminary injunction on December 3, 2020,
prohibiting the Department from enforcing the IFR against the
plaintiffs in that case.\54\ In discussing plaintiffs' likelihood of
success on the merits in that case, the court limited its analysis to
plaintiffs' claim that the Department lacked good cause to forgo
advance notice and comment.\55\ Following the district court's
decisions in Chamber of Commerce and ITServe Alliance, OFLC took
immediate action to comply with the courts' directives, including
issuing a public announcement on its website on December 3, 2020,
outlining the steps it was taking in response to the courts' orders.
---------------------------------------------------------------------------
\52\ Order Granting Plaintiffs' Motion for Partial Summary
Judgment and Denying Defendants' Cross-Motion, Chamber of Commerce,
et al. v. DHS, et al., 20-cv-07331 (N.D. Cal. Dec. 1, 2020). The
plaintiffs in this case also challenged an interim final rule issued
by DHS, Strengthening the H-1B Nonimmigrant Visa Classification
Program, 85 FR 63, 918 (Oct. 8, 2020), that published on October 8,
2020.
\53\ Memorandum Opinion, Purdue University, et al. v. Scalia, et
al., 20-cv-03006 (D.D.C. Dec. 14, 2020); Memorandum Opinion, Stellar
IT, et al. v. Scalia, et al., 20-cv-03175 (D.D.C.).
\54\ Opinion, ITServe Alliance, et al. v. Scalia, et al., 20-cv-
14604 (D.N.J. Dec. 3, 2020).
\55\ Id. at 8-20.
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Notwithstanding the district courts' orders to set aside the IFR on
procedural grounds, the U.S. Supreme Court has acknowledged and
affirmed the proposition that a procedurally flawed IFR does not taint
a final rule relying upon an IFR as a proposed rule.\56\ The Department
is satisfied that it meets the APA's objective requirements necessary
for the promulgation of a final rule in this case. Specifically, the
Department's IFR provided sufficient notice to the public by allowing
for a 30 day comment period; \57\ ``gave interested persons an
opportunity to participate in the rule making through submission of
written data, views or arguments''; \58\ the rule contained a ``concise
general statement of their basis and purpose''; \59\ and the rule will
be published more than 30 days before it becomes effective.\60\
Accordingly, the Department maintains the legal authority to pursue
this final rule based upon its compliance with the APA's procedural
requirements satisfied in the IFR.
---------------------------------------------------------------------------
\56\ Little Sisters of the Poor Saints Peter and Paul Home v.
Pennsylvania, 140 S.Ct. 2367, 2385-86 (2020).
\57\ 5 U.S.C. 553(b).
\58\ 5 U.S.C. 553(c).
\59\ Id.
\60\ 5 U.S.C. 553(d).
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III. Discussion of Final Rule, Comments, and Responses
A. Overview
The IFR provided for the submission of public comments during a
prescribed 30-day public comment period that closed on November 9,
2020. During this time, the Department received 2,340 comments. The
Department received input from a broad range of commenters, including
labor unions; employers; law firms; academic and research institutions;
healthcare providers; public policy organizations; professional and
trade associations; a federal agency; foreign workers, students,
attorneys, and other individuals; and a significant number of anonymous
commenters. Some commenters supported the new wage level computation
methodology in the IFR generally or in concept as a necessary change to
prevent abuse of the H-1B program, particularly its four-tier wage
level system, by employers seeking to hire foreign workers at below
market wages. However, the overwhelming majority of commenters opposed
the new wage level computation methodology. Notably, however,
commenters generally did not offer justifications or data to support
the continued use of the old wage methodology.
Commenters opposed to the substantive changes in the IFR generally
asserted that the revised wage levels do not correspond with wages paid
to U.S. workers with similar qualifications or those employed in job
opportunities with similar requirements, that the IFR wages do not
reflect market wages as evidenced by comparisons to private wage
surveys and wage data on various websites, and that the wage increases
are arbitrary and unsustainable for most employers, especially given
the immediate effective date of the IFR. Commenters expressed concern
that the IFR would negatively impact the economy broadly by reducing
labor demand, reducing American competitiveness in innovative
industries, and encouraging outsourcing. A number of commenters
asserted the IFR would disproportionately impact small businesses and
start-ups; nonprofits; and academic, research, and healthcare
institutions. Many commenters claimed that there is no need to raise
wages to protect U.S. workers, asserting that foreign workers are not
underpaid and employment of foreign workers creates,
[[Page 3613]]
rather than reduces, employment opportunities for U.S. workers and
benefits the economy broadly. Many commenters also expressed concern
the IFR would harm currently employed foreign workers and their
families, especially foreign workers with significant ties to the U.S.
and for whom immigrant visa petitions have been filed but for whom
visas are unavailable due to per country visa caps.
After careful and thorough consideration of the comments, the
Department has adopted a number of modifications in this final rule to
the wage methodology established by the IFR. In particular, the
Department has adjusted the Level I wage and the Level IV wage downward
to the 35th percentile and 90th percentile, respectively. The
Department is also implementing in this rule a number of changes to how
it uses data from BLS in the H-1B and PERM programs that will further
reduce the incidence of inappropriately inflated wages identified by
commenters. Finally, the Department is adopting a phase-in approach to
how the new wage levels will be applied to give employers and workers
time to adapt to the change. In combination, the Department believes
these measures appropriately address commenters' concerns and will
ensure that, going forward, the prevailing wage rates provided by the
Department fully protect the wages and job opportunities of U.S.
workers.
As the Department explained in the IFR, a primary purpose of the
restrictions on immigration created by the INA, both numerical and
otherwise, is ``to preserve jobs for American workers.'' \61\
Safeguards for American labor, and the Department's role in
administering them, have been a foundational element of the statutory
scheme since the INA was enacted in 1952.\62\ For the reasons set forth
below, the Department has determined that the way it previously
regulated the wages of certain immigrant and nonimmigrant workers in
the H-1B, H-1B1, E-3, and PERM programs is inconsistent with the text
of the INA. A substantial body of evidence examined by the Department,
and discussed at length in the IFR, also suggests that the existing
prevailing wage rates used by the Department in these foreign labor
programs are causing adverse effects on the wages and job opportunities
of U.S. workers and are therefore at odds with the purpose of the INA's
labor safeguards. The current wage levels were also promulgated through
guidance, without providing the public with any notice or an
opportunity to comment, and without any meaningful economic
justification. Accordingly, the Department is acting to adjust the wage
levels to ensure they are codified and consistent with the factors the
INA dictates must govern the calculation of foreign workers' wages. In
so doing, the Department expects to reduce the dangers posed by the
existing levels to U.S. workers' wages and job opportunities and
thereby advance a primary purpose of the statute. While some commenters
disagreed with the Department's conclusions about the effects of the
old wage levels on U.S. workers, the Department continues to believe
that the reasoning put forward in the IFR on this point is sound.
---------------------------------------------------------------------------
\61\ Sure-Tan, Inc. v. N.L.R.B., 467 U.S. 883, 893 (1984).
\62\ H.R. Rep. No. 1365, 82d Cong., 2d Sess., 50-51 (1952)
(discussing the INA's ``safeguards for American labor'').
---------------------------------------------------------------------------
The modern H-1B program was created by the enactment of the
Immigration Act of 1990 (IMMACT 90). Among other reforms, IMMACT 90
established ``various labor protections for domestic workers'' in the
program.\63\ These protections were primarily designed ``to prevent
displacement of the American workforce'' by foreign labor.\64\ In
general, the purpose of the H-1B program is to ``allow[ ] an employer
to reach outside of the U.S. to fill a temporary position because of a
special need, presumably one that cannot be easily fulfilled within the
U.S.'' \65\ Using a foreign worker as a substitute for a U.S. worker
who is already working in or could work in a given job is therefore
inconsistent with the broad aims of the program. Congress has
recognized that repeatedly, both in enacting IMMACT 90 and in making
subsequent changes to the H-1B program.\66\
---------------------------------------------------------------------------
\63\ Washington All. of Tech. Workers v. U.S. Dep't of Homeland
Sec., 156 F. Supp. 3d 123, 142 (D.D.C. 2015), judgment vacated,
appeal dismissed sub nom. Washington All. of Tech. Workers v. U.S.
Dep't of Homeland Sec., 650 F. App'x 13 (D.C. Cir. 2016).
\64\ Cyberworld Enter. Techs., Inc. v. Napolitano, 602 F.3d 189,
199 (3d Cir. 2010).
\65\ Caremax Inc v. Holder, 40 F. Supp. 3d 1182, 1187 (N.D. Cal.
2014).
\66\ See, e.g., Public Law 105-277 Sec. Sec. 412-13, 112 Stat.
2681, 2981-642 to -650 (1998). See also H.R. Rep. No. 101-723(I),
101st Cong., 2d Sess. 44, 66-67 (1990) (``[IMMACT 90] recognizes
that certain entry-level workers with highly specialized knowledge
are needed in the United States and that sufficient U.S. workers are
sometimes not available. At the same time, heavy use and abuse of
the H-1 category has produced undue reliance on alien workers.'');
144 Cong. Rec. S12741, S12749 (daily ed. October 21, 1998)
(statement of Sen. Abraham) (describing the purpose of the H-1B
provisions of the American Competiveness and Workforce Improvement
Act as being to ensure ``that companies will not replace American
workers with foreign born professionals, including increased
penalties and oversight, as well as measures eliminating any
economic incentive to hire a foreign born worker if there is an
American available with the skills needed to fill the job.'').
---------------------------------------------------------------------------
Wage requirements are central to the H-1B program's protections for
U.S. workers.\67\ Under the INA, employers must pay H-1B workers the
greater of ``the actual wage level paid by the employer to all other
individuals with similar experience and qualifications for the specific
employment in question'' or the ``the prevailing wage level for the
occupational classification in the area of employment.'' \68\ By
ensuring that H-1B workers are offered and paid wages that are no less
than what U.S. workers similarly employed in the occupation are being
paid, the wage requirements are meant to guard against both wage
suppression and the replacement of U.S. workers by lower-cost foreign
labor.\69\
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\67\ See Labor Condition Applications and Requirements for
Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations
and as Fashion Models, 59 FR 65646, 65655 (December 20, 1994)
(describing the ``Congressional purposes of protecting the wages of
U.S. workers'' in the H-1B program); H.R. REP. 106-692, 12 (quoting
Office of Inspector General, U.S. Department of Labor, Final Report:
The Department of Labor's Foreign Labor Certification Programs: The
System is Broken and Needs to Be Fixed 21 (May 22, 1996) (``The
employer's attestation to . . . pay the prevailing wage is the only
safeguard against the erosion of U.S. worker's [sic.] wages.'').
\68\ 8 U.S.C. 1182(n)(1)(A).
\69\ See Labor Condition Applications and Requirements for
Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations
and as Fashion Models; Labor Certification Process for Permanent
Employment of Aliens in the United States, 65 FR 80110, 80110 (Dec.
20, 2000) (``The [INA], among other things, requires that an
employer pay an H-1B worker the higher of the actual wage or the
prevailing wage, to protect U.S. workers' wages and eliminate any
economic incentive or advantage in hiring temporary foreign
workers.''); Panwar v. Access Therapies, Inc., 975 F. Supp. 2d 948,
952 (S.D. Ind. 2013) (``The wage requirements are designed to
prevent . . . the influx of inexpensive foreign labor for
professional services.'').
---------------------------------------------------------------------------
The OES prevailing wage levels that the Department uses in the H-1B
program--as well as the related H-1B1 and E-3 ``specialty occupation''
programs for foreign workers from Chile, Singapore, and Australia--are
the same as those it uses in its PERM program. Through the PERM
program, the Department processes labor certification applications for
employers seeking to sponsor foreign workers for permanent employment
under the EB-2 and EB-3 immigrant visa preference categories. Aliens
seeking admission or adjustment of status under the EB-2 or EB-3
preference categories are inadmissible ``unless the Secretary of Labor
has determined and certified . . . that--(I) there are not sufficient
workers who are able, willing, qualified . . . and available at the
time of application for
[[Page 3614]]
a visa and admission to the United States and at the place where the
alien is to perform such skilled or unskilled labor, and (II) the
employment of such alien will not adversely affect the wages and
working conditions of workers in the United States similarly
employed.'' \70\
---------------------------------------------------------------------------
\70\ 8 U.S.C. 1182(a)(5)(A)(i).
---------------------------------------------------------------------------
The Secretary makes this determination in the PERM program by,
among other things, requiring the foreign worker's sponsoring employer
to recruit U.S. workers by offering a wage that equals or exceeds the
prevailing wage and to assure that the employer will pay the foreign
worker a wage equal to or exceeding the prevailing wage.\71\ In this
way, similar to its role in the H-1B program, the prevailing wage
requirement in the PERM program furthers the statute's purpose of
protecting the interests of, and preserving job opportunities for,
American workers.\72\ Effectuating this purpose is the principle
objective of the Department's regulatory scheme in the PERM
program.\73\
---------------------------------------------------------------------------
\71\ 20 CFR 656.10(c)(1).
\72\ Pai v. U.S. Citizenship & Immigration Servs., 810 F. Supp.
2d 102, 110 (D.D.C. 2011) (``The plain language of [8 U.S.C.
1182(a)(5)(A) and 1153(b)(3)] reflects a concern to protect the
interests of workers in the United States.''); Fed'n for Am.
Immigration Reform, Inc. v. Reno, 93 F.3d 897, 903 (D.C. Cir. 1996)
(explaining that the INA's various limits on immigration, such as in
the allocation of visas in the EB-2 and EB-3 preference categories,
``reflect a clear concern about protecting the job opportunities of
United States citizens.''). See generally Texas v. United States,
809 F.3d 134, 181 (5th Cir. 2015) (quoting I.N.S. v. Nat'l Ctr. for
Immigrants' Rights, Inc., 502 U.S. 183, 194 (1991) (``The INA's
careful employment-authorization scheme `protect[s] against the
displacement of workers in the United States,' and a `primary
purpose in restricting immigration is to preserve jobs for American
workers.' '').
\73\ See, e.g., Durable Mfg. Co. v. U.S. Dep't of Labor, 578
F.3d 497, 502 (7th Cir. 2009) (``The point remains that the new
Sec. 656.30(b) advances, to some degree, the congressional purpose
of protecting American workers.''); Rizvi v. Dep't of Homeland Sec.
ex rel. Johnson, 627 F. App'x 292, 294-95 (5th Cir. 2015)
(unpublished) (``Viewed in the proper context, the challenged
regulation serves purposes in accord with the statutory duty to
grant immigrant status only where the interests of American workers
will not be harmed; showing the employer's ongoing ability to pay
the prevailing wage is one reasonable way to fulfill this goal.'').
---------------------------------------------------------------------------
While the prevailing wage levels the Department sets in the H-1B,
H-1B1, E-3, and PERM programs are meant to protect against the adverse
effects the entry of immigrant and nonimmigrant workers can have on
U.S. workers, they do not accomplish that goal--and have not for some
time. For starters, the Department has never offered any explanation or
economic justification for the way it currently calculates the
prevailing wage levels it uses in these foreign labor programs.\74\ The
INA requires that a government survey employed to determine the
prevailing wage provide wage levels commensurate with experience,
education, and level of supervision.\75\ However, it is clear that the
Department's current wage levels are not sufficiently set in accordance
with the relevant statutory factors. In setting the wage levels, the
Department did not engage in an effort to tether them to the statutory
factors, identify sources of wage data that would inform an analysis of
how the levels should be calibrated so as to protect U.S. workers'
wages and job opportunities, or otherwise articulate an analytical
framework to guide and explain how the levels were established. It also
set the levels outside the rulemaking process, instead promulgating
them solely through a memorandum of understanding between departmental
components.
---------------------------------------------------------------------------
\74\ See Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, Part 2, 78 FR 24047, 24051 (Apr. 24, 2013)
(``Since the OES survey captures no information about actual skills
or responsibilities of the workers whose wages are being reported,
the two-tier wage structure introduced in 1998 was based on the
assumption that the mean wage of the lowest paid one-third of the
workers surveyed in each occupation could provide a reasonable proxy
for the entry-level wage. DOL did not conduct any meaningful
economic analysis to test the validity of that assumption . . .'').
\75\ 8 U.S.C. 1182(p)(4).
---------------------------------------------------------------------------
Further, the Department's analysis of the likely effects of H-1B
and PERM workers on U.S. workers' wages and job opportunities shows
that the existing wage levels are not advancing the purposes of the
INA's wage provisions. As explained below, under the existing wage
levels, artificially low prevailing wages provide an opportunity for
employers to hire and retain foreign workers at wages well below what
their U.S. counterparts--meaning U.S. workers in the same labor market,
performing similar jobs, and possessing similar levels of education,
experience, and responsibility--make, creating an incentive--entirely
at odds with the statutory scheme--to prefer foreign workers to U.S.
workers, and causing downward pressure on the wages of the domestic
workforce. The Department is therefore acting to adjust the existing
wage levels to ensure the levels reflect the wages paid to U.S. workers
with levels of experience, education, and responsibility comparable to
those possessed by similarly employed foreign workers.
To accomplish this, the Department articulated an analytical
framework in the IFR to govern how it adjusted the prevailing wage
levels. In doing so, the Department considered, among other things, the
statutory context in which the INA's prevailing wage provisions are
found. In particular, because the prevailing wage levels are used
primarily for high-skilled workers, most of whom are H-1B workers, the
Department took into account the INA's definition of ``specialty
occupation,'' which establishes the baseline minimum qualification
requirements that foreign workers must possess to obtain an H-1B visa,
and also looked to the qualification requirements for obtaining an EB-2
visa. From its review of these qualification requirements, the
Department drew a number of conclusions about the least-skilled, or
entry-level workers employed in the PERM and H-1B programs.
Specifically, the Department determined that such workers often possess
greater skills than many of the least qualified workers in the most
common occupational classifications in which H-1B and PERM workers are
found. For that reason, the Department concluded that the lower end of
the wage distribution reported by the OES survey for those
classifications should be discounted in setting an entry-level wage.
Because wages for H-1B and PERM workers are, under the INA, to be based
on the wages paid to U.S. workers with comparable education,
experience, and responsibility, looking to the wage data of workers at
the lowest points of the wage distributions for these occupations who
likely would not be considered as working in a ``specialty occupation''
would therefore be inconsistent with the statute. Because the old wage
methodology made such wage data a central element of the prevailing
wage calculation, it did not, in the Department's judgment, comport
with the INA.
The Department's review of the INA's qualification requirements for
H-1B and EB-2 workers, in combination with an analysis of the
demographic characteristics of workers in the H-1B program, led the
Department to determine that, for purposes of identifying an entry-
level wage, it should look to the wages paid to U.S. workers who
possess a master's degree and limited work experience. Using such
workers as wage comparators for entry-level H-1B and PERM workers, in
the Department's judgment, is an appropriate way of determining what
U.S. workers similarly employed and with comparable education and
experience to such H-1B and PERM workers are paid. In analyzing wage
data on such workers, the Department also determined that it was
appropriate
[[Page 3615]]
to focus its analysis on those occupations that account for one percent
or more of all H-1B workers. As the Department acknowledged in the IFR,
using a single wage structure across multiple programs, hundreds of
different occupations, and for hundreds of thousands of different
workers necessarily means that prevailing wage rates will not be
perfectly tailored to every single job opportunity. While still giving
due weight to other occupations in its analysis, the Department has
determined that paying special attention to those occupations where
foreign workers are most heavily concentrated, and where the risk to
U.S. workers' wages and job opportunities from the employment of
foreign labor is therefore most acute, is the optimal way of advancing
the purpose of the INA's wage protections while accounting for the
breadth of the programs and occupations covered by the four-tier
structure. As discussed further below, while several commenters
disagreed with various aspects of this analytical framework and the
Department's interpretation of the INA, the Department, after
considering those comments, continues to believe that its approach is
appropriate.
Having determined how it would analyze the question of how to set
prevailing wage levels, the Department proceeded to review data from
various, credible government sources, specifically the surveys from the
National Science Foundation (NSF) and the Current Population Survey
(CPS), about the wages paid to master's degree holders with limited
work experience employed in occupations that account for the vast
majority of workers covered by the prevailing wage levels. Based on its
analysis of this data, the Department concluded in the IFR that the
range within the OES distribution where workers similarly employed and
with levels of education and experience comparable to entry-level H-1B
and PERM workers fall is between the 32nd and 49th percentiles of the
distribution. The Department continues to believe that this conclusion
is largely accurate, and that it is highly relevant to how it will set
the entry-level wage in this final rule.
In the IFR, the Department relied on a number of qualitative
considerations, including the relative strengths and weaknesses of the
data it relied on to identify the entry-level wage range as well as the
purpose of the INA's wage protections, to conclude that the entry-level
wage should be placed higher up within the identified range at
approximately the 45th percentile. Based on private wage data and other
considerations provided by commenters, which are addressed below, the
Department has reassessed this conclusion, and has now determined that
the entry-level wage for the H-1B and PERM programs is more appropriate
at the 35th percentile. In particular, data provided by commenters
indicate that the lower end of the range may in fact provide a more
accurate representation of what U.S. workers similarly employed to
entry-level H-1B and PERM workers are paid. Concerns from commenters
about how a potentially inflated entry-level wage would affect
employers' ability to access the program, and how the IFR's reasoning
was weighted too heavily to certain occupations and geographic areas,
are also compelling reasons, in the Department's judgment, to favor a
lower point in the range. Importantly, the Department believes that by
staying within the range identified in the IFR, the entry-level wage it
has selected will provide robust protection for U.S. workers.
The Department acknowledges commenters' reliance interests on the
current wage methodology and understands that immediate changes to wage
rates could cause some economic uncertainty for both employers and
foreign workers. Thus, the Department is also adopting a series of
transition provisions in this final rule to make it easier for
employers and workers to adapt to the changed wage levels, thus
avoiding disruption and striking a proper balance between stakeholders'
reliance interests and the Department's obligation to comply with the
INA and pursue a policy that is protective of U.S. workers. For many
job opportunities, the new wage rates will phase in through two steps
over a year and a half period. For job opportunities that will be
filled by workers on track to become lawful permanent residents, and
who therefore have greater reliance interests in the old wage
methodology, the new wage rates will phase in through four steps over a
three and a half year period. The Department also reduced the Level IV
wage from approximately the 95th percentile to the 90th percentile, and
made a number of other technical modifications to how it uses BLS data
to produce prevailing wage rates. These changes, too, address
commenters' concerns that wages under the IFR were inappropriately
high.
B. Discussion
1. The Need for Rulemaking
Summary of Comments
The Department received a number of comments in support of the IFR,
including one commenter that believed the IFR ``makes important strides
to bring wage requirements for the H-1B program closer to real
prevailing wages in relevant industries.'' These commenters agreed with
the Department that the prior wage levels resulted in adverse effects
on U.S. workers' wages and job opportunities. Some of these commenters
noted that the Level I and II wages under the prior wage level
methodology (approximately the 17th and 34th percentiles) were well
below the median for the occupation and that 60 percent of H-1B
positions were certified at one of these wage levels. One of these
commenters expressed concern that the prior wage level methodology
permitted H-1B employers to ``engage in de facto wage arbitrage
schemes.'' A public policy organization noted that many employers ``pay
H-1B workers the lowest wages legally allowed, and outsource their H-1B
employees to third-party firms.'' The commenter asserted that employers
opposed to the revised wage level methodology and increased wages claim
``that employers will only hire H-1B workers if they are underpaid
relative to similarly-situated U.S. workers,'' which creates a wage
``race to the bottom.'' The commenter further stated that ``other
reliable sources of wage data'' demonstrate that the wage results
generated by the Department in the IFR are in fact too low. The
commenter cited data from both the Department and NSF to draw the
comparison and substantiate this claim, and it requested that the
Department conduct a ``systematic review'' of major H-1B occupations to
ensure that updates to the wage structure are in line with credible
sources of salary data, such as the NSF's survey of recent college
graduates. Another commenter believed the IFR would ``prevent employers
that seek specialized workers from being crowded out of the H-1B
program by employers using the program to pay below market wages.''
Some of these commenters believed the Level I wage should be set closer
to the median for the occupation and one of the commenters stated that
the Level I wage was the only wage level that mattered because the
Department ``has no adjudicative power over employer skill level
claims.''
By contrast, the majority of comments received on the IFR expressed
strong opposition to the rule and a number of commenters questioned
whether adjustments to the prevailing wage level methodology are
necessary. Many commenters believed there was no need to raise wages to
protect U.S. workers, citing the Department's statement that
[[Page 3616]]
many frequent H-1B program users pay wages above the required
prevailing wage rates, as well as other external sources finding that
foreign workers are paid as much or more than similarly employed U.S.
workers and that foreign workers create jobs for U.S. workers or
otherwise benefit U.S. workers and the economy broadly. Many commenters
pointed to unemployment statistics and forecasted job growth in certain
fields as evidence that the IFR changes are not necessary to protect
U.S. workers. Three commenters stated that it is more expensive to hire
foreign workers due to costs related to the visa process and that
employers prefer to hire U.S. workers due to concern about the
``instability of H-1B lottery systems.'' Some commenters believed the
regulatory requirement that H-1B employers must pay the highest of the
actual or prevailing wage provides sufficient protection to U.S.
workers because the employer must pay the actual wage in cases where
the Department's PWD rate is lower. One commenter asserted the annual
visa caps provide sufficient protection for U.S. workers and a second
commenter asserted the recruitment requirements in the permanent labor
certification regulations offer sufficient protection.
Several commenters claimed it was improper for the Department to
cite higher actual wages paid by large H-1B employers as an indication
that the prevailing wage levels were insufficient to protect U.S.
workers. For example, an university commenter noted the Department's
acknowledgment that many large ``program users pay well in excess of
the prevailing wage'' and the commenter asserted this was an
acknowledgment ``that the issue it is trying to resolve . . . is non-
existent.'' This commenter stated that employers paying more than the
prevailing wage might simply indicate these employers pay a higher
actual wage ``due to legitimate business factors.'' Similarly, a public
policy organization and a professional association stated that the fact
that a group of H-1B employers pays more than the prevailing wage
indicates only that some employers voluntarily increase wages for
competitive reasons. Another commenter stated that pay differences are
reflective of the ``free market at work'' and that ``high profile tech
companies . . . are in heavy competition . . . and have large enough
profit margins'' to pay higher wages. A group of associations stated
that payment of higher wages by these employers may be due to geography
and ``intensity of the work'' such that these employers must ``pay a
premium to attract both domestic talent and foreign-born talent . . .''
By intensity of the work, the commenters referred to areas in which at
least one percent of workers are employed in a particular occupation.
The commenters stated that the OES ``identifies for each SOC . . .
[areas where] the number of employed individuals per each 1,000
employed persons in that particular occupation . . .'' and that the
Department should look to this as ``a useful proxy for the intensity of
activity in that particular occupation in a particular geography,'' in
addition to analyzing available LCA data to determine how often wages
in excess of prevailing wages ``are primarily for such high intensity
jobs and locations.''
Many commenters asserted the Department failed to consider or
``insufficiently weighted'' a wide range of relevant and readily
available studies and reports that indicate a revision to the wage
level methodology is unnecessary. These commenters stated that the
Department ignored ample evidence that H-1B workers are paid at least
as much as their U.S. counterparts and that employment of H-1B workers
may increase the wages earned by U.S. workers. A few commenters cited a
GAO report finding H-1B workers earn the same or more than similar U.S.
workers and an analysis by the website Glassdoor finding that across
``10 cities and roughly 100 jobs'' it examined, salaries for H-1B
workers were ``about 2.8 percent higher than comparable U.S. salaries .
. . .'' Similarly, several commenters cited a report published by the
Partnership for a New American Economy, a research and advocacy
organization dedicated to ``mak[ing] the economic case for
immigration,'' \76\ finding that denials of H-1B petitions from 2007 to
2008 slowed job and wage growth for U.S. workers and that every one-
percentage-point increase in the ``foreign STEM share of a city's total
employment . . . made possible by the H-1B visa program'' increased
wage growth by three to seven percentage points for U.S. workers. Other
cited sources included:
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\76\ See New American Economy, ``About,'' https://www.newamericaneconomy.org/about.
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A Cato Institute report indicating roughly 80 percent of
H-1B employers pay H-1B workers ``above average market wages'';
A working paper from the National Bureau of Economic
Research finding that ``complete elimination'' of the H-1B program
would have virtually no effect on the wages of ``high-skilled Americans
in year one and a slight reduction . . . by year three'';
A National Foundation for American Policy (NFAP) report
finding ``on average, H-1B workers reduce overall unemployment and
increase earnings growth within the fields they are employed by
increasing firm productivity'';
An NFAP report finding that each 1 percent increase in H-
1B workers in science, engineering, technology, and mathematics (STEM)
occupations ``increased local wages of college educated Americans by 7-
8 percent and non-college educated Americans by 3-4 percent'';
A journal article concluding that ``after controlling for
human capital attributes, foreign I.T. professionals'' earn more than
their U.S. counterparts; and
A National Survey of College Graduates comparative
analysis finding that ``controlling for socioeconomic and demographic
characteristics, workers who hold a temporary work visa earn about
thirty percent more than comparable'' U.S. workers.
Commenters also cited a variety of studies and reports that
conclude that the employment of foreign workers has little or no effect
on employment rates for similarly employed U.S. workers. For example, a
group comment cited a 2016 Journal of Economic Perspectives study on
``Global Talent Flows'' that the commenter said indicated ``very little
displacement of U.S.-born innovators and high-skilled professionals by
high-skilled immigrants.'' Another commenter stated ``key fields such
as software development and data science . . . are facing undeniable
workforce supply shortages'' and asserted this ``undermin[ed] the
argument that an influx in cheaper labor supply will result in lower
possible earnings'' for U.S. workers. In support, the commenter cited a
Wall Street Journal article noting ``tech job postings in the U.S. rose
32%'' in the first half of 2019 and a 2018 BLS report projecting higher
than average employment growth in high-tech services.
Some commenters also expressed concerns about the sources the
Department did cite in the IFR in support of the need to revise wage
levels. Citing an analysis of the IFR by labor economist and professor
Dr. Madeline Zavodny, a trade association asserted the Department
relied on ``outdated, incorrect, or limited empirical data'' and relied
on sources that did not ``include an analysis of the wages of H-1B
workers in direct comparison with other workers having the same level
of education, experience,
[[Page 3617]]
or responsibility.'' The commenter stated that the Associated Press
analysis cited at footnote 122 provides ``an incomplete picture''
because it is not based on ``actual workers in the U.S. who hold an H-
1B visa'' but instead is based on LCA data, which includes
``applications that are denied (often because the wage is too low).''
The commenter also stated that the analysis ``does not control for any
differences between applicants for an H-1B visa and U.S. workers, such
as differences in age and education.'' An anonymous commenter stated
that the Associated Press article indicated that 58 percent of H-1B
workers are paid more than their U.S. counterparts and asserted the
article can only be used to support statements regarding wages paid to
workers in computer occupations.
The trade association stated that the citations at footnote 121 in
the IFR that the Department relied on to support its statement that H-
1B IT workers earn roughly 25-33 percent less than U.S. workers failed
to provide ``a clear analysis of the wages of workers who hold an H-1B
visa compared with other workers;'' failed to include H-1B workers in
the analysis; and failed to provide sufficient details of the wage
analysis to determine the reason for the wage differentials. The
anonymous commenter stated that the CRISIL Research citation in this
footnote failed to cite evidence or provide data to support the
statement that H-1B workers earn 25 percent less than U.S. workers and
failed to provide a source for the claim that ``local hires . . . cost
25-30% more.'' The anonymous commenter stated that the third citation
in this footnote is outdated, analyzing ``only immigrant trends in the
1990s'' and does not ``specifically reference computer occupations.''
The commenter also noted that the report recognizes that ``the lower
earnings of recent immigrants may reflect unobserved differences in the
quality and type of education among immigrant cohorts'' and the report
``offers alternative factors that weigh into the wage trends of H-1B
workers that [DOL] has not accounted for in this rule.''
An immigration law firm stated that the IFR misconstrued the CRISIL
report, which the commenter asserted ``actually shows that as a result
of recent H-1B policy changes, it is harder to obtain H-1Bs for
employees that are contracted to work at third-party worksites forcing
U.S. employers to instead hire full-time employees to fill these
roles'' and ``the increase in costs is attributed to the costs of full
time employees'' compared to the cost of ``contract employees.'' The
commenter also asserted that the Department misconstrued Economic
Policy Institute research when it claimed the research showed that only
one of every two STEM graduates get a job in the field. The commenter
stated that the researchers ``found that half of students that do not
enter the STEM industry found jobs in other industries.''
The anonymous commenter also asserted that the congressional
testimony cited in this footnote provides no evidence to ``establish
the median wage as the appropriate compensation for any specific [H-1B]
positions'' and fails to consider that ``that a Level 1 wage does not
necessarily represent a position that requires less skill, but rather
may have fewer experience requirements or supervisory duties.'' The
commenter also asserted that the journal article cited in this footnote
is ``outdated in its data'' and ``refers to computer occupations'' so
it ``cannot be applied to any other occupational codes.''
Finally, a trade association noted that the Department cited
findings by George Borjas regarding the impact of foreign workers on
the wages of low-skill workers but failed to acknowledge Borjas's
contribution to a 2016 National Academies of Sciences, Engineering, and
Medicine (NASEM) literature review in which he stated ``wage impacts
from immigrants on U.S.-born college-educated workforce is minor (an
increase for U.S. professionals of one-half of one percent in wage
rates as a result of high-skilled immigration).'' The commenter added
that the NASEM review found that there is a ``broad consensus with
respect to high-skilled immigration that any impacts on U.S. wages by
high-skilled, college-educated foreign-born professionals are close to
negligible.''
Response to Comments
First, as the Department explained in the IFR, a primary and
independently sufficient reason for reforming the manner in which it
sets prevailing wage levels in the H-1B and PERM programs is that the
old wage levels were never justified through an economic analysis, nor
codified in rulemaking through notice and comment, and, on closer
inspection, are in substantial tension with the statutory framework.
Notably, commenters have also not provided data or analysis
demonstrating that the wage rates under the old wage methodology
produces wage rates commensurate with the wages paid to U.S. workers
similarly employed and with comparable education, experience, and
responsibility to H-1B and PERM workers, as required by statute. While
some commenters urged the Department to preserve the old wage
methodology, they provided no evidence for why that would be
appropriate or consistent with the INA. Moreover, the Department notes
that criticism of the way in which the wage levels are currently set is
longstanding and exists across the political spectrum.\77\ Put simply,
the old wage methodology is an outmoded method for calculating
prevailing wage rates that is neither supported economic analysis, nor
defended by commenters, and has never tied to the relevant statutory
factors.
---------------------------------------------------------------------------
\77\ See https://www.grassley.senate.gov/news/news-releases/bipartisan-group-lawmakers-propose-reforms-skilled-non-immigrant-visa-programs.
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The Level I wage under the old methodology is set by calculating
the mean of the bottom third of the OES wage distribution. That means
the wages for many H-1B workers are set based on a calculation that
takes into account wages paid to workers who, as explained in the IFR
and below, almost certainly would not qualify to work in a ``specialty
occupation,'' as defined by the INA. The Department has noted
previously that ``workers in occupations that require sophisticated
skills and training receive higher wages based on those skills.'' \78\
As a worker's education and skills increase, his wages are expected to
increase as well.\79\ For that reason, it is likely that workers at the
lowest end of an occupation's wage distribution generally have the
lowest levels of education, experience, and responsibility in the
occupation. In consequence, if the occupation by definition includes
workers who do not have the level of specialized knowledge required of
H-1B workers, as is the case with some of the most common occupations
in which H-1B workers are employed, the very bottom of the wage
distribution should be discounted in determining the appropriate point
in the OES wage distribution at which to establish the entry-level wage
under the four-tiered wage structure because workers at the bottom end
are not similarly employed to H-1B workers. Yet the old wage structure
made such workers a central component of that calculation.\80\
Similarly, the current
[[Page 3618]]
Level IV wage is set by calculating the mean of the upper two-thirds of
the wage distribution. That means that the wage level provided for the
most experienced and highly educated H-1B workers is determined, in
part, by taking into account a sizeable number of workers who do not
even make more than the median wage of the occupation. Given the
correlation between wages and skills, this calculation also would
appear inconsistent with the statutory and regulatory framework. Common
sense dictates that workers making less than the median wage of the
occupation cannot be regarded as being similarly qualified to the most
competent and experienced members of that occupation. That puts the old
methodology in substantial tension with the governing statute and is in
and of itself a sufficient reason for reassessing and revising the
prior methodology in order to bring it more closely in line with the
INA's wage provisions.\81\
---------------------------------------------------------------------------
\78\ Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, Part 2, 78 FR 24047, 24051 (Apr. 24, 2013).
\79\ See Bureau of Labor Statistics, Learn more, earn more:
Education leads to higher wages, lower unemployment, available at
https://www.bls.gov/careeroutlook/2020/data-on-display/education-pays.htm.
\80\ For example, the occupation of Software Developers, which
accounts for a large number of H-1B workers, does not require the
same degree of specialized knowledge as a baseline entry requirement
as does the INA's definition of ``specialty occupation.'' Yet
approximately 10 percent of all LCAs filed with the Department for
software developer positions classify those positions as entry-
level, meaning that under the current wage levels the wages paid to
such specialty occupation workers are calculated based, at least in
part, on the wages paid to some workers who do not have comparable
specialized knowledge and expertise. This outcome contravenes the
INA's requirement that H-1B workers be paid wages based on the wages
paid to U.S. workers with similar levels of education, experience,
and responsibility.
\81\ See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158,
175 (2007) (``Neither can we find any significant legal problem with
the Department's explanation for the change. The agency said that it
had `concluded that these exemptions can be available to such third
party employers' because that interpretation is `more consistent'
with statutory language that refers to `any employee' engaged `in'
the `enumerated services' and with `prior practices concerning other
similarly worded exemptions.' There is no indication that anyone
objected to this explanation at the time. And more than 30 years
later it remains a reasonable, albeit brief, explanation.'').
---------------------------------------------------------------------------
The Department also based its conclusion in the IFR that regulatory
reform of H-1B and PERM prevailing wages was needed, in part, on a
review of the academic literature on the subject, congressional
testimony and media accounts of the practical consequences of the prior
prevailing wage levels, and data on the actual wages that major users
of the H-1B and PERM programs pay their foreign workers. As discussed
at length in the preamble to the IFR, the Department considered
numerous studies finding that H-1B workers are paid less than their
U.S. counterparts.\82\ Other studies found this disparity to be
especially true of H-1B employees working in computer science and
information technology, fields in which two thirds of H-1B workers are
employed.\83\ The Department's justification also took into account the
fact that economic literature suggests that the introduction of low-
cost foreign labor into a labor market suppresses wages in proportion
to the number of foreign workers present in that labor market.\84\
Studies involving computer science workers confirm this general
finding.\85\ Its review of this information led the Department to
conclude that the old wage methodology resulted in adverse effects on
both U.S. workers' wages as well as their job opportunities. After
reviewing comments and the studies and information they provided, the
Department continues to believe that, at least in some cases, the old
prevailing wage methodology resulted in harm to U.S. workers and
therefore should be revised.
---------------------------------------------------------------------------
\82\ Atlantic Council, Reforming US' High-Skilled Guestworker
Program, (2019), available at https://www.atlanticcouncil.org/in-depth-research-reports/report/reforming-us-high-skilled-immigration-program/; The Impact of High-Skilled Immigration on U.S. Workers:
Hearing before the Senate Committee on the Judiciary (February 25,
2016) (testimony of John Miano, representing Washington Alliance of
Technology Workers, Local 37083 of the Communications Workers of
America, the AFL-CIO); Norman Matloff, On the Need for Reform of the
H-1B Non-Immigrant Work Visa in Computer-Related Occupations, 36 U.
Mich. J.L. Reform 815 (2003).
\83\ U.S. Citizenship and Immigration Services, Characteristics
of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report
to Congress October 1, 2018-September 30, 2019, (2020), available at
https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf, (showing 66 percent of H-1B petitions
approved in FY2019 were for computer-related occupations); Sean
McLain & Dhanya Ann Thoppil, Bulging Staff Cost, Shrinking Margins,
CRISIL Research, (2019), available at https://www.crisil.com/en/home/our-analysis/reports/2019/05/bulging-staff-cost-shrinking-margins.html; Sean McLain & Dhanya Ann Thoppil, U.S. Visa Bill `Very
Tough' for Indian IT, The Wall Street Journal, April 18, 2013,
available at https://blogs.wsj.com/indiarealtime/2013/04/18/u-s-visa-bill-very-tough-for-indian-it/?mod=wsj_streaming_latest-headlines; The State of Asian Pacific America,'' Paul Ong (ed.),
LEAP Asian Pacific American Public Policy Institute and UCLA Asian
American Studies Center, 1994, pp. 179-180; Carnegie Endowment for
International Peace, Balancing Interests: Rethinking U.S. Selection
of Skilled Immigrants, (1996); Youyou Zhou, Most H-1B workers are
paid less, but it depends on the job, Associated Press, April 18,
2017, available at https://apnews.com/afs:Content:873580003/Most-H-1B-workers-are-paid-less,-but-it-depends-on-the-type-of-job.
\84\ George Borjas, The Labor Demand Curve Is Downward Sloping:
Reexamining the Impact of Immigration on the Labor Market, The
Quarterly Journal of Economics Vol. 118, No. 4 (Nov., 2003), pp.
1335-1374, available at https://www.jstor.org/stable/25053941?seq=1.
\85\ John Bound et al., Understanding the Economic Impact of the
H-1B Program on the U.S., NBER Working Paper No. 23153 (2017),
available at https://www.nber.org/papers/w23153.pdf. The Border
Security, Economic Opportunity, and Immigration Modernization Act,
S. 744: Hearing before the Senate Committee on the Judiciary (April
22, 2013) (testimony of Neeraj Gupta, CEO of Systems in Motion, to
the Senate Judiciary Committee), available at https://www.judiciary.senate.gov/imo/media/doc/04-22-13GuptaTestimony.pdf.
Daniel Costa and Ronil Hira, H-1B Visas and Prevailing Wage Levels,
Economic Policy Institute, (2020), available at https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/.
---------------------------------------------------------------------------
The Department recognized, as did some commenters, the limitations
of some of the wage studies it relied on in the IFR, noting that many
of them compare H-1B and U.S. workers in the same occupation but do not
directly compare workers in those occupations with the same levels of
education, experience, and responsibility.\86\ However, in the IFR, the
Department explained why these studies nonetheless allow for an
instructive wage comparison: ``[B]ecause H-1B workers are required to
possess specialized knowledge and expertise that often exceeds the
level of education and experience necessary to enter a given occupation
generally, and greater skills are associated with higher earnings, the
median H-1B workers should earn a wage that is at least the same, if
not more, than the median wage paid to U.S. workers in the occupation.
But a variety of studies show that the opposite is occurring.'' \87\
Put another way, while the Department acknowledges that there is an
inherent limitation in comparing median earnings of groups of workers,
since doing so does not account for different levels of experience and
education, the distortion in the data that results from such a
limitation would be expected to show higher earnings for H-1B workers
at the median given that a result of the INA's specialty occupation
requirement for H-1B workers is that H-1B workers must possess more
advanced education and experience than what is typically required to
enter some of the most common occupations in which H-1B workers are
employed. Yet the median earning of H-1B workers, according to these
studies, are in fact skewed lower than the median U.S. worker in these
occupations. Accordingly, the Department continues to believe this is a
compelling data point demonstrating that H-1B workers in many cases
make wages below those of similarly employed U.S. workers.
---------------------------------------------------------------------------
\86\ 85 FR at 63,882.
\87\ Id.
---------------------------------------------------------------------------
Further, the Department disagrees with commenters that other
aspects of the methodology and reasoning relied on in the various
studies that support the Department's position are flawed. These are,
in many cases, studies from credible sources that are commonly cited in
reporting and literature about the effects of the H-1B program on U.S.
workers. Moreover, to the extent these
[[Page 3619]]
studies focus on computer science and IT occupations, the Department
believes that focus is appropriate. As explained at greater length
below, the Department's analytic framework gives special attention to
these occupations because they are where the largest concentration of
H-1B and PERM workers are found, and therefore the places where the
risks to U.S. workers that the Department is trying to guard against
are most acute.
In addition, the Department considered testimony before the Senate
Judiciary Committee \88\ as well as news reports about the displacement
of U.S. workers by H-1B workers.\89\ As noted, some commenters
criticized these sources as anecdotal and insufficient. But they were
not the only sources on which the Department relied. The information
from those sources supplemented the information the Department derived
from studies and academic articles. Standing alone such information may
(or may not) be insufficient to demonstrate systematic, adverse effects
on U.S. workers, but, viewed in combination with other available
evidence, it provides vital insight into the Department's understanding
of the effects of the old wage methodology. The Department also views
evidence about the real-world consequences of its wage methodology on
U.S. workers, as shown in news reports, as important information that
should not be ignored.
---------------------------------------------------------------------------
\88\ The Impact of High-Skilled Immigration on U.S. Workers:
Hearing before the Senate Committee on the Judiciary (Feb. 25, 2016)
(testimony of John Miano, representing Washington Alliance of
Technology Workers, Local 37083 of the Communications Workers of
America, the AFL-CIO); Immigration Reforms Needed to Protect Skilled
American Workers: Hearing before the Senate Committee on the
Judiciary (Mar. 17, 2015) (testimony of Ronil Hira, Associate
Professor of Public Policy Rochester Institute of Technology,
Rochester, NY), available at https://www.judiciary.senate.gov/imo/media/doc/HiraTestimony.pdf; The Border Security, Economic
Opportunity, and Immigration Modernization Act, S. 744: Hearing
before the Senate Committee on the Judiciary (Apr. 22, 2013)
(testimony of Neeraj Gupta, CEO of Systems in Motion, to the Senate
Judiciary Committee), available at https://www.judiciary.senate.gov/imo/media/doc/04-22-13GuptaTestimony.pdf.
\89\ ``Visa Abuses Harm American Workers,'' The New York Times,
June 16, 2016, available at http://www.nytimes.com/interactive/opinion/editorialboard.html; Julia Preston, Pink Slips at Disney.
But First, Training Foreign Replacements, The New York Times, June
3, 2015, available at https://www.nytimes.com/2015/06/04/us/last-task-after-layoff-at-disney-train-foreign-replacements.html; Julia
Preston, Toys `R' Us Brings Temporary Foreign Workers to U.S. to
Move Jobs Overseas, The New York Times, Sept. 29, 2015, available at
https://www.nytimes.com/2015/09/30/us/toys-r-us-brings-temporary-foreign-workers-to-us-to-move-jobs-overseas.html; Michael Hiltzik, A
loophole in immigration law is costing thousands of American jobs,
Los Angeles Times, February 20, 2015, available at https://www.latimes.com/business/hiltzik/la-fi-hiltzik-20150222-column.html;
Daisuke Wakabayashi & Nelson Schwarts, Not Everyone in Tech Cheers
Visa Program for Foreign Workers, The New York Times, Feb. 5, 2017,
available at https://www.nytimes.com/2017/02/05/business/h-1b-visa-tech-cheers-for-foreign-workers.html.
