New DOL Wage Proposal Could Drive Up H-1B Hiring Costs

A newly proposed rule from the U.S. Department of Labor (DOL) could significantly reshape the cost and strategy of hiring foreign talent through the H-1B and PERM programs.

The proposal, aimed at increasing wage protections for U.S. workers, is expected to drive up salary requirements—adding what some are calling “sticker shock” for employers.

What the Proposed Rule Does

The DOL’s proposal focuses on revising how prevailing wages are calculated across H-1B, H-1B1, E-3, and PERM programs. Instead of relying on lower wage percentiles, the rule would shift wage levels upward to better reflect actual market compensation.

Under the current system, wages are divided into four levels based on experience. The proposal would significantly raise each level—for example, entry-level wages would move from the 17th percentile to the 34th percentile, with similar increases across all tiers.

The DOL’s stated goal is to ensure foreign workers are paid comparably to similarly situated U.S. workers and to eliminate incentives for employers to hire lower-cost foreign labor.

Proposed Prevailing Wage Changes

OEWS wage level	Current percentile levels of the OEWS wage distribution	Proposed percentile levels of the OEWS wage distribution
Level I (Entry)	17th percentile	34th percentile
Level II (Qualified)	34th percentile	52nd percentile
Level III (Experienced)	50th percentile	70th percentile
Level IV (Fully Competent)	67th percentile	88th percentile

Impact on Employers

The financial implications could be substantial. Salaries for certain roles could rise dramatically, with some positions seeing increases of tens of thousands of dollars annually.

Overall, the rule is expected to:

Increase average wages by thousands per worker annually
Raise entry-level salaries significantly
Apply to new and pending applications, but not retroactively

For employers, this means higher labor costs, more complex workforce planning, and potential reconsideration of reliance on the H-1B program.

Broader Policy Goals

The proposal reflects a broader policy shift toward protecting U.S. workers. The DOL has emphasized that the current wage system may undercut domestic wages and create unfair competition.

By aligning H-1B wages more closely with market rates, the government aims to:

Reduce wage suppression
Prevent displacement of U.S. workers
Reinforce the original purpose of the H-1B program as a supplement—not a substitute—for domestic talent

What This Means Going Forward

If finalized, this rule would present new obstacles for employment-based immigration. Employers may need to:

Reevaluate hiring budgets and timelines
Explore alternative visa options
Consider global workforce strategies, including offshoring

For foreign workers, higher wage thresholds could make sponsorship more competitive but may also limit opportunities, particularly for entry-level roles.

Conclusion

The DOL’s proposed wage overhaul raises significant concerns about access to global talent and the future of employer-sponsored immigration, as the cost of employing workers in the United States continues to rise.

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