US Plans Up to 33% Wage Hike for Immigrants: H-1B and EB-2 Holders to Be Hit
The US Department of Labour on Thursday issued a proposed rule to increase prevailing wage levels for the H-1B, H-1B1, E-3 and PERM programmes, a move likely to affect thousands of Indians working or planning to work in the United States.
The notice, titled "Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States", will be published and opened for public comment for 60 days.
"Any sharp increase in prevailing wage thresholds will fundamentally change the accessibility of US work visas for Indian professionals," said Varun Singh, MD, XIPHIAS Immigration, told Business Standard.
What are the New Wage Levels?
The department has proposed revising the four-tier prevailing wage structure that employers must follow when sponsoring foreign workers.
Since 2005, these levels have been set at around the 17th, 34th, 50th and 67th percentiles of the Occupational Employment and Wage Statistics wage distribution for a given role and location.
Officials said the proposed levels are based on a statistical model aligning prevailing wages with the average wages paid to US workers in comparable roles. The change would raise the average certified wage by about $14,000 per position each year.
Key Changes Proposed:
- Wage level I would move from the 17th to the 34th percentile of wage distribution
- Wage level II from the 34th to the 52nd percentile
- Wage level III from the 50th to the 70th percentile
- Wage level IV from the 67th to the 88th percentile
How Does This Affect Actual Salaries?
For wage level II, where most workers are placed, the proposal suggests about a 12 per cent increase over current offered wages.
For example:
A role currently paying $80,000 at the 17th percentile may need to pay around $95,000 to $105,000 or more under the new floor.
The largest percentage rise is expected at level I, at 33.39 per cent, while the smallest increase is at level III, at 20.79 per cent.
The gap between new prevailing wages and offered wages narrows at higher levels. Level I sees the biggest jump at 18.33 per cent, while level IV records the smallest increase at 7.77 per cent.
Who Will Be Affected?
The proposal covers multiple visa categories and employment routes:
- H-1B visa holders: Specialty occupation workers in the US
- H-1B1: Workers from Chile and Singapore
- E-3: Workers from Australia
- PERM (EB-2 and EB-3): Immigrant visa categories
It also applies to the permanent labour certification process tied to green cards. Employers must complete this labour market test when sponsoring workers for permanent residency.
The department noted that these programmes are closely linked, with more than 57 per cent of PERM applications in fiscal year 2024 filed for employees already on H-1B visas.
Impact on Indian H-1B Visa Holders?
"If implemented, this change would mark a shift in how foreign workers are evaluated in the US labour market. For Indian professionals, particularly those in the early or mid stages of their careers, the proposal introduces a new variable — higher cost thresholds — into an already competitive and evolving immigration system," said Shreya Sharma, founder and CEO, Rest The Case, told Business Standard.
"For employers, especially in sectors like technology, consulting and engineering where a large proportion of H-1B hiring is concentrated, higher wage floors directly raise the cost of hiring foreign talent. This could lead to more selective hiring, fewer entry- to mid-level approvals, and a stronger preference for candidates with niche or high-demand skill sets," said Varun Singh.
"For Indian applicants, the impact is two-fold. First, it raises the bar — not just in terms of qualifications but also compensation expectations aligned with US benchmarks. Second, it could narrow opportunities for early-career professionals who traditionally relied on H-1B as an entry point into the US workforce," he added.
Why the Rule Has Been Proposed
The department said the revised wage levels are intended to prevent employers from hiring foreign workers at lower wages than US workers.
The current system, in place for more than two decades, allows wages that can be below what is paid to local workers in similar roles.
"This proposed rule will help ensure that employers pay foreign workers wages that reflect the real market value of their labour, in addition to protecting the wages and job opportunities of American workers," said Lori Chavez-DeRemer in a statement.
"The continued abuse of the H-1B programme by certain bad actors will no longer be tolerated," she added.
A similar attempt to raise prevailing wages during the first Trump administration faced legal challenges and was later dropped by the Biden administration.
What Happens Next
This is a proposed rule and will not take effect immediately.
The department will review public feedback over the 60-day consultation period before issuing a final rule.
"At a broader level, if implemented in its current form, the rule signals a continued policy direction towards prioritising higher-wage, higher-skilled immigration. This may gradually shift Indian mobility patterns, with more professionals exploring alternative destinations like Canada, Australia, or intra-company transfers, rather than relying solely on the H-1B route," said Varun Singh.
