The Trump administration has announced a new set of proposed immigration rules that could dramatically increase the cost of hiring high-skilled foreign workers on H-1B visas, potentially making this talent pipeline too expensive for US employers. The plan includes a massive $100,000 fee for many H-1B applicants and a directive to the Department of Labor (DOL) to significantly raise the required prevailing wage levels for skilled foreign workers.
Details of the proposed H-1B cost hike
The new measures are a revival of previous Trump-era efforts to restrict employment-based immigration that were blocked by courts in 2020 and 2021 due to procedural violations.
Prevailing wage inflation
The most significant financial impact would come from the DOL’s directive to raise the minimum salaries, known as “prevailing wage levels,” for H-1B workers. These wages are currently divided into four tiers (Level I through Level IV) based on experience and responsibility.
- The change: The new formula would push salaries closer to the median local wage for each occupation, regardless of the worker’s experience level.
- Impact on entry-level: This is especially problematic for Level I (entry-level) roles. For example, the required annual salary for a software developer in San Jose would have risen by 72% (from $115,585 to $199,097) under the previous version of the rule.
- Estimated cost: Previous analyses projected that such changes would raise required minimum salaries by an average of 39% to 45%.
The $100,000 application fee
The presidential proclamation also proposes a $100,000 fee for many H-1B applicants, placing another massive financial barrier on sponsoring US employers.
The US Chamber of Commerce has already filed a lawsuit challenging this fee, labeling it unlawful and economically harmful.
What this means for skilled workers
The proposed fee and wage hikes signal a much more hostile and uncertain environment for international talent seeking careers in the US.
- Reduced entry-level opportunities: The most severe impact would be on younger professionals and recent international graduates. By forcing employers to pay entry-level workers at or near the median wage for senior positions, companies will be heavily discouraged from sponsoring them.
- Deterrent to US education: With the pathway to working in the US becoming prohibitively expensive for employers, the incentive for foreign students to pursue technical degrees at US universities is greatly reduced. This is significant, as international students make up about 73% of full-time graduate students in electrical and computer engineering.
- Relocation pressure: The lack of US work opportunities will likely force highly skilled professionals to seek employment in other countries or relocate to remote positions serving US companies from overseas.
What it means for employers
US companies face a direct and immediate hit to their hiring costs, innovation potential, and talent pipelines.
- Prohibitive hiring costs: The combined costs of the $100,000 fee and the mandatory wage inflation could make hiring H-1B professionals financially unviable for all but the largest firms, severely limiting the available talent pool.
- Work relocation: The new rules incentivize companies to relocate jobs requiring high-skilled foreign workers overseas to countries with more favorable immigration and labor cost structures. As one analysis noted, “When you raise the price of something, you get less of it”.
- Loss of future talent: By discouraging international students from enrolling in US universities, the policy threatens the long-term talent pipeline for critical technology and research fields, impacting US competitiveness and future innovation.
The global hiring solution
Faced with these new financial barriers, US employers are increasingly looking to hire top talent directly in their home countries.
- Access global talent with Multiplier: Companies can use an Employer of Record (EOR) solution like Multiplier to compliantly hire the same skilled foreign workers (e.g., software developers, engineers) in countries like India, Canada, or Mexico, without the H-1B fee or the increased prevailing wage requirements.
- Cost-effective compliance: Multiplier manages the entire employment life cycle, including local payroll, taxes, and compliant contracts, allowing US companies to access global talent seamlessly and cost-effectively.
- Maintain talent pipeline: By employing international students or professionals remotely, companies can keep vital talent engaged without the crippling financial and legal burdens imposed by the proposed US visa changes.
Conclusion
The new Trump administration H-1B plan threatens to price top international talent out of the US market, forcing companies to re-evaluate their entire hiring and talent location strategy. For businesses, the clear path forward is to embrace global hiring.
Multiplier’s EOR and Global Payroll services provide a compliant, efficient, and affordable way to employ the best talent in 150+ countries, mitigating the risks and costs created by the shifting US immigration landscape. Book a demo today!
FAQs
What are the two main proposed changes that could make H-1B talent too costly for US companies?
The two main proposed changes are a $100,000 application fee for many H-1B applicants and a directive to the Department of Labor (DOL) to significantly raise the prevailing wage levels for skilled foreign workers. The wage hike would force employers to pay entry-level workers salaries comparable to experienced staff.
How much would the proposed DOL rule increase the required minimum salaries for H-1B workers?
The National Foundation for American Policy (NFAP) estimated that the previous version of the DOL rule would have increased required minimum salaries by 39% to 45% on average, depending on the wage level. For some high-demand roles, like software developers in San Jose, the increase was projected to be around 72%.
Which categories of H-1B workers would be most affected by the prevailing wage increase?
The wage increases would particularly affect Level I or entry-level roles. Since the new formula pushes salaries towards the local median wage, employers hiring recent graduates or less-experienced professionals would be mandated to pay near senior-level wages, making entry-level H-1B hiring financially unviable.
What is the projected economic cost of the Department of Labor's proposed wage rule for US businesses?
Previous versions of the DOL wage rule carried a projected cost of $165 billion over ten years, while the final version of the rule was expected to cost businesses around $105 billion over ten years.
How are these policy changes expected to impact international student enrollment and the US talent pipeline?
The higher cost for H-1B hiring is expected to discourage foreign students from pursuing graduate studies in the US, particularly in technical fields like electrical and computer engineering, where they constitute about 73% of the graduate student body. This threatens the long-term talent pipeline for US technology and research sectors.
How can a global Employer of Record (EOR) help US companies mitigate the costs of the new H-1B plan?
An EOR like Multiplier helps US companies mitigate these costs by enabling them to hire the same skilled professionals remotely as full-time employees in their home countries (e.g., India, Mexico). This strategy bypasses the $100,000 H-1B fee and the increased prevailing wage requirements, allowing for compliant, cost-effective access to global talent without establishing a local US entity.