---------------------------------------------------------------------------
As detailed above, some commenters also claimed that the Department
ignored or unfairly discounted studies showing that some H-1B workers
earn more than U.S. workers. Far from ignoring or discounting such
studies, the Department acknowledged their findings and addressed them
in the IFR.\90\ While the Department did not discuss in the IFR every
study of that kind that the commenters cite, it has reviewed the
studies provided by commenters and notes that it did consider many
sources with similar information, analysis, and conclusions to these
studies.\91\ In addition, while some studies cited by commenters which
were not directly addressed in the IFR offer additional analysis, they
do not overwhelm the conclusions of other studies originally cited in
the IFR. For example, reports that find that H-1B workers' wages exceed
market wages often ignore that the prevailing wage level is fixed for
the H-1B worker for three years, meaning that even if the H-1B worker
is paid in excess of the market wage for an entry-level worker in year
1, this may not be the case in year 3 because the H-1B workers' wages
should no longer be compared to entry-level workers. Other reports
cited by critical commenters acknowledged that the research on
employment of American workers in the presence of H-1B workers remains
inconclusive or that the existing studies present mixed results on
whether H-1B workers crowd out American workers. Some of these studies
then focused on one segment of the American worker and H-1B market
(e.g., recent college graduates) to obtain specific results which in
many cases cannot be extrapolated to other workers cohorts. Others of
these studies relied on data gathered only during recent economic
recessions, which make it difficult to draw proper conclusions about
the effect of H-1B workers on compensation and employment for competing
workers under other (and more typical) economic conditions. The
Department examined these studies concluding that some H-1B workers in
some circumstances are better paid than U.S. workers, weighed them
against other studies reaching the opposite conclusion, and, in its
expert judgment, determined that there was reason to conclude that, at
least in some instances, prevailing wage levels are set too low. An
agency's choice of studies on which to rely is entitled to substantial
deference.\92\ The Supreme Court has held that ``[w]hen specialists
express conflicting views, an agency must have discretion to rely on
the reasonable opinions of its own qualified experts even if, as an
original matter, a court might find contrary views more persuasive.''
\93\ The studies cited by commenters rest on the same kinds of analyses
and reach similar conclusions to those studies reviewed by the
Department in development of the IFR. The Department has reviewed these
studies and has concluded that they do not discredit, or even
necessarily contradict, other sources of information that demonstrate
that H-1B workers do, in some instances, adversely affect U.S. workers'
wages and job opportunities, even if that is not true in all cases, as
explained throughout. Accordingly, based on its review of these studies
the Department continues to believe that some modification to the wage
levels is necessary.
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\90\ 85 FR at 63,882, 63,884.
\91\ An agency is not required to respond to every study, or
consider every conceivable piece of evidence in drawing a
conclusion. Tex. Office of Pub. Util. Counsel v. F.C.C., 265 F.3d
313, 328 n.7 (5th Cir. 2001).
\92\ See Or. Envtl. Council v. Kunzman, 817 F.2d 484, 496 (9th
Cir. 1987); see also New York v. U.S. Nuclear Regulatory Comm'n, 589
F.3d 551, 555 (2d Cir. 2009) (``These are technical and scientific
studies. Courts should be particularly reluctant to second-guess
agency choices involving scientific disputes that are in the
agency's province of expertise. Deference is desirable.'' (quoted
source omitted)); see generally Universal Camera Corp. v. NLRB, 340
U.S. 474, 488 (1951) (``The substantiality of evidence [in APA
review] must take into account whatever in the record fairly
detracts from its weight,'' but this ``does not furnish a calculus
of value by which a reviewing court can assess the evidence,'' nor
does it negate agency expertise that the court ``must respect,'' nor
permit a court to displace the agency's ``choice between two fairly
conflicting views.''); cf. Fed. Power Comm'n v. Fla. Power & Light
Co., 404 U.S. 453, 463, (1972) (``Particularly when we consider a
purely factual question within the area of competence of an
administrative agency created by Congress, and when resolution of
that question depends on `engineering and scientific'
considerations, we recognize the relevant agency's technical
expertise and experience, and defer to its analysis unless it is
without substantial basis in fact.'').
\93\ Marsh v. Or. Nat. Res. Council, 490 U.S. 360, 378 (1989).
---------------------------------------------------------------------------
Contrary to the commenters' assertions, the Department considered
studies showing that H-1B workers benefit U.S. workers. In the IFR, the
Department acknowledged that in some instances the employment of H-1B
workers fuels economic growth and job creation,\94\ as well as the fact
that paying foreign workers at wages lower than U.S. workers may
increase firms'
[[Page 3620]]
profitability.\95\ Indeed, in the IFR the Department discussed studies
that suggest the employment of H-1B workers has positive effects on the
wages and job opportunities of U.S. workers and expressed a qualified
agreement with them, specifically noting that ``[w]hile the Department
agrees that this is true in some instances, it is also clear that the
current prevailing wage levels often result in adverse effects, and
that adjustments to the wage levels are needed to ensure that the
positive effects of the program will be enjoyed more widely.'' \96\ In
other words, the Department anticipates that bringing the wages of
foreign workers in line with what similarly employed U.S. workers
actually make will enhance the benefits resulting from the employment
of such workers, which studies considered in the IFR as well offered by
commenters show exist in some cases. The Department did not dispute in
the IFR ``that allowing firms to access skilled foreign workers can
lead to overall increases in innovation and economic activity, which
can, in turn, benefit U.S. workers,'' but did conclude ``H-1B workers'
earnings data and other research indicate that, in many cases, the
existing wage levels do not lead to these outcomes.'' \97\ At no point
in the IFR did the Department suggest that H-1B workers either always
harm U.S. workers or always benefits U.S. workers and the firms that
employ them. Rather, the Department concluded, and continues to
conclude, that the positive benefits of the program, while real, are
not as widespread as they might otherwise be, and that this is likely
due to the fact that H-1B workers in some instances are paid wages
below that paid to their U.S. counterparts.
---------------------------------------------------------------------------
\94\ 85 FR at 63,882.
\95\ Id. at 63,883.
\96\ Id. at FR at 63,882.
\97\ Id. at 63,884.
---------------------------------------------------------------------------
One argument along these lines that the Department addressed in the
IFR was made by the general counsel of a major user of the H-1B program
in testimony before the Senate Judiciary Committee. In his testimony,
he contended that H-1B workers raise the income of U.S. workers because
they alleviate labor shortages, particularly in STEM and computer
science. Importing workers to fill needs that would otherwise go unmet,
he argued, allows companies to innovate and grow, creating more
employment opportunities and higher-paying jobs for U.S. workers.\98\
The Department rejects the premise of the general counsel's argument
that STEM jobs are going unfilled because there are no qualified
American workers willing to take them, and therefore U.S. gross
domestic product (GDP) would be smaller without importing foreign STEM
workers. The Department notes that for every two students who graduate
from a U.S. university with a STEM degree, only one obtains a STEM
job.\99\ In the case of computer science occupations, another study
cited by the Department challenges the notion that H-1B workers are
filling needs unmet by U.S. workers. The study contains findings that
foreign computer science workers have suppressed wages for U.S.
computer science workers along with findings that ``imply that for
every 100 foreign [computer science] workers that enter the US, between
33 to 61 native [computer science] workers are crowded out from
computer science to other college graduate occupations.'' \100\
Further, while some commenters argued that the Department misconstrued
the study showing that only half of U.S. STEM graduates go on to work
in STEM fields on the grounds that many of these students find
employment in other industries, the Department disagrees that the study
is not relevant here. In fields where a graduate's degree signals
certain skills to potential employers, such as computer science or many
STEM fields, it is reasonable to assume that students who major in a
particular field typically intend to find employment in that field. The
fact that many of these particular students are able to find employment
in other industries does not undercut the conclusion--indeed, it
bolsters it--that at least some of their job opportunities in the
fields for which they trained are limited by the presence of lower-paid
foreign workers in some instances.
---------------------------------------------------------------------------
\98\ The Border Security, Economic Opportunity, and Immigration
Modernization Act, S. 744: Hearing before the Senate Committee on
the Judiciary (Apr. 22, 2013), available at https://www.judiciary.senate.gov/imo/media/doc/04-22-13BradSmithTestimony.pdf.
\99\ 85 FR at 63,855.
\100\ John Bound et al., Understanding the Economic Impact of
the H-1B Program on the U.S., NBER Working Paper No. 23153 (2017),
available at https://www.nber.org/papers/w23153.pdf.
---------------------------------------------------------------------------
The Department also acknowledges commenters' point that in some
circumstances H-1B workers contribute to innovation. Those
contributions notwithstanding, ``such outcomes are not the immediate
objectives of the of the INA's wage protections.'' \101\ Further, this
rulemaking does not alter the number of H-1B workers permitted to work
and it is unclear how the current wage levels promote greater
innovation than the wages which will exist under this rule. The PERM
program permits employers to hire aliens to work at permanent jobs
where the Secretary of Labor has certified to the Secretary of State
and the Secretary of Homeland Security that the employment of an alien
seeking to enter the United States to perform skilled or unskilled
labor ``will not adversely affect the wages and working conditions of
workers in the United States similarly employed.'' \102\ In the case of
H-1B workers, employers must file LCAs stating that the employer will
offer wages that are, at a minimum, ``the actual wage level paid by the
employer to all other individuals with similar experience and
qualifications for the specific employment in question,'' or ``the
prevailing wage level for the occupational classification in the area
of employment, whichever is greater.'' \103\ In rulemaking, an agency
is not required ``to accord greater weight to aspects of a policy
question than the agency's enabling statute itself assigns to those
considerations.'' \104\ In consequence, to the extent some comments and
the studies cited therein criticized the Department's conclusion that
the prevailing wage levels are set too low on the grounds that H-1B
workers fuel innovation and economic growth, the Department affords
them less weight. Such considerations are secondary to the Department's
more immediate concern of fulfilling its statutory mandate to ensure
that the presence of foreign workers does not adversely affect U.S.
workers.
---------------------------------------------------------------------------
\101\ 85 FR at 63,884.
\102\ 8 U.S.C. 1182(a)(5)(A)(i)(II).
\103\ 8 U.S.C. 1182(n)(1)(A)(i).
\104\ Hussion v. Madigan, 950 F.2d 1546, 1554 (11th Cir. 1992).
---------------------------------------------------------------------------
The Department also reemphasizes that while commenters preferred
some studies and sources over others cited by the Department, they and
their studies offered no affirmative argument in support of the old
wage levels, nor did they explain how the prior wage levels reflect
actual market wages. Rather, these commenters presented studies which
the Department has already reviewed and which the Department does not
believe align with the weight of the evidence which the Department
continues to rely upon. The evidence amassed in the IFR provides a
reasonable basis for increasing the wage rates, the Department stands
by its determination that the old methodology did not adequately
protect U.S. workers. The Department also notes that a number of
commenters agreed with its conclusion that current wage levels often do
not reflect prevailing wages and are set too low. For example, one
commenter noted that, in some cases where H-1B workers are used to
replace
[[Page 3621]]
U.S. workers, ``the H-1B workers have been hired with annual wages of
around $30,000 to $40,000 less than the workers they have replaced.''
These comments corroborate the Department's position that it weighted
the conflicting evidence in a reasonable way and reached an appropriate
conclusion that H-1B workers can and in many cases are used as low-cost
alternatives to U.S. workers, and thereby undercut U.S. workers' wages
and job opportunities.
The Department also acknowledges the comments it received (and
studies cited therein) that argue that pointing to the higher actual
wages that some employers pay H-1B and PERM workers to show that
prevailing wage rates were too low is flawed reasoning because there
may be other business factors beyond a worker's qualifications that
explain why some employers pay a premium on the prevailing wage. The
Department agrees that there may, in some instances, be legitimate
business factors that explain why actual wages paid to H-1B workers
would be higher than the prevailing wage rate. For example, a firm that
faces a sudden increase in demand for its product relative to its
competitors might be willing to pay premiums to both domestic and H-1B
workers relative to its competitors. However, factors such as these are
typically specific to a particular firm, employee, or geographic area,
as some commenters acknowledged in their discussion of high-intensity
occupation areas, and do not reflect the wages paid by the typical
employer in a given labor market. In consequence, while the actual
wages paid to H-1B workers might very well exceed the prevailing wage
rate for legitimate reasons in some cases, such incidents should not be
the norm across all employers, occupations, and locales. If the actual
wage is consistently higher across the board than the prevailing wage
rate, this suggests that the prevailing wage is not actually reflective
of the market wage rate on offer in the labor market. As the data
presented in the IFR shows, actual wages paid to H-1B workers not only
exceed the prevailing wage rate, but do so consistently and
substantially, on average, across many different employers. This
suggests that legitimate business factors alone do not account for the
extreme differences between the actual wages paid to H-1B workers and
prevailing wage rates. Rather, it suggests that the prevailing wage
rate is out of line with the market wage.
For similar reasons, the Department also rejects some commenters'
contention (including as purportedly supported by the studies cited)
that the fact that actual wages often exceeds the prevailing wage rate
shows that there is no wage problem in the H-1B and PERM programs. One
shortcoming such studies failed to acknowledge is that because the
prevailing wage is in place for 3 years for H-1B workers, even if they
are paid more than the prevailing wage in their first year, there is a
distinct possibility that the prevailing wage will be low compared to
the market for more experienced workers in the subsequent years. As the
Department explained in the IFR, the INA takes a belt-and-suspenders
approach to protecting U.S. workers' wages. Employers must pay the
higher of the actual wage they pay to similarly employed workers or the
prevailing wage rate set by the Department. Both rates generally should
approximate the market wage for workers with similar qualifications and
performing the same types of job duties in a given labor market as H-1B
workers. It is therefore a reasonable assumption that, if both of the
INA's wage safeguards were working properly, the wage rates they
produce would, at least in many cases, be similar. Where the
Department's otherwise applicable wage rate is significantly below the
rates actually being paid by employers in a given labor market, it
gives rise to an inference that the Department's current wage rates,
based on statistical data and assumptions about the skill levels of
U.S. workers, are not reflective of the types of wages that workers
similarly employed to H-1B workers can and likely do command in the
actual labor market. There is a mismatch between what the Department's
prevailing wage structure says the relevant cohort of U.S. workers are
or should be making and what employers are likely actually paying such
workers, as demonstrated by the actual wage they are paying H-1B
workers. Put another way, when many of the heaviest users of the H-1B
program consistently pay wages well above the prevailing wage, it
suggests that the prevailing wages are too low, and thus can be abused
by other firms to replace U.S. workers with lower-wage foreign workers
in cases where those firms do not have similarly employed workers on
their jobsites whose actual wages would be used to set the wage for H-
1B workers.\105\
---------------------------------------------------------------------------
\105\ See 63872 FR 63885-87.
---------------------------------------------------------------------------
The Department also believes that looking to the pay practices of
some of the most frequent users of the H-1B program is appropriate in
determining whether the prevailing wage rates are set too low. Because
the risk of harm to U.S. workers is most acute by employers in labor
markets with heavy concentrations of H-1B workers, data on the actual
wage rates at those employers and in those areas are entitled to
special weight in the Department's analysis. Further, to the extent
some commenters argue that looking at such firms unduly minimizes the
Department's consideration of wage effects in rural areas or at smaller
employers, the Department notes that, like its use of anecdotal
evidence, the wage data it looked to from the heaviest users of the
program is just one piece of various types of evidence on which it
bases its conclusions about the effects of the old wage levels--no
single piece of which is given dispositive weight. Rather, when
considered in combination, this evidence provides a sound basis, in the
Department's judgment, for concluding that the old wage methodology
resulted in inappropriately low wages in a variety of circumstances.
The Department also disagrees that other safeguards in the INA are
sufficient to protect U.S. workers and that updates to the prevailing
wage levels are therefore unnecessary. Congress chose to enact multiple
forms of protection for U.S. workers in these foreign labor programs.
The Department must operationalize those protections entrusted to its
administration as it sees best for the discharge of its legal
responsibilities under the INA and its policy of more fully ensuring
the protection of U.S. workers, including by updating the prevailing
wage levels.\106\
---------------------------------------------------------------------------
\106\ The Department also notes that the need for this
rulemaking is undiminished by the possibility, recently proposed by
DHS, that the limited visas available under the H-1B cap may be
allocated based on how high the wage level is at which an employer
plans to compensate its foreign workers. See Modification of
Registration Requirement for Petitioners Seeking To File Cap-Subject
H-1B Petitions, 85 FR 69236 (November 2, 2020). The Department's
wage structure applies to programs other than the H-1B program,
meaning that even if there are other means of preventing adverse
wage effects in the H-1B program, the benefits of updating the
Department's prevailing wage methodology extend more broadly.
Relatedly, even within the H-1B program, not all visas are subject
to the annual cap, and would thus not be affected by a new method of
allocating capped visas. Even more critically, the INA directs the
Department to set wage levels that will ensure foreign workers will
be compensated at rates comparable to U.S. workers similarly
employed with similar levels of education, experience, and
responsibility. As explained throughout, the Department has
determined that adjustments are needed for all four wage levels to
ensure they protect similarly employed U.S. workers from wage
suppression and dangers to their job opportunities. Thus, even under
a visas allocation system that prioritizes workers placed at higher
wage levels, the Department's wage methodology must still protect
workers similarly employed to workers at those wage levels from
adverse employment effects. Put another way, the purpose of the
INA's wage provisions is to protect individual U.S. workers from
having to compete with low-cost foreign labor, something that can
only be accomplished by setting appropriate wage levels even if all
H-1B workers granted work authorization are at the highest skill
level since such workers will necessarily be competing with U.S.
workers with comparable qualifications.
---------------------------------------------------------------------------
[[Page 3622]]
As explained in the IFR, the Department has determined that the
conclusions it reached about adverse wage effects with respect to the
H-1B program can also be extrapolated to the PERM program, about which
the economic literature is far scanter. Critically, the PERM programs
and the H-1B program are closely linked in both how they are regulated
and used by employers. Unlike most nonimmigrant visas, H-1B visas are
unusual in that they are ``dual intent'' visas, meaning under the INA,
H-1B workers can enter the U.S. on a temporary status while also
seeking to adjust status to that of lawful permanent residents.\107\
One of the most common pathways by which H-1B visa holders obtain
lawful permanent resident status is through employment-based green
cards, and in particular EB-2 and EB-3 visas.\108\ USCIS has estimated
that over 80 percent of all H-1B visa holders who adjust to lawful
permanent resident status do so through an employment-based green
card.\109\ This is reflected in data on the PERM programs. In recent
years, more than 80 percent of all individuals granted lawful permanent
residence in the EB-2 and EB-3 classifications have been aliens
adjusting status, meaning they were already present in the U.S. on some
kind of nonimmigrant status.\110\ Given that the H-1B program is the
largest temporary visa program in the U.S. and is one of the few that
allows for dual intent, it is a reasonable assumption that the vast
majority of the EB-2 and EB-3 adjustment-of-status cases are for H-1B
workers. This is corroborated by the Department's own data, which shows
that, in recent years, approximately 70 percent of all PERM labor
certification applications filed with the Department have been for H-1B
nonimmigrants.\111\
---------------------------------------------------------------------------
\107\ dePape v. Trinity Health Sys., Inc., 242 F. Supp. 2d 585,
593 (N.D. Iowa 2003).
\108\ See Sadikshya Nepal, The Convoluted Pathway from H-1B to
Permanent Residency: A Primer, Bipartisan Policy Center (2020);
Congressional Research Service, The Employment-Based Immigration
Backlog (2020) (``A primary pathway to acquire an employment-based
green card is by working in the United States on an H-1B visa for
specialty occupation workers, getting sponsored for a green card by
a U.S. employer, and then adjusting status when a green card becomes
available.'').
\109\ U.S. Citizenship and Immigration Services, H-1B
Authorized-to-Work Population Estimate (2020).
\110\ See Department of Homeland Security, 2017 Yearbook of
Immigration Statistics, Table 7. Persons Obtaining Lawful Permanent
Resident Status by Type and Detailed Class of Admission: Fiscal Year
2017, available at https://www.dhs.gov/immigration-statistics/yearbook/2017/table7.
\111\ Office of Foreign Labor Certification, Permanent Labor
Certification Program--Selected Statistics, FY 19, available at
https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.
---------------------------------------------------------------------------
Because of how many H-1B visa holders apply for EB-2 and EB-3
classifications, Congress has repeatedly amended the INA to account for
the close connection between the programs. For example, while H-1B
nonimmigrants are generally required to depart the U.S. after a maximum
of six years of temporary employment, Congress has exempted from that
requirement H-1B nonimmigrants who are beneficiaries of PERM labor
certification applications with the Department, or who are
beneficiaries of petitions for an employment-based immigrant visa with
DHS that have been pending for longer than a year, if certain other
requirements are met.\112\ Similarly, as noted above, Congress
established the INA's prevailing wage requirements in section 212(p)
with specific reference to the fact that they would apply in both the
H-1B and PERM programs.\113\
---------------------------------------------------------------------------
\112\ See Public Law 107-273, Sec. 11030A(a), 116 Stat. 1836
(2002).
\113\ See 144 Cong. Rec. S12741, S12756 (explaining that 8
U.S.C. 1182(p) ``spells out how [the prevailing] wage is to be
calculated in the context of both the H-1B program and the permanent
employment program in two circumstances.'').
---------------------------------------------------------------------------
The various features of the statutory framework governing the
programs, working in combination, have further tightened the
relationship between them. In particular, because H-1B workers can have
dual intent and, if they have a pending petition for an employment-
based green card, can remain in the U.S. beyond the 6-year period of
authorized stay limitation, many workers for whom an employer has filed
a PERM labor certification application are already working for that
same employer on an H-1B status.\114\ And because the method by which
employment-based green cards are allocated can result in significant
delays between when an alien is approved for a green card and when the
green card is actually issued, the period during which a worker can, in
some sense, have one foot in each program, is often protracted.\115\
---------------------------------------------------------------------------
\114\ See Congressional Research Service, The Employment-Based
Immigration Backlog (2020).
\115\ See 8 U.S.C. 1152(a)(2); U.S. Department of State, Visa
Bulletin For September 2020, https://travel.state.gov/content/travel/en/legal/visa-law0/visa-bulletin/2020/visa-bulletin-for-september-2020.html.
---------------------------------------------------------------------------
This system results in significant overlap in the principal uses of
the H-1B and PERM programs. H-1B petitions approved in FY 2019,\116\
and the vast majority of individuals waiting for adjudication of EB-2-
and EB-3-based adjustment of status applications, are concentrated in
the same countries of origin.\117\ Relatedly, LCAs and applications for
PERM labor certifications often are for job opportunities in the same
occupations. Data from the Department's OFLC shows that of the ten most
common occupations in which H-1B workers are employed, seven are also
among the ten most common occupations in which PERM workers are
employed. And PERM workers' wages are set based on the same methodology
used for H-1B workers.
---------------------------------------------------------------------------
\116\ U.S. Citizenship and Immigration Services, Characteristics
of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report
to Congress October 1, 2018-September 30, 2019, (2020), available at
https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf (showing 66 percent of H-1B petitions
approved in FY2019 were for computer-related occupations).
\117\ Congressional Research Service, The Employment-Based
Immigration Backlog (2020).
---------------------------------------------------------------------------
Given the evidence that these two programs are used similarly by
employers, and employ in many instances the same or at least similarly
situated foreign workers, the Department believes that it should treat
the H-1B and PERM programs similarly. The upshot is that the H-1B and
PERM programs are, in a variety of ways, inextricably conjoined. The
rules governing the programs and how employers use them mean that, in
many instances, workers in the PERM programs and workers in the H-1B
program are often the exact same workers doing the same jobs in the
same occupations for the same employers. And given the evidence of
similarity, the Department can reasonably infer that the current wage
levels under the four-tier structure--which result in inappropriately
low wage rates in some instances for H-1B workers--also result in
inappropriately low wage rates in some instances for the PERM programs.
This is also borne out by the fact that, as noted in the IFR, the
significant disparities between actual wages paid by heavy users of the
programs and prevailing wage rates discussed above in connection with
the H-1B program are also found in the PERM program.
2. Wage Level Methodology and Analytical Framework
Summary of Comments
Many commenters disagreed with the methodology and analytical
framework the Department used to determine the
[[Page 3623]]
appropriate prevailing wage rate, often asserting that the Department
inappropriately relied on wage data from a limited pool of employers in
the H-1B program and a pool of workers based on educational attainment
limited to workers in information technology jobs, rather than basing
the prevailing wage on market wages paid to workers in the applicable
occupational classification based on the requirements of the occupation
or employer's job opportunity. Several commenters also expressed
concern about the chosen percentiles, asserting that an entry-level
wage near the median for the occupation does not reflect real pay
structures.
Some commenters asserted the Department inappropriately conflated
the ``actual'' with the ``prevailing'' wage provisions in the INA and
the Department's regulations at 20 CFR 655.731(a)(1) and (a)(2). A
professional association stated it was improper to base prevailing
wages on the ``accomplishments, education or training of the employee''
because that is the focus of the actual wage provision, whereas the
prevailing wage is, ``by regulation, based on the requirements for the
position.'' A university commenter noted that the prevailing wage is
the wage paid to similarly employed workers, defined as ``positions
that have substantially comparable duties'' in the occupation and area
of employment and thus in prevailing wage determinations ``the
requirements of the position matters, not the skills that the
individual worker brings to the table.'' The commenter also asserted
the IFR incorrectly states that the new methodology does not change the
current wage determination process because the Department's 2009 PWD
guidance indicates PWDs begin at entry level and ``progress . . . only
after considering the experience, education, and skill requirements of
an employer's job description (opportunity).''
Related to these comments, many commenters believed it was improper
for the Department to rely solely on wages paid to workers that possess
a master's degree. A university commenter stated that the fact many H-
1B workers possess a master's degree or higher is ``attributed to the
fact that USCIS favors beneficiaries with more advanced degrees.'' Some
commenters asserted that determining prevailing wage levels based only
on wages paid to master's degree holders violates the INA because
Congress did not include a master's degree requirement as a
prerequisite for the employment-based visa programs. An association
noted the statute defines ``specialty occupation'' as ``an occupation
requiring a bachelor's degree as the minimum qualification for entry.''
Similarly, an immigration law firm believed that exclusion of wage data
from workers possessing less than a master's degree is ``baseless''
because ``attainment of a U.S. Bachelor's degree, or its equivalent, is
sufficient for H-1B eligibility provided the petitioner can show a
sufficient nexus between the degree earned and the offered position''
and ``the nexus of the degree specialty is a separate inquiry from
prevailing wage requirements.'' Noting that DHS regulations at 8 CFR
204.5(k)(2) ``equate[ ] a master's degree to a bachelor's degree plus 5
years of progressively responsible work experience,'' the commenter
asked how the same Level I wage can represent both a position requiring
a master's degree for entry and ``entry level H-1B occupations that
require a bachelor's degree in a specific specialty.''
Some commenters noted that a large number of occupations require at
least a master's degree for entry and that it is improper for the
Department to exclude the bottom third of wage data when determining
the Level I prevailing wage in these occupations. For example, a
university commenter stated that even if one accepts the prevailing
wage was set too low for IT occupations ``it is arbitrary to
extrapolate from that very limited data set that the prevailing wage
data set for other occupations is also lacking, especially for
occupations where the normal educational requirement is an advanced
degree.'' Similarly, a professional association noted that at least 99
occupations require an advanced degree for entry according to DOL
sources, including many that require a Ph.D., and that the bottom third
of wages in these occupations ``capture qualified and eligible H-1B
individuals.'' The commenter asserted the Department improperly
excluded from consideration ``one-third of the wages of individuals who
are `similarly employed' '' and ``essentially sets a minimum education
level for entry as those with at least a master's degree in most
professions.'' One commenter from academia stated that many H-1B
occupations that require a bachelor's degree are nonetheless
specialized and thus the Department should consider all wage data for
the occupation.
Several commenters also asserted that reliance on only wages paid
to workers possessing a master's degree is particularly inappropriate
for determining prevailing wages in the permanent labor certification
context because many job opportunities in that program are in
occupations that require no more than a bachelor's degree for entry. A
group of associations asserted the Department ignored the fact that
``about an equal number of individuals in H-1B status with advanced
degrees and Bachelor's degrees are sponsored for green card status.''
An immigration law firm stated the Department's reasoning focused
centrally on wages paid to H-1B workers and asked the Department to
explain how the ``prior wage levels as applied in the PERM program
negatively impact the wages of U.S. workers.'' The commenter noted the
PERM program differs from H-1B in relevant respects, including the
labor market test requirement and the fact that employers file PERM
petitions to fill ``a future permanent position'' that is ``not
necessarily the current position of the H-1B employee.'' Noting the
Department's acknowledgment that ``not all SOC [occupations] qualify as
a `specialty occupation,' '' this commenter asserted the IFR
methodology ``would arbitrarily raise salary requirements for
occupations that are not used in the H-1B program but are used in the
PERM program.'' This commenter also noted that the Department
acknowledged the new wage level methodology would create a ``premium''
on the wages of EB-3 workers and the commenter asserted the Department
failed to cite authority to ``require EB-3 petitioners to pay an
additional fee, above what would be required to ensure the wages of
U.S. workers are not negatively affected.''
Some commenters asserted that reliance on education alone when
considering relevant wage data was inappropriate because many other
factors can determine a worker's wage level. One commenter stated the
Department provided no evidence that workers with a bachelor's degree
``necessarily . . . make up a lower paid cohort of employees'' and
noted the Department's acknowledgment that ``H-1B workers with master's
degrees tend to be younger and less highly compensated than H-1B
workers with bachelor's degrees.'' The commenter noted that employers
will accept equivalent credentials like experience and training and may
base worker compensation on factors like ``experience, special skills,
history with the company or industry . . . [and] highly specialized
knowledge.'' Another commenter noted that someone with a bachelor's
degree and 10 years of experience might be paid more for the same job
opportunity than someone with a master's degree and 2 years of
experience, whereas a bachelor's degree holder with 2 years of
experience may be paid less. The prevailing wage in this
[[Page 3624]]
case would be based on the requirements for the position, whereas the
actual wage would be the wage paid to the worker employed in the
position and may depend on the worker's education and experience.
A number of commenters asserted it was improper for the Department
to rely only on wage data from workers in a limited set of information
technology occupations as the relevant benchmark for determining the
appropriate wage level. An anonymous commenter asserted that the
Department's reasoning focused solely on ``computer occupations'' and
the prevailing wage methodology based on that reasoning ``can therefore
only be applied to computer occupations.'' A university commenter noted
that many common occupations in the H-1B and PERM programs fall outside
of this occupation set, including many occupations in the education
sector, such as post-secondary teachers, several of which may require a
Ph.D. for entry. The commenter added that even if one assumes wages are
too low in the IT sector, ``it is arbitrary to extrapolate from that
very limited data set that the prevailing wage'' is too low in other
sectors.
Based on these concerns, some commenters urged the Department to
reconsider its decision in the IFR to use a uniform wage structure
across all occupations and programs. For example, a university
commenter suggested the Department should apply the pre-IFR wage level
methodology to occupations that normally require an advanced degree for
entry, according to O*Net, rather than discounting the first one-third
of occupational wage data for these occupations. One commenter
suggested the Department should apply the revised wage level
methodology to large IT employers and H-1B dependent employers, while
applying the ``PWD data from 07/01/2020-10/06/2020'' to occupations in
``medicine and health [070-079] and education [090-099].'' Similarly,
some commenters urged the Department to exempt specific positions in
the medical field from revised wage methodology or exempt all ACWIA-
eligible employers.
Many commenters also took issue with the reasoning behind setting
the Level I wage for entry-level workers at approximately the 45th
percentile. A public policy organization stated that placing entry
level workers close to the median wage in the occupation ``departs from
the English language definition of median'' and stated that, by
definition, ``[e]ntry level workers cannot be both at the bottom
quarter of the wage scale and at almost the median of the wage scale.''
A trade association stated that no employer sets compensation above the
occupational median wage for all entry-level workers ``completing
graduate or professional degrees with little professional experience.''
The commenter asserted the Department provided no evidence indicating a
near-median wage is ``the most reasonable and closest proxy'' for the
market wage paid to entry-level workers. A human resources professional
association stated that it is ``particularly important to reflect the
lower and higher range'' of an occupational wage distribution when
using the SOC system because the SOC occupations are ``hopelessly
broad'' and the commenter stated that SOC 11-9033 encompasses 126
distinct jobs in higher education.
Response to Comments
As noted, some commenters asserted that the Department
misinterpreted the INA in the IFR, specifically disagreeing with the
notion that the prevailing wage rate and the actual wage provided for
by the INA should approximate one another, and similarly contending
that the Department should not consider the accomplishments, education,
or training of the employee as those are considerations associated with
the actual wage requirement; rather, the Department should focus on the
requirements for the position. This argument, however, misreads the
statute, and also fails to understand a fundamental premise of the IFR.
The Department is not ignoring its regulations or guidance on how
prevailing wages rates are assigned; rather, the Department in this
rulemaking is doing something different. It is making an assessment of
how the four wage levels required by 8 U.S.C. 1182(p)(4) are to be
established.
To begin with, as the IFR discussed in detail, the INA requires
employers to pay H-1B workers the greater ``of the actual wage level
paid by the employer to all other individuals with similar experience
and qualifications for the specific employment in question,'' or the
``prevailing wage level for the occupational classification in the area
of employment.'' \118\ The statute further provides that, when a
government survey is used to establish the wage levels, ``such survey
shall provide at least 4 levels of wages commensurate with experience,
education, and the level of supervision.'' \119\ If an existing
government survey produces only two levels, the statute provides a
formula to calculate two intermediate levels.\120\ Thus, like the
statute's actual wage clause, the prevailing wage requirement, when
calculated based on a government survey, makes the qualifications
possessed by workers, namely education, experience, and responsibility,
an important part of the wage calculation.
---------------------------------------------------------------------------
\118\ 8 U.S.C. 1182(n)(1)(A).
\119\ 8 U.S.C. 1182(p)(4).
\120\ Id.
---------------------------------------------------------------------------
Put slightly different, both clauses yield wage calculations that
in similar fashions are designed to approximate the rate at which
workers in the U.S. are being compensated, taking into account the area
in which they work, the types of work they perform, and the
qualifications they possess. The statute requires employers to pay the
rate of whichever calculation yields the higher wage. In this way, the
statutory scheme is meant to ``protect U.S. workers' wages and
eliminate any economic incentive or advantage in hiring temporary
foreign workers.'' \121\ If employers are required to pay H-1B workers
approximately the same wage paid to U.S. workers doing the same type of
work in the same geographic area and with similar levels of education,
experience, and responsibility as the H-1B workers, employers will have
significantly diminished incentives to prefer H-1B workers over U.S.
workers, and U.S. workers' wages will not be suppressed by the presence
of foreign workers in the relevant labor market.
---------------------------------------------------------------------------
\121\ Labor Condition Applications and Requirements for
Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations
and as Fashion Models; Labor Certification Process for Permanent
Employment of Aliens in the United States, 65 FR 80110, 80110 (Dec.
20, 2000).
---------------------------------------------------------------------------
The Department therefore disagrees with commenters' contention that
the INA's actual wage clause and prevailing wage clause are not to be
understood and operationalized in similar fashions. Moreover, the
Department notes that, while commenters are correct that Department
guidance and regulations discuss the ``prevailing wage'' as something
that is assigned based on the requirements of a job opportunity, rather
than the qualifications of the specific worker who will fill the
position, the manner in which the ``prevailing wage'' for a specific
job is assigned is different from the manner in which the Department
establishes the four ``prevailing wage levels'' required by Sec.
1182(p)(4). For one thing, a prevailing wage for a specific job
opportunity is often assigned before the identity and actual
qualifications of the worker who will fill the position are known. As a
practical matter, it is therefore unavoidable that this would be done
by reference to job requirements as
[[Page 3625]]
opposed to the qualifications of an unknown worker. By contrast, the
Department sets the four wage levels that are used to calculate
specific prevailing wage rates by reviewing statistical data. The
review of statistical data necessarily occurs at a more general level
given that the four wage levels apply to broad swaths of workers and
occupations and therefore relies on information from surveys, which
often collect information about the skills possessed by particular
workers rather than the job requirements of specific jobs.\122\ It is
thus reasonable for the Department to consider the qualifications
possessed by actual workers in operationalizing section 1182(p)(4).
---------------------------------------------------------------------------
\122\ For example, both the NSF and CPS surveys the Department
used in the IFR survey individual workers about the wages they make
and the skills they possess, not the qualification requirements of
the jobs they fill.
---------------------------------------------------------------------------
In addition, the Department notes that it is a reasonable inference
that, in many cases, the skills possessed by an actual worker will
likely align with the qualification requirements of the job opportunity
such worker fills. Looking to the skills possessed by actual workers
thus should serve as a reasonable proxy in many cases for the
requirements of the job opportunities in which they work. Moreover, to
the extent the qualifications possessed by workers are different from
the requirements of the jobs they fill, the Department believes that
taking workers' actual skills and qualifications into account furthers
the purpose of the statute. As explained throughout, the INA's wage
provisions are designed to protect U.S. workers. In the labor market,
workers compete with other workers based on the skills and
qualifications those workers bring to the job--not based on what
qualifications an employer lists in a job opening. Giving some weight
to the actual characteristics of entry-level workers in the foreign
labor programs thus takes into account important factors that determine
how workers compete against one another over wages and job
opportunities. Ignoring workers' actual qualifications in setting the
wage levels would thus potentially weaken protections for U.S. workers
insofar as it would mean the Department was leaving out of its analysis
an important factor that influences employment outcomes.
Further, because, as noted, the actual wage clause and the
prevailing wage clause of the INA are designed to achieve similar
outcomes, serving as a form of belt-and-suspenders protection for U.S.
workers, and given that the actual wage clause does take into account
the specific qualifications possessed by actual workers, the Department
believes it is reasonable to similarly take into account the actual
qualifications of the workers when assessing survey data to set
prevailing wage levels.
Finally, the Department also notes that, to the extent commenters
suggest that the method by which the Department is setting the four
wage levels pursuant to section 1182(p)(4) contradicts the previous
method by which the Department set the wage levels, they are also
mistaken. As noted, the Department has never previously set the wage
levels through regulation. or has it ever explained its analysis or
provided an economic justification for why the wage levels are set as
they are. Rather, the old wage levels were set through a memorandum of
understanding between DOL components, which offered no explanation for
why the specific levels used were selected or how they comported with
the statute. This rulemaking is therefore the first time the Department
has undertaken to justify, and tether to the relevant statutory factors
the manner in which the wage levels are established. There is no prior
analytical framework to contradict because none was ever used. Again,
the distinction between assigning a prevailing wage rate and setting
prevailing wage levels pursuant to section 1182(p)(4) is key. While the
Department has longstanding regulations on the former, this rulemaking
is its first attempt to do the latter in a meaningful way.
Based, in part, on similar reasoning related to the actual
demographics of workers in the H-1B program, the Department also
concluded in the IFR, and continues to believe, that using master's
degree holders with limited work experience as a proxy for entry-level
workers in analyzing survey data to determine the entry-level wage for
its H-1B and PERM programs is appropriate.\123\ In particular, in the
IFR the Department examined the demographic characteristics of H-1B
workers and concluded that many entry-level workers in the program are
master's degree holders with limited work experience. In particular, a
review of data from USCIS about the characteristics of individuals
granted H-1B visas in fiscal years 2017, 2018, and 2019 indicates that
H-1B workers with master's degrees tend to be younger and less highly
compensated than H-1B workers with bachelor's degrees. On average,
individuals with master's degrees in the program are approximately 30
years old, whereas bachelor's degree holders are, on average, 32 years
old. This suggests that, while possessing a more advanced degree,
master's degree holders in the program are likely to have less relevant
work experience than their bachelor's degree counterparts.\124\
Relatedly, H-1B master's degree holders make, based on a simple
average, $86,927, whereas bachelor's degree holders make on average
$88,565.\125\ Given that differences in skills and experience often
explain differences in wages, this gap in average earnings and age
suggests that, while possessing a more advanced degree, master's degree
holders in the H-1B program tend to be less skilled and experienced--
and are therefore more likely to enter the program as entry-level
workers--than are bachelor's degree holders.\126\
---------------------------------------------------------------------------
\123\ Contrary to some commenters' contentions, the Department
did not look exclusively at educational attainment in assessing
where the entry-level wage should be placed. It also took into
account work experience. While commenters are correct that in some
cases factors other than education and work experience may influence
wages, these are the factors the INA requires the Department to
consider. Further, as explained in the IFR, education and experience
are often key determinants of levels of compensation, and therefore
allow for a reasonable differentiation among workers.
\124\ Age is a common proxy for potential work experience. See,
e.g., Rebecca Chenevert & Danial Litwok, Acquiring Work Experience
with age, United States Census Bureau, (2013) available at https://www.census.gov/newsroom/blogs/random-samplings/2013/02/acquiring-work-experience-with-age.html.
\125\ This analysis is based on data from U.S. Citizenship and
Immigration Services about the demographic characteristics of H-1B
workers.
\126\ Elka Torpey, Same occupation, different pay: How wages
vary, Bureau of Labor Statistics (2015), available at https://www.bls.gov/careeroutlook/2015/article/wage-differences.htm.
---------------------------------------------------------------------------
This conclusion is further bolstered by the fact that master's
degree holders have, in recent years, been the largest educational
cohort within the program. In FY2019, for instance, 54 percent of the
beneficiaries of approved H-1B petitions had a master's degree--whereas
only 36 percent of beneficiaries had only a bachelor's degree.\127\
These facts, in combination with the age and earnings profiles of
master's degree holders in the program, strongly suggest that a
significant number of entry-level H-1B workers are individuals with a
master's degree and very limited work experience. Because, as explained
above, the Department has determined
[[Page 3626]]
that the qualifications of actual workers are highly relevant to
establishing prevailing wage levels pursuant to section 1182(p)(4),
this analysis of the demographic characteristics of H-1B workers adds
critical weight to the Department's conclusion to use master's degree
holders as an analytical proxy for entry-level workers.
---------------------------------------------------------------------------
\127\ U.S. Citizenship and Immigration Services, Characteristics
of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report
to Congress October 1, 2018-September 30, 2019, (2020), available at
https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf.
---------------------------------------------------------------------------
To further address commenters' concerns that master's degree
holders with limited work experience are an inappropriate proxy for
entry-level H-1B workers, the Department notes that, contrary to some
commenters' contentions, this approach is consistent with the baseline
qualification requirements in the INA for the H-1B program, as well as
for EB-2 visas. For one thing, the statutory criteria for who can
qualify as an EB-2 worker provide a clear, analytically useable
definition of the minimum qualifications workers within that
classification must possess. Even the least experienced individuals
within the EB-2 classification are likely to have at least a master's
degree or its equivalent.\128\ Possession of an advanced degree is thus
a meaningful baseline with which to describe entry-level workers in the
EB-2 classification.
---------------------------------------------------------------------------
\128\ See 8 U.S.C. 1153(b)(2)(A) (``Visas shall be made
available . . . to qualified immigrants who are members of the
professions holding advanced degrees or their equivalent . . .'').
---------------------------------------------------------------------------
As noted in the IFR, the baseline qualifications needed to obtain
entry as an H-1B worker are different. An individual with a bachelor's
degree in a specific specialty, or its equivalent, may qualify for an
H-1B visa; a master's degree is not a prerequisite.\129\ However, the
bachelor's degree or equivalent must be in a specific specialty. A
generalized bachelor's degree is insufficient to satisfy the
requirement that H-1B workers possess highly specialized
knowledge.\130\ Further, the statute requires that the individual be
working in a job that requires the application of ``highly specialized
knowledge.'' \131\ Again, this means, contrary to some commenters'
assertions, that for the H-1B program the possession of any kind of
bachelor's degree is not the baseline qualification criterion for
admission. Something more is needed. The ultimate inquiry rests also on
whether the individual can and will be performing work requiring highly
specialized knowledge.
---------------------------------------------------------------------------
\129\ 8 U.S.C. 1184(i).
\130\ See Chung Song Ja Corp. v. U.S. Citizenship & Immigration
Servs., 96 F. Supp. 3d 1191, 1197-98 (W.D. Wash. 2015).
\131\ 8 U.S.C. 1184(i).
---------------------------------------------------------------------------
As with aliens in the EB-2 classification, looking to the earnings
of individuals with a master's degree provides an appropriate and
analytically useable proxy for purposes of analyzing the wages of
typical, entry-level workers within the H-1B program. For one thing,
master's degree programs are, generally speaking, more specialized
courses of study than bachelor's degree programs. Thus, while the fact
that an individual possesses a bachelor's degree does not necessarily
suggest one way or another whether the individual possesses the kind of
specialized knowledge required of H-1B workers, the possession of a
master's degree is significantly more likely to indicate some form of
specialization. Although a master's degree alone does not automatically
mean an individual will qualify for an H-1B visa, possession of a
master's degree--something that is surveyed for in a variety of wage
surveys--is thus a better proxy for specialized knowledge than is
possession of a bachelor's degree for purposes of the Department's
analysis. While possession of a bachelor's degree is also commonly
surveyed for, mere possession of a bachelor's degree is not nearly as
reliable an indicator that the degree holder possesses specialized
knowledge.
Importantly, the Department is not claiming that all entry-level
workers in the H-1B program possess a master's degree, or that
possession of a bachelor's degree in a specific specialty such as would
demonstrate specialized knowledge is in all cases the equivalent of
having a master's degree. To reiterate, the Department is using
master's degree holders with limited work experience as a proxy for
entry-level workers purely for analytical purposes. As more fully
explained below, because the OES survey does not capture data on
workers' education and experience--the factors that the INA requires
the Department to take into account in establishing wage levels--the
Department sought in the IFR to identify where within the OES wage
distribution the entry-level wage should fall by consulting other
survey sources that do gather information on education and experience.
Doing so necessarily requires the Department to identify an appropriate
wage comparator or group of comparators for entry-level H-1B and PERM
workers within those survey sources to ensure that the wage level for
entry-level workers set based on that data reflects what workers with
similar qualifications to entry-level H-1B and PERM workers are paid.
For the reasons given above the Department, in its discretion, has
determined that using master's degree holders as an analytical proxy
for entry-level workers in these high-skilled programs is a reasonable
method of assessing wage data for purposes of establishing the entry-
level wage.
As noted, commenters also criticized the conclusion the Department
reached about where to place the entry-level wage in the IFR based on
its analysis of wage data about master's degree holders, arguing that
placing the entry-level wage at approximately the 45th percentile is
axiomatically in error given that entry-level workers do not, by
definition, start out making more than almost half of all workers in an
occupation. Although for the reasons given below the Department has
decided to adjust the entry-level wage downward to the 35th percentile,
the Department disagrees with commenters that setting the entry-level
wage closer to the median of the OES distribution is inappropriate. As
explained in the IFR, the interplay between the statutory framework
governing the prevailing wage and the OES survey data demonstrate that,
for the top H-1B and PERM occupations, workers at the lower end of the
OES distribution in the most common H-1B occupations likely would not
qualify as working in a ``specialty occupation,'' as that term is
defined in the INA, and thus do not have education and experience
comparable to even the least qualified H-1B worker--a contention
generally not disputed by commenters--meaning their wage data must be
discounted in setting wages for entry-level H-1B workers. In
consequence, while a wage close to the median does not represent what
all entry-level workers in a given occupation generally make, it is
entirely reasonable that the wage for the vast run of entry-level
workers covered by the four-tier wage structure, many of whom are
required to possess more specialized skills, would fall closer to the
median.
