[Federal Register Volume 86, Number 9 (Thursday, January 14, 2021)]

[Rules and Regulations]

[Pages 3608-3674]

From the Federal Register Online via the Government Publishing Office [ www.gpo.gov]

[FR Doc No: 2021-00218]

[[Page 3607]]

Vol. 86

Thursday,

No. 9

January 14, 2021

Part IV

Department of Labor

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Employment and Training Administration

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20 CFR Parts 655 and 656

Strengthening Wage Protections for the Temporary and Permanent

Employment of Certain Aliens in the United States; Final Rule

Federal Register / Vol. 86 , No. 9 / Thursday, January 14, 2021 /

Rules and Regulations

[[Page 3608]]

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DEPARTMENT OF LABOR

Employment and Training Administration

20 CFR Parts 655 and 656

[DOL Docket No. ETA-2020-0006]

RIN 1205-AC00

Strengthening Wage Protections for the Temporary and Permanent

Employment of Certain Aliens in the United States

ACTION: Final rule.

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SUMMARY: In this final rule, the Department of Labor (the Department or

DOL) adopts with changes an Interim Final Rule (IFR) that amended

Employment and Training Administration (ETA) regulations governing the

prevailing wages for employment opportunities that United States (U.S.)

employers seek to fill with foreign workers on a permanent or temporary

basis through certain employment-based immigrant visas or through H-1B,

H-1B1, or E-3 nonimmigrant visas. Specifically, the IFR amended the

Department's regulations governing permanent (PERM) labor

certifications and Labor Condition Applications (LCAs) to incorporate

changes to the computation of wage levels under the Department's four-

tiered wage structure based on the Occupational Employment Statistics

(OES) wage survey administered by the Bureau of Labor Statistics (BLS).

The primary purpose of these changes is to update the computation of

prevailing wage levels under the existing four-tier wage structure to

better reflect the actual wages earned by U.S. workers similarly

employed to foreign workers. This final rule will allow the Department

to more effectively ensure the employment of immigrant and nonimmigrant

workers admitted or otherwise provided status through the above-

referenced programs does not adversely affect the wages and job

opportunities of U.S. workers.

DATES: This final rule is effective March 15, 2021.

FOR FURTHER INFORMATION CONTACT: For further information, contact Brian

D. Pasternak, Administrator, Office of Foreign Labor Certification,

Employment and Training Administration, Department of Labor, 200

Constitution Avenue NW, Room N-5311, Washington, DC 20210, telephone:

(202) 693-8200 (this is not a toll-free number). Individuals with

hearing or speech impairments may access the telephone numbers above

via TTY/TDD by calling the toll-free Federal Information Relay Service

at 1 (877) 889-5627.

SUPPLEMENTARY INFORMATION:

I. Background

The Immigration and Nationality Act (INA or Act), as amended,

assigns responsibilities to the Secretary of Labor (Secretary) relating

to the entry and employment of certain categories of immigrants and

nonimmigrants.\1\ This final rule concerns the calculation of the

prevailing wage for job opportunities in the PERM, H-1B, H-1B1, and E-3

programs for which employers seek labor certification from the

Secretary.\2\

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\1\ There are two general categories of U.S. visas: Immigrant

and nonimmigrant. Immigrant visas are issued to foreign nationals

who intend to live permanently in the U.S. Nonimmigrant visas are

for foreign nationals who enter the U.S. on a temporary basis--for

tourism, medical treatment, business, temporary work, study, or

other reasons.

\2\ 8 U.S.C. 1101(a)(15)(E)(iii), (H)(i)(b), (H)(i)(b1).

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A. Permanent Labor Certifications

The INA prohibits the admission of certain employment-based

immigrants unless the Secretary of Labor has determined and certified

to the Secretary of State and the Attorney General that (1) there are

not sufficient workers who are able, willing, qualified and available

at the time of application for a visa and admission to the United

States and at the place where the alien is to perform such skilled or

unskilled labor, and (2) the employment of such alien will not

adversely affect the wages and working conditions of workers in the

United States similarly employed.\3\

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\3\ 8 U.S.C. 1182(a)(5)(A). Although this provision references

the Attorney General, the authority to adjudicate immigrant visa

petitions was transferred to the Director of the Bureau of

Citizenship and Immigration Services (an agency within the

Department of Homeland Security) by the Homeland Security Act of

2002, Public Law 107-296, 451(b) (codified at 6 U.S.C. 271(b)).

Under 6 U.S.C. 557, references in federal law to any agency or

officer whose functions have been transferred to the Department of

Homeland Security shall be deemed to refer to the Secretary of

Homeland Security or other official or component to which the

functions were transferred.

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This ``labor certification'' requirement does not apply to all

employment-based immigrants. The INA provides for five ``preference''

categories or immigrant visa classes, only two of which--the second and

third preference employment categories (commonly called the EB-2 and

EB-3 immigrant visa classifications)--require a labor certification.\4\

An employer seeking to sponsor a foreign worker for an immigrant visa

under the EB-2 or EB-3 immigrant visa classifications generally must

file a visa petition with the Department of Homeland Security (DHS) on

the worker's behalf, which must include a labor certification from the

Secretary of Labor.\5\ Further, the Department of State (DOS) may not

issue a visa unless the Secretary of Labor has issued a labor

certification in conformity with the relevant provisions of the INA.\6\

If the Secretary determines both that there are not sufficient able,

willing, qualified, and available U.S. workers and that employment of

the foreign worker will not adversely affect the wages and working

conditions of similarly employed U.S. workers, the Secretary so

certifies to DHS and DOS by issuing a permanent labor certification. If

the Secretary cannot make one or both of the above findings, the

application for permanent employment certification is denied.

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\4\ See 8 U.S.C. 1153(b)(2), (3), 1182(a)(5)(D). Section

1153(b)(2) governs the EB-2 classification of immigrant work visas

granted to foreign workers who are either professionals holding

advanced degrees (master's degree or above) or foreign equivalents

of such degrees, or persons of ``exceptional ability'' in the

sciences, arts, or business. To gain entry in this category, the

foreign worker must have prearranged employment with a U.S. employer

that meets the requirements of labor certification, unless the work

he or she is seeking admission to perform is in the ``national

interest,'' such as to qualify for a waiver of the job offer (and

hence, the labor certification) requirement under 8 U.S.C.

1153(b)(2)(B). Section 1153(b)(3), governs the EB-3 classification

of immigrant work visas granted to foreign workers who are either

``skilled workers,'' ``professionals,'' or ``other'' (unskilled)

workers, as defined by the statute. To gain entry in this category,

the foreign worker must have prearranged employment with a U.S.

employer that meets the requirements of labor certification, without

exception.

\5\ 8 U.S.C. 1154(a)(1)(F), 1182(a)(5)(A) and (D).

\6\ 8 U.S.C. 1153(b)(2), (b)(3)(C), 1201(g).

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Under the INA, the EB-2 classification applies to individuals who

are ``members of the professions holding advanced degrees or their

equivalent or who because of their exceptional ability in the sciences,

arts, or business, will substantially benefit prospectively the

national economy, cultural or educational interests, or welfare of the

United States.'' \7\ United States Citizenship and Immigration Services

(USCIS) regulations, in turn, define an ``advanced degree'' as any

United States academic or professional degree or a foreign equivalent

degree above that of baccalaureate. A United States baccalaureate

degree or a foreign equivalent degree followed by at least five years

of progressive experience in the specialty shall be considered the

equivalent of a master's degree. If a doctoral degree customarily is

required by the specialty, the alien must have a United States

doctorate or a foreign equivalent degree.\8\ The regulation goes on to

define ``exceptional ability'' as ``a

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degree of expertise significantly above that ordinarily encountered in

the sciences, arts, or business.'' \9\

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\7\ 8 U.S.C. 1153(b)(2)(A).

\8\ 8 CFR 204.5(k)(2).

\9\ Id.

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The EB-3 program consists of three discrete classifications:

``skilled workers,'' defined as aliens who are ``capable . . . of

performing skilled labor (requiring at least two years training or

experience), not of a temporary or seasonal nature, for which qualified

workers are not available in the United States;'' ``professionals,''

defined as aliens ``who hold baccalaureate degrees and who are members

of the professions;'' and ``other workers,'' defined as aliens who are

``capable . . . of performing unskilled labor, not of a temporary or

seasonal nature, for which qualified workers are not available in the

United States.'' \10\

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\10\ 8 U.S.C. 1153(b)(3); 8 CFR 204.5(l).

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B. Labor Condition Applications

The Secretary must certify an LCA filed by an U.S. employer before

the employer may file a petition with DHS on behalf of a foreign worker

for H-1B, H-1B1, or E-3 nonimmigrant classification.\11\ The LCA

contains various attestations from the employer about the wages and

working conditions that it will provide for the foreign worker.\12\

Most importantly, for the purposes of this final rule, the INA requires

employers to pay H-1B workers the greater of ``the actual wage level

paid by the employer to all other individuals with similar experience

and qualifications for the specific employment in question,'' or the

``the prevailing wage level for the occupational classification in the

area of employment.'' \13\

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\11\ 8 U.S.C. 1101(a)(15)(E)(iii), (H)(i)(b), (H)(i)(b1); 8 CFR

214.2(h)(2)(i)(E).

\12\ See generally 8 U.S.C. 1182(n), (t); 20 CFR part 655,

subpart H.

\13\ 8 U.S.C. 1182(n)(1)(A).

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The H-1B program allows U.S. employers to employ foreign workers

temporarily in specialty occupations. ``Specialty occupation'' is

defined as an occupation that requires the theoretical and practical

application of a body of ``highly specialized knowledge,'' and a

bachelor's or higher degree in the specific specialty, or its

equivalent, as a minimum for entry into the occupation in the U.S.\14\

Similar to the H-1B visa classification, the H-1B1 and E-3 nonimmigrant

visa classifications also allow U.S. employers to temporarily employ

foreign workers in specialty occupations, except that these

classifications specifically apply to the nationals of certain

countries: The H-1B1 visa classification applies to foreign workers in

specialty occupations from Chile and Singapore,\15\ and the E-3 visa

classification applies to foreign workers in specialty occupations from

Australia.\16\

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\14\ See 8 U.S.C. 1101(a)(15)(H)(i)(b), 1184(i).

\15\ 8 U.S.C. 1101(a)(15)(H)(i)(b1).

\16\ 8 U.S.C. 1101(a)(15)(E)(iii).

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C. The Permanent Labor Certification Process

The Department's regulations at 20 CFR part 656 govern the labor

certification process and set forth the responsibilities of employers

who desire to employ, on a permanent basis, foreign nationals covered

by the INA's labor certification requirement.\17\ The Department

processes labor certification applications for employers seeking to

sponsor foreign workers for permanent employment under the EB-2 and EB-

3 immigrant visa preference categories. Aliens seeking admission or

adjustment of status under the EB-2 or EB-3 preference categories are

inadmissible ``unless the Secretary of Labor has determined and

certified . . . that--(I) there are not sufficient workers who are

able, willing, qualified . . . and available at the time of application

for a visa and admission to the United States and at the place where

the alien is to perform such skilled or unskilled labor, and (II) the

employment of such alien will not adversely affect the wages and

working conditions of workers in the United States similarly

employed.'' \18\

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\17\ The current regulations were issued through a final rule

implementing the streamlined permanent labor certification program

through revisions to 20 CFR part 656. The final rule was published

on December 27, 2004, and took effect on March 28, 2005. See Labor

Certification for the Permanent Employment of Aliens in the United

States; Implementation of New System, 69 FR 77326 (Dec. 27, 2004).

The Department published a final rule on May 17, 2007, to enhance

program integrity and reduce the incentives and opportunities for

fraud and abuse related to permanent labor certification, commonly

known as ``the fraud rule.'' Labor Certification for the Permanent

Employment of Aliens in the United States; Reducing the Incentives

and Opportunities for Fraud and Abuse and Enhancing Program

Integrity, 72 FR 27904 (May 17, 2007).

\18\ 8 U.S.C. 1182(a)(5)(A)(i).

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The Secretary makes this determination in the PERM programs by,

among other things, requiring the foreign worker's sponsoring employer

to recruit U.S. workers by offering a wage that equals or exceeds the

prevailing wage and to assure that the employer will pay the foreign

worker a wage equal to or exceeding the prevailing wage.\19\ Prior to

filing a labor certification application, the employer must obtain a

Prevailing Wage Determination (PWD) for its job opportunity from the

Office of Foreign Labor Certification's (OFLC) National Prevailing Wage

Center (NPWC).\20\ The standards and procedures governing the PWD

process in connection with the permanent labor certification program

are set forth in the Department's regulations at 20 CFR 656.40 and

656.41. If the job opportunity is covered by a collective bargaining

agreement (CBA) that was negotiated at arms-length between a union and

the employer, the wage rate set forth in the CBA agreement is

considered the prevailing wage for labor certification purposes.\21\ In

the absence of a prevailing wage rate derived from an applicable CBA,

the employer may elect to use an applicable wage determination under

the Davis-Bacon Act (DBA) or McNamara-O'Hara Service Contract Act

(SCA), or provide a wage survey that complies with the Department's

standards governing employer-provided wage data.\22\ In the absence of

any of the above sources, the NPWC will use the BLS OES survey to

determine the prevailing wage for the employer's job opportunity.\23\

After reviewing the employer's application, the NPWC will determine the

prevailing wage and specify the validity period, which may be no less

than 90 days and no more than one year from the determination date.

Employers must either file the labor certification application or begin

the recruitment process, required by the regulation, within the

validity period of the PWD issued by the NPWC.\24\

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\19\ 20 CFR 656.10(c)(1).

\20\ 20 CFR 656.15(b)(1), 656.40(a).

\21\ See 20 CFR 656.40(b)(1).

\22\ See 20 CFR 656.40(b), (g).

\23\ See 20 CFR 656.40(b)(2).

\24\ 20 CFR 656.40(c).

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Once the U.S. employer has received a PWD, the process for

obtaining a permanent labor certification generally begins with the

U.S. employer filing an Application for Permanent Employment

Certification, Form ETA-9089, with OFLC.\25\ As part of the standard

application process, the employer must describe, among other things,

the labor or services it needs performed; the wage it is offering to

pay for such labor or services and the actual minimum requirements of

the job opportunity; the geographic location(s) where the work is

expected to be performed; and the efforts it made to recruit qualified

and available U.S. workers. Additionally, the employer must attest to

the conditions listed in its labor certification application, including

that

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``[t]he offered wage equals or exceeds the prevailing wage determined

pursuant to [20 CFR 656.40 and 656.41] and the wage the employer will

pay to the alien to begin work will equal or exceed the prevailing wage

that is applicable at the time the alien begins work or from the time

the alien is admitted to take up the certified employment.'' \26\

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\25\ Applications for Schedule A occupations are eligible to

receive pre-certification and bypass the standard applications

review process. In those cases, employers file the appropriate

documentation directly with DHS. See 20 CFR 656.5, 656.15.

\26\ 20 CFR 656.10(c)(1).

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Through the requisite test of the labor market, the employer also

attests, at the time of filing the Form ETA-9089, that the job

opportunity has been and is clearly open to any U.S. worker and that

all U.S. workers who applied for the job opportunity were rejected for

lawful, job-related reasons. OFLC performs a review of the Form ETA-

9089 and may either grant or deny a permanent labor certification.

Where OFLC grants a permanent labor certification, the employer must

submit the certified Form ETA-9089 along with an Immigrant Petition for

Alien Worker (Form I-140 petition) to DHS. A permanent labor

certification is valid only for the job opportunity, employer, foreign

worker, and area of intended employment named on the Form ETA-9089 and

must be filed in support of a Form I-140 petition within 180 calendar

days of the date on which OFLC granted the certification.\27\

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\27\ 20 CFR 656.30(b)(1).

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D. The Temporary Labor Condition Application Process

The Department's regulations at 20 CFR part 655, subpart H, govern

the process for obtaining a certified LCA and set forth the

responsibilities of employers who desire to temporarily employ foreign

nationals in H-1B, H-1B1, and E-3 nonimmigrant classifications.

A prospective employer must attest on the LCA that (1) it is

offering to and will pay the nonimmigrant, during the period of

authorized employment, wages that are at least the actual wage level

paid by the employer to all other employees with similar experience and

qualifications for the specific employment in question, or the

prevailing wage level for the occupational classification in the area

of intended employment, whichever is greater (based on the best

information available at the time of filing the attestation); (2) it

will provide working conditions for the nonimmigrant worker that will

not adversely affect working conditions for similarly employed U.S.

workers; (3) there is no strike or lockout in the course of a labor

dispute in the occupational classification at the worksite; and (4) it

has provided notice of its filing of an LCA to its employee's

bargaining representative for the occupational classification affected

or, if there is no bargaining representative, it has provided notice to

its employees in the affected occupational classification by posting

the notice in a conspicuous location at the worksite or through other

means such as electronic notification.\28\

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\28\ 8 U.S.C. 1182(n)(1)(A)-(C), (t)(1)(A)-(C); 20 CFR

655.705(c)(1), 655.730(d).

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As relevant here, the prevailing wage must be determined as of the

time of the filing of the LCA.\29\ In contrast to the permanent labor

certification process, an employer is not required to obtain a PWD from

the NPWC.\30\ However, like the permanent labor certification process,

if there is an applicable CBA that was negotiated at arms-length

between a union and the employer that contains a wage rate applicable

to the occupation, the CBA must be used to determine the prevailing

wage.\31\ In the absence of an applicable CBA, an employer may base the

prevailing wage on one of several sources: A PWD from the NPWC; an

independent authoritative source that satisfies the requirements in 20

CFR 655.731(b)(3)(iii)(B); or another legitimate source of wage data

that satisfies the requirements in 20 CFR 655.731(b)(3)(iii)(C).\32\

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\29\ 20 CFR 655.731(a)(2).

\30\ Id.

\31\ Id.

\32\ 20 CFR 655.731(a)(2)(ii)(A) through (C).

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An employer may not file an LCA more than six months prior to the

beginning date of the period of intended employment. 20 CFR 655.730.

Unless the LCA is incomplete or obviously inaccurate, the Secretary

must certify it within seven working days of its filing.\33\ Once an

employer receives a certified LCA, it must file the Petition for

Nonimmigrant Worker, Form I-129 (``Form I-129 Petition'') with DHS if

seeking classification of the alien as an H-1B worker.\34\ Upon

petition, DHS then determines, among other things, whether the

employer's position qualifies as a specialty occupation and, if so,

whether the nonimmigrant worker is qualified for the position.

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\33\ 8 U.S.C. 1182(n)(1), (t)(2)(C); 20 CFR 655.740(a)(1).

\34\ For aliens seeking H-1B1 or E-3 classification, the alien

may apply directly to the State Department for a visa once the LCA

has been certified.

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II. Prevailing Wage Background

A. The Department's Prevailing Wage Determination Methodology

The Department has long relied on BLS OES data to establish

prevailing wage levels. The OES is a comprehensive, statistically valid

survey that, in many respects, is the best source of wage data

available for satisfying the Department's purposes in setting wages in

most immigrant and nonimmigrant programs. The OES wage survey is among

the largest continuous statistical survey programs of the Federal

Government. BLS produces the survey materials and selects the nonfarm

establishments to be surveyed using the list of establishments

maintained by State Workforce Agencies (SWAs) for unemployment

insurance purposes. The OES collects data from over one million

establishments. Salary levels based on geographic areas are available

at the national and State levels and for certain territories in which

statistical validity can be ascertained, including the District of

Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands. Salary

information is also made available at the metropolitan and

nonmetropolitan area levels within a State. Wages for the OES survey

are straight-time, gross pay, exclusive of premium pay. Base rate,

cost-of-living allowances, guaranteed pay, hazardous duty pay,

incentive pay including commissions and production bonuses, tips, and

on-call pay are included. These features are unique to the OES survey,

which make it a valuable source for use in many of the Department's

foreign labor programs.\35\

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\35\ Wage Methodology for the Temporary Non-agricultural

Employment H-2B Program, 76 FR 3452, 3463 (Jan. 19, 2011).

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The Department incorporated the wage component of the OES survey

into its prevailing wage guidance in 1997.\36\ At the time, the

Department divided OES wage data into two skill levels: A Level I wage

for ``beginning level employees'' and a Level II wage for ``fully

competent employees.'' Because the OES survey does not provide data

about skill differentials within Standard Occupational Classification

(SOC) codes, the Department established the entry and experienced skill

levels mathematically.\37\ Specifically, under an Memorandum of

Understanding (MOU), BLS computed a Level I wage calculated as the mean

of the lowest paid one-third of workers in a given occupation

(approximately the 17th percentile of the OES wage distribution) \38\

and a

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Level IV wage calculated as the mean wage of the highest paid upper

two-thirds of workers (approximately the 67th percentile).\39\ This

two-tier wage structure was based on the assumption that the mean wage

of the lowest paid one-third of the workers surveyed in each occupation

could provide a surrogate for the entry-level wage, but the Department

did not previously conduct any meaningful economic analysis to test its

validity, or otherwise explain how these levels were consistent with

the INA's wage provisions.\40\

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\36\ Prevailing Wage Policy for Nonagricultural Immigration

Programs, General Administration Letter No. 2-98 (GAL 2-98) (Oct.

31, 1997), available at https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=942 .

\37\ GAL 2-98 at 5.

\38\ By way of clarification, the Department notes that, because

the old wage methodology took the mean of a portion of the OES wage

distribution, the precise wage it produced will not always fall at

17th percentile. Rather, the 17th percentile is the midpoint or

median of the distribution for which a mean was produced, and is

therefore only an approximation for what the actual wage rates would

be. The same is true of the old wage methodology for calculating the

Level IV wage, which used the mean of the upper two thirds of the

OES distribution, the midpoint of which is the 67th percentile.

\39\ Intra-Agency Memorandum of Understanding executed by Mr.

John R. Beverly, III, Director, U.S. Employment Service, ETA, and

Ms. Katharine Newman, Chief, Division of Financial Planning and

Management, Office of Administration, BLS (Sept. 30, 1998).

\40\ GAL 2-98, available at https://oui.doleta.gov/dmstree/gal/gal98/gal_02-98.htm . See also Wage Methodology for the Temporary

Non-agricultural Employment H-2B Program, 76FR 3452, 3453 (Jan. 19,

2011); Wage Methodology for the Temporary Non-Agricultural

Employment H-2B Program, Part 2, 78 FR 24047, 24051 (Apr. 24, 2013).

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In order to implement the INA's four-tier prevailing wage

provision, the Department published comprehensive Prevailing Wage

Determination Policy Guidance for Nonagricultural Immigration Programs

(2005 Guidance), which expanded the two-tier OES wage level system to

provide four ``skill levels'': Level I ``entry level,'' Level II

``qualified,'' Level III ``experienced,'' and Level IV ``fully

competent.'' \41\ The Department applied the formula in the INA to its

two existing wage levels to set Levels I through IV, respectively, at

approximately the 17th percentile, the 34th percentile, the 50th

percentile, and the 67th percentile.\42\ In 2010, the Department

centralized the prevailing wage determination process for

nonagricultural labor certification programs within OFLC's NPWC.\43\ In

preparation for this transition, the Department issued new Prevailing

Wage Determination Policy Guidance for Nonagricultural Immigration

Programs (2009 Guidance).\44\ This guidance currently governs OFLC's

PWD process for the PERM, H-1B, H-1B1, and E-3 visa programs and will

continue to govern OFLC's PWD process for these programs. No rulemaking

to codify the old wage levels was ever undertaken, nor the public given

an opportunity to comment on them.

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\41\ ETA Prevailing Wage Determination Policy Guidance,

Nonagricultural Immigration Programs 7 (May 2005), available at

https://www.foreignlaborcert.doleta....onag_progs.pdf ;

See also 85 FR at 63874--63876 for a discussion of the development

of the prevailing wage determination process.

\42\ Id. at 1.

\43\ See Labor Certification Process and Enforcement for

Temporary Employment in Occupations Other Than Agriculture or

Registered Nursing in the United States (H-2B Workers), and Other

Technical Changes, 73 FR 78020 (Dec. 19, 2008); Prevailing Wage

Determinations for Use in the H-1B, H-1B1 (Chile/Singapore), H-1C,

H-2B, E-3 (Australia), and Permanent Labor Certification Programs;

Prevailing Wage Determinations for Use in the Commonwealth of the

Northern Mariana Islands, 74 FR 63796 (Dec. 4, 2009).

\44\ Employment and Training Administration; Prevailing Wage

Determination Policy Guidance, Nonagricultural Immigration Programs

(Revised Nov. 2009) (hereinafter 2009 Guidance), available at

https://www.dol.gov/sites/dolgov/fil...ed_11_2009.pdf .

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When assigning a prevailing wage using OES data, the NPWC examines

the nature of the job offer, the area of intended employment, and job

duties for workers that are similarly employed.\45\ In particular, the

NPWC uses the SOC taxonomy to classify the employer's job opportunity

into an occupation by comparing the employer's job description, title,

and requirements to occupational information provided in sources like

the Department's Occupational Information Network (O*Net).\46\ Once the

NPWC identifies the applicable SOC code, it determines the appropriate

wage level for the job opportunity by comparing the employer's job

description, title, and requirements to those normally required for the

occupation, as reported in sources like O*Net. This determination

involves a step-by-step process in which each job opportunity begins at

Level I (entry level) and may progress to Level II (experienced), Level

III (qualified), or Level IV (fully competent) based on the NPWC's

comparison of the job opportunity to occupational requirements,

including the education, training, experience, skills, knowledge, and

tasks required in the occupation.\47\ After determining the prevailing

wage level, the NPWC issues a PWD to the employer using the OES wage

for that level in the occupation and area of intended employment.

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\45\ Id. at 1.

\46\ Id. at 1-7; see also Occupational Information Network,

available at http://online.onetcenter.org. O*Net provides

information on skills, abilities, knowledge, tasks, work activities,

and specific vocational preparation levels associated with

occupations and stratifies occupations based on shared skill,

education, and training indicators.

\47\ 2009 Guidance at 6.

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B. The Interim Final Rule

On October 8, 2020, the Department published an Interim Final Rule

(IFR) in the Federal Register, 85 FR 63872, revising the methodology

the Department uses to determine prevailing wage levels for the H-1B,

H-1B1, E-3, and PERM programs. As explained in the IFR, the Department

concluded the existing wage levels were not consistent with the

relevant statutory requirement that a government survey employed to

determine the prevailing wage provide four wage levels commensurate

with experience, education, and level of supervision.\48\ The

Department also determined that the existing wage levels were

artificially low and provided an opportunity for employers to hire and

retain foreign workers at wages well below what their U.S. counterparts

earn, creating an incentive to prefer foreign workers to U.S. workers,

an incentive that is at odds with the statutory scheme and causes

downward pressure on the wages of the domestic workforce. Therefore,

the Department revised wage provisions at 20 CFR 655.731 and 656.40 to

adjust the existing wage levels to ensure the wage levels reflect the

wages paid to U.S. workers with similar experience, education, and

responsibility to those possessed by similarly employed foreign

workers.

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\48\ See 8 U.S.C. 1182(p)(4).

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In particular, the IFR amended paragraphs (a), (b)(2), and (b)(3)

of 20 CFR 656.40, codifying the four-tier wage practice and revising

the wage level computation methodology. A new Sec. 656.40(b)(2)(i)

specified the four new levels (Levels I through IV) to be applied.

Paragraph (b)(2)(i)(A) explained the Level I wage would be calculated

as the mean of the fifth decile of the wage distribution for the most

specific occupation and geographic area available, rather than

calculated as the mean of the bottom third of the OES wage

distribution, as was the case prior to the IFR. Paragraph (b)(2)(i)(D)

provided that the Level IV wage would be calculated as the mean of the

upper decile of the wage distribution for the most specific occupation

and geographic area available, rather than using the mean of the upper

two-thirds of the distribution. As a result of these changes, the wage

levels were increased, respectively, from approximately the 17th, 34th,

50th, and 67th percentiles to approximately the 45th, 62nd, 78th, and

95th percentiles. The IFR also made minor technical and clarifying

amendments to sections 656.40 and 655.731, which the Department has

adopted in this final rule with only a minor change to the location of

one of the amended provisions, as explained further in section IV

below.

[[Page 3612]]

The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq.,

authorizes an agency to issue a rule without prior notice and

opportunity to comment when the agency for good cause finds that those

procedures are ``impracticable, unnecessary, or contrary to the public

interest.'' \49\ The good cause exception for forgoing notice and

comment rulemaking ``excuses notice and comment in emergency

situations, or where delay could result in serious harm.'' \50\ The

Department published the IFR with an immediate effective date,

bypassing notice and comment due to exigent circumstances created by

the coronavirus public health emergency that threatened immediate harm

to the wages and job prospects of U.S. workers, as well as the need to

avoid evasion by employers of the new wage rates.\51\ However, the

Department requested public input on all aspects of the IFR during a

post-promulgation 30-day public comment period and explained it would

review and consider these comments before issuing a final rule. The

public comment period ended on November 9, 2020, and resulted in

receipt of more than two thousand comments. Most of the comments were

not relevant and/or not substantive, but 148 relevant and substantive

comments were received and are discussed further below.

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\49\ 5 U.S.C. 553(b)(B).

\50\ Jifry v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004).

\51\ See 85 FR 63872, 63898-63902 (Oct. 8, 2020).

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C. Litigation

Four groups of plaintiffs separately challenged the Department's

IFR. These groups of plaintiffs, which included academic institutions,

businesses, and trade associations, claimed the Department lacked good

cause to issue the IFR without undergoing notice and comment procedures

under the APA and that the IFR was arbitrary and capricious and in

violation of the INA. These plaintiffs further requested that the IFR

be enjoined and the Department prevented from implementing it. In three

of the four cases, the district court approved the parties' stipulation

to convert plaintiffs' preliminary injunction motion to a motion for

partial summary judgment on the notice and comment claim. In Chamber of

Commerce, the district court issued a decision on December 1, 2020,

granting plaintiffs' motion for partial summary judgment on their

notice and comment claim and setting aside the Department's IFR.\52\ In

Purdue University and Stellar IT (which were consolidated), the

district court issued a decision on December 14, 2020, granting partial

summary judgment to the plaintiffs on the basis that the Department

lacked good cause to issue the IFR, and ordered the Department to re-

issue prevailing wage determinations issued under the IFR on a mutually

agreeable schedule.\53\ In the fourth case, ITServe Alliance, the

district court issued a preliminary injunction on December 3, 2020,

prohibiting the Department from enforcing the IFR against the

plaintiffs in that case.\54\ In discussing plaintiffs' likelihood of

success on the merits in that case, the court limited its analysis to

plaintiffs' claim that the Department lacked good cause to forgo

advance notice and comment.\55\ Following the district court's

decisions in Chamber of Commerce and ITServe Alliance, OFLC took

immediate action to comply with the courts' directives, including

issuing a public announcement on its website on December 3, 2020,

outlining the steps it was taking in response to the courts' orders.

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\52\ Order Granting Plaintiffs' Motion for Partial Summary

Judgment and Denying Defendants' Cross-Motion, Chamber of Commerce,

et al. v. DHS, et al., 20-cv-07331 (N.D. Cal. Dec. 1, 2020). The

plaintiffs in this case also challenged an interim final rule issued

by DHS, Strengthening the H-1B Nonimmigrant Visa Classification

Program, 85 FR 63, 918 (Oct. 8, 2020), that published on October 8,

2020.

\53\ Memorandum Opinion, Purdue University, et al. v. Scalia, et

al., 20-cv-03006 (D.D.C. Dec. 14, 2020); Memorandum Opinion, Stellar

IT, et al. v. Scalia, et al., 20-cv-03175 (D.D.C.).

\54\ Opinion, ITServe Alliance, et al. v. Scalia, et al., 20-cv-

14604 (D.N.J. Dec. 3, 2020).

\55\ Id. at 8-20.

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Notwithstanding the district courts' orders to set aside the IFR on

procedural grounds, the U.S. Supreme Court has acknowledged and

affirmed the proposition that a procedurally flawed IFR does not taint

a final rule relying upon an IFR as a proposed rule.\56\ The Department

is satisfied that it meets the APA's objective requirements necessary

for the promulgation of a final rule in this case. Specifically, the

Department's IFR provided sufficient notice to the public by allowing

for a 30 day comment period; \57\ ``gave interested persons an

opportunity to participate in the rule making through submission of

written data, views or arguments''; \58\ the rule contained a ``concise

general statement of their basis and purpose''; \59\ and the rule will

be published more than 30 days before it becomes effective.\60\

Accordingly, the Department maintains the legal authority to pursue

this final rule based upon its compliance with the APA's procedural

requirements satisfied in the IFR.

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\56\ Little Sisters of the Poor Saints Peter and Paul Home v.

Pennsylvania, 140 S.Ct. 2367, 2385-86 (2020).

\57\ 5 U.S.C. 553(b).

\58\ 5 U.S.C. 553(c).

\59\ Id.

\60\ 5 U.S.C. 553(d).

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III. Discussion of Final Rule, Comments, and Responses

A. Overview

The IFR provided for the submission of public comments during a

prescribed 30-day public comment period that closed on November 9,

2020. During this time, the Department received 2,340 comments. The

Department received input from a broad range of commenters, including

labor unions; employers; law firms; academic and research institutions;

healthcare providers; public policy organizations; professional and

trade associations; a federal agency; foreign workers, students,

attorneys, and other individuals; and a significant number of anonymous

commenters. Some commenters supported the new wage level computation

methodology in the IFR generally or in concept as a necessary change to

prevent abuse of the H-1B program, particularly its four-tier wage

level system, by employers seeking to hire foreign workers at below

market wages. However, the overwhelming majority of commenters opposed

the new wage level computation methodology. Notably, however,

commenters generally did not offer justifications or data to support

the continued use of the old wage methodology.

Commenters opposed to the substantive changes in the IFR generally

asserted that the revised wage levels do not correspond with wages paid

to U.S. workers with similar qualifications or those employed in job

opportunities with similar requirements, that the IFR wages do not

reflect market wages as evidenced by comparisons to private wage

surveys and wage data on various websites, and that the wage increases

are arbitrary and unsustainable for most employers, especially given

the immediate effective date of the IFR. Commenters expressed concern

that the IFR would negatively impact the economy broadly by reducing

labor demand, reducing American competitiveness in innovative

industries, and encouraging outsourcing. A number of commenters

asserted the IFR would disproportionately impact small businesses and

start-ups; nonprofits; and academic, research, and healthcare

institutions. Many commenters claimed that there is no need to raise

wages to protect U.S. workers, asserting that foreign workers are not

underpaid and employment of foreign workers creates,

[[Page 3613]]

rather than reduces, employment opportunities for U.S. workers and

benefits the economy broadly. Many commenters also expressed concern

the IFR would harm currently employed foreign workers and their

families, especially foreign workers with significant ties to the U.S.

and for whom immigrant visa petitions have been filed but for whom

visas are unavailable due to per country visa caps.

After careful and thorough consideration of the comments, the

Department has adopted a number of modifications in this final rule to

the wage methodology established by the IFR. In particular, the

Department has adjusted the Level I wage and the Level IV wage downward

to the 35th percentile and 90th percentile, respectively. The

Department is also implementing in this rule a number of changes to how

it uses data from BLS in the H-1B and PERM programs that will further

reduce the incidence of inappropriately inflated wages identified by

commenters. Finally, the Department is adopting a phase-in approach to

how the new wage levels will be applied to give employers and workers

time to adapt to the change. In combination, the Department believes

these measures appropriately address commenters' concerns and will

ensure that, going forward, the prevailing wage rates provided by the

Department fully protect the wages and job opportunities of U.S.

workers.

As the Department explained in the IFR, a primary purpose of the

restrictions on immigration created by the INA, both numerical and

otherwise, is ``to preserve jobs for American workers.'' \61\

Safeguards for American labor, and the Department's role in

administering them, have been a foundational element of the statutory

scheme since the INA was enacted in 1952.\62\ For the reasons set forth

below, the Department has determined that the way it previously

regulated the wages of certain immigrant and nonimmigrant workers in

the H-1B, H-1B1, E-3, and PERM programs is inconsistent with the text

of the INA. A substantial body of evidence examined by the Department,

and discussed at length in the IFR, also suggests that the existing

prevailing wage rates used by the Department in these foreign labor

programs are causing adverse effects on the wages and job opportunities

of U.S. workers and are therefore at odds with the purpose of the INA's

labor safeguards. The current wage levels were also promulgated through

guidance, without providing the public with any notice or an

opportunity to comment, and without any meaningful economic

justification. Accordingly, the Department is acting to adjust the wage

levels to ensure they are codified and consistent with the factors the

INA dictates must govern the calculation of foreign workers' wages. In

so doing, the Department expects to reduce the dangers posed by the

existing levels to U.S. workers' wages and job opportunities and

thereby advance a primary purpose of the statute. While some commenters

disagreed with the Department's conclusions about the effects of the

old wage levels on U.S. workers, the Department continues to believe

that the reasoning put forward in the IFR on this point is sound.

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\61\ Sure-Tan, Inc. v. N.L.R.B., 467 U.S. 883, 893 (1984).

\62\ H.R. Rep. No. 1365, 82d Cong., 2d Sess., 50-51 (1952)

(discussing the INA's ``safeguards for American labor'').

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The modern H-1B program was created by the enactment of the

Immigration Act of 1990 (IMMACT 90). Among other reforms, IMMACT 90

established ``various labor protections for domestic workers'' in the

program.\63\ These protections were primarily designed ``to prevent

displacement of the American workforce'' by foreign labor.\64\ In

general, the purpose of the H-1B program is to ``allow[ ] an employer

to reach outside of the U.S. to fill a temporary position because of a

special need, presumably one that cannot be easily fulfilled within the

U.S.'' \65\ Using a foreign worker as a substitute for a U.S. worker

who is already working in or could work in a given job is therefore

inconsistent with the broad aims of the program. Congress has

recognized that repeatedly, both in enacting IMMACT 90 and in making

subsequent changes to the H-1B program.\66\

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\63\ Washington All. of Tech. Workers v. U.S. Dep't of Homeland

Sec., 156 F. Supp. 3d 123, 142 (D.D.C. 2015), judgment vacated,

appeal dismissed sub nom. Washington All. of Tech. Workers v. U.S.

Dep't of Homeland Sec., 650 F. App'x 13 (D.C. Cir. 2016).

\64\ Cyberworld Enter. Techs., Inc. v. Napolitano, 602 F.3d 189,

199 (3d Cir. 2010).

\65\ Caremax Inc v. Holder, 40 F. Supp. 3d 1182, 1187 (N.D. Cal.

2014).

\66\ See, e.g., Public Law 105-277 Sec. Sec. 412-13, 112 Stat.

2681, 2981-642 to -650 (1998). See also H.R. Rep. No. 101-723(I),

101st Cong., 2d Sess. 44, 66-67 (1990) (``[IMMACT 90] recognizes

that certain entry-level workers with highly specialized knowledge

are needed in the United States and that sufficient U.S. workers are

sometimes not available. At the same time, heavy use and abuse of

the H-1 category has produced undue reliance on alien workers.'');

144 Cong. Rec. S12741, S12749 (daily ed. October 21, 1998)

(statement of Sen. Abraham) (describing the purpose of the H-1B

provisions of the American Competiveness and Workforce Improvement

Act as being to ensure ``that companies will not replace American

workers with foreign born professionals, including increased

penalties and oversight, as well as measures eliminating any

economic incentive to hire a foreign born worker if there is an

American available with the skills needed to fill the job.'').

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Wage requirements are central to the H-1B program's protections for

U.S. workers.\67\ Under the INA, employers must pay H-1B workers the

greater of ``the actual wage level paid by the employer to all other

individuals with similar experience and qualifications for the specific

employment in question'' or the ``the prevailing wage level for the

occupational classification in the area of employment.'' \68\ By

ensuring that H-1B workers are offered and paid wages that are no less

than what U.S. workers similarly employed in the occupation are being

paid, the wage requirements are meant to guard against both wage

suppression and the replacement of U.S. workers by lower-cost foreign

labor.\69\

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\67\ See Labor Condition Applications and Requirements for

Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations

and as Fashion Models, 59 FR 65646, 65655 (December 20, 1994)

(describing the ``Congressional purposes of protecting the wages of

U.S. workers'' in the H-1B program); H.R. REP. 106-692, 12 (quoting

Office of Inspector General, U.S. Department of Labor, Final Report:

The Department of Labor's Foreign Labor Certification Programs: The

System is Broken and Needs to Be Fixed 21 (May 22, 1996) (``The

employer's attestation to . . . pay the prevailing wage is the only

safeguard against the erosion of U.S. worker's [sic.] wages.'').

\68\ 8 U.S.C. 1182(n)(1)(A).

\69\ See Labor Condition Applications and Requirements for

Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations

and as Fashion Models; Labor Certification Process for Permanent

Employment of Aliens in the United States, 65 FR 80110, 80110 (Dec.

20, 2000) (``The [INA], among other things, requires that an

employer pay an H-1B worker the higher of the actual wage or the

prevailing wage, to protect U.S. workers' wages and eliminate any

economic incentive or advantage in hiring temporary foreign

workers.''); Panwar v. Access Therapies, Inc., 975 F. Supp. 2d 948,

952 (S.D. Ind. 2013) (``The wage requirements are designed to

prevent . . . the influx of inexpensive foreign labor for

professional services.'').

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The OES prevailing wage levels that the Department uses in the H-1B

program--as well as the related H-1B1 and E-3 ``specialty occupation''

programs for foreign workers from Chile, Singapore, and Australia--are

the same as those it uses in its PERM program. Through the PERM

program, the Department processes labor certification applications for

employers seeking to sponsor foreign workers for permanent employment

under the EB-2 and EB-3 immigrant visa preference categories. Aliens

seeking admission or adjustment of status under the EB-2 or EB-3

preference categories are inadmissible ``unless the Secretary of Labor

has determined and certified . . . that--(I) there are not sufficient

workers who are able, willing, qualified . . . and available at the

time of application for

[[Page 3614]]

a visa and admission to the United States and at the place where the

alien is to perform such skilled or unskilled labor, and (II) the

employment of such alien will not adversely affect the wages and

working conditions of workers in the United States similarly

employed.'' \70\

---------------------------------------------------------------------------

\70\ 8 U.S.C. 1182(a)(5)(A)(i).

---------------------------------------------------------------------------

The Secretary makes this determination in the PERM program by,

among other things, requiring the foreign worker's sponsoring employer

to recruit U.S. workers by offering a wage that equals or exceeds the

prevailing wage and to assure that the employer will pay the foreign

worker a wage equal to or exceeding the prevailing wage.\71\ In this

way, similar to its role in the H-1B program, the prevailing wage

requirement in the PERM program furthers the statute's purpose of

protecting the interests of, and preserving job opportunities for,

American workers.\72\ Effectuating this purpose is the principle

objective of the Department's regulatory scheme in the PERM

program.\73\

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\71\ 20 CFR 656.10(c)(1).

\72\ Pai v. U.S. Citizenship & Immigration Servs., 810 F. Supp.

2d 102, 110 (D.D.C. 2011) (``The plain language of [8 U.S.C.

1182(a)(5)(A) and 1153(b)(3)] reflects a concern to protect the

interests of workers in the United States.''); Fed'n for Am.

