FR 2021-00183

The Department of Homeland Security (DHS) recently finalized a rule altering the selection process for H-1B visa petitions. This new rule, expected to go into effect on March 9, 2021, changes the method by which DHS chooses which foreign workers can fill highly skilled job roles within the United States. Instead of the current random lottery system, the new rule will prioritize applications based on the highest wage levels employers offer for jobs. This adjustment aims to ensure that the H-1B visas are allocated to potentially more skilled workers and those who command higher salaries, aligning the program more closely with its intent to bring in highly valued international employees.

Summary of the Document

The final rule aims to bolster economic recovery and protect the wages and job prospects of U.S. workers by ensuring the H-1B visas go to the highest-paid positions, suggesting that higher pay reflects higher skill levels. By changing the selection criteria, the DHS hopes to prioritize those petitions that offer salaries at the upper end of the range, indicating the employer's need for someone with higher skills and qualifications.

Significant Issues and Concerns

A primary concern with this rule is its complexity. The rule is described in highly detailed and legalistic language, which can be difficult for the average person to fully understand. It also references specific legal decisions and cases related to other immigration rules, which may not be clear to those outside the legal profession. Additionally, there is apprehension over how the new rules might disproportionately affect smaller businesses or employers based in rural areas where wage levels are traditionally lower than in urban areas. For these employers, offering wages high enough to be competitive under the new system may be unfeasible.

Impact on the Public

Overall, this rule could significantly impact the operation of the H-1B visa system. By shifting from a lottery to a merit-based selection process that values higher wage offers, the rule may change how companies, especially tech firms and other significant H-1B employers, approach hiring foreign talent. These changes might make it more challenging for employers who cannot offer top-of-the-range salaries to secure visa slots for prospective employees.

Impact on Specific Stakeholders

Positive Impacts:

For employers who can afford to offer higher wages, this new rule might favorably streamline their access to the global talent pool, allowing them to recruit more skilled international workers. This could benefit industries that rely on high levels of specialization.

Negative Impacts:

On the contrary, smaller businesses may face competitive disadvantages. They could struggle to match the wage levels offered by larger firms, potentially losing out on hiring skilled workers. There is also the possibility that businesses in rural areas, where salaries are typically lower due to regional wage norms, might be less competitive in securing visas.

Additionally, there is concern about the potential manipulation of wage levels. Employers might be tempted to list higher hourly rates but reduce overall contractual hours to artificially inflate wage levels in their petitions, though the rule does not detail how DHS plans to monitor or regulate such potential abuses.

Furthermore, the rule could necessitate changes in IT systems to support new processing requirements, which might involve costs and require detailed implementation timelines, although these aspects are not comprehensively addressed in the document.

In summary, while the new rule aligns more closely with a merit-based system intended to bring high-skill labor into the United States, its implementation could present challenges for many stakeholders—including small businesses, employers in lower-wage regions, and the broader integrity and functionality of the H-1B program itself.

The document from the Federal Register discusses the financial impacts of changes to the H-1B visa program, particularly focusing on how wage levels influence visa selection. The analysis and commentary below summarize how money is referenced and the implications of these financial aspects.

The document highlights significant spending and financial estimates related to the H-1B visa selection process. DHS anticipates the rule's implementation over a ten-year period will result in annualized costs to the public of $15,968,792 when discounted at 3 percent and $16,089,770 at 7 percent. This reflects the increased administrative burdens and potential wages offered by employers to enhance their chances of selection in the revised H-1B lottery system. The overall net cost impact of the rule is projected at approximately $158,819,507 undiscounted, $136,217,032 discounting at 3 percent, and $113,007,809 at 7 percent.

A critical financial implication of the rule is that it potentially increases costs for small businesses and companies in rural areas. Smaller businesses may struggle to compete with larger firms that can afford to offer higher wages to attract H-1B workers. The rule indirectly pressures these employers to increase their wage offers, amplifying their financial burdens. This aligns with one of the identified issues, as employers in regions or industries with lower wage scales could be disproportionately affected.

The financial considerations also include opportunity costs. For instance, DHS estimates the cost of replacing a denied H-1B petition will incur an average cost of $4,398 per worker. This figure reflects expenses related to training and hiring U.S. workers to substitute for the roles originally intended for H-1B workers. The potential impacts of these ancillary costs are significant, further reflecting an economic environment where companies dependent on H-1B program labor could suffer both cost increases and productivity losses.

Additional financial analysis points to a need for adaptations within the USCIS. The modifications to the IT systems required to manage the new wage-based selection process and related operational costs were discussed but not explicitly quantified. There is a concern that these changes, viewed through a financial lens, could introduce unexpected expenditures and potential challenges in implementing the new system.

Lastly, the document reveals that, despite these financial burdens, the changes are intended to align the program more closely with the objective of recruiting higher-paid, therefore presumably higher-skilled, workers to the U.S. economy. DHS anticipates that these changes could eventually yield indirect economic benefits by addressing downward pressures on wages in industries heavy with H-1B workers, thereby benefiting U.S. employment rates and wage levels. However, the extent of these projected benefits remains uncertain, contributing to the broader economic ambiguity mentioned in the concerns.