As explained above, the Department interprets the INA's wage
provisions to require it to take into account the education,
experience, and responsibility of workers in setting wage levels for
the H-1B program. It is therefore necessary to identify what types of
U.S. workers in a given occupation have comparable levels of education,
experience, and responsibility to H-1B workers. The Department did so
by looking to wage data about master's degree holders with limited work
experience in occupations in which H-1B workers are commonly employed.
While the INA makes clear that the prevailing wage levels must be set
commensurate with education, experience, and level of supervision, it
leaves assessment of those factors to the Department's discretion. How
the
[[Page 3627]]
Department exercises that discretion is informed by the legislative
context in which the four-tier wage structure was enacted, which
indicates that the wage levels are primarily designed for use in the
Department's high-skilled and PERM foreign labor programs.\132\ Other
provisions in the INA relating to the education and experience
requirements of those programs--and in particular the statutory
definition of ``specialty occupation''--therefore serve as critical
guides for how wage levels based on experience, education, and level of
supervision should be formulated.
---------------------------------------------------------------------------
\132\ See Consolidated Appropriations Act, 2005, Public Law 108-
447, div. J, tit. IV, Sec. 423; 118 Stat. 2809 (Dec. 8, 2004).
---------------------------------------------------------------------------
Under the INA, H-1B visas can, in most cases, only be granted to
aliens entering the U.S. to perform services ``in a specialty
occupation.'' \133\ The statute defines ``specialty occupation'' as an
occupation that requires theoretical and practical application of a
body of ``highly specialized knowledge'' and the ``attainment of a
bachelor's or higher degree in the specific specialty (or its
equivalent) as a minimum for entry into the occupation in the United
States.'' \134\ An alien may be classified as an H-1B specialty
occupation worker if the alien possesses ``full state licensure to
practice in the occupation, if such licensure is required to practice
in the occupation,'' ``completion of [a bachelor's or higher degree in
the specific specialty (or its equivalent)],'' or ``(i) experience in
the specialty equivalent to the completion of such degree, and (ii)
recognition of expertise in the specialty through progressively
responsible positions relating to the specialty.'' \135\ DHS
regulations further clarify the requirements for establishing that the
position is a specialty occupation and that the beneficiary of an H-1B
petition must be qualified for a specialty occupation.\136\ The
Department's regulations restate the statute's definition of specialty
occupation essentially verbatim.\137\
---------------------------------------------------------------------------
\133\ 8 U.S.C. 1101(a)(15)(H)(i)(b).
\134\ 8 U.S.C. 1184(i)(1).
\135\ 8 U.S.C. 1184(i)(2).
\136\ 8 CFR 214.2(h)(4)(iii) (A) and C).
\137\ See 20 CFR. Sec. 655.715.
---------------------------------------------------------------------------
A few features of the definition bear emphasizing. First, the
statute sets the attainment of a bachelor's degree in a specific
specialty, or experience that would give an individual expertise
equivalent to that associated with a bachelor's degree in the specific
specialty, as the baseline, minimum requirement for an alien to qualify
for the classification. Of even greater importance, having any
bachelor's degree as a job requirement is not sufficient to qualify a
job as a specialty occupation position--the bachelor's degree or
equivalent experience required to perform the job must be ``in the
specific specialty.'' In other words, the bachelor's degree required,
or equivalent experience, must be specialized to the particular needs
of the job, and impart a level of expertise greater than that
associated with a general bachelor's degree, meaning a bachelor's
degree not in some way tailored to a given field.\138\ These aspects of
the definition play an important role in how the Department uses data
from the BLS OES survey to set appropriate prevailing wage levels.
---------------------------------------------------------------------------
\138\ See Chung Song Ja Corp. v. U.S. Citizenship & Immigration
Servs., 96 F. Supp. 3d 1191, 1197-98 (W.D. Wash. 2015) (``Permitting
an occupation to qualify simply by requiring a generalized bachelor
degree would run contrary to congressional intent to provide a visa
program for specialized, as opposed to merely educated, workers.'');
Caremax Inc v. Holder, 40 F. Supp. 3d 1182, 1187-88 (N.D. Cal. 2014)
(``A position that requires applicants to have any bachelor's
degree, or a bachelor's degree in a large subset of fields, can
hardly be considered specialized.'').
---------------------------------------------------------------------------
The OES survey categorizes workers into occupational groups defined
by the SOC system, a federal statistical standard used by federal
agencies to classify workers into occupational categories for the
purpose of collecting, calculating, or disseminating data.\139\ An
informative source on the duties and educational requirements of a wide
variety of occupations, including those in the SOC system, is the
Department's Occupational Outlook Handbook (OOH), which, among other
things, details for various occupations the baseline qualifications
needed to work in each occupation. A review of the OOH shows that only
a portion of the workers covered by many of the occupational
classifications used in the OES survey likely have levels of education
and experience similar to those of H-1B workers in the same occupation.
Some share of workers in these classifications likely do not have the
education or experience qualifications necessary to be considered
similarly employed to specialty occupation workers. Because the INA
requires the prevailing wage levels for H-1B workers to be set based on
the wages of U.S. workers with levels of experience and education
similar to those of H-1B workers, the Department must take this into
account when using OES data to determine prevailing wages.
---------------------------------------------------------------------------
\139\ U.S. Bureau of Labor Statistics, Standard Occupational
Classification, https://www.bls.gov/soc/.
---------------------------------------------------------------------------
For example, a common occupational classification in which H-1B
nonimmigrants work is Computer Programmers.\140\ In some cases, the
work of a computer programmer may involve writing basic computer code
and testing it.\141\ The OOH's entry for Computer Programmers describes
the educational requirements for the occupation as follows: ``Most
computer programmers have a bachelor's degree; however, some employers
hire workers with an associate's degree.'' \142\ In other words, while
common, a bachelor's degree-level education, or its equivalent, is not
a prerequisite for working in the occupation. USCIS and at least one
court have reasoned from this that the mere fact that an individual is
working as a Computer Programmer does not establish that the individual
is working in a ``specialty occupation.'' \143\ Because a person
without a specialized bachelor's degree can still be classified as a
Computer Programmer, some portion of Computer Programmers captured by
the OES survey are not similarly employed to H-1B workers because the
baseline qualifications to enter the occupation do not match the
statutory requirements.\144\
---------------------------------------------------------------------------
\140\ Office of Foreign Labor Certification, H-1B Temporary
Specialty Occupations Labor Condition Program--Selected Statistics,
FY 2019, available at https://www.foreignlaborcert.doleta.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf.
\141\ Bureau of Labor Statistics, Occupational Outlook Handbook,
Computer Programmers, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-programmers.htm..
\142\ Id.
\143\ See Innova Sols., Inc. v. Baran, 399 F. Supp. 3d 1004,
1015 (N.D. Cal. 2019).
\144\ As noted throughout, under the INA a bachelor's degree is
not an absolute prerequisite for obtaining an H-1B visa. Work
experience imparting comparable levels of expertise will also
suffice. Indeed, as the President has noted in other contexts,
focusing on possession of a degree to the exclusion of work
experience ignores important considerations about how merit and
qualifications should be assessed. See Exec. Order No. 13932, 85 FR
39457 (2020). The Department's focus on the OOH's description of
degree requirements here is not meant to suggest otherwise, but
rather simply accounts for the fact that, within the H-1B program,
nearly all nonimmigrants hold a degree. See U.S. Citizenship and
Immigration Services, Characteristics of H-1B Specialty Occupation
Workers Fiscal Year 2019 Annual Report to Congress October 1, 2018-
September 30, 2019, (2020), available at https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf. Further, under the INA, EB-2 and EB-3
immigrants are, in many cases, required to possess a degree. And, in
any event, the Department's assessment of the OOH's descriptions of
education requirements and how they demonstrate that, for the most
common H-1B occupations, there is some portion of workers who would
not qualify as working in a specialty occupation holds true for the
OOH's description of various occupations' experience requirements.
The mere fact that OOH describes many workers in an occupation as
having several years of experience in or skills relevant to their
respective fields does not necessarily mean that they possess
``highly specialized knowledge,'' or that all workers in the
occupation have such experience. See Royal Siam Corp. v. Chertoff,
484 F.3d 139, 147 (1st Cir. 2007). See also Bureau of Labor
Statistics, Occupational Outlook Handbook, Computer Systems
Analysts, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-systems-analysts.htm; Bureau of
Labor Statistics, Occupational Outlook Handbook, Food Service
Managers, available at https://www.bls.gov/ooh/management/food-service-managers.htm. Whether discussing education or experience
requirements, the fact remains that OOH's description of the
occupational classifications used in the BLS OES are, in most cases,
not limited to workers who would qualify as working in a specialty
occupation.
---------------------------------------------------------------------------
[[Page 3628]]
The same is true for other occupational classifications in which H-
1B workers are often employed. For example, the Medical and Health
Services Manager occupation, as described by the OOH, does not in all
cases require a bachelor's degree as a minimum requirement for
entry.\145\ USCIS has therefore concluded that the fact that an
individual works in that occupational classification does not
necessarily mean that the individual is working in a ``specialty
occupation.'' \146\ USCIS and its predecessor agency, the Immigration
and Naturalization Service, have long emphasized that the term
``specialty occupation'' does not ``include those occupations which
[do] not require a bachelor's degree in the specific specialty.'' \147\
In other words, if not all jobs in an occupational classification
require a specialized bachelor's degree or equivalent experience, under
the INA other evidence is needed to show that a worker will be
performing duties in a specialty occupation beyond whether the job
opportunity falls within a particular SOC classification.\148\
---------------------------------------------------------------------------
\145\ See Ajit Healthcare Inc. v. U.S. Dep't of Homeland Sec.,
2014 WL 11412671, at 4 (C.D. Cal. Feb. 7, 2014); see also Bureau of
Labor Statistics, Occupational Outlook Handbook, Medical and Health
Services Managers, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-programmers.htm. The Department
notes that some courts and USCIS have concluded that the fact that
an occupation does not in all cases require a bachelor's degree as a
minimum qualification does not necessarily preclude the occupational
classification from serving as evidence that a particular job
qualifies as a ``specialty occupation.'' See, e.g., Taylor Made
Software, Inc. v. Cuccinelli, 2020 WL 1536306, at 6 (D.D.C. Mar. 31,
2020); see also 8 CFR 214.2(h)(4)(iii). That said the INA ultimately
does not admit of any exceptions to the rule that a job must require
a bachelor's degree in a specific specialty, or its equivalent, to
qualify as a specialty occupation, meaning, whatever its relevance
to determining whether a particular job is in a ``specialty
occupation,'' the fact that many SOC classifications contain workers
that would not meet the statutory definition is highly relevant to
how OES data for an entire occupational classification is used in
setting prevailing wage levels. Put another way, as the court in
Taylor Made acknowledged, the fact that a bachelor's degree is not
required in all cases for a given occupation means that some number
of workers within the occupation are not performing work in a
specialty occupation. Id. Because such workers are almost certainly
captured within OES data, and the Department calculates prevailing
wages by taking into account the actual wages reported for broad
swaths of workers in the OES data, the presence of these workers in
the survey data directly relates to how prevailing wage levels are
set, even if it does not have a great deal of significance for how a
single, specific job in an occupation is determined to be or not to
be in a ``specialty occupation.''
\146\ See Ajit Healthcare, 2014 WL 11412671, at 4.
\147\ Temporary Alien Workers Seeking Classification Under the
Immigration and Nationality Act, 56 FR 61,111, 61,113 (Dec. 2, 1991)
(emphasis added).
\148\ 8 U.S.C. 1184(i); see Royal Siam Corp. v. Chertoff, 484
F.3d 139, 147 (1st Cir. 2007).
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A review of the OOH entries for the occupations in which H-1B
nonimmigrants most commonly work demonstrates that most H-1B workers
fall within SOC classifications that include some number of workers who
would not qualify for employment in a specialty occupation. For
instance, the OOH entries for Software Developers--an occupation
accounting for over 40 percent of all certified LCAs \149\--provides
that such workers ``usually have a bachelor's degree in computer
science and strong computer programming skills.'' \150\ For Computer
Systems Analysts, which make up approximately 8.8 percent of all
certified LCAs,\151\ ``a bachelor's degree in a computer or information
science field is common, although not always a requirement. Some firms
hire analysts with business or liberal arts degrees who have skills in
information technology or computer programming.'' \152\ Similarly, the
O*Net database, which surveys employers on the types of qualifications
they seek in workers for various occupations, shows that, on average,
over 13 percent of all jobs in the occupations that H-1B workers are
most likely to work in do not require workers to have even a bachelor's
degree.\153\ Moreover, the O*Net does not differentiate between jobs
that require bachelor's degrees in specific specialties and job for
which a general bachelor's degree will suffice. It is therefore a
reasonable inference that the percentage of jobs in these occupations
that would not qualify as specialty occupation positions for purposes
of the INA is almost certainly even higher.
---------------------------------------------------------------------------
\149\ Office of Foreign Labor Certification, H-1B Temporary
Specialty Occupations Labor Condition Program--Selected Statistics,
FY 2019, available at https://www.foreignlaborcert.doleta.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf
\150\ Bureau of Labor Statistics, Occupational Outlook Handbook,
Software Developers, available at https://www.bls.gov/ooh/computer-and-information-technology/software-developers.htm.
\151\ Office of Foreign Labor Certification, H-1B Temporary
Specialty Occupations Labor Condition Program--Selected Statistics,
FY 2019, available at https://www.foreignlaborcert.doleta.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf
\152\ Bureau of Labor Statistics, Occupational Outlook Handbook,
Computer Systems Analysts, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-systems-analysts.htm
\153\ See Office of Foreign Labor Certification, H-1B Temporary
Specialty Occupations Labor Condition Program--Selected Statistics,
FY 2019, available at https://www.foreignlaborcert.doleta.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf; O*NET
Online, https://www.onetonline.org/.
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Simply put, the universe of workers surveyed by the OES for some of
the most common occupational classifications in which H-1B workers are
employed is larger than the pool of workers who can be said to have
levels of education and experience comparable to those of even the
least skilled H-1B workers performing work in a specialty occupation.
Because the statutory scheme requires the Department to set the
prevailing wage levels based on what workers similarly employed to
foreign workers make, taking into account workers' qualifications and,
as noted, the large majority of foreign workers are H-1B workers, it
would be inappropriate to consider the wages of the least educated and
experienced workers in these occupational classifications in setting
the prevailing wage levels. To conclude otherwise would place the
Department at odds with one of the purposes of the INA's wage
protections: to ensure that foreign workers earn wages comparable to
the wages of their U.S. counterparts.
As a result, it is entirely reasonable that the entry-level wage
for H-1B workers would fall closer to the median of the OES
distribution. The OES survey is not specifically designed to serve the
Department's foreign labor programs. It does not survey for education
and experience--the factors the INA requires the Department to consider
in setting prevailing wage levels--which is why the Department looks to
other survey sources, like the NSF and CPS, to make assessments about
where within the OES distribution workers with particular education and
experience levels are likely to fall. So too, as demonstrated by the
above analysis of the OOH, its occupational classifications are not
delineated so as to exclude workers who could not be regarded as
working in a specialty occupation, meaning only a portion of the OES
distribution for many occupations is actually relevant to how the
Department sets wages for the H-1B program. As a result, the median of
the OES distribution is not necessarily the
[[Page 3629]]
median of the distribution of workers who have qualifications
comparable to H-1B workers. The median of that distribution will likely
in many cases fall above the median of the overall OES distribution
since lower skilled, and therefore less highly compensated workers will
be excluded.
On this last point, commenters also argued that the IFR's analysis
improperly focused on only certain occupations, and that, for other
occupations, most particularly those requiring an advanced degree, the
above reasoning about how SOC classifications should be assessed in
light of the statutory framework is inapposite. Relatedly, a number of
commenters faulted the Department for focusing much of its analysis on
the H-1B program, claiming the Department did not take adequate account
of the array of occupations for which labor certification is sought in
the PERM program. Despite these comments, for the reasons discussed
above, the Department continues to believe that focusing its analysis
on those programs and occupations that account for the largest share of
workers covered by the four-tier wage structure is appropriate and
consistent with the approach the Department has taken in setting wages
in other foreign labor programs. Doing so is, in the Department's
judgment, the most appropriate way to ensure U.S. workers are protected
to the greatest extent possible in light of the fact that the
Department's wage structure applies to a large and varied class of
workers and occupations. Further, the Department acknowledges that PERM
workers and advanced degree occupations are entitled to some weight in
the Department's decision over how to set wage levels. As discussed at
greater length below, taking into account these aspects of the issue
addressed by this rule played an important part in the Department's
decision to reduce the entry-level wage from the 45th percentile to the
35th percentile.
To explain its focus on H-1B workers, the Department notes that the
H-1B program accounts, by order of magnitude, for the largest share of
foreign workers covered by the Department's four-tier wage structure.
Upwards of 80 percent of all workers admitted or otherwise authorized
to work under the programs covered by the wage structure are H-1B
workers.\154\ This, in combination with the fact that, as explained in
an earlier section, the risk of adverse effects to U.S. workers posed
by the presence of foreign workers is most acute where there are high
concentrations of such workers, supports the Department's determination
to pay special attention to the H-1B program in how it sets wages.
Because the wage structure governs wages for hundreds of thousands of
workers across five different foreign labor programs and hundreds of
different occupations, no wage methodology will be perfectly tailored
to the unique circumstances of every job opportunity.\155\ Advancing
the INA's purpose of guarding against displacement and adverse wage
effects against this statutory backdrop therefore means, in the
Department's judgment, that particular weight should be given in the
Department's analysis to those aspects of the problem this rule
addresses where there is the greatest danger to U.S. workers' wages--
hence the added focus on the H-1B program.
---------------------------------------------------------------------------
\154\ See Department of Homeland Security, 2017 Yearbook of
Immigration Statistics, Table 7. Persons Obtaining Lawful Permanent
Resident Status by Type and Detailed Class of Admission: Fiscal Year
2017, available at https://www.dhs.gov/immigration-statistics/yearbook/2017/table7; United States Citizenship and Immigration
Services, Characteristics of H-1B Specialty Occupation Workers:
Fiscal Year 2017 Annual Report to Congress October 1, 2016--
September 30, 2017, (2020), available at https://www.uscis.gov/sites/default/files/document/foia/Characteristics_of_H-1B_Specialty_Occupation_Workers_FY17.pdf.
\155\ Cf. Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3461 (Jan. 19, 2011)
(justifying wage methodology designed for lower-skilled workers that
was adopted in the H-2B program on grounds that the program ``is
overwhelmingly used for work requiring lesser skilled workers,''
while also acknowledging that ``not all positions requested through
the H-2B program are for low-skilled labor.'').
---------------------------------------------------------------------------
Relatedly, the Department notes that the H-1B program is linked
closely to the PERM programs that are also covered by the Department's
wage structure. For one thing, there is significant overlap in the
types of occupations in which H-1B and PERM workers are employed.\156\
For example, the top ten most common H-1B occupations include seven of
the ten most common PERM occupations. Through the third quarter of FY
2020, 80 percent of PERM cases were for jobs in Job Zones 4 and 5
\157\--the most highly skilled job categories, which also account for
94 percent of all H-1B cases.\158\ Moreover, it is also clear that H-1B
status often serves as a pathway to employment-based green card status
for many foreign workers and that a very substantial majority of
workers covered by PERM labor certification applications are already
working in the U.S. as H-1B nonimmigrants.\159\ In FY 2019, 68.2
percent of all PERM applications were for aliens that at the time the
applications were filed were already working in the U.S. on H-1B
visas.\160\ For these reasons, giving particular attention to the H-1B
program in determining how to adjust the wage levels is entirely
consistent with also ensuring that how the wage levels are applied in
the PERM programs is properly accounted for in the Department's
analysis.
---------------------------------------------------------------------------
\156\ In FY2019, 68.2 percent of all PERM labor certification
applications filed were for H-1B workers already working in the
United States. Office of Foreign Labor Certification, Permanent
Labor Certification Program--Selected Statistics, FY 19, available
at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.
\157\ Under the O*Net system a job zone is a group of
occupations that are similar in the amount of education, experience,
and on the job training that is required for a worker to fill a
position in the occupation. Job Zone 4 includes occupations that
require considerable preparation; Job Zone 5 includes occupations
that require extensive preparation. See https://www.onetonline.org/help/online/zones.
\158\ This information is based on data collected by the
Department's Office of Foreign Labor Certification on LCAs filed
between March 1, 2020, and August 14, 2020.
\159\ See Sadikshya Nepal, The Convoluted Pathway from H-1B to
Permanent Residency: A Primer, Bipartisan Policy Center (2020).
\160\ Office of Foreign Labor Certification, Permanent Labor
Certification Program--Selected Statistics, FY 19, available at
https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.
---------------------------------------------------------------------------
Similarly, the Department has concluded, in its discretion, that
the Level I wage should be established based on the wages paid to
workers in those occupations that make up a substantial majority of the
applications filed in the H-1B, H-1B1, E-3, and PERM programs. This
also ensures that the Department appropriately takes into account the
size and breadth of the programs covered by the four-tier wage
structure by giving special attention to those areas where the risk to
U.S. workers' wages and job opportunities is most severe by virtue of
having high concentrations of H-1B and PERM workers. Commenters are
incorrect that the Department's decision to take this focus means it
only looked at computer occupations. Rather, the Department looked at
all occupations that account for one percent or more of the total H-1B
population. While many of these occupations are computer-related, some
are not. Further, while commenters are correct that there are as many
as 99 occupations that require advanced degrees, the Department notes
that this is out of a total of over 550 occupations covered by the OOH.
Further, those 99 occupations account for an even smaller share of the
actual workers who are employed under the Department's four-tier wage
structure. While this does not
[[Page 3630]]
mean that due attention should not be given to how the wage levels
affect workers in advanced degree occupations, it does guide the
relative weight these occupations are given in the Department's
analysis.
Despite their disagreement with the methodology employed by the
Department, commenters generally did not offer alternative ways to
balance using a single wage structure across all five programs and
hundreds of different occupations with varying skill requirements
against the need to protect U.S. workers as fully as possible. Some
commenters suggested as an alternative that different occupations or
groups of occupations should be subject to a separate analysis and
different wage structure. The Department has considered this option and
believes that the utility of preserving a uniform wage structure across
all programs and occupations outweighs any benefits that might be
achieved by promulgating multiple, occupation or program-specific wage
structures. The Department continues to believe that its method of
doing so is the best available option as it is consistent with the
approach the Department has taken in other foreign labor programs and
focuses the Department's analysis on those areas where the risk to U.S.
workers is greatest.
As for treating the PERM programs differently than the H-1B
program, the Department notes that its analysis of highly skilled
workers with advanced degrees and/or specialized knowledge--namely the
EB-2 immigrant classification and the H-1B, E-3, and H-1B1 nonimmigrant
programs--already takes into full account a large portion of the PERM
program. With respect to the EB-3 classification, it is also noteworthy
that many H-1B workers adjust status to that of lawful permanent
residents through EB-3 classification, and the manner in which the
programs operate means that, in many cases, foreign workers can, in
some sense, have one foot in each program simultaneously for extended
periods of time. Using different wage methodologies in the programs
would therefore result in the incongruous possibility of a worker doing
the same job for the same employer suddenly receiving a different wage
upon adjusting status. Similarly, while having somewhat different
eligibility criteria, the EB-2 and EB-3 classifications are not
mutually exclusive: many workers that satisfy the eligibility criteria
for one would also do so for the other.\161\ Applying the same wage
methodology in both classifications is therefore important to ensure
consistent treatment of similarly situated workers and prevent the
creation of incentives for employers to prefer one classification over
the other because different wage methodologies yield different
wages.\162\ Thus, it is key in the Department's judgment that the EB-3
classification be treated the same as the EB-2 classification and H-1B
program. More generally, continuing to employ the same wage structure
across both the H-1B and PERM programs advances the Department's
interest in administrative consistency and efficiency. Because there is
significant overlap between the H-1B and PERM programs, they have long
been regulated in connection with one another. Moreover, to the extent
commenters assert that the IFR's wage levels resulted in
inappropriately high wages for certain workers in advanced degree
occupations, the Department notes that its decision to reduce the
entry-level wage should, to some degree, ameliorate this concern.
---------------------------------------------------------------------------
\161\ See Musunuru v. Lynch, 831 F.3d 880, 885 (7th Cir. 2016)
(describing a person applying for both EB-2 and EB-3 status).
\162\ See Comite' De Apoyo A Los Trabajadores Agricolas v.
Perez, 774 F.3d 173, 185 (3d Cir. 2014) (noting loopholes that can
be created if employers are able to use different methodologies to
calculate wages for the same types of workers).
---------------------------------------------------------------------------
For several reasons, the Department has also determined that
occupation-specific wage structures are undesirable. For starters,
calculating multiple different wage structures based on occupation
would be a substantial and costly administrative undertaking for
multiple components within the Department. There are over 800 different
occupations in the SOC classification system used in the OES survey.
The analysis needed to tailor different wage structures to each
occupation would be an enormous undertaking, even assuming it were
possible to conduct a meaningful, occupation-by-occupation analysis.
Further, the burden on BLS to produce hundreds of different wage levels
every year across various occupations would simply be unsustainable.
In addition, treating different occupations differently would
create an opportunity and incentive, in some cases, for employers to
misclassify workers in order to take advantage of lower wage rates.
This is something that the Department already encounters by virtue of
having different wage methodologies for different nonimmigrant programs
that cover different types of jobs. Introducing the possibility of
securing a different wage methodology within the H-1B and PERM programs
would similarly allow employers ability to seek lower wages even if
such wages are not the right wage for the job opportunity in question
and result in adverse effects on U.S. workers. Again, this also means
that, barring a compelling reason to introduce this kind of
disuniformity into the H-1B and PERM programs, a single wage structure
should be preserved. And the Department does not believe that there is
such a compelling reason to disaggregate the wage methodology by
occupation. While certain advanced degree occupations present somewhat
different considerations in terms of how wage rates should be provided
as compared to the top H-1B and PERM occupations the Department focused
on in its analysis in the IFR, the Department reiterates that, as
explained more fully below, the effects of the new wage methodology on
advanced degree occupations have been given significant weight in the
Department's analysis of where to set the entry-level wage. The
Department therefore believes that adjusting the IFR's entry-level wage
down to the 35th percentile--together with other features of the
system, discussed below--adequately accounts for the interests of
workers and employers in advanced degree occupations and will more
consistently supply wage rates that are appropriate across a broader
range of occupations. Moreover, other changes made in this final rule,
including eliminating the use of the default wage of $208,000 per year
for all four wage levels in cases where BLS cannot supply a Level IV
wage (an issue that was of particular concern for commenters that
discussed how the IFR affected employers of workers in advanced degree
occupations), will also reduce the incidence of job opportunities
requiring an advanced degree being assigned inflated wage rates.
Moreover, the Department notes that the use of a single wage
structure has been its practice ever since it began using leveled wages
in the H-1B and PERM programs. Twenty years of experience shows that
using a single wage structure across all occupations is not
unmanageable for employers. Indeed, given that the previous wage levels
were selected with no analysis or explanation, the Department
anticipates that its revised levels will in fact produce more
appropriate outcomes in a larger number of cases across different
occupations. For the first time the Department has undertaken a
meaningful analysis of what wage levels
[[Page 3631]]
will yield prevailing wage rates in the largest number of cases
possible that are consistent with the wages paid to U.S. workers
similarly employed and with comparable levels of education, experience,
and responsibility to H-1B and PERM workers. In consequence, preserving
a single wage structure should, if anything, be even more feasible and
reasonable now than it was when the old wage levels were operative.
Further, the INA allows an employer to use the best available
information at the time of filing an LCA in setting the wages in the H-
1B program.\163\ If an employer does not believe the OES wage provided
by the Department is the best available information at the time of
filing, the employer may utilize an alternative prevailing wage survey
provided by an independent authoritative source or another legitimate
source of wage information.\164\ Such alternative sources of wage
information are, in the Department's experience, widely available, and
provide a backstop for employers, thereby reducing any need to create
multiple, precisely tailored wage structures for different occupations.
---------------------------------------------------------------------------
\163\ 8 U.S.C. 1182(n)(1)(A)(i)(II).
\164\ 20 CFR 655.731(a)(2)(ii)(B) and (C).
---------------------------------------------------------------------------
The Department defines a prevailing wage survey published by
independent authoritative source as ``a prevailing wage survey for the
occupation in the area of intended employment published . . . in a
book, newspaper, periodical, loose-leaf service, newsletter, or other
similar medium, within the 24-month period immediately preceding the
filing of the employer's application.'' \165\ The independent
authoritative source should: (1) Reflect the average wage paid to
workers similarly employed in the area of intended employment; (2)
Reflect the median wage of workers similarly employed in the area of
intended employment if the survey provides such a median and does not
provide a weighted average wage of workers similarly employed in the
area of intended employment; (3) be based upon recently collected data;
and (4) represent the latest published prevailing wage finding by the
authoritative source for the occupation in the area of intended
employment.\166\
---------------------------------------------------------------------------
\165\ 20 CFR 655.715.
\166\ 20 CFR 655.731(b)(3)(iii)(B)(1)-(4).
---------------------------------------------------------------------------
In utilizing an independent authoritative source, the Department
requires employers to follow the Department guidance, which explains
the standards contained in the Department's regulations.\167\ Employers
following the 2009 Guidance should ensure wage data collected is for
similarly employed workers, meaning having substantially similar levels
of skills. The survey should contain a representative sample of wages
within the occupation that comports with recognized statistical
standards and principals in producing prevailing wages. It is important
to note that the nature of the employer, such as whether the employer
is public or private, for profit or nonprofit, large or small,
charitable, a religious institution, a job contractor, or a struggling
or prosperous firm, do not bear in a significant way on the skills and
knowledge levels required and should not limit the universe of
employers surveyed. The relevant factors are the job, the geographic
locality of the job, and the level of skill required to perform
independently on the job. The Department provides a set of minimum
survey standards in Appendix E of the 2009 Guidance, and encourages
employers to reference these standards when seeking to use an
independent authoritative source as the prevailing wage. Written
documentation on the methodology used to conduct the survey and the
validity of the methodology used in computing the occupational wage
data covering the area of intended employment must be kept in the
employer's data file and made available in the event of an
investigation.
---------------------------------------------------------------------------
\167\ Employment and Training Administration; Prevailing Wage
Determination Policy Guidance, Nonagricultural Immigration Programs
(Revised Nov. 2009), available at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/NPWHC_Guidance_Revised_11_2009.pdf.
---------------------------------------------------------------------------
In addition, the Department allows employers to rely upon other
legitimate sources of wage information if they do not have access to a
published independent authoritative source.\168\ The only difference
between a published independent authoritative source and another
legitimate source of wage information is that the other legitimate
source of wage information simply has to be ``reasonable and consistent
with recognized standards and principals in producing a prevailing
wage'' and does not need to be published.\169\ As with independent
authoritative sources, the Department encourages employers to ensure
the other legitimate source of wage information follows the
Department's 2009 Guidance to ensure it is reasonable and consistent
with recognized standards and principals in producing a prevailing
wage.
---------------------------------------------------------------------------
\168\ 20 CFR 655.731(b)(3)(iii)(C).
\169\ 20 CFR 655.731 (b)(3)(iii)(C)(4).
---------------------------------------------------------------------------
The Department notes that since the IFR, employers have availed
themselves of the ability to use independent authoritative sources and
other legitimate sources of wage information at rates 274 percent
greater than the same timeframe in 2019. In fact, since publication of
the IFR, the Department has received 14,153 LCAs supported by an
independent authoritative source or other legitimate source of wage
information for 153 unique occupations, compared to 19,509 representing
216 unique occupations for the entirety of FY 2020. This increased use
of private surveys is consistent with the Department's experience that
alternative wage surveys are readily available across many different
regions and industries.
This widespread use and availability of alternative age sources
extends to advanced degree occupations. Since the IFR publication,
employers filing 523 LCAs representing 950 positions for occupations
requiring advanced degrees used an independent authoritative source or
other legitimate source of wage information. Since the IFR, there have
been 4,973 PWDs requested for occupations requiring an advanced degree
using a survey as the wage source; this is 1,780 more PWDs relying on a
survey as the wage source than for similar PWDs in FY 2020.
For the PERM program, too, employers are required to obtain a PWD
from the Department; they have the option of providing an alternate
wage source to the OES survey in this process as well. There are well-
established standards of acceptance of alternative wage sources. In the
weeks since the publication of the IFR, the Department has received
more than 6,900 prevailing wage requests supported by private wage
surveys in the PERM program, which is a 335% increase over the same
timeframe in 2019. Again, this increase confirms that such sources of
wage data are readily available for use in seeking a PWD not based on
the OES survey if employers believe in anomalous cases that the OES
survey does not produce an accurate wage. This obviates any need, in
the Department's view, to create a complicated, administratively
burdensome scheme of occupation-specific wage structures.
3. The IFR Wages and Market Wage Rates
Summary of Comments
The most common concern raised by commenters on this subject was
that prevailing wages under the IFR's
[[Page 3632]]
methodology do not reflect actual market rates and in many cases are
unrealistically high such that they will require employers to lay off
currently employed foreign workers, will make it ``difficult if not
impossible, to hire for highly specialized and hard-to-recruit for
positions,'' and will ``frustrate equal pay principles for U.S.
workers, and create an endless upward spiral of wage obligations that
bear no relation to market dynamics.'' A professional association
asserted that the wage level methodology in the IFR produced
``artificially high'' prevailing wages and circumvented congressional
intent by making it ``virtually impossible for employers to use the H-
1B visa program.'' The commenter asserted the Department violated
section 212(n) of the INA by ``incorrectly setting the way data is
leveled'' and ``prevent[ing] employers from obtaining'' from the
Department's Online Wage Library ``a wage that is in fact the
prevailing wage for the'' occupation and Area of Intended Employment or
a wage that represents ``the best information available as of the time
of filing the application.'' An employer asserted the IFR would create
spiraling wages because ``the next collection of BLS data will be
distorted by these new wage requirements, yielding new and even higher
prevailing wage requirements, in a pattern that will repeat and
multiply'' over time. A public policy organization said the IFR would
lead to inflated wages because employers must post at the worksite the
H-1B worker's salary, which will compel employers to pay the increased
IFR wage to similarly employed U.S. workers.
Commenters cited numerous general and specific examples of
substantial wage increases for combinations of occupations and areas of
employment that do not reflect, according to commenters, market wages.
Several commenters cited an NFAP analysis that compared wages under the
IFR to private survey wages and pre-IFR OES wages and found that for
all occupations and geographic locations the new wages are ``on
average, 39% higher for Level 1 positions, 41% higher for Level 2, 43%
higher for Level 3 and 45% higher for Level 4.'' Examples included a
99.5 percent increase for Level I petroleum engineers and for
electrical engineers, computer network architects, computer systems
analysts, mechanical engineers, and database administrators at all wage
levels. The most dramatic examples included a Level I wage increase of
more than 206 percent for a computer and information systems manager in
East Stroudsburg, Pennsylvania, and more than 177 percent for a
pediatrician in Wichita, Kansas. Referencing an American Action Forum
report, a trade association cited average IFR wage increases for
several occupations, including ``an 83 percent increase for Level 1
Computer and Information Systems Managers'' and ``a 44 percent increase
for Level 2 Software Developers.'' Several commenters asserted the
required prevailing wages for some information technology occupations
would exceed the salary cap implemented by some big tech employers,
such as Level II and Level IV wages in Silicon Valley and Seattle that
exceed a $160,000 salary maximum at Amazon.
Many commenters stated the wages produced under the IFR did not
reflect data on prevailing wages found on websites like Payscale,
Glassdoor, Indeed, or Levels.fyi. Examples cited include Level I
software developer wages in Santa Clara and Level I engineer wages in
Seattle that are lower than the 45th percentile, according to
Levels.fyi, and a median salary for software developers in Cincinnati
that is $20,000 per year lower than the entry level wage under the IFR,
based on Payscale data. One commenter also stated that the Level IV IFR
wage for electrical engineers in Seattle exceeded $168,820, the highest
wage listed for the occupation in O*Net.
A few commenters expressed concern that the IFR wages are not
consistent with prevailing wage determinations produced by private wage
surveys. A public policy organization compared wages under the IFR to
surveys conducted by Willis Towers Watson and found a divergence in
wage determinations between the two, including IFR wages 63 percent
higher for Level IV programmers in Chicago, three times higher for all
levels of financial analysts in New York City, and 62 percent higher
for Level I software developers in Los Angeles. This commenter noted
that many private surveys use ``precise methodologies and a wide range
of data gathering to ensure that the surveys'' are accurate and they
are ``used by employers for company-wide salary benchmarking.''
Similarly, a trade association stated that private wage surveys
``commonly collect compensation information reflecting education,
experience, and responsibility,'' and a professional association stated
these surveys often ``gather real market data for what companies are
paying employees at different levels,'' in contrast to the OES, which
gathers ``general data without regard to experience levels.''
In addition to arguing that the IFR's wage rates were too high, a
number of commenters highlighted what can be described as second and
third order consequences of prevailing wage rates being out-of-step
with market wages. For instance, comments primarily from academic and
research institutions and related organizations and individuals
expressed concern that if wages are untethered from market rates,
particularly for post-doctoral research positions, clinical faculty,
administrative positions, and teaching assistants, and the prevailing
wage requirement would be untenable for institutions reliant on grant
funding, especially those reliant on government funding. As a result,
commenters believed the IFR would produce a shortage of qualified
faculty and diminish the quality of education students receive; reduce
already declining foreign student enrollment and tuition revenue; and
derail critical research projects in science, healthcare, and
technology.
Most of these commenters asserted wages under the IFR often are
significantly higher than prevailing wages in the higher education or
research sectors, and several commenters cited specific examples, like
a Level I wage increase for post-doctoral researchers that would raise
the wage higher than the salary of many experienced tenure track
faculty. Several commenters asserted the increased wages would be
especially burdensome for employers reliant on grant funding that may
be subject to statutory or other limits on the funding amounts and the
ways the employer can expend the funds. For example, a university
stated that federal research organizations lack adequate funding to pay
the IFR wages for work on research projects funded by federal awards
and will need to reduce the size of those project groups or attempt to
avoid employing H-1B workers on any of those projects. Other commenters
noted more specifically that grants like those awarded by the National
Institute of Health (NIH) are subject to rules limiting the amount that
can be used for ``administrative costs, including salaries,'' and one
commenter stated that the IFR prevailing wage for biological scientists
would exceed the NIH salary cap by as much as 79 percent in some areas.
Commenters expressed concern the wage increases would diminish the
quality of education universities provide by making it difficult or
impossible to retain or hire qualified faculty, researchers, and
workers in other jobs like administrative positions.
[[Page 3633]]
A leading teaching and medical research hospital stated that the
inability to retain researchers at the IFR wage levels would jeopardize
critical research projects and the jobs in which U.S. workers are
employed in ``assistant, tech and coordinator roles.'' Commenters also
believed the wage increases would reduce post-graduation career
opportunities significantly for international students and would reduce
already declining foreign student enrollment, which in turn would
contribute to a shortage of skilled labor in higher education and
research and in the United States broadly. For example, some commenters
asserted the IFR would reduce the number of available and qualified
graduate teaching assistants, tutors, post-doctoral researchers, and
similar workers because international students constitute a substantial
portion of this labor force. An employer expressed concern about the
impact of the IFR on the STEM and engineering labor force, noting that
foreign graduates account for more than 70 percent of workers
possessing a master's degree or Ph.D. in electronics engineering or
related fields, according to a referenced 2018 National Center for
Education Statistics Integrated Postsecondary Education Data System
survey. Several of the commenters also stated the enrollment decline
would reduce not only tuition revenue but also tax revenue and consumer
spending.
Citing budget constraints and the importance of its work, a
research organization reliant on NIH grant funding urged the Department
to provide an exemption from the wage rule for ACWIA-eligible
employers, which would encompass institutions of higher education and
related or affiliated nonprofit entities, as well as nonprofit and
governmental research organizations. The commenter added that the
Department should continue to work to ``update the ACWIA wage
library.''
Comments primarily from healthcare providers and academic
institutions expressed concerns similar to concerns of higher education
commenters. The commenters asserted the new wage rates would exceed
market rates, particularly for physicians subject to a $208,000 wage in
many areas and for resident physicians. Two commenters asserted
university clinical programs and medical research programs did not have
adequate funds to pay the increased wages and asserted this would set
back important ``biomedical research during a pandemic'' and curtail
their ability ``to care for and treat those afflicted.'' A professional
association stated that resident physicians are physicians in training
and asserted that use of the OES to determine the prevailing wage for
these job opportunities would produce wages higher than the actual
prevailing wage for residents.
Most of these commenters asserted the increased wages would lead to
a shortage of healthcare workers, including bilingual workers and
mental health professionals and would reduce the quality of and access
to healthcare and the quality of care available. Several commenters
expressed concern this would have a particularly significant impact on
providers in rural areas that have difficulty recruiting, cannot afford
to pay the same wages as employers in larger areas, and often rely on
foreign workers allocated to underserved areas through the Conrad-30
waiver program. One commenter also asserted the increased wages under
the IFR ``may cause elimination of the Conrad-30 waiver program''
altogether.
Several commenters expressed concern the IFR would adversely impact
small employers, start-ups, and nonprofits in particular because many
these employers cannot afford competitive base wages due to limited
resources and instead compete based on intangibles or use incentives
like stock options. One commenter asserted that ``incremental
compliance costs'' for small employers would be as much as three
percent of revenue in 2020-21 and that these employers would
effectively ``be shut out of the H-1B visa program for new workers.''
Some commenters asserted these employers are more likely to rely on DOL
issued wages than private wage surveys, either due to inability to
afford the survey or because they operate in small or nonmetropolitan
areas and ``private wage surveys are based on metropolitan area wages
and do not cover many small market areas or less commonly utilized
occupations because of data limitations.''
Many commenters expressed concern that the IFR would require
employers to pay foreign workers more than the wage paid to U.S.
workers or foreign workers hired prior to the IFR effective date and
this would require employers to increase wages across the board due to
the potential for worker resentment or decreased morale or because
federal and state laws prohibiting discrimination require equal pay.
For example, a professional association expressed concern that the IFR
would require employers to pay the IFR wage to similarly employed
workers to avoid potential pay equity claims under federal and state
laws prohibiting discrimination, including Title VII of the Civil
Rights Act of 1964 and a New York state law requiring equal pay for
``equal or substantially similar work.'' Similarly, some higher
education commenters were concerned that they would need to pay the IFR
wage to a broad range of U.S. workers due to ``pay equity demands'' or
an ``actual wage analysis'' requiring payment of the higher wage to
``all comparable workers.'' Several commenters expressed general
concern that the IFR would produce entry-level wages higher than wages
paid to mid-career professionals or even the managers or supervisors of
those workers.
By contrast, a number of commenters suggested that IFR's entry-
level wage was set too low, that the entry-level wage should be placed
no lower than the median of the OES distribution, and that some place
even higher up within the distribution may be appropriate. A public
policy organization asserted that wages ``close to and above the median
. . . will ensure H-1B workers are not being sought out simply because
employers can save on labor costs.'' A second public policy
organization expressed concern that the pre-IFR wage level methodology
that set rates below the median in the occupation ``failed to require
that firms pay market wages to H-1B workers.'' A third public policy
organization supported the increased wages under the IFR but expressed
concern that setting the Level I wage ``just below the local median
wage'' would ``permit employers to pay H-1B workers at below market
wage rates.'' Similarly, a labor union and a commenter from academia
supported the Department's decision to increase the Level I wage closer
to the median, which the labor union asserted ``is reflective of the
minimum market rate that should be paid to an H-1B worker in order to
safeguard U.S. wage standards and ensure that migrant workers in H-1B
status are compensated fairly.'' Another public policy organization and
an academic commenter suggested the Department should increase the
Level I wage to the 75th percentile and require that all H-1B job
opportunities be certified ``at a wage that is no lower than the
national median wage for the occupation.''
Other suggestions about how to set the wage levels included one
from an anonymous commenter, who urged the Department to set the
prevailing wage at the highest prevailing wage in the country for the
occupation, such as requiring all employers to pay the prevailing wage
for physicians in New York City if that is the highest wage among all
areas in the country. The commenter believed this would
[[Page 3634]]
``equalize the cost to [all] employers'' and would incentivize
employers to recruit in other regions of the United States before
hiring foreign workers. Another anonymous commenter suggested the
Department should set the wage levels at the average of the IFR and
pre-IFR levels, stating this would result in wage levels at the 31st,
48th or 50th, 64th or 66th, and 81st or 83rd percentiles for Levels I
through IV, respectively.
Response to Comments
At the outset, the Department notes that commenters generally did
not offer data or economic justifications purporting to show that the
old wage level methodology produced wages across many different
occupations and geographic areas that reflect the wages paid to U.S.
workers similarly employed to H-1B and PERM workers. Further, as
explained above, the Department has reasonably concluded that the old
wage methodology, in many instances, is a source of harm to U.S.
workers' wages and job opportunities. This fact, on its own, in the
Department's view, gives rise to a clear inference that the old wage
levels were not set in a manner that yielded prevailing wage rates on
par with market wages. Whatever merits some commenters might see in the
old methodology, it is clear it did not advance the purpose of the
INA's wage provisions to protect U.S. workers. Of equal importance, and
a reason independently sufficient for concluding that adjustments to
the old wage methodology are needed, is the fact that the old
methodology, as noted previously, is in tension with the governing
statute.
The need for this rulemaking clear, the question then turns to how
the wage levels should be adjusted. Notably, a number of commenters
agreed with the foundational premise of the IFR that the Department
should set prevailing wage levels based on an assessment of what
workers with similar levels of education and experience to the foreign
workers covered by the four-tier wage structure are paid. As one
commenter said, ``DOL reasonably claims that a well-functioning system
for prevailing wages determinations would find that the wages that need
to be paid for foreign national workers subject to these requirements
`generally should approximate the going wage for workers with similar
qualifications and performing the same types of job duties in a given
labor market.' '' This commenter, and others, therefore did not
disagree with the aim of the IFR, but rather simply claimed that the
Department had overshot the mark and adjusted the wage levels so high
that they do not reflect actual market wages.