Immigration Reform, Inc. v. Reno, 93 F.3d 897, 903 (D.C. Cir. 1996)

(explaining that the INA's various limits on immigration, such as in

the allocation of visas in the EB-2 and EB-3 preference categories,

``reflect a clear concern about protecting the job opportunities of

United States citizens.''). See generally Texas v. United States,

809 F.3d 134, 181 (5th Cir. 2015) (quoting I.N.S. v. Nat'l Ctr. for

Immigrants' Rights, Inc., 502 U.S. 183, 194 (1991) (``The INA's

careful employment-authorization scheme `protect[s] against the

displacement of workers in the United States,' and a `primary

purpose in restricting immigration is to preserve jobs for American

workers.' '').

\73\ See, e.g., Durable Mfg. Co. v. U.S. Dep't of Labor, 578

F.3d 497, 502 (7th Cir. 2009) (``The point remains that the new

Sec. 656.30(b) advances, to some degree, the congressional purpose

of protecting American workers.''); Rizvi v. Dep't of Homeland Sec.

ex rel. Johnson, 627 F. App'x 292, 294-95 (5th Cir. 2015)

(unpublished) (``Viewed in the proper context, the challenged

regulation serves purposes in accord with the statutory duty to

grant immigrant status only where the interests of American workers

will not be harmed; showing the employer's ongoing ability to pay

the prevailing wage is one reasonable way to fulfill this goal.'').

---------------------------------------------------------------------------

While the prevailing wage levels the Department sets in the H-1B,

H-1B1, E-3, and PERM programs are meant to protect against the adverse

effects the entry of immigrant and nonimmigrant workers can have on

U.S. workers, they do not accomplish that goal--and have not for some

time. For starters, the Department has never offered any explanation or

economic justification for the way it currently calculates the

prevailing wage levels it uses in these foreign labor programs.\74\ The

INA requires that a government survey employed to determine the

prevailing wage provide wage levels commensurate with experience,

education, and level of supervision.\75\ However, it is clear that the

Department's current wage levels are not sufficiently set in accordance

with the relevant statutory factors. In setting the wage levels, the

Department did not engage in an effort to tether them to the statutory

factors, identify sources of wage data that would inform an analysis of

how the levels should be calibrated so as to protect U.S. workers'

wages and job opportunities, or otherwise articulate an analytical

framework to guide and explain how the levels were established. It also

set the levels outside the rulemaking process, instead promulgating

them solely through a memorandum of understanding between departmental

components.

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\74\ See Wage Methodology for the Temporary Non-Agricultural

Employment H-2B Program, Part 2, 78 FR 24047, 24051 (Apr. 24, 2013)

(``Since the OES survey captures no information about actual skills

or responsibilities of the workers whose wages are being reported,

the two-tier wage structure introduced in 1998 was based on the

assumption that the mean wage of the lowest paid one-third of the

workers surveyed in each occupation could provide a reasonable proxy

for the entry-level wage. DOL did not conduct any meaningful

economic analysis to test the validity of that assumption . . .'').

\75\ 8 U.S.C. 1182(p)(4).

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Further, the Department's analysis of the likely effects of H-1B

and PERM workers on U.S. workers' wages and job opportunities shows

that the existing wage levels are not advancing the purposes of the

INA's wage provisions. As explained below, under the existing wage

levels, artificially low prevailing wages provide an opportunity for

employers to hire and retain foreign workers at wages well below what

their U.S. counterparts--meaning U.S. workers in the same labor market,

performing similar jobs, and possessing similar levels of education,

experience, and responsibility--make, creating an incentive--entirely

at odds with the statutory scheme--to prefer foreign workers to U.S.

workers, and causing downward pressure on the wages of the domestic

workforce. The Department is therefore acting to adjust the existing

wage levels to ensure the levels reflect the wages paid to U.S. workers

with levels of experience, education, and responsibility comparable to

those possessed by similarly employed foreign workers.

To accomplish this, the Department articulated an analytical

framework in the IFR to govern how it adjusted the prevailing wage

levels. In doing so, the Department considered, among other things, the

statutory context in which the INA's prevailing wage provisions are

found. In particular, because the prevailing wage levels are used

primarily for high-skilled workers, most of whom are H-1B workers, the

Department took into account the INA's definition of ``specialty

occupation,'' which establishes the baseline minimum qualification

requirements that foreign workers must possess to obtain an H-1B visa,

and also looked to the qualification requirements for obtaining an EB-2

visa. From its review of these qualification requirements, the

Department drew a number of conclusions about the least-skilled, or

entry-level workers employed in the PERM and H-1B programs.

Specifically, the Department determined that such workers often possess

greater skills than many of the least qualified workers in the most

common occupational classifications in which H-1B and PERM workers are

found. For that reason, the Department concluded that the lower end of

the wage distribution reported by the OES survey for those

classifications should be discounted in setting an entry-level wage.

Because wages for H-1B and PERM workers are, under the INA, to be based

on the wages paid to U.S. workers with comparable education,

experience, and responsibility, looking to the wage data of workers at

the lowest points of the wage distributions for these occupations who

likely would not be considered as working in a ``specialty occupation''

would therefore be inconsistent with the statute. Because the old wage

methodology made such wage data a central element of the prevailing

wage calculation, it did not, in the Department's judgment, comport

with the INA.

The Department's review of the INA's qualification requirements for

H-1B and EB-2 workers, in combination with an analysis of the

demographic characteristics of workers in the H-1B program, led the

Department to determine that, for purposes of identifying an entry-

level wage, it should look to the wages paid to U.S. workers who

possess a master's degree and limited work experience. Using such

workers as wage comparators for entry-level H-1B and PERM workers, in

the Department's judgment, is an appropriate way of determining what

U.S. workers similarly employed and with comparable education and

experience to such H-1B and PERM workers are paid. In analyzing wage

data on such workers, the Department also determined that it was

appropriate

[[Page 3615]]

to focus its analysis on those occupations that account for one percent

or more of all H-1B workers. As the Department acknowledged in the IFR,

using a single wage structure across multiple programs, hundreds of

different occupations, and for hundreds of thousands of different

workers necessarily means that prevailing wage rates will not be

perfectly tailored to every single job opportunity. While still giving

due weight to other occupations in its analysis, the Department has

determined that paying special attention to those occupations where

foreign workers are most heavily concentrated, and where the risk to

U.S. workers' wages and job opportunities from the employment of

foreign labor is therefore most acute, is the optimal way of advancing

the purpose of the INA's wage protections while accounting for the

breadth of the programs and occupations covered by the four-tier

structure. As discussed further below, while several commenters

disagreed with various aspects of this analytical framework and the

Department's interpretation of the INA, the Department, after

considering those comments, continues to believe that its approach is

appropriate.

Having determined how it would analyze the question of how to set

prevailing wage levels, the Department proceeded to review data from

various, credible government sources, specifically the surveys from the

National Science Foundation (NSF) and the Current Population Survey

(CPS), about the wages paid to master's degree holders with limited

work experience employed in occupations that account for the vast

majority of workers covered by the prevailing wage levels. Based on its

analysis of this data, the Department concluded in the IFR that the

range within the OES distribution where workers similarly employed and

with levels of education and experience comparable to entry-level H-1B

and PERM workers fall is between the 32nd and 49th percentiles of the

distribution. The Department continues to believe that this conclusion

is largely accurate, and that it is highly relevant to how it will set

the entry-level wage in this final rule.

In the IFR, the Department relied on a number of qualitative

considerations, including the relative strengths and weaknesses of the

data it relied on to identify the entry-level wage range as well as the

purpose of the INA's wage protections, to conclude that the entry-level

wage should be placed higher up within the identified range at

approximately the 45th percentile. Based on private wage data and other

considerations provided by commenters, which are addressed below, the

Department has reassessed this conclusion, and has now determined that

the entry-level wage for the H-1B and PERM programs is more appropriate

at the 35th percentile. In particular, data provided by commenters

indicate that the lower end of the range may in fact provide a more

accurate representation of what U.S. workers similarly employed to

entry-level H-1B and PERM workers are paid. Concerns from commenters

about how a potentially inflated entry-level wage would affect

employers' ability to access the program, and how the IFR's reasoning

was weighted too heavily to certain occupations and geographic areas,

are also compelling reasons, in the Department's judgment, to favor a

lower point in the range. Importantly, the Department believes that by

staying within the range identified in the IFR, the entry-level wage it

has selected will provide robust protection for U.S. workers.

The Department acknowledges commenters' reliance interests on the

current wage methodology and understands that immediate changes to wage

rates could cause some economic uncertainty for both employers and

foreign workers. Thus, the Department is also adopting a series of

transition provisions in this final rule to make it easier for

employers and workers to adapt to the changed wage levels, thus

avoiding disruption and striking a proper balance between stakeholders'

reliance interests and the Department's obligation to comply with the

INA and pursue a policy that is protective of U.S. workers. For many

job opportunities, the new wage rates will phase in through two steps

over a year and a half period. For job opportunities that will be

filled by workers on track to become lawful permanent residents, and

who therefore have greater reliance interests in the old wage

methodology, the new wage rates will phase in through four steps over a

three and a half year period. The Department also reduced the Level IV

wage from approximately the 95th percentile to the 90th percentile, and

made a number of other technical modifications to how it uses BLS data

to produce prevailing wage rates. These changes, too, address

commenters' concerns that wages under the IFR were inappropriately

high.

B. Discussion

1. The Need for Rulemaking

Summary of Comments

The Department received a number of comments in support of the IFR,

including one commenter that believed the IFR ``makes important strides

to bring wage requirements for the H-1B program closer to real

prevailing wages in relevant industries.'' These commenters agreed with

the Department that the prior wage levels resulted in adverse effects

on U.S. workers' wages and job opportunities. Some of these commenters

noted that the Level I and II wages under the prior wage level

methodology (approximately the 17th and 34th percentiles) were well

below the median for the occupation and that 60 percent of H-1B

positions were certified at one of these wage levels. One of these

commenters expressed concern that the prior wage level methodology

permitted H-1B employers to ``engage in de facto wage arbitrage

schemes.'' A public policy organization noted that many employers ``pay

H-1B workers the lowest wages legally allowed, and outsource their H-1B

employees to third-party firms.'' The commenter asserted that employers

opposed to the revised wage level methodology and increased wages claim

``that employers will only hire H-1B workers if they are underpaid

relative to similarly-situated U.S. workers,'' which creates a wage

``race to the bottom.'' The commenter further stated that ``other

reliable sources of wage data'' demonstrate that the wage results

generated by the Department in the IFR are in fact too low. The

commenter cited data from both the Department and NSF to draw the

comparison and substantiate this claim, and it requested that the

Department conduct a ``systematic review'' of major H-1B occupations to

ensure that updates to the wage structure are in line with credible

sources of salary data, such as the NSF's survey of recent college

graduates. Another commenter believed the IFR would ``prevent employers

that seek specialized workers from being crowded out of the H-1B

program by employers using the program to pay below market wages.''

Some of these commenters believed the Level I wage should be set closer

to the median for the occupation and one of the commenters stated that

the Level I wage was the only wage level that mattered because the

Department ``has no adjudicative power over employer skill level

claims.''

By contrast, the majority of comments received on the IFR expressed

strong opposition to the rule and a number of commenters questioned

whether adjustments to the prevailing wage level methodology are

necessary. Many commenters believed there was no need to raise wages to

protect U.S. workers, citing the Department's statement that

[[Page 3616]]

many frequent H-1B program users pay wages above the required

prevailing wage rates, as well as other external sources finding that

foreign workers are paid as much or more than similarly employed U.S.

workers and that foreign workers create jobs for U.S. workers or

otherwise benefit U.S. workers and the economy broadly. Many commenters

pointed to unemployment statistics and forecasted job growth in certain

fields as evidence that the IFR changes are not necessary to protect

U.S. workers. Three commenters stated that it is more expensive to hire

foreign workers due to costs related to the visa process and that

employers prefer to hire U.S. workers due to concern about the

``instability of H-1B lottery systems.'' Some commenters believed the

regulatory requirement that H-1B employers must pay the highest of the

actual or prevailing wage provides sufficient protection to U.S.

workers because the employer must pay the actual wage in cases where

the Department's PWD rate is lower. One commenter asserted the annual

visa caps provide sufficient protection for U.S. workers and a second

commenter asserted the recruitment requirements in the permanent labor

certification regulations offer sufficient protection.

Several commenters claimed it was improper for the Department to

cite higher actual wages paid by large H-1B employers as an indication

that the prevailing wage levels were insufficient to protect U.S.

workers. For example, an university commenter noted the Department's

acknowledgment that many large ``program users pay well in excess of

the prevailing wage'' and the commenter asserted this was an

acknowledgment ``that the issue it is trying to resolve . . . is non-

existent.'' This commenter stated that employers paying more than the

prevailing wage might simply indicate these employers pay a higher

actual wage ``due to legitimate business factors.'' Similarly, a public

policy organization and a professional association stated that the fact

that a group of H-1B employers pays more than the prevailing wage

indicates only that some employers voluntarily increase wages for

competitive reasons. Another commenter stated that pay differences are

reflective of the ``free market at work'' and that ``high profile tech

companies . . . are in heavy competition . . . and have large enough

profit margins'' to pay higher wages. A group of associations stated

that payment of higher wages by these employers may be due to geography

and ``intensity of the work'' such that these employers must ``pay a

premium to attract both domestic talent and foreign-born talent . . .''

By intensity of the work, the commenters referred to areas in which at

least one percent of workers are employed in a particular occupation.

The commenters stated that the OES ``identifies for each SOC . . .

[areas where] the number of employed individuals per each 1,000

employed persons in that particular occupation . . .'' and that the

Department should look to this as ``a useful proxy for the intensity of

activity in that particular occupation in a particular geography,'' in

addition to analyzing available LCA data to determine how often wages

in excess of prevailing wages ``are primarily for such high intensity

jobs and locations.''

Many commenters asserted the Department failed to consider or

``insufficiently weighted'' a wide range of relevant and readily

available studies and reports that indicate a revision to the wage

level methodology is unnecessary. These commenters stated that the

Department ignored ample evidence that H-1B workers are paid at least

as much as their U.S. counterparts and that employment of H-1B workers

may increase the wages earned by U.S. workers. A few commenters cited a

GAO report finding H-1B workers earn the same or more than similar U.S.

workers and an analysis by the website Glassdoor finding that across

``10 cities and roughly 100 jobs'' it examined, salaries for H-1B

workers were ``about 2.8 percent higher than comparable U.S. salaries .

. . .'' Similarly, several commenters cited a report published by the

Partnership for a New American Economy, a research and advocacy

organization dedicated to ``mak[ing] the economic case for

immigration,'' \76\ finding that denials of H-1B petitions from 2007 to

2008 slowed job and wage growth for U.S. workers and that every one-

percentage-point increase in the ``foreign STEM share of a city's total

employment . . . made possible by the H-1B visa program'' increased

wage growth by three to seven percentage points for U.S. workers. Other

cited sources included:

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\76\ See New American Economy, ``About,'' https://www.newamericaneconomy.org/about .

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A Cato Institute report indicating roughly 80 percent of

H-1B employers pay H-1B workers ``above average market wages'';

A working paper from the National Bureau of Economic

Research finding that ``complete elimination'' of the H-1B program

would have virtually no effect on the wages of ``high-skilled Americans

in year one and a slight reduction . . . by year three'';

A National Foundation for American Policy (NFAP) report

finding ``on average, H-1B workers reduce overall unemployment and

increase earnings growth within the fields they are employed by

increasing firm productivity'';

An NFAP report finding that each 1 percent increase in H-

1B workers in science, engineering, technology, and mathematics (STEM)

occupations ``increased local wages of college educated Americans by 7-

8 percent and non-college educated Americans by 3-4 percent'';

A journal article concluding that ``after controlling for

human capital attributes, foreign I.T. professionals'' earn more than

their U.S. counterparts; and

A National Survey of College Graduates comparative

analysis finding that ``controlling for socioeconomic and demographic

characteristics, workers who hold a temporary work visa earn about

thirty percent more than comparable'' U.S. workers.

Commenters also cited a variety of studies and reports that

conclude that the employment of foreign workers has little or no effect

on employment rates for similarly employed U.S. workers. For example, a

group comment cited a 2016 Journal of Economic Perspectives study on

``Global Talent Flows'' that the commenter said indicated ``very little

displacement of U.S.-born innovators and high-skilled professionals by

high-skilled immigrants.'' Another commenter stated ``key fields such

as software development and data science . . . are facing undeniable

workforce supply shortages'' and asserted this ``undermin[ed] the

argument that an influx in cheaper labor supply will result in lower

possible earnings'' for U.S. workers. In support, the commenter cited a

Wall Street Journal article noting ``tech job postings in the U.S. rose

32%'' in the first half of 2019 and a 2018 BLS report projecting higher

than average employment growth in high-tech services.

Some commenters also expressed concerns about the sources the

Department did cite in the IFR in support of the need to revise wage

levels. Citing an analysis of the IFR by labor economist and professor

Dr. Madeline Zavodny, a trade association asserted the Department

relied on ``outdated, incorrect, or limited empirical data'' and relied

on sources that did not ``include an analysis of the wages of H-1B

workers in direct comparison with other workers having the same level

of education, experience,

[[Page 3617]]

or responsibility.'' The commenter stated that the Associated Press

analysis cited at footnote 122 provides ``an incomplete picture''

because it is not based on ``actual workers in the U.S. who hold an H-

1B visa'' but instead is based on LCA data, which includes

``applications that are denied (often because the wage is too low).''

The commenter also stated that the analysis ``does not control for any

differences between applicants for an H-1B visa and U.S. workers, such

as differences in age and education.'' An anonymous commenter stated

that the Associated Press article indicated that 58 percent of H-1B

workers are paid more than their U.S. counterparts and asserted the

article can only be used to support statements regarding wages paid to

workers in computer occupations.

The trade association stated that the citations at footnote 121 in

the IFR that the Department relied on to support its statement that H-

1B IT workers earn roughly 25-33 percent less than U.S. workers failed

to provide ``a clear analysis of the wages of workers who hold an H-1B

visa compared with other workers;'' failed to include H-1B workers in

the analysis; and failed to provide sufficient details of the wage

analysis to determine the reason for the wage differentials. The

anonymous commenter stated that the CRISIL Research citation in this

footnote failed to cite evidence or provide data to support the

statement that H-1B workers earn 25 percent less than U.S. workers and

failed to provide a source for the claim that ``local hires . . . cost

25-30% more.'' The anonymous commenter stated that the third citation

in this footnote is outdated, analyzing ``only immigrant trends in the

1990s'' and does not ``specifically reference computer occupations.''

The commenter also noted that the report recognizes that ``the lower

earnings of recent immigrants may reflect unobserved differences in the

quality and type of education among immigrant cohorts'' and the report

``offers alternative factors that weigh into the wage trends of H-1B

workers that [DOL] has not accounted for in this rule.''

An immigration law firm stated that the IFR misconstrued the CRISIL

report, which the commenter asserted ``actually shows that as a result

of recent H-1B policy changes, it is harder to obtain H-1Bs for

employees that are contracted to work at third-party worksites forcing

U.S. employers to instead hire full-time employees to fill these

roles'' and ``the increase in costs is attributed to the costs of full

time employees'' compared to the cost of ``contract employees.'' The

commenter also asserted that the Department misconstrued Economic

Policy Institute research when it claimed the research showed that only

one of every two STEM graduates get a job in the field. The commenter

stated that the researchers ``found that half of students that do not

enter the STEM industry found jobs in other industries.''

The anonymous commenter also asserted that the congressional

testimony cited in this footnote provides no evidence to ``establish

the median wage as the appropriate compensation for any specific [H-1B]

positions'' and fails to consider that ``that a Level 1 wage does not

necessarily represent a position that requires less skill, but rather

may have fewer experience requirements or supervisory duties.'' The

commenter also asserted that the journal article cited in this footnote

is ``outdated in its data'' and ``refers to computer occupations'' so

it ``cannot be applied to any other occupational codes.''

Finally, a trade association noted that the Department cited

findings by George Borjas regarding the impact of foreign workers on

the wages of low-skill workers but failed to acknowledge Borjas's

contribution to a 2016 National Academies of Sciences, Engineering, and

Medicine (NASEM) literature review in which he stated ``wage impacts

from immigrants on U.S.-born college-educated workforce is minor (an

increase for U.S. professionals of one-half of one percent in wage

rates as a result of high-skilled immigration).'' The commenter added

that the NASEM review found that there is a ``broad consensus with

respect to high-skilled immigration that any impacts on U.S. wages by

high-skilled, college-educated foreign-born professionals are close to

negligible.''

Response to Comments

First, as the Department explained in the IFR, a primary and

independently sufficient reason for reforming the manner in which it

sets prevailing wage levels in the H-1B and PERM programs is that the

old wage levels were never justified through an economic analysis, nor

codified in rulemaking through notice and comment, and, on closer

inspection, are in substantial tension with the statutory framework.

Notably, commenters have also not provided data or analysis

demonstrating that the wage rates under the old wage methodology

produces wage rates commensurate with the wages paid to U.S. workers

similarly employed and with comparable education, experience, and

responsibility to H-1B and PERM workers, as required by statute. While

some commenters urged the Department to preserve the old wage

methodology, they provided no evidence for why that would be

appropriate or consistent with the INA. Moreover, the Department notes

that criticism of the way in which the wage levels are currently set is

longstanding and exists across the political spectrum.\77\ Put simply,

the old wage methodology is an outmoded method for calculating

prevailing wage rates that is neither supported economic analysis, nor

defended by commenters, and has never tied to the relevant statutory

factors.

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\77\ See https://www.grassley.senate.gov/news...-visa-programs .

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The Level I wage under the old methodology is set by calculating

the mean of the bottom third of the OES wage distribution. That means

the wages for many H-1B workers are set based on a calculation that

takes into account wages paid to workers who, as explained in the IFR

and below, almost certainly would not qualify to work in a ``specialty

occupation,'' as defined by the INA. The Department has noted

previously that ``workers in occupations that require sophisticated

skills and training receive higher wages based on those skills.'' \78\

As a worker's education and skills increase, his wages are expected to

increase as well.\79\ For that reason, it is likely that workers at the

lowest end of an occupation's wage distribution generally have the

lowest levels of education, experience, and responsibility in the

occupation. In consequence, if the occupation by definition includes

workers who do not have the level of specialized knowledge required of

H-1B workers, as is the case with some of the most common occupations

in which H-1B workers are employed, the very bottom of the wage

distribution should be discounted in determining the appropriate point

in the OES wage distribution at which to establish the entry-level wage

under the four-tiered wage structure because workers at the bottom end

are not similarly employed to H-1B workers. Yet the old wage structure

made such workers a central component of that calculation.\80\

Similarly, the current

[[Page 3618]]

Level IV wage is set by calculating the mean of the upper two-thirds of

the wage distribution. That means that the wage level provided for the

most experienced and highly educated H-1B workers is determined, in

part, by taking into account a sizeable number of workers who do not

even make more than the median wage of the occupation. Given the

correlation between wages and skills, this calculation also would

appear inconsistent with the statutory and regulatory framework. Common

sense dictates that workers making less than the median wage of the

occupation cannot be regarded as being similarly qualified to the most

competent and experienced members of that occupation. That puts the old

methodology in substantial tension with the governing statute and is in

and of itself a sufficient reason for reassessing and revising the

prior methodology in order to bring it more closely in line with the

INA's wage provisions.\81\

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\78\ Wage Methodology for the Temporary Non-Agricultural

Employment H-2B Program, Part 2, 78 FR 24047, 24051 (Apr. 24, 2013).

\79\ See Bureau of Labor Statistics, Learn more, earn more:

Education leads to higher wages, lower unemployment, available at

https://www.bls.gov/careeroutlook/20...ation-pays.htm .

\80\ For example, the occupation of Software Developers, which

accounts for a large number of H-1B workers, does not require the

same degree of specialized knowledge as a baseline entry requirement

as does the INA's definition of ``specialty occupation.'' Yet

approximately 10 percent of all LCAs filed with the Department for

software developer positions classify those positions as entry-

level, meaning that under the current wage levels the wages paid to

such specialty occupation workers are calculated based, at least in

part, on the wages paid to some workers who do not have comparable

specialized knowledge and expertise. This outcome contravenes the

INA's requirement that H-1B workers be paid wages based on the wages

paid to U.S. workers with similar levels of education, experience,

and responsibility.

\81\ See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158,

175 (2007) (``Neither can we find any significant legal problem with

the Department's explanation for the change. The agency said that it

had `concluded that these exemptions can be available to such third

party employers' because that interpretation is `more consistent'

with statutory language that refers to `any employee' engaged `in'

the `enumerated services' and with `prior practices concerning other

similarly worded exemptions.' There is no indication that anyone

objected to this explanation at the time. And more than 30 years

later it remains a reasonable, albeit brief, explanation.'').

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The Department also based its conclusion in the IFR that regulatory

reform of H-1B and PERM prevailing wages was needed, in part, on a

review of the academic literature on the subject, congressional

testimony and media accounts of the practical consequences of the prior

prevailing wage levels, and data on the actual wages that major users

of the H-1B and PERM programs pay their foreign workers. As discussed

at length in the preamble to the IFR, the Department considered

numerous studies finding that H-1B workers are paid less than their

U.S. counterparts.\82\ Other studies found this disparity to be

especially true of H-1B employees working in computer science and

information technology, fields in which two thirds of H-1B workers are

employed.\83\ The Department's justification also took into account the

fact that economic literature suggests that the introduction of low-

cost foreign labor into a labor market suppresses wages in proportion

to the number of foreign workers present in that labor market.\84\

Studies involving computer science workers confirm this general

finding.\85\ Its review of this information led the Department to

conclude that the old wage methodology resulted in adverse effects on

both U.S. workers' wages as well as their job opportunities. After

reviewing comments and the studies and information they provided, the

Department continues to believe that, at least in some cases, the old

prevailing wage methodology resulted in harm to U.S. workers and

therefore should be revised.

---------------------------------------------------------------------------

\82\ Atlantic Council, Reforming US' High-Skilled Guestworker

Program, (2019), available at https://www.atlanticcouncil.org/in-d...ation-program/ ; The Impact of High-Skilled Immigration on U.S. Workers:

Hearing before the Senate Committee on the Judiciary (February 25,

2016) (testimony of John Miano, representing Washington Alliance of

Technology Workers, Local 37083 of the Communications Workers of

America, the AFL-CIO); Norman Matloff, On the Need for Reform of the

H-1B Non-Immigrant Work Visa in Computer-Related Occupations, 36 U.

Mich. J.L. Reform 815 (2003).

\83\ U.S. Citizenship and Immigration Services, Characteristics

of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report

to Congress October 1, 2018-September 30, 2019, (2020), available at

https://www.uscis.gov/sites/default/..._Year_2019.pdf , (showing 66 percent of H-1B petitions

approved in FY2019 were for computer-related occupations); Sean

McLain & Dhanya Ann Thoppil, Bulging Staff Cost, Shrinking Margins,

CRISIL Research, (2019), available at https://www.crisil.com/en/home/our-a...g-margins.html ; Sean McLain & Dhanya Ann Thoppil, U.S. Visa Bill `Very

Tough' for Indian IT, The Wall Street Journal, April 18, 2013,

available at https://blogs.wsj.com/indiarealtime/...test-headlines ; The State of Asian Pacific America,'' Paul Ong (ed.),

LEAP Asian Pacific American Public Policy Institute and UCLA Asian

American Studies Center, 1994, pp. 179-180; Carnegie Endowment for

International Peace, Balancing Interests: Rethinking U.S. Selection

of Skilled Immigrants, (1996); Youyou Zhou, Most H-1B workers are

paid less, but it depends on the job, Associated Press, April 18,

2017, available at https://apnews.com/afs:Content:87358...he-type-of-job .

\84\ George Borjas, The Labor Demand Curve Is Downward Sloping:

Reexamining the Impact of Immigration on the Labor Market, The

Quarterly Journal of Economics Vol. 118, No. 4 (Nov., 2003), pp.

1335-1374, available at https://www.jstor.org/stable/25053941?seq=1 .

\85\ John Bound et al., Understanding the Economic Impact of the

H-1B Program on the U.S., NBER Working Paper No. 23153 (2017),

available at https://www.nber.org/papers/w23153.pdf . The Border

Security, Economic Opportunity, and Immigration Modernization Act,

S. 744: Hearing before the Senate Committee on the Judiciary (April

22, 2013) (testimony of Neeraj Gupta, CEO of Systems in Motion, to

the Senate Judiciary Committee), available at https://www.judiciary.senate.gov/imo...aTestimony.pdf .

Daniel Costa and Ronil Hira, H-1B Visas and Prevailing Wage Levels,

Economic Policy Institute, (2020), available at https://www.epi.org/publication/h-1b...g-wage-levels/ .

---------------------------------------------------------------------------

The Department recognized, as did some commenters, the limitations

of some of the wage studies it relied on in the IFR, noting that many

of them compare H-1B and U.S. workers in the same occupation but do not

directly compare workers in those occupations with the same levels of

education, experience, and responsibility.\86\ However, in the IFR, the

Department explained why these studies nonetheless allow for an

instructive wage comparison: ``[B]ecause H-1B workers are required to

possess specialized knowledge and expertise that often exceeds the

level of education and experience necessary to enter a given occupation

generally, and greater skills are associated with higher earnings, the

median H-1B workers should earn a wage that is at least the same, if

not more, than the median wage paid to U.S. workers in the occupation.

But a variety of studies show that the opposite is occurring.'' \87\

Put another way, while the Department acknowledges that there is an

inherent limitation in comparing median earnings of groups of workers,

since doing so does not account for different levels of experience and

education, the distortion in the data that results from such a

limitation would be expected to show higher earnings for H-1B workers

at the median given that a result of the INA's specialty occupation

requirement for H-1B workers is that H-1B workers must possess more

advanced education and experience than what is typically required to

enter some of the most common occupations in which H-1B workers are

employed. Yet the median earning of H-1B workers, according to these

studies, are in fact skewed lower than the median U.S. worker in these

occupations. Accordingly, the Department continues to believe this is a

compelling data point demonstrating that H-1B workers in many cases

make wages below those of similarly employed U.S. workers.

---------------------------------------------------------------------------

\86\ 85 FR at 63,882.

\87\ Id.

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Further, the Department disagrees with commenters that other

aspects of the methodology and reasoning relied on in the various

studies that support the Department's position are flawed. These are,

in many cases, studies from credible sources that are commonly cited in

reporting and literature about the effects of the H-1B program on U.S.

workers. Moreover, to the extent these

[[Page 3619]]

studies focus on computer science and IT occupations, the Department

believes that focus is appropriate. As explained at greater length

below, the Department's analytic framework gives special attention to

these occupations because they are where the largest concentration of

H-1B and PERM workers are found, and therefore the places where the

risks to U.S. workers that the Department is trying to guard against

are most acute.

In addition, the Department considered testimony before the Senate

Judiciary Committee \88\ as well as news reports about the displacement

of U.S. workers by H-1B workers.\89\ As noted, some commenters

criticized these sources as anecdotal and insufficient. But they were

not the only sources on which the Department relied. The information

from those sources supplemented the information the Department derived

from studies and academic articles. Standing alone such information may

(or may not) be insufficient to demonstrate systematic, adverse effects

on U.S. workers, but, viewed in combination with other available

evidence, it provides vital insight into the Department's understanding

of the effects of the old wage methodology. The Department also views

evidence about the real-world consequences of its wage methodology on

U.S. workers, as shown in news reports, as important information that

should not be ignored.

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\88\ The Impact of High-Skilled Immigration on U.S. Workers:

Hearing before the Senate Committee on the Judiciary (Feb. 25, 2016)

(testimony of John Miano, representing Washington Alliance of

Technology Workers, Local 37083 of the Communications Workers of

America, the AFL-CIO); Immigration Reforms Needed to Protect Skilled

American Workers: Hearing before the Senate Committee on the

Judiciary (Mar. 17, 2015) (testimony of Ronil Hira, Associate

Professor of Public Policy Rochester Institute of Technology,

Rochester, NY), available at https://www.judiciary.senate.gov/imo...aTestimony.pdf ; The Border Security, Economic

Opportunity, and Immigration Modernization Act, S. 744: Hearing

before the Senate Committee on the Judiciary (Apr. 22, 2013)

(testimony of Neeraj Gupta, CEO of Systems in Motion, to the Senate

Judiciary Committee), available at https://www.judiciary.senate.gov/imo...aTestimony.pdf .

\89\ ``Visa Abuses Harm American Workers,'' The New York Times,

June 16, 2016, available at http://www.nytimes.com/interactive/o...rialboard.html ; Julia Preston, Pink Slips at Disney.

But First, Training Foreign Replacements, The New York Times, June

3, 2015, available at https://www.nytimes.com/2015/06/04/u...lacements.html ; Julia

Preston, Toys `R' Us Brings Temporary Foreign Workers to U.S. to

Move Jobs Overseas, The New York Times, Sept. 29, 2015, available at

https://www.nytimes.com/2015/09/30/u...-overseas.html ; Michael Hiltzik, A

loophole in immigration law is costing thousands of American jobs,

Los Angeles Times, February 20, 2015, available at https://www.latimes.com/business/hil...22-column.html ;

Daisuke Wakabayashi & Nelson Schwarts, Not Everyone in Tech Cheers

Visa Program for Foreign Workers, The New York Times, Feb. 5, 2017,

available at https://www.nytimes.com/2017/02/05/b...n-workers.html .

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As detailed above, some commenters also claimed that the Department

ignored or unfairly discounted studies showing that some H-1B workers

earn more than U.S. workers. Far from ignoring or discounting such

studies, the Department acknowledged their findings and addressed them

in the IFR.\90\ While the Department did not discuss in the IFR every

study of that kind that the commenters cite, it has reviewed the

studies provided by commenters and notes that it did consider many

sources with similar information, analysis, and conclusions to these

studies.\91\ In addition, while some studies cited by commenters which

were not directly addressed in the IFR offer additional analysis, they

do not overwhelm the conclusions of other studies originally cited in

the IFR. For example, reports that find that H-1B workers' wages exceed

market wages often ignore that the prevailing wage level is fixed for

the H-1B worker for three years, meaning that even if the H-1B worker

is paid in excess of the market wage for an entry-level worker in year

1, this may not be the case in year 3 because the H-1B workers' wages

should no longer be compared to entry-level workers. Other reports

cited by critical commenters acknowledged that the research on

employment of American workers in the presence of H-1B workers remains

inconclusive or that the existing studies present mixed results on

whether H-1B workers crowd out American workers. Some of these studies

then focused on one segment of the American worker and H-1B market

(e.g., recent college graduates) to obtain specific results which in

many cases cannot be extrapolated to other workers cohorts. Others of

these studies relied on data gathered only during recent economic

recessions, which make it difficult to draw proper conclusions about

the effect of H-1B workers on compensation and employment for competing

workers under other (and more typical) economic conditions. The

Department examined these studies concluding that some H-1B workers in

some circumstances are better paid than U.S. workers, weighed them

against other studies reaching the opposite conclusion, and, in its

expert judgment, determined that there was reason to conclude that, at

least in some instances, prevailing wage levels are set too low. An

agency's choice of studies on which to rely is entitled to substantial

deference.\92\ The Supreme Court has held that ``[w]hen specialists

express conflicting views, an agency must have discretion to rely on

the reasonable opinions of its own qualified experts even if, as an

original matter, a court might find contrary views more persuasive.''

\93\ The studies cited by commenters rest on the same kinds of analyses

and reach similar conclusions to those studies reviewed by the

Department in development of the IFR. The Department has reviewed these

studies and has concluded that they do not discredit, or even

necessarily contradict, other sources of information that demonstrate

that H-1B workers do, in some instances, adversely affect U.S. workers'

wages and job opportunities, even if that is not true in all cases, as

explained throughout. Accordingly, based on its review of these studies

the Department continues to believe that some modification to the wage

levels is necessary.

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\90\ 85 FR at 63,882, 63,884.

\91\ An agency is not required to respond to every study, or

consider every conceivable piece of evidence in drawing a

conclusion. Tex. Office of Pub. Util. Counsel v. F.C.C., 265 F.3d

313, 328 n.7 (5th Cir. 2001).

\92\ See Or. Envtl. Council v. Kunzman, 817 F.2d 484, 496 (9th

Cir. 1987); see also New York v. U.S. Nuclear Regulatory Comm'n, 589

F.3d 551, 555 (2d Cir. 2009) (``These are technical and scientific

studies. Courts should be particularly reluctant to second-guess

agency choices involving scientific disputes that are in the

agency's province of expertise. Deference is desirable.'' (quoted

source omitted)); see generally Universal Camera Corp. v. NLRB, 340

U.S. 474, 488 (1951) (``The substantiality of evidence [in APA

review] must take into account whatever in the record fairly

detracts from its weight,'' but this ``does not furnish a calculus

of value by which a reviewing court can assess the evidence,'' nor

does it negate agency expertise that the court ``must respect,'' nor

permit a court to displace the agency's ``choice between two fairly

conflicting views.''); cf. Fed. Power Comm'n v. Fla. Power & Light

Co., 404 U.S. 453, 463, (1972) (``Particularly when we consider a

purely factual question within the area of competence of an

administrative agency created by Congress, and when resolution of

that question depends on `engineering and scientific'

considerations, we recognize the relevant agency's technical

expertise and experience, and defer to its analysis unless it is

without substantial basis in fact.'').

\93\ Marsh v. Or. Nat. Res. Council, 490 U.S. 360, 378 (1989).

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Contrary to the commenters' assertions, the Department considered

studies showing that H-1B workers benefit U.S. workers. In the IFR, the

Department acknowledged that in some instances the employment of H-1B

workers fuels economic growth and job creation,\94\ as well as the fact

that paying foreign workers at wages lower than U.S. workers may

increase firms'

[[Page 3620]]

profitability.\95\ Indeed, in the IFR the Department discussed studies

that suggest the employment of H-1B workers has positive effects on the

wages and job opportunities of U.S. workers and expressed a qualified

agreement with them, specifically noting that ``[w]hile the Department

agrees that this is true in some instances, it is also clear that the

current prevailing wage levels often result in adverse effects, and

that adjustments to the wage levels are needed to ensure that the

positive effects of the program will be enjoyed more widely.'' \96\ In

other words, the Department anticipates that bringing the wages of

foreign workers in line with what similarly employed U.S. workers

actually make will enhance the benefits resulting from the employment

of such workers, which studies considered in the IFR as well offered by

commenters show exist in some cases. The Department did not dispute in

the IFR ``that allowing firms to access skilled foreign workers can

lead to overall increases in innovation and economic activity, which

can, in turn, benefit U.S. workers,'' but did conclude ``H-1B workers'

earnings data and other research indicate that, in many cases, the

existing wage levels do not lead to these outcomes.'' \97\ At no point

in the IFR did the Department suggest that H-1B workers either always

harm U.S. workers or always benefits U.S. workers and the firms that

employ them. Rather, the Department concluded, and continues to

conclude, that the positive benefits of the program, while real, are

not as widespread as they might otherwise be, and that this is likely

due to the fact that H-1B workers in some instances are paid wages

below that paid to their U.S. counterparts.

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\94\ 85 FR at 63,882.

\95\ Id. at 63,883.

\96\ Id. at FR at 63,882.

\97\ Id. at 63,884.

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One argument along these lines that the Department addressed in the

IFR was made by the general counsel of a major user of the H-1B program

in testimony before the Senate Judiciary Committee. In his testimony,

he contended that H-1B workers raise the income of U.S. workers because

they alleviate labor shortages, particularly in STEM and computer

science. Importing workers to fill needs that would otherwise go unmet,

he argued, allows companies to innovate and grow, creating more

employment opportunities and higher-paying jobs for U.S. workers.\98\

The Department rejects the premise of the general counsel's argument

that STEM jobs are going unfilled because there are no qualified

American workers willing to take them, and therefore U.S. gross

domestic product (GDP) would be smaller without importing foreign STEM

workers. The Department notes that for every two students who graduate

from a U.S. university with a STEM degree, only one obtains a STEM

job.\99\ In the case of computer science occupations, another study

cited by the Department challenges the notion that H-1B workers are

filling needs unmet by U.S. workers. The study contains findings that

foreign computer science workers have suppressed wages for U.S.

computer science workers along with findings that ``imply that for

every 100 foreign [computer science] workers that enter the US, between

33 to 61 native [computer science] workers are crowded out from

computer science to other college graduate occupations.'' \100\

Further, while some commenters argued that the Department misconstrued

the study showing that only half of U.S. STEM graduates go on to work

in STEM fields on the grounds that many of these students find

employment in other industries, the Department disagrees that the study

is not relevant here. In fields where a graduate's degree signals

certain skills to potential employers, such as computer science or many

STEM fields, it is reasonable to assume that students who major in a

particular field typically intend to find employment in that field. The

fact that many of these particular students are able to find employment

in other industries does not undercut the conclusion--indeed, it

bolsters it--that at least some of their job opportunities in the

fields for which they trained are limited by the presence of lower-paid

foreign workers in some instances.

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\98\ The Border Security, Economic Opportunity, and Immigration

Modernization Act, S. 744: Hearing before the Senate Committee on

the Judiciary (Apr. 22, 2013), available at https://www.judiciary.senate.gov/imo...hTestimony.pdf .

\99\ 85 FR at 63,855.

\100\ John Bound et al., Understanding the Economic Impact of

the H-1B Program on the U.S., NBER Working Paper No. 23153 (2017),

available at https://www.nber.org/papers/w23153.pdf .

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The Department also acknowledges commenters' point that in some

circumstances H-1B workers contribute to innovation. Those

contributions notwithstanding, ``such outcomes are not the immediate

objectives of the of the INA's wage protections.'' \101\ Further, this

rulemaking does not alter the number of H-1B workers permitted to work

and it is unclear how the current wage levels promote greater

innovation than the wages which will exist under this rule. The PERM

program permits employers to hire aliens to work at permanent jobs

where the Secretary of Labor has certified to the Secretary of State

and the Secretary of Homeland Security that the employment of an alien

seeking to enter the United States to perform skilled or unskilled

labor ``will not adversely affect the wages and working conditions of

workers in the United States similarly employed.'' \102\ In the case of

H-1B workers, employers must file LCAs stating that the employer will

offer wages that are, at a minimum, ``the actual wage level paid by the

employer to all other individuals with similar experience and

qualifications for the specific employment in question,'' or ``the

prevailing wage level for the occupational classification in the area

of employment, whichever is greater.'' \103\ In rulemaking, an agency

is not required ``to accord greater weight to aspects of a policy

question than the agency's enabling statute itself assigns to those

considerations.'' \104\ In consequence, to the extent some comments and

the studies cited therein criticized the Department's conclusion that

the prevailing wage levels are set too low on the grounds that H-1B

workers fuel innovation and economic growth, the Department affords

them less weight. Such considerations are secondary to the Department's

more immediate concern of fulfilling its statutory mandate to ensure

that the presence of foreign workers does not adversely affect U.S.

workers.

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\101\ 85 FR at 63,884.

\102\ 8 U.S.C. 1182(a)(5)(A)(i)(II).

