According to Forbes, the Trump administration is preparing to publish a new Department of Labor rule that would dramatically increase salary requirements for H-1B visa holders and employment-based immigrants, effectively pricing many out of the U.S. labor market. The administration previously attempted similar wage increases in 2020 and 2021 that would have raised required minimum salaries by 39-45% on average, requiring companies to pay software developers precisely $208,000 annually in markets ranging from San Francisco to Battle Creek, Michigan. These earlier rules were blocked by courts for violating administrative procedures, and research consistently shows H-1B holders actually earn the same or more than comparable U.S. workers. The administration’s justification relies on flawed comparisons between entry-level and experienced workers that economists consider invalid. This approach represents a fundamental misunderstanding of how skilled immigration actually functions in the U.S. economy.
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Table of Contents
The Economic Reality Behind H-1B Compensation
What’s missing from the political rhetoric is the sophisticated economic framework that governs prevailing wage determinations. The current four-level system (Level I entry-level through Level IV senior) reflects real market differentiation in skills, experience, and responsibility. When the government mandates that employers pay entry-level workers senior-level salaries, they’re not preventing wage suppression—they’re creating artificial price floors that distort labor markets. This is particularly damaging in technology fields where skill progression happens rapidly and entry-level positions serve as crucial onboarding pathways for recent graduates, including the 73% of electrical engineering and computer science graduate students who are international students.
Innovation Ecosystem at Risk
The proposed changes threaten to dismantle America’s innovation pipeline at precisely the wrong moment. Global competition for tech talent has never been fiercer, with countries like Canada, Australia, and Germany actively reforming their immigration systems to attract the very workers the U.S. appears determined to repel. The requirement to pay software developers $208,000 regardless of skill level ignores how technology companies actually build teams—they hire junior developers who grow into senior roles, often creating new technologies and companies along the way. Research from the National Foundation for American Policy indicates that immigrant founders started 55% of U.S. unicorn startups, suggesting that restricting this talent pipeline could have devastating long-term consequences for American innovation leadership.
Hidden Costs of Administrative Burden
Beyond the direct salary increases, these changes create massive administrative uncertainty for employers. The rollercoaster of regulatory changes—attempted rules in 2020 and 2021, court blocks, and now renewed efforts—makes long-term workforce planning nearly impossible. Companies facing potential 207% wage increases for certain positions (as seen in the earlier rules) must either abandon U.S. operations or accelerate offshoring strategies. The U.S. Chamber of Commerce estimated the previous versions would cost employers $105-165 billion over ten years, representing one of the costliest regulatory actions in modern history. These aren’t abstract numbers—they represent real resources diverted from research, development, and domestic hiring.
Competitive Landscape Shift
While the U.S. contemplates making itself less attractive to global talent, competitors are moving in the opposite direction. Canada’s Global Skills Strategy processes work permits in two weeks, Germany’s Blue Card system offers path to permanent residence, and the UK’s Global Talent visa requires no job offer for exceptional promise in digital technology. The proposed $100,000 fee mentioned in the September proclamation—though partially clarified in October guidance—sends precisely the wrong signal to international students considering where to build their careers. When combined with proposed limits on student visa duration and changes to the H-1B selection process, the U.S. risks becoming the destination of last resort rather than first choice for global talent.
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Real Solutions Versus Political Theater
If the goal is genuinely to protect American workers, there are more effective approaches than artificial wage inflation. Strengthening Labor Condition Application enforcement, increasing site visits to detect fraud, and modernizing the green card system to reduce backlogs would address actual vulnerabilities without sacrificing competitiveness. The current approach appears designed to achieve through regulatory burden what cannot be accomplished through legislation—effectively ending most employment-based immigration without the political cost of openly saying so. As the Peterson Institute analysis demonstrates, the economic evidence simply doesn’t support the administration’s claims about wage suppression.
Broader Implications for U.S. Leadership
The consequences extend far beyond individual companies’ hiring challenges. America’s technology leadership rests on its ability to attract and retain the world’s best talent. From semiconductor design to artificial intelligence research, from pharmaceutical development to financial technology, the collaborative nature of innovation means that restricting talent flows has multiplicative negative effects. When brilliant researchers cannot work together because of immigration barriers, entire fields suffer. The NFAP research correctly notes that when you raise the price of something, you get less of it—in this case, that means fewer startups, less innovation, and ultimately fewer jobs created in the United States.