The Department agrees with these commenters, and the reasoning in
the IFR, that prevailing wage rates produced by the four-tier wage
structure should approximate actual market wages to the greatest extent
possible. The Department also takes seriously commenters' concerns that
the IFR's wage levels may yield prevailing wage rates that do not meet
that goal. It has therefore taken into account data and analysis
provided by commenters to supplement and inform the analysis used in
the IFR. Based on this reassessment of the conclusions it reached in
the IFR, the Department has determined that it is appropriate to reduce
the entry-level wage from the mean of the fifth decile, or the 45th
percentile, to the 35th percentile. Doing so will, in the Department's
expert judgment, and based on a review of the relevant data sources,
including those provided by commenters, result in entry-level
prevailing wage rates that approximate the wages paid to U.S. workers
similarly employed to H-1B and PERM workers.
While the Department believes that data and analysis provided by
commenters warrants a reassessment of the IFR's wage levels, the
Department, as discussed in detail above, has determined that the
analytical framework relied on in the IFR remains the appropriate lens
through which to understand how the levels should be set.
While the INA provides the relevant factors and general framework
by which the wage levels are to be set, it leaves the precise manner in
which this is accomplished, including the types of data and evidence to
be used and how such data and evidence are weighed, to the Department's
discretion and expert judgment. In exercising that discretion, the
Department's decision on how to adjust the wage levels is informed by
the statute's purpose of protecting the wages and job opportunities of
U.S. workers. This means the Department has focused its analysis on
those areas where the risk to U.S. workers is most acute, taken into
account how the foreign labor programs are actually used by employers,
and, where appropriate, resolved doubts in favor of refining the wage
calculations so as to eliminate to the greatest extent reasonably
possible adverse effects on U.S. workers caused by the employment of
foreign workers, while also ensuring that the program is still
accessible to employers.
As explained in the IFR, to determine the wages typically made by
individuals having comparable levels of education, experience, and
responsibility to the prototypical entry-level H-1B and EB-2 workers
and working in the most common H-1B and PERM occupations, the
Department consulted a variety of data sources, most importantly wage
data on individuals with master's degrees or higher and limited years
of work experience--the type of worker the Department determined to be
an appropriate wage comparator for entry-level H-1B and EB-2 workers--
from the 2016, 2017, and 2018 CPS \170\ conducted by the U.S. Census
Bureau, and data on the salaries of recent graduates of master's degree
programs in STEM occupations garnered from surveys conducted by the NSF
in 2015 and 2017. Both of these surveys represent the highest standards
of data collection and analysis performed by the federal government.
Both surveys have large sample sizes that have been methodically
collected and are consistently used not just across the federal
government for purposes of analysis and policymaking but by academia
and the broader public as well.
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\170\ The CPS, sponsored jointly by the U.S. Census Bureau and
BLS, is the primary source of labor force statistics for the
population of the U.S. See United States Census Bureau, Current
Population Survey, available at https://www.census.gov/programs-surveys/cps.html.
---------------------------------------------------------------------------
In the case of the CPS survey, the Department used a wage
prediction model to identify the wages an individual with a master's
degree or higher and little-to-no work experience (based on age) would
be expected to make and matched the predicted wage with the
corresponding point on the OES wage distribution. Using the NSF
surveys, the Department calculated the average wage of individuals who
recently graduated from STEM master's degree programs and matched the
average wage against the corresponding point on the OES distribution.
These analyses located three points within the OES wage
distribution at which the wages of U.S. workers with similar levels of
education and experience to the prototypical entry-level workers in
specialty occupations and the EB-2 program are likely to fall. In
particular, the 2015 NSF survey data indicate that workers in some of
the most common H-1B and PERM occupations with a master's degree and
little-to-no relevant work experience are likely to make wages at or
near the 49th percentile of the OES distribution.\171\
[[Page 3635]]
The 2017 NSF survey suggests that these workers are likely to make
wages at or near the 46th percentile of the OES distribution. On the
low end, the CPS data suggest that such individuals make wages at or
near the 32nd percentile.
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\171\ For the CPS data, the Department looked at the wages of
workers in all occupations that account for 1 percent or more of the
total H-1B population. These occupations also account for the
majority of PERM workers. For the NSF data the Department examined
the wages of workers in 11 of the most common (in the top 17)
occupational codes for H-1B workers that were convertible to the
occupational code convention of the NSF, which account for
approximately 63 percent of all H-1B workers, according to data from
USCIS.
---------------------------------------------------------------------------
The Department thus identified a range within the OES data wherein
fall the wages of workers who, while being relatively junior within
their occupations, clearly possess the kinds of specialized education
and/or experience that the vast majority of foreign workers covered by
the Department's wage structure are, at a minimum, required to
have.\172\ Put another way, through an assessment of the experience and
education generally possessed by some of the least skilled and least
experienced H-1B and EB-2 workers--workers who are likely entry-level
workers within their respective programs--the Department determined
what U.S. workers with similar levels of education and experience are
likely paid. Accordingly, it is appropriate for the wages paid to such
U.S. workers to govern the entry-level prevailing wage paid under the
Department's wage structure.\173\
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\172\ The Department notes again by way of clarification that it
is not suggesting that possession of a master's degree is required
to work in a specialty occupation. Rather, as explained above,
possession of a master's degree by someone with little-to-no
relevant work experience is being employed as a useable proxy, for
analytical purposes, of the level of education and experience that
approximates the baseline level of specialized knowledge needed to
work in the H-1B and EB-2 programs and that many entry-level workers
in those programs actually possess. Again, the Department notes that
master's degree holders have, in recent years, been the largest
educational cohort within the H-1B program, accounting in FY2019 for
over fifty percent of new H-1B workers. See U.S. Citizenship and
Immigration Services, Characteristics of H-1B Specialty Occupation
Workers Fiscal Year 2019 Annual Report to Congress October 1, 2018--
September 30, 2019, (2020), available at https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf.
\173\ See 8 U.S.C. 1182(a)(5)(A) (requiring the Secretary to
certify that the employment of immigrants seeking EB-2
classification ``will not adversely affect the wages and working
conditions of workers in the United States similarly employed)
(emphasis added); 8 U.S.C. 1182(n)(1)(A)(i) (requiring prospective
H-1B employers to offer and pay at least the actual wage level or
``the prevailing wage level for the occupational classification in
the area of employment'').
---------------------------------------------------------------------------
In the IFR, the Department explained that translating the
identified range into an entry-level wage for the Department's use in
the H-1B and PERM programs could be accomplished in a number of ways.
One option would be to simply calculate the average wage of all workers
that fall within the range, meaning those workers whose reported wage
falls between the 32nd and 49th percentiles, which would place the
entry-level wage at approximately just above the 40th percentile. An
alternative would be to identify a subset of wages within the range--
either on the lower end or the higher end of the range--and calculate
the average wage paid to workers within such subset. Because of the
greater suitability of the NSF data for the Department's purposes,
likely distortions in the wage data of both surveys caused by the
presence of lower-paid foreign workers in the relevant labor markets,
and the purposes of the INA's wage protections, the Department
determined in the IFR that the most appropriate course was to set the
entry-level wage by calculating the average of a subset of the data
located at the higher end of the identified wage range. This resulted
in the entry-level wage being placed at approximately the 45th
percentile. Notably, commenters did not dispute these three qualitative
considerations the Department offered for why it favored the higher end
of the range.
The Department therefore continues to believe that the reasoning
that led it to set the entry-level wage at the higher end of the
identified range remains relevant to its decision in this rule. For one
thing, as between the two data sources and the manner in which they
were analyzed, the NSF data are better tailored to the Department's
purposes in identifying an entry-level wage for the H-1B program. The
NSF surveys provide data on the wages of individuals with degrees
directly relevant to the specialized occupations in which they are
working, namely degrees in STEM fields. By contrast, the CPS data only
show whether a person does or does not have a master's degree and does
not identify what field the master's degree or the individual's
undergraduate course of study was in. It is therefore likely that some
of the wage data relied on in generating the CPS estimate were based on
the earnings of individuals who possess degrees not directly related to
the occupation in which they work. Given that the CPS data used only
accounted for persons with little-to-no experience, such individuals
would therefore be unlikely to have the qualifications needed to work
in a ``specialty occupation,'' as that term is defined in the INA.
Having neither a specialized degree nor experience, and therefore
lacking in specialized skills or expertise, at least with respect to
the occupations in which they work, such individuals would not qualify
as similarly employed to even the least skilled H-1B workers and are
thus not appropriate comparators for identifying an entry-level wage in
the H-1B program. Because of these workers' relative lack of skill and
expertise, they are likely to command lower wages, and thus decrease
the predicted wage below what would be an appropriate entry-level wage
for the Department's foreign labor programs.
Relatedly, the Department's method for approximating experience in
the CPS data is also not as closely tailored to the goal of determining
what U.S. workers similarly employed to the prototypical entry-level H-
1B and EB-2 workers are paid as is the NSF data. The CPS analysis
relied on potential experience as a proxy for actual experience, which
was calculated using a standard formula of subtracting from
individuals' ages their years of education and six, based on the common
assumption that most individuals start their education at the age of
six.\174\ While a standard measure for potential experience, this
method of approximation is imprecise because it shows each individual
of the same age and education level as having the same level of work
experience. In reality, such individuals may vary significantly in
their levels of experience.
---------------------------------------------------------------------------
\174\ For example, under this metric, a 30 year old individual
with 18 years' worth of education would be counted as having six
years of work experience.
---------------------------------------------------------------------------
For starters, the approximation does not take into account the
possibility of a worker temporarily exiting the workforce, and would
count the time spent outside the workforce as work experience. It also
does not account for gaps between when a person received his or her
bachelor's degree and when he or she enrolled in a master's degree
program. In such cases, the work experience captured by the proxy of
potential experience may thus not be directly relevant to the work a
person performs after he or she graduates from a master's degree
program since in some cases the work experience in question was likely
acquired before the individual enrolled in a master's degree program.
In consequence, the sample used in the CPS analysis almost certainly
includes some individuals who have no relevant experience in the
specialized occupations in which they are working, which likely
decreases the wage estimate calculated using the CPS data and makes it
a less precise and reliable estimation of the wages of U.S. workers
with similar levels of education and experience to the prototypical,
entry-level H-1B and EB-2 workers. In other words, the CPS data allows
for
[[Page 3636]]
only a rough approximation of experience--a key factor the Department
must take into account in adjusting the prevailing wage levels. This,
in combination with the fact that some workers contained within the CPS
dataset likely also lack specialized education relevant to the
occupations in which they work, means that CPS data is, in some degree,
distorted by wage earners who should be discounted in identifying the
appropriate entry-level wage because they likely possess neither the
type of specialized experience nor the education in their field that is
comparable to that possessed by entry-level H-1B and EB-2 workers.
The NSF survey data, by contrast, are uniquely suited to the
Department's purposes. The NSF surveys in 2015 and 2017 capture wage
data about exactly the sort of workers the Department has determined
serve as the appropriate comparators for entry-level H-1B and EB-2
workers. They surveyed individuals with master's degrees in STEM fields
who are working in STEM occupations, including some of the most common
H-1B and PERM occupations, and who are approximately three years or
less out of their master's degree programs. In other words, the NSF
surveys report wage data for individuals with specialized knowledge and
expertise working in the occupations in which H-1B and PERM workers are
most often employed and who are relatively junior within their
respective occupations. The NSF data therefore provide a more accurate
wage profile of workers similarly employed to entry-level H-1B and EB-2
workers. While both data sources are useful in helping determine a wage
range for entry-level H-1B and PERM workers, of the two, the NSF
surveys provide information more relevant to the Department's
assessment of what is the appropriate entry-level wage. Therefore, the
Department's analysis relies more on the NSF surveys. This weighs in
favor of placing the entry-level wage higher up in the identified wage
range given that is where the NSF survey results fall.
Beyond the relative weight of each data source, the Department also
takes into account in identifying the appropriate entry-level wage the
fact that both sources are likely distorted to some degree by the
presence, in both the surveyed population and the labor market as a
whole, of the very foreign workers the Department has determined are,
in some instances, paid wages below the market rate. As noted above,
various studies and data demonstrate that some H-1B workers are paid
wages substantially below the wages paid to their U.S. counterparts,
and that this has a suppressive effect on the wages of U.S. workers.
Further, these adverse effects are most likely to occur and be severe
in occupations with higher concentrations of foreign workers. It is
therefore relevant to how the Department weighs the data that many of
the occupations examined in the analyses of the NSF and CPS datasets
have very high concentrations of H-1B workers. H-1B nonimmigrants make
up about 10 percent of the total IT labor force in the U.S.\175\ In
certain fields, including software developers, applications (22
percent); statisticians (22 percent); computer occupations, all other
(18 percent); and computer systems analysts (12 percent), H-1B workers
likely make up an even higher percentage of the overall workforce.\176\
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\175\ The Department estimated the share of H-1B workers in the
IT sector by tallying the total number of computer occupation
workers in the U.S., subtracting those workers that fill positions
for which H-1B workers are generally ineligible, and dividing the
total by the total number of H-1B workers likely working in computer
occupations, based on data and reports issued by USCIS. See Bureau
of Labor Statistics, Employment by Detailed Occupation, https://www.bls.gov/emp/tables/emp-by-detailed-occupation.htm; United States
Citizenship and Immigration Services, H-1B Authorized-to-Work
Population Estimate, (2020), available at https://www.uscis.gov/sites/default/files/document/reports/USCIS%20H-1B%20Authorized%20to%20Work%20Report.pdf; United States Citizenship
and Immigration Services, Characteristics of H-1B Specialty
Occupation Workers: Fiscal Year 2019 Annual Report to Congress
October 1, 2018-September 30, 2019, (2020), available at https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2019.pdf.
\176\ These findings come from data provided by USCIS and the
2017 Occupational Employment Statistics survey from the Bureau of
Labor Statistics. They are based the total number of H-1B workers
according the FY19 USCIS tracker data within a SOC code divided by
the 2017 OES estimate of total workers in a SOC code.
---------------------------------------------------------------------------
From this, the Department draws two conclusions. First, the
respondents reporting wages in the CPS and NSF surveys are likely in
some cases H-1B or PERM workers, given that both surveys contain
responses from both U.S. citizens and noncitizens and the surveyed
occupations have high concentrations of such foreign workers. The
reported wages are thus in some instances likely not the market wage
paid to U.S. workers similarly employed to H-1B and PERM workers, but
rather the wages of the foreign workers themselves, which, as discussed
previously, will be likely lower than the wages of U.S. workers in some
cases. Second, even the reported wages of respondents who are not H-1B
and PERM workers are likely not perfectly accurate reflections of what
the market rate would be absent wage suppression given that high
concentrations of lower-paid foreign workers likely decrease the
overall average wage paid in the relevant labor market, as detailed
above.
The need to account for these distortions also weighs in favor of
setting the entry-level wage at the higher end of the identified wage
range. To discount this consideration would mean that, far from
ensuring that the adjusted wage levels guard against adverse effects on
U.S. workers caused by the presence and availability of lower-cost
foreign labor, the Department would, to some degree, be basing its
regulations on a preexisting distortion caused by the old, flawed wage
methodology.\177\
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\177\ Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3453 (Jan. 19, 2011)
(acknowledging the Department did not conduct ``meaningful economic
analysis to test [the] validity'' of its ``assumption that the mean
wage of the lowest paid one-third of the workers surveyed in each
occupation could provide a surrogate for the entry-level wage'');
see also Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, Part 2, 78 FR 24,047, 24,051 (Apr. 24,
2013).
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Finally, the purpose of the relevant INA authorities, particularly
the prevailing wage requirement, also weighs in favor of adjusting the
entry-level wage higher up within the identified wage range. As
emphasized throughout, the guiding purpose of the INA's prevailing wage
requirements is to ``protect U.S. workers' wages and eliminate any
economic incentive or advantage in hiring temporary foreign workers.''
\178\ Giving due weight to the purpose of the statutory scheme
suggests, in the Department's judgment, that uncertainties should, to
some extent, be resolved so as to eliminate the risk of adverse effects
on U.S. workers' wages and job opportunities. That also countenances in
favor of placing the entry-level wage at the higher end of the wage
range.
---------------------------------------------------------------------------
\178\ Labor Condition Applications and Requirements for
Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations
and as Fashion Models; Labor Certification Process for Permanent
Employment of Aliens in the United States, 65 FR 80,110 (Dec. 20,
2000).
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However, in response to the IFR commenters provided the Department
with additional data and considerations, which have led the Department
to modify the wage levels established in the IFR. As noted, the
principal concern commenters expressed about the IFR was that the wages
it produces are significantly higher than the actual market wages
employers pay their workers. To substantiate this criticism, various
commenters offered wage figures from private and public wage surveys,
and, in some instances, reported what specific employers pay their
workers. The wage data from commenters analyzed by the
[[Page 3637]]
Department generally dealt with wages paid to what commenters
represented to be starting or entry-level positions.
To allow for a meaningful comparison with the wage figures used in
the IFR, the Department selected a cross section of the wage data
provided by commenters and used the same mode of analysis it used in
the IFR to match those figures with percentiles in the OES. In
particular, it compared annual wage data offered for specific jobs in
specific metropolitan areas with OES data for the occupation in which
the job falls in the same metropolitan area. OES data provides annual
wage data for the 10th, 25th, 50th, 75th, and 90th percentiles for
occupations at national, state, and metropolitan area levels. Using
these data, the Department interpolated annual wages data provided by
commenters at each of the missing percentiles between the 10th and the
25th, the 25th and the 50th, the 50th and the 75th, and the 75th and
the 90th percentiles. This allowed the Department to approximate the
specific percentile at which the wages offered by employers fall.
In general, the Department found that the annual wage data for
specific jobs in specific metropolitan areas offered by commenters were
clustered around percentiles in the 30s. Some annual wage data offered
by commenters fell in lower percentiles, and a few fell higher in the
distribution.
A number of commenters cited annual wage data based on salary
offers for L3 software developers with no relevant work experience from
major employers that are significant users of H-1B workers in the
Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area (MSA) and San
Jose-Sunnyvale-Santa Clara, CA. These offers ranged between the 25th
percentile and 42nd percentile of the OES distribution. Excluding the
lowest offer and the highest offer, most offers were clustered between
the 32nd percentile and 41st percentile.
One commenter cited annual wage data from Glassdoor for entry-level
tax managers at public accounting firms in the New York-Newark-Jersey
City, NY-NJ-PA MSA. The Department found that the annual wage was
between 33rd percentile and the 34th percentile. Another commenter
offered Indeed and Payscale annual wage data for accountants in the
Dallas-Fort Worth-Arlington, TX MSA. Using the higher annual wages from
the two surveys, annual wages were between the 19th percentile and the
20th percentile.
One comment cited Glassdoor, Payscale, and ZipRecruiter data for
minimum and maximum annual wages for statisticians in the New York-
Newark-Jersey City, NY-NJ-PA MSA. Review of this data showed the
minimum annual wages were less than the 10th percentile. Another
comment cited Glassdoor average annual wage data for financial analysts
with no experience in in the Dallas-Fort Worth-Arlington, TX MSA, which
showed that the average annual wages were between the 31st percentile
and 32nd percentile.
A commenter cited annual wages offered by a major university in the
Bloomington, IN MSA. Because of data limitations in the OES, the
Department could only compare the annual wages for the computer system
analyst position provided by the commenter. The Department found that
the annual wages for this position were between the 68th percentile and
69th percentile.
A commenter cited the annual wages of an assistant professor of
clinical pediatrics/physician surgeon at a major university in the
Chicago-Naperville-Elgin, IL-IN-WI MSA. The Department found the annual
wages were between the 44th percentile and the 45th percentile.
One commenter cited the annual wages of four employees of a major
university in the Salt Lake City, UT MSA: (1) A computer and
information research scientist, (2) a database architect, (3) a foreign
language instructor, and (4) a pediatric endocrinologist. The
Department found that these annual wages were (1) between the 36th
percentile and the 37th percentile, (2) between the 32 percentile and
the 33rd percentile, (3) between the 12th percentile and 13th
percentile, and (4) between the 34th percentile and the 35th
percentile, respectively.
Another commenter cited Glassdoor annual wage data for a structural
engineer with four to six years of experience in the Boston-Cambridge-
Nashua, MA-NH MSA. The Department found that the annual wages were
between the 24th percentile and the 25th percentile.
One commenter cited Willis Tower Watson private wage survey data
for eight jobs in different metropolitan area that compare with Level 1
and Level 4 OES. The Department focused on the Level 1 data and found
the following:
----------------------------------------------------------------------------------------------------------------
Percentile Percentile
Job OES code Metro below above
----------------------------------------------------------------------------------------------------------------
Electrical Engineer................... 17-2017 San Jose-Sunnyvale-Santa Less than 10 ..............
Clara, CA.
Computer Programmer................... 15-1251 Chicago-Naperville- 32 33
Elgin, IL-IN-WI MSA.
Financial Analyst..................... 13-2098 New York-Newark-Jersey 10 11
City, NY-NJ-PA MSA.
Software Developer.................... 15-1256 New York-Newark-Jersey 14 15
City, NY-NJ-PA MSA.
Information Security Analyst.......... 15-1212 Chicago-Naperville- 16 17
Elgin, IL-IN-WI MSA.
Software Developer.................... 15-1256 Los Angeles-Long Beach- 11 12
Anaheim, CA.
Electrical Engineer................... 17-2071 Los Angeles-Long Beach- 21 22
Anaheim, CA.
----------------------------------------------------------------------------------------------------------------
In sum, most of the wage data offered by commenters was for
salaries paid by employers to entry-level workers in positions
typically filled by H-1B workers. While there are outliers, most of
these wage observations fell between the 30th and 40th percentiles of
the OES distribution. Importantly, wage data about entry-level software
developers employed by some of the largest users of the H-1B program
fell between the 32nd and 41st percentiles. This is noteworthy given
that such data may allow for the closest comparison to the IFR's data
of all the private wage data submitted by commenters. This is because,
as noted above, the IFR's analysis also focused on software developers
and other occupations in the IT sector to account for the fact that
such occupations comprise the largest share of the relevant programs.
It is also notable, in the Department's judgment, that, while the
wage data submitted by commenters tends to be lower on the OES
distribution than the IFR's 45th percentile entry-level wage, it still
generally falls within the wage range between the 32nd and 49th
percentiles identified by the IFR as the portion of the OES
distribution where U.S. workers similarly employed to entry-level H-1B
workers are likely to
[[Page 3638]]
be found. From this, the Department draws two conclusions. First, the
IFR's determination that wages paid to workers similarly employed to
entry-level H-1B and PERM workers likely fall in this range seems to be
largely accurate. While there are outliers in the wage data provided by
commenters that fall both well above and well below the range, the data
from commenters does not give the Department reason to abandon its
conclusion in the IFR that some point within that range will serve as
the appropriate entry-level wage.
Second, while consistent with the IFR's wage range, the commenters'
data suggests, contrary to the IFR's reasoning, that the lower half, as
opposed to the upper half of the range, would be a more appropriate
place to set the entry-level wage. While the IFR offered a variety of
reasons for why the NSF data, which falls at the higher end of the
range, were likely better suited as compared to the CPS data for
informing the Department's decision about where to set the entry-level
wage, and the Department still views those considerations as relevant,
the commenters' data suggests otherwise. As noted, the CPS data suggest
that a point closer to the 32nd percentile would be the appropriate
place to set the entry-level wage, which many data from commenters
would seem to confirm.
As was the case in the IFR, the Department does not evaluate the
data from either the government sources it analyzed or the private wage
data submitted by commenters in a vacuum. Various qualitative
considerations, including key points raised by commenters, shape the
Department's assessment of what conclusions to derive from this data.
First, DOL regulations and guidance establish quality standards for
the use of private wage sources in setting prevailing wage rates.\179\
Some of the private wage sources provided by commenters--particularly
the comments that offer a single example of a wage paid by one employer
in one geographic area--would almost certainly not satisfy these
standards if an employer sought to use them to establish a wage rate
for its H-1B workers. These data are therefore arguably entitled to
less weight than the data relied on in the IFR. Similarly, even as to
the private wage survey sources offered by commenters that may satisfy
DOL's standards, the NSF and CPS data are, in the Department's
judgment, of higher quality. These are highly credible government
surveys administered by agencies with extensive experience in gathering
wage data. This too suggests that the data provided by commenters is
entitled to less weight in the Department's analysis than the data used
in the IFR.
---------------------------------------------------------------------------
\179\ See 20 CFR 655.731(b)(3)(iii)(B) and (C); Sec. 656.40(g).
---------------------------------------------------------------------------
Similarly, as explained above, the analysis used in the IFR
controlled for characteristics relevant to setting a wage rate under
the INA's framework. Because the Department is seeking to set an
appropriate wage primarily for workers in specialty occupations--not
for workers generally--the IFR took, among other things, the INA's
minimum qualification requirements for working in a specialty
occupation into account in deciding what data to use. It is at best
unclear whether some of the surveys offered by commenters are also
limited to workers who could be described as working in a specialty
occupation, and therefore similarly employed to H-1B workers. For
example, while data from one commenter suggest that an entry-level
computer programmer working in the Chicago area makes wages that fall
between the 32nd and 33rd percentiles of the OES distribution, computer
programmers will likely not in all cases be properly regarded as
working in a specialty occupation. For example, in some cases, the job
of a computer programmer may involve writing basic computer code and
testing it.\180\ As explained previously, because a person without a
specialized bachelor's degree can still be classified as a Computer
Programmer, some portion of Computer Programmers captured by the OES
survey are not similarly employed to H-1B workers because the baseline
qualifications to enter the occupation do not match the statutory
requirements. It is therefore possible that the computer programmer
described as an entry-level worker by the commenter may not in fact
have the same level of qualifications as an entry-level H-1B computer
programmer. In such cases, the wage data provided by commenters, being
based on the wages paid to workers who lack the specialized knowledge
required of H-1B workers, is likely below the level that would be an
appropriate entry-level wage for the Department's foreign labor
programs. This, in turn, suggests that the data provided by commenters
are entitled to less weight than the IFR's analysis, which controlled
for the INA's specialty occupation requirement, and may also explain
some of the extreme outliers at the lower end of the OES distribution
found among commenters' data.
---------------------------------------------------------------------------
\180\ Bureau of Labor Statistics, Occupational Outlook Handbook,
Computer Programmers, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-programmers.htm.
---------------------------------------------------------------------------
Relatedly, some of the commenters' private wage surveys report the
bare minimum wage paid to workers in the occupation as the entry-level
wage. Given that entry-level workers typically fall within a range of
the wage data, as opposed to falling only at the very low end of the
distribution, some of the private wage data arguably does not represent
what would count as a reasonable entry-level wage, even if some portion
of entry-level workers do in fact make wages at the bottom end of the
distribution. Indeed, as the Department explained above, the purpose of
the INA's wage provisions to protect U.S. workers suggests that
uncertainty over how to read available wage data should be resolved in
favor of placing the entry-level wage higher up within the distribution
to eliminate as much as possible risks to U.S. workers from the
employment of foreign labor. Yet these private wage sources do just the
opposite, offering what is the absolute bare minimum wage that an
entry-level worker might be expected to make. This too likely accounts
for some of the outliers in the commenters' data that fall below the
IFR's identified wage range, and suggests a wage higher up within the
range should be selected.
On the other side of the equation, and in addition to the data they
provided, commenters have provided the Department with various
considerations that pull in the direction of favoring the lower end of
the IFR's wage range. As explained previously, commenters detailed
various second and third order consequences that would result if
prevailing wage rates do not approximate actual market wages. These
consequences include limiting healthcare providers', universities', and
small businesses' ability to use the H-1B program, which would, in
turn, disrupt research and impede access to healthcare, particularly in
rural areas. Commenters also expressed concerns about the effect overly
inflated prevailing wages would have on their ability to comply with
pay equity laws. The Department takes these concerns seriously, and has
determined that they weigh in favor of placing the entry-level wage at
the lower end of the range identified by the IFR.
To begin with, the Department notes that many if not all of these
problems are eliminated if prevailing wages rates are set in line with
actual market wages. Each of these issues arises principally because,
according to commenters, the IFR's wages do not approximate market
wages. Setting an appropriate entry-level wage based on available data
and
[[Page 3639]]
other relevant considerations is thus the appropriate way to address
these concerns.
As explained previously, the Department continues to believe that
the range identified by the IFR accurately reflects the portion of the
OES distribution where workers with levels of education, experience,
and responsibility similar to the vast run of entry-level H-1B and PERM
workers likely fall--something that commenters' wage data largely
confirms. However, as the Department has also acknowledged, there is
some level of indeterminacy about the exact point in that range at
which placing the entry-level wage will yield optimal outcomes in the
largest number of cases given that different data sources point toward
somewhat different conclusions. In the IFR, the Department reasoned
that the purpose of the INA's wage provisions to protect U.S. workers
warranted resolving such indeterminacy in favor of placing the wage
higher up within the range. However, the Department also recognizes
that a purpose of the H-1B program more generally is to ensure that
employers can access needed high-skilled labor to supplement their
workforces.\181\ Given that prevailing wage rates that are
substantially above actual market wages can impede employers' access to
the program, and cause various problematic, secondary consequences, the
importance of avoiding such outcomes weighs in favor of resolving
indeterminacy in favor of the lower end of the identified range. While
the INA's wage provisions must be implemented in a way that fully
protects U.S. workers' wages, raising wages to such a degree that the
program becomes unusable for many employers defeats the entire reason
Congress created the program. Placing the entry-level wage at a lower
point within the range is one way to ensure that does not occur.
---------------------------------------------------------------------------
\181\ See 144 Cong. Rec. S12741-04, 144 Cong. Rec. S12741-04,
S12749, 1998 WL 734046.
---------------------------------------------------------------------------
Relatedly, because the four-tier wage structure covers hundreds of
thousands of workers employed across hundreds of different occupations
by a wide variety of different employers, there is some level of
variability as between different workers and what would constitute an
appropriate entry-level wage for each of them. As explained above, in
establishing the identified range, the Department focused its analysis
on those occupations that account for the largest number of workers
covered by the four-tier wage structure. The Department continues to
believe this is appropriate given that occupations with large numbers
of foreign workers are where U.S. workers are most at risk of
experiencing adverse wage effects due to competition from foreign
labor. However, the Department also acknowledges that some occupations,
such as physicians, that account for a smaller share of H-1B and PERM
workers and are therefore given less weight in how the Department
identified the entry-level wage range, may have entry-level market
wages that are somewhat lower within the OES distribution than the top
H-1B occupations. This is because, as commenters explained, occupations
like physicians typically require all workers in them to possess an
advanced degree, meaning that, while in the top H-1B occupations the
INA's specialty occupation requirement will generally mean that wages
paid to H-1B workers should be placed higher up within the OES
distribution, that is less true of advanced degree occupations. Workers
in such occupations with qualifications similar to the least skilled H-
1B worker might be found closer to the lower end of the OES
distribution.
In consequence, while the analysis used to identify the entry-level
wage range largely focused on top H-1B occupations, the decision of
where within that range the entry-level wage should be set should give
additional weight to occupations that account for a smaller number of
workers within the program, particularly the advanced degree
occupations about which commenters raised concerns. This suggests that
the lower end of the entry-level range would be a more appropriate
point to place the first wage level. Indeed, the Department notes that
data from at least one commenter about the starting salary of a
pediatric endocrinologist--which falls between the 34th and the 35th
percentiles of the OES distribution--suggest that the lower end of the
range may yield an appropriate entry-level wage for some positions in
advanced degree occupations. Further, as discussed previously, some
commenters suggested that the bottom third of the distribution for
advanced degree occupations consists of entry-level workers similarly
employed to H-1B workers. If commenters are correct, that means that
the lowest points within the entry-level range identified by the
Department does in fact cover the highest paid entry-level workers in
such occupations.
Accounting for small businesses and rural employers that use the H-
1B and PERM programs in selecting a point within the entry-level range
identified by the Department also weighs in favor of the lower part of
the range. As commenters note, large employers are able in some cases
pay higher wages than small businesses. Further, wages in metropolitan
areas may be higher to the extent that these are high-intensity
occupational areas. The Department notes that some of these differences
are already accounted for by other aspects of the regulatory framework
governing prevailing wage rates. In particular, the Department issues
wages based not only on the occupation a worker is in, but also on the
geographic area in which the worker is employed. Thus, for example,
while the wage data described above from large tech companies fall
between the 32nd and 41st percentiles of the wage data gathered for the
metropolitan areas in which those firms operate, such data fall well
above the 60th percentile of the national OES wage distribution. By
taking geographic area into account in analyzing what the appropriate
entry-level wage is, the Department has thus, to some degree, already
accounted for the differences between employers about which some
commenters expressed concern. However, the Department also recognizes
that higher wages may still be less manageable for small businesses and
rural employers, which suggests that the lower part of the entry-level
range would be appropriate.
Moreover, the Department acknowledges that placing the entry-level
wage at any place within the identified range--even the lowest point--
will result in significant wage increases for employers that may, in
some cases, be difficult to adapt to given how long the old wage
methodology has been in place. As detailed at greater length below, the
Department is addressing this concern by phasing in the new wage rates
over a period of time. However, the Department also believes that, even
with a phased-in approach, the ability of employers to adapt to a
significant change is relevant to the decision of where to set the
entry-level wage. Insofar as a smaller increase--albeit one that is
still substantial--will be more manageable for employers, the
Department considers that also to be a reason to favor the lower end of
the range.
On balance, the Department has determined that the factors pointing
to the lower end of the identified range carry greater weight than the
reasoning relied on in the IFR to select the higher end of the range.
Accounting for advanced degree occupations, employers' ability to
access the program and adapt to the change effected by this rule, and
private wage data are all compelling considerations put forward by
commenters that, in the Department's judgment, warrant a reassessment
of its
[[Page 3640]]
decision in the IFR. Thus, while in the IFR the Department chose to set
the entry-level wage at approximately the 45th percentile, which fell
at approximately the midpoint of the upper half of the entry-level
range, the Department is now adjusting the level downward to
approximately the midpoint of the lower half of the range, which is the
35th percentile.
Importantly, setting the wage at the 35th percentile will, in the
Department's view, still provide the full protection to U.S. workers
contemplated by the INA. The 35th percentile falls within the range
identified in the IFR as the portion of the OES distribution where
workers with qualifications comparable to entry-level H-1B and PERM
workers are likely to fall. The manner in which the Department
identified that range, as recounted above, relied on a variety of
considerations, including the INA's specialty occupation requirement
and how that interplays with the OES data, to ensure that the interests
of U.S. workers are fully and properly accounted for in how the wage
levels are set. As a result, while lower than the level set in the IFR,
the 35th percentile will still achieve the purpose of the INA's wage
provisions. While a point higher up within the range may also be
reasonable, and the Department may reassess how to set the entry-level
wage as it gains experience administering the entry-level at the 35th
percentile, the Department believes that the 35th percentile strikes
the right balance between fully protecting workers' wages and job
opportunities while also preserving employers' ability to access the
program.
By favoring the lower end of the range, the Department is confident
the second and third order consequences identified by commenters as a
product of prevailing wage rates that are inflated above actual market
wages will be reduced if not eliminated by the downward adjustment in
the entry-level wage. The Department notes that the downward adjustment
is substantial. To compare the effects of the final rule on prevailing
wages with the effects on prevailing wages produced by the IFR, the
Department calculated the prevailing wages for two common occupations
for H-1B workers (web develops and electrical engineers) in five
metropolitan area (Atlanta-Sandy Springs-Roswell, GA; Austin-Round
Rock, TX; Chicago-Naperville-Elgin, IL-IN-WI; San Jose-Sunnyvale-Santa
Clara, CA; and Seattle-Tacoma-Bellevue, WA) under the IFR and the final
rule. The Department then analyzed the differences. Comparing the
prevailing wages under the final rule and interim final rule, the
Department found that the prevailing wages are significantly lower
under the final rule for both occupations in all five metropolitan
areas at all four levels expect for the prevailing wage for level 4 web
developers in Seattle, which is $7,322 or 3.8% higher (see table
below).
--------------------------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------------------------------
MSA Occupation Level 1
Level 2
Level 3
Level 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Atlanta-Sandy Springs-Roswell, Web Developer... -$11,648 -13.1% -$12,370 -11.6% -$13,114 -10.6% -$13,836 -9.8%
GA.
Atlanta-Sandy Springs-Roswell, Electrical -11,635 -12.6% -13,743 -11.6% -15,851 -11.0% -17,960 -10.6%
GA. Engineer.
Austin-Round Rock, TX......... Web Developer... -4,235 -5.9% -7,805 -8.2% -11,355 -9.5% -14,926 -10.5%
Austin-Round Rock, TX......... Electrical -2,732 -3.0% -9,165 -7.6% -15,576 -10.5% -22,009 -12.4%
Engineer.
Chicago-Naperville-Elgin, IL- Web Developer... -27,280 -29.6% -29,138 -25.6% -30,974 -22.9% -32,831 -20.9%
IN-WI.
Chicago-Naperville-Elgin, IL- Electrical -9,720 -10.5% -15,301 -13.2% -20,881 -15.1% -26,462 -16.4%
IN-WI. Engineer.
San Jose-Sunnyvale-Santa Web Developer... -9,157 -10.2% -11,963 -10.0% -14,769 -9.9% -17,576 -9.9%
Clara, CA.
San Jose-Sunnyvale-Santa Electrical -5,420 -4.5% -18,039 -11.1% -30,680 -15.0% -43,299 -17.6%
Clara, CA. Engineer.
Seattle-Tacoma-Bellevue, WA... Web Developer... -20,876 -14.6% -11,477 -7.2% -2,078 -1.2% 7,322 3.8%
Seattle-Tacoma-Bellevue, WA... Electrical -16,485 -14.1% -21,561 -14.8% -26,617 -15.2% -31,693 -15.4%
Engineer.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Further, the Department notes that many of commenters' concerns are
also addressed by other measures the Department is taking in this final
rule. For example, commenters' complaints about overly inflated wages
for physicians, particularly in rural areas, focused in many cases on
the fact that the IFR resulted in a default wage of $208,000 a year for
all four levels in a number of different locations. As detailed more
fully below, the Department is eliminating the influence of outliers on
the upper level wage, reducing the upper level wage, and providing a
default rule for cases where BLS is unable to calculate the upper level
wage to ensure that the Department provides leveled wages wherever
possible. These measures will further alleviate complications
healthcare providers and other employers in rural areas encountered
under the IFR.
The Department disagrees with comments that suggested that the
median of the OES distribution should be the absolute minimum for the
entry-level wage, and that some point even higher up in the
distribution might be appropriate. The purpose of having a four-tier
wage structure is to provide gradually increasing wages as workers
skill levels increase. The entry-level wage should therefore be set not
based on what the median wage is of all workers, but rather based on an
assessment of what other entry-level workers with qualifications
comparable to H-1B and PERM workers possess. As detailed at length
above, the Department's review of the relevant data and other
considerations indicates that a point below the median is the right
place to set the entry-level wage.
The Department also rejects other alternatives suggested by
commenters. For example, the recommendation that the Department set
wages by averaging the IFR's wage levels with the old wage levels is
flawed because, as noted, the old wage levels were selected
arbitrarily, and therefore should not be a significant factor in how
the Department determines the new wage levels, except insofar as the
Department takes into account employers' and workers' reliance
interests in the prior methodology. The Department also disagrees with
the commenter that suggested that the prevailing wage should be the
highest prevailing wage in the nation for any given occupation. Doing
so would ignore the importance variations in labor markets by
geographic area have long played in how prevailing wage rates are
provided, as well as the statutory requirement that prevailing wage
rates be based in part on geographic area.
4. Reliance Interests
Summary of Comments
Many commenters expressed concern about the IFR's negative impact
on current H-1B visa holders in the United States, especially those
with families and strong ties in the United States and those with
pending or approved I-140 Immigrant Petitions for Alien Workers or
pending I-485 Applications to Register Permanent Residence or Adjust
Status (``green cards''). Several commenters discussed the impact on
foreign workers who had expected to continue working in the United
States and for some, obtain lawful permanent status through their
employer. Commenters expressed concern that employers would terminate
H-1B visa holders and ``potential green-card recipients'' would have to
leave the country. An individual commenter
[[Page 3641]]
asserted that the IFR would inhibit job opportunities for international
graduates of U.S. universities, regardless of their capabilities, and
contended that the new wage levels would disincentivize legal
immigration. Similarly, another individual commenter described the rule
as ``eliminating legal immigration paths'' and warned that it will
cause foreign workers who have contributed greatly to the U.S. tax base
to go out of status.
Commenters stated that since some employers will not be able to
afford the wage increases and will terminate foreign workers, the IFR
would have devastating effects on the lives of foreign workers with
families, property, and ties to a community. One lobbying organization
stated the IFR would mean that ``many talented foreign nationals [would
be] forced to leave the U.S. because these new wage requirements make
it impractical to continue employing them in our country.'' Based on
polls of their membership conducted by some of the signatories, a group
of professional associations and advocacy organizations asserted that
as many as 70 percent of H-1B workers who are making progress toward
obtaining a green card, and in many cases have ``developed permanent
ties to the United States'' through home ownership or U.S.-born
children, may have to abandon the process. The commenter also stated
that the IFR ``understates or ignores altogether the reliance
interests'' of the nearly 600,000 H-1B workers currently employed in
the United States. This professional association warned that H-1B
workers whose status is threatened by the IFR will need to leave the
country abruptly, impacting not only the workers, but also their
spouses and children, and it expressed concern about COVID-19
complicating further their ability to relocate. The commenter
maintained that suddenly changing the longstanding rules that have
before now allowed workers to buy homes, raise children, and otherwise
create ties to the United States over time is unfair and unreasonable.
Meanwhile, an attorney claimed that the IFR's economic and social
impacts will be acute for Indian nationals in particular because they
often face long delays while waiting for green cards, which the
commenter said results in many purchasing houses and having children
here. One public policy organization that supported the IFR opposed
immediate implementation, asserting the abrupt wage increase would put
currently employed workers in a ``precarious position'' and ``may cause
churn if employers [are] unwilling to pay real market wages [and]
decline to renew their workers' H-1B visas or initiate petitions for
permanence.''
One commenter also expressed concern that an employer may violate
DOL regulations at Sec. 655.731(a) if it pays the IFR wage to workers
hired after the IFR effective date, but continues to pay a current H-1B
worker the lower wage issued prior to the IFR, because the employer
will be paying less than the actual wage to the first employee. The
commenter suggested that this would result in additional disruption to
employers' operations as the new wage levels would result in increases
in the wages owed to new H-1B workers, but would result in immediate
changes to the wages owed to workers already employed.
Many commenters expressed concern that immediate implementation of
the IFR dramatically increased prevailing wages too abruptly,
jeopardizing operations by disrupting long-term budget and other
planning, interfering with contractual obligations, and preventing
employers from adapting to the wage increases by adjusting operations
and hiring and training new workers.
A professional association expressed concern that the immediate
implementation of the IFR would increase costs for ``human resources
and compensation staff to bring their companies into compliance with
the rule'' and asserted the Department failed to consider staffing
changes that may be necessary for employers that cannot ``support''
wages at levels produced by the IFR methodology. A trade association
expressed concern that the IFR may cause ``material disruption'' to
employers' ``operations or delivery models . . . because of long-term
contractual commitments . . .'' and that these employers may be
``forced to operate at a loss'' because they are unable to re-negotiate
contracts entered into prior to the IFR effective date. Another trade
association stated that the IFR forced employers to put ``talent
acquisition and workforce development decisions on hold'' and required
them to ``reconsider work schedules, cost increases, and performance
metrics that impact their entire workforce.'' The commenter expressed
concern that immediate implementation of the IFR created operational
disruptions because employers relied on the published July 2020 OES
wages ``to create plans, develop strategies and hiring, and consider
talent retention and immigration programs.'' A third trade association
asserted the IFR may cause long-term damage to employers and disrupt
U.S. worker hiring processes because employers ``plan and budget their
hiring months and often years in advance.''
A higher education policy organization noted that colleges and
universities have planned budgets and salaries and signed employment
contracts in reliance on wages produced by the Department's wage
surveys and expressed concern the IFR would require these employers to
``re-visit all of those plans, in the midst of a pandemic and in the
middle of an academic year.'' The commenter also stated the
Department's wage rules are complex and that universities have ``spent
years developing the methodology according to DOL requirements'' and
``invested significant resources over the years to train international
offices on DOL prevailing wage methodology.'' A higher education
professional association noted hiring cycles at academic institutions
``often run over a year'' and that employers have already made offers
to foreign workers ``based on the ability to sponsor H-1B status and/or
green cards.'' A university submitted a similar comment and expressed
concern that immediate implementation of the IFR would require the
employer to renegotiate employment offers ``in some cases . . . just
days before the expiration of the beneficiary's current status.''
Several commenters, including some that expressed support for the
IFR, urged the Department to provide for a transition period or to
phase in the wages over time to permit employers to adjust to the wage
increases. A commenter from academia suggested the Department should
phase in the new wage levels over no more than a two-year period, which
the commenter believed would be sufficient time for employers to adjust
to the new wage levels while also preventing employer ``exploitation of
artificially low wage rules.'' A public policy organization that
supported a phase-in period also suggested the Department should work
with DHS to ``create positive incentives for employers who match the
new wage requirements for their existing workforce.'' A public policy
organization also suggested the Department should apply the revised
wage level methodology only to ``new workers in . . . temporary work
visa programs with [LCAs] submitted after the IFR took effect'' to
avoid ``discourag[ing] renewals and petitions for lawful permanent
residence by employers unwilling to pay market wage rates.'' The
commenter stated this would protect workers who were ``contracted under
one set of rules and expectations'' by avoiding an
[[Page 3642]]
unreasonable change to those terms and conditions of employment.
Response to Comments
While the Department believes that adjusting the wage levels in the
IFR to a level that more closely approximates the actual wage typically
paid to U.S. workers similarly employed to H-1B workers will address
many if not most of the concerns raised by commenters about the impact
of the new wage methodology, it also recognizes that implementing such
an immediate and significant change may cause disruption to employers'
and foreign workers' reliance interests in the old methodology. While
such reliance interests are difficult to quantify, the Department has
sought to account for these interests and ensure that the new wage
levels are implemented in a way that appropriately balances the need to
protect U.S. workers with the Department's obligation to consider
reliance interests engendered by its prior methodology, the Department
has decided to adopt a series of measures to ease the transition to the
new wage structure.
In particular, the Department is including in the final rule a
delayed implementation period under which adjustments to the new wage
levels will not begin until July 1, 2021. Further, once adjustments
begin, they will be made in a phased approach, with most job
opportunities not becoming subject to the full increase to the new
levels until July 1, 2022. For workers who are on track to receive
lawful permanent resident (LPR) status, as indicated by their being the
beneficiaries of approved employment-based green card petitions, or
otherwise eligible to extend their H-1B status beyond the six-year
limit, the Department has determined that a more gradual phase-in
occurring in four steps that results in job opportunities filled by
such workers being placed at the new wage levels beginning on July 1,
2024, is appropriate. Finally, to the extent that employers' actual
wage obligations under the INA may result in more immediate changes to
the wages they must pay workers who have already received work
authorization on a previously approved LCA, the Department will take
this into account in exercising the discretion afforded it by the INA
when enforcing such obligations.