\103\ 8 U.S.C. 1182(n)(1)(A)(i).

\104\ Hussion v. Madigan, 950 F.2d 1546, 1554 (11th Cir. 1992).

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The Department also reemphasizes that while commenters preferred

some studies and sources over others cited by the Department, they and

their studies offered no affirmative argument in support of the old

wage levels, nor did they explain how the prior wage levels reflect

actual market wages. Rather, these commenters presented studies which

the Department has already reviewed and which the Department does not

believe align with the weight of the evidence which the Department

continues to rely upon. The evidence amassed in the IFR provides a

reasonable basis for increasing the wage rates, the Department stands

by its determination that the old methodology did not adequately

protect U.S. workers. The Department also notes that a number of

commenters agreed with its conclusion that current wage levels often do

not reflect prevailing wages and are set too low. For example, one

commenter noted that, in some cases where H-1B workers are used to

replace

[[Page 3621]]

U.S. workers, ``the H-1B workers have been hired with annual wages of

around $30,000 to $40,000 less than the workers they have replaced.''

These comments corroborate the Department's position that it weighted

the conflicting evidence in a reasonable way and reached an appropriate

conclusion that H-1B workers can and in many cases are used as low-cost

alternatives to U.S. workers, and thereby undercut U.S. workers' wages

and job opportunities.

The Department also acknowledges the comments it received (and

studies cited therein) that argue that pointing to the higher actual

wages that some employers pay H-1B and PERM workers to show that

prevailing wage rates were too low is flawed reasoning because there

may be other business factors beyond a worker's qualifications that

explain why some employers pay a premium on the prevailing wage. The

Department agrees that there may, in some instances, be legitimate

business factors that explain why actual wages paid to H-1B workers

would be higher than the prevailing wage rate. For example, a firm that

faces a sudden increase in demand for its product relative to its

competitors might be willing to pay premiums to both domestic and H-1B

workers relative to its competitors. However, factors such as these are

typically specific to a particular firm, employee, or geographic area,

as some commenters acknowledged in their discussion of high-intensity

occupation areas, and do not reflect the wages paid by the typical

employer in a given labor market. In consequence, while the actual

wages paid to H-1B workers might very well exceed the prevailing wage

rate for legitimate reasons in some cases, such incidents should not be

the norm across all employers, occupations, and locales. If the actual

wage is consistently higher across the board than the prevailing wage

rate, this suggests that the prevailing wage is not actually reflective

of the market wage rate on offer in the labor market. As the data

presented in the IFR shows, actual wages paid to H-1B workers not only

exceed the prevailing wage rate, but do so consistently and

substantially, on average, across many different employers. This

suggests that legitimate business factors alone do not account for the

extreme differences between the actual wages paid to H-1B workers and

prevailing wage rates. Rather, it suggests that the prevailing wage

rate is out of line with the market wage.

For similar reasons, the Department also rejects some commenters'

contention (including as purportedly supported by the studies cited)

that the fact that actual wages often exceeds the prevailing wage rate

shows that there is no wage problem in the H-1B and PERM programs. One

shortcoming such studies failed to acknowledge is that because the

prevailing wage is in place for 3 years for H-1B workers, even if they

are paid more than the prevailing wage in their first year, there is a

distinct possibility that the prevailing wage will be low compared to

the market for more experienced workers in the subsequent years. As the

Department explained in the IFR, the INA takes a belt-and-suspenders

approach to protecting U.S. workers' wages. Employers must pay the

higher of the actual wage they pay to similarly employed workers or the

prevailing wage rate set by the Department. Both rates generally should

approximate the market wage for workers with similar qualifications and

performing the same types of job duties in a given labor market as H-1B

workers. It is therefore a reasonable assumption that, if both of the

INA's wage safeguards were working properly, the wage rates they

produce would, at least in many cases, be similar. Where the

Department's otherwise applicable wage rate is significantly below the

rates actually being paid by employers in a given labor market, it

gives rise to an inference that the Department's current wage rates,

based on statistical data and assumptions about the skill levels of

U.S. workers, are not reflective of the types of wages that workers

similarly employed to H-1B workers can and likely do command in the

actual labor market. There is a mismatch between what the Department's

prevailing wage structure says the relevant cohort of U.S. workers are

or should be making and what employers are likely actually paying such

workers, as demonstrated by the actual wage they are paying H-1B

workers. Put another way, when many of the heaviest users of the H-1B

program consistently pay wages well above the prevailing wage, it

suggests that the prevailing wages are too low, and thus can be abused

by other firms to replace U.S. workers with lower-wage foreign workers

in cases where those firms do not have similarly employed workers on

their jobsites whose actual wages would be used to set the wage for H-

1B workers.\105\

---------------------------------------------------------------------------

\105\ See 63872 FR 63885-87.

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The Department also believes that looking to the pay practices of

some of the most frequent users of the H-1B program is appropriate in

determining whether the prevailing wage rates are set too low. Because

the risk of harm to U.S. workers is most acute by employers in labor

markets with heavy concentrations of H-1B workers, data on the actual

wage rates at those employers and in those areas are entitled to

special weight in the Department's analysis. Further, to the extent

some commenters argue that looking at such firms unduly minimizes the

Department's consideration of wage effects in rural areas or at smaller

employers, the Department notes that, like its use of anecdotal

evidence, the wage data it looked to from the heaviest users of the

program is just one piece of various types of evidence on which it

bases its conclusions about the effects of the old wage levels--no

single piece of which is given dispositive weight. Rather, when

considered in combination, this evidence provides a sound basis, in the

Department's judgment, for concluding that the old wage methodology

resulted in inappropriately low wages in a variety of circumstances.

The Department also disagrees that other safeguards in the INA are

sufficient to protect U.S. workers and that updates to the prevailing

wage levels are therefore unnecessary. Congress chose to enact multiple

forms of protection for U.S. workers in these foreign labor programs.

The Department must operationalize those protections entrusted to its

administration as it sees best for the discharge of its legal

responsibilities under the INA and its policy of more fully ensuring

the protection of U.S. workers, including by updating the prevailing

wage levels.\106\

---------------------------------------------------------------------------

\106\ The Department also notes that the need for this

rulemaking is undiminished by the possibility, recently proposed by

DHS, that the limited visas available under the H-1B cap may be

allocated based on how high the wage level is at which an employer

plans to compensate its foreign workers. See Modification of

Registration Requirement for Petitioners Seeking To File Cap-Subject

H-1B Petitions, 85 FR 69236 (November 2, 2020). The Department's

wage structure applies to programs other than the H-1B program,

meaning that even if there are other means of preventing adverse

wage effects in the H-1B program, the benefits of updating the

Department's prevailing wage methodology extend more broadly.

Relatedly, even within the H-1B program, not all visas are subject

to the annual cap, and would thus not be affected by a new method of

allocating capped visas. Even more critically, the INA directs the

Department to set wage levels that will ensure foreign workers will

be compensated at rates comparable to U.S. workers similarly

employed with similar levels of education, experience, and

responsibility. As explained throughout, the Department has

determined that adjustments are needed for all four wage levels to

ensure they protect similarly employed U.S. workers from wage

suppression and dangers to their job opportunities. Thus, even under

a visas allocation system that prioritizes workers placed at higher

wage levels, the Department's wage methodology must still protect

workers similarly employed to workers at those wage levels from

adverse employment effects. Put another way, the purpose of the

INA's wage provisions is to protect individual U.S. workers from

having to compete with low-cost foreign labor, something that can

only be accomplished by setting appropriate wage levels even if all

H-1B workers granted work authorization are at the highest skill

level since such workers will necessarily be competing with U.S.

workers with comparable qualifications.

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[[Page 3622]]

As explained in the IFR, the Department has determined that the

conclusions it reached about adverse wage effects with respect to the

H-1B program can also be extrapolated to the PERM program, about which

the economic literature is far scanter. Critically, the PERM programs

and the H-1B program are closely linked in both how they are regulated

and used by employers. Unlike most nonimmigrant visas, H-1B visas are

unusual in that they are ``dual intent'' visas, meaning under the INA,

H-1B workers can enter the U.S. on a temporary status while also

seeking to adjust status to that of lawful permanent residents.\107\

One of the most common pathways by which H-1B visa holders obtain

lawful permanent resident status is through employment-based green

cards, and in particular EB-2 and EB-3 visas.\108\ USCIS has estimated

that over 80 percent of all H-1B visa holders who adjust to lawful

permanent resident status do so through an employment-based green

card.\109\ This is reflected in data on the PERM programs. In recent

years, more than 80 percent of all individuals granted lawful permanent

residence in the EB-2 and EB-3 classifications have been aliens

adjusting status, meaning they were already present in the U.S. on some

kind of nonimmigrant status.\110\ Given that the H-1B program is the

largest temporary visa program in the U.S. and is one of the few that

allows for dual intent, it is a reasonable assumption that the vast

majority of the EB-2 and EB-3 adjustment-of-status cases are for H-1B

workers. This is corroborated by the Department's own data, which shows

that, in recent years, approximately 70 percent of all PERM labor

certification applications filed with the Department have been for H-1B

nonimmigrants.\111\

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\107\ dePape v. Trinity Health Sys., Inc., 242 F. Supp. 2d 585,

593 (N.D. Iowa 2003).

\108\ See Sadikshya Nepal, The Convoluted Pathway from H-1B to

Permanent Residency: A Primer, Bipartisan Policy Center (2020);

Congressional Research Service, The Employment-Based Immigration

Backlog (2020) (``A primary pathway to acquire an employment-based

green card is by working in the United States on an H-1B visa for

specialty occupation workers, getting sponsored for a green card by

a U.S. employer, and then adjusting status when a green card becomes

available.'').

\109\ U.S. Citizenship and Immigration Services, H-1B

Authorized-to-Work Population Estimate (2020).

\110\ See Department of Homeland Security, 2017 Yearbook of

Immigration Statistics, Table 7. Persons Obtaining Lawful Permanent

Resident Status by Type and Detailed Class of Admission: Fiscal Year

2017, available at https://www.dhs.gov/immigration-stat...ok/2017/table7 .

\111\ Office of Foreign Labor Certification, Permanent Labor

Certification Program--Selected Statistics, FY 19, available at

https://www.dol.gov/sites/dolgov/fil..._FY2019_Q4.pdf .

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Because of how many H-1B visa holders apply for EB-2 and EB-3

classifications, Congress has repeatedly amended the INA to account for

the close connection between the programs. For example, while H-1B

nonimmigrants are generally required to depart the U.S. after a maximum

of six years of temporary employment, Congress has exempted from that

requirement H-1B nonimmigrants who are beneficiaries of PERM labor

certification applications with the Department, or who are

beneficiaries of petitions for an employment-based immigrant visa with

DHS that have been pending for longer than a year, if certain other

requirements are met.\112\ Similarly, as noted above, Congress

established the INA's prevailing wage requirements in section 212(p)

with specific reference to the fact that they would apply in both the

H-1B and PERM programs.\113\

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\112\ See Public Law 107-273, Sec. 11030A(a), 116 Stat. 1836

(2002).

\113\ See 144 Cong. Rec. S12741, S12756 (explaining that 8

U.S.C. 1182(p) ``spells out how [the prevailing] wage is to be

calculated in the context of both the H-1B program and the permanent

employment program in two circumstances.'').

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The various features of the statutory framework governing the

programs, working in combination, have further tightened the

relationship between them. In particular, because H-1B workers can have

dual intent and, if they have a pending petition for an employment-

based green card, can remain in the U.S. beyond the 6-year period of

authorized stay limitation, many workers for whom an employer has filed

a PERM labor certification application are already working for that

same employer on an H-1B status.\114\ And because the method by which

employment-based green cards are allocated can result in significant

delays between when an alien is approved for a green card and when the

green card is actually issued, the period during which a worker can, in

some sense, have one foot in each program, is often protracted.\115\

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\114\ See Congressional Research Service, The Employment-Based

Immigration Backlog (2020).

\115\ See 8 U.S.C. 1152(a)(2); U.S. Department of State, Visa

Bulletin For September 2020, https://travel.state.gov/content/tra...mber-2020.html .

---------------------------------------------------------------------------

This system results in significant overlap in the principal uses of

the H-1B and PERM programs. H-1B petitions approved in FY 2019,\116\

and the vast majority of individuals waiting for adjudication of EB-2-

and EB-3-based adjustment of status applications, are concentrated in

the same countries of origin.\117\ Relatedly, LCAs and applications for

PERM labor certifications often are for job opportunities in the same

occupations. Data from the Department's OFLC shows that of the ten most

common occupations in which H-1B workers are employed, seven are also

among the ten most common occupations in which PERM workers are

employed. And PERM workers' wages are set based on the same methodology

used for H-1B workers.

---------------------------------------------------------------------------

\116\ U.S. Citizenship and Immigration Services, Characteristics

of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report

to Congress October 1, 2018-September 30, 2019, (2020), available at

https://www.uscis.gov/sites/default/..._Year_2019.pdf (showing 66 percent of H-1B petitions

approved in FY2019 were for computer-related occupations).

\117\ Congressional Research Service, The Employment-Based

Immigration Backlog (2020).

---------------------------------------------------------------------------

Given the evidence that these two programs are used similarly by

employers, and employ in many instances the same or at least similarly

situated foreign workers, the Department believes that it should treat

the H-1B and PERM programs similarly. The upshot is that the H-1B and

PERM programs are, in a variety of ways, inextricably conjoined. The

rules governing the programs and how employers use them mean that, in

many instances, workers in the PERM programs and workers in the H-1B

program are often the exact same workers doing the same jobs in the

same occupations for the same employers. And given the evidence of

similarity, the Department can reasonably infer that the current wage

levels under the four-tier structure--which result in inappropriately

low wage rates in some instances for H-1B workers--also result in

inappropriately low wage rates in some instances for the PERM programs.

This is also borne out by the fact that, as noted in the IFR, the

significant disparities between actual wages paid by heavy users of the

programs and prevailing wage rates discussed above in connection with

the H-1B program are also found in the PERM program.

2. Wage Level Methodology and Analytical Framework

Summary of Comments

Many commenters disagreed with the methodology and analytical

framework the Department used to determine the

[[Page 3623]]

appropriate prevailing wage rate, often asserting that the Department

inappropriately relied on wage data from a limited pool of employers in

the H-1B program and a pool of workers based on educational attainment

limited to workers in information technology jobs, rather than basing

the prevailing wage on market wages paid to workers in the applicable

occupational classification based on the requirements of the occupation

or employer's job opportunity. Several commenters also expressed

concern about the chosen percentiles, asserting that an entry-level

wage near the median for the occupation does not reflect real pay

structures.

Some commenters asserted the Department inappropriately conflated

the ``actual'' with the ``prevailing'' wage provisions in the INA and

the Department's regulations at 20 CFR 655.731(a)(1) and (a)(2). A

professional association stated it was improper to base prevailing

wages on the ``accomplishments, education or training of the employee''

because that is the focus of the actual wage provision, whereas the

prevailing wage is, ``by regulation, based on the requirements for the

position.'' A university commenter noted that the prevailing wage is

the wage paid to similarly employed workers, defined as ``positions

that have substantially comparable duties'' in the occupation and area

of employment and thus in prevailing wage determinations ``the

requirements of the position matters, not the skills that the

individual worker brings to the table.'' The commenter also asserted

the IFR incorrectly states that the new methodology does not change the

current wage determination process because the Department's 2009 PWD

guidance indicates PWDs begin at entry level and ``progress . . . only

after considering the experience, education, and skill requirements of

an employer's job description (opportunity).''

Related to these comments, many commenters believed it was improper

for the Department to rely solely on wages paid to workers that possess

a master's degree. A university commenter stated that the fact many H-

1B workers possess a master's degree or higher is ``attributed to the

fact that USCIS favors beneficiaries with more advanced degrees.'' Some

commenters asserted that determining prevailing wage levels based only

on wages paid to master's degree holders violates the INA because

Congress did not include a master's degree requirement as a

prerequisite for the employment-based visa programs. An association

noted the statute defines ``specialty occupation'' as ``an occupation

requiring a bachelor's degree as the minimum qualification for entry.''

Similarly, an immigration law firm believed that exclusion of wage data

from workers possessing less than a master's degree is ``baseless''

because ``attainment of a U.S. Bachelor's degree, or its equivalent, is

sufficient for H-1B eligibility provided the petitioner can show a

sufficient nexus between the degree earned and the offered position''

and ``the nexus of the degree specialty is a separate inquiry from

prevailing wage requirements.'' Noting that DHS regulations at 8 CFR

204.5(k)(2) ``equate[ ] a master's degree to a bachelor's degree plus 5

years of progressively responsible work experience,'' the commenter

asked how the same Level I wage can represent both a position requiring

a master's degree for entry and ``entry level H-1B occupations that

require a bachelor's degree in a specific specialty.''

Some commenters noted that a large number of occupations require at

least a master's degree for entry and that it is improper for the

Department to exclude the bottom third of wage data when determining

the Level I prevailing wage in these occupations. For example, a

university commenter stated that even if one accepts the prevailing

wage was set too low for IT occupations ``it is arbitrary to

extrapolate from that very limited data set that the prevailing wage

data set for other occupations is also lacking, especially for

occupations where the normal educational requirement is an advanced

degree.'' Similarly, a professional association noted that at least 99

occupations require an advanced degree for entry according to DOL

sources, including many that require a Ph.D., and that the bottom third

of wages in these occupations ``capture qualified and eligible H-1B

individuals.'' The commenter asserted the Department improperly

excluded from consideration ``one-third of the wages of individuals who

are `similarly employed' '' and ``essentially sets a minimum education

level for entry as those with at least a master's degree in most

professions.'' One commenter from academia stated that many H-1B

occupations that require a bachelor's degree are nonetheless

specialized and thus the Department should consider all wage data for

the occupation.

Several commenters also asserted that reliance on only wages paid

to workers possessing a master's degree is particularly inappropriate

for determining prevailing wages in the permanent labor certification

context because many job opportunities in that program are in

occupations that require no more than a bachelor's degree for entry. A

group of associations asserted the Department ignored the fact that

``about an equal number of individuals in H-1B status with advanced

degrees and Bachelor's degrees are sponsored for green card status.''

An immigration law firm stated the Department's reasoning focused

centrally on wages paid to H-1B workers and asked the Department to

explain how the ``prior wage levels as applied in the PERM program

negatively impact the wages of U.S. workers.'' The commenter noted the

PERM program differs from H-1B in relevant respects, including the

labor market test requirement and the fact that employers file PERM

petitions to fill ``a future permanent position'' that is ``not

necessarily the current position of the H-1B employee.'' Noting the

Department's acknowledgment that ``not all SOC [occupations] qualify as

a `specialty occupation,' '' this commenter asserted the IFR

methodology ``would arbitrarily raise salary requirements for

occupations that are not used in the H-1B program but are used in the

PERM program.'' This commenter also noted that the Department

acknowledged the new wage level methodology would create a ``premium''

on the wages of EB-3 workers and the commenter asserted the Department

failed to cite authority to ``require EB-3 petitioners to pay an

additional fee, above what would be required to ensure the wages of

U.S. workers are not negatively affected.''

Some commenters asserted that reliance on education alone when

considering relevant wage data was inappropriate because many other

factors can determine a worker's wage level. One commenter stated the

Department provided no evidence that workers with a bachelor's degree

``necessarily . . . make up a lower paid cohort of employees'' and

noted the Department's acknowledgment that ``H-1B workers with master's

degrees tend to be younger and less highly compensated than H-1B

workers with bachelor's degrees.'' The commenter noted that employers

will accept equivalent credentials like experience and training and may

base worker compensation on factors like ``experience, special skills,

history with the company or industry . . . [and] highly specialized

knowledge.'' Another commenter noted that someone with a bachelor's

degree and 10 years of experience might be paid more for the same job

opportunity than someone with a master's degree and 2 years of

experience, whereas a bachelor's degree holder with 2 years of

experience may be paid less. The prevailing wage in this

[[Page 3624]]

case would be based on the requirements for the position, whereas the

actual wage would be the wage paid to the worker employed in the

position and may depend on the worker's education and experience.

A number of commenters asserted it was improper for the Department

to rely only on wage data from workers in a limited set of information

technology occupations as the relevant benchmark for determining the

appropriate wage level. An anonymous commenter asserted that the

Department's reasoning focused solely on ``computer occupations'' and

the prevailing wage methodology based on that reasoning ``can therefore

only be applied to computer occupations.'' A university commenter noted

that many common occupations in the H-1B and PERM programs fall outside

of this occupation set, including many occupations in the education

sector, such as post-secondary teachers, several of which may require a

Ph.D. for entry. The commenter added that even if one assumes wages are

too low in the IT sector, ``it is arbitrary to extrapolate from that

very limited data set that the prevailing wage'' is too low in other

sectors.

Based on these concerns, some commenters urged the Department to

reconsider its decision in the IFR to use a uniform wage structure

across all occupations and programs. For example, a university

commenter suggested the Department should apply the pre-IFR wage level

methodology to occupations that normally require an advanced degree for

entry, according to O*Net, rather than discounting the first one-third

of occupational wage data for these occupations. One commenter

suggested the Department should apply the revised wage level

methodology to large IT employers and H-1B dependent employers, while

applying the ``PWD data from 07/01/2020-10/06/2020'' to occupations in

``medicine and health [070-079] and education [090-099].'' Similarly,

some commenters urged the Department to exempt specific positions in

the medical field from revised wage methodology or exempt all ACWIA-

eligible employers.

Many commenters also took issue with the reasoning behind setting

the Level I wage for entry-level workers at approximately the 45th

percentile. A public policy organization stated that placing entry

level workers close to the median wage in the occupation ``departs from

the English language definition of median'' and stated that, by

definition, ``[e]ntry level workers cannot be both at the bottom

quarter of the wage scale and at almost the median of the wage scale.''

A trade association stated that no employer sets compensation above the

occupational median wage for all entry-level workers ``completing

graduate or professional degrees with little professional experience.''

The commenter asserted the Department provided no evidence indicating a

near-median wage is ``the most reasonable and closest proxy'' for the

market wage paid to entry-level workers. A human resources professional

association stated that it is ``particularly important to reflect the

lower and higher range'' of an occupational wage distribution when

using the SOC system because the SOC occupations are ``hopelessly

broad'' and the commenter stated that SOC 11-9033 encompasses 126

distinct jobs in higher education.

Response to Comments

As noted, some commenters asserted that the Department

misinterpreted the INA in the IFR, specifically disagreeing with the

notion that the prevailing wage rate and the actual wage provided for

by the INA should approximate one another, and similarly contending

that the Department should not consider the accomplishments, education,

or training of the employee as those are considerations associated with

the actual wage requirement; rather, the Department should focus on the

requirements for the position. This argument, however, misreads the

statute, and also fails to understand a fundamental premise of the IFR.

The Department is not ignoring its regulations or guidance on how

prevailing wages rates are assigned; rather, the Department in this

rulemaking is doing something different. It is making an assessment of

how the four wage levels required by 8 U.S.C. 1182(p)(4) are to be

established.

To begin with, as the IFR discussed in detail, the INA requires

employers to pay H-1B workers the greater ``of the actual wage level

paid by the employer to all other individuals with similar experience

and qualifications for the specific employment in question,'' or the

``prevailing wage level for the occupational classification in the area

of employment.'' \118\ The statute further provides that, when a

government survey is used to establish the wage levels, ``such survey

shall provide at least 4 levels of wages commensurate with experience,

education, and the level of supervision.'' \119\ If an existing

government survey produces only two levels, the statute provides a

formula to calculate two intermediate levels.\120\ Thus, like the

statute's actual wage clause, the prevailing wage requirement, when

calculated based on a government survey, makes the qualifications

possessed by workers, namely education, experience, and responsibility,

an important part of the wage calculation.

---------------------------------------------------------------------------

\118\ 8 U.S.C. 1182(n)(1)(A).

\119\ 8 U.S.C. 1182(p)(4).

\120\ Id.

---------------------------------------------------------------------------

Put slightly different, both clauses yield wage calculations that

in similar fashions are designed to approximate the rate at which

workers in the U.S. are being compensated, taking into account the area

in which they work, the types of work they perform, and the

qualifications they possess. The statute requires employers to pay the

rate of whichever calculation yields the higher wage. In this way, the

statutory scheme is meant to ``protect U.S. workers' wages and

eliminate any economic incentive or advantage in hiring temporary

foreign workers.'' \121\ If employers are required to pay H-1B workers

approximately the same wage paid to U.S. workers doing the same type of

work in the same geographic area and with similar levels of education,

experience, and responsibility as the H-1B workers, employers will have

significantly diminished incentives to prefer H-1B workers over U.S.

workers, and U.S. workers' wages will not be suppressed by the presence

of foreign workers in the relevant labor market.

---------------------------------------------------------------------------

\121\ Labor Condition Applications and Requirements for

Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations

and as Fashion Models; Labor Certification Process for Permanent

Employment of Aliens in the United States, 65 FR 80110, 80110 (Dec.

20, 2000).

---------------------------------------------------------------------------

The Department therefore disagrees with commenters' contention that

the INA's actual wage clause and prevailing wage clause are not to be

understood and operationalized in similar fashions. Moreover, the

Department notes that, while commenters are correct that Department

guidance and regulations discuss the ``prevailing wage'' as something

that is assigned based on the requirements of a job opportunity, rather

than the qualifications of the specific worker who will fill the

position, the manner in which the ``prevailing wage'' for a specific

job is assigned is different from the manner in which the Department

establishes the four ``prevailing wage levels'' required by Sec.

1182(p)(4). For one thing, a prevailing wage for a specific job

opportunity is often assigned before the identity and actual

qualifications of the worker who will fill the position are known. As a

practical matter, it is therefore unavoidable that this would be done

by reference to job requirements as

[[Page 3625]]

opposed to the qualifications of an unknown worker. By contrast, the

Department sets the four wage levels that are used to calculate

specific prevailing wage rates by reviewing statistical data. The

review of statistical data necessarily occurs at a more general level

given that the four wage levels apply to broad swaths of workers and

occupations and therefore relies on information from surveys, which

often collect information about the skills possessed by particular

workers rather than the job requirements of specific jobs.\122\ It is

thus reasonable for the Department to consider the qualifications

possessed by actual workers in operationalizing section 1182(p)(4).

---------------------------------------------------------------------------

\122\ For example, both the NSF and CPS surveys the Department

used in the IFR survey individual workers about the wages they make

and the skills they possess, not the qualification requirements of

the jobs they fill.

---------------------------------------------------------------------------

In addition, the Department notes that it is a reasonable inference

that, in many cases, the skills possessed by an actual worker will

likely align with the qualification requirements of the job opportunity

such worker fills. Looking to the skills possessed by actual workers

thus should serve as a reasonable proxy in many cases for the

requirements of the job opportunities in which they work. Moreover, to

the extent the qualifications possessed by workers are different from

the requirements of the jobs they fill, the Department believes that

taking workers' actual skills and qualifications into account furthers

the purpose of the statute. As explained throughout, the INA's wage

provisions are designed to protect U.S. workers. In the labor market,

workers compete with other workers based on the skills and

qualifications those workers bring to the job--not based on what

qualifications an employer lists in a job opening. Giving some weight

to the actual characteristics of entry-level workers in the foreign

labor programs thus takes into account important factors that determine

how workers compete against one another over wages and job

opportunities. Ignoring workers' actual qualifications in setting the

wage levels would thus potentially weaken protections for U.S. workers

insofar as it would mean the Department was leaving out of its analysis

an important factor that influences employment outcomes.

Further, because, as noted, the actual wage clause and the

prevailing wage clause of the INA are designed to achieve similar

outcomes, serving as a form of belt-and-suspenders protection for U.S.

workers, and given that the actual wage clause does take into account

the specific qualifications possessed by actual workers, the Department

believes it is reasonable to similarly take into account the actual

qualifications of the workers when assessing survey data to set

prevailing wage levels.

Finally, the Department also notes that, to the extent commenters

suggest that the method by which the Department is setting the four

wage levels pursuant to section 1182(p)(4) contradicts the previous

method by which the Department set the wage levels, they are also

mistaken. As noted, the Department has never previously set the wage

levels through regulation. or has it ever explained its analysis or

provided an economic justification for why the wage levels are set as

they are. Rather, the old wage levels were set through a memorandum of

understanding between DOL components, which offered no explanation for

why the specific levels used were selected or how they comported with

the statute. This rulemaking is therefore the first time the Department

has undertaken to justify, and tether to the relevant statutory factors

the manner in which the wage levels are established. There is no prior

analytical framework to contradict because none was ever used. Again,

the distinction between assigning a prevailing wage rate and setting

prevailing wage levels pursuant to section 1182(p)(4) is key. While the

Department has longstanding regulations on the former, this rulemaking

is its first attempt to do the latter in a meaningful way.

Based, in part, on similar reasoning related to the actual

demographics of workers in the H-1B program, the Department also

concluded in the IFR, and continues to believe, that using master's

degree holders with limited work experience as a proxy for entry-level

workers in analyzing survey data to determine the entry-level wage for

its H-1B and PERM programs is appropriate.\123\ In particular, in the

IFR the Department examined the demographic characteristics of H-1B

workers and concluded that many entry-level workers in the program are

master's degree holders with limited work experience. In particular, a

review of data from USCIS about the characteristics of individuals

granted H-1B visas in fiscal years 2017, 2018, and 2019 indicates that

H-1B workers with master's degrees tend to be younger and less highly

compensated than H-1B workers with bachelor's degrees. On average,

individuals with master's degrees in the program are approximately 30

years old, whereas bachelor's degree holders are, on average, 32 years

old. This suggests that, while possessing a more advanced degree,

master's degree holders in the program are likely to have less relevant

work experience than their bachelor's degree counterparts.\124\

Relatedly, H-1B master's degree holders make, based on a simple

average, $86,927, whereas bachelor's degree holders make on average

$88,565.\125\ Given that differences in skills and experience often

explain differences in wages, this gap in average earnings and age

suggests that, while possessing a more advanced degree, master's degree

holders in the H-1B program tend to be less skilled and experienced--

and are therefore more likely to enter the program as entry-level

workers--than are bachelor's degree holders.\126\

---------------------------------------------------------------------------

\123\ Contrary to some commenters' contentions, the Department

did not look exclusively at educational attainment in assessing

where the entry-level wage should be placed. It also took into

account work experience. While commenters are correct that in some

cases factors other than education and work experience may influence

wages, these are the factors the INA requires the Department to

consider. Further, as explained in the IFR, education and experience

are often key determinants of levels of compensation, and therefore

allow for a reasonable differentiation among workers.

\124\ Age is a common proxy for potential work experience. See,

e.g., Rebecca Chenevert & Danial Litwok, Acquiring Work Experience

with age, United States Census Bureau, (2013) available at https://www.census.gov/newsroom/blog...-with-age.html .

\125\ This analysis is based on data from U.S. Citizenship and

Immigration Services about the demographic characteristics of H-1B

workers.

\126\ Elka Torpey, Same occupation, different pay: How wages

vary, Bureau of Labor Statistics (2015), available at https://www.bls.gov/careeroutlook/20...ifferences.htm .

---------------------------------------------------------------------------

This conclusion is further bolstered by the fact that master's

degree holders have, in recent years, been the largest educational

cohort within the program. In FY2019, for instance, 54 percent of the

beneficiaries of approved H-1B petitions had a master's degree--whereas

only 36 percent of beneficiaries had only a bachelor's degree.\127\

These facts, in combination with the age and earnings profiles of

master's degree holders in the program, strongly suggest that a

significant number of entry-level H-1B workers are individuals with a

master's degree and very limited work experience. Because, as explained

above, the Department has determined

[[Page 3626]]

that the qualifications of actual workers are highly relevant to

establishing prevailing wage levels pursuant to section 1182(p)(4),

this analysis of the demographic characteristics of H-1B workers adds

critical weight to the Department's conclusion to use master's degree

holders as an analytical proxy for entry-level workers.

---------------------------------------------------------------------------

\127\ U.S. Citizenship and Immigration Services, Characteristics

of H-1B Specialty Occupation Workers Fiscal Year 2019 Annual Report

to Congress October 1, 2018-September 30, 2019, (2020), available at

https://www.uscis.gov/sites/default/..._Year_2019.pdf .

---------------------------------------------------------------------------

To further address commenters' concerns that master's degree

holders with limited work experience are an inappropriate proxy for

entry-level H-1B workers, the Department notes that, contrary to some

commenters' contentions, this approach is consistent with the baseline

qualification requirements in the INA for the H-1B program, as well as

for EB-2 visas. For one thing, the statutory criteria for who can

qualify as an EB-2 worker provide a clear, analytically useable

definition of the minimum qualifications workers within that

classification must possess. Even the least experienced individuals

within the EB-2 classification are likely to have at least a master's

degree or its equivalent.\128\ Possession of an advanced degree is thus

a meaningful baseline with which to describe entry-level workers in the

EB-2 classification.

---------------------------------------------------------------------------

\128\ See 8 U.S.C. 1153(b)(2)(A) (``Visas shall be made

available . . . to qualified immigrants who are members of the

professions holding advanced degrees or their equivalent . . .'').

---------------------------------------------------------------------------

As noted in the IFR, the baseline qualifications needed to obtain

entry as an H-1B worker are different. An individual with a bachelor's

degree in a specific specialty, or its equivalent, may qualify for an

H-1B visa; a master's degree is not a prerequisite.\129\ However, the

bachelor's degree or equivalent must be in a specific specialty. A

generalized bachelor's degree is insufficient to satisfy the

requirement that H-1B workers possess highly specialized

knowledge.\130\ Further, the statute requires that the individual be

working in a job that requires the application of ``highly specialized

knowledge.'' \131\ Again, this means, contrary to some commenters'

assertions, that for the H-1B program the possession of any kind of

bachelor's degree is not the baseline qualification criterion for

admission. Something more is needed. The ultimate inquiry rests also on

whether the individual can and will be performing work requiring highly

specialized knowledge.

---------------------------------------------------------------------------

\129\ 8 U.S.C. 1184(i).

\130\ See Chung Song Ja Corp. v. U.S. Citizenship & Immigration

Servs., 96 F. Supp. 3d 1191, 1197-98 (W.D. Wash. 2015).

\131\ 8 U.S.C. 1184(i).

---------------------------------------------------------------------------

As with aliens in the EB-2 classification, looking to the earnings

of individuals with a master's degree provides an appropriate and

analytically useable proxy for purposes of analyzing the wages of

typical, entry-level workers within the H-1B program. For one thing,

master's degree programs are, generally speaking, more specialized

courses of study than bachelor's degree programs. Thus, while the fact

that an individual possesses a bachelor's degree does not necessarily

suggest one way or another whether the individual possesses the kind of

specialized knowledge required of H-1B workers, the possession of a

master's degree is significantly more likely to indicate some form of

specialization. Although a master's degree alone does not automatically

mean an individual will qualify for an H-1B visa, possession of a

master's degree--something that is surveyed for in a variety of wage

surveys--is thus a better proxy for specialized knowledge than is

possession of a bachelor's degree for purposes of the Department's

analysis. While possession of a bachelor's degree is also commonly

surveyed for, mere possession of a bachelor's degree is not nearly as

reliable an indicator that the degree holder possesses specialized

knowledge.

Importantly, the Department is not claiming that all entry-level

workers in the H-1B program possess a master's degree, or that

possession of a bachelor's degree in a specific specialty such as would

demonstrate specialized knowledge is in all cases the equivalent of

having a master's degree. To reiterate, the Department is using

master's degree holders with limited work experience as a proxy for

entry-level workers purely for analytical purposes. As more fully

explained below, because the OES survey does not capture data on

workers' education and experience--the factors that the INA requires

the Department to take into account in establishing wage levels--the

Department sought in the IFR to identify where within the OES wage

distribution the entry-level wage should fall by consulting other

survey sources that do gather information on education and experience.

Doing so necessarily requires the Department to identify an appropriate

wage comparator or group of comparators for entry-level H-1B and PERM

workers within those survey sources to ensure that the wage level for

entry-level workers set based on that data reflects what workers with

similar qualifications to entry-level H-1B and PERM workers are paid.

For the reasons given above the Department, in its discretion, has

determined that using master's degree holders as an analytical proxy

for entry-level workers in these high-skilled programs is a reasonable

method of assessing wage data for purposes of establishing the entry-

level wage.

As noted, commenters also criticized the conclusion the Department

reached about where to place the entry-level wage in the IFR based on

its analysis of wage data about master's degree holders, arguing that

placing the entry-level wage at approximately the 45th percentile is

axiomatically in error given that entry-level workers do not, by

definition, start out making more than almost half of all workers in an

occupation. Although for the reasons given below the Department has

decided to adjust the entry-level wage downward to the 35th percentile,

the Department disagrees with commenters that setting the entry-level

wage closer to the median of the OES distribution is inappropriate. As

explained in the IFR, the interplay between the statutory framework

governing the prevailing wage and the OES survey data demonstrate that,

for the top H-1B and PERM occupations, workers at the lower end of the

OES distribution in the most common H-1B occupations likely would not

qualify as working in a ``specialty occupation,'' as that term is

defined in the INA, and thus do not have education and experience

comparable to even the least qualified H-1B worker--a contention

generally not disputed by commenters--meaning their wage data must be

discounted in setting wages for entry-level H-1B workers. In

consequence, while a wage close to the median does not represent what

all entry-level workers in a given occupation generally make, it is

entirely reasonable that the wage for the vast run of entry-level

workers covered by the four-tier wage structure, many of whom are

required to possess more specialized skills, would fall closer to the

median.

As explained above, the Department interprets the INA's wage

provisions to require it to take into account the education,

experience, and responsibility of workers in setting wage levels for

the H-1B program. It is therefore necessary to identify what types of

U.S. workers in a given occupation have comparable levels of education,

experience, and responsibility to H-1B workers. The Department did so

by looking to wage data about master's degree holders with limited work

experience in occupations in which H-1B workers are commonly employed.

While the INA makes clear that the prevailing wage levels must be set

commensurate with education, experience, and level of supervision, it

leaves assessment of those factors to the Department's discretion. How

the

[[Page 3627]]

Department exercises that discretion is informed by the legislative

context in which the four-tier wage structure was enacted, which

indicates that the wage levels are primarily designed for use in the

Department's high-skilled and PERM foreign labor programs.\132\ Other

provisions in the INA relating to the education and experience

requirements of those programs--and in particular the statutory

definition of ``specialty occupation''--therefore serve as critical

guides for how wage levels based on experience, education, and level of

supervision should be formulated.

---------------------------------------------------------------------------

\132\ See Consolidated Appropriations Act, 2005, Public Law 108-

447, div. J, tit. IV, Sec. 423; 118 Stat. 2809 (Dec. 8, 2004).

---------------------------------------------------------------------------

Under the INA, H-1B visas can, in most cases, only be granted to

aliens entering the U.S. to perform services ``in a specialty

occupation.'' \133\ The statute defines ``specialty occupation'' as an

occupation that requires theoretical and practical application of a

body of ``highly specialized knowledge'' and the ``attainment of a

bachelor's or higher degree in the specific specialty (or its

equivalent) as a minimum for entry into the occupation in the United

States.'' \134\ An alien may be classified as an H-1B specialty

occupation worker if the alien possesses ``full state licensure to

practice in the occupation, if such licensure is required to practice

in the occupation,'' ``completion of [a bachelor's or higher degree in

the specific specialty (or its equivalent)],'' or ``(i) experience in

the specialty equivalent to the completion of such degree, and (ii)

recognition of expertise in the specialty through progressively

responsible positions relating to the specialty.'' \135\ DHS

regulations further clarify the requirements for establishing that the

position is a specialty occupation and that the beneficiary of an H-1B

petition must be qualified for a specialty occupation.\136\ The

Department's regulations restate the statute's definition of specialty

occupation essentially verbatim.\137\

---------------------------------------------------------------------------

\133\ 8 U.S.C. 1101(a)(15)(H)(i)(b).

\134\ 8 U.S.C. 1184(i)(1).

\135\ 8 U.S.C. 1184(i)(2).

\136\ 8 CFR 214.2(h)(4)(iii) (A) and C).

\137\ See 20 CFR. Sec. 655.715.

---------------------------------------------------------------------------

A few features of the definition bear emphasizing. First, the

statute sets the attainment of a bachelor's degree in a specific

specialty, or experience that would give an individual expertise

equivalent to that associated with a bachelor's degree in the specific

specialty, as the baseline, minimum requirement for an alien to qualify

for the classification. Of even greater importance, having any

bachelor's degree as a job requirement is not sufficient to qualify a

job as a specialty occupation position--the bachelor's degree or

equivalent experience required to perform the job must be ``in the

specific specialty.'' In other words, the bachelor's degree required,

or equivalent experience, must be specialized to the particular needs

of the job, and impart a level of expertise greater than that

associated with a general bachelor's degree, meaning a bachelor's

degree not in some way tailored to a given field.\138\ These aspects of

the definition play an important role in how the Department uses data

from the BLS OES survey to set appropriate prevailing wage levels.

---------------------------------------------------------------------------

\138\ See Chung Song Ja Corp. v. U.S. Citizenship & Immigration

Servs., 96 F. Supp. 3d 1191, 1197-98 (W.D. Wash. 2015) (``Permitting

an occupation to qualify simply by requiring a generalized bachelor

degree would run contrary to congressional intent to provide a visa

program for specialized, as opposed to merely educated, workers.'');

Caremax Inc v. Holder, 40 F. Supp. 3d 1182, 1187-88 (N.D. Cal. 2014)

(``A position that requires applicants to have any bachelor's

degree, or a bachelor's degree in a large subset of fields, can

hardly be considered specialized.'').

---------------------------------------------------------------------------

The OES survey categorizes workers into occupational groups defined

by the SOC system, a federal statistical standard used by federal

agencies to classify workers into occupational categories for the

purpose of collecting, calculating, or disseminating data.\139\ An

informative source on the duties and educational requirements of a wide

variety of occupations, including those in the SOC system, is the

Department's Occupational Outlook Handbook (OOH), which, among other

things, details for various occupations the baseline qualifications

needed to work in each occupation. A review of the OOH shows that only

a portion of the workers covered by many of the occupational

classifications used in the OES survey likely have levels of education

and experience similar to those of H-1B workers in the same occupation.

Some share of workers in these classifications likely do not have the

education or experience qualifications necessary to be considered

similarly employed to specialty occupation workers. Because the INA

requires the prevailing wage levels for H-1B workers to be set based on

the wages of U.S. workers with levels of experience and education

similar to those of H-1B workers, the Department must take this into

account when using OES data to determine prevailing wages.

---------------------------------------------------------------------------

\139\ U.S. Bureau of Labor Statistics, Standard Occupational

Classification, https://www.bls.gov/soc/.