In effecting an adjustment to the wage levels previously used to
set the prevailing wage in the H-1B and PERM programs, the Department
is obligated to consider whether ``its prior policy has engendered
serious reliance interests.'' \182\ In the IFR, the Department
recognized that the old wage levels ``have been in place for over 20
years, and that many employers likely have longstanding practices of
paying their foreign workers at the rates produced by the current
levels.'' \183\ The Department further acknowledged that making
significant adjustments to the wage levels ``may result in some
employers modifying their use of the H-1B and PERM programs,'' and
``will also likely result in higher personnel costs for some
employers.'' \184\ Despite these considerations, the Department
concluded that ``to the extent employers have reliance interests in the
existing levels . . . setting the wage levels in a manner that is
consistent with the text of the INA and that advances the statute's
purpose of protecting U.S. workers outweighs such interests and
justifies such increased costs.'' \185\
---------------------------------------------------------------------------
\182\ F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515
(2009).
\183\ 85 FR 63,893.
\184\ 85 FR 63,894.
\185\ Id.
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As explained above, the Department continues to believe that the
old wage levels are the source, in many cases, of serious, adverse
effects on U.S. workers' wages and job opportunities. Adjusting the
levels to bring them in line with the wages paid to U.S. workers with
levels of education, experience, and responsibility comparable to H-1B
workers--and thereby reducing the danger posed to U.S. workers by the
employment of foreign workers--remains the principal aim of this
rulemaking. Ensuring that the Department's wage structure is set in
accordance with the relevant statutory factors is also necessarily a
controlling objective in the Department's assessment of how best to
reform the prevailing wage levels. The old levels have never been
justified by economic analysis, and, as detailed above, are in tension
with the statutory scheme insofar as they are based, in many instances,
on data about the earnings of workers who cannot be regarded as
similarly employed to workers in specialty occupations. Effecting a
significant adjustment to the wage levels, and doing so as
expeditiously as is reasonably possible, is therefore of paramount
importance in the Department's judgment.
That said, concerns raised by commenters about disruptions to
business operations, fairness to foreign workers, and the feasibility
of adapting to significant changes to the wage levels in a short period
of time are also entitled to weight in how the Department implements
adjustments to the levels. The old levels were set far too low, which
means that the adjustment necessary to bring them in line with what
similarly employed U.S. workers make, and therefore be consistent with
the statutory scheme, is substantial. The Department notes that
shifting the entry-level wage from approximately the 45th percentile
provided for by the IFR to the 35th percentile means the adjustment
employers will have to make to accommodate themselves to the new levels
is less dramatic. But it is still significant. Indeed, approximately 60
percent of all LCAs in recent years have been for job opportunities at
the first and second wage levels, which are at roughly the 17th and
34th percentiles of the OES distribution. Setting the lowest wage level
at the 35th percentile thus means that the prevailing wage for all H-1B
workers going forward will likely be higher--and in many cases
substantially so--than the prevailing wage for as much as 60 percent of
the current H-1B population. The Level III and Level IV wages will also
now be, in many cases, higher than the highest wage required under the
old Level IV wage. Considerations brought to the Department's attention
by commenters about the effects of an adjustment of this magnitude have
provided the Department with greater insight into how to implement such
a substantial change.
For that reason, the Department has reassessed how it balanced in
the IFR reliance interests in the old wage levels with the need to
adjust the wage levels. To begin with, the Department reiterates that
setting wages so as to protect U.S. workers is the central purpose of
the INA's wage requirements.\186\ To the extent commenters suggest that
business practices have evolved around and been shaped by the old wage
levels, and that the old levels, or something close to them, should
therefore be maintained indefinitely or for extended periods of time to
prevent disruption to employers' operations, the Department disagrees.
The fact that some employers have long benefited from inappropriately
low
[[Page 3643]]
wage rates cannot justify the continued perpetuation of the harms to
U.S. workers that result from foreign workers earning wages that do not
reflect what similarly employed U.S. workers are paid.
---------------------------------------------------------------------------
\186\ See Labor Condition Applications and Requirements for
Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations
and as Fashion Models, 59 FR 65,646, 65,655 (Dec. 20, 1994)
(describing the ``Congressional purposes of protecting the wages of
U.S. workers'' in the H-1B program); H.R. Rep. 106-692, 12 (quoting
Office of Inspector General, U.S. Department of Labor, Final Report:
The Department of Labor's Foreign Labor Certification Programs: The
System is Broken and Needs to Be Fixed 21 (May 22, 1996) (``The
employer's attestation to . . . pay the prevailing wage is the only
safeguard against the erosion of U.S. worker's [sic.] wages.'').
---------------------------------------------------------------------------
However, in light of the comments it received, the Department has
determined that a wage increase that is both dramatic and immediate is
also undesirable, and indeed may be counterproductive to the aims of
this rule. For one thing, as some commenters noted, immediate
disruptions to business operations, such as might lead to the
termination of contracts or the shuttering of offices, may in fact
threaten U.S. workers with job losses or reductions in work. Adopting a
rule that eliminates workers' jobs in order to protect their wages
advances neither the interests of workers nor the purposes of the INA.
Similarly, the Department acknowledges that, while the aim of the
INA's wage requirements is to protect U.S. workers, one purpose of the
H-1B program more generally is to ensure that employers can access
needed high-skilled labor to supplement their workforces.\187\ Although
permitting employers to access temporary foreign labor must be
accomplished in a way that works no harm on the wages and job
opportunities of U.S. workers, it is also important to ensure that
reforms to the prevailing wage do not unnecessarily limit employers'
use of the program. Helping employers bring the wages they pay their H-
1B workers in line with the requirements of the INA while avoiding the
kind of abrupt change that might make it unreasonably difficult for
employers to adapt is therefore consistent with the broader goals of
the H-1B program.
---------------------------------------------------------------------------
\187\ See 144 Cong. Rec. S12741-04, 144 Cong. Rec. S12741-04,
S12749, 1998 WL 734046.
---------------------------------------------------------------------------
For those reasons, the Department has determined that a gradual
transition to the new wage levels is needed to account for employers'
reliance interests on the prior system while still ensuring that U.S.
workers' wages and job opportunities are fully protected. Such an
approach is a reasonable method of effecting a regulatory change that
results in increased costs on regulated entities.\188\ Modifying the
existing system over a period of time, even where the prior system is
inconsistent with the governing statute, can assist affected parties in
``reorder[ing] their affairs.'' \189\ The Department's decision to
implement the new wage rates through a transition rather than through
an immediate adjustment is also consistent with the notice the IFR gave
to the public of the intended policy change.\190\
---------------------------------------------------------------------------
\188\ See Mexichem Fluor, Inc. v. Envtl. Prot. Agency, 866 F.3d
451, 464 (D.C. Cir. 2017).
\189\ Dep't of Homeland Sec. v. Regents of the Univ. of
California, 140 S. Ct. 1891, 1914 (2020).
\190\ Select Specialty Hosp.-Akron, LLC v. Sebelius, 820 F.
Supp. 2d 13, 24 (D.D.C. 2011).
---------------------------------------------------------------------------
Modifying the prevailing wage levels through a delayed or graduated
transition matches how Congress and other agencies have instituted
similar changes to employers' wage obligations in other contexts. For
example, all increases in the Federal minimum wage that Congress
enacted over the last 60 years were phased in over two or more
years.\191\ Only two of the ten minimum wage adjustments since the
enactment of the Fair Labor Standards Act have been made fully
effective immediately. The three most recent amendments to the Federal
minimum wage were implemented over two or three year periods.\192\ In
so doing, Congress has sought to minimize any loss of jobs or other
economic disruptions that an immediate, one-step increase in the
Federal minimum wage might cause to labor markets. Changes to minimum
wage laws at the state level are also often made through incremental
adjustments.\193\ Similarly, the Department has employed comparable
transition provisions when implementing wage changes in other foreign
labor programs.\194\
---------------------------------------------------------------------------
\191\ https://www.dol.gov/agencies/whd/minimum-wage/history.
\192\ Id.
\193\ https://www.dol.gov/agencies/whd/minimum-wage/state.
\194\ See 20 CFR 655.211(d).
---------------------------------------------------------------------------
Similarly, the Wage and Hour Division has typically implemented
changes to employers' obligations to provide overtime pay through
delayed effective periods. The most recent change to overtime rules was
made effective more than 90 days after the final rule was published--
more time than is required by either the Administrative Procedure Act
or the Congressional Review Act.\195\ The 2016 overtime rule (later
enjoined) was made effective more than five months after
publication.\196\ The 2004 overtime rule was made effective 120 days
after publication.\197\ In both cases, the Department determined that a
delayed effective date would ``provide employers ample time to make any
changes necessary to ensure compliance with the final regulations.''
\198\
---------------------------------------------------------------------------
\195\ 84 FR 51,230, 51,234.
\196\ 81 FR 32,391 (May 23, 2016).
\197\ 69 FR 22,121.
\198\ Id. at 22,126.
---------------------------------------------------------------------------
The Department notes that changes to the minimum wage or overtime
obligations are different in important respects from the adjustments
the Department is making to the prevailing wage levels. For one thing,
changes to the minimum wage and overtime requirements are often made in
light of gradual changes in economic conditions that make it necessary
to reassess a prior policy determination. By contrast, in undertaking a
change to the prevailing wage levels, the Department is giving
meaningful consideration to what employers' wage obligations should be
based on available economic data for the first time since the
Department began using a multi-level wage structure in its foreign
labor programs. Similarly, while Congress's decision to adjust the
minimum wage is driven entirely by competing policy considerations, the
Department's discretion to adjust the wage levels is to some degree
confined by the INA. As explained above, the Department is adjusting
the manner in which it sets prevailing wage rates not only because the
existing wage levels are the source, in some cases, of harm to U.S.
workers' wages and job opportunities, but also because they are
inconsistent with the governing statute. In consequence, the reform the
Department is undertaking in this rulemaking is long overdue and of
greater significance than similar kinds of changes to employers' wage
obligations in other contexts. Finally, as explained further below, the
adjustments to the prevailing wage levels will not have the same kind
of immediate impact on employers' wage obligations with respect to all
workers currently on their payroll as changes to the minimum wage do.
Employers will be able to pay H-1B workers currently employed in many
cases at the current wage levels for the duration of the validity
period of their current LCAs. Increases in the wage levels will
generally have an immediate impact only on new workers or where the
employer seeks to renew a current worker for a new period of
employment. In consequence, immediate changes to the wage levels are
likely to be less disruptive than immediate increases in the minimum
wage. In combination, these considerations weigh in favor of keeping
the transition period to the new wage levels of short duration, even if
that means employers will still be required to adapt quickly to a
significant increase in the wage levels.
The Department has therefore decided to implement the adjustments
to the prevailing wage levels through a combination of a delayed
effective period and multi-step adjustments occurring over
approximately a year and
[[Page 3644]]
half period. The first adjustment to employers' prevailing wage
obligation will not occur until July 1, 2021. This delay from
publication of this rule until the first wage increase will give
employers time to plan for the adjustment. Adjusting the wage levels on
July 1st is also consistent with historical practice at the Department,
which has typically published the new annual wage rates for the H-1B
and PERM programs each year at the beginning of July. Employers are
thus accustomed to modifications being made at that time of the year.
On July 1st, the entry-level wage will increase from roughly the
17th percentile to 90 percent of the 35th percentile wage, as provided
by BLS--a point approximately halfway between the current Level I wage
and the 35th percentile, which, as explained above, is the point in the
OES distribution that the Department has determined is appropriate for
setting entry-level wage rates. Similarly, at the same time the Level
IV wage will increase from roughly the 67th percentile to 90 percent of
the 90th percentile wage. The following year, on July 1, 2022, the wage
levels will again increase, and be placed at the 35th percentile for
the entry-level wage and the 90th percentile for the uppermost level,
at which point the transition to the new wage structure will be
complete.
The Department determined the appropriate step up in wages by
analyzing national wage data for the top ten occupations in which H-1B
workers are employed. In particular, the Department averaged the wages
estimated to fall at various percentile in the OES distribution using
linear interpolation, and weighted that average by the share of H-1B
workers in each occupation relative to the total number of H-1B workers
in the top ten occupations. In so doing, the Department relied on the
same basic methodology it used to determine the appropriate entry-level
wage. As explained elsewhere, the Department's interest in maintaining
a single, uniform wage methodology for the H-1B and PERM programs means
that the wage provided will not be perfectly tailored to every job
opportunity or geographic location. Providing wages that are closely
tailored to the unique circumstances of as many job opportunities as
possible while still using a single wage structure necessarily means
that the Department must focus on nationwide data and those occupations
that account for the largest share of the affected programs.
An analysis of national data for the top ten H-1B occupations
indicates that 90 percent of the average wage at the 35th percentile
falls approximately at the midpoint between wages at the 17th
percentile--a rough proxy for the wages yielded by the old wage
methodology--and wages at the 35th percentile. Similarly, 90 percent of
the average wage at the 90th percentile is approximately the midpoint
between wages at the 67th percentile--a rough proxy for the Level IV
wages yielded by the old methodology--and the 90th percentile.
Requiring employers to pay wages that are 90 percent of the 35th
percentile for entry-level workers and 90 percent for Level IV workers
in the first stage of the two-step implantation of this rule will thus
ensure an even and gradual adjustment over the period of time the
Department has determined is appropriate to allow employers to adapt to
the new wage rates.
The Department recognizes that, even under this incremental
approach, wage rates will still increase significantly in a relatively
short period. An analysis of wage rates based on current OES data
suggests that an increase in the entry-level wage from roughly the 17th
percentile to 90 percent of the 35th percentile may equate in many
cases to a real dollar increase of approximately 14 percent in the
annual wages employers will be required to pay their foreign workers.
However, for the reasons given above, the Department believes that a
transition consisting of both a delayed effective period and a gradual
increase to the new wage levels occurring over a year and a half period
is the appropriate way to balance the need to ensure U.S. workers are
not harmed by the presence of foreign workers in the labor market while
giving employers time to adapt to the new wage system. Further delay in
adjusting to the new levels would, absent some other compelling
consideration, entail too great a risk to U.S. workers' wages and job
opportunities, in the Department's judgment.
Beyond employers' general reliance on the old wage levels, the
Department notes that some employers also have reliance interests in a
specific worker or group of workers currently working who were hired on
the understanding that they would be employed at wages based on the
prior prevailing wage methodology. Immediate changes to the wages
employers are required to pay could change the expectations employers
had about the cost of employing such workers when they invested in
sponsoring them for a visa. Such concern would only pertain to visa
workers who have already been approved and who are already working. It
is unlikely that this kind of immediate change to employers' wage
obligations to current workers will occur, however, to the extent it
does the Department possesses some enforcement discretion to mitigate
against any such potential impact on visa workers hired under the prior
prevailing wage methodology.\199\
---------------------------------------------------------------------------
\199\ It should be noted that this is a finite issue that exists
only until current workers' visas expire.
---------------------------------------------------------------------------
As some commenters noted, there is a possibility that employers'
wage obligations as to current workers will be immediately affected by
significant adjustments to the prevailing wage levels, even though the
Department has already approved LCAs for these workers, which contain
prevailing wage rates that will remain valid for the duration of the
LCA's validity period.\200\ This may occur through operation of
employers' actual wage obligation under the INA and the Department's
regulations, which is to say their obligation to pay the higher of the
actual wage or the prevailing wage to their H-1B workers.\201\ As the
Department's regulations note, ``employers are cautioned that the
actual wage component to the required wage may, as a practical matter,
eliminate any wage-payment differentiation among H-1B employees based
on different prevailing wage rates stated in applicable LCAs.'' \202\
While new prevailing wage rates based on this rule's revised
methodology will not immediately change the prevailing wage for H-1B
workers with already-approved LCAs, the arrival of new H-1B workers at
the same worksite that is subject to a higher prevailing wage under the
new methodology could potentially modify employers' actual wage
obligations with respect to current H-1B workers and result in the
employer having to pay a higher wage.
---------------------------------------------------------------------------
\200\ See 20 CFR 655.731(a)(2)(viii) (``Where new nonimmigrants
are employed pursuant to a new LCA, that new LCA prescribes the
employer's obligations as to those new nonimmigrants. The prevailing
wage determination on the later/subsequent LCA does not ``relate
back'' to operate as an ``update'' of the prevailing wage for the
previously-filed LCA for the same occupational classification in the
same area of employment.
\201\ See 8 U.S.C. 1182(n)(1).
\202\ 20 CFR 655.731(a)(2)(viii); see also Labor Condition
Applications and Requirements for Employers Using Nonimmigrants on
H-1B Visas in Specialty Occupations and as Fashion Models; Labor
Certification Process for Permanent Employment of Aliens in the
United States, 65 FR 80,110-01 (``The Department's interpretation of
an employer's actual wage obligation as an ongoing, dynamic
obligation has been the Department's position since the inception of
the H-1B program.'').
---------------------------------------------------------------------------
While acknowledging this issue, the Department believes, as a
practical matter, it is unlikely that the introduction of new H-1B
workers at a worksite will result in immediate and
[[Page 3645]]
significant increases in the wages an employer is required to pay
current H-1B workers who have already been approved to work at
prevailing wage rates based on the prior wage methodology. First, the
Department's Wage and Hour Division has never brought a case in which
an employer was deemed to have violated its actual wage obligations as
a result of a different H-1B worker being paid a higher prevailing wage
rate. This is so for a few reasons. For instance, for the wage paid to
a new H-1B worker to be relevant to the employer's actual wage
obligation to a current worker, the new worker would not only have to
be stationed at the same specific worksite, but also possessed of
similar qualifications and experience as the current worker and be
performing the same set of duties and responsibilities.\203\ Thus, the
wages paid to many new H-1B workers will likely simply not be relevant
to employers' actual wage obligations to current workers.
---------------------------------------------------------------------------
\203\ See 20 CFR 655.731(a)(1); 20 CFR 655.715.
---------------------------------------------------------------------------
Second, the actual wage ``reflects the application of an employer's
actual pay system.'' \204\ Employers are therefore permitted to
establish the actual wage they pay H-1B workers by taking into account
``Experience, qualifications, education, job responsibility and
function, specialized knowledge, and other legitimate business
factors.'' \205\ In consequence, even as between H-1B workers with
similar qualifications and experience performing the same duties and
responsibilities, an employer may have other legitimate reasons for
paying these workers different wages. The fact that one worker has a
significantly higher prevailing wage rate will, in many cases, be only
one of many relevant factors governing the employers' actual wage
obligation.
---------------------------------------------------------------------------
\204\ 65 FR 80193 (Dec. 20, 2000).
\205\ 20 CFR 655.731(a)(1).
---------------------------------------------------------------------------
In those instances where the employer has not documented and cannot
reconstruct its actual wage system, the Department may base the actual
wage on averaging the wages paid to all similarly employed
workers.\206\ In those instances, the introduction of a new H-1B worker
at the worksite will not necessarily cause the actual wage owed to
current H-1B workers to immediately increase to whatever the new
workers' prevailing wage rate is. Rather, a more modest increase may be
required based on an average of what the new worker is being paid as
compared to what similarly employed current workers are making.
---------------------------------------------------------------------------
\206\ 65 FR 80193.
---------------------------------------------------------------------------
Finally, although the Department does not believe that employers'
actual wage obligations to current H-1B workers are likely to change
immediately as a result of adjustments to the prevailing wage levels,
the Wage and Hour Division will, where appropriate, take the above
factors into consideration in enforcement actions. In some cases, the
Department has discretion over whether to launch an investigation into
potential violations of the INA's wage requirements.\207\ Similarly,
even in those cases where the Department is obligated by statute to
initiate an investigation and make a determination as to whether a
violation has occurred, the assessment of civil money penalties, where
such penalties are applicable at all, is sufficiently flexible to take
all of the facts and circumstances into account.\208\
---------------------------------------------------------------------------
\207\ See 8 U.S.C. 1182(n)(2)(G)(ii); Heckler v. Chaney, 470
U.S. 821, 835 (1985).
\208\ See 8 U.S.C. 1182(n)(2)(C); Butz v. Glover Livestock
Comm'n Co., 411 U.S. 182, 185-86 (1973); 20 CFR 655.810(c).
---------------------------------------------------------------------------
In the unlikely event that violations of this kind arise the
Department will evaluate them on a case-by-case basis, and, in choosing
whether to bring an enforcement action or impose civil monetary
penalties, the cause of the violation will be taken into account.
Once a currently employed worker's LCA expires, the employer will,
except as explained below, be required to pay the worker a prevailing
wage rate based on the new methodology if the employer seeks a new
labor certification. As noted above, some commenters suggested that
this will result in certain employers being unable to renew their
workers for a new period of employment as it will be too costly to do
so, and that this will be disruptive to business operations. While this
may be the case in some instances, the Department emphasizes that H-1B
visas provide only temporary work authorization. Neither employers nor
guest workers on H-1B visas can claim a permanent interest in a
temporary employment relationship.\209\ Further, requiring employers to
file new LCAs periodically to continue employing H-1B workers gives
teeth to the INA's wage protections by ensuring that the prevailing
wage an employer must pay is not based on out-of-date information.\210\
Allowing all current H-1B workers to continue working at the prevailing
wage rates below the level the Department has determined is appropriate
after the LCAs associated with their positions have expired and their
employers have filed new LCAs would undermine the Department's
determination that significant adjustments are needed to the wage
levels to adequately protect U.S. workers.
---------------------------------------------------------------------------
\209\ Cf. LeClerc v. Webb, 419 F.3d 405, 417-18 (5th Cir. 2005).
\210\ See Labor Condition Applications and Requirements for
Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations
and as Fashion Models, 59 FR 65646, 65654-55.
---------------------------------------------------------------------------
In consequence, when an employer files a new LCA as part of the
process of renewing an H-1B worker for a new period of employment, the
Department has concluded that it is appropriate that the new prevailing
wage rates should, except as noted below, apply. To the extent
employers may have had expectations that current workers could be
renewed at rates based on the old wage levels, such expectations are
naturally circumscribed by the fact that H-1B visas are inherently
temporary in nature and there is no legal guarantee that work
authorizations will be renewed on the terms that they were previously
granted. Further, any such expectations are, in the Department's view,
outweighed by the need to guard against adverse effects on U.S.
workers' wages and job opportunities.
Beyond concerns about being able to renew current H-1B workers
generally, some commenters also noted that employers' and guest
workers' reliance interests in the old wage methodology are
particularly weighty in cases where the employer has sponsored the H-1B
worker for LPR status. As one commenter noted, H-1B workers who are on
the path to obtaining LPR status ``often have purchased a home,
developed permanent ties to the United States, or made a decision to
have children here, counting on obtaining Lawful Permanent Resident
status.'' That commenter also suggested that an immediate and abrupt
change in the wage rates could mean that ``65%-70% of all individuals
being sponsored for green card status through a Permanent Employment
Certification may be unable to continue in the process'' as their
employers will be unable to pay the increased wage rates. Relatedly,
employers of such workers have undertaken additional investments in the
workers beyond what would ordinarily be expended on sponsoring an H-1B
worker as part of the permanent labor certification process.
The Department agrees with commenters that H-1B workers who are on
the path to becoming employment-based lawful permanent residents
present unique considerations for how the Department transitions
current H-1B workers to wage rates produced by the new wage
methodology. These
[[Page 3646]]
individuals, in many cases, have spent extended periods of time in the
United States, during which they have developed greater connections to
this country than the typical temporary visa holder. What's more, they
have done so under a legal regime established by Congress that permits
and, indeed, encourages them to develop strong ties to the United
States. In other words, not only have these individuals built lives in
the United States in reliance on the prior wage methodology, which set
the terms of their employment, but their expectation of being able to
remain in the country indefinitely has been fostered by congressional
enactments specifically designed to treat this group of individuals
differently than other H-1B visa holders. For that reason, the
Department has concluded that accelerated, significant increases in the
wages employers owe these workers, insofar as it may result in large
numbers of these workers losing their current employment, and therefore
potentially being required to depart the country, would work a unique
hardship and unfairness on both the workers themselves as well as the
employers that have made greater investments in retaining these
workers. In consequence, the Department has determined that a more
gradual transition to the new wage rates for these workers is
appropriate.
As the Department noted in the IFR, unlike most nonimmigrant visas,
H-1B visas are unusual in that they are ``dual intent'' visas, meaning
under the INA H-1B workers can enter the U.S. on a temporary status
while also seeking to adjust status to that of lawful permanent
residents.\211\ One of the most common pathways by which H-1B visa
holders obtain lawful permanent resident status is through employment-
based green cards, and in particular EB-2 and EB-3 visas.\212\ USCIS
has estimated that over 80 percent of all H-1B visa holders who adjust
to lawful permanent resident status do so through an employment-based
green card.\213\ This is reflected in data on the PERM programs. In
recent years, more than 80 percent of all individuals granted lawful
permanent residence in the EB-2 and EB-3 classifications have been
aliens adjusting status, meaning they were already present in the U.S.
on some kind of nonimmigrant status.\214\ Given that the H-1B program
is the largest temporary visa program in the U.S. and is one of the few
that allows for dual intent, it is a reasonable assumption that the
vast majority of the EB-2 and EB-3 adjustment of status cases are for
H-1B workers. This is corroborated by the Department's own data, which
shows that, in recent years, approximately 70 percent of all PERM labor
certification applications filed with the Department have been for H-1B
nonimmigrants.\215\
---------------------------------------------------------------------------
\211\ dePape v. Trinity Health Sys., Inc., 242 F. Supp. 2d 585,
593 (N.D. Iowa 2003).
\212\ See Sadikshya Nepal, The Convoluted Pathway from H-1B to
Permanent Residency: A Primer, Bipartisan Policy Center (2020);
Congressional Research Service, The Employment-Based Immigration
Backlog (2020) (``A primary pathway to acquire an employment-based
green card is by working in the United States on an H-1B visa for
specialty occupation workers, getting sponsored for a green card by
a U.S. employer, and then adjusting status when a green card becomes
available.'').
\213\ U.S. Citizenship and Immigration Services, H-1B
Authorized-to-Work Population Estimate (2020).
\214\ See Department of Homeland Security, 2017 Yearbook of
Immigration Statistics, Table 7. Persons Obtaining Lawful Permanent
Resident Status by Type and Detailed Class of Admission: Fiscal Year
2017, available at https://www.dhs.gov/immigration-statistics/yearbook/2017/table7.
\215\ Office of Foreign Labor Certification, Permanent Labor
Certification Program--Selected Statistics, FY 19, available at
https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.
---------------------------------------------------------------------------
Because of how many H-1B visa holders apply for EB-2 and EB-3
classifications, Congress has repeatedly adapted the INA to account for
the close connection between the programs. For example, while H-1B
nonimmigrants are generally required to depart the U.S. after a maximum
of six years of temporary employment, Congress has created an exception
that allows H-1B nonimmigrants for whom PERM labor certification
applications have been filed with the Department or petitions for
employment-based immigrant visas have been filed with DHS that have
been pending for longer than a year to be exempt from the six year
period of authorized admission limitation if certain requirements are
met.\216\ In such cases, the workers are able to renew their H-1B
status in one-year increments indefinitely until the process by which
they can obtain lawful permanent resident status is resolved.\217\
Similarly, aliens who are the beneficiaries of an approved petition for
an EB-1, EB-2, or EB-3 green card and who are eligible to be granted
LPR status but for application of the per country limitations are
permitted to extend their stay beyond the usual six year limit in three
year increments.
---------------------------------------------------------------------------
\216\ See Public Law 107-273, 11030A(a), 116 Stat. 1836 (2002).
\217\ Id.
---------------------------------------------------------------------------
Congress created these exceptions to the temporary limits of H-1B
status in recognition of the fact that the method by which employment-
based green cards are allocated--namely through the operation of caps
on the number of visas that can be allocated to nationals of a given
country in any given year--can result in significant delays between
when an alien is approved for a green card and when the green card is
actually issued.\218\ Put another way, the system for allocating
employment-based green cards often results in protracted periods during
which a worker can, in some sense, have one foot in the temporary H-1B
program and another in the PERM program as they progress to LPR status.
These workers, while not yet possessed of LPR status, have made
substantial, formal steps toward acquiring such status, and, in so
doing, acquired more permanent ties to the United States than does the
typical temporary worker. Congress recognized as much and singled out
this group for a special accommodation that allows their temporary
status to continue indefinitely.\219\ In so doing, Congress further
increased the degree to which such workers can reasonably expect to be
permitted eventually to remain in the country on a permanent basis.
---------------------------------------------------------------------------
\218\ See 8 U.S.C. 1152(a)(2); U.S. Department of State, Visa
Bulletin For September 2020, https://travel.state.gov/content/travel/en/legal/visa-law0/visa-bulletin/2020/visa-bulletin-for-september-2020.html.
\219\ See Save Jobs USA v. Dep't of Homeland Sec., 942 F.3d 504,
506-08 (DC Cir. 2019) (``Recognizing the potential for delay in
adjustment, Congress amended the Act to permit H-1B visa holders who
have begun the employer-based immigration process to remain and work
in the United States while awaiting decisions on their applications
for lawful permanent residence.'').
---------------------------------------------------------------------------
Congress's creation of exceptions to the six-year limit on H-1B
status was also undertaken in recognition of the fact that requiring
workers on track to receive LPR status to leave the United States after
six years before they receive a green card would be disruptive to the
employers of such workers. As noted above, employers that have
sponsored H-1B workers for an employment-based green card have
undertaken investments in retaining such workers beyond what would
ordinarily be required to continue renewing such workers' H-1B status.
Similarly, in many cases these workers will likely have been with their
employer for longer than the typical H-1B worker, meaning the employer
may have developed a greater reliance on the services of these
particular workers. Absent these workers being able to extend their
stays indefinitely, they ``would otherwise be forced to return home at
the conclusion of their allotted time in H-1B status, disrupting
projects and American workers.'' \220\ As a result, Congress chose to
allow ``these individuals to remain in H-1B status until they are able
to receive an immigrant visa and adjust their status
[[Page 3647]]
within the United States, thus limiting the disruption to American
businesses.'' \221\
---------------------------------------------------------------------------
\220\ S. Rep. 106-260, 22.
\221\ Id.
---------------------------------------------------------------------------
In sum, H-1B workers whose employers have taken substantial, formal
steps toward obtaining an employment-based green card are uniquely
situated as compared to other H-1B visa holders subject to the
Department's prevailing wage methodology such that applying a sudden
and significant change in wages would work a special hardship to such
workers and their employers to the extent it might result in some
workers losing their H-1B status. Not only have many of these workers
spent extended periods of time in the United States, and begun building
lives here, but they have done so with a guarantee from Congress that
they legally may remain here beyond the six year limit that usually
applies to H-1B visa holders until their application for LPR status is
resolved. And because such workers are seeking employment-based green
cards, their employers in many cases also have substantial reliance
interests on such workers' continued presence in the country beyond
what would normally be the case for other H-1B workers. The special
status of workers who are the beneficiaries of an approved employment-
based green card petition, or who are otherwise eligible to extend
their status beyond the six-year limit, has also been recognized by the
Department of Homeland Security in a separate rulemaking that singled
this group out for unique treatment for many of the same reasons
outlined above.\222\
---------------------------------------------------------------------------
\222\ Employment Authorization for Certain H-4 Dependent
Spouses, 80 FR 10284, 10289-90.
---------------------------------------------------------------------------
Consequently, as suggested by some commenters, the Department is
adopting a phase-in approach to how it applies the new wage methodology
to job opportunities that will be filled by workers who are on track to
obtaining employment-based green cards. While, for the reasons given
above, the Department believes that a two-step transition is
appropriate with respect to new H-1B workers and many other workers for
whom their employer seeks renewed status, the Department has concluded
that the unique circumstances of workers who are on track to receive
LPR status warrant a longer transition period. These workers and their
employers have more substantial expectations of their being able to
remain employed in the United States that have been engendered by
congressionally created exceptions to the six year limit on H-1B
status.
The Department is also cognizant of its obligation to ensure that
U.S. workers' wage and job opportunities are protected. That
consideration, as elaborated previously, means that any transition to
the new wage structure should be kept as short as reasonably possible
while still accommodating the reliance interests identified by
commenters. The Department believes that a delayed implementation
period followed by a four-step adjustment occurring over a three and a
half year period for job opportunities filled by workers on track to
receive LPR status appropriately balances these competing
considerations.
By making the phase-in nearly twice as long for these workers, and
stretching it out over a period of more than three years, the
Department has taken into account the fact that most LCAs are approved
for a three year period, meaning that all employers seeking to renew
the status of H-1B workers on track to receive LPR status will be able
to do so at least once at wage levels below the new levels set by this
rule and that in many cases will be closer to the prevailing wage rates
that would have obtained if the prior methodology had been left in
place. This allows for a more gradual transition than would be achieved
if these job opportunities were subject to the two-step phase-in
occurring over a year and a half. Gradually increasing the wage rates
that will be available for these job opportunities over a period of
time also takes into account the need to protect U.S. workers by not
allowing the current, inappropriately low wage levels to remain in
place beyond the initial, delayed effective period, as well as the fact
that wage increases that occur further out in time from the date this
rule is published will be more manageable for both employers and
workers to plan for. Moreover, the Department notes that, because
employers have undertaken significant investments in the long-term
employment of these workers, a longer transition period is also
unnecessary insofar as such employers can be expected to have an
incentive to undertake the additional expenditures needed to retain the
workers at the new prevailing wage levels by the time the transition is
complete.
The Department recognizes that many H-1B workers on track to
receive LPR status will still be on H-1B status and have their green
card petitions pending at the time the transition to the new wage rates
is complete. Workers in the green card backlog as of October 2020 may
not be able to obtain an employment-based green card for a decade or
more.\223\ However, in the Department's judgment, delaying full
implementation of the new wage rates for what amounts to a significant
share of the current H-1B population \224\ until all workers on track
to receive LPR status have had their green card petitions resolved
would result in far too lengthy of a delay that would result in ongoing
harm to U.S. workers' wages and job opportunities. A three and a half
year, graduated transition gives these workers adequate time to adjust
to the new wage rates, whether by allowing their employers sufficient
time to adapt or, in some cases, allowing such workers additional time
to find a new employer that is able to pay the higher wage rates.\225\
---------------------------------------------------------------------------
\223\ See https://travel.state.gov/content/travel/en/legal/visa-law0/visa-bulletin/2021/visa-bulletin-for-october-2020.html.
\224\ (RIA Data).
\225\ See 8 U.S.C. 1154(j).
---------------------------------------------------------------------------
Using the same methodology and data it used to set the wage rate at
the intermediate step of the two-step transition, the Department has
concluded that the wage rates for the three and a half year transition
will be 85 percent of the wage rates produced by the 35th and 90th
percentiles beginning in July, 2021; 90 percent of such wage rates
beginning in July, 2022; and 95 percent of such rates beginning in
July, 2023. For the reasons given with respect to the year and a half
transition, these rates allow for a gradual, even adjustment to the
wage levels the Department has determined are appropriate. Beginning in
July 2024, the wage rates provided for any job opportunity filled by an
alien on track to receive LPR status will be the same as the wage rates
provided for all H-1B job opportunities.
Finally, the Department has decided that the job opportunities that
should be eligible for these special transition wage rates are those
that will be filled by any H-1B workers who, as of October 8, 2020,
were the beneficiaries of approved employment-based green card
petitions, or who were otherwise eligible to extend their temporary
status beyond the six year limit under the American Competiveness in
the 21st Century Act. October 8th is the date the Department published
the IFR and thereby gave notice to employers and workers that it would
be increasing wage rates. It thus provides a clear, administrable
delineation of the class of workers who can benefit from the three and
a half year transition period, and takes into account the fact that
workers whose expectation of being able to remain in the country
indefinitely became settled
[[Page 3648]]
before such notice was provided have the most compelling reliance
interests in the prior wage methodology.
5. Wage Data and Sources
a. OES
Summary of Comments
Some commenters expressed concern about the Department's exclusive
reliance on the OES to determine prevailing wages. Citing an NFAP
policy brief, a public policy organization commented the ``fundamental
problem'' with prevailing wage determinations is that the ``process
requires statistical precision that simply is not available'' because
``no government survey [ ] collects data within occupations with
detailed wage levels, much less a survey that seeks to assemble data to
calculate wage levels based on experience, education or level of
supervision.'' The commenter further stated that the OES produces ``two
average wage figures, neither of which is based on the collection of
data connecting compensation to education, experience or supervision.''
The commenter expressed concern that this method is less reliable than
``asking employers directly what they pay employees at different levels
of education, experience, or supervision'' and that ``a government
agency can adjust the formula in a way that makes the required wages
far higher than the market rate.'' An employer expressed concern the
OES ``does not measure workers' skills or duties or ``reflect what
workers in the survey are paid'' and instead ``simply records [the] set
of DOL-established pay bands'' within which a worker can be classified.
Several commenters also expressed concern that the OES fails to
consider total compensation, including stock options and bonuses, for
example, resulting in an underestimation of the total earnings of U.S.
and foreign workers. An individual commenter noted that many workers,
particularly those in information technology occupations, earn much
more than their base salary when accounting for total compensation and
asserted that the IFR unfairly advantages ``companies with a cash-heavy
pay structure'' and harms small start-ups that are more likely to
compete by providing ``equity and stock options.'' A trade association
asserted the IFR ignores an ``important evolution'' in the compensation
of professionals ``whereby many employers add to annual salaries with
variable compensation tied to productivity, performance, or other
specific goals'' and may ``incentivize employers to abandon variable
compensation schemes altogether, in order to use available resources in
an attempt to meet the new required wages.'' Citing a Society for Human
Resources Management article stating ``85% of employers use variable
pay. . .'' an employer asserted that consideration of fixed pay
exclusively is outdated because an increasingly important component of
compensation packages is variable pay, including ``incentive plans,
bonuses, profit-sharing plans, performance-sharing plans, and equity.''
Many commenters expressed concern that the Department would issue a
prevailing wage of ``exactly $100 an hour, or $208,000 a year, for any
occupation and geographic area'' for which the Department lacks
sufficient OES wage data to determine a prevailing wage for each wage
level. Many commenters cited a finding by a public policy organization
that this $208,000 wage requirement would apply to at least 18,000
combinations of occupations and geographic locations. A university
stated that assigning a ``default wage rate of $100'' per hour ``for
each of the four wage levels . . . artificially inflates the wage data
for each of the wage levels for affected occupations.'' A trade
association expressed concern that OES wage data is ``skewed toward
employers in large metro areas'' and that the failure to collect
sufficient wage data would result in many non-metropolitan employers
receiving a ``default'' prevailing wage of $208,000 under the IFR. A
professional association believed the lack of BLS data and resulting
``default'' wage of $208,000 was due to the Department's decision to
use data for a limited ``pool of workers who use the H-1B . . . and
PERM programs,'' rather than using a ``prevailing wage data pool [ ]
based on all wage data within the occupation, regardless of the number
of years of education, experience, and level of responsibility.'' A
second professional association asserted assignment of a $208,000 wage
in this context violates the INA, 8 U.S.C. 1182(p)(4), because the
Department provides only one wage level, despite the four levels of
wages required by Congress, and that it is contrary to a 1990
Congressional directive that BLS must ``make determinations on
prevailing wages'' and make this information ``readily available to
employers and workers.'' Many of these commenters provided examples of
prevailing wages far exceeding the market wage, such as a prevailing
wage of $208,000 for an entry-level software developer in California,
despite a private wage survey determination that the prevailing wage is
approximately $70,600 per year.
A public policy organization and an academic commenter that
supported the IFR wage increases urged the Department to clarify an
employer's wage obligation in these cases, expressing concern that the
policy created confusion that threatens necessary wage reform efforts.
Specifically, one of the commenters requested clarification of whether
the employer must pay the $208,000 salary, must ``use an alternative
method to the OFLC-generated OES wage rates in these cases,'' or may
choose either option.
Response to Comments
The Department received many comments regarding the prevalence of
the use of the OES footnote wage to set prevailing wage rates under the
IFR's wage levels. This issue arises when BLS cannot provide a wage
estimate for a Level IV wage. BLS is unable, at times, to produce a
wage estimate when the survey results at the upper end of the wage
distribution exceed the highest wage interval BLS uses, which is $100
an hour or $208,800 annually. In such cases, BLS reports a default
wage, or footnote wage, of $208,000 for the Level IV wage to OFLC as
that is the highest wage value available. Currently, BLS collects
actual wage data from employers and then converts the actual wage data
into wage intervals, which range from under $9.25 an hour to $100.00 an
hour and over.\226\ In situations when BLS reports a footnote wage for
the Level IV wage to the Department, the Department's standard practice
has been to note that leveled prevailing wages for an occupation and/or
geographic area was unavailable and only to provide the OES footnote
wage for all four levels.
---------------------------------------------------------------------------
\226\ https://www.bls.gov/oes/2016/may/methods_statement.pdf
(accessed December 4, 2020).
---------------------------------------------------------------------------
Under the Department's proposal in the IFR, the mean of the upper
decile produced an OES footnote wage for more than 18,000 occupations,
up from roughly 6,000 occupations under the old prevailing wage
methodology. The higher prevalence of the use of the footnote wage
under the IFR's methodology resulted in the default wage of $208,000
per year being used for a number of occupations where its use was
likely not appropriate, as some commenters noted. The Department has
therefore determined that it a change to its standard practice of not
providing leveled wages in these situations is warranted.
Upon the effective date of this final rule, when BLS is able to
report a Level
[[Page 3649]]
I wage, the Department will utilize the OES footnote only as the Level
IV wage estimate in cases where the 90th percentile wage value exceeds
the highest wage interval value used by BLS. This change will allow the
Department to provide leveled wages even where the footnote wage must
be used for the Level IV wage and ensure that entry-level wages are not
improperly inflated. In making this change, the Department expects
there will be far fewer instances of the Department being unable to
provide leveled wages than was the case under the IFR, or even the old
wage methodology.
This change to how the Department handles situations where the
footnote wage is used for the Level IV wage will ensure that leveled
wages and an entry-level wage appropriately set at the 35th percentile
will be provided wherever possible. This change will largely eliminate
those incidents commenters expressed concern about, such as in
healthcare occupations, where even an entry-level wage under the IFR
was set at $208,000 per year, and is thereby inflated well above both
the previous entry-level wage as well as what the Department has
determined is an appropriate entry-level wage. Like its decision to
move the entry-level wage to the 35th percentile, this change will
ensure that prevailing wage rates more accurately reflect actual market
wages and are more manageable for employers. Further, as discussed in
more detail below, the changes the Department is making to how it
calculates the Level IV wage--namely by using the 90th percentile as
the Level IV wage instead of the mean of the upper decile--will
eliminate the influence of extreme outlier at the upper end of the
distribution, thereby reducing the reported Level IV rate to a level
that is not inflated by anomalous data, and thus potentially reducing
the frequency with which the footnote wage is used even for Level IV
wage.
The Department acknowledges that there will continue to be
instances, as there are currently, where BLS will report to OFLC an OES
footnote wage for all levels in an occupation because the survey
results received by BLS at and above the 35th percentile are all in the
wage interval of $100.00 an hour and over. This will occur in a few
very highly compensated occupations. Importantly, in such cases the use
of the footnote wage will actually result in a lower prevailing wage
rate than would otherwise be the case if actual wage data were
available because BLS only reports up to the maximum interval of
$100.00 an hour and in these situations the actual wages are at or over
$100.00 an hour. Put another way, the use of the footnote wage in these
cases, unlike its use under the IFR, will not result in wages that are
inflated beyond what the actual market wage would be if actual wage
data were available. Until BLS moves away from collecting all wage data
in intervals this will continue to occur. But the Department believes
that as BLS expands its collection of actual wage data this issue will
cease to occur even in those few very highly compensated occupations.
The Department anticipates that this change to its standard procedures
will allow the Department to report leveled wages in more occupations
and/or geographic areas than has historically been the case.
Relatedly, many commenters expressed concern that because the
Department raised the Level IV wage to the mean of the upper decile, it
caused more physician occupations, in particular, to default to the OES
footnote wage of $100.00 an hour, or $208,000 annually at an especially
high rate. As discussed above, the Department's changes to its standard
procedures to use the OES footnote wage only as the Level IV wage
estimate when a Level I wage is also reported from BLS will allow the
Department to report leveled wages in these instances, thus reducing,
if not altogether eliminating this concern.
Similarly, many commenters suggested that the failure of the
Department to provide leveled wages would disproportionately harm
employers outside of large urban areas and cause rural communities to
lose access to healthcare. Many of these commenters suggested that
under the IFR the Department is unable to provide leveled wage
estimates for physicians and researchers in rural areas who would
therefore be provided the OES footnote that is significantly higher
than what some of those employees' supervisors are paid, which would be
unsustainable and potentially result, among other things, in
undermining the Conrad-30 program in certain areas. However, as
previously stated, the Department has reviewed the commenters concerns
and determined it is appropriate to make changes to the standard
procedures of not providing leveled wage estimates in these situations.
Instead, upon the effective date of this Final Rule the Department will
use the OES footnote wage only as the Level IV wage estimate, allowing
the Department to provide leveled wage estimates, except in those cases
where the wage at the 35th percentile is also above the highest OES
wage interval value. This will reduce if not eliminate the incidents of
inappropriately high wages being provided for these specific
occupations and areas.
The Department also acknowledges commenters' concerns with flaws in
the OES collection of wage data from employers that result from BLS
collecting data in 12 wage intervals as opposed to reporting actual
wages. Though the OES survey does collect most wage data in wage
intervals, BLS does collect actual wage data from employers in some
instances and is exploring the ability to collect and report actual
wage data from employers on a more consistent basis. As BLS phases in
the collection of actual wage data from employers, wage estimates
reported to the Department will become even more accurate and all
instances of the OES footnote wage being used to set prevailing wage
rates, which is a product of the current practice of using wage
intervals, should cease. Further, even if BLS ultimately does not
convert all wage data collection from employers to actual wages, this
methodology of using wage intervals has been in place since the
inception of the OES survey and has in most cases produced accurate
wage estimates at the levels defined by the Department. Given the low
incidence of the footnote wage being used; the modifications made by
the Department to how it provides default wages that both further
reduce the use of the footnote wage and eliminate its use in cases
where it would result in an inappropriately inflated wage; and the
other strengths of the OES data discussed below, the Department
continues to believe that the OES survey serves as the best possible
source of wage data for use in various foreign labor programs and that
its reliance on wage intervals does not warrant the Department
abandoning its longstanding practice of using the OES.
As noted above, the Department received several more general
comments regarding the suitability of the BLS OES data for setting
wages in the foreign labor certification programs. Some of the comments
cited the fact that the OES data uses broad occupational
classifications that encompass a wide range of different positions,
some of which only fall at the lower end of the pay scale. Others
commented that the OES data does not survey for education and
experience, making it a poor fit for use in setting H-1B wage levels.
As the Department stated in the IFR, the Department reviewed the
statutory framework of the INA and its interplay with the BLS OES
survey data that the Department uses to calculate prevailing wages.
This review demonstrated that, while the OES survey is the best source
[[Page 3650]]
of wage data available for use in the Department's foreign labor
certification programs, it is not specifically designed for such
programs, and therefore does not account for the requirement that
workers in the H-1B program possess highly specialized knowledge in how
it gathers data about U.S. workers' wages. This fact necessarily shapes
how the Department integrates the OES survey into its foreign labor
programs.
The Department has long relied on OES data to establish prevailing
wage levels. That is because it is a comprehensive, statistically valid
survey that is the best source of wage data available for satisfying
the Department's purposes in setting wages in most immigrant and
nonimmigrant programs. As the Department has previously noted, the OES
wage survey is among the largest continuous statistical survey programs
of the federal government. BLS produces the survey materials and
selects the nonfarm establishments to be surveyed using the list of
establishments maintained by State Workforce Agencies (SWAs) for
unemployment insurance purposes. The OES collects data from over one
million establishments. Salary levels based on geographic areas are
available at the national and State levels and for certain territories
in which statistical validity can be ascertained, including the
District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.
Salary information is also made available at the metropolitan and
nonmetropolitan area levels within a State. Wages for the OES survey
are straight-time, gross pay, exclusive of premium pay. Base rate,
cost-of-living allowances, guaranteed pay, hazardous duty pay,
incentive pay including commissions and production bonuses, tips, and
on-call pay are included. The features described above are unique to
the OES survey, which is a comprehensive, statistically valid, and
useable wage reference.\227\ The OES survey's quality and
characteristics have made it, and continue to make it, a useful tool
for setting prevailing wage levels in the Department's foreign labor
programs. There are no consistently and readily available alternative
surveys or sources of wage data that would provide DOL with wage
information at the same level of granularity needed to properly
administer the H-1B and PERM programs. For these reasons, the
Department continues to believe that the OES survey is the best
possible source of wage data for use in various foreign labor programs.
---------------------------------------------------------------------------
\227\ Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3463 (Jan. 19, 2011).
---------------------------------------------------------------------------
The Department also notes that the OES survey is what is currently
used to set prevailing wage rates in the H-1B and PERM programs. As a
result, even if the modifications to the prevailing wage levels in this
final rule were not adopted, the OES would continue to be the source
used to produce prevailing wage rates by the Department. As explained,
the Department believes that continuing to use the OES is the best way
to advance the policy aims of the INA's wage protections. However, even
if reconsideration of the Department's use of the OES were warranted,
the Department believes that the more immediate goal of correcting how
the wage levels are set is the appropriate focus of this rule.\228\
---------------------------------------------------------------------------
\228\ See Ctr. for Biological Diversity v. EPA, 722 F.3d 401,
410 (DC Cir. 2013) (observing that `` `agencies have great
discretion to treat a problem partially'' ') (quoting City of Las
Vegas v. Lujan, 891 F.2d 927, 935 (DC Cir. 1989)).
---------------------------------------------------------------------------
However, as noted, the OES survey is not specifically designed to
serve these programs. For one thing, ``the OES survey captures no
information about differences within the [occupational] groupings based
on skills, training, experience or responsibility levels of the workers
whose wages are being reported'' \229\--the factors the INA requires
the Department to rely on in setting prevailing wage levels.\230\
Relatedly, ``there are factors in addition to skill level that can
account for OES wage variation for the same occupation and location.''
\231\ Further, the geographic areas used by BLS to calculate local
wages do not always match up exactly with the ``area of employment''
for which wage rates are set, as that term is defined by the INA for
purposes of the H-1B program.\232\ So while the OES survey is the best
available source of wage data for the Department's purposes, it is not
a perfect tool for providing wages in the H-1B, H-1B1, E-3, and PERM
programs--a fact that the Department must take into consideration in
how it uses the OES data.
---------------------------------------------------------------------------
\229\ Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, 80 FR 24,146, 24,155 (Apr. 29, 2015).
\230\ 8 U.S.C. 1182(p)(4).
\231\ 80 FR 24,146, 24,159.
\232\ 8 U.S.C. 1182(n)(4)(A).
---------------------------------------------------------------------------
The Department also acknowledged in the IFR that the universe of
workers surveyed by the OES for some of the most common occupational
classifications in which H-1B workers are employed is larger than the
pool of workers who can be said to have levels of education and
experience comparable to those of even the least skilled H-1B workers
performing work in a specialty occupation. Commenters are therefore
correct that BLS's occupational classifications are not delineated with
the H-1B and PERM programs in mind. But, as explained in the IFR, the
Department took steps to account for this potential mismatch. In
particular, because the statutory scheme requires the Department to set
the prevailing wage levels based on what workers similarly employed to
foreign workers make, taking into account workers' qualifications and,
as noted, the large majority of foreign workers are H-1B workers, the
Department determined it would be inappropriate to consider the wages
of the least educated and experienced workers in these common H-1B
occupational classifications in setting the prevailing wage levels.
To address the fact that the OES survey does not itself contain
information about experience and education, the Department sought to
determine the wages typically earned by individuals having comparable
levels of education, experience, and responsibility to the prototypical
entry-level H-1B and EB-2 workers working in the most common H-1B and
PERM occupations by looking to other credible government surveys that
do gather such information and comparing their data to the OES data. In
particular, the Department consulted a variety of data sources, most
importantly wage data on individuals with master's degrees or higher
and limited years of work experience from the 2016, 2017, and 2018 CPS
\233\ conducted by the U.S. Census Bureau, and data on the salaries of
recent graduates of master's degree programs in STEM occupations
garnered from surveys conducted by the NSF in 2015 and 2017. Both of
these surveys represent the highest standards of data collection and
analysis performed by the federal government. Both surveys have large
sample sizes that have been methodically collected and are consistently
used not just across the federal government for purposes of analysis
and policymaking, but by academia and the broader public as well.
Comparing their data to OES wage distributions thus allowed the
Department to take into account education and experience in determining
how to use OES data. Further, though the CPS and NSF surveys provide a
good approximation
[[Page 3651]]
of where U.S. workers with similar skills to entry-level H-1B and EB-2
workers, fall within the OES distribution; they are not conducted on a
regular basis with enough granularity as the OES survey to produce wage
estimates at the occupational and geographic levels, nor are the
produced frequently enough to provide the up to date wage data
necessary to ensure accurate prevailing wages. They thus are useful for
assessing how the OES data should be used in the Department's foreign
labor programs, but could not be used as a substitute for the OES,
which, as noted above, has unique attributes that make it, in the
Department's judgment, the best possible source of wage data even
though it does not survey for education and experience. The Department
is therefore confident that its use of the OES continues to be
appropriate in the H-1B and PERM programs, and that the IFR's
methodology properly accounted for the fact that the OES does not
survey for education and experience.
---------------------------------------------------------------------------
\233\ The CPS, sponsored jointly by the U.S. Census Bureau and
BLS, is the primary source of labor force statistics for the
population of the U.S. See United States Census Bureau, Current
Population Survey, available at https://www.census.gov/programs-surveys/cps.html.
---------------------------------------------------------------------------
As noted, some commenters suggested that the BLS OES survey is
flawed because it is a voluntary survey and some smaller or more rural
employers are less likely to respond to the survey, which in turn
means, according to commenters, that such employers will be given
inappropriately high wages because they will be grouped in with
establishments in metropolitan statistical areas with higher labor
costs due to a lack of survey responses. The Department recognizes that
the BLS OES survey is voluntary. However, BLS sends the OES survey to
over 1 million establishments and those establishments are encouraged
to respond to the survey. The survey is recognized as a statistically
valid, comprehensive source of wages nationwide. As the Department has
discussed, the OES survey is not the perfect tool for setting wages in
the foreign labor certification programs, but it is the largest and
best single source of wage data available for setting wages across
hundreds of occupational classifications in hundreds of geographical
areas. The Department endeavors to produce as many statistically valid
wage estimates as possible and therefore will move to the next
geographic area until it can report a statistically valid wage. While
it may be the case that in some instances wage rates provided for areas
of the country with fewer establishments responding to the survey will
result in those areas being grouped in with adjacent regions, the
Department believes, as elaborated on previously, that the value in
having a single, uniform survey that produces consistent and reliable
results for its foreign labor programs outweighs any benefits that
might result from using different sources of wage data for specific
areas of employment. Moreover, the fact that the Department permits
employers to use alternative sources of wage data to set prevailing
wage rates gives employers some recourse if they believe, in certain
instances, that the OES prevailing wage rate is not accurate.
Some commenters suggested that the Department should use a separate
survey for certain occupations, such as physicians, because there are
better surveys for those specific occupations. The Department declines
to make this change. As explained throughout, the Department has
determined that the OES survey is the largest and best available survey
to rely upon for setting wages in the foreign labor certification
programs. The Department understands the shortfalls that a survey the
size of the OES survey has, and, as discussed above, has taken various
steps to account for the fact that the OES survey is not specifically
designed for use in the Department's foreign labor programs. For
administrative uniformity the Department believes that providing one
set of data, from a government conducted survey, has more benefits than
using on potentially less reliable surveys conducted by private
organizations that could be discontinued or have changes to their
methodology made without the Department's input. Further, as noted
previously, employers already have a method for utilizing a survey
other than the BLS OES survey. If employers believe there are better
surveys for their occupations than the BLS OES survey, they may rely
upon those surveys, either through the Prevailing Wage Determination
process or listing a valid wage survey as the source of the prevailing
wage when submitting an LCA in the FLAG system.\234\ Indeed, the
Department notes that the AAMC survey itself is often used by employers
as the source of the prevailing wage on their LCAs and PWD
applications.
---------------------------------------------------------------------------
\234\ 20 CFR 655.731(a)(2)(ii)(B) and (C).
---------------------------------------------------------------------------
6. The Upper and Intermediate Wage Levels
Summary of Comments
Several commenters expressed concern that use of the mean of the
top decile of the OES distribution to approximate the prevailing wage
for Level IV workers produces a Level IV wage above the 95th percentile
due to outlier wages at the top of the distribution and that this, in
turn, skews the intermediate wage levels because they are ``set by
statute by interpolating the data for levels'' I and IV. Some
commenters cited a Cato Institute finding that ``extreme outliers'' in
the data used to determine the level IV wage resulted, in some cases,
in Level II and III wage determinations ``up to 26 percent higher than
predicted in'' the IFR. A university commenter and an anonymous
commenter stated that this methodology resulted in situations where the
Level II wage increases to the 78th percentile and the Level III wage
increases to the 90th percentile. An employer stated that the IFR
methodology would produce clearly inaccurate prevailing wages in
industries with bi-modal salary distributions. An individual commenter
stated that the 95th percentile represents workers ``nearing the end of
their career, with decades of experience.''
Similarly, a few commenters expressed concern about specific errors
or discrepancies in prevailing wages produced by the IFR at the
intermediate levels. An individual commenter asserted that of ``437,593
Area Code-SOC Code combinations'' there are prevailing wage
``discrepancies in 228,836.'' As an example, the commenter noted that
the Level II wage for SOC 15-2031 in ``[a]rea code 37980'' based on
what the Department estimated would be at the 62nd percentile is higher
than the pre-IFR Level IV wage, which the Department estimated to be at
the 67th percentile. Similarly, a trade association stated that its
members reported that the Level II 62nd percentile wage is higher in
many cases than the pre-IFR Level IV 67th percentile wage. In these
cases, commenters noted that the wage increases effected by the IFR
appeared to be even greater than the Department anticipated or
intended. By contrast, two commenters asserted that prevailing wages
published in the Department's Online Wage Library clearly were too low
in some cases, citing examples like a level I wage of $22,000 for
Electrical Engineers in College Station, Texas, much lower than entry-
level wages indicated in a NSF survey.
Response to Comments
To begin, the Department agrees with commenters that setting the
top wage at the mean of the upper decile skews the wages of the
intermediate wage levels by including, sometimes extreme, outliers. For
the reasons given below, the Department continues to believe that the
Level IV wage should be placed at the uppermost end of the OES
[[Page 3652]]
distribution. However, to avoid the statistical issues that resulted in
overly inflated wages at both the upper and intermediate wage levels
under the IFR, the Department has adjusted the manner in which BLS will
provide data for the Level IV wage.
As the Department explained in the IFR, the highest wage level
should be commensurate with the wages paid to the most highly
compensated workers in any given occupation because such workers are
also generally the workers with the most advanced skills and competence
in the occupation, and therefore the type of workers who are similarly
employed to the most highly qualified H-1B and PERM workers.\235\
Again, it is generally the case that, as a worker's education and
experience increase, so too do his wages. Further, while the INA places
baseline, minimum skills-based qualifications on who can obtain an H-1B
or EB-2 visa, it does not place any limit on how highly skilled a
worker can be within these programs. Thus, while the Department
necessarily discounted the lower end of the OES wage distribution in
determining the entry-level wage, full consideration must be given to
the uppermost portion of the distribution in adjusting the Level IV
wage.
---------------------------------------------------------------------------
\235\ Edward P. Lazear, Productivity and Wages: Common Factors
and Idiosyncrasies Across Countries and Industries, National Bureau
of Economic Research, 11/2019, Working Paper 26428, available at
http://www.nber.org/papers/w26428; David H. Autor & Michael J.
Handel, Putting Tasks to the Test: Human Capital, Job Tasks and
Wages, National Bureau of Economic Research, 6/2009, Working Paper
15116, available at http://www.nber.org/papers/w15116.
---------------------------------------------------------------------------
H-1B workers can be, and at least in some cases already are among
the most highly paid, and therefore likely among the most highly
skilled workers within their respective occupations.\236\ This is
demonstrated by a review of the highest salaries paid to H-1B workers
in the most common occupations in which H-1B workers are employed. In
Fiscal Year (FY) 2019, for example, the most highly compensated H-1B
nonimmigrants employed as Computer Systems Analysts commanded annual
wages as high as $450,000. That figure was $357,006 for H-1B workers in
other Computer Occupations. The wages of workers at the 90th percentile
of the OES distribution for these occupations, by contrast, are
significantly lower. Computer Systems Analysts at the 90th percentile
in the OES distribution make approximately $142,220. That figure is
$144,820 for workers in other computer occupations. In other words, H-
1B workers in some instances make wages far in excess of those earned
by 90 percent of all U.S. workers in the same occupation. Indeed, a
review of the wages of the top five percent highest earners among H-1B
nonimmigrants, and therefore the earners likely to have the highest
levels of education, experience, and responsibility, in the 16
occupational classifications that account for one percent or more of
all approved H-1B petitions in FY2019 shows that such workers make
wages that are, on average, at least 20 percent higher than those made
by workers at the 90th percentile in the OES wage distribution.
---------------------------------------------------------------------------
\236\ Data on the actual wages paid to H-1B workers shows that
in some cases such workers are paid at or near the very top of the
OES wage distribution.
---------------------------------------------------------------------------
Further demonstrating that H-1B workers can be and sometimes are
among the most skilled and competent workers in their occupations, an
examination of the top end of the wage distribution within the H-1B
program shows that, for H-1B nonimmigrants with graduate and bachelor's
degrees, the association between education and income level begins to
break down to some extent. Among the most highly compensated H-1B
workers, the higher the income level, the more likely the foreign
worker beneficiary only has a bachelor's degree.\237\ This strongly
suggests that individuals at the fourth wage level truly possess the
most advanced skills and competence--the only remaining parameters that
can reasonably account for significant wage differentials--within their
occupations, as additional years of education are largely irrelevant in
explaining wages among top earners. The U.S. workers who are similarly
employed to the most highly qualified H-1B workers are, therefore, also
likely to be among the most highly skilled, and, therefore, the most
highly compensated workers within the OES wage distribution.
---------------------------------------------------------------------------
\237\ This analysis is based on data provided by U.S.
Citizenship and Immigration Services and 2019 OFLC Disclosure Data.
---------------------------------------------------------------------------
The high levels of pay that the most skilled H-1B workers can
command is also shown by the fact that, due to their advanced skills,
diversified knowledge, and competence, workers placed at the fourth
wage level are likely to be far more productive than their less
experienced and educated peers. Whereas experience itself generally
increases on a linear basis, as a function of age and time spent in an
occupation, productivity and an individual's supervisory
responsibilities, as a function of experience and skills, do not. For
example, the nature of senior management or supervisory roles, in
particular, means workers who serve as productivity multipliers are
more likely to fill such positions, which in turn translates to higher
wages. Perhaps even more relevant to the Department's assessment of the
wages paid to H-1B workers is the nature of the work these individuals
do, which is highly specialized and typically occurs in computer or
engineering-related fields. In such occupations, experience and
abilities can result in exponentially divergent levels of productivity,
which in turn means that workers with the most advanced skills and
competence can command wages far above what other workers in those
occupations do.\238\
---------------------------------------------------------------------------
\238\ Andy Oram & Greg Wilson, Making Software: What Really
Works, and Why We Believe It (2010).
---------------------------------------------------------------------------
All of these considerations strongly indicate that U.S. workers
similarly employed to the H-1B and PERM workers with the most advanced
skills and competence are themselves among the most highly skilled
workers in any given occupation, and therefore the most highly
compensated. Thus, because the INA requires wages for H-1B and PERM
workers to be set based on the wages paid to similarly employed U.S.
workers, taking into account education, experience, and responsibility,
and the Level IV wage is used for job opportunities filled by the most
highly skilled workers, the Level IV wage should, in the Department's
judgment be placed at the uppermost end of the OES distribution.
Importantly, commenters by and large did not dispute the
Department's conclusion that H-1B workers in some cases are among the
most skilled and educated workers in an occupation, and therefore
should be compensated at rates that reflect what the most skilled and
educated U.S. workers in those occupations make. Rather, as noted,
commenters' primary concern was with the statistical methodology the
Department used to calculate the Level IV wage. Because the Department
agrees with commenters that the methodology contained certain
unforeseen flaws, it has decided to take a new approach in the final
rule that, while still resulting in wage rates that reflect what some
of the most highly skilled, and therefore the most highly compensated
individuals in a given occupation, make will eliminate the influence of
outliers on prevailing wage rates that result in anomalous and overly
inflated rates at both the upper and intermediate wage levels. In
consequence, the Department has determined that the Level IV should be
calculated as the 90th percentile of the OES distribution, as opposed
to the mean of the upper decile used in the IFR. This change will
reduce
[[Page 3653]]
significantly, if not eliminate, the influence of outliers on wage
rates because outlier data at the very upper end of the distribution
will no longer be a significant factor in how the Level IV wage is
calculated.
In particular, as commenters noted, the extremely high wages paid
to a few ``superstar'' outliers in an occupation in a geographic area
may raise the mean of the upper decile of workers in that occupation
and geographic area far above the median of the upper decile, which is
the 95th percentile. Thus, using the mean of the upper decile to
calculate Level IV wages and derive Level II and III wages may boost
Level II, III, and IV wages higher than the Department anticipated or
intended in the IFR. Changing to the 90th percentile to calculate the
Level IV wages and derive Level II and III wages means the Level IV
wages will more accurately reflect the wages paid to workers with
levels of education, experience, and responsibility comparable to the
typical U.S. worker at the high end of the distribution, rather than
workers with abnormally high levels of compensation even for that part
of the distribution. For example, a ``superstar'' senior software
designer (OES code 15-1256) that makes over $750,000 per year working
in San Jose, California in 2019 would affect the mean of the top
decile, but would not affect the 90th percentile wage figure of
software engineers in San Jose, California, which was $207,200 in 2019,
according to OES statistics. Thus, using the mean of the top decile to
calculate Level IV wages and derive Levels II and III wages allows the
presence of a few ``superstar'' outliers in an occupation in a
geographic area to inflate Level II, III, and IV wages for an
occupation in a geographic area.
In addition, there are other considerations weighing against using
the mean of the upper decile to calculate Level IV wages and derive
Levels II and III wages. The extremely high wages that employers pay to
``superstar'' outliers in an occupation in a geographic area of course
do not necessarily mean that employers also pay high wages to other
workers in the same occupation in the same geographic area. Thus, using
the mean of the top decile to calculate Level IV wages and derive
Levels II and III wages not only inflate Level II, III and IV wages so
that they do not accurately reflect the overall wage distribution for
an occupation in a geographic area, but also introduces the potential
for significant unpredictability in wages from year to year that is not
based on any systemic change to the labor market. Consider the same
``superstar'' senior software designer that makes over $750,000 per
year working in San Jose, California in 2019 and suppose his employer
agreed to let him work remotely in 2020, and he moved to Salt Lake
City, Utah. That decision would affect the mean of the top decile,
reducing it in San Jose and increasing it in Salt Lake City, but would
not affect the respective 90th percentiles of $207,200 in San Jose and
$157,290 in Salt Lake City. Changing the work location for one
``superstar'' outlier would not affect the distribution of wages for 80
percent of software developers earning between the 10th and 90th
percentiles in either San Jose or Salt Lake City. Software developers
would still make more on average at the every level in San Jose than in
Salt Lake City. Moreover, because the OES survey does not necessarily
capture the same workers year-over-year, the unpredictability in wages
that can result from the presence and then absence of an outlier in the
wage data can occur even if that same worker has not changed locations.
The weakening of the linkage between supply and demand factors
affecting wages for most workers in an occupation and the Level II,
III, and IV wages was not the Department's intention in the IFR, and is
not consistent with the INA's wage provisions. Using the 90th
percentile instead to calculate the Level IV wages and derive Level II
and III wages for an occupation in a geographic area eliminates the
distortions and minimizes the excessive and unintended variability in
Levels II, III, and IV wages arising from the inclusion of a few
``superstar'' outliers in the mean of top decile.
Finally, the Department has decided to use a percentile calculation
instead of a mean calculation because the Department can produce such
data more efficiently. In addition, experience with the IFR's
methodology has demonstrated that taking the mean of a small portion of
the OES distribution, such as of a decile, can in some cases result in
exceedingly small sample sizes being used to produce the wage figure,
which make the figure produced potentially less reliable.
Based on its review of the comments received, the Department also
believes that a percentile calculation will be easier for employers,
workers, and the public to understand than a mean calculation. As noted
above, some commenters challenged the wage figures provided under the
IFR as being incorrect because some wages the Department estimated as
falling at the 62nd percentile wage were significantly higher than what
the Department had described as the 67th percentile wage under the old
methodology. While, for the reasons given above, it is likely that this
occurred in some cases due to the presence of outliers in the data used
to calculate the Level IV wage, there is also another explanation.
Specifically, describing the wage figures produced under the old
methodology and the IFR's methodology as percentiles was, as explained
in the IFR, simply a shorthand way of describing a rough approximation
of what a mean calculation yields. For example, under the old
methodology, the Level IV wage was provided as the mean of the upper
two-thirds of the OES distribution, meaning the average of the wage
data falling between the 33rd and 100th percentiles. The midpoint of
that portion of the distribution is the 67th percentile, but its mean
will not necessarily be the 67th percentile. Put more simply, the
average of a set of numbers does not always fall at the median of those
numbers. As a result, discussing two different means calculated based
on different portions of the distributions by describing them as
percentiles gives a false sense of comparability, as demonstrated by
some of the discrepancies raised by commenters.
To avoid confusion about how it describes the wages it provides
going forward, the Department will speak more clearly about the kinds
of data it is providing and will consequently report the wage based on
a percentile calculation. This means that the Department will no longer
take the average of portion of the wage distribution, but instead will
provide a wage that falls at a particular predetermined point within
the distribution.
As to the precise values of the intermediate levels, the Department
notes that it will continue to calculate the two intermediate wage
levels in accordance with 8 U.S.C. 1182(p)(4), which provides that, in
establishing a four-tier wage structure, ``[w]here an existing
government survey has only 2 levels, 2 intermediate levels may be
created by dividing by 3, the difference between the 2 levels offered,
adding the quotient thus obtained to the first level and subtracting
that quotient from the second level.'' \239\ The BLS OES survey is, as
provided in the statute, an existing survey that has long provided two
wage levels for Department's use in setting the prevailing wage
rates.\240\
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\239\ 8 U.S.C. 1182(p)(4).
\240\ BLS also produces data for the public from the OES survey
that is divided into five different wage levels. However, the public
data BLS produces is not broken down with the level of granularity
by area of employment needed to administer the Department's
immigrant and nonimmigrant programs, which is why BLS has also long
produced a separate dataset with two wage levels for the
Department's use.
---------------------------------------------------------------------------
[[Page 3654]]
The Department will apply the statutory formula as follows: the
difference between the two levels provided by the OES survey data is 55
percentiles. Dividing this by three yields a quotient of 18.33. This
quotient, added to the value of the Level I wage at the 35th
percentile, yields a Level II wage at approximately the 53rd
percentile. When subtracted from the value of the Level IV wage at the
90th percentile, the quotient yields a Level III wage at approximately
the 72nd percentile of the OES distribution.
Finally, while eliminating the influence of outliers on how the
upper level wage is calculated and moving to percentile calculations
will reduce unpredictability in the data, prevent the inflation of
wages beyond the levels the Department has determined appropriate, and
make the wage structure easier to understand for the public, it is
possible that there will continue to be anomalies as the Department
moves from a mean-based to a percentile-based methodology. However, the
Department does not expect these will be common.
7. Other Suggested Alternatives and Additional Comments
One public policy organization suggested the Department should
require use of a government survey to determine prevailing wages,
stating the INA does not require the Department to permit use of other
sources and expressing concern that employers ``have routinely relied
on LCA prevailing wage sources that do not fit the `independent
authoritative source' or `another legitimate source of wage
information.''
The Department believes that allowing employers the flexibility of
choosing to use an independent authoritative source or another
legitimate source of wage data provides a backstop for cases in which
OES data on an occupation in a given region is insufficient or the OES
data provides an anomalous result. This flexibility serves the goal of
ensuring that the wage requirement actually reflects the market wage
for the job.
Another public policy organization stated it is unclear how
independent authoritative and other non-OES sources ``compare to OFLC-
generated OES prevailing wage'' and urged the Department to conduct a
study comparing OES-based wages and wages produced by private surveys
and non-OES sources ``to identify whether there are any systematic
biases'' in non-OES sources.
The quality of independent wage surveys is an important subject to
which OFLC pays attention and will continue to pay attention. Although
private surveys are conducted independently of the Department, the
Department in its regulations and guidance has set standards that
private surveys must attain. As discussed above, the regulations
restrict independent authoritative sources to publications within 24
months of the application and require them to use recent and valid
data.\241\ Independent sources must be ``reasonable and consistent with
recognized standards and principals in producing a prevailing wage.''
\242\
---------------------------------------------------------------------------
\241\ 20 CFR 655.731 (b)(3)(iii).
\242\ Id. at 655.731 (b)(3)(iii)(C)(4).
---------------------------------------------------------------------------
Guidance that the Department issued in 2009 requires that wage data
collected by an independent authoritative source is for similarly
employed workers, meaning workers having substantially similar levels
of skills. The survey should contain a representative sample of wages
within the occupation that comports with recognized statistical
standards and principles in producing prevailing wages. The Department
provides a set of minimum survey standards in Appendix E of the 2009
Guidance and encourages employers to reference these standards when
seeking to use an independent authoritative source as the prevailing
wage. Written documentation on the methodology used to conduct the
survey and the validity of the methodology used in computing the
occupational wage data covering the area of intended employment must be
kept in the employer's data file and made available in the event of an
investigation. Two commenters suggested the Department should combine
data collected by the OES survey with ``certain data from private,
independently published compensation surveys'' to produce prevailing
wages that would more accurately reflect skill, education, and
experience levels than wages determined using OES pay band data alone.
One of these commenters suggested BLS could ``layer'' the private
survey data ``over the OES data'' and asserted this would not be
difficult because H-1B workers are heavily concentrated in IT
occupations that are included in private surveys, though the commenter
acknowledged private surveys are not available for all occupations and
localities. Other general suggestions included applying a higher wage
to ``tech companies'' or applying a higher wage as ``the number of
visas grow for an employer.''
The Department does not believe that combining or layering data
from studies that may not be measuring quite the same occupations in
the same regions would yield more accurate results. OES data is
comprehensive and reliable. As the commenter acknowledged, private
survey data is not available for some occupations and localities. An
advantage of the OES survey is that it allows uniformity in the
Department's methodology. That advantage would be lost if the
Department adopted the commenters' proposal. The system the Department
has adopted allows for cases where private survey data may be more
accurate. As discussed, using other authoritative or legitimate sources
is an option available to employers.
Various commenters asserted increased wages under the IFR
methodology would have negative macroeconomic impacts, including: Brain
drain and loss of American competitiveness in a global economy,
stifling innovation in areas like artificial intelligence and
manufacturing 4.0; increased prices for or elimination of products and
services; elimination or increased outsourcing of jobs and a general
reduction in labor demand; and reduced revenues, including local,
State, and Federal tax revenue and reduced consumer spending from
foreign workers and students. Many commenters also expressed concern
that the higher IFR wages would result in increased outsourcing of
jobs, rather than increased opportunities for U.S. workers. One of
these commenters noted that U.S. employers can hire workers through
foreign affiliates and cited a Wharton School of Business study finding
H-1B restrictions ``caused foreign affiliate employment increases at
the intensive and extensive margins.''
The Department does not anticipate that the harms the commenters
envisage will be the consequences of more accurately calculating
prevailing wages of H-1B and PERM workers. Some of the consequences are
possible, but in setting wage requirements, Congress accepted that
there would be costs resulting from its chosen means of protecting U.S.
workers. The Department has not been assigned the function of
reconsidering Congress's decision. Rather, the Department's obligation
under the INA is to match as closely as possible workers' pay with
their occupations and qualifications.
Two public policy organizations believed the Department must
address employer misclassification of job opportunities by reviewing
``the qualifications of individual workers
[[Page 3655]]
before DHS petitions are approved to ensure that wage levels match up
with age, education, and experience'' to ensure the employer is paying
an accurate prevailing wage. One of these commenters asserted some
employer petitions contain the same prevailing wage for different job
opportunities, such as listing the same wage for a software engineer
and a senior software engineer.
These comments propose actions that may be undertaken by DHS but
not by the Department. The Department cannot review DHS petitions
before DHS approves them.
Some commenters suggested new definitions of the terms `employer'
and `employment,' enhanced regulation of foreign labor recruiters, a
ban of staffing companies from the H-1B program, and enhanced wage
protections in the H-2A program. Other commenters expressed concerns
related to DHS regulations and recent rulemaking either unrelated or
not directly related to this rulemaking, including a DHS IFR regarding
specialty occupation determinations.
These comments express concerns or provide suggestions that exceed
the scope of this rulemaking. Accordingly, they need not be addressed
in this preamble.
IV. Amendments to the Computation of Prevailing Wage Levels Created by
the Final Rule
In light of the foregoing, this final rule amends the Department's
regulations at part 20, sections 656.40 and 655.731 to reflect the wage
level computations the Department will use to determine prevailing
wages in the H-1B, H-1B1, E-3, EB-2, and EB-3 classifications. These
amendments are in accordance with the President's Executive Order
(E.O.) 13788, ``Buy American and Hire American,'' which instructed the
Department to ``propose new rules and issue new guidance, to supersede
or revise previous rules and guidance if appropriate, to protect the
interests of United States workers in the administration of our
immigration system.'' \243\ Additionally, the Department has determined
that the existing prevailing wage levels were artificially low and
provided an opportunity for employers to hire and retain foreign
workers at wages well below what their U.S. counterparts earn, creating
an incentive to prefer foreign workers to U.S. workers, an incentive
that is at odds with the statutory scheme and causes downward pressure
on the wages of the domestic workforce. Therefore, the amendments
discussed below revising the wage provisions at 20 CFR 655.731 and
656.40 will ensure the prevailing wage levels reflect the wages paid to
U.S. workers with similar experience, education, and responsibility to
those possessed by similarly employed foreign workers.
---------------------------------------------------------------------------
\243\ See Exec. Order 13788, 82 FR 18,837 (Apr. 18, 2017).
---------------------------------------------------------------------------
1. Prevailing Wage Levels Based on the OES in the Permanent Labor
Certification Program (20 CFR 656.40)
The IFR amended this section to codify the practice of using four
prevailing wage levels and to specify the manner in which the wages
levels are calculated. Additionally, the IFR incorporated minor
technical amendments to clarify the prevailing wage process and to
codify the Department's practice of having the OFLC Administrator
announce, via a notice of implementation, annual updates to OES wage
data. After a careful review of the comments and as discussed above,
this final rule adopts a revised wage level computation methodology and
other clarifying and technical amendments to Sec. 656.40.
Paragraph (b)(2)(ii)(A) describes the computation of the Level I
Wage following implementation of transition wage rates specified under
paragraph (b)(2)(iii). This first wage level--calculated as the mean of
the fifth decile of the OES wage distribution under the IFR--will now
be calculated as the 35th percentile of the wage distribution for the
most specific occupation and geographic area available. Roughly
speaking, this means that the Level I Wage will be adjusted downward
from the approximate 45th percentile under the IFR to the exact 35th
percentile of the relevant OES wage distribution in this final rule.
Next, paragraph (b)(2)(ii)(D) provides that the Level IV Wage--
calculated as the mean of the upper decile of the OES wage
distribution--will now be calculated as the exact 90th percentile of
the wage distribution for the most specific occupation and geographic
area available. This means the Level IV Wage will decrease
approximately from the 95th percentile under the IFR to exactly the
90th percentile of the relevant OES wage distribution. Further, where
the Department is unable to compute a Level IV Wage for an occupation
and geographic area due to wage values exceeding the uppermost interval
of the OES wage interval methodology, the Level IV Wage will be the
highest of: (1) The current hourly wage rate applicable to the highest
OES wage interval for the specific occupation and geographic area (also
known as the footnote wage), or (2) the mean of the wages of all
workers for the most specific occupation and geographic area available.
For the two intermediate levels, II and III, the Department will
continue to rely on the mathematical formula Congress provided in the
INA.\244\ Thus, new paragraph (b)(2)(ii)(B) states that the Level II
Wage shall be determined by first dividing the difference between
Levels I and IV by three and then adding the quotient to the computed
value for Level I. The Level III Wage is defined in new paragraph
(b)(2)(ii)(C) as a level determined by first dividing the difference
between Levels I and IV by three and then subtracting the quotient from
the computed value for Level IV. This yields second and third wage
levels at approximately the 53rd and 72nd percentiles, respectively,
under this final rule as compared to the computations under the IFR,
which placed Level II Wage at approximately the 62nd percentile and
Level III Wage at approximately the 78th percentile.
---------------------------------------------------------------------------
\244\ See 8 U.S.C. 1182(p)(4) (``Where an existing government
survey has only 2 levels, 2 intermediate levels may be created by
dividing by 3, the difference between the 2 levels offered, adding
the quotient thus obtained to the first level and subtracting that
quotient from the second level.'').
---------------------------------------------------------------------------
Section 656.40(b)(2)(ii) in the IFR explained that the OFLC
Administrator will publish the prevailing wage rates at least once in
each calendar year, on a date to be determined by the Administrator,
codifying the Department's current practice of announcing updates to
OES wage data via a notice of implementation, rather than publishing
multiple prevailing wage rates in the Federal Register. The Department
has adopted the language of the provision without change, but has made
a minor technical change moving the provision to paragraph (b)(2)(iv)
in order to accommodate revisions to the wage level computation
provisions in this final rule.
The Department is adopting without change revisions to Sec.
656.40(b)(2) that provide greater precision in the language used by
changing the term ``DOL'' to ``BLS'' when describing which entity
administers the OES survey and eliminate redundancy by deleting the
language ``except as provided in (b)(3) of this section.'' Because the
Department is now specifying within the regulation exactly how the
prevailing wage levels are calculated, the revised text also removes
the existing reference to how the levels are calculated--namely the
reference to the ``arithmetic mean''--and will instead read: ``If the
job opportunity is not covered by a CBA, the prevailing wage for labor
certification purposes shall be based on the wages of workers
[[Page 3656]]
similarly employed using the wage component of the OES survey, in
accordance with subparagraph (b)(2)(i), unless the employer provides an
acceptable survey under paragraphs (b)(3) and (g) of this section or
elects to utilize a wage permitted under paragraph (b)(4) of this
section.'' The Department also is adopting without change the revisions
to paragraph (a) that remove an out-of-date reference to the role of
the SWAs in the prevailing wage determination process and an
unnecessary reference to ``arithmetic mean'' that is specified in other
paragraphs.
2. Amending the Wage Requirement for LCAs in the H-1B, H-1B1, and E-3
Visa Classifications (20 CFR 655.731)
The IFR made minor technical amendments to this section to remove
out-of-date references, clarify use of the BLS's OES survey and other
permissible wage sources to determine prevailing wages, and specify
that these determinations will be made in a manner consistent with the
amended section 656.40(b)(2). After a careful review of the comments
and as discussed above, this final rule adopts, without change, these
clarifying and technical amendments to Sec. 656.731.
This final rule adopts amendments to paragraph (a)(2)(ii)(A) that
removes an out-of-date reference to SWAs' role in the prevailing wage
determination process to reflect current practice and to provide for
operational flexibilities in the future with respect to where PWD
requests are processed. Non-agricultural PWD requests are no longer
processed by SWAs; since 2010 they have solely been processed by the
Department at a National Processing Center (NPC). PWD requests are
primarily adjudicated by the NPWC, located in Washington, DC, but
through interoperability, they may be processed by any NPC. The
regulatory text is amended to reflect current DOL practice and to
provide maximum flexibility for DOL to ensure PWDs are issued in a
timely manner.
The Department also adopts without change revised language in Sec.
655.731 that more clearly explains the Department will use BLS's OES
survey to determine the prevailing wages under this paragraph, as well
as an additional sentence that specifies these determinations will be
made in a manner consistent with amended Sec. 656.40(b)(2). The
revised language in paragraphs (a)(2)(ii), (a)(2)(ii)(A), and
(a)(2)(ii)(A)(2) also includes technical and clarifying revisions
regarding other permissible wage sources (i.e., applicable wage
determinations under the Davis-Bacon Act or McNamara-O'Hara Service
Contract Act), as well as other independent authoritative or legitimate
sources of wage data in accordance with paragraph (a)(2)(ii)(B) or (C).
This final rule adopts without change language that removed the
reference to ``arithmetic mean'' in paragraph (a)(2)(ii) and now states
``. . . the prevailing wage shall be based on the wages of workers
similarly employed as determined by the OES survey in accordance with
20 CFR. 656.40(b)(2)(i) . . .'' The revisions also correct an error
referencing ``H-2B nonimmigrant(s)'' by changing the reference to ``H-
1B nonimmigrant(s)'' in paragraph (a)(2)(ii)(A)(2). The revisions
further provide that an NPC will continue to determine whether a job is
covered by a collective bargaining agreement that was negotiated at
arms-length, but in the event the occupation is not covered by such
agreement, an NPC will determine the wages of workers similarly
employed using the wage component of the BLS OES, unless the employer
provides an acceptable wage survey. An NPC will determine the
prevailing wage in accordance with sections 212(n) and 212(t) of the
INA and in a manner consistent with the newly revised 20 CFR
656.40(b)(2).
3. Transition Wage Rates for Implementing Changes Created by the Final
Rule
As stated in the IFR, the Department applied the new regulations to
applications for prevailing wage determination pending with the NPWC as
of the effective date of the regulation; applications for prevailing
wage determinations filed with the NPWC on or after the effective date
of the regulation; and LCAs filed with the Department on or after the
effective date of the regulation where the OES survey data is the
prevailing wage source, and where the employer did not obtain the PWD
from the NPWC prior to the effective date of the regulation. However,
the Department received a number of comments expressing concerns that
immediate implementation of the revised wage levels may have a
significant negative impact on the economy, and that a phased
implementation of the revised wage levels is appropriate to allow
employers to adjust to the new computation methodology and plan
payroll, budget, and contractual obligations accordingly.
To address these concerns and support an orderly and seamless
transition between the rules, the Department is adding paragraph
(b)(2)(iii) to this section to provide a phased implementation period
to the new prevailing wage levels. A short transition period also
allows the Department to implement necessary changes to program
operations, OES wage databases, and technology systems, and to provide
training and technical assistance to the NPC, employers, and other
stakeholders in order to familiarize them with changes required by this
final rule. The wage level computations contained in this section will
only apply to applications for prevailing wage determination pending
with the NPWC on or during the effective date(s) of each transition
period; applications for prevailing wage determinations filed with the
NPWC on or during the effective date(s) of each transition period; and
LCAs filed with the Department on or during the effective date(s) of
each transition period where the OES survey data is the prevailing wage
source, and where the employer did not obtain the PWD from the NPWC
prior to the effective date(s) of each transition period.
Accordingly, paragraph (b)(2)(iii)(A) describes the computations of
the wage levels for the period beginning on the effective date of this
final rule through June 30, 2021. The Level I Wage will continue to be
calculated as the mean of the lower one-third of the wage distribution
for the most specific occupation and geographic area available, which
roughly approximates the 17th percentile of the wage distribution. The
Level IV Wage will continue to be calculated as the mean of the upper
two-thirds of the wage distribution for the most specific occupation
and geographic area available, which roughly approximates the 67th
percentile of the wage distribution. For the two intermediate levels,
II and III, the Department will continue to rely on the mathematical
formula Congress provided in the INA.
Paragraph (b)(2)(iii)(B) describes the computations of the wage
levels for the period beginning on July 1, 2021, through June 30, 2022.
The Level I Wage will be set as either (1) 90 percent of the wage value
calculated at the 35th percentile of the wage distribution under
paragraph (b)(2)(ii)(A), or (2) the mean of the lower one-third of the
wage distribution under paragraph (b)(2)(iii)(A)(1), whichever is
highest. The Level IV Wage will be set as either (1) 90 percent of the
wage value calculated at the 90th percentile of the wage distribution
under paragraph (b)(2)(ii)(D), or (2) the mean of the upper two-thirds
of the wage distribution under paragraph (b)(2)(iii)(A)(2), whichever
is highest. For the two intermediate levels, II and III, the
[[Page 3657]]
Department will continue to rely on the mathematical formula Congress
provided in the INA based on the wage levels derived under this
paragraph.
Paragraph (b)(2)(iii)(C) describes transition wage rates that will
apply only to LCAs and, as applicable, applications for prevailing wage
determinations submitted by employers seeking to employ a H-1B
nonimmigrant worker in job opportunity where such H-1B nonimmigrant
worker was, as of October 8, 2020, the beneficiary of an approved I-140
Petition or eligible for an extension of his or her H-1B visa status
under AC21, and eligible to be granted immigrant status but for
application of the per country visa limitations or remains eligible for
an extension of his or her H-1B visa status at the time the LCA is
filed.
Where these requirements pertaining to job opportunities for which
LCAs are filed are met, paragraph (b)(2)(iii)(C)(1) describes the
computations of the wage levels for the period beginning on July 1,
2021, through June 30, 2022. The Level I Wage will be set as either (1)
85 percent of the wage value calculated at the 35th percentile of the
wage distribution under paragraph (b)(2)(ii)(A), or (2) the mean of the
lower one-third of the wage distribution under paragraph
(b)(2)(iii)(A)(1), whichever is highest. The Level IV Wage will be set
as either (1) 85 percent of the wage value calculated at the 90th
percentile of the wage distribution under paragraph (b)(2)(ii)(D), or
(2) the mean of the upper two-thirds of the wage distribution under
paragraph (b)(2)(iii)(A)(2), whichever is highest. For the two
intermediate levels, II and III, the Department will continue to rely
on the mathematical formula Congress provided in the INA based on the
wage levels derived under this paragraph.
Paragraph (b)(2)(iii)(C)(2) describes the computations of the wage
levels for the period beginning on July 1, 2022, through June 30, 2023.
The Level I Wage will be set as either (1) 90 percent of the wage value
calculated at the 35th percentile of the wage distribution under
paragraph (b)(2)(ii)(A), or (2) the wage value provided from the
calculation specified under paragraph (b)(2)(iii)(C)(1)(i), whichever
is highest. The Level IV Wage will be set as either (1) 90 percent of
the wage value calculated at the 90th percentile of the wage
distribution under paragraph (b)(2)(ii)(D), or (2) the wage value
provided from the calculation specified under paragraph
(b)(2)(iii)(C)(1)(ii), whichever is highest. For the two intermediate
levels, II and III, the Department will continue to rely on the
mathematical formula Congress provided in the INA based on the wage
levels derived under this paragraph.
Paragraph (b)(2)(iii)(C)(3) describes the computations of the wage
levels for the period beginning on July 1, 2023, through June 30, 2024.
The Level I Wage will be set as either (1) 95 percent of the wage value
calculated at the 35th percentile of the wage distribution under
paragraph (b)(2)(ii)(A), or (2) the wage value provided from the
calculation specified under paragraph (b)(2)(iii)(C)(2)(i), whichever
is highest. The Level IV Wage will be set as either (1) 95 percent of
the wage value calculated at the 90th percentile of the wage
distribution under paragraph (b)(2)(ii)(D), or (2) the wage value
provided from the calculation specified under paragraph
(b)(2)(iii)(C)(2)(ii), whichever is highest. For the two intermediate
levels, II and III, the Department will continue to rely on the
mathematical formula Congress provided in the INA based on the wage
levels derived under this paragraph.
Following this transition period and beginning on July 1, 2024,
paragraph (b)(2)(iii)(C)(4) requires that all prevailing wage
calculations for job opportunities for which LCAs are filed shall be
provided by the OFLC Administrator as specified under paragraph
(b)(2)(ii) of this section. Where the Department is unable to compute a
Level IV Wage under paragraph (b)(2)(iii) for an occupation and
geographic area due to wage values exceeding the uppermost interval of
the OES wage interval methodology, paragraph (b)(2)(iii)(D) specifies
that the OFLC Administrator shall determine the Level IV Wage as the
highest of: (1) The current hourly wage rate applicable to the highest
OES wage interval for the specific occupation and geographic area, or
(2) the mean of the wages of all workers for the most specific
occupation and geographic area available.
V. Statutory and Regulatory Requirements
A. Executive Orders 12866 (Regulatory Planning and Review), Executive
Order 13563 (Improving Regulation and Regulatory Review), and Executive
Order 13771 (Reducing Regulation and Controlling Regulatory Costs)
Under E.O. 12866, the OMB's Office of Information and Regulatory
Affairs (OIRA) determines whether a regulatory action is significant
and, therefore, subject to the requirements of the E.O. and review by
OMB. 58 FR 51735. Section 3(f) of E.O. 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a rule
that: (1) Has an annual effect on the economy of $100 million or more,
or adversely affects in a material way a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities (also
referred to as economically significant); (2) creates serious
inconsistency or otherwise interferes with an action taken or planned
by another agency; (3) materially alters the budgetary impacts of
entitlement grants, user fees, or loan programs, or the rights and
obligations of recipients thereof; or (4) raises novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the E.O. Id. Pursuant to E.O. 12866, OIRA
has determined that this is an economically significant regulatory
action. However, OIRA has waived review of this regulation under E.O.
12866, section 6(a)(3)(A). Pursuant to the Congressional Review Act (5
U.S.C. 801 et seq.), OIRA has designated that this rule is a ``major
rule,'' as defined by 5 U.S.C. 804(2).