---------------------------------------------------------------------------

For example, a common occupational classification in which H-1B

nonimmigrants work is Computer Programmers.\140\ In some cases, the

work of a computer programmer may involve writing basic computer code

and testing it.\141\ The OOH's entry for Computer Programmers describes

the educational requirements for the occupation as follows: ``Most

computer programmers have a bachelor's degree; however, some employers

hire workers with an associate's degree.'' \142\ In other words, while

common, a bachelor's degree-level education, or its equivalent, is not

a prerequisite for working in the occupation. USCIS and at least one

court have reasoned from this that the mere fact that an individual is

working as a Computer Programmer does not establish that the individual

is working in a ``specialty occupation.'' \143\ Because a person

without a specialized bachelor's degree can still be classified as a

Computer Programmer, some portion of Computer Programmers captured by

the OES survey are not similarly employed to H-1B workers because the

baseline qualifications to enter the occupation do not match the

statutory requirements.\144\

---------------------------------------------------------------------------

\140\ Office of Foreign Labor Certification, H-1B Temporary

Specialty Occupations Labor Condition Program--Selected Statistics,

FY 2019, available at https://www.foreignlaborcert.doleta...._FY2019_Q4.pdf .

\141\ Bureau of Labor Statistics, Occupational Outlook Handbook,

Computer Programmers, available at https://www.bls.gov/ooh/computer-and...rogrammers.htm ..

\142\ Id.

\143\ See Innova Sols., Inc. v. Baran, 399 F. Supp. 3d 1004,

1015 (N.D. Cal. 2019).

\144\ As noted throughout, under the INA a bachelor's degree is

not an absolute prerequisite for obtaining an H-1B visa. Work

experience imparting comparable levels of expertise will also

suffice. Indeed, as the President has noted in other contexts,

focusing on possession of a degree to the exclusion of work

experience ignores important considerations about how merit and

qualifications should be assessed. See Exec. Order No. 13932, 85 FR

39457 (2020). The Department's focus on the OOH's description of

degree requirements here is not meant to suggest otherwise, but

rather simply accounts for the fact that, within the H-1B program,

nearly all nonimmigrants hold a degree. See U.S. Citizenship and

Immigration Services, Characteristics of H-1B Specialty Occupation

Workers Fiscal Year 2019 Annual Report to Congress October 1, 2018-

September 30, 2019, (2020), available at https://www.uscis.gov/sites/default/..._Year_2019.pdf . Further, under the INA, EB-2 and EB-3

immigrants are, in many cases, required to possess a degree. And, in

any event, the Department's assessment of the OOH's descriptions of

education requirements and how they demonstrate that, for the most

common H-1B occupations, there is some portion of workers who would

not qualify as working in a specialty occupation holds true for the

OOH's description of various occupations' experience requirements.

The mere fact that OOH describes many workers in an occupation as

having several years of experience in or skills relevant to their

respective fields does not necessarily mean that they possess

``highly specialized knowledge,'' or that all workers in the

occupation have such experience. See Royal Siam Corp. v. Chertoff,

484 F.3d 139, 147 (1st Cir. 2007). See also Bureau of Labor

Statistics, Occupational Outlook Handbook, Computer Systems

Analysts, available at https://www.bls.gov/ooh/computer-and...s-analysts.htm ; Bureau of

Labor Statistics, Occupational Outlook Handbook, Food Service

Managers, available at https://www.bls.gov/ooh/management/f...e-managers.htm . Whether discussing education or experience

requirements, the fact remains that OOH's description of the

occupational classifications used in the BLS OES are, in most cases,

not limited to workers who would qualify as working in a specialty

occupation.

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[[Page 3628]]

The same is true for other occupational classifications in which H-

1B workers are often employed. For example, the Medical and Health

Services Manager occupation, as described by the OOH, does not in all

cases require a bachelor's degree as a minimum requirement for

entry.\145\ USCIS has therefore concluded that the fact that an

individual works in that occupational classification does not

necessarily mean that the individual is working in a ``specialty

occupation.'' \146\ USCIS and its predecessor agency, the Immigration

and Naturalization Service, have long emphasized that the term

``specialty occupation'' does not ``include those occupations which

[do] not require a bachelor's degree in the specific specialty.'' \147\

In other words, if not all jobs in an occupational classification

require a specialized bachelor's degree or equivalent experience, under

the INA other evidence is needed to show that a worker will be

performing duties in a specialty occupation beyond whether the job

opportunity falls within a particular SOC classification.\148\

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\145\ See Ajit Healthcare Inc. v. U.S. Dep't of Homeland Sec.,

2014 WL 11412671, at 4 (C.D. Cal. Feb. 7, 2014); see also Bureau of

Labor Statistics, Occupational Outlook Handbook, Medical and Health

Services Managers, available at https://www.bls.gov/ooh/computer-and...rogrammers.htm . The Department

notes that some courts and USCIS have concluded that the fact that

an occupation does not in all cases require a bachelor's degree as a

minimum qualification does not necessarily preclude the occupational

classification from serving as evidence that a particular job

qualifies as a ``specialty occupation.'' See, e.g., Taylor Made

Software, Inc. v. Cuccinelli, 2020 WL 1536306, at 6 (D.D.C. Mar. 31,

2020); see also 8 CFR 214.2(h)(4)(iii). That said the INA ultimately

does not admit of any exceptions to the rule that a job must require

a bachelor's degree in a specific specialty, or its equivalent, to

qualify as a specialty occupation, meaning, whatever its relevance

to determining whether a particular job is in a ``specialty

occupation,'' the fact that many SOC classifications contain workers

that would not meet the statutory definition is highly relevant to

how OES data for an entire occupational classification is used in

setting prevailing wage levels. Put another way, as the court in

Taylor Made acknowledged, the fact that a bachelor's degree is not

required in all cases for a given occupation means that some number

of workers within the occupation are not performing work in a

specialty occupation. Id. Because such workers are almost certainly

captured within OES data, and the Department calculates prevailing

wages by taking into account the actual wages reported for broad

swaths of workers in the OES data, the presence of these workers in

the survey data directly relates to how prevailing wage levels are

set, even if it does not have a great deal of significance for how a

single, specific job in an occupation is determined to be or not to

be in a ``specialty occupation.''

\146\ See Ajit Healthcare, 2014 WL 11412671, at 4.

\147\ Temporary Alien Workers Seeking Classification Under the

Immigration and Nationality Act, 56 FR 61,111, 61,113 (Dec. 2, 1991)

(emphasis added).

\148\ 8 U.S.C. 1184(i); see Royal Siam Corp. v. Chertoff, 484

F.3d 139, 147 (1st Cir. 2007).

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A review of the OOH entries for the occupations in which H-1B

nonimmigrants most commonly work demonstrates that most H-1B workers

fall within SOC classifications that include some number of workers who

would not qualify for employment in a specialty occupation. For

instance, the OOH entries for Software Developers--an occupation

accounting for over 40 percent of all certified LCAs \149\--provides

that such workers ``usually have a bachelor's degree in computer

science and strong computer programming skills.'' \150\ For Computer

Systems Analysts, which make up approximately 8.8 percent of all

certified LCAs,\151\ ``a bachelor's degree in a computer or information

science field is common, although not always a requirement. Some firms

hire analysts with business or liberal arts degrees who have skills in

information technology or computer programming.'' \152\ Similarly, the

O*Net database, which surveys employers on the types of qualifications

they seek in workers for various occupations, shows that, on average,

over 13 percent of all jobs in the occupations that H-1B workers are

most likely to work in do not require workers to have even a bachelor's

degree.\153\ Moreover, the O*Net does not differentiate between jobs

that require bachelor's degrees in specific specialties and job for

which a general bachelor's degree will suffice. It is therefore a

reasonable inference that the percentage of jobs in these occupations

that would not qualify as specialty occupation positions for purposes

of the INA is almost certainly even higher.

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\149\ Office of Foreign Labor Certification, H-1B Temporary

Specialty Occupations Labor Condition Program--Selected Statistics,

FY 2019, available at https://www.foreignlaborcert.doleta...._FY2019_Q4.pdf

\150\ Bureau of Labor Statistics, Occupational Outlook Handbook,

Software Developers, available at https://www.bls.gov/ooh/computer-and...developers.htm .

\151\ Office of Foreign Labor Certification, H-1B Temporary

Specialty Occupations Labor Condition Program--Selected Statistics,

FY 2019, available at https://www.foreignlaborcert.doleta...._FY2019_Q4.pdf

\152\ Bureau of Labor Statistics, Occupational Outlook Handbook,

Computer Systems Analysts, available at https://www.bls.gov/ooh/computer-and...s-analysts.htm

\153\ See Office of Foreign Labor Certification, H-1B Temporary

Specialty Occupations Labor Condition Program--Selected Statistics,

FY 2019, available at https://www.foreignlaborcert.doleta...._FY2019_Q4.pdf ; O*NET

Online, https://www.onetonline.org/.

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Simply put, the universe of workers surveyed by the OES for some of

the most common occupational classifications in which H-1B workers are

employed is larger than the pool of workers who can be said to have

levels of education and experience comparable to those of even the

least skilled H-1B workers performing work in a specialty occupation.

Because the statutory scheme requires the Department to set the

prevailing wage levels based on what workers similarly employed to

foreign workers make, taking into account workers' qualifications and,

as noted, the large majority of foreign workers are H-1B workers, it

would be inappropriate to consider the wages of the least educated and

experienced workers in these occupational classifications in setting

the prevailing wage levels. To conclude otherwise would place the

Department at odds with one of the purposes of the INA's wage

protections: to ensure that foreign workers earn wages comparable to

the wages of their U.S. counterparts.

As a result, it is entirely reasonable that the entry-level wage

for H-1B workers would fall closer to the median of the OES

distribution. The OES survey is not specifically designed to serve the

Department's foreign labor programs. It does not survey for education

and experience--the factors the INA requires the Department to consider

in setting prevailing wage levels--which is why the Department looks to

other survey sources, like the NSF and CPS, to make assessments about

where within the OES distribution workers with particular education and

experience levels are likely to fall. So too, as demonstrated by the

above analysis of the OOH, its occupational classifications are not

delineated so as to exclude workers who could not be regarded as

working in a specialty occupation, meaning only a portion of the OES

distribution for many occupations is actually relevant to how the

Department sets wages for the H-1B program. As a result, the median of

the OES distribution is not necessarily the

[[Page 3629]]

median of the distribution of workers who have qualifications

comparable to H-1B workers. The median of that distribution will likely

in many cases fall above the median of the overall OES distribution

since lower skilled, and therefore less highly compensated workers will

be excluded.

On this last point, commenters also argued that the IFR's analysis

improperly focused on only certain occupations, and that, for other

occupations, most particularly those requiring an advanced degree, the

above reasoning about how SOC classifications should be assessed in

light of the statutory framework is inapposite. Relatedly, a number of

commenters faulted the Department for focusing much of its analysis on

the H-1B program, claiming the Department did not take adequate account

of the array of occupations for which labor certification is sought in

the PERM program. Despite these comments, for the reasons discussed

above, the Department continues to believe that focusing its analysis

on those programs and occupations that account for the largest share of

workers covered by the four-tier wage structure is appropriate and

consistent with the approach the Department has taken in setting wages

in other foreign labor programs. Doing so is, in the Department's

judgment, the most appropriate way to ensure U.S. workers are protected

to the greatest extent possible in light of the fact that the

Department's wage structure applies to a large and varied class of

workers and occupations. Further, the Department acknowledges that PERM

workers and advanced degree occupations are entitled to some weight in

the Department's decision over how to set wage levels. As discussed at

greater length below, taking into account these aspects of the issue

addressed by this rule played an important part in the Department's

decision to reduce the entry-level wage from the 45th percentile to the

35th percentile.

To explain its focus on H-1B workers, the Department notes that the

H-1B program accounts, by order of magnitude, for the largest share of

foreign workers covered by the Department's four-tier wage structure.

Upwards of 80 percent of all workers admitted or otherwise authorized

to work under the programs covered by the wage structure are H-1B

workers.\154\ This, in combination with the fact that, as explained in

an earlier section, the risk of adverse effects to U.S. workers posed

by the presence of foreign workers is most acute where there are high

concentrations of such workers, supports the Department's determination

to pay special attention to the H-1B program in how it sets wages.

Because the wage structure governs wages for hundreds of thousands of

workers across five different foreign labor programs and hundreds of

different occupations, no wage methodology will be perfectly tailored

to the unique circumstances of every job opportunity.\155\ Advancing

the INA's purpose of guarding against displacement and adverse wage

effects against this statutory backdrop therefore means, in the

Department's judgment, that particular weight should be given in the

Department's analysis to those aspects of the problem this rule

addresses where there is the greatest danger to U.S. workers' wages--

hence the added focus on the H-1B program.

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\154\ See Department of Homeland Security, 2017 Yearbook of

Immigration Statistics, Table 7. Persons Obtaining Lawful Permanent

Resident Status by Type and Detailed Class of Admission: Fiscal Year

2017, available at https://www.dhs.gov/immigration-stat...ok/2017/table7 ; United States Citizenship and Immigration

Services, Characteristics of H-1B Specialty Occupation Workers:

Fiscal Year 2017 Annual Report to Congress October 1, 2016--

September 30, 2017, (2020), available at https://www.uscis.gov/sites/default/...rkers_FY17.pdf .

\155\ Cf. Wage Methodology for the Temporary Non-agricultural

Employment H-2B Program, 76 FR 3452, 3461 (Jan. 19, 2011)

(justifying wage methodology designed for lower-skilled workers that

was adopted in the H-2B program on grounds that the program ``is

overwhelmingly used for work requiring lesser skilled workers,''

while also acknowledging that ``not all positions requested through

the H-2B program are for low-skilled labor.'').

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Relatedly, the Department notes that the H-1B program is linked

closely to the PERM programs that are also covered by the Department's

wage structure. For one thing, there is significant overlap in the

types of occupations in which H-1B and PERM workers are employed.\156\

For example, the top ten most common H-1B occupations include seven of

the ten most common PERM occupations. Through the third quarter of FY

2020, 80 percent of PERM cases were for jobs in Job Zones 4 and 5

\157\--the most highly skilled job categories, which also account for

94 percent of all H-1B cases.\158\ Moreover, it is also clear that H-1B

status often serves as a pathway to employment-based green card status

for many foreign workers and that a very substantial majority of

workers covered by PERM labor certification applications are already

working in the U.S. as H-1B nonimmigrants.\159\ In FY 2019, 68.2

percent of all PERM applications were for aliens that at the time the

applications were filed were already working in the U.S. on H-1B

visas.\160\ For these reasons, giving particular attention to the H-1B

program in determining how to adjust the wage levels is entirely

consistent with also ensuring that how the wage levels are applied in

the PERM programs is properly accounted for in the Department's

analysis.

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\156\ In FY2019, 68.2 percent of all PERM labor certification

applications filed were for H-1B workers already working in the

United States. Office of Foreign Labor Certification, Permanent

Labor Certification Program--Selected Statistics, FY 19, available

at https://www.dol.gov/sites/dolgov/fil..._FY2019_Q4.pdf .

\157\ Under the O*Net system a job zone is a group of

occupations that are similar in the amount of education, experience,

and on the job training that is required for a worker to fill a

position in the occupation. Job Zone 4 includes occupations that

require considerable preparation; Job Zone 5 includes occupations

that require extensive preparation. See https://www.onetonline.org/help/online/zones .

\158\ This information is based on data collected by the

Department's Office of Foreign Labor Certification on LCAs filed

between March 1, 2020, and August 14, 2020.

\159\ See Sadikshya Nepal, The Convoluted Pathway from H-1B to

Permanent Residency: A Primer, Bipartisan Policy Center (2020).

\160\ Office of Foreign Labor Certification, Permanent Labor

Certification Program--Selected Statistics, FY 19, available at

https://www.dol.gov/sites/dolgov/fil..._FY2019_Q4.pdf .

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Similarly, the Department has concluded, in its discretion, that

the Level I wage should be established based on the wages paid to

workers in those occupations that make up a substantial majority of the

applications filed in the H-1B, H-1B1, E-3, and PERM programs. This

also ensures that the Department appropriately takes into account the

size and breadth of the programs covered by the four-tier wage

structure by giving special attention to those areas where the risk to

U.S. workers' wages and job opportunities is most severe by virtue of

having high concentrations of H-1B and PERM workers. Commenters are

incorrect that the Department's decision to take this focus means it

only looked at computer occupations. Rather, the Department looked at

all occupations that account for one percent or more of the total H-1B

population. While many of these occupations are computer-related, some

are not. Further, while commenters are correct that there are as many

as 99 occupations that require advanced degrees, the Department notes

that this is out of a total of over 550 occupations covered by the OOH.

Further, those 99 occupations account for an even smaller share of the

actual workers who are employed under the Department's four-tier wage

structure. While this does not

[[Page 3630]]

mean that due attention should not be given to how the wage levels

affect workers in advanced degree occupations, it does guide the

relative weight these occupations are given in the Department's

analysis.

Despite their disagreement with the methodology employed by the

Department, commenters generally did not offer alternative ways to

balance using a single wage structure across all five programs and

hundreds of different occupations with varying skill requirements

against the need to protect U.S. workers as fully as possible. Some

commenters suggested as an alternative that different occupations or

groups of occupations should be subject to a separate analysis and

different wage structure. The Department has considered this option and

believes that the utility of preserving a uniform wage structure across

all programs and occupations outweighs any benefits that might be

achieved by promulgating multiple, occupation or program-specific wage

structures. The Department continues to believe that its method of

doing so is the best available option as it is consistent with the

approach the Department has taken in other foreign labor programs and

focuses the Department's analysis on those areas where the risk to U.S.

workers is greatest.

As for treating the PERM programs differently than the H-1B

program, the Department notes that its analysis of highly skilled

workers with advanced degrees and/or specialized knowledge--namely the

EB-2 immigrant classification and the H-1B, E-3, and H-1B1 nonimmigrant

programs--already takes into full account a large portion of the PERM

program. With respect to the EB-3 classification, it is also noteworthy

that many H-1B workers adjust status to that of lawful permanent

residents through EB-3 classification, and the manner in which the

programs operate means that, in many cases, foreign workers can, in

some sense, have one foot in each program simultaneously for extended

periods of time. Using different wage methodologies in the programs

would therefore result in the incongruous possibility of a worker doing

the same job for the same employer suddenly receiving a different wage

upon adjusting status. Similarly, while having somewhat different

eligibility criteria, the EB-2 and EB-3 classifications are not

mutually exclusive: many workers that satisfy the eligibility criteria

for one would also do so for the other.\161\ Applying the same wage

methodology in both classifications is therefore important to ensure

consistent treatment of similarly situated workers and prevent the

creation of incentives for employers to prefer one classification over

the other because different wage methodologies yield different

wages.\162\ Thus, it is key in the Department's judgment that the EB-3

classification be treated the same as the EB-2 classification and H-1B

program. More generally, continuing to employ the same wage structure

across both the H-1B and PERM programs advances the Department's

interest in administrative consistency and efficiency. Because there is

significant overlap between the H-1B and PERM programs, they have long

been regulated in connection with one another. Moreover, to the extent

commenters assert that the IFR's wage levels resulted in

inappropriately high wages for certain workers in advanced degree

occupations, the Department notes that its decision to reduce the

entry-level wage should, to some degree, ameliorate this concern.

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\161\ See Musunuru v. Lynch, 831 F.3d 880, 885 (7th Cir. 2016)

(describing a person applying for both EB-2 and EB-3 status).

\162\ See Comite' De Apoyo A Los Trabajadores Agricolas v.

Perez, 774 F.3d 173, 185 (3d Cir. 2014) (noting loopholes that can

be created if employers are able to use different methodologies to

calculate wages for the same types of workers).

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For several reasons, the Department has also determined that

occupation-specific wage structures are undesirable. For starters,

calculating multiple different wage structures based on occupation

would be a substantial and costly administrative undertaking for

multiple components within the Department. There are over 800 different

occupations in the SOC classification system used in the OES survey.

The analysis needed to tailor different wage structures to each

occupation would be an enormous undertaking, even assuming it were

possible to conduct a meaningful, occupation-by-occupation analysis.

Further, the burden on BLS to produce hundreds of different wage levels

every year across various occupations would simply be unsustainable.

In addition, treating different occupations differently would

create an opportunity and incentive, in some cases, for employers to

misclassify workers in order to take advantage of lower wage rates.

This is something that the Department already encounters by virtue of

having different wage methodologies for different nonimmigrant programs

that cover different types of jobs. Introducing the possibility of

securing a different wage methodology within the H-1B and PERM programs

would similarly allow employers ability to seek lower wages even if

such wages are not the right wage for the job opportunity in question

and result in adverse effects on U.S. workers. Again, this also means

that, barring a compelling reason to introduce this kind of

disuniformity into the H-1B and PERM programs, a single wage structure

should be preserved. And the Department does not believe that there is

such a compelling reason to disaggregate the wage methodology by

occupation. While certain advanced degree occupations present somewhat

different considerations in terms of how wage rates should be provided

as compared to the top H-1B and PERM occupations the Department focused

on in its analysis in the IFR, the Department reiterates that, as

explained more fully below, the effects of the new wage methodology on

advanced degree occupations have been given significant weight in the

Department's analysis of where to set the entry-level wage. The

Department therefore believes that adjusting the IFR's entry-level wage

down to the 35th percentile--together with other features of the

system, discussed below--adequately accounts for the interests of

workers and employers in advanced degree occupations and will more

consistently supply wage rates that are appropriate across a broader

range of occupations. Moreover, other changes made in this final rule,

including eliminating the use of the default wage of $208,000 per year

for all four wage levels in cases where BLS cannot supply a Level IV

wage (an issue that was of particular concern for commenters that

discussed how the IFR affected employers of workers in advanced degree

occupations), will also reduce the incidence of job opportunities

requiring an advanced degree being assigned inflated wage rates.

Moreover, the Department notes that the use of a single wage

structure has been its practice ever since it began using leveled wages

in the H-1B and PERM programs. Twenty years of experience shows that

using a single wage structure across all occupations is not

unmanageable for employers. Indeed, given that the previous wage levels

were selected with no analysis or explanation, the Department

anticipates that its revised levels will in fact produce more

appropriate outcomes in a larger number of cases across different

occupations. For the first time the Department has undertaken a

meaningful analysis of what wage levels

[[Page 3631]]

will yield prevailing wage rates in the largest number of cases

possible that are consistent with the wages paid to U.S. workers

similarly employed and with comparable levels of education, experience,

and responsibility to H-1B and PERM workers. In consequence, preserving

a single wage structure should, if anything, be even more feasible and

reasonable now than it was when the old wage levels were operative.

Further, the INA allows an employer to use the best available

information at the time of filing an LCA in setting the wages in the H-

1B program.\163\ If an employer does not believe the OES wage provided

by the Department is the best available information at the time of

filing, the employer may utilize an alternative prevailing wage survey

provided by an independent authoritative source or another legitimate

source of wage information.\164\ Such alternative sources of wage

information are, in the Department's experience, widely available, and

provide a backstop for employers, thereby reducing any need to create

multiple, precisely tailored wage structures for different occupations.

---------------------------------------------------------------------------

\163\ 8 U.S.C. 1182(n)(1)(A)(i)(II).

\164\ 20 CFR 655.731(a)(2)(ii)(B) and (C).

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The Department defines a prevailing wage survey published by

independent authoritative source as ``a prevailing wage survey for the

occupation in the area of intended employment published . . . in a

book, newspaper, periodical, loose-leaf service, newsletter, or other

similar medium, within the 24-month period immediately preceding the

filing of the employer's application.'' \165\ The independent

authoritative source should: (1) Reflect the average wage paid to

workers similarly employed in the area of intended employment; (2)

Reflect the median wage of workers similarly employed in the area of

intended employment if the survey provides such a median and does not

provide a weighted average wage of workers similarly employed in the

area of intended employment; (3) be based upon recently collected data;

and (4) represent the latest published prevailing wage finding by the

authoritative source for the occupation in the area of intended

employment.\166\

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\165\ 20 CFR 655.715.

\166\ 20 CFR 655.731(b)(3)(iii)(B)(1)-(4).

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In utilizing an independent authoritative source, the Department

requires employers to follow the Department guidance, which explains

the standards contained in the Department's regulations.\167\ Employers

following the 2009 Guidance should ensure wage data collected is for

similarly employed workers, meaning having substantially similar levels

of skills. The survey should contain a representative sample of wages

within the occupation that comports with recognized statistical

standards and principals in producing prevailing wages. It is important

to note that the nature of the employer, such as whether the employer

is public or private, for profit or nonprofit, large or small,

charitable, a religious institution, a job contractor, or a struggling

or prosperous firm, do not bear in a significant way on the skills and

knowledge levels required and should not limit the universe of

employers surveyed. The relevant factors are the job, the geographic

locality of the job, and the level of skill required to perform

independently on the job. The Department provides a set of minimum

survey standards in Appendix E of the 2009 Guidance, and encourages

employers to reference these standards when seeking to use an

independent authoritative source as the prevailing wage. Written

documentation on the methodology used to conduct the survey and the

validity of the methodology used in computing the occupational wage

data covering the area of intended employment must be kept in the

employer's data file and made available in the event of an

investigation.

---------------------------------------------------------------------------

\167\ Employment and Training Administration; Prevailing Wage

Determination Policy Guidance, Nonagricultural Immigration Programs

(Revised Nov. 2009), available at https://www.dol.gov/sites/dolgov/fil...ed_11_2009.pdf .

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In addition, the Department allows employers to rely upon other

legitimate sources of wage information if they do not have access to a

published independent authoritative source.\168\ The only difference

between a published independent authoritative source and another

legitimate source of wage information is that the other legitimate

source of wage information simply has to be ``reasonable and consistent

with recognized standards and principals in producing a prevailing

wage'' and does not need to be published.\169\ As with independent

authoritative sources, the Department encourages employers to ensure

the other legitimate source of wage information follows the

Department's 2009 Guidance to ensure it is reasonable and consistent

with recognized standards and principals in producing a prevailing

wage.

---------------------------------------------------------------------------

\168\ 20 CFR 655.731(b)(3)(iii)(C).

\169\ 20 CFR 655.731 (b)(3)(iii)(C)(4).

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The Department notes that since the IFR, employers have availed

themselves of the ability to use independent authoritative sources and

other legitimate sources of wage information at rates 274 percent

greater than the same timeframe in 2019. In fact, since publication of

the IFR, the Department has received 14,153 LCAs supported by an

independent authoritative source or other legitimate source of wage

information for 153 unique occupations, compared to 19,509 representing

216 unique occupations for the entirety of FY 2020. This increased use

of private surveys is consistent with the Department's experience that

alternative wage surveys are readily available across many different

regions and industries.

This widespread use and availability of alternative age sources

extends to advanced degree occupations. Since the IFR publication,

employers filing 523 LCAs representing 950 positions for occupations

requiring advanced degrees used an independent authoritative source or

other legitimate source of wage information. Since the IFR, there have

been 4,973 PWDs requested for occupations requiring an advanced degree

using a survey as the wage source; this is 1,780 more PWDs relying on a

survey as the wage source than for similar PWDs in FY 2020.

For the PERM program, too, employers are required to obtain a PWD

from the Department; they have the option of providing an alternate

wage source to the OES survey in this process as well. There are well-

established standards of acceptance of alternative wage sources. In the

weeks since the publication of the IFR, the Department has received

more than 6,900 prevailing wage requests supported by private wage

surveys in the PERM program, which is a 335% increase over the same

timeframe in 2019. Again, this increase confirms that such sources of

wage data are readily available for use in seeking a PWD not based on

the OES survey if employers believe in anomalous cases that the OES

survey does not produce an accurate wage. This obviates any need, in

the Department's view, to create a complicated, administratively

burdensome scheme of occupation-specific wage structures.

3. The IFR Wages and Market Wage Rates

Summary of Comments

The most common concern raised by commenters on this subject was

that prevailing wages under the IFR's

[[Page 3632]]

methodology do not reflect actual market rates and in many cases are

unrealistically high such that they will require employers to lay off

currently employed foreign workers, will make it ``difficult if not

impossible, to hire for highly specialized and hard-to-recruit for

positions,'' and will ``frustrate equal pay principles for U.S.

workers, and create an endless upward spiral of wage obligations that

bear no relation to market dynamics.'' A professional association

asserted that the wage level methodology in the IFR produced

``artificially high'' prevailing wages and circumvented congressional

intent by making it ``virtually impossible for employers to use the H-

1B visa program.'' The commenter asserted the Department violated

section 212(n) of the INA by ``incorrectly setting the way data is

leveled'' and ``prevent[ing] employers from obtaining'' from the

Department's Online Wage Library ``a wage that is in fact the

prevailing wage for the'' occupation and Area of Intended Employment or

a wage that represents ``the best information available as of the time

of filing the application.'' An employer asserted the IFR would create

spiraling wages because ``the next collection of BLS data will be

distorted by these new wage requirements, yielding new and even higher

prevailing wage requirements, in a pattern that will repeat and

multiply'' over time. A public policy organization said the IFR would

lead to inflated wages because employers must post at the worksite the

H-1B worker's salary, which will compel employers to pay the increased

IFR wage to similarly employed U.S. workers.

Commenters cited numerous general and specific examples of

substantial wage increases for combinations of occupations and areas of

employment that do not reflect, according to commenters, market wages.

Several commenters cited an NFAP analysis that compared wages under the

IFR to private survey wages and pre-IFR OES wages and found that for

all occupations and geographic locations the new wages are ``on

average, 39% higher for Level 1 positions, 41% higher for Level 2, 43%

higher for Level 3 and 45% higher for Level 4.'' Examples included a

99.5 percent increase for Level I petroleum engineers and for

electrical engineers, computer network architects, computer systems

analysts, mechanical engineers, and database administrators at all wage

levels. The most dramatic examples included a Level I wage increase of

more than 206 percent for a computer and information systems manager in

East Stroudsburg, Pennsylvania, and more than 177 percent for a

pediatrician in Wichita, Kansas. Referencing an American Action Forum

report, a trade association cited average IFR wage increases for

several occupations, including ``an 83 percent increase for Level 1

Computer and Information Systems Managers'' and ``a 44 percent increase

for Level 2 Software Developers.'' Several commenters asserted the

required prevailing wages for some information technology occupations

would exceed the salary cap implemented by some big tech employers,

such as Level II and Level IV wages in Silicon Valley and Seattle that

exceed a $160,000 salary maximum at Amazon.

Many commenters stated the wages produced under the IFR did not

reflect data on prevailing wages found on websites like Payscale,

Glassdoor, Indeed, or Levels.fyi. Examples cited include Level I

software developer wages in Santa Clara and Level I engineer wages in

Seattle that are lower than the 45th percentile, according to

Levels.fyi, and a median salary for software developers in Cincinnati

that is $20,000 per year lower than the entry level wage under the IFR,

based on Payscale data. One commenter also stated that the Level IV IFR

wage for electrical engineers in Seattle exceeded $168,820, the highest

wage listed for the occupation in O*Net.

A few commenters expressed concern that the IFR wages are not

consistent with prevailing wage determinations produced by private wage

surveys. A public policy organization compared wages under the IFR to

surveys conducted by Willis Towers Watson and found a divergence in

wage determinations between the two, including IFR wages 63 percent

higher for Level IV programmers in Chicago, three times higher for all

levels of financial analysts in New York City, and 62 percent higher

for Level I software developers in Los Angeles. This commenter noted

that many private surveys use ``precise methodologies and a wide range

of data gathering to ensure that the surveys'' are accurate and they

are ``used by employers for company-wide salary benchmarking.''

Similarly, a trade association stated that private wage surveys

``commonly collect compensation information reflecting education,

experience, and responsibility,'' and a professional association stated

these surveys often ``gather real market data for what companies are

paying employees at different levels,'' in contrast to the OES, which

gathers ``general data without regard to experience levels.''

In addition to arguing that the IFR's wage rates were too high, a

number of commenters highlighted what can be described as second and

third order consequences of prevailing wage rates being out-of-step

with market wages. For instance, comments primarily from academic and

research institutions and related organizations and individuals

expressed concern that if wages are untethered from market rates,

particularly for post-doctoral research positions, clinical faculty,

administrative positions, and teaching assistants, and the prevailing

wage requirement would be untenable for institutions reliant on grant

funding, especially those reliant on government funding. As a result,

commenters believed the IFR would produce a shortage of qualified

faculty and diminish the quality of education students receive; reduce

already declining foreign student enrollment and tuition revenue; and

derail critical research projects in science, healthcare, and

technology.

Most of these commenters asserted wages under the IFR often are

significantly higher than prevailing wages in the higher education or

research sectors, and several commenters cited specific examples, like

a Level I wage increase for post-doctoral researchers that would raise

the wage higher than the salary of many experienced tenure track

faculty. Several commenters asserted the increased wages would be

especially burdensome for employers reliant on grant funding that may

be subject to statutory or other limits on the funding amounts and the

ways the employer can expend the funds. For example, a university

stated that federal research organizations lack adequate funding to pay

the IFR wages for work on research projects funded by federal awards

and will need to reduce the size of those project groups or attempt to

avoid employing H-1B workers on any of those projects. Other commenters

noted more specifically that grants like those awarded by the National

Institute of Health (NIH) are subject to rules limiting the amount that

can be used for ``administrative costs, including salaries,'' and one

commenter stated that the IFR prevailing wage for biological scientists

would exceed the NIH salary cap by as much as 79 percent in some areas.

Commenters expressed concern the wage increases would diminish the

quality of education universities provide by making it difficult or

impossible to retain or hire qualified faculty, researchers, and

workers in other jobs like administrative positions.

[[Page 3633]]

A leading teaching and medical research hospital stated that the

inability to retain researchers at the IFR wage levels would jeopardize

critical research projects and the jobs in which U.S. workers are

employed in ``assistant, tech and coordinator roles.'' Commenters also

believed the wage increases would reduce post-graduation career

opportunities significantly for international students and would reduce

already declining foreign student enrollment, which in turn would

contribute to a shortage of skilled labor in higher education and

research and in the United States broadly. For example, some commenters

asserted the IFR would reduce the number of available and qualified

graduate teaching assistants, tutors, post-doctoral researchers, and

similar workers because international students constitute a substantial

portion of this labor force. An employer expressed concern about the

impact of the IFR on the STEM and engineering labor force, noting that

foreign graduates account for more than 70 percent of workers

possessing a master's degree or Ph.D. in electronics engineering or

related fields, according to a referenced 2018 National Center for

Education Statistics Integrated Postsecondary Education Data System

survey. Several of the commenters also stated the enrollment decline

would reduce not only tuition revenue but also tax revenue and consumer

spending.

Citing budget constraints and the importance of its work, a

research organization reliant on NIH grant funding urged the Department

to provide an exemption from the wage rule for ACWIA-eligible

employers, which would encompass institutions of higher education and

related or affiliated nonprofit entities, as well as nonprofit and

governmental research organizations. The commenter added that the

Department should continue to work to ``update the ACWIA wage

library.''

Comments primarily from healthcare providers and academic

institutions expressed concerns similar to concerns of higher education

commenters. The commenters asserted the new wage rates would exceed

market rates, particularly for physicians subject to a $208,000 wage in

many areas and for resident physicians. Two commenters asserted

university clinical programs and medical research programs did not have

adequate funds to pay the increased wages and asserted this would set

back important ``biomedical research during a pandemic'' and curtail

their ability ``to care for and treat those afflicted.'' A professional

association stated that resident physicians are physicians in training

and asserted that use of the OES to determine the prevailing wage for

these job opportunities would produce wages higher than the actual

prevailing wage for residents.

Most of these commenters asserted the increased wages would lead to

a shortage of healthcare workers, including bilingual workers and

mental health professionals and would reduce the quality of and access

to healthcare and the quality of care available. Several commenters

expressed concern this would have a particularly significant impact on

providers in rural areas that have difficulty recruiting, cannot afford

to pay the same wages as employers in larger areas, and often rely on

foreign workers allocated to underserved areas through the Conrad-30

waiver program. One commenter also asserted the increased wages under

the IFR ``may cause elimination of the Conrad-30 waiver program''

altogether.

Several commenters expressed concern the IFR would adversely impact

small employers, start-ups, and nonprofits in particular because many

these employers cannot afford competitive base wages due to limited

resources and instead compete based on intangibles or use incentives

like stock options. One commenter asserted that ``incremental

compliance costs'' for small employers would be as much as three

percent of revenue in 2020-21 and that these employers would

effectively ``be shut out of the H-1B visa program for new workers.''

Some commenters asserted these employers are more likely to rely on DOL

issued wages than private wage surveys, either due to inability to

afford the survey or because they operate in small or nonmetropolitan

areas and ``private wage surveys are based on metropolitan area wages

and do not cover many small market areas or less commonly utilized

occupations because of data limitations.''

Many commenters expressed concern that the IFR would require

employers to pay foreign workers more than the wage paid to U.S.

workers or foreign workers hired prior to the IFR effective date and

this would require employers to increase wages across the board due to

the potential for worker resentment or decreased morale or because

federal and state laws prohibiting discrimination require equal pay.

For example, a professional association expressed concern that the IFR

would require employers to pay the IFR wage to similarly employed

workers to avoid potential pay equity claims under federal and state

laws prohibiting discrimination, including Title VII of the Civil

Rights Act of 1964 and a New York state law requiring equal pay for

``equal or substantially similar work.'' Similarly, some higher

education commenters were concerned that they would need to pay the IFR

wage to a broad range of U.S. workers due to ``pay equity demands'' or

an ``actual wage analysis'' requiring payment of the higher wage to

``all comparable workers.'' Several commenters expressed general

concern that the IFR would produce entry-level wages higher than wages

paid to mid-career professionals or even the managers or supervisors of

those workers.

By contrast, a number of commenters suggested that IFR's entry-

level wage was set too low, that the entry-level wage should be placed

no lower than the median of the OES distribution, and that some place

even higher up within the distribution may be appropriate. A public

policy organization asserted that wages ``close to and above the median

. . . will ensure H-1B workers are not being sought out simply because

employers can save on labor costs.'' A second public policy

organization expressed concern that the pre-IFR wage level methodology

that set rates below the median in the occupation ``failed to require

that firms pay market wages to H-1B workers.'' A third public policy

organization supported the increased wages under the IFR but expressed

concern that setting the Level I wage ``just below the local median

wage'' would ``permit employers to pay H-1B workers at below market

wage rates.'' Similarly, a labor union and a commenter from academia

supported the Department's decision to increase the Level I wage closer

to the median, which the labor union asserted ``is reflective of the

minimum market rate that should be paid to an H-1B worker in order to

safeguard U.S. wage standards and ensure that migrant workers in H-1B

status are compensated fairly.'' Another public policy organization and

an academic commenter suggested the Department should increase the

Level I wage to the 75th percentile and require that all H-1B job

opportunities be certified ``at a wage that is no lower than the

national median wage for the occupation.''

Other suggestions about how to set the wage levels included one

from an anonymous commenter, who urged the Department to set the

prevailing wage at the highest prevailing wage in the country for the

occupation, such as requiring all employers to pay the prevailing wage

for physicians in New York City if that is the highest wage among all

areas in the country. The commenter believed this would

[[Page 3634]]

``equalize the cost to [all] employers'' and would incentivize

employers to recruit in other regions of the United States before

hiring foreign workers. Another anonymous commenter suggested the

Department should set the wage levels at the average of the IFR and

pre-IFR levels, stating this would result in wage levels at the 31st,

48th or 50th, 64th or 66th, and 81st or 83rd percentiles for Levels I

through IV, respectively.

Response to Comments

At the outset, the Department notes that commenters generally did

not offer data or economic justifications purporting to show that the

old wage level methodology produced wages across many different

occupations and geographic areas that reflect the wages paid to U.S.

workers similarly employed to H-1B and PERM workers. Further, as

explained above, the Department has reasonably concluded that the old

wage methodology, in many instances, is a source of harm to U.S.

workers' wages and job opportunities. This fact, on its own, in the

Department's view, gives rise to a clear inference that the old wage

levels were not set in a manner that yielded prevailing wage rates on

par with market wages. Whatever merits some commenters might see in the

old methodology, it is clear it did not advance the purpose of the

INA's wage provisions to protect U.S. workers. Of equal importance, and

a reason independently sufficient for concluding that adjustments to

the old wage methodology are needed, is the fact that the old

methodology, as noted previously, is in tension with the governing

statute.

The need for this rulemaking clear, the question then turns to how

the wage levels should be adjusted. Notably, a number of commenters

agreed with the foundational premise of the IFR that the Department

should set prevailing wage levels based on an assessment of what

workers with similar levels of education and experience to the foreign

workers covered by the four-tier wage structure are paid. As one

commenter said, ``DOL reasonably claims that a well-functioning system

for prevailing wages determinations would find that the wages that need

to be paid for foreign national workers subject to these requirements

`generally should approximate the going wage for workers with similar

qualifications and performing the same types of job duties in a given

labor market.' '' This commenter, and others, therefore did not

disagree with the aim of the IFR, but rather simply claimed that the

Department had overshot the mark and adjusted the wage levels so high

that they do not reflect actual market wages.

The Department agrees with these commenters, and the reasoning in

the IFR, that prevailing wage rates produced by the four-tier wage

structure should approximate actual market wages to the greatest extent

possible. The Department also takes seriously commenters' concerns that

the IFR's wage levels may yield prevailing wage rates that do not meet

that goal. It has therefore taken into account data and analysis

provided by commenters to supplement and inform the analysis used in

the IFR. Based on this reassessment of the conclusions it reached in

the IFR, the Department has determined that it is appropriate to reduce

the entry-level wage from the mean of the fifth decile, or the 45th

percentile, to the 35th percentile. Doing so will, in the Department's

expert judgment, and based on a review of the relevant data sources,

including those provided by commenters, result in entry-level

prevailing wage rates that approximate the wages paid to U.S. workers

similarly employed to H-1B and PERM workers.

While the Department believes that data and analysis provided by

commenters warrants a reassessment of the IFR's wage levels, the

Department, as discussed in detail above, has determined that the

analytical framework relied on in the IFR remains the appropriate lens

through which to understand how the levels should be set.

While the INA provides the relevant factors and general framework

by which the wage levels are to be set, it leaves the precise manner in

which this is accomplished, including the types of data and evidence to

be used and how such data and evidence are weighed, to the Department's

discretion and expert judgment. In exercising that discretion, the

Department's decision on how to adjust the wage levels is informed by

the statute's purpose of protecting the wages and job opportunities of

U.S. workers. This means the Department has focused its analysis on

those areas where the risk to U.S. workers is most acute, taken into

account how the foreign labor programs are actually used by employers,

and, where appropriate, resolved doubts in favor of refining the wage

calculations so as to eliminate to the greatest extent reasonably

possible adverse effects on U.S. workers caused by the employment of

foreign workers, while also ensuring that the program is still

accessible to employers.

As explained in the IFR, to determine the wages typically made by

individuals having comparable levels of education, experience, and

responsibility to the prototypical entry-level H-1B and EB-2 workers

and working in the most common H-1B and PERM occupations, the

Department consulted a variety of data sources, most importantly wage

data on individuals with master's degrees or higher and limited years

of work experience--the type of worker the Department determined to be

an appropriate wage comparator for entry-level H-1B and EB-2 workers--

from the 2016, 2017, and 2018 CPS \170\ conducted by the U.S. Census

Bureau, and data on the salaries of recent graduates of master's degree

programs in STEM occupations garnered from surveys conducted by the NSF

in 2015 and 2017. Both of these surveys represent the highest standards

of data collection and analysis performed by the federal government.

Both surveys have large sample sizes that have been methodically

collected and are consistently used not just across the federal

government for purposes of analysis and policymaking but by academia

and the broader public as well.

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\170\ The CPS, sponsored jointly by the U.S. Census Bureau and

BLS, is the primary source of labor force statistics for the

population of the U.S. See United States Census Bureau, Current

Population Survey, available at https://www.census.gov/programs-surveys/cps.html .

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In the case of the CPS survey, the Department used a wage

prediction model to identify the wages an individual with a master's

degree or higher and little-to-no work experience (based on age) would

be expected to make and matched the predicted wage with the

corresponding point on the OES wage distribution. Using the NSF

surveys, the Department calculated the average wage of individuals who

recently graduated from STEM master's degree programs and matched the

average wage against the corresponding point on the OES distribution.

These analyses located three points within the OES wage

distribution at which the wages of U.S. workers with similar levels of

education and experience to the prototypical entry-level workers in

specialty occupations and the EB-2 program are likely to fall. In

particular, the 2015 NSF survey data indicate that workers in some of

the most common H-1B and PERM occupations with a master's degree and

little-to-no relevant work experience are likely to make wages at or

near the 49th percentile of the OES distribution.\171\

[[Page 3635]]

The 2017 NSF survey suggests that these workers are likely to make

wages at or near the 46th percentile of the OES distribution. On the

low end, the CPS data suggest that such individuals make wages at or

near the 32nd percentile.

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\171\ For the CPS data, the Department looked at the wages of

workers in all occupations that account for 1 percent or more of the

total H-1B population. These occupations also account for the

majority of PERM workers. For the NSF data the Department examined

the wages of workers in 11 of the most common (in the top 17)

occupational codes for H-1B workers that were convertible to the

occupational code convention of the NSF, which account for

approximately 63 percent of all H-1B workers, according to data from

USCIS.

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The Department thus identified a range within the OES data wherein

fall the wages of workers who, while being relatively junior within

their occupations, clearly possess the kinds of specialized education

and/or experience that the vast majority of foreign workers covered by

the Department's wage structure are, at a minimum, required to

have.\172\ Put another way, through an assessment of the experience and

education generally possessed by some of the least skilled and least

experienced H-1B and EB-2 workers--workers who are likely entry-level

workers within their respective programs--the Department determined

what U.S. workers with similar levels of education and experience are

likely paid. Accordingly, it is appropriate for the wages paid to such

U.S. workers to govern the entry-level prevailing wage paid under the

Department's wage structure.\173\

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\172\ The Department notes again by way of clarification that it

is not suggesting that possession of a master's degree is required

to work in a specialty occupation. Rather, as explained above,

possession of a master's degree by someone with little-to-no

relevant work experience is being employed as a useable proxy, for

analytical purposes, of the level of education and experience that

approximates the baseline level of specialized knowledge needed to

work in the H-1B and EB-2 programs and that many entry-level workers

in those programs actually possess. Again, the Department notes that

master's degree holders have, in recent years, been the largest

educational cohort within the H-1B program, accounting in FY2019 for

over fifty percent of new H-1B workers. See U.S. Citizenship and

Immigration Services, Characteristics of H-1B Specialty Occupation

Workers Fiscal Year 2019 Annual Report to Congress October 1, 2018--

September 30, 2019, (2020), available at https://www.uscis.gov/sites/default/..._Year_2019.pdf .

\173\ See 8 U.S.C. 1182(a)(5)(A) (requiring the Secretary to

certify that the employment of immigrants seeking EB-2

classification ``will not adversely affect the wages and working

conditions of workers in the United States similarly employed)

(emphasis added); 8 U.S.C. 1182(n)(1)(A)(i) (requiring prospective

H-1B employers to offer and pay at least the actual wage level or

``the prevailing wage level for the occupational classification in

the area of employment'').

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In the IFR, the Department explained that translating the

identified range into an entry-level wage for the Department's use in

the H-1B and PERM programs could be accomplished in a number of ways.

One option would be to simply calculate the average wage of all workers

that fall within the range, meaning those workers whose reported wage

falls between the 32nd and 49th percentiles, which would place the

entry-level wage at approximately just above the 40th percentile. An

alternative would be to identify a subset of wages within the range--

either on the lower end or the higher end of the range--and calculate

the average wage paid to workers within such subset. Because of the

greater suitability of the NSF data for the Department's purposes,

likely distortions in the wage data of both surveys caused by the

presence of lower-paid foreign workers in the relevant labor markets,

and the purposes of the INA's wage protections, the Department

determined in the IFR that the most appropriate course was to set the

entry-level wage by calculating the average of a subset of the data

located at the higher end of the identified wage range. This resulted

in the entry-level wage being placed at approximately the 45th

percentile. Notably, commenters did not dispute these three qualitative

considerations the Department offered for why it favored the higher end

of the range.

The Department therefore continues to believe that the reasoning

that led it to set the entry-level wage at the higher end of the

identified range remains relevant to its decision in this rule. For one

thing, as between the two data sources and the manner in which they

were analyzed, the NSF data are better tailored to the Department's

purposes in identifying an entry-level wage for the H-1B program. The

NSF surveys provide data on the wages of individuals with degrees

directly relevant to the specialized occupations in which they are

working, namely degrees in STEM fields. By contrast, the CPS data only

show whether a person does or does not have a master's degree and does

not identify what field the master's degree or the individual's

undergraduate course of study was in. It is therefore likely that some

of the wage data relied on in generating the CPS estimate were based on

the earnings of individuals who possess degrees not directly related to

the occupation in which they work. Given that the CPS data used only

accounted for persons with little-to-no experience, such individuals

would therefore be unlikely to have the qualifications needed to work

in a ``specialty occupation,'' as that term is defined in the INA.

Having neither a specialized degree nor experience, and therefore

lacking in specialized skills or expertise, at least with respect to

the occupations in which they work, such individuals would not qualify

as similarly employed to even the least skilled H-1B workers and are

thus not appropriate comparators for identifying an entry-level wage in

the H-1B program. Because of these workers' relative lack of skill and

expertise, they are likely to command lower wages, and thus decrease

the predicted wage below what would be an appropriate entry-level wage

for the Department's foreign labor programs.

Relatedly, the Department's method for approximating experience in

the CPS data is also not as closely tailored to the goal of determining

what U.S. workers similarly employed to the prototypical entry-level H-

1B and EB-2 workers are paid as is the NSF data. The CPS analysis

relied on potential experience as a proxy for actual experience, which

was calculated using a standard formula of subtracting from

individuals' ages their years of education and six, based on the common

assumption that most individuals start their education at the age of

six.\174\ While a standard measure for potential experience, this

method of approximation is imprecise because it shows each individual

of the same age and education level as having the same level of work

experience. In reality, such individuals may vary significantly in

their levels of experience.

---------------------------------------------------------------------------

\174\ For example, under this metric, a 30 year old individual

with 18 years' worth of education would be counted as having six

years of work experience.

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For starters, the approximation does not take into account the

possibility of a worker temporarily exiting the workforce, and would

count the time spent outside the workforce as work experience. It also

does not account for gaps between when a person received his or her

bachelor's degree and when he or she enrolled in a master's degree

program. In such cases, the work experience captured by the proxy of

potential experience may thus not be directly relevant to the work a

person performs after he or she graduates from a master's degree

program since in some cases the work experience in question was likely

acquired before the individual enrolled in a master's degree program.

In consequence, the sample used in the CPS analysis almost certainly

includes some individuals who have no relevant experience in the

specialized occupations in which they are working, which likely

decreases the wage estimate calculated using the CPS data and makes it

a less precise and reliable estimation of the wages of U.S. workers

with similar levels of education and experience to the prototypical,

entry-level H-1B and EB-2 workers. In other words, the CPS data allows

for

[[Page 3636]]

only a rough approximation of experience--a key factor the Department

must take into account in adjusting the prevailing wage levels. This,

in combination with the fact that some workers contained within the CPS

dataset likely also lack specialized education relevant to the

occupations in which they work, means that CPS data is, in some degree,

distorted by wage earners who should be discounted in identifying the

appropriate entry-level wage because they likely possess neither the

type of specialized experience nor the education in their field that is

comparable to that possessed by entry-level H-1B and EB-2 workers.

The NSF survey data, by contrast, are uniquely suited to the

Department's purposes. The NSF surveys in 2015 and 2017 capture wage

data about exactly the sort of workers the Department has determined

serve as the appropriate comparators for entry-level H-1B and EB-2

workers. They surveyed individuals with master's degrees in STEM fields

who are working in STEM occupations, including some of the most common

H-1B and PERM occupations, and who are approximately three years or

less out of their master's degree programs. In other words, the NSF

surveys report wage data for individuals with specialized knowledge and

expertise working in the occupations in which H-1B and PERM workers are

most often employed and who are relatively junior within their

respective occupations. The NSF data therefore provide a more accurate

wage profile of workers similarly employed to entry-level H-1B and EB-2

workers. While both data sources are useful in helping determine a wage

range for entry-level H-1B and PERM workers, of the two, the NSF

surveys provide information more relevant to the Department's

assessment of what is the appropriate entry-level wage. Therefore, the

Department's analysis relies more on the NSF surveys. This weighs in

favor of placing the entry-level wage higher up in the identified wage

range given that is where the NSF survey results fall.

Beyond the relative weight of each data source, the Department also

takes into account in identifying the appropriate entry-level wage the

fact that both sources are likely distorted to some degree by the

presence, in both the surveyed population and the labor market as a

whole, of the very foreign workers the Department has determined are,

in some instances, paid wages below the market rate. As noted above,

various studies and data demonstrate that some H-1B workers are paid

wages substantially below the wages paid to their U.S. counterparts,

and that this has a suppressive effect on the wages of U.S. workers.

Further, these adverse effects are most likely to occur and be severe

in occupations with higher concentrations of foreign workers. It is

therefore relevant to how the Department weighs the data that many of

the occupations examined in the analyses of the NSF and CPS datasets

have very high concentrations of H-1B workers. H-1B nonimmigrants make

up about 10 percent of the total IT labor force in the U.S.\175\ In

certain fields, including software developers, applications (22

percent); statisticians (22 percent); computer occupations, all other

(18 percent); and computer systems analysts (12 percent), H-1B workers

likely make up an even higher percentage of the overall workforce.\176\

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\175\ The Department estimated the share of H-1B workers in the

IT sector by tallying the total number of computer occupation

workers in the U.S., subtracting those workers that fill positions

for which H-1B workers are generally ineligible, and dividing the

total by the total number of H-1B workers likely working in computer

occupations, based on data and reports issued by USCIS. See Bureau

of Labor Statistics, Employment by Detailed Occupation, https://www.bls.gov/emp/tables/emp-b...occupation.htm ; United States

Citizenship and Immigration Services, H-1B Authorized-to-Work

Population Estimate, (2020), available at https://www.uscis.gov/sites/default/...k%20Report.pdf ; United States Citizenship

and Immigration Services, Characteristics of H-1B Specialty

Occupation Workers: Fiscal Year 2019 Annual Report to Congress

October 1, 2018-September 30, 2019, (2020), available at https://www.uscis.gov/sites/default/..._Year_2019.pdf .

\176\ These findings come from data provided by USCIS and the

2017 Occupational Employment Statistics survey from the Bureau of

Labor Statistics. They are based the total number of H-1B workers

according the FY19 USCIS tracker data within a SOC code divided by

the 2017 OES estimate of total workers in a SOC code.

---------------------------------------------------------------------------

From this, the Department draws two conclusions. First, the

respondents reporting wages in the CPS and NSF surveys are likely in

some cases H-1B or PERM workers, given that both surveys contain

responses from both U.S. citizens and noncitizens and the surveyed

occupations have high concentrations of such foreign workers. The

reported wages are thus in some instances likely not the market wage

paid to U.S. workers similarly employed to H-1B and PERM workers, but

rather the wages of the foreign workers themselves, which, as discussed

previously, will be likely lower than the wages of U.S. workers in some

cases. Second, even the reported wages of respondents who are not H-1B

and PERM workers are likely not perfectly accurate reflections of what

the market rate would be absent wage suppression given that high

concentrations of lower-paid foreign workers likely decrease the

overall average wage paid in the relevant labor market, as detailed

above.

The need to account for these distortions also weighs in favor of

setting the entry-level wage at the higher end of the identified wage

range. To discount this consideration would mean that, far from

ensuring that the adjusted wage levels guard against adverse effects on

U.S. workers caused by the presence and availability of lower-cost

foreign labor, the Department would, to some degree, be basing its

regulations on a preexisting distortion caused by the old, flawed wage

methodology.\177\

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\177\ Wage Methodology for the Temporary Non-agricultural

Employment H-2B Program, 76 FR 3452, 3453 (Jan. 19, 2011)

(acknowledging the Department did not conduct ``meaningful economic

analysis to test [the] validity'' of its ``assumption that the mean

wage of the lowest paid one-third of the workers surveyed in each

occupation could provide a surrogate for the entry-level wage'');

see also Wage Methodology for the Temporary Non-Agricultural

Employment H-2B Program, Part 2, 78 FR 24,047, 24,051 (Apr. 24,

2013).

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Finally, the purpose of the relevant INA authorities, particularly

the prevailing wage requirement, also weighs in favor of adjusting the

entry-level wage higher up within the identified wage range. As

emphasized throughout, the guiding purpose of the INA's prevailing wage

requirements is to ``protect U.S. workers' wages and eliminate any

economic incentive or advantage in hiring temporary foreign workers.''

\178\ Giving due weight to the purpose of the statutory scheme

suggests, in the Department's judgment, that uncertainties should, to

some extent, be resolved so as to eliminate the risk of adverse effects

on U.S. workers' wages and job opportunities. That also countenances in

favor of placing the entry-level wage at the higher end of the wage

range.

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\178\ Labor Condition Applications and Requirements for

Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations

and as Fashion Models; Labor Certification Process for Permanent

Employment of Aliens in the United States, 65 FR 80,110 (Dec. 20,

2000).

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However, in response to the IFR commenters provided the Department

with additional data and considerations, which have led the Department

to modify the wage levels established in the IFR. As noted, the

principal concern commenters expressed about the IFR was that the wages

it produces are significantly higher than the actual market wages

employers pay their workers. To substantiate this criticism, various

commenters offered wage figures from private and public wage surveys,

and, in some instances, reported what specific employers pay their

workers. The wage data from commenters analyzed by the

[[Page 3637]]

Department generally dealt with wages paid to what commenters

represented to be starting or entry-level positions.

To allow for a meaningful comparison with the wage figures used in

the IFR, the Department selected a cross section of the wage data

provided by commenters and used the same mode of analysis it used in

the IFR to match those figures with percentiles in the OES. In

particular, it compared annual wage data offered for specific jobs in

specific metropolitan areas with OES data for the occupation in which

the job falls in the same metropolitan area. OES data provides annual

wage data for the 10th, 25th, 50th, 75th, and 90th percentiles for

occupations at national, state, and metropolitan area levels. Using

these data, the Department interpolated annual wages data provided by

commenters at each of the missing percentiles between the 10th and the

25th, the 25th and the 50th, the 50th and the 75th, and the 75th and

the 90th percentiles. This allowed the Department to approximate the

specific percentile at which the wages offered by employers fall.

In general, the Department found that the annual wage data for

specific jobs in specific metropolitan areas offered by commenters were

clustered around percentiles in the 30s. Some annual wage data offered

by commenters fell in lower percentiles, and a few fell higher in the

distribution.

A number of commenters cited annual wage data based on salary

offers for L3 software developers with no relevant work experience from

major employers that are significant users of H-1B workers in the

Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area (MSA) and San

Jose-Sunnyvale-Santa Clara, CA. These offers ranged between the 25th

percentile and 42nd percentile of the OES distribution. Excluding the

lowest offer and the highest offer, most offers were clustered between

the 32nd percentile and 41st percentile.

One commenter cited annual wage data from Glassdoor for entry-level

tax managers at public accounting firms in the New York-Newark-Jersey

City, NY-NJ-PA MSA. The Department found that the annual wage was

between 33rd percentile and the 34th percentile. Another commenter

offered Indeed and Payscale annual wage data for accountants in the

Dallas-Fort Worth-Arlington, TX MSA. Using the higher annual wages from

the two surveys, annual wages were between the 19th percentile and the

20th percentile.

One comment cited Glassdoor, Payscale, and ZipRecruiter data for

minimum and maximum annual wages for statisticians in the New York-

Newark-Jersey City, NY-NJ-PA MSA. Review of this data showed the

minimum annual wages were less than the 10th percentile. Another

comment cited Glassdoor average annual wage data for financial analysts

with no experience in in the Dallas-Fort Worth-Arlington, TX MSA, which

showed that the average annual wages were between the 31st percentile

and 32nd percentile.

A commenter cited annual wages offered by a major university in the

Bloomington, IN MSA. Because of data limitations in the OES, the

Department could only compare the annual wages for the computer system

analyst position provided by the commenter. The Department found that

the annual wages for this position were between the 68th percentile and

69th percentile.

A commenter cited the annual wages of an assistant professor of

clinical pediatrics/physician surgeon at a major university in the

Chicago-Naperville-Elgin, IL-IN-WI MSA. The Department found the annual

wages were between the 44th percentile and the 45th percentile.

One commenter cited the annual wages of four employees of a major

university in the Salt Lake City, UT MSA: (1) A computer and

information research scientist, (2) a database architect, (3) a foreign

language instructor, and (4) a pediatric endocrinologist. The

Department found that these annual wages were (1) between the 36th

percentile and the 37th percentile, (2) between the 32 percentile and

the 33rd percentile, (3) between the 12th percentile and 13th

percentile, and (4) between the 34th percentile and the 35th

percentile, respectively.

Another commenter cited Glassdoor annual wage data for a structural

engineer with four to six years of experience in the Boston-Cambridge-

Nashua, MA-NH MSA. The Department found that the annual wages were

between the 24th percentile and the 25th percentile.

One commenter cited Willis Tower Watson private wage survey data

for eight jobs in different metropolitan area that compare with Level 1

and Level 4 OES. The Department focused on the Level 1 data and found

the following:

----------------------------------------------------------------------------------------------------------------

Percentile Percentile

Job OES code Metro below above

----------------------------------------------------------------------------------------------------------------

Electrical Engineer................... 17-2017 San Jose-Sunnyvale-Santa Less than 10 ..............

Clara, CA.

Computer Programmer................... 15-1251 Chicago-Naperville- 32 33

Elgin, IL-IN-WI MSA.

Financial Analyst..................... 13-2098 New York-Newark-Jersey 10 11

City, NY-NJ-PA MSA.

Software Developer.................... 15-1256 New York-Newark-Jersey 14 15

City, NY-NJ-PA MSA.

Information Security Analyst.......... 15-1212 Chicago-Naperville- 16 17

Elgin, IL-IN-WI MSA.

Software Developer.................... 15-1256 Los Angeles-Long Beach- 11 12

Anaheim, CA.

Electrical Engineer................... 17-2071 Los Angeles-Long Beach- 21 22

Anaheim, CA.

----------------------------------------------------------------------------------------------------------------

In sum, most of the wage data offered by commenters was for

salaries paid by employers to entry-level workers in positions

typically filled by H-1B workers. While there are outliers, most of

these wage observations fell between the 30th and 40th percentiles of

the OES distribution. Importantly, wage data about entry-level software

developers employed by some of the largest users of the H-1B program

fell between the 32nd and 41st percentiles. This is noteworthy given

that such data may allow for the closest comparison to the IFR's data

of all the private wage data submitted by commenters. This is because,

as noted above, the IFR's analysis also focused on software developers

and other occupations in the IT sector to account for the fact that

such occupations comprise the largest share of the relevant programs.

It is also notable, in the Department's judgment, that, while the

wage data submitted by commenters tends to be lower on the OES

distribution than the IFR's 45th percentile entry-level wage, it still

generally falls within the wage range between the 32nd and 49th

percentiles identified by the IFR as the portion of the OES

distribution where U.S. workers similarly employed to entry-level H-1B

workers are likely to

[[Page 3638]]

be found. From this, the Department draws two conclusions. First, the

IFR's determination that wages paid to workers similarly employed to

entry-level H-1B and PERM workers likely fall in this range seems to be

largely accurate. While there are outliers in the wage data provided by

commenters that fall both well above and well below the range, the data

from commenters does not give the Department reason to abandon its

conclusion in the IFR that some point within that range will serve as

the appropriate entry-level wage.

Second, while consistent with the IFR's wage range, the commenters'

data suggests, contrary to the IFR's reasoning, that the lower half, as

opposed to the upper half of the range, would be a more appropriate

place to set the entry-level wage. While the IFR offered a variety of

reasons for why the NSF data, which falls at the higher end of the

range, were likely better suited as compared to the CPS data for

informing the Department's decision about where to set the entry-level

wage, and the Department still views those considerations as relevant,

the commenters' data suggests otherwise. As noted, the CPS data suggest

that a point closer to the 32nd percentile would be the appropriate

place to set the entry-level wage, which many data from commenters

would seem to confirm.

As was the case in the IFR, the Department does not evaluate the

data from either the government sources it analyzed or the private wage

data submitted by commenters in a vacuum. Various qualitative

considerations, including key points raised by commenters, shape the

Department's assessment of what conclusions to derive from this data.

First, DOL regulations and guidance establish quality standards for

the use of private wage sources in setting prevailing wage rates.\179\

Some of the private wage sources provided by commenters--particularly

the comments that offer a single example of a wage paid by one employer

in one geographic area--would almost certainly not satisfy these

standards if an employer sought to use them to establish a wage rate

for its H-1B workers. These data are therefore arguably entitled to

less weight than the data relied on in the IFR. Similarly, even as to

the private wage survey sources offered by commenters that may satisfy

DOL's standards, the NSF and CPS data are, in the Department's

judgment, of higher quality. These are highly credible government

surveys administered by agencies with extensive experience in gathering

wage data. This too suggests that the data provided by commenters is

entitled to less weight in the Department's analysis than the data used

in the IFR.

---------------------------------------------------------------------------

\179\ See 20 CFR 655.731(b)(3)(iii)(B) and (C); Sec. 656.40(g).

---------------------------------------------------------------------------

Similarly, as explained above, the analysis used in the IFR

controlled for characteristics relevant to setting a wage rate under

the INA's framework. Because the Department is seeking to set an

appropriate wage primarily for workers in specialty occupations--not

for workers generally--the IFR took, among other things, the INA's

minimum qualification requirements for working in a specialty

occupation into account in deciding what data to use. It is at best

unclear whether some of the surveys offered by commenters are also

limited to workers who could be described as working in a specialty

occupation, and therefore similarly employed to H-1B workers. For

example, while data from one commenter suggest that an entry-level

computer programmer working in the Chicago area makes wages that fall

between the 32nd and 33rd percentiles of the OES distribution, computer

programmers will likely not in all cases be properly regarded as

working in a specialty occupation. For example, in some cases, the job

of a computer programmer may involve writing basic computer code and

testing it.\180\ As explained previously, because a person without a

specialized bachelor's degree can still be classified as a Computer

Programmer, some portion of Computer Programmers captured by the OES

survey are not similarly employed to H-1B workers because the baseline

qualifications to enter the occupation do not match the statutory

requirements. It is therefore possible that the computer programmer

described as an entry-level worker by the commenter may not in fact

have the same level of qualifications as an entry-level H-1B computer

programmer. In such cases, the wage data provided by commenters, being

based on the wages paid to workers who lack the specialized knowledge

required of H-1B workers, is likely below the level that would be an

appropriate entry-level wage for the Department's foreign labor

programs. This, in turn, suggests that the data provided by commenters

are entitled to less weight than the IFR's analysis, which controlled

for the INA's specialty occupation requirement, and may also explain

some of the extreme outliers at the lower end of the OES distribution

found among commenters' data.

---------------------------------------------------------------------------

\180\ Bureau of Labor Statistics, Occupational Outlook Handbook,

Computer Programmers, available at https://www.bls.gov/ooh/computer-and...rogrammers.htm .

---------------------------------------------------------------------------

Relatedly, some of the commenters' private wage surveys report the

bare minimum wage paid to workers in the occupation as the entry-level

wage. Given that entry-level workers typically fall within a range of

the wage data, as opposed to falling only at the very low end of the

distribution, some of the private wage data arguably does not represent

what would count as a reasonable entry-level wage, even if some portion

of entry-level workers do in fact make wages at the bottom end of the

distribution. Indeed, as the Department explained above, the purpose of

the INA's wage provisions to protect U.S. workers suggests that

uncertainty over how to read available wage data should be resolved in

favor of placing the entry-level wage higher up within the distribution

to eliminate as much as possible risks to U.S. workers from the

employment of foreign labor. Yet these private wage sources do just the

opposite, offering what is the absolute bare minimum wage that an

entry-level worker might be expected to make. This too likely accounts

for some of the outliers in the commenters' data that fall below the

IFR's identified wage range, and suggests a wage higher up within the

range should be selected.

On the other side of the equation, and in addition to the data they

provided, commenters have provided the Department with various

considerations that pull in the direction of favoring the lower end of

the IFR's wage range. As explained previously, commenters detailed

various second and third order consequences that would result if

prevailing wage rates do not approximate actual market wages. These

consequences include limiting healthcare providers', universities', and

small businesses' ability to use the H-1B program, which would, in

turn, disrupt research and impede access to healthcare, particularly in

rural areas. Commenters also expressed concerns about the effect overly

inflated prevailing wages would have on their ability to comply with

pay equity laws. The Department takes these concerns seriously, and has

determined that they weigh in favor of placing the entry-level wage at

the lower end of the range identified by the IFR.

To begin with, the Department notes that many if not all of these

problems are eliminated if prevailing wages rates are set in line with

actual market wages. Each of these issues arises principally because,

according to commenters, the IFR's wages do not approximate market

wages. Setting an appropriate entry-level wage based on available data

and

[[Page 3639]]

other relevant considerations is thus the appropriate way to address

these concerns.

As explained previously, the Department continues to believe that

the range identified by the IFR accurately reflects the portion of the

OES distribution where workers with levels of education, experience,

and responsibility similar to the vast run of entry-level H-1B and PERM

workers likely fall--something that commenters' wage data largely

confirms. However, as the Department has also acknowledged, there is

some level of indeterminacy about the exact point in that range at

which placing the entry-level wage will yield optimal outcomes in the

largest number of cases given that different data sources point toward

somewhat different conclusions. In the IFR, the Department reasoned

that the purpose of the INA's wage provisions to protect U.S. workers

warranted resolving such indeterminacy in favor of placing the wage

higher up within the range. However, the Department also recognizes

that a purpose of the H-1B program more generally is to ensure that

employers can access needed high-skilled labor to supplement their

workforces.\181\ Given that prevailing wage rates that are

substantially above actual market wages can impede employers' access to

the program, and cause various problematic, secondary consequences, the

importance of avoiding such outcomes weighs in favor of resolving

indeterminacy in favor of the lower end of the identified range. While

the INA's wage provisions must be implemented in a way that fully

protects U.S. workers' wages, raising wages to such a degree that the

program becomes unusable for many employers defeats the entire reason

Congress created the program. Placing the entry-level wage at a lower

point within the range is one way to ensure that does not occur.

---------------------------------------------------------------------------

\181\ See 144 Cong. Rec. S12741-04, 144 Cong. Rec. S12741-04,

S12749, 1998 WL 734046.

---------------------------------------------------------------------------

Relatedly, because the four-tier wage structure covers hundreds of

thousands of workers employed across hundreds of different occupations

by a wide variety of different employers, there is some level of

variability as between different workers and what would constitute an

appropriate entry-level wage for each of them. As explained above, in

establishing the identified range, the Department focused its analysis

on those occupations that account for the largest number of workers

covered by the four-tier wage structure. The Department continues to

believe this is appropriate given that occupations with large numbers

of foreign workers are where U.S. workers are most at risk of

experiencing adverse wage effects due to competition from foreign

labor. However, the Department also acknowledges that some occupations,

such as physicians, that account for a smaller share of H-1B and PERM

workers and are therefore given less weight in how the Department

identified the entry-level wage range, may have entry-level market

wages that are somewhat lower within the OES distribution than the top

H-1B occupations. This is because, as commenters explained, occupations

like physicians typically require all workers in them to possess an

advanced degree, meaning that, while in the top H-1B occupations the

INA's specialty occupation requirement will generally mean that wages

paid to H-1B workers should be placed higher up within the OES

distribution, that is less true of advanced degree occupations. Workers

in such occupations with qualifications similar to the least skilled H-

1B worker might be found closer to the lower end of the OES

distribution.

In consequence, while the analysis used to identify the entry-level

wage range largely focused on top H-1B occupations, the decision of

where within that range the entry-level wage should be set should give

additional weight to occupations that account for a smaller number of

workers within the program, particularly the advanced degree

occupations about which commenters raised concerns. This suggests that

the lower end of the entry-level range would be a more appropriate

point to place the first wage level. Indeed, the Department notes that

data from at least one commenter about the starting salary of a

pediatric endocrinologist--which falls between the 34th and the 35th

percentiles of the OES distribution--suggest that the lower end of the

range may yield an appropriate entry-level wage for some positions in

advanced degree occupations. Further, as discussed previously, some

commenters suggested that the bottom third of the distribution for

advanced degree occupations consists of entry-level workers similarly

employed to H-1B workers. If commenters are correct, that means that

the lowest points within the entry-level range identified by the

Department does in fact cover the highest paid entry-level workers in

such occupations.

Accounting for small businesses and rural employers that use the H-

1B and PERM programs in selecting a point within the entry-level range

identified by the Department also weighs in favor of the lower part of

the range. As commenters note, large employers are able in some cases

pay higher wages than small businesses. Further, wages in metropolitan

areas may be higher to the extent that these are high-intensity

occupational areas. The Department notes that some of these differences

are already accounted for by other aspects of the regulatory framework

governing prevailing wage rates. In particular, the Department issues

wages based not only on the occupation a worker is in, but also on the

geographic area in which the worker is employed. Thus, for example,

while the wage data described above from large tech companies fall

between the 32nd and 41st percentiles of the wage data gathered for the

metropolitan areas in which those firms operate, such data fall well

above the 60th percentile of the national OES wage distribution. By

taking geographic area into account in analyzing what the appropriate

entry-level wage is, the Department has thus, to some degree, already

accounted for the differences between employers about which some

commenters expressed concern. However, the Department also recognizes

that higher wages may still be less manageable for small businesses and

rural employers, which suggests that the lower part of the entry-level

range would be appropriate.

Moreover, the Department acknowledges that placing the entry-level

wage at any place within the identified range--even the lowest point--

will result in significant wage increases for employers that may, in

some cases, be difficult to adapt to given how long the old wage

methodology has been in place. As detailed at greater length below, the

Department is addressing this concern by phasing in the new wage rates

over a period of time. However, the Department also believes that, even

with a phased-in approach, the ability of employers to adapt to a

significant change is relevant to the decision of where to set the

entry-level wage. Insofar as a smaller increase--albeit one that is

still substantial--will be more manageable for employers, the

Department considers that also to be a reason to favor the lower end of

the range.

On balance, the Department has determined that the factors pointing

to the lower end of the identified range carry greater weight than the

reasoning relied on in the IFR to select the higher end of the range.

Accounting for advanced degree occupations, employers' ability to

access the program and adapt to the change effected by this rule, and

private wage data are all compelling considerations put forward by

commenters that, in the Department's judgment, warrant a reassessment

of its

[[Page 3640]]

decision in the IFR. Thus, while in the IFR the Department chose to set

the entry-level wage at approximately the 45th percentile, which fell

at approximately the midpoint of the upper half of the entry-level

range, the Department is now adjusting the level downward to

approximately the midpoint of the lower half of the range, which is the

35th percentile.

Importantly, setting the wage at the 35th percentile will, in the

Department's view, still provide the full protection to U.S. workers

contemplated by the INA. The 35th percentile falls within the range

identified in the IFR as the portion of the OES distribution where

workers with qualifications comparable to entry-level H-1B and PERM

workers are likely to fall. The manner in which the Department

identified that range, as recounted above, relied on a variety of

considerations, including the INA's specialty occupation requirement

and how that interplays with the OES data, to ensure that the interests

of U.S. workers are fully and properly accounted for in how the wage

levels are set. As a result, while lower than the level set in the IFR,

the 35th percentile will still achieve the purpose of the INA's wage

provisions. While a point higher up within the range may also be

reasonable, and the Department may reassess how to set the entry-level

wage as it gains experience administering the entry-level at the 35th

percentile, the Department believes that the 35th percentile strikes

the right balance between fully protecting workers' wages and job

opportunities while also preserving employers' ability to access the

program.

By favoring the lower end of the range, the Department is confident

the second and third order consequences identified by commenters as a

product of prevailing wage rates that are inflated above actual market

wages will be reduced if not eliminated by the downward adjustment in

the entry-level wage. The Department notes that the downward adjustment

is substantial. To compare the effects of the final rule on prevailing

wages with the effects on prevailing wages produced by the IFR, the

Department calculated the prevailing wages for two common occupations

for H-1B workers (web develops and electrical engineers) in five

metropolitan area (Atlanta-Sandy Springs-Roswell, GA; Austin-Round

Rock, TX; Chicago-Naperville-Elgin, IL-IN-WI; San Jose-Sunnyvale-Santa

Clara, CA; and Seattle-Tacoma-Bellevue, WA) under the IFR and the final

rule. The Department then analyzed the differences. Comparing the

prevailing wages under the final rule and interim final rule, the

Department found that the prevailing wages are significantly lower

under the final rule for both occupations in all five metropolitan

areas at all four levels expect for the prevailing wage for level 4 web

developers in Seattle, which is $7,322 or 3.8% higher (see table

below).

--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------

MSA Occupation Level 1

Level 2

Level 3

Level 4

--------------------------------------------------------------------------------------------------------------------------------------------------------

Atlanta-Sandy Springs-Roswell, Web Developer... -$11,648 -13.1% -$12,370 -11.6% -$13,114 -10.6% -$13,836 -9.8%

GA.

Atlanta-Sandy Springs-Roswell, Electrical -11,635 -12.6% -13,743 -11.6% -15,851 -11.0% -17,960 -10.6%

GA. Engineer.

Austin-Round Rock, TX......... Web Developer... -4,235 -5.9% -7,805 -8.2% -11,355 -9.5% -14,926 -10.5%

Austin-Round Rock, TX......... Electrical -2,732 -3.0% -9,165 -7.6% -15,576 -10.5% -22,009 -12.4%

Engineer.

Chicago-Naperville-Elgin, IL- Web Developer... -27,280 -29.6% -29,138 -25.6% -30,974 -22.9% -32,831 -20.9%

IN-WI.

Chicago-Naperville-Elgin, IL- Electrical -9,720 -10.5% -15,301 -13.2% -20,881 -15.1% -26,462 -16.4%

IN-WI. Engineer.

San Jose-Sunnyvale-Santa Web Developer... -9,157 -10.2% -11,963 -10.0% -14,769 -9.9% -17,576 -9.9%

Clara, CA.

San Jose-Sunnyvale-Santa Electrical -5,420 -4.5% -18,039 -11.1% -30,680 -15.0% -43,299 -17.6%

Clara, CA. Engineer.

Seattle-Tacoma-Bellevue, WA... Web Developer... -20,876 -14.6% -11,477 -7.2% -2,078 -1.2% 7,322 3.8%

Seattle-Tacoma-Bellevue, WA... Electrical -16,485 -14.1% -21,561 -14.8% -26,617 -15.2% -31,693 -15.4%

Engineer.

--------------------------------------------------------------------------------------------------------------------------------------------------------

Further, the Department notes that many of commenters' concerns are

also addressed by other measures the Department is taking in this final

rule. For example, commenters' complaints about overly inflated wages

for physicians, particularly in rural areas, focused in many cases on

the fact that the IFR resulted in a default wage of $208,000 a year for

all four levels in a number of different locations. As detailed more

fully below, the Department is eliminating the influence of outliers on

the upper level wage, reducing the upper level wage, and providing a

default rule for cases where BLS is unable to calculate the upper level

wage to ensure that the Department provides leveled wages wherever

possible. These measures will further alleviate complications

healthcare providers and other employers in rural areas encountered

under the IFR.

The Department disagrees with comments that suggested that the

median of the OES distribution should be the absolute minimum for the

entry-level wage, and that some point even higher up in the

distribution might be appropriate. The purpose of having a four-tier

wage structure is to provide gradually increasing wages as workers

skill levels increase. The entry-level wage should therefore be set not

based on what the median wage is of all workers, but rather based on an

assessment of what other entry-level workers with qualifications

comparable to H-1B and PERM workers possess. As detailed at length

above, the Department's review of the relevant data and other

considerations indicates that a point below the median is the right

place to set the entry-level wage.

The Department also rejects other alternatives suggested by

commenters. For example, the recommendation that the Department set

wages by averaging the IFR's wage levels with the old wage levels is

flawed because, as noted, the old wage levels were selected

arbitrarily, and therefore should not be a significant factor in how

the Department determines the new wage levels, except insofar as the

Department takes into account employers' and workers' reliance

interests in the prior methodology. The Department also disagrees with

the commenter that suggested that the prevailing wage should be the

highest prevailing wage in the nation for any given occupation. Doing

so would ignore the importance variations in labor markets by

geographic area have long played in how prevailing wage rates are

provided, as well as the statutory requirement that prevailing wage

rates be based in part on geographic area.

4. Reliance Interests

Summary of Comments

Many commenters expressed concern about the IFR's negative impact

on current H-1B visa holders in the United States, especially those

with families and strong ties in the United States and those with

pending or approved I-140 Immigrant Petitions for Alien Workers or

pending I-485 Applications to Register Permanent Residence or Adjust

Status (``green cards''). Several commenters discussed the impact on

foreign workers who had expected to continue working in the United

States and for some, obtain lawful permanent status through their

employer. Commenters expressed concern that employers would terminate

H-1B visa holders and ``potential green-card recipients'' would have to

leave the country. An individual commenter

[[Page 3641]]

asserted that the IFR would inhibit job opportunities for international

graduates of U.S. universities, regardless of their capabilities, and

contended that the new wage levels would disincentivize legal

immigration. Similarly, another individual commenter described the rule

as ``eliminating legal immigration paths'' and warned that it will

cause foreign workers who have contributed greatly to the U.S. tax base

to go out of status.

Commenters stated that since some employers will not be able to

afford the wage increases and will terminate foreign workers, the IFR

would have devastating effects on the lives of foreign workers with

families, property, and ties to a community. One lobbying organization

stated the IFR would mean that ``many talented foreign nationals [would

be] forced to leave the U.S. because these new wage requirements make

it impractical to continue employing them in our country.'' Based on

polls of their membership conducted by some of the signatories, a group

of professional associations and advocacy organizations asserted that

as many as 70 percent of H-1B workers who are making progress toward

obtaining a green card, and in many cases have ``developed permanent

ties to the United States'' through home ownership or U.S.-born

children, may have to abandon the process. The commenter also stated

that the IFR ``understates or ignores altogether the reliance

interests'' of the nearly 600,000 H-1B workers currently employed in

the United States. This professional association warned that H-1B

workers whose status is threatened by the IFR will need to leave the

country abruptly, impacting not only the workers, but also their

spouses and children, and it expressed concern about COVID-19

complicating further their ability to relocate. The commenter

maintained that suddenly changing the longstanding rules that have

before now allowed workers to buy homes, raise children, and otherwise

create ties to the United States over time is unfair and unreasonable.

Meanwhile, an attorney claimed that the IFR's economic and social

impacts will be acute for Indian nationals in particular because they

often face long delays while waiting for green cards, which the

commenter said results in many purchasing houses and having children

here. One public policy organization that supported the IFR opposed

immediate implementation, asserting the abrupt wage increase would put

currently employed workers in a ``precarious position'' and ``may cause

churn if employers [are] unwilling to pay real market wages [and]

decline to renew their workers' H-1B visas or initiate petitions for

permanence.''

One commenter also expressed concern that an employer may violate

DOL regulations at Sec. 655.731(a) if it pays the IFR wage to workers

hired after the IFR effective date, but continues to pay a current H-1B

worker the lower wage issued prior to the IFR, because the employer

will be paying less than the actual wage to the first employee. The

commenter suggested that this would result in additional disruption to

employers' operations as the new wage levels would result in increases

in the wages owed to new H-1B workers, but would result in immediate

changes to the wages owed to workers already employed.

Many commenters expressed concern that immediate implementation of

the IFR dramatically increased prevailing wages too abruptly,

jeopardizing operations by disrupting long-term budget and other

planning, interfering with contractual obligations, and preventing

employers from adapting to the wage increases by adjusting operations

and hiring and training new workers.

A professional association expressed concern that the immediate

implementation of the IFR would increase costs for ``human resources

and compensation staff to bring their companies into compliance with

the rule'' and asserted the Department failed to consider staffing

changes that may be necessary for employers that cannot ``support''

wages at levels produced by the IFR methodology. A trade association

expressed concern that the IFR may cause ``material disruption'' to

employers' ``operations or delivery models . . . because of long-term

contractual commitments . . .'' and that these employers may be

``forced to operate at a loss'' because they are unable to re-negotiate

contracts entered into prior to the IFR effective date. Another trade

association stated that the IFR forced employers to put ``talent

acquisition and workforce development decisions on hold'' and required

them to ``reconsider work schedules, cost increases, and performance

metrics that impact their entire workforce.'' The commenter expressed

concern that immediate implementation of the IFR created operational

disruptions because employers relied on the published July 2020 OES

wages ``to create plans, develop strategies and hiring, and consider

talent retention and immigration programs.'' A third trade association

asserted the IFR may cause long-term damage to employers and disrupt

U.S. worker hiring processes because employers ``plan and budget their

hiring months and often years in advance.''

A higher education policy organization noted that colleges and

universities have planned budgets and salaries and signed employment

contracts in reliance on wages produced by the Department's wage

surveys and expressed concern the IFR would require these employers to

``re-visit all of those plans, in the midst of a pandemic and in the

middle of an academic year.'' The commenter also stated the

Department's wage rules are complex and that universities have ``spent

years developing the methodology according to DOL requirements'' and

``invested significant resources over the years to train international

offices on DOL prevailing wage methodology.'' A higher education

professional association noted hiring cycles at academic institutions

``often run over a year'' and that employers have already made offers

to foreign workers ``based on the ability to sponsor H-1B status and/or

green cards.'' A university submitted a similar comment and expressed

concern that immediate implementation of the IFR would require the

employer to renegotiate employment offers ``in some cases . . . just

days before the expiration of the beneficiary's current status.''

Several commenters, including some that expressed support for the

IFR, urged the Department to provide for a transition period or to

phase in the wages over time to permit employers to adjust to the wage

increases. A commenter from academia suggested the Department should

phase in the new wage levels over no more than a two-year period, which

the commenter believed would be sufficient time for employers to adjust

to the new wage levels while also preventing employer ``exploitation of

artificially low wage rules.'' A public policy organization that

supported a phase-in period also suggested the Department should work

with DHS to ``create positive incentives for employers who match the

new wage requirements for their existing workforce.'' A public policy

organization also suggested the Department should apply the revised

wage level methodology only to ``new workers in . . . temporary work

visa programs with [LCAs] submitted after the IFR took effect'' to

avoid ``discourag[ing] renewals and petitions for lawful permanent

residence by employers unwilling to pay market wage rates.'' The

commenter stated this would protect workers who were ``contracted under

one set of rules and expectations'' by avoiding an

[[Page 3642]]

unreasonable change to those terms and conditions of employment.