E.O. 13563 directs agencies to propose or adopt a regulation only
upon a reasoned determination that its benefits justify its costs; the
regulation is tailored to impose the least burden on society,
consistent with achieving the regulatory objectives; and in choosing
among alternative regulatory approaches, the agency has selected those
approaches that maximize net benefits. E.O. 13563 recognizes that some
benefits are difficult to quantify and provides that, where appropriate
and permitted by law, agencies may consider and qualitatively discuss
values that are difficult or impossible to quantify, including equity,
human dignity, fairness, and distributive impacts.
Outline of the Analysis
Section III.B.1 describes the need for the final rule, and section
III.B.2 describes the process used to estimate the costs of the rule
and the general inputs used to reach these estimates, such as wages and
number of affected entities. Section III.B.3 explains how the
provisions of the final rule will result in costs and transfer payments
and presents the calculations the Department used to reach the cost and
transfer payment estimates. In addition, this section describes the
qualitative transfer payments and benefits of the changes contained in
this final rule. Section III.B.4 summarizes the estimated first-year
and 10-year total and annualized costs, perpetuated costs, and transfer
payments of the final rule. Finally, section III.B.5 describes the
regulatory alternatives that were
[[Page 3658]]
considered during the development of the final rule.
Summary of the Analysis
The Department expects that the final rule will result in costs and
transfer payments. As shown in Exhibit 1, the final rule will have an
annualized cost of $2.90 million and a total 10-year cost of $20.34
million at a discount rate of 7 percent in 2019 dollars.\245\ The final
rule will result in annualized transfer payments of $14.97 billion and
total 10-year transfer payments of $105.16 billion at a discount rate
of 7 percent in 2019 dollars.\246\ When the Department uses a perpetual
time horizon to allow for cost comparisons under E.O. 13771, the
annualized cost of this final rule is $1.86 million at a discount rate
of 7 percent in 2016 dollars.\247\
---------------------------------------------------------------------------
\245\ The final rule will have an annualized net cost of $2.75
million and a total 10-year cost of $23.47 million at a discount
rate of 3 percent in 2019 dollars.
\246\ The final rule will result in annualized transfer payments
of $15.34 billion and total 10-year transfer payments of $130.83
billion at a discount rate of 3 percent in 2019 dollars.
\247\ To comply with E.O. 13771 accounting, the Department
multiplied the initial and then constant rule familiarization costs
(initial cost of $4,077,113; constant costs of $2,316,661 in 2019$)
by the GDP deflator (0.94242) to convert the cost to 2016 dollars
(initial cost of $4,077,113; constant costs of $2,316,661 in 2019$).
The Department used this result to determine the perpetual
annualized cost ($2,431,831) at a discount rate of 7 percent in 2016
dollars. Assuming the rule takes effect in 2020, the Department
divided $2,431,831 by 1.07\4\, which equals $1,855,232. This amount
reflects implementation of the rule in 2020.
Exhibit 1--Estimated Monetized Costs and Transfer Payments of the Final
Rule
[2019 $ millions]
------------------------------------------------------------------------
Transfer
Costs payments
------------------------------------------------------------------------
10-Year Total with a Discount Rate of 3% $23.47 $130,830
10-Year Total with a Discount Rate of 7% 20.34 105,157
Annualized at a Discount Rate of 3%..... 2.75 15,337
Annualized at a Discount Rate of 7%..... 2.90 14,972
Perpetuated Costs* with a Discount Rate .............. 1.86
of 7% (2016 $ Millions)................
------------------------------------------------------------------------
The total cost associated with the final rule includes only rule
familiarization. The rule is not expected to result in any cost
savings. Transfer payments are the result of changes to the computation
of prevailing wage rates for employment opportunities that U.S.
employers seek to fill with foreign workers on a temporary basis
through H-1B, H-1B1, and E-3 nonimmigrant visas.\248\ See the costs and
transfer payments subsections of section III.B.3 (Subject-by-Subject
Analysis) below for a detailed explanation.
---------------------------------------------------------------------------
\248\ As explained, infra, the Department did not quantify
transfer payments associated with new certifications under the
Permanent Labor Certification Program (e.g., EB-2 and EB-3
classifications) because they are expected to be de minimis.
---------------------------------------------------------------------------
The Department was unable to quantify some transfer payments and
benefits of the final rule. The Department describes them qualitatively
in section III.B.3 (Subject-by-Subject Analysis).
1. Need for Regulation
The Department has determined that this rulemaking is needed to
update the computation of prevailing wage levels under the existing
four-tier wage structure to better reflect the actual wages earned by
U.S. workers similarly employed to foreign workers, eliminate economic
incentive or advantage in hiring foreign workers on a permanent or
temporary basis in the United States, and further the goals of E.O.
13788, Buy American and Hire American. See 82 FR 18837. The ``Hire
American'' directive of the E.O. articulates the executive branch
policy to rigorously enforce and administer the laws governing entry of
nonimmigrant workers into the United States in order to create higher
wages and employment rates for U.S. workers and to protect their
economic interests. Id. sec. 2(b). It directs Federal agencies,
including the Department, to propose new rules and issue new guidance
to prevent fraud and abuse in nonimmigrant visa programs, thereby
protecting U.S. workers. Id. sec. 5.
The Department is therefore amending its regulations at Sections
656.40 and 655.731 to update the methodology it will use to determine
prevailing wages using wage data from the BLS OES survey for job
opportunities in the H-1B, H-1B1, E-3, and permanent labor
certification programs. The reports discussed and analyses provided in
the preamble above explain how application of the current wage
methodology for the four-tier OES wage structure fails to produce
prevailing wages at a level consistent with the actual wages earned by
U.S. workers similarly employed to foreign workers and, therefore, has
a suppressive effect on the wages of U.S. workers similarly employed.
The Department has a statutory mandate to protect the wages and working
conditions of U.S. workers similarly employed from adverse effects
caused by the employment of foreign workers in the United States on a
permanent or temporary basis.
2. Analysis Considerations
The Department estimated the costs and transfer payments of the
final rule relative to the baseline (the regulations governing
permanent labor certifications at 20 CFR part 656 and labor condition
applications at 20 CFR part 655, subpart H).
In accordance with the regulatory analysis guidance articulated in
OMB's Circular A-4 and consistent with the Department's practices in
previous rulemakings, this regulatory analysis focuses on the likely
consequences of the final rule (i.e., costs and transfer payments that
accrue to entities affected). The analysis covers 10 years (from 2021
through 2030) to ensure it captures major costs and transfer payments
that accrue over time. The Department expresses all quantifiable
impacts in 2019 dollars and uses discount rates of 3 and 7 percent,
pursuant to Circular A-4.
Exhibit 2 presents the number of entities affected by the final
rule. The number of affected entities is calculated using OFLC
performance data from fiscal years (FY) 2018, 2019, and 2020. The
Department uses them throughout this analysis to estimate the costs and
transfer payments of the final rule.
[[Page 3659]]
Exhibit 2--Number of Affected Entities by Type
[FY 2018-2020 average]
------------------------------------------------------------------------
Entity type Number
------------------------------------------------------------------------
Unique H-1B Program Certified Employers \249\........... 58,750
H-1B Program Certified Worker Positions with Prevailing 904,445
Wage Set by OES \250\..................................
Unique PERM Employers \251\............................. 24,563
------------------------------------------------------------------------
Estimated Number of Workers and Change in Hours
---------------------------------------------------------------------------
\249\ The total unique LCA employers in 2018, 2019, and 2020
were 57,682, 63,027, and 55,540, respectively.
\250\ The total number of worker positions associated with LCA
certifications that use OES prevailing wages in 2018, 2019, and 2020
were 1,022,908, 907,732, and 782,696, respectively.
\251\ The unique employers in 2018, 2019, and 2020 were 28,856,
23,596, and 21,236, respectively.
---------------------------------------------------------------------------
The Department presents the estimated average number of foreign
worker applicants and the change in burden hours required for rule
familiarization in section III.B.3 (Subject-by-Subject Analysis).
Compensation Rates
In section III.B.3 (Subject-by-Subject Analysis), the Department
presents the costs, including labor, associated with implementation of
the provisions contained in this final rule. Exhibit 3 presents the
hourly compensation rates for the occupational categories expected to
experience a change in the number of hours necessary to comply with the
final rule. The Department used the BLS mean hourly wage rate for
private sector human resources specialists.\252\ Wage rates were
adjusted to reflect total compensation, which includes non-wage factors
such as overhead and fringe benefits (e.g., health and retirement
benefits). We used an overhead rate of 17 percent \253\ and a fringe
benefits rate based on the ratio of average total compensation to
average wages and salaries in 2019. For the private sector employees,
we used a fringe benefits rate of 42 percent.\254\
---------------------------------------------------------------------------
\252\ Bureau of Labor Statistics. (2019). May 2019 National
Occupational Employment and Wage Estimates: 13-1071--Human Resources
Specialist. Retrieved from: https://www.bls.gov/oes/current/oes131071.htm.
\253\ Cody Rice, U.S. Environmental Protection Agency, ``Wage
Rates for Economic Analyses of the Toxics Release Inventory
Program,'' June 10, 2002, https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
\254\ BLS. (2019). ``2019 Employer Costs for Employee
Compensation.'' Retrieved from: https://www.bls.gov/news.release/ecec.toc.htm. Ratio of total compensation to wages and salaries for
all private industry workers.
---------------------------------------------------------------------------
The Department received one comment on the adjustment of wage rates
to reflect total compensation. One commenter said the Department had
underestimated the cost of the program because fringe and overhead were
included in calculations of costs and transfers. In response to the
commenter's concern, the wage transfer calculations in the IFR and the
final rule do not include overhead or fringe benefits; they are raw
wages. Overhead and fringe benefits were only applied to staffing wages
in the cost section. The commenter's calculation of fringe and overhead
application was incorrect when suggesting how they were applied. The 17
percent overhead rate is not applied after calculating the fringe rate;
instead, the fringe rate and the overhead rates are applied
simultaneously to wages as shown in Exhibit 3.
The fringe wage rate is based on Employer Costs for Employee
Compensation data which includes paid leave; supplemental pay (i.e.,
overtime and premium, shift differentials, and nonproduction bonuses);
insurance (i.e., life, health, short-term disability, and long-term
disability); retirement and savings; and legally required benefits
(i.e., Social Security, Medicare, federal unemployment insurance, state
unemployment insurance, and workers' compensation). As wages increase
the costs associated with paid leave, retirement savings, and
supplemental pay will also increase.
The Department used the hourly compensation rates presented in
Exhibit 3 to estimate the labor costs.
---------------------------------------------------------------------------
\255\ Numbers may slightly differ due to rounding.
Exhibit 3--Compensation Rates
[2019 dollars] \255\
----------------------------------------------------------------------------------------------------------------
Hourly
Position Base hourly Fringe rate Overhead costs compensation
wage rate rate
(a) (b) (c) d = a + b + c
----------------------------------------------------------------------------------------------------------------
HR Specialist................ $32.58 $13.81 ($32.58 x 0.42) $5.54 ($32.58 x 0.17) $51.93
----------------------------------------------------------------------------------------------------------------
3. Subject-by-Subject Analysis
The Department's analysis below covers the estimated costs and
transfer payments of the final rule. In accordance with Circular A-4,
the Department considers transfer payments as payments from one group
to another that do not affect total resources available to society. The
regulatory impact analysis focuses on the costs and transfer payments
that can be attributed exclusively to the new requirements in the final
rule.
Costs
The following section describes the costs of the final rule.
Rule Familiarization
When the final rule takes effect, existing employers of foreign
workers with H-1B, H-1B1, E-3 visas, and those employers sponsoring
foreign workers for permanent employment, will need to familiarize
themselves with the new regulations. Consequently, this imposes a one-
time cost for existing employers in the temporary and permanent visa
programs in the first year. Each year, there are new employers that
participate in the temporary and permanent visa programs. Therefore, in
each year subsequent to the first year, new employers will need to
familiarize themselves with the new regulations.
To estimate the first-year cost of rule familiarization, the
Department calculated the average (83,312) number of unique employers
requesting H-1B certifications and PERM
[[Page 3660]]
certifications.\256\ The average number of unique H-1B and PERM
employers (83,312) was multiplied by the estimated amount of time
required to review the rule (1 hour).\257\ This number was then
multiplied by the hourly, fully loaded compensation rate of Human
Resources Specialists ($51.93 per hour). This calculation results in an
initial cost of $4.33 million in the first year after the final rule
takes effect. Each year after the first year the same calculation is
done for the average number of new unique employers requesting H-1B and
PERM certifications in FY 2019 and FY 2020 (47,339).\258\ This
calculation results in a continuing annual undiscounted cost of $2.46
million in years 2-10 of the analysis. The one-time and continuing cost
yields a total average annual undiscounted cost of $2.65 million. The
annualized cost over the 10-year period is $2.75 million and $2.90
million at discount rates of 3 and 7 percent, respectively.
---------------------------------------------------------------------------
\256\ The total number of unique employers requesting H-1B
certifications and PERM certifications in FY18 (57,682 + 28,856 =
86,538), FY19 (63,027 + 23,596 = 86,623), and FY20 (55,540 + 21,236
= 76,776).
\257\ This final rule amends parts of an existing regulation.
Therefore, the Department estimates 1-hour to review the rule
assuming a high number of readers familiar with the existing
regulation.
\258\ The total number of new employers in FY19 was 51,289
(35,790 H1B + 15,499 PERM), and in FY20 was 43,389 (29,051 H1B +
14,338 PERM).
---------------------------------------------------------------------------
Transfer Payments
Quantifiable Transfer Payments
This section discusses the quantifiable transfer payments related
to changes to the computation of the prevailing wage levels.
As discussed in the preamble, the Department determined that
current wage level methodology results in prevailing wage rates for
temporary and permanent workers that are far below what their U.S.
counterparts are likely paid, which has a suppressive effect on the
wages of similarly employed U.S. workers. While allowing employers to
access higher-skilled H-1B workers to fill specialized positions can
help U.S. workers' job opportunities in some instances, the benefits of
this policy diminish or disappear when the prevailing wage levels do
not accurately reflect the wages paid to similarly employed workers in
the U.S. labor market. The distortions resulting from a poor
calculation of the prevailing wage allow some firms to replace
qualified U.S. workers with lower-cost foreign workers.
Under this final rule, the Department will compute the Level I Wage
for PERM labor certifications and LCAs as the 35th percentile of the
OES wage distribution for the most specific occupation and geographic
area available, rather than the mean of the fifth decile used in the
IFR. Roughly speaking, this means that the first wage level will be
decreased from the 45th percentile to the 35th percentile. The
Department will compute the Level IV Wage as the 90th percentile of the
OES wage distribution for the most specific occupation and geographic
area available, rather than the arithmetic mean of the upper decile
used in the IFR. This means the fourth wage level will decrease
approximately from the 95th percentile to the 90th percentile.
Consistent with the formula provided in the INA, the Level II Wage
will be calculated by dividing by three, the difference between Levels
I and IV, and adding the quotient to the computed value for Level I.
The Level III Wage will be calculated by dividing by three the
difference between Levels I and IV, and subtracting the quotient from
the computed value for Level IV. This yields a Level II Wage at
approximately the 53rd percentile and a Level III Wage at approximately
the 72nd percentile, as compared to the current computation, which
places Level II at approximately the 34th percentile and Level III at
approximately the 50th percentile.
This final rule also provides for a transition period from the
current wage methodology to the wage methodology contained in this
final rule to give foreign workers and their employers time to adapt to
the new wage rates. For most job opportunities, the transition will
occur in two steps, following a short delayed implementation period,
and conclude on July 1, 2022. For job opportunities that will be filled
by workers who are the beneficiary of an approved Immigrant Petition
for Alien Worker, or successor form, or is eligible for an extension of
his or her H-1B status under sections 106(a) and (b) of the American
Competitiveness in the Twenty-first Century Act of 2000 (AC21), Public
Law 106-313, as amended by the 21st Century Department of Justice
Appropriations Authorization Act, Public Law 107-273 (2002), the
transition will occur in four steps, following a short delayed
implementation period, and conclude on July 1, 2024.
For the two-step transition the current wage levels will be in
effect from January 1, 2021 through June 30, 2021. From July 1, 2021
through June 30, 2022, the prevailing wage will be 90 percent of the
final wage level. From July 1, 2022 and onward the prevailing wage will
be the final wage levels. For the three and a half year transition the
current wage levels will be in effect from January 1, 2021 through June
30, 2021. From July 1, 2021 through June 30, 2022 the prevailing wage
will be 85 percent of the final wage levels; from July 1, 2022 through
June 30, 2023 the prevailing wage will be 90 percent of the final wage
levels; from July 1, 2023 through June 30 2024 the prevailing wage will
be 95 percent of the final wage levels; and from July 1, 2024 onwards
the prevailing wage will be the final wage levels.
Finally, the Department is revising Sec. 655.731 to explain that
it will use the BLS's OES survey wage data to establish the prevailing
wages in the H-1B, H-1B1, and E-3 visa classifications. The Department
added a sentence to explain that these determinations will be made by
the OFLC NPC in a manner consistent with Sec. 656.40(b)(2).
The Department calculated the impact on wages that will occur from
implementation of the prevailing wage computation changes contained in
the final rule. It is expected that the increase in prevailing wages
under the final rule will incentivize some employers to employ U.S.
workers instead of foreign workers from the H-1B program, but
nonetheless, the Department still expects that the same number of H-1B
visas will be granted under the annual caps. For many years, the
Department has observed that the number of petitions exceeds the
numerical cap, as the annual H-1B cap was reached within the first five
business days each year from FY 2014 through FY 2020, and higher
prevailing wage levels do not necessarily mean that demand for
temporary foreign labor will fall below the available supply of visas.
Under existing prevailing wage levels, which the Department has shown
are too low and do not accurately reflect the wages paid to similarly
employed U.S. workers, demand for temporary foreign labor far exceeds
the statutory limits on supply. Usually prices rise in a market when
demand exceeds supply. However, given the statutory framework of the H-
1B system, along with the lower wages for comparable work in many other
countries and the non-pecuniary benefits of participating the H-1B
program, prices for temporary foreign labor under the H-1B program have
stayed too low to depress overall employer demand.
Under the final rule, wage transfers will still occur in cases
where U.S. workers are employed instead of H-1B workers; therefore, no
adjustments to the wage estimates are necessary due to this effect.
However, it is possible that prevailing wage increases will induce some
employers to train and provide
[[Page 3661]]
more working hours to incumbent workers, resulting in no increase in
employment but an increase in earnings. It is also possible that
prevailing wage increases will induce some employers to not hire a
worker at all (either a U.S. worker or a worker from the H-1B program
that is subject to the annual cap or not subject to the annual cap),
resulting in a decrease in employment of guest workers. However, given
that participation in temporary labor certification programs is
voluntary, and there exists an alternative labor market of U.S. workers
who are not being prevented from accepting work offered at potentially
lower market-based wages, there is some reason to doubt whether an
increase in prevailing wages will lead to an efficiency loss from
decreased labor demand. Due to data limitations on the expected change
in labor demand and supply of U.S. workers, the Department cannot
accurately measure the efficiency gains or losses to the U.S. labor
market created by the new prevailing wage system. The Department
discusses this potential impact qualitatively; the Department invited
comment on how to estimate changes to efficiency from the new
prevailing wage levels, but did not receive any such comment.
The Department received two comments suggesting that the transfers
of the rule were underestimated.
One commenter suggests that the analysis in the IFR underestimates
the transfer payments of the IFR. They cite a 2020 Cato Institute study
that found the wage increases, using interpolated wages from the
publicly available BLS OES dataset resulted in underestimates of the
wage impacts of the IFR. In addition, they suggested that the use of
the 90th percentile as a proxy for the 95th percentile significantly
underestimated wages.
In response to the commenter's concern, the IFR estimate of wages
was based on BLS OES data publicly available at the time of
publication. Therefore, the estimated wage impacts in the IFR were
conservative, particularly for workers with wages set at the 95th
percentile where wage impacts were calculated based on the publicly
available 90th percentile. In this final rule the Department revises
its wage tier methodology, including setting the Level IV percentile at
the 90th percentile. The change in methodology will result in wage
tiers that are set at percentiles that are lower than those presented
in the IFR and that will be phased in over a period of 2 years for
applicants that are new to the H-1B program, and three and a half years
for applicants on track for lawful permanent residency (LPR).
Another commentator suggested the transfers were underestimated and
they calculated that the IFR was based on wage increases of $4,825 to
$9,651 per worker based on Exhibit 5 and Exhibit 6 of the IFR.
In response to the commenter's concern, Exhibit 5 and Exhibit 6 of
the IFR contained illustrative wage data for a particular SOC-code and
area in BLS OES and do not reflect the average impact of the IFR. They
instead serve the purpose of illustrating the Department's wage impact
calculations. Wage increases vary by SOC code and geographic area and
therefore can be higher than these examples. The analysis for the IFR
estimated that workers facing a wage increase (i.e., those that were
offered less under the baseline than required by the IFR) had an
average increase of $27,000.
Under this final rule the Department revises the wage level
percentiles of the IFR with some modifications to account for the two-
step and three and a half year transition periods that are new to the
final rule. Therefore, the final rule wage impact estimation follows
four main steps: Step 1--simulate wage impacts with the revised
percentiles for each transition wage level using historical
certification data and adjust wage impacts for USCIS approval rates.
Step 2--project 10-year series wage impacts incorporating the
transition schedule. Step 3--during the transition period adjust the
population of workers eligible for the two-step transition versus the
three and a half year transition. Step 4--Estimate total transfers by
combining adjusted two-step and three and a half year transition total
wage impacts. This methodology is described in more detail below.
Step 1--simulate wage impacts with the revised percentiles for each
transition wage level and adjusted based on USCIS approval rates.\259\
For each H-1B certification in FY 2018, FY 2019, and FY 2020, the
Department used the difference between the estimated prevailing wage
level under the final rule and the wage offered under the current
baseline to establish the wage impact of the prevailing wage
computation changes in each calendar year of the certification's
employment period. Under the H-1B visa classification, employment
periods for certifications can last for up to three years in length and
generally begin up to six months after a certification is issued by the
Department. Therefore, a given fiscal year can have wage impacts that
start in that calendar year and last up to three years, or wage impacts
that could start in the following calendar year and have an end-date up
to four calendar years past the fiscal year. For example, an employment
start date in March of 2019 may be associated with an H-1B application
certified by the Department during FY 2018 and, if that certified
application contains a three-year employment period, the wage impacts
on the employer will extend through March of 2022. This final rule does
not retroactively impact certified wages, so there will be new H-1B
applications certified by the Department during FY 2020 that may extend
well into the analysis period. Therefore, the first year of the rule
will only impact new certifications, in the second year new and
continuing certifications from year 1 will be impacted, and in the
third year and beyond both new and continuing certifications from years
1 and 2 will be impacted.
---------------------------------------------------------------------------
\259\ Not all E-3 applicants need to file an I-129 with USCIS.
---------------------------------------------------------------------------
To account for this pattern of wage impacts, we classify
certifications into three length cohorts and calculate annual wage
impacts for each length cohort based on FY 2018 through FY 2020 data.
The length cohorts are: Certifications lasting less than 1 year,
certifications lasting 1-2 years, and certifications lasting 2-3 years.
For each length cohort we calculate wage impacts for their first
calendar year (``new''), their second calendar year (``ongoing''), and
third or more calendar year (``ongoing +'')
H-1B, H-1B1, or E-3 applications certified by the Department do not
necessarily result in employer wage obligations. After obtaining a
certification, employers applying under the H-1B and H-1B1 programs,
and in certain situations, the E-3 program must then submit a Form I-
129, Petition for a Nonimmigrant Worker for approval by U.S.
Citizenship and Immigration Services (USCIS). USCIS may approve or deny
the H-1B visa petition. USCIS approval data represents approvals of
petitions based on both certifications issued by the Department that
used OES data for the prevailing wage, or certifications that were
based on other approved sources to determine the prevailing wage (e.g.,
Collective Bargaining Agreements, employer-provided surveys). Exhibit 4
summarizes FY 2018 and FY 2019 data on H-1B, H-1B1, and E-3
certifications with their prevailing wage based on the OES survey,
adjusted USCIS approvals,
[[Page 3662]]
and approval rate.\260\ To account for approval rates that may differ
by geographic location and whether a certification is new or
continuing, we adjust each certification's wage impact by the approval
rate of the State of intended employment for the employer's
certification and whether it is a new or continuing application.\261\
---------------------------------------------------------------------------
\260\ Form I-129 data for H-1B is obtained from the USCIS H-1B
data hub. Retrieved from: https://www.uscis.gov/tools/reports-and-studies/h-1b-employer-data-hub.
\261\ Both USCIS H-1B data and LCA data indicate the state for
which the work is to be completed. Therefore, approval rates are
calculated separately for each state and used in the analysis.
Exhibit 4--LCA and I-129 H-1B, H-1B1, and E-3 Approvals and Denials
--------------------------------------------------------------------------------------------------------------------------------------------------------
FY 2018 FY 2019
------------------------------------------------------------------------------------------------ Average
USCIS approved Percent USCIS approved Percent percent
LCA certified \+\ approved LCA certified \+\ approved approved
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total................................... 1,023,552 308,147 30 908,218 368,811 41 35
New..................................... 423,174 80,855 19 378,175 132,965 35 27
Continuing *............................ 600,378 227,292 38 530,043 235,846 44 41
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Includes: ``Continued Employment'', ``Change Previous Employment'', ``Change Employer'', ``Amended Petition'', ``New Concurrent Employment''.
\+\ Approval numbers adjusted by 92% to account for approvals with prevailing wages set by sources other than OES.
To estimate the wage impacts of new percentiles contained in this
final rule, the Department used publicly available BLS OES data that
reports the 10th, 25th, 50th, 75th, and 90th percentile wages by SOC
code and metropolitan or non-metropolitan area.\262\ In order to
estimate wages for the new final rule levels of 35th, 53rd, 72nd, and
90th percentiles, the Department linearly interpolated between relevant
percentiles for reported wages at each SOC code and geographic area
combination.\263\ For each certification from FY 2018 through FY 2020
the new wage was estimated for the final rule wage levels as well as
all transition periods (i.e., 90 percent for the two-step transition;
85 percent, 90 percent, and 95 percent for the three and a half year
transition).
---------------------------------------------------------------------------
\262\ BLS OES data for Metropolitan and Nonmetropolitan Areas
acquired for each year required for the analysis: May 2016-May 2019.
Retrieved from https://www.bls.gov/oes/current/oessrcma.htm
\263\ For example, if OES reports a wage of $30 per hour at the
25th25th percentile and $40 per hour at the 50th50th percentile then
the 35th35th percentile is interpolated as $30 + ($40-$30)*((35-25)/
(50-35)) = $36.66 per hour.
---------------------------------------------------------------------------
An illustrative example of calculations used to calculate wage
impacts under the final rule is provided in Exhibit 5 and Exhibit 6
below. In Exhibit 5, to calculate projected wage impacts under the
final rule, the Department first multiplied the number of certified
workers by the number of hours worked in each calendar year (2,080
hours) and the new prevailing wage for the level the workers were
certified at for their particular SOC and the geographic area
combination. The examples in Exhibit 5 set forth how the Department
calculated the final rule wage impact for an individual case of each
length cohort.
Exhibit 5--Prevailing Wage Under the Final Rule
[Example cases]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of Number of
Number of Prevailing hours hours hours Total wages Total wages Total wages Total wages USCIS Adjusted
Length cohort certified wage (hour) worked in worked in worked in 2018 2019 2020 2018-2020 approval total wages
workers 2018 2019 2020 rate
(a) (b) (c) (d) (e) (a*b*c) = (a*b*d) = (a*b*e) = (f+g+h) = (j) (i*j)
(f) (g) (h) (i)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<1 Year.......................................... 100 $44.27 648 1,032 0 $2,868,437 $4,568,251 $0 $7,436,688 33% $2,444,080
1-2 Years........................................ 100 34.76 0 2,080 2,080 0 7,230,496 7,230,496 14,460,992 49 7,097,181
2-3 Years........................................ 100 27.37 528 2,080 2,080 1,445,030 5,692,544 5,692,544 12,830,118 31 4,002,637
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
After the total wages for the final rule was determined, the
Department calculated the baseline wage. The baseline wage is always
equal to or greater than the baseline prevailing wage because some
certifications offer a wage higher than the prevailing wage. The
methodology is the same as that used to estimate the projected wages
under the final rule: Number of certified workers is multiplied by the
number of hours worked in each calendar year (based on 2,080 hours in a
full year) of certified employment and the actual offered wage for the
certified workers (Exhibit 6 provides an example of the calculation of
the baseline wages for the same case as in Exhibit 5).
Exhibit 6--Current Prevailing Wage
[Example cases]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of Number of
Number of Prevailing Prevailing hours hours hours Total wages Total wages Total wages Total wages USCIS Adjusted
Length cohort certified wage (year) wage worked in worked in worked in 2018 2019 2020 2018-2020 approval total wages
workers 2018 2019 2020 rate
(a) (b) (b/2080) = (d) (e) (f) (a*c*d) = (a*c*e) = (a*c*f) = (g+h+i) = (k) (j*k)
(c) (g) (h) (i) (j)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<1 Year............................. 100 $77,459 $37.24 648 1,032 0 $2,413,146 $3,843,158 $0 $6,256,304 33% $2,056,144
1-2 Years........................... 100 41,163 19.79 0 2,080 2,080 0 4,116,300 4,116,300 8,232,600 49 4,040,404
2-3 Years........................... 100 43,846 21.08 528 2,080 2,080 1,113,014 4,384,600 4,384,600 9,882,214 31 3,082,973
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Once the baseline offered wage was obtained, the Department
estimated the wage impact of the final rule prevailing wage levels by
subtracting the baseline offered wage for each calendar year from the
final rule prevailing wage. The total
[[Page 3663]]
wage impact was then multiplied by the average USCIS petition
beneficiary approval rate for the State of intended employment. Here,
the Department presents the wage impacts for the examples in Exhibits 5
and 6, above. For the length cohort less than 1 year, the impact in
2018 was $149,632 (($2,868,437 - $2,413,146) * 0.33) and $238,303 in
2019 (($4,568,251 - $3,843,158) * 0.33). For the length cohort of 1-2
years, the impact in 2019 was $1,528,388 (($7,230,496 - $4,116,300) *
0.49), and in 2020 was $1,528,388 (($7,230,496 - $4,116,300) * 0.49).
The example for length cohort 2-3 years had wage impacts in 2018, 2019,
and 2020. In the 2018 the wage impact was $103,580 (($1,445,030 -
$1,113,014) * 0.31), $408,042 in 2019 (($5,692,544 - $4,384,600) *
0.31), and $2,947,905 in 2020 (($5,692,544 - $4,384,600) * 0.31).
Existing prevailing wage data from the Foreign Labor Certification
(FLC) Data Center, accessible at http://www.flcdatacenter.com, contains
wage data for each SOC code and geographic area combination that are
not readily available in the public OES data used to estimate new
prevailing wage levels. For example, when an OES wage is not releasable
for a geographic area, the prevailing wage available through the FLC
Data Center may be computed by BLS for the geographic area plus its
contiguous areas. Additionally, in publicly available OES data, some
percentiles are missing for certain combinations of SOC codes and
geographic areas. These two factors result in a small number of
certifications having no match with a new prevailing wage level.\264\
To estimate wage impacts for workers associated with these
certifications, the average wage impact per worker, for the given
cohort and fiscal year the certification is associated with, is
calculated and then applied to an adjusted number of workers associated
with the certification that does not match. It is unlikely that all
unmatched certifications will have a wage impact so the calculated wage
impact per worker is applied to 85 percent of workers associated with
unmatched certifications.\265\ This produces a series of estimated wage
impacts for workers that are not matched with new prevailing wages in
the public OES data for each calendar year for which they have
employment. These imputed wage impacts are then added to the calculated
wage impact to produce a final total wage impact for each length cohort
and percentile group in each calendar year.
---------------------------------------------------------------------------
\264\ In FY 2018, 7 percent of certifications do not match, in
FY 2019 9 percent, and FY 2020 21 percent.
\265\ Approximately 85 percent of matched workers in FY 2019
certification data have wage impacts.
---------------------------------------------------------------------------
Exhibit 7 summarizes the wage impacts of each length cohort for all
percentile groups involved in the two wage transitions based on FY 2018
through FY 2020 certification data. The result of this analysis is an
annual average wage impact for each length cohort and percentile group
that is used in following steps to construct projected 10-year wage
impacts. In Exhibit 7 some calendar years do not have values because
the cohort, based on FY 2018 through FY 2020 data, does not have a full
year of data for those years. For example, calendar year 2021 does have
new entries from FY 2020 data but it is not a complete year of data as
FY 2021 would also have new entries, and therefore it is not included.
Exhibit 7--Wage Transfers by Percentile Group and Length Cohort
[2019$ millions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Wage level transition group Length cohort CY18 CY19 CY20 CY21 CY22 Annual
average
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
85 Percent.............................. <1 Year................... New....................... $7.89 $9.06 $5.21 NA NA $7.39
Ongoing................... 1.28 7.11 5.96 2.89 NA 4.31
1-2 Years................. New....................... 29.58 24.59 12.43 NA NA 22.20
Ongoing................... NA 59.89 61.09 30.43 NA 50.47
2-3 Years................. New....................... 831 742 352 NA NA 642
Ongoing................... NA 1,711 1,522 644 NA 1,292
Ongoing +................. NA NA 1,901 2,386 1,404 1,897
90 Percent.............................. <1 Year................... New....................... 13.92 16.71 8.85 NA NA 13.16
Ongoing................... 2.88 12.11 10.32 4.38 NA 7.42
1-2 Years................. New....................... 65.74 51.67 24.13 NA NA 47.18
Ongoing................... NA 134.46 129.80 59.59 NA 107.95
2-3 Years................. New....................... 2,007 1,820 829 NA NA 1,552
Ongoing................... NA 4,133 3,693 1,505 NA 3,110
Ongoing +................. NA NA 4,625 5,785 3,347 4,586
95 Percent.............................. <1 Year................... New....................... 21.30 25.64 13.26 NA NA 20.07
Ongoing................... 4.82 18.24 15.61 6.25 NA 11.23
1-2 Years................. New....................... 109.28 84.09 38.43 NA NA 77.27
Ongoing................... NA 224.73 212.31 95.55 NA 177.53
2-3 Years................. New....................... 3,386 3,075 1,405 NA NA 2,622
Ongoing................... NA 6,979 6,238 2,537 NA 5,251
Ongoing +................. NA NA 7,830 9,771 5,648 7,749
100 Percent (Final Wage Level).......... <1 Year................... New....................... 29.61 35.57 18.05 NA NA 27.74
Ongoing................... 6.99 25.12 21.56 8.30 NA 15.49
1-2 Years................. New....................... 158.13 119.63 54.32 NA NA 110.70
Ongoing................... NA 325.78 270.70 135.79 NA 244.09
2-3 Years................. New....................... 4,861 4,426 2,029 NA NA 3,772
Ongoing................... NA 10,022 8,983 3,653 NA 7,553
Ongoing +................. NA NA 11,258 14,056 8,135 11,150
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Step 3--project 10-year series of wage impacts incorporating
transition schedule. To project 10-year wage transfers the average
annual values from Exhibit 7 are used to construct a 10-year series
that incorporates the transition schedule and change in worker
population eligible for the two-step transition or three and a half
year transition. Based on data provided by USCIS there are
approximately 266,500 workers in backlog for a Green Card that
[[Page 3664]]
are on continuing H-1B visas and are therefore eligible for the three
and a half year transition. On average from FY 2018 to FY 2020 316,845
workers were approved annually by USCIS.\266\ Therefore, approximately
84 percent of applications are currently eligible for the three and a
half year transition and the remaining 16 percent will use the two-step
transition.\267\ Over time USCIS estimates that 30,000 workers would be
processed through the backlog every year resulting in a declining
population of workers eligible in each subsequent year for wages under
the three and a half year transition. The Department assumes that the
total population of applicants will not change, therefore the percent
of applicants applying to the H-1B visa program for two-step transition
wages (or the final wage level after the transition) will grow over
time and the population of workers eligible for wages under the three
and a half year transition will decline. A summary of this population
transition as well as the wage transition for each group is presented
in Exhibit 8.
---------------------------------------------------------------------------
\266\ Based on applying the average approval rate of USCIS LCA
and I-129 H-1B, H-1B1, and E-3 applications (35%) to the average of
annual certifications by DOL (905,271).
\267\ 84 percent derived from 266,500 workers divided by 316,845
total workers approved annually.
Exhibit 8--Wage and Population Transition for the Two Application Groups
----------------------------------------------------------------------------------------------------------------
Wage transition Population transition
-----------------------------------------------------------------
Year Months Three and a Three and a
Two-step half year Two-step (%) half year (%)
----------------------------------------------------------------------------------------------------------------
2021......................... Jan-Jun........ Baseline....... Baseline....... 16% 84%
Jul-Dec........ 90%............ 85%............ 16 84
2022......................... Jan-Jun........ 90%............ 85%............ 25 75
Jul-Dec........ Final Wage 90%............ 25 75
Level.
2023......................... Jan-Jun........ Final Wage 90%............ 35 65
Level.
Jul-Dec........ Final Wage 95%............ 35 65
Level.
2024......................... Jan-Jun........ Final Wage 95%............ 44 56
Level.
Jul-Dec........ Final Wage Final Wage * NA * NA
Level. Level.
2025-2030.................... ............... Final Wage Final Wage * NA * NA
Level. Level.
----------------------------------------------------------------------------------------------------------------
* Beginning July 1, 2024, the transitions are both complete and all workers are at the final wage level.
To illustrate the application of the wage and population
transitions to the average annual wages provided above in Exhibit 7 we
describe an example of this calculation for new applications in 2021.
Exhibit 9, below, provides an example calculation for new applicants in
2021 under the two-step transition wage (90 percent of final wage
levels).
Exhibit 9--Wage Impacts for Two-Step Transition Applicants in 2021
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Annual average wage impact * Adjustments Projected wage impact
Length Cohort: -------------------------------------------------------------------------------------------------------------------------------
<1 Year 1-2 Years 2-3 Years Transition Population <1 Year 1-2 Years 2-3 Years Total
(a) (b) (c) (d) (e) (f) = (a * d * (g) = (b * d * (h) = (c * d * (f + g + h)
e) e) e)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Length Cohort: New
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2021............................................................ $13.16 $47 $1,552 50.60% 16% $1.07 $3.82 $125.62 $130.51
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Length Cohort: Ongoing
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2022............................................................ $7.42 $104 $3,110 50.60% 16% $0.60 $8.39 $251.82 $260.81
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Length Cohort: Ongoing +
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2023............................................................ NA NA $4,586 50.60% 16% NA NA $371.25 $371.25
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Average annual wage impacts from Exhibit 7 for 90 percent wage level transition group.
Average annual wage impacts for each length cohort represent a full
year of wage impacts, however the wage transition does not begin until
July 1, 2021. Therefore, the proportion of working days in July 1, 2021
through December 31, 2021 (50.6%) is used to adjust each length
cohort's average annual wage impact. A second adjustment is made to
account for the population transition (16% of the total applicant
population faces wages under the two-step transition in 2021).\268\
Ongoing wages from new applications in 2021 occur in 2022 and 2023.
Therefore, the estimates of ongoing wages from Exhibit 7 are included
in 2022 and 2023 and also adjusted by 2021 transition and population
adjustments (because these ongoing wages are associated with the 2021
new applicants).
---------------------------------------------------------------------------
\268\ See Exhibit 8 transition schedule.
---------------------------------------------------------------------------
This process was repeated for each year of 2021-2024 to account for
each new year of applicants (i.e., in 2022, under the two-step
transition, half of applicants have impacts at 90 percent of final wage
levels and half at the final wage levels). In addition, the population
of applicants under the two-step transition increases from 16 percent
in 2021 to 25 percent in 2022. From 2025 onwards all new applicants are
subject to the final wage levels.
Step 4--estimate total transfer payments. The Department determined
[[Page 3665]]
the total impact of the final rule by summing wage impacts from new
applicants in each year and ongoing wage impacts from new applicants in
prior years. The results of this is presented below in Exhibit 10.
Exhibit 10--Total Transfer Payments of the Final Rule
[2019$ millions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<1 1-2 Years 2-3 Years
Cohort ---------------------------------------------------------------------------------------------------------------- Total
New Ongoing New Ongoing New Ongoing Ongoing +
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2021............................................................ $4 $0 $13 $0 $398 $0 $0 $416
2022............................................................ 13 2 46 29 1,495 782 0 2,368
2023............................................................ 20 7 79 103 2,674 2,992 1,150 7,026
2024............................................................ 26 11 101 178 3,451 5,356 4,419 13,542
2025............................................................ 28 14 111 226 3,772 6,911 7,903 18,964
2026............................................................ 28 15 111 244 3,772 7,553 10,201 21,924
2027............................................................ 28 15 111 244 3,772 7,553 11,150 22,872
2028............................................................ 28 15 111 244 3,772 7,553 11,150 22,872
2029............................................................ 28 15 111 244 3,772 7,553 11,150 22,872
2030............................................................ 28 15 111 244 3,772 7,553 11,150 22,872
-------------------------------------------------------------------------------------------------------------------------------
10-year Total............................................... 230 113 904 1,756 30,652 53,803 68,272 155,730
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
The changes in prevailing wage rates constitute a transfer payment
from employers to employees. The Department estimates the total
transfer over the 10-year period is $130.83 billion and $105.16 billion
at discount rates of 3 and 7 percent, respectively. The annualized
transfer over the 10-year period is $15.34 billion and $14.97 billion
at discount rates of 3 and 7 percent, respectively.
With the increases in prevailing wage levels under the final rule,
some employers may decide not to hire a U.S. worker or a foreign worker
on a temporary or permanent basis. The prevailing wage increase may
mitigate labor arbitrage and induce some employers to train and provide
more working hours to incumbent workers, resulting in no increase in
employment. The Department is unable to quantify the extent to which
these two factors will occur and therefore discusses them
qualitatively.
The labor economics literature has a significant volume of research
on the impact of wages on demand for labor. Of interest in the context
of the H-1B program is the long-run own-wage elasticity of labor demand
that describes how firms demand labor in response to marginal changes
in wages. There is significant heterogeneity in estimates of labor
demand elasticities that can depend on industry, skill-level, region,
and more.\269\ A commonly cited value of average long-run own-wage
elasticity of labor demand is -0.3.\270\ This would mean that a one
percent increase in wage would reduce demand for labor by 0.3 percent.
The average annual increase in wage transfers is anan 18.8 percent
increase in wage payments,\271\ which would imply a potential reduction
in labor demand by 5.64 percent (18.8 * .3). It is likely that U.S.
employers will pay higher wages to H-1B workers or replace them with
U.S. workers to the extent that is possible. However, we can
approximate that, if U.S. employers were limited in the ability to pay
higher wages and did reduce demand for workers in these roles, it would
reduce the transfer payment by approximately 5.64 percent. The annual
average undiscounted wage transfer estimate of $15.57 billion would
therefore be reduced to $14.69 billion.
---------------------------------------------------------------------------
\269\ For a full discussion of labor demand elasticity
heterogeneity see Lichter, A., Peichl, A., & Siegloch, S. (2015).
The own-wage elasticity of labor demand: A meta-regression analysis.
European Economic Review, 94-119: Retrieved from: https://www.econstor.eu/bitstream/10419/93299/1/dp7958.pdf.
\270\ This value is the best-guess in seminal work by Hamermesh,
D. H. (1993). Labor Demand. Princeton University Press. Values
around -0.3 have been further estimated by additional studies
including in meta-analysis studies as cited in footnote 10.
\271\ The average unadjusted total wages paid to employees
impacted by the final rule in the FY18-FY20 datasets is $225.5
billion. The average unadjusted total wages paid to those same
employees in the baseline in the FY18-FY20 datasets is $189.8
billion. This represents an 18.8 percent increase in wages. Not all
of these wages are paid due to USCIS approval rates, but the wages
would adjust proportionally (i.e., the percentage increase would
remain the same).
---------------------------------------------------------------------------
Non-Quantifiable Transfer Payments
This section discusses the non-quantifiable transfer payments
related to changes to the computation of the prevailing wage levels.
Specifically, the Department did not quantify transfer payments
associated with new certifications under the Permanent Labor
Certification Program because they are expected to be de minimis.
The PERM programs have a large proportion of certifications issued
annually to foreign beneficiaries that are working in the U.S. at the
time of certification and would have changes to wages under the final
rule prevailing wage. Prior to the PERM certification, these
beneficiaries are typically working under H-1B, H-1B1, and E-3
temporary visas and wage transfers for these PERM certifications are
therefore already factored into our wage transfer calculations for H-
1B, H-1B1, and E-3 temporary visas. Below, Exhibit 11 illustrates the
percentage of PERM certifications that are on H-1B, H-1B1, or E-3
temporary visas, the percent that are not on a temporary visa and/or
are not currently in the U.S. and would therefore enter on an EB-2 or
EB-3 visa, and all other visa classes.
Exhibit 11--PERM Certifications by Class of Admission, FY18-FY20
----------------------------------------------------------------------------------------------------------------
Average
Category FY18 FY19 FY20 percent of
total
----------------------------------------------------------------------------------------------------------------
Not on a temporary visa/not currently residing 10,047 9,841 9,166 10.1%
in the United States...........................
H-1B visa....................................... 74,454 63,976 58,390 68.0%
H-1B1 visa...................................... 109 81 83 0.1%
E-3 visa........................................ 471 280 280 0.4%
[[Page 3666]]
All other visa classifications*................. 24,469 12,907 18,128 21.5%
---------------------------------------------------------------
Total....................................... 109,550 87,085 86,047 100%
----------------------------------------------------------------------------------------------------------------
Other visa classes include: A1/A2, L-1, F-1, A-3, B-1, C-1, TN, C-3, E-2, B-2, D-1, D-2, H-4, O-1, E-1, EWI, J-
1, TPS, F-2, L-2, G-4, H-2A, G-1, G-5, H-1A, Parolee, P-1, J-2, H-3, I, M-1, R-1, O-2, M-2, P-3, O-3, VWT, TD,
P-2, P-4, Q, VWB, R-2, N, S-6, T-1, V-2, T-2, K-4, U-1.
Approximately 10 percent of PERM certifications are issued annually
by OFLC to foreign beneficiaries who do not currently reside in the
U.S. and would enter on immigrant visas in the EB-2 or EB-3 preference
category. Employment-based immigrant visa availability and
corresponding wait times change regularly for different preference
categories and countries. Foreign workers from countries with
significant visa demand consistently experience delays, at times over a
decade. Therefore, employers would not have wage obligations until, at
the earliest, the very end of the 10-year analysis period, and the
number of relevant certifications is a relatively small percent of all
PERM certifications; the Department therefore has not included
associated wage transfers in the analysis.
Benefits Discussion
This section discusses the non-quantifiable benefits related to
changes to the computation of the prevailing wage levels.