Response to Comments

While the Department believes that adjusting the wage levels in the

IFR to a level that more closely approximates the actual wage typically

paid to U.S. workers similarly employed to H-1B workers will address

many if not most of the concerns raised by commenters about the impact

of the new wage methodology, it also recognizes that implementing such

an immediate and significant change may cause disruption to employers'

and foreign workers' reliance interests in the old methodology. While

such reliance interests are difficult to quantify, the Department has

sought to account for these interests and ensure that the new wage

levels are implemented in a way that appropriately balances the need to

protect U.S. workers with the Department's obligation to consider

reliance interests engendered by its prior methodology, the Department

has decided to adopt a series of measures to ease the transition to the

new wage structure.

In particular, the Department is including in the final rule a

delayed implementation period under which adjustments to the new wage

levels will not begin until July 1, 2021. Further, once adjustments

begin, they will be made in a phased approach, with most job

opportunities not becoming subject to the full increase to the new

levels until July 1, 2022. For workers who are on track to receive

lawful permanent resident (LPR) status, as indicated by their being the

beneficiaries of approved employment-based green card petitions, or

otherwise eligible to extend their H-1B status beyond the six-year

limit, the Department has determined that a more gradual phase-in

occurring in four steps that results in job opportunities filled by

such workers being placed at the new wage levels beginning on July 1,

2024, is appropriate. Finally, to the extent that employers' actual

wage obligations under the INA may result in more immediate changes to

the wages they must pay workers who have already received work

authorization on a previously approved LCA, the Department will take

this into account in exercising the discretion afforded it by the INA

when enforcing such obligations.

In effecting an adjustment to the wage levels previously used to

set the prevailing wage in the H-1B and PERM programs, the Department

is obligated to consider whether ``its prior policy has engendered

serious reliance interests.'' \182\ In the IFR, the Department

recognized that the old wage levels ``have been in place for over 20

years, and that many employers likely have longstanding practices of

paying their foreign workers at the rates produced by the current

levels.'' \183\ The Department further acknowledged that making

significant adjustments to the wage levels ``may result in some

employers modifying their use of the H-1B and PERM programs,'' and

``will also likely result in higher personnel costs for some

employers.'' \184\ Despite these considerations, the Department

concluded that ``to the extent employers have reliance interests in the

existing levels . . . setting the wage levels in a manner that is

consistent with the text of the INA and that advances the statute's

purpose of protecting U.S. workers outweighs such interests and

justifies such increased costs.'' \185\

---------------------------------------------------------------------------

\182\ F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 515

(2009).

\183\ 85 FR 63,893.

\184\ 85 FR 63,894.

\185\ Id.

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As explained above, the Department continues to believe that the

old wage levels are the source, in many cases, of serious, adverse

effects on U.S. workers' wages and job opportunities. Adjusting the

levels to bring them in line with the wages paid to U.S. workers with

levels of education, experience, and responsibility comparable to H-1B

workers--and thereby reducing the danger posed to U.S. workers by the

employment of foreign workers--remains the principal aim of this

rulemaking. Ensuring that the Department's wage structure is set in

accordance with the relevant statutory factors is also necessarily a

controlling objective in the Department's assessment of how best to

reform the prevailing wage levels. The old levels have never been

justified by economic analysis, and, as detailed above, are in tension

with the statutory scheme insofar as they are based, in many instances,

on data about the earnings of workers who cannot be regarded as

similarly employed to workers in specialty occupations. Effecting a

significant adjustment to the wage levels, and doing so as

expeditiously as is reasonably possible, is therefore of paramount

importance in the Department's judgment.

That said, concerns raised by commenters about disruptions to

business operations, fairness to foreign workers, and the feasibility

of adapting to significant changes to the wage levels in a short period

of time are also entitled to weight in how the Department implements

adjustments to the levels. The old levels were set far too low, which

means that the adjustment necessary to bring them in line with what

similarly employed U.S. workers make, and therefore be consistent with

the statutory scheme, is substantial. The Department notes that

shifting the entry-level wage from approximately the 45th percentile

provided for by the IFR to the 35th percentile means the adjustment

employers will have to make to accommodate themselves to the new levels

is less dramatic. But it is still significant. Indeed, approximately 60

percent of all LCAs in recent years have been for job opportunities at

the first and second wage levels, which are at roughly the 17th and

34th percentiles of the OES distribution. Setting the lowest wage level

at the 35th percentile thus means that the prevailing wage for all H-1B

workers going forward will likely be higher--and in many cases

substantially so--than the prevailing wage for as much as 60 percent of

the current H-1B population. The Level III and Level IV wages will also

now be, in many cases, higher than the highest wage required under the

old Level IV wage. Considerations brought to the Department's attention

by commenters about the effects of an adjustment of this magnitude have

provided the Department with greater insight into how to implement such

a substantial change.

For that reason, the Department has reassessed how it balanced in

the IFR reliance interests in the old wage levels with the need to

adjust the wage levels. To begin with, the Department reiterates that

setting wages so as to protect U.S. workers is the central purpose of

the INA's wage requirements.\186\ To the extent commenters suggest that

business practices have evolved around and been shaped by the old wage

levels, and that the old levels, or something close to them, should

therefore be maintained indefinitely or for extended periods of time to

prevent disruption to employers' operations, the Department disagrees.

The fact that some employers have long benefited from inappropriately

low

[[Page 3643]]

wage rates cannot justify the continued perpetuation of the harms to

U.S. workers that result from foreign workers earning wages that do not

reflect what similarly employed U.S. workers are paid.

---------------------------------------------------------------------------

\186\ See Labor Condition Applications and Requirements for

Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations

and as Fashion Models, 59 FR 65,646, 65,655 (Dec. 20, 1994)

(describing the ``Congressional purposes of protecting the wages of

U.S. workers'' in the H-1B program); H.R. Rep. 106-692, 12 (quoting

Office of Inspector General, U.S. Department of Labor, Final Report:

The Department of Labor's Foreign Labor Certification Programs: The

System is Broken and Needs to Be Fixed 21 (May 22, 1996) (``The

employer's attestation to . . . pay the prevailing wage is the only

safeguard against the erosion of U.S. worker's [sic.] wages.'').

---------------------------------------------------------------------------

However, in light of the comments it received, the Department has

determined that a wage increase that is both dramatic and immediate is

also undesirable, and indeed may be counterproductive to the aims of

this rule. For one thing, as some commenters noted, immediate

disruptions to business operations, such as might lead to the

termination of contracts or the shuttering of offices, may in fact

threaten U.S. workers with job losses or reductions in work. Adopting a

rule that eliminates workers' jobs in order to protect their wages

advances neither the interests of workers nor the purposes of the INA.

Similarly, the Department acknowledges that, while the aim of the

INA's wage requirements is to protect U.S. workers, one purpose of the

H-1B program more generally is to ensure that employers can access

needed high-skilled labor to supplement their workforces.\187\ Although

permitting employers to access temporary foreign labor must be

accomplished in a way that works no harm on the wages and job

opportunities of U.S. workers, it is also important to ensure that

reforms to the prevailing wage do not unnecessarily limit employers'

use of the program. Helping employers bring the wages they pay their H-

1B workers in line with the requirements of the INA while avoiding the

kind of abrupt change that might make it unreasonably difficult for

employers to adapt is therefore consistent with the broader goals of

the H-1B program.

---------------------------------------------------------------------------

\187\ See 144 Cong. Rec. S12741-04, 144 Cong. Rec. S12741-04,

S12749, 1998 WL 734046.

---------------------------------------------------------------------------

For those reasons, the Department has determined that a gradual

transition to the new wage levels is needed to account for employers'

reliance interests on the prior system while still ensuring that U.S.

workers' wages and job opportunities are fully protected. Such an

approach is a reasonable method of effecting a regulatory change that

results in increased costs on regulated entities.\188\ Modifying the

existing system over a period of time, even where the prior system is

inconsistent with the governing statute, can assist affected parties in

``reorder[ing] their affairs.'' \189\ The Department's decision to

implement the new wage rates through a transition rather than through

an immediate adjustment is also consistent with the notice the IFR gave

to the public of the intended policy change.\190\

---------------------------------------------------------------------------

\188\ See Mexichem Fluor, Inc. v. Envtl. Prot. Agency, 866 F.3d

451, 464 (D.C. Cir. 2017).

\189\ Dep't of Homeland Sec. v. Regents of the Univ. of

California, 140 S. Ct. 1891, 1914 (2020).

\190\ Select Specialty Hosp.-Akron, LLC v. Sebelius, 820 F.

Supp. 2d 13, 24 (D.D.C. 2011).

---------------------------------------------------------------------------

Modifying the prevailing wage levels through a delayed or graduated

transition matches how Congress and other agencies have instituted

similar changes to employers' wage obligations in other contexts. For

example, all increases in the Federal minimum wage that Congress

enacted over the last 60 years were phased in over two or more

years.\191\ Only two of the ten minimum wage adjustments since the

enactment of the Fair Labor Standards Act have been made fully

effective immediately. The three most recent amendments to the Federal

minimum wage were implemented over two or three year periods.\192\ In

so doing, Congress has sought to minimize any loss of jobs or other

economic disruptions that an immediate, one-step increase in the

Federal minimum wage might cause to labor markets. Changes to minimum

wage laws at the state level are also often made through incremental

adjustments.\193\ Similarly, the Department has employed comparable

transition provisions when implementing wage changes in other foreign

labor programs.\194\

---------------------------------------------------------------------------

\191\ https://www.dol.gov/agencies/whd/minimum-wage/history .

\192\ Id.

\193\ https://www.dol.gov/agencies/whd/minimum-wage/state .

\194\ See 20 CFR 655.211(d).

---------------------------------------------------------------------------

Similarly, the Wage and Hour Division has typically implemented

changes to employers' obligations to provide overtime pay through

delayed effective periods. The most recent change to overtime rules was

made effective more than 90 days after the final rule was published--

more time than is required by either the Administrative Procedure Act

or the Congressional Review Act.\195\ The 2016 overtime rule (later

enjoined) was made effective more than five months after

publication.\196\ The 2004 overtime rule was made effective 120 days

after publication.\197\ In both cases, the Department determined that a

delayed effective date would ``provide employers ample time to make any

changes necessary to ensure compliance with the final regulations.''

\198\

---------------------------------------------------------------------------

\195\ 84 FR 51,230, 51,234.

\196\ 81 FR 32,391 (May 23, 2016).

\197\ 69 FR 22,121.

\198\ Id. at 22,126.

---------------------------------------------------------------------------

The Department notes that changes to the minimum wage or overtime

obligations are different in important respects from the adjustments

the Department is making to the prevailing wage levels. For one thing,

changes to the minimum wage and overtime requirements are often made in

light of gradual changes in economic conditions that make it necessary

to reassess a prior policy determination. By contrast, in undertaking a

change to the prevailing wage levels, the Department is giving

meaningful consideration to what employers' wage obligations should be

based on available economic data for the first time since the

Department began using a multi-level wage structure in its foreign

labor programs. Similarly, while Congress's decision to adjust the

minimum wage is driven entirely by competing policy considerations, the

Department's discretion to adjust the wage levels is to some degree

confined by the INA. As explained above, the Department is adjusting

the manner in which it sets prevailing wage rates not only because the

existing wage levels are the source, in some cases, of harm to U.S.

workers' wages and job opportunities, but also because they are

inconsistent with the governing statute. In consequence, the reform the

Department is undertaking in this rulemaking is long overdue and of

greater significance than similar kinds of changes to employers' wage

obligations in other contexts. Finally, as explained further below, the

adjustments to the prevailing wage levels will not have the same kind

of immediate impact on employers' wage obligations with respect to all

workers currently on their payroll as changes to the minimum wage do.

Employers will be able to pay H-1B workers currently employed in many

cases at the current wage levels for the duration of the validity

period of their current LCAs. Increases in the wage levels will

generally have an immediate impact only on new workers or where the

employer seeks to renew a current worker for a new period of

employment. In consequence, immediate changes to the wage levels are

likely to be less disruptive than immediate increases in the minimum

wage. In combination, these considerations weigh in favor of keeping

the transition period to the new wage levels of short duration, even if

that means employers will still be required to adapt quickly to a

significant increase in the wage levels.

The Department has therefore decided to implement the adjustments

to the prevailing wage levels through a combination of a delayed

effective period and multi-step adjustments occurring over

approximately a year and

[[Page 3644]]

half period. The first adjustment to employers' prevailing wage

obligation will not occur until July 1, 2021. This delay from

publication of this rule until the first wage increase will give

employers time to plan for the adjustment. Adjusting the wage levels on

July 1st is also consistent with historical practice at the Department,

which has typically published the new annual wage rates for the H-1B

and PERM programs each year at the beginning of July. Employers are

thus accustomed to modifications being made at that time of the year.

On July 1st, the entry-level wage will increase from roughly the

17th percentile to 90 percent of the 35th percentile wage, as provided

by BLS--a point approximately halfway between the current Level I wage

and the 35th percentile, which, as explained above, is the point in the

OES distribution that the Department has determined is appropriate for

setting entry-level wage rates. Similarly, at the same time the Level

IV wage will increase from roughly the 67th percentile to 90 percent of

the 90th percentile wage. The following year, on July 1, 2022, the wage

levels will again increase, and be placed at the 35th percentile for

the entry-level wage and the 90th percentile for the uppermost level,

at which point the transition to the new wage structure will be

complete.

The Department determined the appropriate step up in wages by

analyzing national wage data for the top ten occupations in which H-1B

workers are employed. In particular, the Department averaged the wages

estimated to fall at various percentile in the OES distribution using

linear interpolation, and weighted that average by the share of H-1B

workers in each occupation relative to the total number of H-1B workers

in the top ten occupations. In so doing, the Department relied on the

same basic methodology it used to determine the appropriate entry-level

wage. As explained elsewhere, the Department's interest in maintaining

a single, uniform wage methodology for the H-1B and PERM programs means

that the wage provided will not be perfectly tailored to every job

opportunity or geographic location. Providing wages that are closely

tailored to the unique circumstances of as many job opportunities as

possible while still using a single wage structure necessarily means

that the Department must focus on nationwide data and those occupations

that account for the largest share of the affected programs.

An analysis of national data for the top ten H-1B occupations

indicates that 90 percent of the average wage at the 35th percentile

falls approximately at the midpoint between wages at the 17th

percentile--a rough proxy for the wages yielded by the old wage

methodology--and wages at the 35th percentile. Similarly, 90 percent of

the average wage at the 90th percentile is approximately the midpoint

between wages at the 67th percentile--a rough proxy for the Level IV

wages yielded by the old methodology--and the 90th percentile.

Requiring employers to pay wages that are 90 percent of the 35th

percentile for entry-level workers and 90 percent for Level IV workers

in the first stage of the two-step implantation of this rule will thus

ensure an even and gradual adjustment over the period of time the

Department has determined is appropriate to allow employers to adapt to

the new wage rates.

The Department recognizes that, even under this incremental

approach, wage rates will still increase significantly in a relatively

short period. An analysis of wage rates based on current OES data

suggests that an increase in the entry-level wage from roughly the 17th

percentile to 90 percent of the 35th percentile may equate in many

cases to a real dollar increase of approximately 14 percent in the

annual wages employers will be required to pay their foreign workers.

However, for the reasons given above, the Department believes that a

transition consisting of both a delayed effective period and a gradual

increase to the new wage levels occurring over a year and a half period

is the appropriate way to balance the need to ensure U.S. workers are

not harmed by the presence of foreign workers in the labor market while

giving employers time to adapt to the new wage system. Further delay in

adjusting to the new levels would, absent some other compelling

consideration, entail too great a risk to U.S. workers' wages and job

opportunities, in the Department's judgment.

Beyond employers' general reliance on the old wage levels, the

Department notes that some employers also have reliance interests in a

specific worker or group of workers currently working who were hired on

the understanding that they would be employed at wages based on the

prior prevailing wage methodology. Immediate changes to the wages

employers are required to pay could change the expectations employers

had about the cost of employing such workers when they invested in

sponsoring them for a visa. Such concern would only pertain to visa

workers who have already been approved and who are already working. It

is unlikely that this kind of immediate change to employers' wage

obligations to current workers will occur, however, to the extent it

does the Department possesses some enforcement discretion to mitigate

against any such potential impact on visa workers hired under the prior

prevailing wage methodology.\199\

---------------------------------------------------------------------------

\199\ It should be noted that this is a finite issue that exists

only until current workers' visas expire.

---------------------------------------------------------------------------

As some commenters noted, there is a possibility that employers'

wage obligations as to current workers will be immediately affected by

significant adjustments to the prevailing wage levels, even though the

Department has already approved LCAs for these workers, which contain

prevailing wage rates that will remain valid for the duration of the

LCA's validity period.\200\ This may occur through operation of

employers' actual wage obligation under the INA and the Department's

regulations, which is to say their obligation to pay the higher of the

actual wage or the prevailing wage to their H-1B workers.\201\ As the

Department's regulations note, ``employers are cautioned that the

actual wage component to the required wage may, as a practical matter,

eliminate any wage-payment differentiation among H-1B employees based

on different prevailing wage rates stated in applicable LCAs.'' \202\

While new prevailing wage rates based on this rule's revised

methodology will not immediately change the prevailing wage for H-1B

workers with already-approved LCAs, the arrival of new H-1B workers at

the same worksite that is subject to a higher prevailing wage under the

new methodology could potentially modify employers' actual wage

obligations with respect to current H-1B workers and result in the

employer having to pay a higher wage.

---------------------------------------------------------------------------

\200\ See 20 CFR 655.731(a)(2)(viii) (``Where new nonimmigrants

are employed pursuant to a new LCA, that new LCA prescribes the

employer's obligations as to those new nonimmigrants. The prevailing

wage determination on the later/subsequent LCA does not ``relate

back'' to operate as an ``update'' of the prevailing wage for the

previously-filed LCA for the same occupational classification in the

same area of employment.

\201\ See 8 U.S.C. 1182(n)(1).

\202\ 20 CFR 655.731(a)(2)(viii); see also Labor Condition

Applications and Requirements for Employers Using Nonimmigrants on

H-1B Visas in Specialty Occupations and as Fashion Models; Labor

Certification Process for Permanent Employment of Aliens in the

United States, 65 FR 80,110-01 (``The Department's interpretation of

an employer's actual wage obligation as an ongoing, dynamic

obligation has been the Department's position since the inception of

the H-1B program.'').

---------------------------------------------------------------------------

While acknowledging this issue, the Department believes, as a

practical matter, it is unlikely that the introduction of new H-1B

workers at a worksite will result in immediate and

[[Page 3645]]

significant increases in the wages an employer is required to pay

current H-1B workers who have already been approved to work at

prevailing wage rates based on the prior wage methodology. First, the

Department's Wage and Hour Division has never brought a case in which

an employer was deemed to have violated its actual wage obligations as

a result of a different H-1B worker being paid a higher prevailing wage

rate. This is so for a few reasons. For instance, for the wage paid to

a new H-1B worker to be relevant to the employer's actual wage

obligation to a current worker, the new worker would not only have to

be stationed at the same specific worksite, but also possessed of

similar qualifications and experience as the current worker and be

performing the same set of duties and responsibilities.\203\ Thus, the

wages paid to many new H-1B workers will likely simply not be relevant

to employers' actual wage obligations to current workers.

---------------------------------------------------------------------------

\203\ See 20 CFR 655.731(a)(1); 20 CFR 655.715.

---------------------------------------------------------------------------

Second, the actual wage ``reflects the application of an employer's

actual pay system.'' \204\ Employers are therefore permitted to

establish the actual wage they pay H-1B workers by taking into account

``Experience, qualifications, education, job responsibility and

function, specialized knowledge, and other legitimate business

factors.'' \205\ In consequence, even as between H-1B workers with

similar qualifications and experience performing the same duties and

responsibilities, an employer may have other legitimate reasons for

paying these workers different wages. The fact that one worker has a

significantly higher prevailing wage rate will, in many cases, be only

one of many relevant factors governing the employers' actual wage

obligation.

---------------------------------------------------------------------------

\204\ 65 FR 80193 (Dec. 20, 2000).

\205\ 20 CFR 655.731(a)(1).

---------------------------------------------------------------------------

In those instances where the employer has not documented and cannot

reconstruct its actual wage system, the Department may base the actual

wage on averaging the wages paid to all similarly employed

workers.\206\ In those instances, the introduction of a new H-1B worker

at the worksite will not necessarily cause the actual wage owed to

current H-1B workers to immediately increase to whatever the new

workers' prevailing wage rate is. Rather, a more modest increase may be

required based on an average of what the new worker is being paid as

compared to what similarly employed current workers are making.

---------------------------------------------------------------------------

\206\ 65 FR 80193.

---------------------------------------------------------------------------

Finally, although the Department does not believe that employers'

actual wage obligations to current H-1B workers are likely to change

immediately as a result of adjustments to the prevailing wage levels,

the Wage and Hour Division will, where appropriate, take the above

factors into consideration in enforcement actions. In some cases, the

Department has discretion over whether to launch an investigation into

potential violations of the INA's wage requirements.\207\ Similarly,

even in those cases where the Department is obligated by statute to

initiate an investigation and make a determination as to whether a

violation has occurred, the assessment of civil money penalties, where

such penalties are applicable at all, is sufficiently flexible to take

all of the facts and circumstances into account.\208\

---------------------------------------------------------------------------

\207\ See 8 U.S.C. 1182(n)(2)(G)(ii); Heckler v. Chaney, 470

U.S. 821, 835 (1985).

\208\ See 8 U.S.C. 1182(n)(2)(C); Butz v. Glover Livestock

Comm'n Co., 411 U.S. 182, 185-86 (1973); 20 CFR 655.810(c).

---------------------------------------------------------------------------

In the unlikely event that violations of this kind arise the

Department will evaluate them on a case-by-case basis, and, in choosing

whether to bring an enforcement action or impose civil monetary

penalties, the cause of the violation will be taken into account.

Once a currently employed worker's LCA expires, the employer will,

except as explained below, be required to pay the worker a prevailing

wage rate based on the new methodology if the employer seeks a new

labor certification. As noted above, some commenters suggested that

this will result in certain employers being unable to renew their

workers for a new period of employment as it will be too costly to do

so, and that this will be disruptive to business operations. While this

may be the case in some instances, the Department emphasizes that H-1B

visas provide only temporary work authorization. Neither employers nor

guest workers on H-1B visas can claim a permanent interest in a

temporary employment relationship.\209\ Further, requiring employers to

file new LCAs periodically to continue employing H-1B workers gives

teeth to the INA's wage protections by ensuring that the prevailing

wage an employer must pay is not based on out-of-date information.\210\

Allowing all current H-1B workers to continue working at the prevailing

wage rates below the level the Department has determined is appropriate

after the LCAs associated with their positions have expired and their

employers have filed new LCAs would undermine the Department's

determination that significant adjustments are needed to the wage

levels to adequately protect U.S. workers.

---------------------------------------------------------------------------

\209\ Cf. LeClerc v. Webb, 419 F.3d 405, 417-18 (5th Cir. 2005).

\210\ See Labor Condition Applications and Requirements for

Employers Using Nonimmigrants on H-1B Visas in Specialty Occupations

and as Fashion Models, 59 FR 65646, 65654-55.

---------------------------------------------------------------------------

In consequence, when an employer files a new LCA as part of the

process of renewing an H-1B worker for a new period of employment, the

Department has concluded that it is appropriate that the new prevailing

wage rates should, except as noted below, apply. To the extent

employers may have had expectations that current workers could be

renewed at rates based on the old wage levels, such expectations are

naturally circumscribed by the fact that H-1B visas are inherently

temporary in nature and there is no legal guarantee that work

authorizations will be renewed on the terms that they were previously

granted. Further, any such expectations are, in the Department's view,

outweighed by the need to guard against adverse effects on U.S.

workers' wages and job opportunities.

Beyond concerns about being able to renew current H-1B workers

generally, some commenters also noted that employers' and guest

workers' reliance interests in the old wage methodology are

particularly weighty in cases where the employer has sponsored the H-1B

worker for LPR status. As one commenter noted, H-1B workers who are on

the path to obtaining LPR status ``often have purchased a home,

developed permanent ties to the United States, or made a decision to

have children here, counting on obtaining Lawful Permanent Resident

status.'' That commenter also suggested that an immediate and abrupt

change in the wage rates could mean that ``65%-70% of all individuals

being sponsored for green card status through a Permanent Employment

Certification may be unable to continue in the process'' as their

employers will be unable to pay the increased wage rates. Relatedly,

employers of such workers have undertaken additional investments in the

workers beyond what would ordinarily be expended on sponsoring an H-1B

worker as part of the permanent labor certification process.

The Department agrees with commenters that H-1B workers who are on

the path to becoming employment-based lawful permanent residents

present unique considerations for how the Department transitions

current H-1B workers to wage rates produced by the new wage

methodology. These

[[Page 3646]]

individuals, in many cases, have spent extended periods of time in the

United States, during which they have developed greater connections to

this country than the typical temporary visa holder. What's more, they

have done so under a legal regime established by Congress that permits

and, indeed, encourages them to develop strong ties to the United

States. In other words, not only have these individuals built lives in

the United States in reliance on the prior wage methodology, which set

the terms of their employment, but their expectation of being able to

remain in the country indefinitely has been fostered by congressional

enactments specifically designed to treat this group of individuals

differently than other H-1B visa holders. For that reason, the

Department has concluded that accelerated, significant increases in the

wages employers owe these workers, insofar as it may result in large

numbers of these workers losing their current employment, and therefore

potentially being required to depart the country, would work a unique

hardship and unfairness on both the workers themselves as well as the

employers that have made greater investments in retaining these

workers. In consequence, the Department has determined that a more

gradual transition to the new wage rates for these workers is

appropriate.

As the Department noted in the IFR, unlike most nonimmigrant visas,

H-1B visas are unusual in that they are ``dual intent'' visas, meaning

under the INA H-1B workers can enter the U.S. on a temporary status

while also seeking to adjust status to that of lawful permanent

residents.\211\ One of the most common pathways by which H-1B visa

holders obtain lawful permanent resident status is through employment-

based green cards, and in particular EB-2 and EB-3 visas.\212\ USCIS

has estimated that over 80 percent of all H-1B visa holders who adjust

to lawful permanent resident status do so through an employment-based

green card.\213\ This is reflected in data on the PERM programs. In

recent years, more than 80 percent of all individuals granted lawful

permanent residence in the EB-2 and EB-3 classifications have been

aliens adjusting status, meaning they were already present in the U.S.

on some kind of nonimmigrant status.\214\ Given that the H-1B program

is the largest temporary visa program in the U.S. and is one of the few

that allows for dual intent, it is a reasonable assumption that the

vast majority of the EB-2 and EB-3 adjustment of status cases are for

H-1B workers. This is corroborated by the Department's own data, which

shows that, in recent years, approximately 70 percent of all PERM labor

certification applications filed with the Department have been for H-1B

nonimmigrants.\215\

---------------------------------------------------------------------------

\211\ dePape v. Trinity Health Sys., Inc., 242 F. Supp. 2d 585,

593 (N.D. Iowa 2003).

\212\ See Sadikshya Nepal, The Convoluted Pathway from H-1B to

Permanent Residency: A Primer, Bipartisan Policy Center (2020);

Congressional Research Service, The Employment-Based Immigration

Backlog (2020) (``A primary pathway to acquire an employment-based

green card is by working in the United States on an H-1B visa for

specialty occupation workers, getting sponsored for a green card by

a U.S. employer, and then adjusting status when a green card becomes

available.'').

\213\ U.S. Citizenship and Immigration Services, H-1B

Authorized-to-Work Population Estimate (2020).

\214\ See Department of Homeland Security, 2017 Yearbook of

Immigration Statistics, Table 7. Persons Obtaining Lawful Permanent

Resident Status by Type and Detailed Class of Admission: Fiscal Year

2017, available at https://www.dhs.gov/immigration-stat...ok/2017/table7 .

\215\ Office of Foreign Labor Certification, Permanent Labor

Certification Program--Selected Statistics, FY 19, available at

https://www.dol.gov/sites/dolgov/fil..._FY2019_Q4.pdf .

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Because of how many H-1B visa holders apply for EB-2 and EB-3

classifications, Congress has repeatedly adapted the INA to account for

the close connection between the programs. For example, while H-1B

nonimmigrants are generally required to depart the U.S. after a maximum

of six years of temporary employment, Congress has created an exception

that allows H-1B nonimmigrants for whom PERM labor certification

applications have been filed with the Department or petitions for

employment-based immigrant visas have been filed with DHS that have

been pending for longer than a year to be exempt from the six year

period of authorized admission limitation if certain requirements are

met.\216\ In such cases, the workers are able to renew their H-1B

status in one-year increments indefinitely until the process by which

they can obtain lawful permanent resident status is resolved.\217\

Similarly, aliens who are the beneficiaries of an approved petition for

an EB-1, EB-2, or EB-3 green card and who are eligible to be granted

LPR status but for application of the per country limitations are

permitted to extend their stay beyond the usual six year limit in three

year increments.

---------------------------------------------------------------------------

\216\ See Public Law 107-273, 11030A(a), 116 Stat. 1836 (2002).

\217\ Id.

---------------------------------------------------------------------------

Congress created these exceptions to the temporary limits of H-1B

status in recognition of the fact that the method by which employment-

based green cards are allocated--namely through the operation of caps

on the number of visas that can be allocated to nationals of a given

country in any given year--can result in significant delays between

when an alien is approved for a green card and when the green card is

actually issued.\218\ Put another way, the system for allocating

employment-based green cards often results in protracted periods during

which a worker can, in some sense, have one foot in the temporary H-1B

program and another in the PERM program as they progress to LPR status.

These workers, while not yet possessed of LPR status, have made

substantial, formal steps toward acquiring such status, and, in so

doing, acquired more permanent ties to the United States than does the

typical temporary worker. Congress recognized as much and singled out

this group for a special accommodation that allows their temporary

status to continue indefinitely.\219\ In so doing, Congress further

increased the degree to which such workers can reasonably expect to be

permitted eventually to remain in the country on a permanent basis.

---------------------------------------------------------------------------

\218\ See 8 U.S.C. 1152(a)(2); U.S. Department of State, Visa

Bulletin For September 2020, https://travel.state.gov/content/tra...mber-2020.html .

\219\ See Save Jobs USA v. Dep't of Homeland Sec., 942 F.3d 504,

506-08 (DC Cir. 2019) (``Recognizing the potential for delay in

adjustment, Congress amended the Act to permit H-1B visa holders who

have begun the employer-based immigration process to remain and work

in the United States while awaiting decisions on their applications

for lawful permanent residence.'').

---------------------------------------------------------------------------

Congress's creation of exceptions to the six-year limit on H-1B

status was also undertaken in recognition of the fact that requiring

workers on track to receive LPR status to leave the United States after

six years before they receive a green card would be disruptive to the

employers of such workers. As noted above, employers that have

sponsored H-1B workers for an employment-based green card have

undertaken investments in retaining such workers beyond what would

ordinarily be required to continue renewing such workers' H-1B status.

Similarly, in many cases these workers will likely have been with their

employer for longer than the typical H-1B worker, meaning the employer

may have developed a greater reliance on the services of these

particular workers. Absent these workers being able to extend their

stays indefinitely, they ``would otherwise be forced to return home at

the conclusion of their allotted time in H-1B status, disrupting

projects and American workers.'' \220\ As a result, Congress chose to

allow ``these individuals to remain in H-1B status until they are able

to receive an immigrant visa and adjust their status

[[Page 3647]]

within the United States, thus limiting the disruption to American

businesses.'' \221\

---------------------------------------------------------------------------

\220\ S. Rep. 106-260, 22.

\221\ Id.

---------------------------------------------------------------------------

In sum, H-1B workers whose employers have taken substantial, formal

steps toward obtaining an employment-based green card are uniquely

situated as compared to other H-1B visa holders subject to the

Department's prevailing wage methodology such that applying a sudden

and significant change in wages would work a special hardship to such

workers and their employers to the extent it might result in some

workers losing their H-1B status. Not only have many of these workers

spent extended periods of time in the United States, and begun building

lives here, but they have done so with a guarantee from Congress that

they legally may remain here beyond the six year limit that usually

applies to H-1B visa holders until their application for LPR status is

resolved. And because such workers are seeking employment-based green

cards, their employers in many cases also have substantial reliance

interests on such workers' continued presence in the country beyond

what would normally be the case for other H-1B workers. The special

status of workers who are the beneficiaries of an approved employment-

based green card petition, or who are otherwise eligible to extend

their status beyond the six-year limit, has also been recognized by the

Department of Homeland Security in a separate rulemaking that singled

this group out for unique treatment for many of the same reasons

outlined above.\222\

---------------------------------------------------------------------------

\222\ Employment Authorization for Certain H-4 Dependent

Spouses, 80 FR 10284, 10289-90.

---------------------------------------------------------------------------

Consequently, as suggested by some commenters, the Department is

adopting a phase-in approach to how it applies the new wage methodology

to job opportunities that will be filled by workers who are on track to

obtaining employment-based green cards. While, for the reasons given

above, the Department believes that a two-step transition is

appropriate with respect to new H-1B workers and many other workers for

whom their employer seeks renewed status, the Department has concluded

that the unique circumstances of workers who are on track to receive

LPR status warrant a longer transition period. These workers and their

employers have more substantial expectations of their being able to

remain employed in the United States that have been engendered by

congressionally created exceptions to the six year limit on H-1B

status.

The Department is also cognizant of its obligation to ensure that

U.S. workers' wage and job opportunities are protected. That

consideration, as elaborated previously, means that any transition to

the new wage structure should be kept as short as reasonably possible

while still accommodating the reliance interests identified by

commenters. The Department believes that a delayed implementation

period followed by a four-step adjustment occurring over a three and a

half year period for job opportunities filled by workers on track to

receive LPR status appropriately balances these competing

considerations.

By making the phase-in nearly twice as long for these workers, and

stretching it out over a period of more than three years, the

Department has taken into account the fact that most LCAs are approved

for a three year period, meaning that all employers seeking to renew

the status of H-1B workers on track to receive LPR status will be able

to do so at least once at wage levels below the new levels set by this

rule and that in many cases will be closer to the prevailing wage rates

that would have obtained if the prior methodology had been left in

place. This allows for a more gradual transition than would be achieved

if these job opportunities were subject to the two-step phase-in

occurring over a year and a half. Gradually increasing the wage rates

that will be available for these job opportunities over a period of

time also takes into account the need to protect U.S. workers by not

allowing the current, inappropriately low wage levels to remain in

place beyond the initial, delayed effective period, as well as the fact

that wage increases that occur further out in time from the date this

rule is published will be more manageable for both employers and

workers to plan for. Moreover, the Department notes that, because

employers have undertaken significant investments in the long-term

employment of these workers, a longer transition period is also

unnecessary insofar as such employers can be expected to have an

incentive to undertake the additional expenditures needed to retain the

workers at the new prevailing wage levels by the time the transition is

complete.

The Department recognizes that many H-1B workers on track to

receive LPR status will still be on H-1B status and have their green

card petitions pending at the time the transition to the new wage rates

is complete. Workers in the green card backlog as of October 2020 may

not be able to obtain an employment-based green card for a decade or

more.\223\ However, in the Department's judgment, delaying full

implementation of the new wage rates for what amounts to a significant

share of the current H-1B population \224\ until all workers on track

to receive LPR status have had their green card petitions resolved

would result in far too lengthy of a delay that would result in ongoing

harm to U.S. workers' wages and job opportunities. A three and a half

year, graduated transition gives these workers adequate time to adjust

to the new wage rates, whether by allowing their employers sufficient

time to adapt or, in some cases, allowing such workers additional time

to find a new employer that is able to pay the higher wage rates.\225\

---------------------------------------------------------------------------

\223\ See https://travel.state.gov/content/tra...ober-2020.html .

\224\ (RIA Data).

\225\ See 8 U.S.C. 1154(j).

---------------------------------------------------------------------------

Using the same methodology and data it used to set the wage rate at

the intermediate step of the two-step transition, the Department has

concluded that the wage rates for the three and a half year transition

will be 85 percent of the wage rates produced by the 35th and 90th

percentiles beginning in July, 2021; 90 percent of such wage rates

beginning in July, 2022; and 95 percent of such rates beginning in

July, 2023. For the reasons given with respect to the year and a half

transition, these rates allow for a gradual, even adjustment to the

wage levels the Department has determined are appropriate. Beginning in

July 2024, the wage rates provided for any job opportunity filled by an

alien on track to receive LPR status will be the same as the wage rates

provided for all H-1B job opportunities.

Finally, the Department has decided that the job opportunities that

should be eligible for these special transition wage rates are those

that will be filled by any H-1B workers who, as of October 8, 2020,

were the beneficiaries of approved employment-based green card

petitions, or who were otherwise eligible to extend their temporary

status beyond the six year limit under the American Competiveness in

the 21st Century Act. October 8th is the date the Department published

the IFR and thereby gave notice to employers and workers that it would

be increasing wage rates. It thus provides a clear, administrable

delineation of the class of workers who can benefit from the three and

a half year transition period, and takes into account the fact that

workers whose expectation of being able to remain in the country

indefinitely became settled

[[Page 3648]]

before such notice was provided have the most compelling reliance

interests in the prior wage methodology.

5. Wage Data and Sources

a. OES

Summary of Comments

Some commenters expressed concern about the Department's exclusive

reliance on the OES to determine prevailing wages. Citing an NFAP

policy brief, a public policy organization commented the ``fundamental

problem'' with prevailing wage determinations is that the ``process

requires statistical precision that simply is not available'' because

``no government survey [ ] collects data within occupations with

detailed wage levels, much less a survey that seeks to assemble data to

calculate wage levels based on experience, education or level of

supervision.'' The commenter further stated that the OES produces ``two

average wage figures, neither of which is based on the collection of

data connecting compensation to education, experience or supervision.''

The commenter expressed concern that this method is less reliable than

``asking employers directly what they pay employees at different levels

of education, experience, or supervision'' and that ``a government

agency can adjust the formula in a way that makes the required wages

far higher than the market rate.'' An employer expressed concern the

OES ``does not measure workers' skills or duties or ``reflect what

workers in the survey are paid'' and instead ``simply records [the] set

of DOL-established pay bands'' within which a worker can be classified.

Several commenters also expressed concern that the OES fails to

consider total compensation, including stock options and bonuses, for

example, resulting in an underestimation of the total earnings of U.S.

and foreign workers. An individual commenter noted that many workers,

particularly those in information technology occupations, earn much

more than their base salary when accounting for total compensation and

asserted that the IFR unfairly advantages ``companies with a cash-heavy

pay structure'' and harms small start-ups that are more likely to

compete by providing ``equity and stock options.'' A trade association

asserted the IFR ignores an ``important evolution'' in the compensation

of professionals ``whereby many employers add to annual salaries with

variable compensation tied to productivity, performance, or other

specific goals'' and may ``incentivize employers to abandon variable

compensation schemes altogether, in order to use available resources in

an attempt to meet the new required wages.'' Citing a Society for Human

Resources Management article stating ``85% of employers use variable

pay. . .'' an employer asserted that consideration of fixed pay

exclusively is outdated because an increasingly important component of

compensation packages is variable pay, including ``incentive plans,

bonuses, profit-sharing plans, performance-sharing plans, and equity.''

Many commenters expressed concern that the Department would issue a

prevailing wage of ``exactly $100 an hour, or $208,000 a year, for any

occupation and geographic area'' for which the Department lacks

sufficient OES wage data to determine a prevailing wage for each wage

level. Many commenters cited a finding by a public policy organization

that this $208,000 wage requirement would apply to at least 18,000

combinations of occupations and geographic locations. A university

stated that assigning a ``default wage rate of $100'' per hour ``for

each of the four wage levels . . . artificially inflates the wage data

for each of the wage levels for affected occupations.'' A trade

association expressed concern that OES wage data is ``skewed toward

employers in large metro areas'' and that the failure to collect

sufficient wage data would result in many non-metropolitan employers

receiving a ``default'' prevailing wage of $208,000 under the IFR. A

professional association believed the lack of BLS data and resulting

``default'' wage of $208,000 was due to the Department's decision to

use data for a limited ``pool of workers who use the H-1B . . . and

PERM programs,'' rather than using a ``prevailing wage data pool [ ]

based on all wage data within the occupation, regardless of the number

of years of education, experience, and level of responsibility.'' A

second professional association asserted assignment of a $208,000 wage

in this context violates the INA, 8 U.S.C. 1182(p)(4), because the

Department provides only one wage level, despite the four levels of

wages required by Congress, and that it is contrary to a 1990

Congressional directive that BLS must ``make determinations on

prevailing wages'' and make this information ``readily available to

employers and workers.'' Many of these commenters provided examples of

prevailing wages far exceeding the market wage, such as a prevailing

wage of $208,000 for an entry-level software developer in California,

despite a private wage survey determination that the prevailing wage is

approximately $70,600 per year.

A public policy organization and an academic commenter that

supported the IFR wage increases urged the Department to clarify an

employer's wage obligation in these cases, expressing concern that the

policy created confusion that threatens necessary wage reform efforts.

Specifically, one of the commenters requested clarification of whether

the employer must pay the $208,000 salary, must ``use an alternative

method to the OFLC-generated OES wage rates in these cases,'' or may

choose either option.

Response to Comments

The Department received many comments regarding the prevalence of

the use of the OES footnote wage to set prevailing wage rates under the

IFR's wage levels. This issue arises when BLS cannot provide a wage

estimate for a Level IV wage. BLS is unable, at times, to produce a

wage estimate when the survey results at the upper end of the wage

distribution exceed the highest wage interval BLS uses, which is $100

an hour or $208,800 annually. In such cases, BLS reports a default

wage, or footnote wage, of $208,000 for the Level IV wage to OFLC as

that is the highest wage value available. Currently, BLS collects

actual wage data from employers and then converts the actual wage data

into wage intervals, which range from under $9.25 an hour to $100.00 an

hour and over.\226\ In situations when BLS reports a footnote wage for

the Level IV wage to the Department, the Department's standard practice

has been to note that leveled prevailing wages for an occupation and/or

geographic area was unavailable and only to provide the OES footnote

wage for all four levels.

---------------------------------------------------------------------------

\226\ https://www.bls.gov/oes/2016/may/methods_statement.pdf

(accessed December 4, 2020).

---------------------------------------------------------------------------

Under the Department's proposal in the IFR, the mean of the upper

decile produced an OES footnote wage for more than 18,000 occupations,

up from roughly 6,000 occupations under the old prevailing wage

methodology. The higher prevalence of the use of the footnote wage

under the IFR's methodology resulted in the default wage of $208,000

per year being used for a number of occupations where its use was

likely not appropriate, as some commenters noted. The Department has

therefore determined that it a change to its standard practice of not

providing leveled wages in these situations is warranted.

Upon the effective date of this final rule, when BLS is able to

report a Level

[[Page 3649]]

I wage, the Department will utilize the OES footnote only as the Level

IV wage estimate in cases where the 90th percentile wage value exceeds

the highest wage interval value used by BLS. This change will allow the

Department to provide leveled wages even where the footnote wage must

be used for the Level IV wage and ensure that entry-level wages are not

improperly inflated. In making this change, the Department expects

there will be far fewer instances of the Department being unable to

provide leveled wages than was the case under the IFR, or even the old

wage methodology.

This change to how the Department handles situations where the

footnote wage is used for the Level IV wage will ensure that leveled

wages and an entry-level wage appropriately set at the 35th percentile

will be provided wherever possible. This change will largely eliminate

those incidents commenters expressed concern about, such as in

healthcare occupations, where even an entry-level wage under the IFR

was set at $208,000 per year, and is thereby inflated well above both

the previous entry-level wage as well as what the Department has

determined is an appropriate entry-level wage. Like its decision to

move the entry-level wage to the 35th percentile, this change will

ensure that prevailing wage rates more accurately reflect actual market

wages and are more manageable for employers. Further, as discussed in

more detail below, the changes the Department is making to how it

calculates the Level IV wage--namely by using the 90th percentile as

the Level IV wage instead of the mean of the upper decile--will

eliminate the influence of extreme outlier at the upper end of the

distribution, thereby reducing the reported Level IV rate to a level

that is not inflated by anomalous data, and thus potentially reducing

the frequency with which the footnote wage is used even for Level IV

wage.

The Department acknowledges that there will continue to be

instances, as there are currently, where BLS will report to OFLC an OES

footnote wage for all levels in an occupation because the survey

results received by BLS at and above the 35th percentile are all in the

wage interval of $100.00 an hour and over. This will occur in a few

very highly compensated occupations. Importantly, in such cases the use

of the footnote wage will actually result in a lower prevailing wage

rate than would otherwise be the case if actual wage data were

available because BLS only reports up to the maximum interval of

$100.00 an hour and in these situations the actual wages are at or over

$100.00 an hour. Put another way, the use of the footnote wage in these

cases, unlike its use under the IFR, will not result in wages that are

inflated beyond what the actual market wage would be if actual wage

data were available. Until BLS moves away from collecting all wage data

in intervals this will continue to occur. But the Department believes

that as BLS expands its collection of actual wage data this issue will

cease to occur even in those few very highly compensated occupations.

The Department anticipates that this change to its standard procedures

will allow the Department to report leveled wages in more occupations

and/or geographic areas than has historically been the case.

Relatedly, many commenters expressed concern that because the

Department raised the Level IV wage to the mean of the upper decile, it

caused more physician occupations, in particular, to default to the OES

footnote wage of $100.00 an hour, or $208,000 annually at an especially

high rate. As discussed above, the Department's changes to its standard

procedures to use the OES footnote wage only as the Level IV wage

estimate when a Level I wage is also reported from BLS will allow the

Department to report leveled wages in these instances, thus reducing,

if not altogether eliminating this concern.

Similarly, many commenters suggested that the failure of the

Department to provide leveled wages would disproportionately harm

employers outside of large urban areas and cause rural communities to

lose access to healthcare. Many of these commenters suggested that

under the IFR the Department is unable to provide leveled wage

estimates for physicians and researchers in rural areas who would

therefore be provided the OES footnote that is significantly higher

than what some of those employees' supervisors are paid, which would be

unsustainable and potentially result, among other things, in

undermining the Conrad-30 program in certain areas. However, as

previously stated, the Department has reviewed the commenters concerns

and determined it is appropriate to make changes to the standard

procedures of not providing leveled wage estimates in these situations.

Instead, upon the effective date of this Final Rule the Department will

use the OES footnote wage only as the Level IV wage estimate, allowing

the Department to provide leveled wage estimates, except in those cases

where the wage at the 35th percentile is also above the highest OES

wage interval value. This will reduce if not eliminate the incidents of

inappropriately high wages being provided for these specific

occupations and areas.

The Department also acknowledges commenters' concerns with flaws in

the OES collection of wage data from employers that result from BLS

collecting data in 12 wage intervals as opposed to reporting actual

wages. Though the OES survey does collect most wage data in wage

intervals, BLS does collect actual wage data from employers in some

instances and is exploring the ability to collect and report actual

wage data from employers on a more consistent basis. As BLS phases in

the collection of actual wage data from employers, wage estimates

reported to the Department will become even more accurate and all

instances of the OES footnote wage being used to set prevailing wage

rates, which is a product of the current practice of using wage

intervals, should cease. Further, even if BLS ultimately does not

convert all wage data collection from employers to actual wages, this

methodology of using wage intervals has been in place since the

inception of the OES survey and has in most cases produced accurate

wage estimates at the levels defined by the Department. Given the low

incidence of the footnote wage being used; the modifications made by

the Department to how it provides default wages that both further

reduce the use of the footnote wage and eliminate its use in cases

where it would result in an inappropriately inflated wage; and the

other strengths of the OES data discussed below, the Department

continues to believe that the OES survey serves as the best possible

source of wage data for use in various foreign labor programs and that

its reliance on wage intervals does not warrant the Department

abandoning its longstanding practice of using the OES.

As noted above, the Department received several more general

comments regarding the suitability of the BLS OES data for setting

wages in the foreign labor certification programs. Some of the comments

cited the fact that the OES data uses broad occupational

classifications that encompass a wide range of different positions,

some of which only fall at the lower end of the pay scale. Others

commented that the OES data does not survey for education and

experience, making it a poor fit for use in setting H-1B wage levels.

As the Department stated in the IFR, the Department reviewed the

statutory framework of the INA and its interplay with the BLS OES

survey data that the Department uses to calculate prevailing wages.

This review demonstrated that, while the OES survey is the best source

[[Page 3650]]

of wage data available for use in the Department's foreign labor

certification programs, it is not specifically designed for such

programs, and therefore does not account for the requirement that

workers in the H-1B program possess highly specialized knowledge in how

it gathers data about U.S. workers' wages. This fact necessarily shapes

how the Department integrates the OES survey into its foreign labor

programs.

The Department has long relied on OES data to establish prevailing

wage levels. That is because it is a comprehensive, statistically valid

survey that is the best source of wage data available for satisfying

the Department's purposes in setting wages in most immigrant and

nonimmigrant programs. As the Department has previously noted, the OES

wage survey is among the largest continuous statistical survey programs

of the federal government. BLS produces the survey materials and

selects the nonfarm establishments to be surveyed using the list of

establishments maintained by State Workforce Agencies (SWAs) for

unemployment insurance purposes. The OES collects data from over one

million establishments. Salary levels based on geographic areas are

available at the national and State levels and for certain territories

in which statistical validity can be ascertained, including the

District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.

Salary information is also made available at the metropolitan and

nonmetropolitan area levels within a State. Wages for the OES survey

are straight-time, gross pay, exclusive of premium pay. Base rate,

cost-of-living allowances, guaranteed pay, hazardous duty pay,

incentive pay including commissions and production bonuses, tips, and

on-call pay are included. The features described above are unique to

the OES survey, which is a comprehensive, statistically valid, and

useable wage reference.\227\ The OES survey's quality and

characteristics have made it, and continue to make it, a useful tool

for setting prevailing wage levels in the Department's foreign labor

programs. There are no consistently and readily available alternative

surveys or sources of wage data that would provide DOL with wage

information at the same level of granularity needed to properly

administer the H-1B and PERM programs. For these reasons, the

Department continues to believe that the OES survey is the best

possible source of wage data for use in various foreign labor programs.

---------------------------------------------------------------------------

\227\ Wage Methodology for the Temporary Non-agricultural

Employment H-2B Program, 76 FR 3452, 3463 (Jan. 19, 2011).

---------------------------------------------------------------------------

The Department also notes that the OES survey is what is currently

used to set prevailing wage rates in the H-1B and PERM programs. As a

result, even if the modifications to the prevailing wage levels in this

final rule were not adopted, the OES would continue to be the source

used to produce prevailing wage rates by the Department. As explained,

the Department believes that continuing to use the OES is the best way

to advance the policy aims of the INA's wage protections. However, even

if reconsideration of the Department's use of the OES were warranted,

the Department believes that the more immediate goal of correcting how

the wage levels are set is the appropriate focus of this rule.\228\

---------------------------------------------------------------------------

\228\ See Ctr. for Biological Diversity v. EPA, 722 F.3d 401,

410 (DC Cir. 2013) (observing that `` `agencies have great

discretion to treat a problem partially'' ') (quoting City of Las

Vegas v. Lujan, 891 F.2d 927, 935 (DC Cir. 1989)).

---------------------------------------------------------------------------

However, as noted, the OES survey is not specifically designed to

serve these programs. For one thing, ``the OES survey captures no

information about differences within the [occupational] groupings based

on skills, training, experience or responsibility levels of the workers

whose wages are being reported'' \229\--the factors the INA requires

the Department to rely on in setting prevailing wage levels.\230\

Relatedly, ``there are factors in addition to skill level that can

account for OES wage variation for the same occupation and location.''

\231\ Further, the geographic areas used by BLS to calculate local

wages do not always match up exactly with the ``area of employment''

for which wage rates are set, as that term is defined by the INA for

purposes of the H-1B program.\232\ So while the OES survey is the best

available source of wage data for the Department's purposes, it is not

a perfect tool for providing wages in the H-1B, H-1B1, E-3, and PERM

programs--a fact that the Department must take into consideration in

how it uses the OES data.

---------------------------------------------------------------------------

\229\ Wage Methodology for the Temporary Non-Agricultural

Employment H-2B Program, 80 FR 24,146, 24,155 (Apr. 29, 2015).

\230\ 8 U.S.C. 1182(p)(4).

\231\ 80 FR 24,146, 24,159.

\232\ 8 U.S.C. 1182(n)(4)(A).

---------------------------------------------------------------------------

The Department also acknowledged in the IFR that the universe of

workers surveyed by the OES for some of the most common occupational

classifications in which H-1B workers are employed is larger than the

pool of workers who can be said to have levels of education and

experience comparable to those of even the least skilled H-1B workers

performing work in a specialty occupation. Commenters are therefore

correct that BLS's occupational classifications are not delineated with

the H-1B and PERM programs in mind. But, as explained in the IFR, the

Department took steps to account for this potential mismatch. In

particular, because the statutory scheme requires the Department to set

the prevailing wage levels based on what workers similarly employed to

foreign workers make, taking into account workers' qualifications and,

as noted, the large majority of foreign workers are H-1B workers, the

Department determined it would be inappropriate to consider the wages

of the least educated and experienced workers in these common H-1B

occupational classifications in setting the prevailing wage levels.

To address the fact that the OES survey does not itself contain

information about experience and education, the Department sought to

determine the wages typically earned by individuals having comparable

levels of education, experience, and responsibility to the prototypical

entry-level H-1B and EB-2 workers working in the most common H-1B and

PERM occupations by looking to other credible government surveys that

do gather such information and comparing their data to the OES data. In

particular, the Department consulted a variety of data sources, most

importantly wage data on individuals with master's degrees or higher

and limited years of work experience from the 2016, 2017, and 2018 CPS

\233\ conducted by the U.S. Census Bureau, and data on the salaries of

recent graduates of master's degree programs in STEM occupations

garnered from surveys conducted by the NSF in 2015 and 2017. Both of

these surveys represent the highest standards of data collection and

analysis performed by the federal government. Both surveys have large

sample sizes that have been methodically collected and are consistently

used not just across the federal government for purposes of analysis

and policymaking, but by academia and the broader public as well.

Comparing their data to OES wage distributions thus allowed the

Department to take into account education and experience in determining

how to use OES data. Further, though the CPS and NSF surveys provide a

good approximation

[[Page 3651]]

of where U.S. workers with similar skills to entry-level H-1B and EB-2

workers, fall within the OES distribution; they are not conducted on a

regular basis with enough granularity as the OES survey to produce wage

estimates at the occupational and geographic levels, nor are the

produced frequently enough to provide the up to date wage data

necessary to ensure accurate prevailing wages. They thus are useful for

assessing how the OES data should be used in the Department's foreign

labor programs, but could not be used as a substitute for the OES,

which, as noted above, has unique attributes that make it, in the

Department's judgment, the best possible source of wage data even

though it does not survey for education and experience. The Department

is therefore confident that its use of the OES continues to be

appropriate in the H-1B and PERM programs, and that the IFR's

methodology properly accounted for the fact that the OES does not

survey for education and experience.

---------------------------------------------------------------------------

\233\ The CPS, sponsored jointly by the U.S. Census Bureau and

BLS, is the primary source of labor force statistics for the

population of the U.S. See United States Census Bureau, Current

Population Survey, available at https://www.census.gov/programs-surveys/cps.html .

---------------------------------------------------------------------------

As noted, some commenters suggested that the BLS OES survey is

flawed because it is a voluntary survey and some smaller or more rural

employers are less likely to respond to the survey, which in turn

means, according to commenters, that such employers will be given

inappropriately high wages because they will be grouped in with

establishments in metropolitan statistical areas with higher labor

costs due to a lack of survey responses. The Department recognizes that

the BLS OES survey is voluntary. However, BLS sends the OES survey to

over 1 million establishments and those establishments are encouraged

to respond to the survey. The survey is recognized as a statistically

valid, comprehensive source of wages nationwide. As the Department has

discussed, the OES survey is not the perfect tool for setting wages in

the foreign labor certification programs, but it is the largest and

best single source of wage data available for setting wages across

hundreds of occupational classifications in hundreds of geographical

areas. The Department endeavors to produce as many statistically valid

wage estimates as possible and therefore will move to the next

geographic area until it can report a statistically valid wage. While

it may be the case that in some instances wage rates provided for areas

of the country with fewer establishments responding to the survey will

result in those areas being grouped in with adjacent regions, the

Department believes, as elaborated on previously, that the value in

having a single, uniform survey that produces consistent and reliable

results for its foreign labor programs outweighs any benefits that

might result from using different sources of wage data for specific

areas of employment. Moreover, the fact that the Department permits

employers to use alternative sources of wage data to set prevailing

wage rates gives employers some recourse if they believe, in certain

instances, that the OES prevailing wage rate is not accurate.

Some commenters suggested that the Department should use a separate

survey for certain occupations, such as physicians, because there are

better surveys for those specific occupations. The Department declines

to make this change. As explained throughout, the Department has

determined that the OES survey is the largest and best available survey

to rely upon for setting wages in the foreign labor certification

programs. The Department understands the shortfalls that a survey the

size of the OES survey has, and, as discussed above, has taken various

steps to account for the fact that the OES survey is not specifically

designed for use in the Department's foreign labor programs. For

administrative uniformity the Department believes that providing one

set of data, from a government conducted survey, has more benefits than

using on potentially less reliable surveys conducted by private

organizations that could be discontinued or have changes to their

methodology made without the Department's input. Further, as noted

previously, employers already have a method for utilizing a survey

other than the BLS OES survey. If employers believe there are better

surveys for their occupations than the BLS OES survey, they may rely

upon those surveys, either through the Prevailing Wage Determination

process or listing a valid wage survey as the source of the prevailing

wage when submitting an LCA in the FLAG system.\234\ Indeed, the

Department notes that the AAMC survey itself is often used by employers

as the source of the prevailing wage on their LCAs and PWD

applications.

---------------------------------------------------------------------------

\234\ 20 CFR 655.731(a)(2)(ii)(B) and (C).

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6. The Upper and Intermediate Wage Levels

Summary of Comments

Several commenters expressed concern that use of the mean of the

top decile of the OES distribution to approximate the prevailing wage

for Level IV workers produces a Level IV wage above the 95th percentile

due to outlier wages at the top of the distribution and that this, in

turn, skews the intermediate wage levels because they are ``set by

statute by interpolating the data for levels'' I and IV. Some

commenters cited a Cato Institute finding that ``extreme outliers'' in

the data used to determine the level IV wage resulted, in some cases,

in Level II and III wage determinations ``up to 26 percent higher than

predicted in'' the IFR. A university commenter and an anonymous

commenter stated that this methodology resulted in situations where the

Level II wage increases to the 78th percentile and the Level III wage

increases to the 90th percentile. An employer stated that the IFR

methodology would produce clearly inaccurate prevailing wages in

industries with bi-modal salary distributions. An individual commenter

stated that the 95th percentile represents workers ``nearing the end of

their career, with decades of experience.''

Similarly, a few commenters expressed concern about specific errors

or discrepancies in prevailing wages produced by the IFR at the

intermediate levels. An individual commenter asserted that of ``437,593

Area Code-SOC Code combinations'' there are prevailing wage

``discrepancies in 228,836.'' As an example, the commenter noted that

the Level II wage for SOC 15-2031 in ``[a]rea code 37980'' based on

what the Department estimated would be at the 62nd percentile is higher

than the pre-IFR Level IV wage, which the Department estimated to be at

the 67th percentile. Similarly, a trade association stated that its

members reported that the Level II 62nd percentile wage is higher in

many cases than the pre-IFR Level IV 67th percentile wage. In these

cases, commenters noted that the wage increases effected by the IFR

appeared to be even greater than the Department anticipated or

intended. By contrast, two commenters asserted that prevailing wages

published in the Department's Online Wage Library clearly were too low

in some cases, citing examples like a level I wage of $22,000 for

Electrical Engineers in College Station, Texas, much lower than entry-

level wages indicated in a NSF survey.

Response to Comments

To begin, the Department agrees with commenters that setting the

top wage at the mean of the upper decile skews the wages of the

intermediate wage levels by including, sometimes extreme, outliers. For

the reasons given below, the Department continues to believe that the

Level IV wage should be placed at the uppermost end of the OES

[[Page 3652]]

distribution. However, to avoid the statistical issues that resulted in

overly inflated wages at both the upper and intermediate wage levels

under the IFR, the Department has adjusted the manner in which BLS will

provide data for the Level IV wage.

As the Department explained in the IFR, the highest wage level

should be commensurate with the wages paid to the most highly

compensated workers in any given occupation because such workers are

also generally the workers with the most advanced skills and competence

in the occupation, and therefore the type of workers who are similarly

employed to the most highly qualified H-1B and PERM workers.\235\

Again, it is generally the case that, as a worker's education and

experience increase, so too do his wages. Further, while the INA places

baseline, minimum skills-based qualifications on who can obtain an H-1B

or EB-2 visa, it does not place any limit on how highly skilled a

worker can be within these programs. Thus, while the Department

necessarily discounted the lower end of the OES wage distribution in

determining the entry-level wage, full consideration must be given to

the uppermost portion of the distribution in adjusting the Level IV

wage.

---------------------------------------------------------------------------

\235\ Edward P. Lazear, Productivity and Wages: Common Factors

and Idiosyncrasies Across Countries and Industries, National Bureau

of Economic Research, 11/2019, Working Paper 26428, available at

http://www.nber.org/papers/w26428 ; David H. Autor & Michael J.

Handel, Putting Tasks to the Test: Human Capital, Job Tasks and

Wages, National Bureau of Economic Research, 6/2009, Working Paper

15116, available at http://www.nber.org/papers/w15116 .

---------------------------------------------------------------------------

H-1B workers can be, and at least in some cases already are among

the most highly paid, and therefore likely among the most highly

skilled workers within their respective occupations.\236\ This is

demonstrated by a review of the highest salaries paid to H-1B workers

in the most common occupations in which H-1B workers are employed. In

Fiscal Year (FY) 2019, for example, the most highly compensated H-1B

nonimmigrants employed as Computer Systems Analysts commanded annual

wages as high as $450,000. That figure was $357,006 for H-1B workers in

other Computer Occupations. The wages of workers at the 90th percentile

of the OES distribution for these occupations, by contrast, are

significantly lower. Computer Systems Analysts at the 90th percentile

in the OES distribution make approximately $142,220. That figure is

$144,820 for workers in other computer occupations. In other words, H-

1B workers in some instances make wages far in excess of those earned

by 90 percent of all U.S. workers in the same occupation. Indeed, a

review of the wages of the top five percent highest earners among H-1B

nonimmigrants, and therefore the earners likely to have the highest

levels of education, experience, and responsibility, in the 16

occupational classifications that account for one percent or more of

all approved H-1B petitions in FY2019 shows that such workers make

wages that are, on average, at least 20 percent higher than those made

by workers at the 90th percentile in the OES wage distribution.

---------------------------------------------------------------------------

\236\ Data on the actual wages paid to H-1B workers shows that

in some cases such workers are paid at or near the very top of the

OES wage distribution.

---------------------------------------------------------------------------

Further demonstrating that H-1B workers can be and sometimes are

among the most skilled and competent workers in their occupations, an

examination of the top end of the wage distribution within the H-1B

program shows that, for H-1B nonimmigrants with graduate and bachelor's

degrees, the association between education and income level begins to

break down to some extent. Among the most highly compensated H-1B

workers, the higher the income level, the more likely the foreign

worker beneficiary only has a bachelor's degree.\237\ This strongly

suggests that individuals at the fourth wage level truly possess the

most advanced skills and competence--the only remaining parameters that

can reasonably account for significant wage differentials--within their

occupations, as additional years of education are largely irrelevant in

explaining wages among top earners. The U.S. workers who are similarly

employed to the most highly qualified H-1B workers are, therefore, also

likely to be among the most highly skilled, and, therefore, the most

highly compensated workers within the OES wage distribution.

---------------------------------------------------------------------------

\237\ This analysis is based on data provided by U.S.

Citizenship and Immigration Services and 2019 OFLC Disclosure Data.

---------------------------------------------------------------------------

The high levels of pay that the most skilled H-1B workers can

command is also shown by the fact that, due to their advanced skills,

diversified knowledge, and competence, workers placed at the fourth

wage level are likely to be far more productive than their less

experienced and educated peers. Whereas experience itself generally

increases on a linear basis, as a function of age and time spent in an

occupation, productivity and an individual's supervisory

responsibilities, as a function of experience and skills, do not. For

example, the nature of senior management or supervisory roles, in

particular, means workers who serve as productivity multipliers are

more likely to fill such positions, which in turn translates to higher

wages. Perhaps even more relevant to the Department's assessment of the

wages paid to H-1B workers is the nature of the work these individuals

do, which is highly specialized and typically occurs in computer or

engineering-related fields. In such occupations, experience and

abilities can result in exponentially divergent levels of productivity,

which in turn means that workers with the most advanced skills and

competence can command wages far above what other workers in those

occupations do.\238\

---------------------------------------------------------------------------

\238\ Andy Oram & Greg Wilson, Making Software: What Really

Works, and Why We Believe It (2010).

---------------------------------------------------------------------------

All of these considerations strongly indicate that U.S. workers

similarly employed to the H-1B and PERM workers with the most advanced

skills and competence are themselves among the most highly skilled

workers in any given occupation, and therefore the most highly

compensated. Thus, because the INA requires wages for H-1B and PERM

workers to be set based on the wages paid to similarly employed U.S.

workers, taking into account education, experience, and responsibility,

and the Level IV wage is used for job opportunities filled by the most

highly skilled workers, the Level IV wage should, in the Department's

judgment be placed at the uppermost end of the OES distribution.

Importantly, commenters by and large did not dispute the

Department's conclusion that H-1B workers in some cases are among the

most skilled and educated workers in an occupation, and therefore

should be compensated at rates that reflect what the most skilled and

educated U.S. workers in those occupations make. Rather, as noted,

commenters' primary concern was with the statistical methodology the

Department used to calculate the Level IV wage. Because the Department

agrees with commenters that the methodology contained certain

unforeseen flaws, it has decided to take a new approach in the final

rule that, while still resulting in wage rates that reflect what some

of the most highly skilled, and therefore the most highly compensated

individuals in a given occupation, make will eliminate the influence of

outliers on prevailing wage rates that result in anomalous and overly

inflated rates at both the upper and intermediate wage levels. In

consequence, the Department has determined that the Level IV should be

calculated as the 90th percentile of the OES distribution, as opposed

to the mean of the upper decile used in the IFR. This change will

reduce

[[Page 3653]]

significantly, if not eliminate, the influence of outliers on wage

rates because outlier data at the very upper end of the distribution

will no longer be a significant factor in how the Level IV wage is

calculated.

In particular, as commenters noted, the extremely high wages paid

to a few ``superstar'' outliers in an occupation in a geographic area

may raise the mean of the upper decile of workers in that occupation

and geographic area far above the median of the upper decile, which is

the 95th percentile. Thus, using the mean of the upper decile to

calculate Level IV wages and derive Level II and III wages may boost

Level II, III, and IV wages higher than the Department anticipated or

intended in the IFR. Changing to the 90th percentile to calculate the

Level IV wages and derive Level II and III wages means the Level IV

wages will more accurately reflect the wages paid to workers with

levels of education, experience, and responsibility comparable to the

typical U.S. worker at the high end of the distribution, rather than

workers with abnormally high levels of compensation even for that part

of the distribution. For example, a ``superstar'' senior software

designer (OES code 15-1256) that makes over $750,000 per year working

in San Jose, California in 2019 would affect the mean of the top

decile, but would not affect the 90th percentile wage figure of

software engineers in San Jose, California, which was $207,200 in 2019,

according to OES statistics. Thus, using the mean of the top decile to

calculate Level IV wages and derive Levels II and III wages allows the

presence of a few ``superstar'' outliers in an occupation in a

geographic area to inflate Level II, III, and IV wages for an

occupation in a geographic area.

In addition, there are other considerations weighing against using

the mean of the upper decile to calculate Level IV wages and derive

Levels II and III wages. The extremely high wages that employers pay to

``superstar'' outliers in an occupation in a geographic area of course

do not necessarily mean that employers also pay high wages to other

workers in the same occupation in the same geographic area. Thus, using

the mean of the top decile to calculate Level IV wages and derive

Levels II and III wages not only inflate Level II, III and IV wages so

that they do not accurately reflect the overall wage distribution for

an occupation in a geographic area, but also introduces the potential

for significant unpredictability in wages from year to year that is not

based on any systemic change to the labor market. Consider the same

``superstar'' senior software designer that makes over $750,000 per

year working in San Jose, California in 2019 and suppose his employer

agreed to let him work remotely in 2020, and he moved to Salt Lake

City, Utah. That decision would affect the mean of the top decile,

reducing it in San Jose and increasing it in Salt Lake City, but would

not affect the respective 90th percentiles of $207,200 in San Jose and

$157,290 in Salt Lake City. Changing the work location for one

``superstar'' outlier would not affect the distribution of wages for 80

percent of software developers earning between the 10th and 90th

percentiles in either San Jose or Salt Lake City. Software developers

would still make more on average at the every level in San Jose than in

Salt Lake City. Moreover, because the OES survey does not necessarily

capture the same workers year-over-year, the unpredictability in wages

that can result from the presence and then absence of an outlier in the

wage data can occur even if that same worker has not changed locations.

The weakening of the linkage between supply and demand factors

affecting wages for most workers in an occupation and the Level II,

III, and IV wages was not the Department's intention in the IFR, and is

not consistent with the INA's wage provisions. Using the 90th

percentile instead to calculate the Level IV wages and derive Level II

and III wages for an occupation in a geographic area eliminates the

distortions and minimizes the excessive and unintended variability in

Levels II, III, and IV wages arising from the inclusion of a few

``superstar'' outliers in the mean of top decile.

Finally, the Department has decided to use a percentile calculation

instead of a mean calculation because the Department can produce such

data more efficiently. In addition, experience with the IFR's

methodology has demonstrated that taking the mean of a small portion of

the OES distribution, such as of a decile, can in some cases result in

exceedingly small sample sizes being used to produce the wage figure,

which make the figure produced potentially less reliable.

Based on its review of the comments received, the Department also

believes that a percentile calculation will be easier for employers,

workers, and the public to understand than a mean calculation. As noted

above, some commenters challenged the wage figures provided under the

IFR as being incorrect because some wages the Department estimated as

falling at the 62nd percentile wage were significantly higher than what

the Department had described as the 67th percentile wage under the old

methodology. While, for the reasons given above, it is likely that this

occurred in some cases due to the presence of outliers in the data used

to calculate the Level IV wage, there is also another explanation.

Specifically, describing the wage figures produced under the old

methodology and the IFR's methodology as percentiles was, as explained

in the IFR, simply a shorthand way of describing a rough approximation

of what a mean calculation yields. For example, under the old

methodology, the Level IV wage was provided as the mean of the upper

two-thirds of the OES distribution, meaning the average of the wage

data falling between the 33rd and 100th percentiles. The midpoint of

that portion of the distribution is the 67th percentile, but its mean

will not necessarily be the 67th percentile. Put more simply, the

average of a set of numbers does not always fall at the median of those

numbers. As a result, discussing two different means calculated based

on different portions of the distributions by describing them as

percentiles gives a false sense of comparability, as demonstrated by

some of the discrepancies raised by commenters.

To avoid confusion about how it describes the wages it provides

going forward, the Department will speak more clearly about the kinds

of data it is providing and will consequently report the wage based on

a percentile calculation. This means that the Department will no longer

take the average of portion of the wage distribution, but instead will

provide a wage that falls at a particular predetermined point within

the distribution.

As to the precise values of the intermediate levels, the Department

notes that it will continue to calculate the two intermediate wage

levels in accordance with 8 U.S.C. 1182(p)(4), which provides that, in

establishing a four-tier wage structure, ``[w]here an existing

government survey has only 2 levels, 2 intermediate levels may be

created by dividing by 3, the difference between the 2 levels offered,

adding the quotient thus obtained to the first level and subtracting

that quotient from the second level.'' \239\ The BLS OES survey is, as

provided in the statute, an existing survey that has long provided two

wage levels for Department's use in setting the prevailing wage

rates.\240\

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\239\ 8 U.S.C. 1182(p)(4).

\240\ BLS also produces data for the public from the OES survey

that is divided into five different wage levels. However, the public

data BLS produces is not broken down with the level of granularity

by area of employment needed to administer the Department's

immigrant and nonimmigrant programs, which is why BLS has also long

produced a separate dataset with two wage levels for the

Department's use.

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[[Page 3654]]

The Department will apply the statutory formula as follows: the

difference between the two levels provided by the OES survey data is 55

percentiles. Dividing this by three yields a quotient of 18.33. This

quotient, added to the value of the Level I wage at the 35th

percentile, yields a Level II wage at approximately the 53rd

percentile. When subtracted from the value of the Level IV wage at the

90th percentile, the quotient yields a Level III wage at approximately

the 72nd percentile of the OES distribution.

Finally, while eliminating the influence of outliers on how the

upper level wage is calculated and moving to percentile calculations

will reduce unpredictability in the data, prevent the inflation of

wages beyond the levels the Department has determined appropriate, and

make the wage structure easier to understand for the public, it is

possible that there will continue to be anomalies as the Department

moves from a mean-based to a percentile-based methodology. However, the

Department does not expect these will be common.

7. Other Suggested Alternatives and Additional Comments

One public policy organization suggested the Department should

require use of a government survey to determine prevailing wages,

stating the INA does not require the Department to permit use of other

sources and expressing concern that employers ``have routinely relied

on LCA prevailing wage sources that do not fit the `independent

authoritative source' or `another legitimate source of wage

information.''

The Department believes that allowing employers the flexibility of

choosing to use an independent authoritative source or another

legitimate source of wage data provides a backstop for cases in which

OES data on an occupation in a given region is insufficient or the OES

data provides an anomalous result. This flexibility serves the goal of

ensuring that the wage requirement actually reflects the market wage

for the job.

Another public policy organization stated it is unclear how

independent authoritative and other non-OES sources ``compare to OFLC-

generated OES prevailing wage'' and urged the Department to conduct a

study comparing OES-based wages and wages produced by private surveys

and non-OES sources ``to identify whether there are any systematic

biases'' in non-OES sources.

The quality of independent wage surveys is an important subject to

which OFLC pays attention and will continue to pay attention. Although

private surveys are conducted independently of the Department, the

Department in its regulations and guidance has set standards that

private surveys must attain. As discussed above, the regulations

restrict independent authoritative sources to publications within 24

months of the application and require them to use recent and valid

data.\241\ Independent sources must be ``reasonable and consistent with

recognized standards and principals in producing a prevailing wage.''

\242\

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\241\ 20 CFR 655.731 (b)(3)(iii).

\242\ Id. at 655.731 (b)(3)(iii)(C)(4).

---------------------------------------------------------------------------

Guidance that the Department issued in 2009 requires that wage data

collected by an independent authoritative source is for similarly

employed workers, meaning workers having substantially similar levels

of skills. The survey should contain a representative sample of wages

within the occupation that comports with recognized statistical

standards and principles in producing prevailing wages. The Department

provides a set of minimum survey standards in Appendix E of the 2009

Guidance and encourages employers to reference these standards when

seeking to use an independent authoritative source as the prevailing

wage. Written documentation on the methodology used to conduct the

survey and the validity of the methodology used in computing the

occupational wage data covering the area of intended employment must be

kept in the employer's data file and made available in the event of an

investigation. Two commenters suggested the Department should combine

data collected by the OES survey with ``certain data from private,

independently published compensation surveys'' to produce prevailing

wages that would more accurately reflect skill, education, and

experience levels than wages determined using OES pay band data alone.

One of these commenters suggested BLS could ``layer'' the private

survey data ``over the OES data'' and asserted this would not be

difficult because H-1B workers are heavily concentrated in IT

occupations that are included in private surveys, though the commenter

acknowledged private surveys are not available for all occupations and

localities. Other general suggestions included applying a higher wage

to ``tech companies'' or applying a higher wage as ``the number of

visas grow for an employer.''

The Department does not believe that combining or layering data

from studies that may not be measuring quite the same occupations in

the same regions would yield more accurate results. OES data is

comprehensive and reliable. As the commenter acknowledged, private

survey data is not available for some occupations and localities. An

advantage of the OES survey is that it allows uniformity in the

Department's methodology. That advantage would be lost if the

Department adopted the commenters' proposal. The system the Department

has adopted allows for cases where private survey data may be more

accurate. As discussed, using other authoritative or legitimate sources

is an option available to employers.

Various commenters asserted increased wages under the IFR

methodology would have negative macroeconomic impacts, including: Brain

drain and loss of American competitiveness in a global economy,

stifling innovation in areas like artificial intelligence and

manufacturing 4.0; increased prices for or elimination of products and

services; elimination or increased outsourcing of jobs and a general

reduction in labor demand; and reduced revenues, including local,

State, and Federal tax revenue and reduced consumer spending from

foreign workers and students. Many commenters also expressed concern

that the higher IFR wages would result in increased outsourcing of

jobs, rather than increased opportunities for U.S. workers. One of

these commenters noted that U.S. employers can hire workers through

foreign affiliates and cited a Wharton School of Business study finding

H-1B restrictions ``caused foreign affiliate employment increases at

the intensive and extensive margins.''

The Department does not anticipate that the harms the commenters

envisage will be the consequences of more accurately calculating

prevailing wages of H-1B and PERM workers. Some of the consequences are

possible, but in setting wage requirements, Congress accepted that

there would be costs resulting from its chosen means of protecting U.S.

workers. The Department has not been assigned the function of

reconsidering Congress's decision. Rather, the Department's obligation

under the INA is to match as closely as possible workers' pay with

their occupations and qualifications.

Two public policy organizations believed the Department must

address employer misclassification of job opportunities by reviewing

``the qualifications of individual workers

[[Page 3655]]

before DHS petitions are approved to ensure that wage levels match up

with age, education, and experience'' to ensure the employer is paying

an accurate prevailing wage. One of these commenters asserted some

employer petitions contain the same prevailing wage for different job

opportunities, such as listing the same wage for a software engineer

and a senior software engineer.

These comments propose actions that may be undertaken by DHS but

not by the Department. The Department cannot review DHS petitions

before DHS approves them.

Some commenters suggested new definitions of the terms `employer'

and `employment,' enhanced regulation of foreign labor recruiters, a

ban of staffing companies from the H-1B program, and enhanced wage

protections in the H-2A program. Other commenters expressed concerns

related to DHS regulations and recent rulemaking either unrelated or

not directly related to this rulemaking, including a DHS IFR regarding

specialty occupation determinations.

These comments express concerns or provide suggestions that exceed

the scope of this rulemaking. Accordingly, they need not be addressed

in this preamble.

IV. Amendments to the Computation of Prevailing Wage Levels Created by

the Final Rule

In light of the foregoing, this final rule amends the Department's

regulations at part 20, sections 656.40 and 655.731 to reflect the wage

level computations the Department will use to determine prevailing

wages in the H-1B, H-1B1, E-3, EB-2, and EB-3 classifications. These

amendments are in accordance with the President's Executive Order

(E.O.) 13788, ``Buy American and Hire American,'' which instructed the

Department to ``propose new rules and issue new guidance, to supersede

or revise previous rules and guidance if appropriate, to protect the

interests of United States workers in the administration of our

immigration system.'' \243\ Additionally, the Department has determined

that the existing prevailing wage levels were artificially low and

provided an opportunity for employers to hire and retain foreign

workers at wages well below what their U.S. counterparts earn, creating

an incentive to prefer foreign workers to U.S. workers, an incentive

that is at odds with the statutory scheme and causes downward pressure

on the wages of the domestic workforce. Therefore, the amendments

discussed below revising the wage provisions at 20 CFR 655.731 and

656.40 will ensure the prevailing wage levels reflect the wages paid to

U.S. workers with similar experience, education, and responsibility to

those possessed by similarly employed foreign workers.

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\243\ See Exec. Order 13788, 82 FR 18,837 (Apr. 18, 2017).

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1. Prevailing Wage Levels Based on the OES in the Permanent Labor

Certification Program (20 CFR 656.40)

The IFR amended this section to codify the practice of using four

prevailing wage levels and to specify the manner in which the wages

levels are calculated. Additionally, the IFR incorporated minor

technical amendments to clarify the prevailing wage process and to

codify the Department's practice of having the OFLC Administrator

announce, via a notice of implementation, annual updates to OES wage

data. After a careful review of the comments and as discussed above,

this final rule adopts a revised wage level computation methodology and

other clarifying and technical amendments to Sec. 656.40.

Paragraph (b)(2)(ii)(A) describes the computation of the Level I

Wage following implementation of transition wage rates specified under

paragraph (b)(2)(iii). This first wage level--calculated as the mean of

the fifth decile of the OES wage distribution under the IFR--will now

be calculated as the 35th percentile of the wage distribution for the

most specific occupation and geographic area available. Roughly

speaking, this means that the Level I Wage will be adjusted downward

from the approximate 45th percentile under the IFR to the exact 35th

percentile of the relevant OES wage distribution in this final rule.

Next, paragraph (b)(2)(ii)(D) provides that the Level IV Wage--

calculated as the mean of the upper decile of the OES wage

distribution--will now be calculated as the exact 90th percentile of

the wage distribution for the most specific occupation and geographic

area available. This means the Level IV Wage will decrease

approximately from the 95th percentile under the IFR to exactly the

90th percentile of the relevant OES wage distribution. Further, where

the Department is unable to compute a Level IV Wage for an occupation

and geographic area due to wage values exceeding the uppermost interval

of the OES wage interval methodology, the Level IV Wage will be the

highest of: (1) The current hourly wage rate applicable to the highest

OES wage interval for the specific occupation and geographic area (also

known as the footnote wage), or (2) the mean of the wages of all

workers for the most specific occupation and geographic area available.

For the two intermediate levels, II and III, the Department will

continue to rely on the mathematical formula Congress provided in the

INA.\244\ Thus, new paragraph (b)(2)(ii)(B) states that the Level II

Wage shall be determined by first dividing the difference between

Levels I and IV by three and then adding the quotient to the computed

value for Level I. The Level III Wage is defined in new paragraph

(b)(2)(ii)(C) as a level determined by first dividing the difference

between Levels I and IV by three and then subtracting the quotient from

the computed value for Level IV. This yields second and third wage

levels at approximately the 53rd and 72nd percentiles, respectively,

under this final rule as compared to the computations under the IFR,

which placed Level II Wage at approximately the 62nd percentile and

Level III Wage at approximately the 78th percentile.

---------------------------------------------------------------------------

\244\ See 8 U.S.C. 1182(p)(4) (``Where an existing government

survey has only 2 levels, 2 intermediate levels may be created by

dividing by 3, the difference between the 2 levels offered, adding

the quotient thus obtained to the first level and subtracting that

quotient from the second level.'').

---------------------------------------------------------------------------

Section 656.40(b)(2)(ii) in the IFR explained that the OFLC

Administrator will publish the prevailing wage rates at least once in

each calendar year, on a date to be determined by the Administrator,

codifying the Department's current practice of announcing updates to

OES wage data via a notice of implementation, rather than publishing

multiple prevailing wage rates in the Federal Register. The Department

has adopted the language of the provision without change, but has made

a minor technical change moving the provision to paragraph (b)(2)(iv)

in order to accommodate revisions to the wage level computation

provisions in this final rule.

The Department is adopting without change revisions to Sec.

656.40(b)(2) that provide greater precision in the language used by

changing the term ``DOL'' to ``BLS'' when describing which entity

administers the OES survey and eliminate redundancy by deleting the

language ``except as provided in (b)(3) of this section.'' Because the

Department is now specifying within the regulation exactly how the

prevailing wage levels are calculated, the revised text also removes

the existing reference to how the levels are calculated--namely the

reference to the ``arithmetic mean''--and will instead read: ``If the

job opportunity is not covered by a CBA, the prevailing wage for labor

certification purposes shall be based on the wages of workers

[[Page 3656]]

similarly employed using the wage component of the OES survey, in

accordance with subparagraph (b)(2)(i), unless the employer provides an

acceptable survey under paragraphs (b)(3) and (g) of this section or

elects to utilize a wage permitted under paragraph (b)(4) of this

section.'' The Department also is adopting without change the revisions

to paragraph (a) that remove an out-of-date reference to the role of

the SWAs in the prevailing wage determination process and an

unnecessary reference to ``arithmetic mean'' that is specified in other

paragraphs.

2. Amending the Wage Requirement for LCAs in the H-1B, H-1B1, and E-3

Visa Classifications (20 CFR 655.731)

The IFR made minor technical amendments to this section to remove

out-of-date references, clarify use of the BLS's OES survey and other

permissible wage sources to determine prevailing wages, and specify

that these determinations will be made in a manner consistent with the

amended section 656.40(b)(2). After a careful review of the comments

and as discussed above, this final rule adopts, without change, these

clarifying and technical amendments to Sec. 656.731.

This final rule adopts amendments to paragraph (a)(2)(ii)(A) that

removes an out-of-date reference to SWAs' role in the prevailing wage

determination process to reflect current practice and to provide for

operational flexibilities in the future with respect to where PWD

requests are processed. Non-agricultural PWD requests are no longer

processed by SWAs; since 2010 they have solely been processed by the

Department at a National Processing Center (NPC). PWD requests are

primarily adjudicated by the NPWC, located in Washington, DC, but

through interoperability, they may be processed by any NPC. The

regulatory text is amended to reflect current DOL practice and to

provide maximum flexibility for DOL to ensure PWDs are issued in a

timely manner.

The Department also adopts without change revised language in Sec.

655.731 that more clearly explains the Department will use BLS's OES

survey to determine the prevailing wages under this paragraph, as well

as an additional sentence that specifies these determinations will be

made in a manner consistent with amended Sec. 656.40(b)(2). The

revised language in paragraphs (a)(2)(ii), (a)(2)(ii)(A), and

(a)(2)(ii)(A)(2) also includes technical and clarifying revisions

regarding other permissible wage sources (i.e., applicable wage

determinations under the Davis-Bacon Act or McNamara-O'Hara Service

Contract Act), as well as other independent authoritative or legitimate

sources of wage data in accordance with paragraph (a)(2)(ii)(B) or (C).