The Department's increase in the prevailing wages for the four wage
levels is expected to result in multiple benefits that the Department
is unable to quantify but discusses qualitatively. One benefit of the
final rule's increase in prevailing wages is the economic incentive to
increase employee retention, training, and productivity which will
increase benefits to both employers and U.S. workers. The increase in
prevailing wages is expected to induce employers--particularly those
using the permanent and temporary visa programs--to fill critical skill
shortages, to minimize labor costs by implementing retention
initiatives to reduce employee turnover, and/or to increase the number
of work hours offered to similarly employed U.S. workers. Furthermore,
for employers in the technology and health care sectors, this could
mean using higher wages to attract and hire the industry's most
productive U.S. workers and to provide them with the most advanced
equipment and technologies to perform their work in the most efficient
manner.
This high-wage, high-skill approach to minimizing labor costs is
commonly referred to as the ``efficiency wage'' theory in labor
economics--a well-established strategy that allows companies employing
high-wage workers to minimize labor costs and effectively compete with
companies employing low-wage workers. The efficiency wage theory
supports the idea that increasing wages can lead to increased labor
productivity because workers feel more motivated to work at higher wage
levels. Where these jobs offer wages that are significantly higher than
the wages and working conditions of alternative jobs, workers will have
a greater incentive to be loyal to the company, impress their
supervisors with the quality of their work, and exert an effort that
involves no shirking. Thus, if employers increase wages, some, or even
all, of the higher wage costs can be recouped through increased staff
retention, lower costs of supervision, and higher labor productivity.
Strengthening prevailing wages will also help promote and protect
jobs for American workers. By ensuring that the employment of any
foreign worker is commensurate with the wages paid to similarly
employed U.S. workers, the Department will be protecting the types of
white-collar, middle-class jobs that are critical to ensuring the
economic viability of communities throughout the country.
There is some evidence that the existing prevailing wage levels
offer opportunities to use lower-cost alternatives to U.S. workers
doing similar jobs by offering at the two wage levels below the median
wage. For example, in FY 2019, 60 percent of H-1B workers were placed
at either the first or second wage level, meaning a substantial
majority of workers in the program could be paid wages well below the
median wage for their occupational classification.\272\ By setting the
Level I wage level at the 35th percentile, employers using the H-1B and
PERM programs will have less of an incentive to replace U.S. workers
doing similar jobs at lower wage rates when there are available U.S.
workers. This will increase earnings and standards of living for U.S.
workers. It also will level the playing field by reducing incentives to
replace similarly employed U.S. workers with a low-cost foreign
alternative.
---------------------------------------------------------------------------
\272\ Costa and Hira (2020), H-1B Visas and Prevailing Wage
Levels, Economic Policy Institute: Retrieved August 12, 2020 from
https://files.epi.org/pdf/186895.pdf.
---------------------------------------------------------------------------
In addition, because workers with greater skills tend to be more
productive, and as a result can command higher wages, raising the
prevailing wage levels will lead to the limited number of H-1B visas
going to higher-skilled foreign workers, which will likely increase the
spillover economic benefits associated with high-skilled immigration.
Finally, ensuring that skilled occupations are not performed at
below-market wage rates by foreign workers will provide greater
incentives for firms to expand education and job training programs.
These programs can attract and develop the skills of a younger
generation of U.S. workers to enter occupations that currently rely on
elevated levels of foreign workers.
4. Summary of the Analysis
Exhibit 12 below summarizes the costs and transfer payments of the
final rule. The Department estimates the annualized cost of the final
rule at $2.90 million and the annualized transfer payments (from H-1B,
H-1B1, and E-3 employers to workers) at $14.97 billion, at a discount
rate of 7 percent.\273\ The Department did not estimate any cost
savings. For the purpose of E.O. 13771, the annualized cost, when
perpetuated, is $1.86 million at a discount rate of 7 percent in 2016
dollars.
---------------------------------------------------------------------------
\273\ The reduction of the transfer payments in this final rule
compared to the IFR is likely understated due to the fact that the
Department used the 90th percentile instead of the 95th percentile
wage for the Level IV in analyzing the economic impact of the IFR.
This resulted in underestimation of the transfer payment in the IFR.
[[Page 3667]]
Exhibit 12--Estimated Monetized Costs and Transfer Payments of the Final
Rule
[2019$ millions]
------------------------------------------------------------------------
Transfer
Year Costs payments
------------------------------------------------------------------------
2021.................................... $4.33 $416
2022.................................... 2.46 2,368
2023.................................... 2.46 7,026
2024.................................... 2.46 13,542
2025.................................... 2.46 18,964
2026.................................... 2.46 21,924
2027.................................... 2.46 22,872
2028.................................... 2.46 22,872
2029.................................... 2.46 22,872
2030.................................... 2.46 22,872
-------------------------------
Undiscounted Total.................. 26.45 155,730
10-Year Total with a Discount Rate 23.47 130,830
of 3%..............................
10-Year Total with a Discount Rate 20.34 105,157
of 7%..............................
10-Year Average..................... 2.65 15,573
Annualized with a Discount Rate of 2.75 15,337
3%.................................
Annualized with a Discount Rate of 2.90 14,972
7%.................................
Perpetuated Net Costs with a 1.86
Discount Rate of 7% (2016$
Millions)..........................
------------------------------------------------------------------------
5. Regulatory Alternatives
The Department considered two alternatives to the chosen approach
of establishing the prevailing wage for Levels I through IV,
respectively, at approximately 35th percentile, the 45nd percentile,
the 72nd percentile, and the 90th percentile with a transition period.
First, the Department considered an alternative that would modify
the number of wage tiers from four levels to three levels. Under this
alternative, prevailing wages would be set for Levels I through III at
the 35th, 72nd, and 90th percentile, respectively. Modifying the number
of wage tiers to three levels would allow for more manageable wage
assignments that would be easier for employers and employees to
understand due to decreased complexity to matching wage tiers with
position experience. A three-tiered prevailing wage structure would
maintain the minimum entry-level and fully competent experience levels
and simplify the intermediate level of experience by combining the
current qualified and experienced distinctions. The Department prefers
the chosen methodology over this alternative because the chosen four-
tiered prevailing wage structure is likely to produce more accurate
prevailing wages than a three-tiered structure due to the ability to
have two intermediate wage levels. In addition, creating a three-tiered
prevailing wage structure would require a statutory change.
The Department considered a second alternative that would modify
the geographic levels for assigning prevailing wages for the SOC code
within the current four-tiered prevailing wage structure, which ranges
from local MSA or BOS areas to national, to a two-tiered geographic
area structure containing only statewide or national area estimates. By
assigning prevailing wages at a statewide or, where statewide averages
cannot be reported by the BLS, national geographic area, this second
alternative would again simplify the prevailing wage determination
process by reducing the number of distinct wage computations reported
by the BLS and provide employers with greater certainty regarding their
wage obligations, especially where the job opportunity requires work to
be performed in a number of different worksite locations within a state
or regional area. This process would also reduce variability in
prevailing wages within a state for the same occupations across time,
making prevailing wages more consistent and uniform. However, this
method would not account for wage variability that may occur within
states and that can account for within-state differences in labor
market dynamics, industry competitiveness, or cost of living.
The Department prefers the chosen methodology because it preserves
important differences in county and regional level prevailing wages and
better aligns with the statutory requirement that the prevailing wage
be the wage paid in the area of employment.
The Department received one comment on the regulatory alternatives
considered in the IFR. One commenter representing 23 organizations
suggested that the Department consider an alternative where data from
private sector compensation surveys is layered on top of BLS OES data
to provide more accurate prevailing wage data for certain occupations
and localities where private sector compensation surveys may have
coverage.
Supplementing BLS OES data from private sector compensation surveys
may result in an increased ability to quantitatively connect education,
experience, or employee responsibility with wages for certain
occupations and localities. However, this introduction of fidelity in
certain locales and not others could lead to inconsistent treatment of
wages in the same occupation in different geographic areas depending on
whether prevailing wages are based on BLS OES or the private sector
compensation survey. In addition, such an approach would reduce
transparency of prevailing wages by introducing additional complexity
in the wage determination as well as non-public data sources.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,
as amended by the Small Business Regulatory Enforcement Fairness Act of
1996, Public Law 104-121 (March 29, 1996), hereafter jointly referred
to as the RFA, requires that an agency prepare an initial regulatory
flexibility analysis (IRFA) when proposing, and a final regulatory
flexibility analysis (FRFA) when issuing, regulations that will have a
significant economic impact on a substantial number of small entities.
The agency is also required to respond to public comment.\274\ The
Chief Counsel for Advocacy of the Small Business Administration
submitted
[[Page 3668]]
public comment on the Initial Regulatory Flexibility Analysis (IRFA)
which is addressed below.
---------------------------------------------------------------------------
\274\ See 5 U.S.C. 604.
---------------------------------------------------------------------------
The Department believes that this final rule will have a
significant economic impact on a substantial number of small entities
and therefore the Department publishes this FRFA.
1. Objectives of and Legal Basis for the Final Rule
The Department has determined that new rulemaking is needed to
better protect the wages and job opportunities of U.S. workers,
minimize incentives to hire foreign workers over U.S. workers on a
permanent or temporary basis in the United States under the H-1B, H-
1B1, and E-3 visa programs and the PERM program, and further the goals
of Executive Order 13788, Buy American and Hire American. Accordingly,
this final rule revises the computation of wage levels under the
Department's four-tiered wage structure based on the OES wage survey
administered by the BLS to ensure that wages paid to immigrant and
nonimmigrant workers are commensurate with the wages of U.S. workers
with comparable levels of education, experience, and levels of
supervision in the occupation and area of employment.
The Department is amending its regulations at Sections 656.40 and
655.731 to reflect the methodology the Department will use to determine
prevailing wages based on the BLS's OES survey for job opportunities in
the H-1B and PERM programs. The revised methodology will establish the
prevailing wage for Levels I through IV, respectively, at approximately
the 35th percentile, the 53rd percentile, the 72nd percentile, and the
90th percentile. In addition, the final rule allows for a transition
period by setting an interim year of wages at 90 percent of the above
wage levels for new H-1B visas, and a three and a half year transition
period of 85 percent, 90 percent, 95 percent of the above wage levels
for workers on track for lawful permanent residency (LPR).
The INA assigns responsibilities to the Secretary relating to the
entry and employment of certain categories of employment-based
immigrants and nonimmigrants. This rule relates to the labor
certifications that the Secretary issues for certain employment-based
immigrants and to the LCAs that the Secretary certifies in connection
with the temporary employment of foreign workers under the H-1B, H-1B1,
and E-3 visa classifications.\275\ The Department has a statutory
mandate to protect the wages and working conditions of similarly
employed U.S. workers from adverse effects caused by the employment of
foreign workers in the U.S. on a permanent or temporary basis.
---------------------------------------------------------------------------
\275\ See 8 U.S.C. 1101(a)(5), 1101(a)(15)(E)(iii),
1101(a)(15)(H)(i)(b), 1101(a)(15)(H)(i)(b1), 1182(n), 1182(t)(1),
1184(c).
---------------------------------------------------------------------------
2. The Agency's Response to Public Comments
The Department did not receive public comment on the IRFA.
3. Response to Comments by the Chief Counsel for Advocacy of the Small
Business Administration
The Department received a comment on the IRFA by the Chief Counsel
for Advocacy of the Small Business Administration that suggested the
Department underestimated the economic impacts of the IFR, and
therefore underestimated the significant impacts on small entities. The
comment suggested that the IFR underestimated impacts based on IFR RIA
Exhibits 5 and 6 which indicated a wage increase of $4,825 to $9,651
per worker and the comment provided examples from the Department's
online wage library showing examples of higher wage increases.
IFR RIA Exhibit 5 and Exhibit 6 contain illustrative wage data for
a particular SOC-code and area in BLS OES and do not reflect the
average impact of the IFR. They instead serve the purpose of
illustrating the Department's wage impact calculations. Wage increases
vary by SOC code and geographic area and therefore can be higher than
these examples. The analysis for the IFR estimated that workers facing
a wage increase (i.e., those that were offered less under the baseline
than required by the IFR) had an average increase of approximately
$27,000.
Under the final rule the Department revises its wage tier estimates
so that wages will be transitioned over a period of two to three and a
half years reducing impacts in some years. In addition, the final wage
levels (after transition) will be set at lower percentiles than the IFR
resulting in reduced wage obligations from the IFR, therefore reducing
impacts on small businesses. Finally, Department wage estimates are
based on DOL H-1B disclosure data. However, USCIS does not approve all
certifications contained in the disclosure data. As a result, the
estimated wage obligations for some small entities may be
overestimated, and the overall number of impacted small entities at all
levels of impact may be overestimated.
4. Description of the Number of Small Entities to Which the Final Rule
Will Apply
i. Definition of Small Entity
The RFA defines a ``small entity'' as a (1) small not-for-profit
organization, (2) small governmental jurisdiction, or (3) small
business. The Department used the entity size standards defined by SBA,
in effect as of August 19, 2019, to classify entities as small.\276\
SBA establishes separate standards for individual 6-digit NAICS
industry codes, and standard cutoffs are typically based on either the
average number of employees, or the average annual receipts. For
example, small businesses are generally defined as having fewer than
500, 1,000, or 1,250 employees in manufacturing industries and less
than $7.5 million in average annual receipts for nonmanufacturing
industries. However, some exceptions do exist, the most notable being
that depository institutions (including credit unions, commercial
banks, and non-commercial banks) are classified by total assets (small
defined as less than $550 million in assets). Small governmental
jurisdictions are another noteworthy exception. They are defined as the
governments of cities, counties, towns, townships, villages, school
districts, or special districts with populations of less than 50,000
people.\277\
---------------------------------------------------------------------------
\276\ Small Business Administration Table of Small Business Size
Standards Matched to North American Industry Classification System
Codes. (Aug. 2019), https://www.sba.gov/document/support--table-size-standards.
\277\ See http://www.sba.gov/advocacy/regulatoryflexibility-act
for details.
---------------------------------------------------------------------------
ii. Number of Small Entities
[[Page 3669]]
The Department collected employment and annual revenue data from
the business information provider Data Axle and merged those data into
the H-1B, H-1B1, and E-3 visa program disclosure data (H-1B disclosure
data) for FY 2019.\278\ This process allowed the Department to identify
the number and type of small entities using the H-1B program and their
annual revenues. A single employer can apply for H-1B workers multiple
times; therefore, unique employers were identified. The Department was
able to obtain data matches for 34,203 unique H-1B employers. Next, the
Department used the SBA size standards to classify 26,354 of these
employers (or 77.1 percent) as small.\279\ These unique small employers
had an average of 75 employees and average annual revenue of
approximately $18.61 million. Of these unique employers, 22,430 of them
had revenue data available from Data Axle. The Department's analysis of
the impact of this final rule on small entities is based on the number
of small unique employers (22,430 with revenue data).
---------------------------------------------------------------------------
\278\ The PERM program has a large proportion of certifications
issued annually to foreign beneficiaries that are working in the
U.S. at the time of certification. Prior to the PERM certification,
these beneficiaries are typically working under H-1B, H-1B1, and E-3
temporary visas. Therefore, the Department has not included
estimates for PERM employers in the IRFA, consistent with the
analysis and estimates contained in the E.O. 12866 section. The
Department considered PERM employers for purposes of calculating
one-time costs in the E.O. 12866 section but did not consider these
employers for purposes of cost transfers.
\279\ Small Business Administration, Table of Small Business
Size Standards Matched to North American Industry Classification
System Codes. (Aug. 2019), https://www.sba.gov/document/support--table-size-standards.
---------------------------------------------------------------------------
To provide clarity on the types of industries impacted by this
regulation, Exhibit 13 shows the number of unique H-1B small entity
employers with certifications in FY 2019 within the top 10 most
prevalent industries at the 6-digit and 4-digit NAICS code level.
Depending on when their employment period starts and the length of the
employment period (up to 3 years), small entities with certifications
in FY 2019 can have wage obligations in calendar years 2018 through
2023.
Exhibit 13--Number of H-1B and PERM Small Employers by NAICS Code
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of employers
Description -----------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
6-Digit NAICS:
511210..................... Software Publishers.... 435 (12%) 1,570 (6%) 1,577 (6%) 1,555 (6%) 1,463 (6%) 119 (14%)
541511..................... Custom Computer 394 (11%) 1,149 (4%) 1,155 (4%) 1,141 (5%) 1,072 (5%) 95 (11%)
Programming Services.
621111..................... Offices of Physicians 132 (4%) 1,091 (4%) 1,097 (4%) 1,081 (4%) 998 (4%) 36 (4%)
(except Mental Health
Specialists).
541330..................... Engineering Services... 90 (3%) 973 (4%) 979 (4%) 965 (4%) 910 (4%) 13 (1%)
611310..................... Colleges, Universities, 106 (3%) 639 (2%) 644 (2%) 627 (2%) 588 (3%) 35 (4%)
and Professional
Schools.
541110..................... Offices of Lawyers..... 60 (2%) 606 (2%) 606 (2%) 596 (2%) 548 (2%) 13 (1%)
611110..................... Elementary and 43 (1%) 625 (2%) 621 (2%) 577 (2%) 508 (2%) 10 (1%)
Secondary Schools.
541310..................... Architectural Services. 23 (1%) 501 (2%) 503 (2%) 499 (2%) 464 (2%) 1 (0%)
541714..................... Research and 49 (1%) 444 (2%) 445 (2%) 435 (2%) 405 (2%) 13 (1%)
Development in
Biotechnology (except
Nanobiotechnology).
541614..................... Process, Physical 87 (2%) 394 (2%) 399 (2%) 392 (2%) 368 (2%) 25 (3%)
Distribution, and
Logistics Consulting
Services.
Other NAICS.................... ....................... 2,090 (60%) 1,7692 (69%) 17,755 (69%) 17,347 (69%) 15,755 (68%) 513 (59%)
4-Digit NAICS:
5112....................... Software Publishers.... 435 (12%) 1,570 (6%) 1,577 (6%) 1,555 (6%) 1,463 (6%) 119 (14%)
5413....................... Architectural, 121 (3%) 1,679 (7%) 1,689 (7%) 1,668 (7%) 1,568 (7%) 17 (2%)
Engineering, and
Related Services.
5415....................... Computer Systems Design 500 (14%) 1,518 (6%) 1,526 (6%) 1,507 (6%) 1,415 (6%) 120 (14%)
and Related Services.
5416....................... Management, Scientific, 300 (9%) 1,437 (6%) 1,448 (6%) 1,425 (6%) 1,313 (6%) 59 (7%)
and Technical
Consulting Services.
6211....................... Offices of Physicians.. 132 (4%) 1091 (4%) 1097 (4%) 1081 (4%) 998 (4%) 36 (4%)
5417....................... Scientific Research and 93 (3%) 659 (3%) 663 (3%) 650 (3%) 600 (3%) 28 (3%)
Development Services.
6113....................... Colleges, Universities, 106 (100%) 639 (2%) 644 (2%) 627 (2%) 588 (3%) 35 (4%)
and Professional
Schools.
5239....................... Other Financial 68 (2%) 635 (2%) 638 (2%) 628 (2%) 564 (2%) 16 (2%)
Investment Activities.
5411....................... Legal Services......... 61 (2%) 614 (2%) 614 (2%) 604 (2%) 555 (2%) 13 (1%)
5412....................... Accounting, Tax 41 (1%) 595 (2%) 598 (2%) 585 (2%) 551 (2%) 12 (1%)
Preparation,
Bookkeeping, and
Payroll Services.
Other NAICS.................... ....................... 1,652 (47%) 15,247 (59%) 15,287 (59%) 14,885 (59%) 13,464 (58%) 418 (48%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
iii. Projected Impacts to Affected Small Entities
The Department has considered the incremental costs for small
entities from the baseline (the regulations governing permanent labor
certifications at 20 CFR part 656 and labor condition applications at
20 CFR part 655, subpart H) to this final rule. We estimated the cost
of (a) the time to read and review the final rule and (b) wage costs.
These estimates are consistent with those presented in the E.O. 12866
section.
The Department estimates that small entities using the H-1B
program, 22,430 unique employers would incur a one-time cost of $51.93
to familiarize themselves with the rule.280 281
---------------------------------------------------------------------------
\280\ $51.93 = 1 hour x $51.93, where $51.93 = $32.58 + ($32.58
x 42%) + ($32.58 x 17%).
\281\ The Department considered PERM employers for purposes of
calculating one-time costs in the E.O. 12866 section.
---------------------------------------------------------------------------
In addition to the total first-year cost above, each small entity
using the H-1B program may have an increase in annual wage costs due to
the revisions to the wage structure if they currently offer a wage
lower than the final rule's prevailing wage levels. For each small
entity, we calculated the likely annual wage cost as the sum of the
total final
[[Page 3670]]
rule wage minus the total baseline wage for each small entity
identified from the H-1B disclosure data in FY 2019. We added this
change in the wage costs to the total first-year costs to measure the
total impact of the final rule on the small entity. Small entities with
certifications in FY 2019 can have wage obligations in calendar years
2018 through 2023, depending on when their employment period starts and
the length of the employment period (up to 3 years). Because USCIS does
not approve all certifications, the estimated wage obligations for some
small entities may be overestimated. The Department is unable to
determine which small entities had certifications approved or not
approved by USCIS and therefore estimates the total wage obligation
with no adjustment for USCIS approval rates. As a result, estimates of
the total cost to small entities are likely to be inflated. The
Department sought public comments on how to best estimate which small
entities had certifications approved by USCIS but did not receive any
comments that discussed a method for estimating certification approval
by USCIS. Exhibit 14 presents the number of small entities with a wage
impact in each year, as well as the average wage impact per small
entity in each year.
Exhibit 14--Wage Impacts on H-1B Program Small Entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proportion of revenue impacted 2018 2019 2020 2021 2022 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of H-1B Small Entities with Wage Impacts......... 2,577 19,948 20,036 19,679 18,293 635
Average Wage Impact per Entity.......................... $14,178 $96,828 $183,463 $179,455 $92,531 $19,464
--------------------------------------------------------------------------------------------------------------------------------------------------------
The Department determined the proportion of each small entity's
total revenue affected by the costs of the final rule to determine if
the final rule would have a significant and substantial impact on small
entities. The cost impacts included estimated first-year costs and the
wage costs introduced by the final rule. Wage costs are based on the
final wage levels as these represent the largest annual impacts a small
entity would face (as opposed to wage impacts during the transition to
the final wage levels). The Department used a total cost estimate of 3
percent of revenue as the threshold for a significant individual impact
and set a total of 15 percent of small entities incurring a significant
impact as the threshold for a substantial impact on small entities.
The Department has used a threshold of three percent of revenues in
prior rulemakings for the definition of significant economic
impact.\282\ This threshold is also consistent with that sometimes used
by other agencies.\283\ The Department also maintains that 15 percent
of small entities experiencing a significant impact represents an
appropriate threshold to determine whether the rule has a substantial
impact on small entities generally. The Department has used the same
threshold in prior rulemakings for the definition of substantial number
of small entities.\284\
---------------------------------------------------------------------------
\282\ See, e.g., 79 FR 60634 (October 7, 2014, Establishing a
Minimum Wage for Contractors), 81 FR 39108 (June 15, 2016,
Discrimination on the Basis of Sex), and 84 FR 36178 (July 26, 2019,
Proposed Rule for Temporary Agricultural Employment of H-2A
Nonimmigrants in the United States).
\283\ See, e.g., 79 FR 27106 (May 12, 2014, Department of Health
and Human Services rule stating that under its agency guidelines for
conducting regulatory flexibility analyses, actions that do not
negatively affect costs or revenues by more than three percent
annually are not economically significant).
\284\ See, e.g., 79 FR 60633 (October 7, 2014, Establishing a
Minimum Wage for Contractors) and 84 FR 36178 (July 26, 2019,
Proposed Rule for Temporary Agricultural Employment of H-2A
Nonimmigrants in the United States).
---------------------------------------------------------------------------
Of the 22,430 unique small employers with revenue data, up to 13
percent of employers would have more than 3 percent of their total
revenue affected in 2019, up to 22 percent in 2020 and 2021, and up to
16 percent in 2022. Exhibit 15 provides a breakdown of small employers
by the proportion of revenue affected by the costs of the final rule.
Exhibit 15--Cost Impacts as a Proportion of Total Revenue for Small Entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proportion of revenue impacted 2018 2019 2020 2021 2022 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
<1%..................................................... 2,689 (88%) 16,418 (75%) 13,286 (61%) 13,286 (61%) 13,705 (69%) 699 (95%)
1%-2%................................................... 168 (6%) 1,884 (9%) 2,349 (11%) 2,349 (11%) 2,013 (10%) 23 (3%)
2%-3%................................................... 70 (2%) 847 (4%) 1314 (6%) 1314 (6%) 1036 (5%) 5 (1%)
3%-4%................................................... 22 (1%) 503 (2%) 794 (4%) 794 (4%) 567 (3%) 1 (0%)
4%-5%................................................... 24 (1%) 325 (1%) 549 (3%) 549 (3%) 372 (2%) 2 (0%)
>5%..................................................... 69 (2%) 2,036 (9%) 3,352 (15%) 3,352 (15%) 2,172 (11%) 7 (1%)
-----------------------------------------------------------------------------------------------
Total >3%........................................... 115 (4%) 2,864 (13%) 4,695 (22%) 4,695 (22%) 3,111 (16%) 10 (1%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
5. Projected Reporting, Recordkeeping, and Other Compliance
Requirements of the Final Rule
The final rule does not have any reporting, recordkeeping, or other
compliance requirements impacting small entities.
6. Steps the Agency Has Taken To Minimize the Significant Economic
Impact on Small Entities
The RFA directs agencies to assess the effects that various
regulatory alternatives would have on small entities and to consider
ways to minimize those effects. Accordingly, the Department considered
two regulatory alternatives to the chosen approach of establishing the
prevailing wage for Levels I through IV, respectively, at approximately
the 35th percentile, the 53rd percentile, the 72nd percentile, and the
90th percentile with a transition period.
First, the Department considered an alternative that would modify
the number of wage tiers from four levels to three levels. Under this
alternative, the Department attempted to set the prevailing wages for
Levels I through III,
[[Page 3671]]
respectively, at the 35th, 72nd, and 90th percentile. Modifying the
number of wage tiers to three levels would allow for more manageable
wage assignments that would be easier for small entities and their
employees to understand due to decreased complexity to matching wage
tiers with position experience. The Department decided not to pursue
this alternative because the chosen four-tiered wage methodology is
likely to be more accurate than the three-tiered wage level because it
has two intermediate wage levels. In addition, creating a three-tiered
wage level would require a statutory change. Although the Department
recognizes that legal limitations prevent this alternative from being
actionable, the Department nonetheless presents it as a regulatory
alternative in accord with OMB guidance.\285\
---------------------------------------------------------------------------
\285\ OMB Circular A-4 advises that agencies ``should discuss
the statutory requirements that affect the selection of regulatory
Approach. If legal constraints prevent the selection of a regulatory
action that best satisfies the philosophy and principles of
Executive Order 12866, [agencies] should identify these constraints
and estimate their opportunity cost. Such information may be useful
to Congress under the Regulatory Right-to-Know Act.''
---------------------------------------------------------------------------
The Department considered a second alternative that attempted to
modify the geographic levels for assigning prevailing wages for the
occupation from the current four-tiered structure, which ranges from
local MSA or BOS areas to national, to a two-tiered structure
containing statewide or national levels. By assigning prevailing wages
at a statewide or national level (depending on whether statewide
averages can be reported by BLS), this second alternative attempted to
simplify the prevailing wage determination process by reducing the
number of distinct wage computations reported by the BLS. It would also
provide small entities with greater certainty regarding their wage
obligations, especially where the job opportunity requires work to be
performed in a number of different worksite locations within a State or
regional area. The Department decided not to pursue this alternative
because the chosen methodology preserves important differences in
county and regional level prevailing wages, and because it would
require a statutory change.
C. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among
other things, to curb the practice of imposing unfunded Federal
mandates on State, local, and tribal governments. Title II of UMRA
requires each Federal agency to prepare a written statement assessing
the effects of any Federal mandate in a proposed or final agency rule
that may result in a $100 million or more expenditure (adjusted
annually for inflation) in any one year by State, local, and tribal
governments, in the aggregate, or by the private sector. The inflation-
adjusted value equivalent of $100 million in 1995 adjusted for
inflation to 2019 levels by the Consumer Price Index for All Urban
Consumers (CPI-U) is approximately $168 million based on the Consumer
Price Index for All Urban Consumers.\286\
---------------------------------------------------------------------------
\286\ See U.S. Bureau of Labor Statistics, Historical Consumer
Price Index for All Urban Consumers (CPI-U): U.S. City Average, All
Items, available at https://www.bls.gov/cpi/tables/supplemental-files/historical-cpi-u-202003.pdf (last visited June 2, 2020).
Calculation of inflation: (1) Calculate the average monthly CPI-
U for the reference year (1995) and the current year (2019); (2)
Subtract reference year CPI-U from current year CPI-U; (3) Divide
the difference of the reference year CPI-U and current year CPI-U by
the reference year CPI-U; (4) Multiply by 100 = [(Average monthly
CPI-U for 2019 - Average monthly CPI-U for 1995)/(Average monthly
CPI-U for 1995)] * 100 = [(255.657 - 152.383)/152.383] * 100 =
(103.274/152.383) * 100 = 0.6777 * 100 = 67.77 percent = 68 percent
(rounded).
Calculation of inflation-adjusted value: $100 million in 1995
dollars * 1.68 = $168 million in 2019 dollars.
---------------------------------------------------------------------------
While this final rule may result in the expenditure of more than
$100 million by the private sector annually, the rulemaking is not a
``Federal mandate'' as defined for UMRA purposes.\287\ The cost of
obtaining prevailing wages, preparing labor condition and certification
applications (including all required evidence) and the payment of wages
by employers is, to the extent it could be termed an enforceable duty,
one that arises from participation in a voluntary Federal program,
applying for immigration status in the United States.\288\ This final
rule does not contain such a mandate. The requirements of Title II of
UMRA, therefore, do not apply, and DOL has not prepared a statement
under UMRA. Therefore, no actions were deemed necessary under the
provisions of the UMRA.
---------------------------------------------------------------------------
\287\ See 2 U.S.C. 658(6).
\288\ See 2 U.S.C. 658(7)(A)(ii).
---------------------------------------------------------------------------
D. Congressional Review Act
The Office of Information and Regulatory Affairs, of the Office of
Management and Budget, has determined that this final rule is a major
rule as defined by 5 U.S.C. 804, also known as the ``Congressional
Review Act,'' as enacted in section 251 of the Small Business
Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, 110
Stat. 847, 868, et seq.
E. Executive Order 13132 (Federalism)
This final rule would not have substantial direct effects on the
states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with section 6
of Executive Order 13132, it is determined that this final rule does
not have sufficient federalism implications to warrant the preparation
of a federalism summary impact statement.
F. Executive Order 12988 (Civil Justice Reform)
This final rule meets the applicable standards set forth in
sections 3(a) and 3(b)(2) of Executive Order 12988.
G. Regulatory Flexibility Executive Order 13175 (Consultation and
Coordination With Indian Tribal Governments)
This final rule does not have ``tribal implications'' because it
does not have substantial direct effects on one or more Indian tribes,
on the relationship between the Federal Government and Indian tribes,
or on the distribution of power and responsibilities between the
Federal Government and Indian tribes. Accordingly, E.O. 13175,
Consultation and Coordination with Indian Tribal Governments, requires
no further agency action or analysis.
H. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501, et seq.,
and its attendant regulations, 5 CFR part 1320, require the Department
to consider the agency's need for its information collections and their
practical utility, the impact of paperwork and other information
collection burdens imposed on the public, and how to minimize those
burdens. This final rule does not require a collection of information
subject to approval by OMB under the PRA, or affect any existing
collections of information.
List of Subjects
20 CFR Part 655
Administrative practice and procedure, Australia, Chile,
Employment, Employment and training, Immigration, Labor, Migrant labor,
Wages.
20 CFR Part 656
Administrative practice and procedure, Employment, Foreign workers,
Labor, Wages.
[[Page 3672]]
DEPARTMENT OF LABOR
Accordingly, for the reasons stated in the preamble, the Department
of Labor amends parts 655 and 656 of Chapter V, Title 20, Code of
Federal Regulations, as follows:
PART 655--TEMPORARY EMPLOYMENT OF FOREIGN WORKERS IN THE UNITED
STATES
0
1. The authority citation for part 655 is revised to read as follows:
Authority: Section 655.0 issued under 8 U.S.C.
1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) and (ii), 8 U.S.C.
1103(a)(6), 1182(m), (n), (p), and (t), 1184(c), (g), and (j), 1188,
and 1288(c) and (d); sec. 3(c)(1), Pub. L. 101-238, 103 Stat. 2099,
2102 (8 U.S.C. 1182 note); sec. 221(a), Pub. L. 101-649, 104 Stat.
4978, 5027 (8 U.S.C. 1184 note); sec. 303(a)(8), Pub. L. 102-232,
105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 323(c), Pub. L. 103-
206, 107 Stat. 2428; sec. 412(e), Pub. L. 105-277, 112 Stat. 2681 (8
U.S.C. 1182 note); sec. 2(d), Pub. L. 106-95, 113 Stat. 1312, 1316
(8 U.S.C. 1182 note); 29 U.S.C. 49k; Pub. L. 107-296, 116 Stat.
2135, as amended; Pub. L. 109-423, 120 Stat. 2900; 8 CFR
214.2(h)(4)(i); 8 CFR 214.2(h)(6)(iii); and sec. 6, Pub. L. 115-218,
132 Stat. 1547 (48 U.S.C. 1806).
Subpart A issued under 8 CFR 214.2(h).
Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c),
and 1188; and 8 CFR 214.2(h).
Subpart E issued under 48 U.S.C. 1806.
Subparts F and G issued under 8 U.S.C. 1288(c) and (d); sec.
323(c), Public Law 103-206, 107 Stat. 2428; and 28 U.S.C. 2461 note,
Public Law 114-74 at section 701.
Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b) and
(b)(1), 1182(n), (p), and (t), and 1184(g) and (j); sec. 303(a)(8),
Public Law 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec.
412(e), Public Law 105-277, 112 Stat. 2681; 8 CFR 214.2(h); and 28
U.S.C. 2461 note, Public Law 114-74 at section 701.
Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c) and
1182(m); sec. 2(d), Public Law 106-95, 113 Stat. 1312, 1316 (8
U.S.C. 1182 note); Public Law 109-423, 120 Stat. 2900; and 8 CFR
214.2(h).
0
2. Amend Sec. 655.731 by revising paragraphs (a)(2)(ii) introductory
text, (a)(2)(ii)(A) introductory text, and (a)(2)(ii)(A)(2) to read as
follows:
Sec. 655.731 What is the first LCA requirement, regarding wages?
* * * * *
(a) * * *
(2) * * *
(ii) If the job opportunity is not covered by paragraph (a)(2)(i)
of this section, the prevailing wage shall be based on the wages of
workers similarly employed as determined by the wage component of the
Bureau of Labor Statistics (BLS) Occupational Employment Statistics
Survey (OES) in accordance with 20 CFR 656.40(b)(2)(i); a current wage
as determined in the area under the Davis-Bacon Act, 40 U.S.C. 276a et
seq. (see 29 CFR part 1), or the McNamara-O'Hara Service Contract Act,
41 U.S.C. 351 et seq. (see 29 CFR part 4); an independent authoritative
source in accordance with paragraph (a)(2)(ii)(B) of this section; or
another legitimate source of wage data in accordance with paragraph
(a)(2)(ii)(C) of this section. If an employer uses an independent
authoritative source or other legitimate source of wage data, the
prevailing wage shall be the arithmetic mean of the wages of workers
similarly employed, except that the prevailing wage shall be the median
when provided by paragraphs (a)(2)(ii)(A), (b)(3)(iii)(B)(2), and
(b)(3)(iii)(C)(2) of this section. The prevailing wage rate shall be
based on the best information available. The following prevailing wage
sources may be used:
(A) OFLC National Processing Center (NPC) determination. The NPC
shall receive and process prevailing wage determination requests in
accordance with these regulations and Department guidance. Upon receipt
of a written request for a PWD, the NPC will determine whether the
occupation is covered by a collective bargaining agreement which was
negotiated at arm's length, and, if not, determine the wages of workers
similarly employed using the wage component of the BLS OES and
selecting an appropriate wage level in accordance with 20 CFR
656.40(b)(2)(i), unless the employer provides an acceptable survey. The
NPC shall determine the wage in accordance with secs. 212(n), 212(p),
and 212(t) of the INA and in a manner consistent with 20 CFR
656.40(b)(2). If an acceptable employer-provided wage survey provides
an arithmetic mean then that wage shall be the prevailing wage; if an
acceptable employer-provided wage survey provides a median and does not
provide an arithmetic mean, the median shall be the prevailing wage
applicable to the employer's job opportunity. In making a PWD, the NPC
will follow 20 CFR 656.40 and other administrative guidelines or
regulations issued by ETA. The NPC shall specify the validity period of
the PWD, which in no event shall be for less than 90 days or more than
1 year from the date of the determination.
* * * * *
(2) If the employer is unable to wait for the NPC to produce the
requested prevailing wage for the occupation in question, or for the CO
and/or the BALCA to issue a decision, the employer may rely on other
legitimate sources of available wage information as set forth in
paragraphs (a)(2)(ii)(B) and (C) of this section. If the employer later
discovers, upon receipt of the PWD from the NPC, that the information
relied upon produced a wage below the final PWD and the employer was
not paying the NPC-determined wage, no wage violation will be found if
the employer retroactively compensates the H-1B nonimmigrant(s) for the
difference between the wage paid and the prevailing wage, within 30
days of the employer's receipt of the PWD.
* * * * *
PART 656--LABOR CERTIFICATION PROCESS FOR PERMANENT EMPLOYMENT OF
ALIENS IN THE UNITED STATES
0
3. The authority citation for part 656 is revised to read as follows:
Authority: 8 U.S.C. 1182(a)(5)(A), 1182(p); sec.122, Pub. L.
101-649, 109 Stat. 4978; and Title IV, Pub. L. 105-277, 112 Stat.
2681.
0
4. Amend Sec. 656.40 by revising paragraphs (a) and (b)(2) and (3) to
read as follows:
Sec. 656.40 Determination of prevailing wage for labor certification
purposes.
(a) Application process. The employer must request a PWD from the
NPC, on a form or in a manner prescribed by OFLC. The NPC shall receive
and process prevailing wage determination requests in accordance with
these regulations and with Department guidance. The NPC will provide
the employer with an appropriate prevailing wage rate. The NPC shall
determine the wage in accordance with sec. 212(p) of the INA. Unless
the employer chooses to appeal the center's PWD under Sec. 656.41(a)
of this part, it files the Application for Permanent Employment
Certification either electronically or by mail with the processing
center of jurisdiction and maintains the PWD in its files. The
determination shall be submitted to the CO, if requested.
(b) * * *
(2) If the job opportunity is not covered by a CBA, the prevailing
wage for labor certification purposes shall be based on the wages of
workers similarly employed using the wage component of the Bureau of
Labor Statistics (BLS) Occupational Employment Statistics Survey (OES)
in accordance with subparagraph (b)(2)(i), unless the employer provides
an acceptable survey under paragraphs (b)(3) and (g) of this section or
elects to utilize a wage permitted under paragraph (b)(4) of this
section.
(i) The BLS shall provide the OFLC Administrator with the OES wage
data
[[Page 3673]]
by occupational classification and geographic area, which is computed
and assigned at levels set commensurate with the education, experience,
and level of supervision of similarly employed workers, as determined
by the Department.
(ii) Except as provided under paragraph (b)(2)(iii) of this
section, the prevailing wage shall be provided by the OFLC
Administrator at the following four levels:
(A) The Level I Wage shall be computed as the 35th percentile of
the OES wage distribution and assigned for the most specific occupation
and geographic area available.
(B) The Level II Wage shall be determined by first dividing the
difference between Levels I and IV by three and then adding the
quotient to the computed value for Level I and assigned for the most
specific occupation and geographic area available.
(C) The Level III Wage shall be determined by first dividing the
difference between Levels I and IV by three and then subtracting the
quotient from the computed value for Level IV and assigned for the most
specific occupation and geographic area available.
(D) The Level IV Wage shall be computed as the 90th percentile of
the OES wage distribution and assigned for the most specific occupation
and geographic area available. Where the Level IV Wage cannot be
computed due to wage values exceeding the uppermost interval of the OES
wage interval methodology, the OFLC Administrator shall determine the
Level IV Wage using the current hourly wage rate applicable to the
highest OES wage interval for the specific occupation and geographic
area, or the arithmetic mean of the wages of all workers for the most
specific occupation and geographic area available, whichever is
highest.
(iii) Transition Wage Rates:
(A) For the period from the effective date of this rule through
June 30, 2021, the prevailing wage shall be provided by the OFLC
Administrator at the following four levels:
(1) The Level I Wage shall be computed as the arithmetic mean of
the lower one-third of the OES wage distribution and assigned for the
most specific occupation and geographic area available.
(2) The Level IV Wage shall be computed as the arithmetic mean of
the upper two-thirds of the OES wage distribution and assigned for the
most specific occupation and geographic area available.
(3) The Level II Wage and Level III Wage shall be determined by
applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of
this section to the Level I and Level IV values in paragraphs
(b)(2)(iii)(A)(1) and (2) of this section.
(B) For the period from July 1, 2021, through June 30, 2022, the
prevailing wage shall be provided by the OFLC Administrator at the
following four levels:
(1) The Level I Wage shall be 90 percent of the wage provided under
paragraph (b)(2)(ii)(A) of this section, or the wage provided under
paragraph (b)(2)(iii)(A)(1) of this section, whichever is higher.
(2) The Level IV Wage shall be 90 percent of the wage provided
under paragraph (b)(2)(ii)(D) of this section, or the wage provided
under paragraph (b)(2)(iii)(A)(2) of this section, whichever is higher.
(3) The Level II Wage and Level III Wage shall be determined by
applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of
this section to the wages established under paragraphs
(b)(2)(iii)(B)(1) and (3) of this section.
(C) Notwithstanding any other provision of this section, if the
employer submitting the Form ETA-9035/9035E, Labor Condition
Application for Nonimmigrant Workers and, as applicable, the Form ETA-
9141, Application for Prevailing Wage Determination, will employ an H-
1B nonimmigrant in the job opportunity subject to the Labor Condition
Application for Nonimmigrant Workers who was, as of October 8, 2020,
the beneficiary of an approved Immigrant Petition for Alien Worker, or
successor form, or is eligible for an extension of his or her H-1B
status under sections 106(a) and (b) of the American Competitiveness in
the Twenty-first Century Act of 2000 (AC21), Public Law 106-313, as
amended by the 21st Century Department of Justice Appropriations
Authorization Act, Public Law 107-273 (2002), and the H-1B nonimmigrant
is eligible to be granted immigrant status but for application of the
per country limitations applicable to immigrants under paragraphs
203(b)(1), (2), and (3) of the INA, or remains eligible for an
extension of the H-1B status at the time the Labor Condition
Application for Nonimmigrant Workers is filed:
(1) For the period from July 1, 2021, through June 30, 2022, the
prevailing wage shall be provided by the OFLC Administrator at the
following four levels:
(i) The Level I Wage shall be 85 percent of the wage provided under
paragraph (b)(2)(ii)(A) of this section, or the wage provided under
paragraph (b)(2)(iii)(A)(1) of this section, whichever is higher.
(ii) The Level IV Wage shall be 85 percent of the wage provided
under paragraph (b)(2)(ii)(D) of this section, or the wage provided
under paragraph (b)(2)(iii)(A)(2) of this section, whichever is higher.
(iii) The Level II Wage and Level III Wage shall be determined by
applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of
this section to the wages established under paragraphs
(b)(2)(iii)(C)(1)(i) and (ii) of this section.
(2) For the period from July 1, 2022, through June 30, 2023, the
prevailing wage shall be provided by the OFLC Administrator at the
following four levels:
(i) The Level I Wage shall be 90 percent of the wage provided under
paragraph (b)(2)(ii)(A) of this section, or the wage provided under
paragraph (b)(2)(iii)(C)(1)(i) of this section, whichever is higher.
(ii) The Level IV Wage shall be 90 percent of the wage established
under paragraph (b)(2)(ii)(D) of this section, or the wage established
under paragraph (b)(2)(iii)(C)(1)(ii) of this section, whichever is
higher.
(iii) The Level II Wage and Level III Wage shall be determined by
applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of
this section to the wages established under paragraphs
(b)(2)(iii)(C)(2)(i) and (ii) of this section.
(3) For the period from July 1, 2023, through June 30, 2024, the
prevailing wage shall be provided by the OFLC Administrator at the
following four levels:
(i) The Level I Wage shall be 95 percent of the wage provided under
paragraph (b)(2)(ii)(A) of this section, or the wage provided under
paragraph (b)(2)(iii)(C)(2)(i) of this section, whichever is higher.
(ii) The Level IV Wage shall be 95 percent of the wage provided
under paragraph (b)(2)(ii)(D) of this section, or the wage provided
under paragraph (b)(2)(iii)(C)(2)(ii) of this section, whichever is
higher.
(iii) The Level II Wage and III Wage shall be determined by
applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of
this section to the wages established under paragraphs
(b)(2)(iii)(C)(3)(i) and (ii) of this section.
(4) Beginning July 1, 2024, the prevailing wage shall be provided
by the OFLC Administrator in accordance with the computations under
paragraph (b)(2)(ii) of this section.
(5) Where the Level I Wage or Level IV Wage provided under
paragraphs
[[Page 3674]]
(b)(2)(iii)(C)(1) through (3) of this section exceeds the Level I Wage
or Level IV Wage provided under paragraph (b)(2)(ii) of this section in
a given period, the Level I Wage or Level IV Wage for that period shall
be the wage provided under paragraph (b)(2)(ii), and the Level II Wage
and Level III Wage for that period shall be adjusted by applying the
formulae provided in paragraphs (b)(2)(ii)(B) and (C) of this section.
(D) Where a Level IV Wage provided under paragraph (b)(2)(iii) of
this section cannot be computed due to wage values exceeding the
uppermost interval of the OES wage interval methodology, the OFLC
Administrator shall determine the Level IV Wage using the current
hourly wage rate applicable to the highest OES wage interval for the
specific occupation and geographic area or the arithmetic mean of the
wages of all workers for the most specific occupation and geographic
area available, whichever is highest.
(iv) The OFLC Administrator will publish, at least once in each
calendar year, on a date to be determined by the OFLC Administrator,
the prevailing wage levels under paragraphs (b)(2)(ii) and (iii) of
this section as a notice posted on the OFLC website.
(3) If the employer provides a survey acceptable under paragraph
(g) of this section, the prevailing wage for labor certification
purposes shall be the arithmetic mean of the wages of workers similarly
employed in the area of intended employment. If an otherwise acceptable
survey provides a median and does not provide an arithmetic mean, the
prevailing wage applicable to the employer's job opportunity shall be
the median of the wages of workers similarly employed in the area of
intended employment.
* * * * *
Signed in Washington, DC.
John P. Pallasch,
Assistant Secretary for Employment and Training, Labor.
[FR Doc. 2021-00218 Filed 1-13-21; 8:45 am]
BILLING CODE P