This final rule adopts without change language that removed the

reference to ``arithmetic mean'' in paragraph (a)(2)(ii) and now states

``. . . the prevailing wage shall be based on the wages of workers

similarly employed as determined by the OES survey in accordance with

20 CFR. 656.40(b)(2)(i) . . .'' The revisions also correct an error

referencing ``H-2B nonimmigrant(s)'' by changing the reference to ``H-

1B nonimmigrant(s)'' in paragraph (a)(2)(ii)(A)(2). The revisions

further provide that an NPC will continue to determine whether a job is

covered by a collective bargaining agreement that was negotiated at

arms-length, but in the event the occupation is not covered by such

agreement, an NPC will determine the wages of workers similarly

employed using the wage component of the BLS OES, unless the employer

provides an acceptable wage survey. An NPC will determine the

prevailing wage in accordance with sections 212(n) and 212(t) of the

INA and in a manner consistent with the newly revised 20 CFR

656.40(b)(2).

3. Transition Wage Rates for Implementing Changes Created by the Final

Rule

As stated in the IFR, the Department applied the new regulations to

applications for prevailing wage determination pending with the NPWC as

of the effective date of the regulation; applications for prevailing

wage determinations filed with the NPWC on or after the effective date

of the regulation; and LCAs filed with the Department on or after the

effective date of the regulation where the OES survey data is the

prevailing wage source, and where the employer did not obtain the PWD

from the NPWC prior to the effective date of the regulation. However,

the Department received a number of comments expressing concerns that

immediate implementation of the revised wage levels may have a

significant negative impact on the economy, and that a phased

implementation of the revised wage levels is appropriate to allow

employers to adjust to the new computation methodology and plan

payroll, budget, and contractual obligations accordingly.

To address these concerns and support an orderly and seamless

transition between the rules, the Department is adding paragraph

(b)(2)(iii) to this section to provide a phased implementation period

to the new prevailing wage levels. A short transition period also

allows the Department to implement necessary changes to program

operations, OES wage databases, and technology systems, and to provide

training and technical assistance to the NPC, employers, and other

stakeholders in order to familiarize them with changes required by this

final rule. The wage level computations contained in this section will

only apply to applications for prevailing wage determination pending

with the NPWC on or during the effective date(s) of each transition

period; applications for prevailing wage determinations filed with the

NPWC on or during the effective date(s) of each transition period; and

LCAs filed with the Department on or during the effective date(s) of

each transition period where the OES survey data is the prevailing wage

source, and where the employer did not obtain the PWD from the NPWC

prior to the effective date(s) of each transition period.

Accordingly, paragraph (b)(2)(iii)(A) describes the computations of

the wage levels for the period beginning on the effective date of this

final rule through June 30, 2021. The Level I Wage will continue to be

calculated as the mean of the lower one-third of the wage distribution

for the most specific occupation and geographic area available, which

roughly approximates the 17th percentile of the wage distribution. The

Level IV Wage will continue to be calculated as the mean of the upper

two-thirds of the wage distribution for the most specific occupation

and geographic area available, which roughly approximates the 67th

percentile of the wage distribution. For the two intermediate levels,

II and III, the Department will continue to rely on the mathematical

formula Congress provided in the INA.

Paragraph (b)(2)(iii)(B) describes the computations of the wage

levels for the period beginning on July 1, 2021, through June 30, 2022.

The Level I Wage will be set as either (1) 90 percent of the wage value

calculated at the 35th percentile of the wage distribution under

paragraph (b)(2)(ii)(A), or (2) the mean of the lower one-third of the

wage distribution under paragraph (b)(2)(iii)(A)(1), whichever is

highest. The Level IV Wage will be set as either (1) 90 percent of the

wage value calculated at the 90th percentile of the wage distribution

under paragraph (b)(2)(ii)(D), or (2) the mean of the upper two-thirds

of the wage distribution under paragraph (b)(2)(iii)(A)(2), whichever

is highest. For the two intermediate levels, II and III, the

[[Page 3657]]

Department will continue to rely on the mathematical formula Congress

provided in the INA based on the wage levels derived under this

paragraph.

Paragraph (b)(2)(iii)(C) describes transition wage rates that will

apply only to LCAs and, as applicable, applications for prevailing wage

determinations submitted by employers seeking to employ a H-1B

nonimmigrant worker in job opportunity where such H-1B nonimmigrant

worker was, as of October 8, 2020, the beneficiary of an approved I-140

Petition or eligible for an extension of his or her H-1B visa status

under AC21, and eligible to be granted immigrant status but for

application of the per country visa limitations or remains eligible for

an extension of his or her H-1B visa status at the time the LCA is

filed.

Where these requirements pertaining to job opportunities for which

LCAs are filed are met, paragraph (b)(2)(iii)(C)(1) describes the

computations of the wage levels for the period beginning on July 1,

2021, through June 30, 2022. The Level I Wage will be set as either (1)

85 percent of the wage value calculated at the 35th percentile of the

wage distribution under paragraph (b)(2)(ii)(A), or (2) the mean of the

lower one-third of the wage distribution under paragraph

(b)(2)(iii)(A)(1), whichever is highest. The Level IV Wage will be set

as either (1) 85 percent of the wage value calculated at the 90th

percentile of the wage distribution under paragraph (b)(2)(ii)(D), or

(2) the mean of the upper two-thirds of the wage distribution under

paragraph (b)(2)(iii)(A)(2), whichever is highest. For the two

intermediate levels, II and III, the Department will continue to rely

on the mathematical formula Congress provided in the INA based on the

wage levels derived under this paragraph.

Paragraph (b)(2)(iii)(C)(2) describes the computations of the wage

levels for the period beginning on July 1, 2022, through June 30, 2023.

The Level I Wage will be set as either (1) 90 percent of the wage value

calculated at the 35th percentile of the wage distribution under

paragraph (b)(2)(ii)(A), or (2) the wage value provided from the

calculation specified under paragraph (b)(2)(iii)(C)(1)(i), whichever

is highest. The Level IV Wage will be set as either (1) 90 percent of

the wage value calculated at the 90th percentile of the wage

distribution under paragraph (b)(2)(ii)(D), or (2) the wage value

provided from the calculation specified under paragraph

(b)(2)(iii)(C)(1)(ii), whichever is highest. For the two intermediate

levels, II and III, the Department will continue to rely on the

mathematical formula Congress provided in the INA based on the wage

levels derived under this paragraph.

Paragraph (b)(2)(iii)(C)(3) describes the computations of the wage

levels for the period beginning on July 1, 2023, through June 30, 2024.

The Level I Wage will be set as either (1) 95 percent of the wage value

calculated at the 35th percentile of the wage distribution under

paragraph (b)(2)(ii)(A), or (2) the wage value provided from the

calculation specified under paragraph (b)(2)(iii)(C)(2)(i), whichever

is highest. The Level IV Wage will be set as either (1) 95 percent of

the wage value calculated at the 90th percentile of the wage

distribution under paragraph (b)(2)(ii)(D), or (2) the wage value

provided from the calculation specified under paragraph

(b)(2)(iii)(C)(2)(ii), whichever is highest. For the two intermediate

levels, II and III, the Department will continue to rely on the

mathematical formula Congress provided in the INA based on the wage

levels derived under this paragraph.

Following this transition period and beginning on July 1, 2024,

paragraph (b)(2)(iii)(C)(4) requires that all prevailing wage

calculations for job opportunities for which LCAs are filed shall be

provided by the OFLC Administrator as specified under paragraph

(b)(2)(ii) of this section. Where the Department is unable to compute a

Level IV Wage under paragraph (b)(2)(iii) for an occupation and

geographic area due to wage values exceeding the uppermost interval of

the OES wage interval methodology, paragraph (b)(2)(iii)(D) specifies

that the OFLC Administrator shall determine the Level IV Wage as the

highest of: (1) The current hourly wage rate applicable to the highest

OES wage interval for the specific occupation and geographic area, or

(2) the mean of the wages of all workers for the most specific

occupation and geographic area available.

V. Statutory and Regulatory Requirements

A. Executive Orders 12866 (Regulatory Planning and Review), Executive

Order 13563 (Improving Regulation and Regulatory Review), and Executive

Order 13771 (Reducing Regulation and Controlling Regulatory Costs)

Under E.O. 12866, the OMB's Office of Information and Regulatory

Affairs (OIRA) determines whether a regulatory action is significant

and, therefore, subject to the requirements of the E.O. and review by

OMB. 58 FR 51735. Section 3(f) of E.O. 12866 defines a ``significant

regulatory action'' as an action that is likely to result in a rule

that: (1) Has an annual effect on the economy of $100 million or more,

or adversely affects in a material way a sector of the economy,

productivity, competition, jobs, the environment, public health or

safety, or State, local, or tribal governments or communities (also

referred to as economically significant); (2) creates serious

inconsistency or otherwise interferes with an action taken or planned

by another agency; (3) materially alters the budgetary impacts of

entitlement grants, user fees, or loan programs, or the rights and

obligations of recipients thereof; or (4) raises novel legal or policy

issues arising out of legal mandates, the President's priorities, or

the principles set forth in the E.O. Id. Pursuant to E.O. 12866, OIRA

has determined that this is an economically significant regulatory

action. However, OIRA has waived review of this regulation under E.O.

12866, section 6(a)(3)(A). Pursuant to the Congressional Review Act (5

U.S.C. 801 et seq.), OIRA has designated that this rule is a ``major

rule,'' as defined by 5 U.S.C. 804(2).

E.O. 13563 directs agencies to propose or adopt a regulation only

upon a reasoned determination that its benefits justify its costs; the

regulation is tailored to impose the least burden on society,

consistent with achieving the regulatory objectives; and in choosing

among alternative regulatory approaches, the agency has selected those

approaches that maximize net benefits. E.O. 13563 recognizes that some

benefits are difficult to quantify and provides that, where appropriate

and permitted by law, agencies may consider and qualitatively discuss

values that are difficult or impossible to quantify, including equity,

human dignity, fairness, and distributive impacts.

Outline of the Analysis

Section III.B.1 describes the need for the final rule, and section

III.B.2 describes the process used to estimate the costs of the rule

and the general inputs used to reach these estimates, such as wages and

number of affected entities. Section III.B.3 explains how the

provisions of the final rule will result in costs and transfer payments

and presents the calculations the Department used to reach the cost and

transfer payment estimates. In addition, this section describes the

qualitative transfer payments and benefits of the changes contained in

this final rule. Section III.B.4 summarizes the estimated first-year

and 10-year total and annualized costs, perpetuated costs, and transfer

payments of the final rule. Finally, section III.B.5 describes the

regulatory alternatives that were

[[Page 3658]]

considered during the development of the final rule.

Summary of the Analysis

The Department expects that the final rule will result in costs and

transfer payments. As shown in Exhibit 1, the final rule will have an

annualized cost of $2.90 million and a total 10-year cost of $20.34

million at a discount rate of 7 percent in 2019 dollars.\245\ The final

rule will result in annualized transfer payments of $14.97 billion and

total 10-year transfer payments of $105.16 billion at a discount rate

of 7 percent in 2019 dollars.\246\ When the Department uses a perpetual

time horizon to allow for cost comparisons under E.O. 13771, the

annualized cost of this final rule is $1.86 million at a discount rate

of 7 percent in 2016 dollars.\247\

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\245\ The final rule will have an annualized net cost of $2.75

million and a total 10-year cost of $23.47 million at a discount

rate of 3 percent in 2019 dollars.

\246\ The final rule will result in annualized transfer payments

of $15.34 billion and total 10-year transfer payments of $130.83

billion at a discount rate of 3 percent in 2019 dollars.

\247\ To comply with E.O. 13771 accounting, the Department

multiplied the initial and then constant rule familiarization costs

(initial cost of $4,077,113; constant costs of $2,316,661 in 2019$)

by the GDP deflator (0.94242) to convert the cost to 2016 dollars

(initial cost of $4,077,113; constant costs of $2,316,661 in 2019$).

The Department used this result to determine the perpetual

annualized cost ($2,431,831) at a discount rate of 7 percent in 2016

dollars. Assuming the rule takes effect in 2020, the Department

divided $2,431,831 by 1.07\4\, which equals $1,855,232. This amount

reflects implementation of the rule in 2020.

Exhibit 1--Estimated Monetized Costs and Transfer Payments of the Final

Rule

[2019 $ millions]

------------------------------------------------------------------------

Transfer

Costs payments

------------------------------------------------------------------------

10-Year Total with a Discount Rate of 3% $23.47 $130,830

10-Year Total with a Discount Rate of 7% 20.34 105,157

Annualized at a Discount Rate of 3%..... 2.75 15,337

Annualized at a Discount Rate of 7%..... 2.90 14,972

Perpetuated Costs* with a Discount Rate .............. 1.86

of 7% (2016 $ Millions)................

------------------------------------------------------------------------

The total cost associated with the final rule includes only rule

familiarization. The rule is not expected to result in any cost

savings. Transfer payments are the result of changes to the computation

of prevailing wage rates for employment opportunities that U.S.

employers seek to fill with foreign workers on a temporary basis

through H-1B, H-1B1, and E-3 nonimmigrant visas.\248\ See the costs and

transfer payments subsections of section III.B.3 (Subject-by-Subject

Analysis) below for a detailed explanation.

---------------------------------------------------------------------------

\248\ As explained, infra, the Department did not quantify

transfer payments associated with new certifications under the

Permanent Labor Certification Program (e.g., EB-2 and EB-3

classifications) because they are expected to be de minimis.

---------------------------------------------------------------------------

The Department was unable to quantify some transfer payments and

benefits of the final rule. The Department describes them qualitatively

in section III.B.3 (Subject-by-Subject Analysis).

1. Need for Regulation

The Department has determined that this rulemaking is needed to

update the computation of prevailing wage levels under the existing

four-tier wage structure to better reflect the actual wages earned by

U.S. workers similarly employed to foreign workers, eliminate economic

incentive or advantage in hiring foreign workers on a permanent or

temporary basis in the United States, and further the goals of E.O.

13788, Buy American and Hire American. See 82 FR 18837. The ``Hire

American'' directive of the E.O. articulates the executive branch

policy to rigorously enforce and administer the laws governing entry of

nonimmigrant workers into the United States in order to create higher

wages and employment rates for U.S. workers and to protect their

economic interests. Id. sec. 2(b). It directs Federal agencies,

including the Department, to propose new rules and issue new guidance

to prevent fraud and abuse in nonimmigrant visa programs, thereby

protecting U.S. workers. Id. sec. 5.

The Department is therefore amending its regulations at Sections

656.40 and 655.731 to update the methodology it will use to determine

prevailing wages using wage data from the BLS OES survey for job

opportunities in the H-1B, H-1B1, E-3, and permanent labor

certification programs. The reports discussed and analyses provided in

the preamble above explain how application of the current wage

methodology for the four-tier OES wage structure fails to produce

prevailing wages at a level consistent with the actual wages earned by

U.S. workers similarly employed to foreign workers and, therefore, has

a suppressive effect on the wages of U.S. workers similarly employed.

The Department has a statutory mandate to protect the wages and working

conditions of U.S. workers similarly employed from adverse effects

caused by the employment of foreign workers in the United States on a

permanent or temporary basis.

2. Analysis Considerations

The Department estimated the costs and transfer payments of the

final rule relative to the baseline (the regulations governing

permanent labor certifications at 20 CFR part 656 and labor condition

applications at 20 CFR part 655, subpart H).

In accordance with the regulatory analysis guidance articulated in

OMB's Circular A-4 and consistent with the Department's practices in

previous rulemakings, this regulatory analysis focuses on the likely

consequences of the final rule (i.e., costs and transfer payments that

accrue to entities affected). The analysis covers 10 years (from 2021

through 2030) to ensure it captures major costs and transfer payments

that accrue over time. The Department expresses all quantifiable

impacts in 2019 dollars and uses discount rates of 3 and 7 percent,

pursuant to Circular A-4.

Exhibit 2 presents the number of entities affected by the final

rule. The number of affected entities is calculated using OFLC

performance data from fiscal years (FY) 2018, 2019, and 2020. The

Department uses them throughout this analysis to estimate the costs and

transfer payments of the final rule.

[[Page 3659]]

Exhibit 2--Number of Affected Entities by Type

[FY 2018-2020 average]

------------------------------------------------------------------------

Entity type Number

------------------------------------------------------------------------

Unique H-1B Program Certified Employers \249\........... 58,750

H-1B Program Certified Worker Positions with Prevailing 904,445

Wage Set by OES \250\..................................

Unique PERM Employers \251\............................. 24,563

------------------------------------------------------------------------

Estimated Number of Workers and Change in Hours

---------------------------------------------------------------------------

\249\ The total unique LCA employers in 2018, 2019, and 2020

were 57,682, 63,027, and 55,540, respectively.

\250\ The total number of worker positions associated with LCA

certifications that use OES prevailing wages in 2018, 2019, and 2020

were 1,022,908, 907,732, and 782,696, respectively.

\251\ The unique employers in 2018, 2019, and 2020 were 28,856,

23,596, and 21,236, respectively.

---------------------------------------------------------------------------

The Department presents the estimated average number of foreign

worker applicants and the change in burden hours required for rule

familiarization in section III.B.3 (Subject-by-Subject Analysis).

Compensation Rates

In section III.B.3 (Subject-by-Subject Analysis), the Department

presents the costs, including labor, associated with implementation of

the provisions contained in this final rule. Exhibit 3 presents the

hourly compensation rates for the occupational categories expected to

experience a change in the number of hours necessary to comply with the

final rule. The Department used the BLS mean hourly wage rate for

private sector human resources specialists.\252\ Wage rates were

adjusted to reflect total compensation, which includes non-wage factors

such as overhead and fringe benefits (e.g., health and retirement

benefits). We used an overhead rate of 17 percent \253\ and a fringe

benefits rate based on the ratio of average total compensation to

average wages and salaries in 2019. For the private sector employees,

we used a fringe benefits rate of 42 percent.\254\

---------------------------------------------------------------------------

\252\ Bureau of Labor Statistics. (2019). May 2019 National

Occupational Employment and Wage Estimates: 13-1071--Human Resources

Specialist. Retrieved from: https://www.bls.gov/oes/current/oes131071.htm .

\253\ Cody Rice, U.S. Environmental Protection Agency, ``Wage

Rates for Economic Analyses of the Toxics Release Inventory

Program,'' June 10, 2002, https://www.regulations.gov/document...2014-0650-0005 .

\254\ BLS. (2019). ``2019 Employer Costs for Employee

Compensation.'' Retrieved from: https://www.bls.gov/news.release/ecec.toc.htm . Ratio of total compensation to wages and salaries for

all private industry workers.

---------------------------------------------------------------------------

The Department received one comment on the adjustment of wage rates

to reflect total compensation. One commenter said the Department had

underestimated the cost of the program because fringe and overhead were

included in calculations of costs and transfers. In response to the

commenter's concern, the wage transfer calculations in the IFR and the

final rule do not include overhead or fringe benefits; they are raw

wages. Overhead and fringe benefits were only applied to staffing wages

in the cost section. The commenter's calculation of fringe and overhead

application was incorrect when suggesting how they were applied. The 17

percent overhead rate is not applied after calculating the fringe rate;

instead, the fringe rate and the overhead rates are applied

simultaneously to wages as shown in Exhibit 3.

The fringe wage rate is based on Employer Costs for Employee

Compensation data which includes paid leave; supplemental pay (i.e.,

overtime and premium, shift differentials, and nonproduction bonuses);

insurance (i.e., life, health, short-term disability, and long-term

disability); retirement and savings; and legally required benefits

(i.e., Social Security, Medicare, federal unemployment insurance, state

unemployment insurance, and workers' compensation). As wages increase

the costs associated with paid leave, retirement savings, and

supplemental pay will also increase.

The Department used the hourly compensation rates presented in

Exhibit 3 to estimate the labor costs.

---------------------------------------------------------------------------

\255\ Numbers may slightly differ due to rounding.

Exhibit 3--Compensation Rates

[2019 dollars] \255\

----------------------------------------------------------------------------------------------------------------

Hourly

Position Base hourly Fringe rate Overhead costs compensation

wage rate rate

(a) (b) (c) d = a + b + c

----------------------------------------------------------------------------------------------------------------

HR Specialist................ $32.58 $13.81 ($32.58 x 0.42) $5.54 ($32.58 x 0.17) $51.93

----------------------------------------------------------------------------------------------------------------

3. Subject-by-Subject Analysis

The Department's analysis below covers the estimated costs and

transfer payments of the final rule. In accordance with Circular A-4,

the Department considers transfer payments as payments from one group

to another that do not affect total resources available to society. The

regulatory impact analysis focuses on the costs and transfer payments

that can be attributed exclusively to the new requirements in the final

rule.

Costs

The following section describes the costs of the final rule.

Rule Familiarization

When the final rule takes effect, existing employers of foreign

workers with H-1B, H-1B1, E-3 visas, and those employers sponsoring

foreign workers for permanent employment, will need to familiarize

themselves with the new regulations. Consequently, this imposes a one-

time cost for existing employers in the temporary and permanent visa

programs in the first year. Each year, there are new employers that

participate in the temporary and permanent visa programs. Therefore, in

each year subsequent to the first year, new employers will need to

familiarize themselves with the new regulations.

To estimate the first-year cost of rule familiarization, the

Department calculated the average (83,312) number of unique employers

requesting H-1B certifications and PERM

[[Page 3660]]

certifications.\256\ The average number of unique H-1B and PERM

employers (83,312) was multiplied by the estimated amount of time

required to review the rule (1 hour).\257\ This number was then

multiplied by the hourly, fully loaded compensation rate of Human

Resources Specialists ($51.93 per hour). This calculation results in an

initial cost of $4.33 million in the first year after the final rule

takes effect. Each year after the first year the same calculation is

done for the average number of new unique employers requesting H-1B and

PERM certifications in FY 2019 and FY 2020 (47,339).\258\ This

calculation results in a continuing annual undiscounted cost of $2.46

million in years 2-10 of the analysis. The one-time and continuing cost

yields a total average annual undiscounted cost of $2.65 million. The

annualized cost over the 10-year period is $2.75 million and $2.90

million at discount rates of 3 and 7 percent, respectively.

---------------------------------------------------------------------------

\256\ The total number of unique employers requesting H-1B

certifications and PERM certifications in FY18 (57,682 + 28,856 =

86,538), FY19 (63,027 + 23,596 = 86,623), and FY20 (55,540 + 21,236

= 76,776).

\257\ This final rule amends parts of an existing regulation.

Therefore, the Department estimates 1-hour to review the rule

assuming a high number of readers familiar with the existing

regulation.

\258\ The total number of new employers in FY19 was 51,289

(35,790 H1B + 15,499 PERM), and in FY20 was 43,389 (29,051 H1B +

14,338 PERM).

---------------------------------------------------------------------------

Transfer Payments

Quantifiable Transfer Payments

This section discusses the quantifiable transfer payments related

to changes to the computation of the prevailing wage levels.

As discussed in the preamble, the Department determined that

current wage level methodology results in prevailing wage rates for

temporary and permanent workers that are far below what their U.S.

counterparts are likely paid, which has a suppressive effect on the

wages of similarly employed U.S. workers. While allowing employers to

access higher-skilled H-1B workers to fill specialized positions can

help U.S. workers' job opportunities in some instances, the benefits of

this policy diminish or disappear when the prevailing wage levels do

not accurately reflect the wages paid to similarly employed workers in

the U.S. labor market. The distortions resulting from a poor

calculation of the prevailing wage allow some firms to replace

qualified U.S. workers with lower-cost foreign workers.

Under this final rule, the Department will compute the Level I Wage

for PERM labor certifications and LCAs as the 35th percentile of the

OES wage distribution for the most specific occupation and geographic

area available, rather than the mean of the fifth decile used in the

IFR. Roughly speaking, this means that the first wage level will be

decreased from the 45th percentile to the 35th percentile. The

Department will compute the Level IV Wage as the 90th percentile of the

OES wage distribution for the most specific occupation and geographic

area available, rather than the arithmetic mean of the upper decile

used in the IFR. This means the fourth wage level will decrease

approximately from the 95th percentile to the 90th percentile.

Consistent with the formula provided in the INA, the Level II Wage

will be calculated by dividing by three, the difference between Levels

I and IV, and adding the quotient to the computed value for Level I.

The Level III Wage will be calculated by dividing by three the

difference between Levels I and IV, and subtracting the quotient from

the computed value for Level IV. This yields a Level II Wage at

approximately the 53rd percentile and a Level III Wage at approximately

the 72nd percentile, as compared to the current computation, which

places Level II at approximately the 34th percentile and Level III at

approximately the 50th percentile.

This final rule also provides for a transition period from the

current wage methodology to the wage methodology contained in this

final rule to give foreign workers and their employers time to adapt to

the new wage rates. For most job opportunities, the transition will

occur in two steps, following a short delayed implementation period,

and conclude on July 1, 2022. For job opportunities that will be filled

by workers who are the beneficiary of an approved Immigrant Petition

for Alien Worker, or successor form, or is eligible for an extension of

his or her H-1B status under sections 106(a) and (b) of the American

Competitiveness in the Twenty-first Century Act of 2000 (AC21), Public

Law 106-313, as amended by the 21st Century Department of Justice

Appropriations Authorization Act, Public Law 107-273 (2002), the

transition will occur in four steps, following a short delayed

implementation period, and conclude on July 1, 2024.

For the two-step transition the current wage levels will be in

effect from January 1, 2021 through June 30, 2021. From July 1, 2021

through June 30, 2022, the prevailing wage will be 90 percent of the

final wage level. From July 1, 2022 and onward the prevailing wage will

be the final wage levels. For the three and a half year transition the

current wage levels will be in effect from January 1, 2021 through June

30, 2021. From July 1, 2021 through June 30, 2022 the prevailing wage

will be 85 percent of the final wage levels; from July 1, 2022 through

June 30, 2023 the prevailing wage will be 90 percent of the final wage

levels; from July 1, 2023 through June 30 2024 the prevailing wage will

be 95 percent of the final wage levels; and from July 1, 2024 onwards

the prevailing wage will be the final wage levels.

Finally, the Department is revising Sec. 655.731 to explain that

it will use the BLS's OES survey wage data to establish the prevailing

wages in the H-1B, H-1B1, and E-3 visa classifications. The Department

added a sentence to explain that these determinations will be made by

the OFLC NPC in a manner consistent with Sec. 656.40(b)(2).

The Department calculated the impact on wages that will occur from

implementation of the prevailing wage computation changes contained in

the final rule. It is expected that the increase in prevailing wages

under the final rule will incentivize some employers to employ U.S.

workers instead of foreign workers from the H-1B program, but

nonetheless, the Department still expects that the same number of H-1B

visas will be granted under the annual caps. For many years, the

Department has observed that the number of petitions exceeds the

numerical cap, as the annual H-1B cap was reached within the first five

business days each year from FY 2014 through FY 2020, and higher

prevailing wage levels do not necessarily mean that demand for

temporary foreign labor will fall below the available supply of visas.

Under existing prevailing wage levels, which the Department has shown

are too low and do not accurately reflect the wages paid to similarly

employed U.S. workers, demand for temporary foreign labor far exceeds

the statutory limits on supply. Usually prices rise in a market when

demand exceeds supply. However, given the statutory framework of the H-

1B system, along with the lower wages for comparable work in many other

countries and the non-pecuniary benefits of participating the H-1B

program, prices for temporary foreign labor under the H-1B program have

stayed too low to depress overall employer demand.

Under the final rule, wage transfers will still occur in cases

where U.S. workers are employed instead of H-1B workers; therefore, no

adjustments to the wage estimates are necessary due to this effect.

However, it is possible that prevailing wage increases will induce some

employers to train and provide

[[Page 3661]]

more working hours to incumbent workers, resulting in no increase in

employment but an increase in earnings. It is also possible that

prevailing wage increases will induce some employers to not hire a

worker at all (either a U.S. worker or a worker from the H-1B program

that is subject to the annual cap or not subject to the annual cap),

resulting in a decrease in employment of guest workers. However, given

that participation in temporary labor certification programs is

voluntary, and there exists an alternative labor market of U.S. workers

who are not being prevented from accepting work offered at potentially

lower market-based wages, there is some reason to doubt whether an

increase in prevailing wages will lead to an efficiency loss from

decreased labor demand. Due to data limitations on the expected change

in labor demand and supply of U.S. workers, the Department cannot

accurately measure the efficiency gains or losses to the U.S. labor

market created by the new prevailing wage system. The Department

discusses this potential impact qualitatively; the Department invited

comment on how to estimate changes to efficiency from the new

prevailing wage levels, but did not receive any such comment.

The Department received two comments suggesting that the transfers

of the rule were underestimated.

One commenter suggests that the analysis in the IFR underestimates

the transfer payments of the IFR. They cite a 2020 Cato Institute study

that found the wage increases, using interpolated wages from the

publicly available BLS OES dataset resulted in underestimates of the

wage impacts of the IFR. In addition, they suggested that the use of

the 90th percentile as a proxy for the 95th percentile significantly

underestimated wages.

In response to the commenter's concern, the IFR estimate of wages

was based on BLS OES data publicly available at the time of

publication. Therefore, the estimated wage impacts in the IFR were

conservative, particularly for workers with wages set at the 95th

percentile where wage impacts were calculated based on the publicly

available 90th percentile. In this final rule the Department revises

its wage tier methodology, including setting the Level IV percentile at

the 90th percentile. The change in methodology will result in wage

tiers that are set at percentiles that are lower than those presented

in the IFR and that will be phased in over a period of 2 years for

applicants that are new to the H-1B program, and three and a half years

for applicants on track for lawful permanent residency (LPR).

Another commentator suggested the transfers were underestimated and

they calculated that the IFR was based on wage increases of $4,825 to

$9,651 per worker based on Exhibit 5 and Exhibit 6 of the IFR.

In response to the commenter's concern, Exhibit 5 and Exhibit 6 of

the IFR contained illustrative wage data for a particular SOC-code and

area in BLS OES and do not reflect the average impact of the IFR. They

instead serve the purpose of illustrating the Department's wage impact

calculations. Wage increases vary by SOC code and geographic area and

therefore can be higher than these examples. The analysis for the IFR

estimated that workers facing a wage increase (i.e., those that were

offered less under the baseline than required by the IFR) had an

average increase of $27,000.

Under this final rule the Department revises the wage level

percentiles of the IFR with some modifications to account for the two-

step and three and a half year transition periods that are new to the

final rule. Therefore, the final rule wage impact estimation follows

four main steps: Step 1--simulate wage impacts with the revised

percentiles for each transition wage level using historical

certification data and adjust wage impacts for USCIS approval rates.

Step 2--project 10-year series wage impacts incorporating the

transition schedule. Step 3--during the transition period adjust the

population of workers eligible for the two-step transition versus the

three and a half year transition. Step 4--Estimate total transfers by

combining adjusted two-step and three and a half year transition total

wage impacts. This methodology is described in more detail below.

Step 1--simulate wage impacts with the revised percentiles for each

transition wage level and adjusted based on USCIS approval rates.\259\

For each H-1B certification in FY 2018, FY 2019, and FY 2020, the

Department used the difference between the estimated prevailing wage

level under the final rule and the wage offered under the current

baseline to establish the wage impact of the prevailing wage

computation changes in each calendar year of the certification's

employment period. Under the H-1B visa classification, employment

periods for certifications can last for up to three years in length and

generally begin up to six months after a certification is issued by the

Department. Therefore, a given fiscal year can have wage impacts that

start in that calendar year and last up to three years, or wage impacts

that could start in the following calendar year and have an end-date up

to four calendar years past the fiscal year. For example, an employment

start date in March of 2019 may be associated with an H-1B application

certified by the Department during FY 2018 and, if that certified

application contains a three-year employment period, the wage impacts

on the employer will extend through March of 2022. This final rule does

not retroactively impact certified wages, so there will be new H-1B

applications certified by the Department during FY 2020 that may extend

well into the analysis period. Therefore, the first year of the rule

will only impact new certifications, in the second year new and

continuing certifications from year 1 will be impacted, and in the

third year and beyond both new and continuing certifications from years

1 and 2 will be impacted.

---------------------------------------------------------------------------

\259\ Not all E-3 applicants need to file an I-129 with USCIS.

---------------------------------------------------------------------------

To account for this pattern of wage impacts, we classify

certifications into three length cohorts and calculate annual wage

impacts for each length cohort based on FY 2018 through FY 2020 data.

The length cohorts are: Certifications lasting less than 1 year,

certifications lasting 1-2 years, and certifications lasting 2-3 years.

For each length cohort we calculate wage impacts for their first

calendar year (``new''), their second calendar year (``ongoing''), and

third or more calendar year (``ongoing +'')

H-1B, H-1B1, or E-3 applications certified by the Department do not

necessarily result in employer wage obligations. After obtaining a

certification, employers applying under the H-1B and H-1B1 programs,

and in certain situations, the E-3 program must then submit a Form I-

129, Petition for a Nonimmigrant Worker for approval by U.S.

Citizenship and Immigration Services (USCIS). USCIS may approve or deny

the H-1B visa petition. USCIS approval data represents approvals of

petitions based on both certifications issued by the Department that

used OES data for the prevailing wage, or certifications that were

based on other approved sources to determine the prevailing wage (e.g.,

Collective Bargaining Agreements, employer-provided surveys). Exhibit 4

summarizes FY 2018 and FY 2019 data on H-1B, H-1B1, and E-3

certifications with their prevailing wage based on the OES survey,

adjusted USCIS approvals,

[[Page 3662]]

and approval rate.\260\ To account for approval rates that may differ

by geographic location and whether a certification is new or

continuing, we adjust each certification's wage impact by the approval

rate of the State of intended employment for the employer's

certification and whether it is a new or continuing application.\261\

---------------------------------------------------------------------------

\260\ Form I-129 data for H-1B is obtained from the USCIS H-1B

data hub. Retrieved from: https://www.uscis.gov/tools/reports-...loyer-data-hub .

\261\ Both USCIS H-1B data and LCA data indicate the state for

which the work is to be completed. Therefore, approval rates are

calculated separately for each state and used in the analysis.

Exhibit 4--LCA and I-129 H-1B, H-1B1, and E-3 Approvals and Denials

--------------------------------------------------------------------------------------------------------------------------------------------------------

FY 2018 FY 2019

------------------------------------------------------------------------------------------------ Average

USCIS approved Percent USCIS approved Percent percent

LCA certified \+\ approved LCA certified \+\ approved approved

--------------------------------------------------------------------------------------------------------------------------------------------------------

Total................................... 1,023,552 308,147 30 908,218 368,811 41 35

New..................................... 423,174 80,855 19 378,175 132,965 35 27

Continuing *............................ 600,378 227,292 38 530,043 235,846 44 41

--------------------------------------------------------------------------------------------------------------------------------------------------------

* Includes: ``Continued Employment'', ``Change Previous Employment'', ``Change Employer'', ``Amended Petition'', ``New Concurrent Employment''.

\+\ Approval numbers adjusted by 92% to account for approvals with prevailing wages set by sources other than OES.

To estimate the wage impacts of new percentiles contained in this

final rule, the Department used publicly available BLS OES data that

reports the 10th, 25th, 50th, 75th, and 90th percentile wages by SOC

code and metropolitan or non-metropolitan area.\262\ In order to

estimate wages for the new final rule levels of 35th, 53rd, 72nd, and

90th percentiles, the Department linearly interpolated between relevant

percentiles for reported wages at each SOC code and geographic area

combination.\263\ For each certification from FY 2018 through FY 2020

the new wage was estimated for the final rule wage levels as well as

all transition periods (i.e., 90 percent for the two-step transition;

85 percent, 90 percent, and 95 percent for the three and a half year

transition).

---------------------------------------------------------------------------

\262\ BLS OES data for Metropolitan and Nonmetropolitan Areas

acquired for each year required for the analysis: May 2016-May 2019.

Retrieved from https://www.bls.gov/oes/current/oessrcma.htm

\263\ For example, if OES reports a wage of $30 per hour at the

25th25th percentile and $40 per hour at the 50th50th percentile then

the 35th35th percentile is interpolated as $30 + ($40-$30)*((35-25)/

(50-35)) = $36.66 per hour.

---------------------------------------------------------------------------

An illustrative example of calculations used to calculate wage

impacts under the final rule is provided in Exhibit 5 and Exhibit 6

below. In Exhibit 5, to calculate projected wage impacts under the

final rule, the Department first multiplied the number of certified

workers by the number of hours worked in each calendar year (2,080

hours) and the new prevailing wage for the level the workers were

certified at for their particular SOC and the geographic area

combination. The examples in Exhibit 5 set forth how the Department

calculated the final rule wage impact for an individual case of each

length cohort.

Exhibit 5--Prevailing Wage Under the Final Rule

[Example cases]

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of Number of Number of

Number of Prevailing hours hours hours Total wages Total wages Total wages Total wages USCIS Adjusted

Length cohort certified wage (hour) worked in worked in worked in 2018 2019 2020 2018-2020 approval total wages

workers 2018 2019 2020 rate

(a) (b) (c) (d) (e) (a*b*c) = (a*b*d) = (a*b*e) = (f+g+h) = (j) (i*j)

(f) (g) (h) (i)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

<1 Year.......................................... 100 $44.27 648 1,032 0 $2,868,437 $4,568,251 $0 $7,436,688 33% $2,444,080

1-2 Years........................................ 100 34.76 0 2,080 2,080 0 7,230,496 7,230,496 14,460,992 49 7,097,181

2-3 Years........................................ 100 27.37 528 2,080 2,080 1,445,030 5,692,544 5,692,544 12,830,118 31 4,002,637

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

After the total wages for the final rule was determined, the

Department calculated the baseline wage. The baseline wage is always

equal to or greater than the baseline prevailing wage because some

certifications offer a wage higher than the prevailing wage. The

methodology is the same as that used to estimate the projected wages

under the final rule: Number of certified workers is multiplied by the

number of hours worked in each calendar year (based on 2,080 hours in a

full year) of certified employment and the actual offered wage for the

certified workers (Exhibit 6 provides an example of the calculation of

the baseline wages for the same case as in Exhibit 5).

Exhibit 6--Current Prevailing Wage

[Example cases]

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of Number of Number of

Number of Prevailing Prevailing hours hours hours Total wages Total wages Total wages Total wages USCIS Adjusted

Length cohort certified wage (year) wage worked in worked in worked in 2018 2019 2020 2018-2020 approval total wages

workers 2018 2019 2020 rate

(a) (b) (b/2080) = (d) (e) (f) (a*c*d) = (a*c*e) = (a*c*f) = (g+h+i) = (k) (j*k)

(c) (g) (h) (i) (j)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

<1 Year............................. 100 $77,459 $37.24 648 1,032 0 $2,413,146 $3,843,158 $0 $6,256,304 33% $2,056,144

1-2 Years........................... 100 41,163 19.79 0 2,080 2,080 0 4,116,300 4,116,300 8,232,600 49 4,040,404

2-3 Years........................... 100 43,846 21.08 528 2,080 2,080 1,113,014 4,384,600 4,384,600 9,882,214 31 3,082,973

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Once the baseline offered wage was obtained, the Department

estimated the wage impact of the final rule prevailing wage levels by

subtracting the baseline offered wage for each calendar year from the

final rule prevailing wage. The total

[[Page 3663]]

wage impact was then multiplied by the average USCIS petition

beneficiary approval rate for the State of intended employment. Here,

the Department presents the wage impacts for the examples in Exhibits 5

and 6, above. For the length cohort less than 1 year, the impact in

2018 was $149,632 (($2,868,437 - $2,413,146) * 0.33) and $238,303 in

2019 (($4,568,251 - $3,843,158) * 0.33). For the length cohort of 1-2

years, the impact in 2019 was $1,528,388 (($7,230,496 - $4,116,300) *

0.49), and in 2020 was $1,528,388 (($7,230,496 - $4,116,300) * 0.49).

The example for length cohort 2-3 years had wage impacts in 2018, 2019,

and 2020. In the 2018 the wage impact was $103,580 (($1,445,030 -

$1,113,014) * 0.31), $408,042 in 2019 (($5,692,544 - $4,384,600) *

0.31), and $2,947,905 in 2020 (($5,692,544 - $4,384,600) * 0.31).

Existing prevailing wage data from the Foreign Labor Certification

(FLC) Data Center, accessible at http://www.flcdatacenter.com, contains

wage data for each SOC code and geographic area combination that are

not readily available in the public OES data used to estimate new

prevailing wage levels. For example, when an OES wage is not releasable

for a geographic area, the prevailing wage available through the FLC

Data Center may be computed by BLS for the geographic area plus its

contiguous areas. Additionally, in publicly available OES data, some

percentiles are missing for certain combinations of SOC codes and

geographic areas. These two factors result in a small number of

certifications having no match with a new prevailing wage level.\264\

To estimate wage impacts for workers associated with these

certifications, the average wage impact per worker, for the given

cohort and fiscal year the certification is associated with, is

calculated and then applied to an adjusted number of workers associated

with the certification that does not match. It is unlikely that all

unmatched certifications will have a wage impact so the calculated wage

impact per worker is applied to 85 percent of workers associated with

unmatched certifications.\265\ This produces a series of estimated wage

impacts for workers that are not matched with new prevailing wages in

the public OES data for each calendar year for which they have

employment. These imputed wage impacts are then added to the calculated

wage impact to produce a final total wage impact for each length cohort

and percentile group in each calendar year.

---------------------------------------------------------------------------

\264\ In FY 2018, 7 percent of certifications do not match, in

FY 2019 9 percent, and FY 2020 21 percent.

\265\ Approximately 85 percent of matched workers in FY 2019

certification data have wage impacts.

---------------------------------------------------------------------------

Exhibit 7 summarizes the wage impacts of each length cohort for all

percentile groups involved in the two wage transitions based on FY 2018

through FY 2020 certification data. The result of this analysis is an

annual average wage impact for each length cohort and percentile group

that is used in following steps to construct projected 10-year wage

impacts. In Exhibit 7 some calendar years do not have values because

the cohort, based on FY 2018 through FY 2020 data, does not have a full

year of data for those years. For example, calendar year 2021 does have

new entries from FY 2020 data but it is not a complete year of data as

FY 2021 would also have new entries, and therefore it is not included.

Exhibit 7--Wage Transfers by Percentile Group and Length Cohort

[2019$ millions]

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Wage level transition group Length cohort CY18 CY19 CY20 CY21 CY22 Annual

average

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

85 Percent.............................. <1 Year................... New....................... $7.89 $9.06 $5.21 NA NA $7.39

Ongoing................... 1.28 7.11 5.96 2.89 NA 4.31

1-2 Years................. New....................... 29.58 24.59 12.43 NA NA 22.20

Ongoing................... NA 59.89 61.09 30.43 NA 50.47

2-3 Years................. New....................... 831 742 352 NA NA 642

Ongoing................... NA 1,711 1,522 644 NA 1,292

Ongoing +................. NA NA 1,901 2,386 1,404 1,897

90 Percent.............................. <1 Year................... New....................... 13.92 16.71 8.85 NA NA 13.16

Ongoing................... 2.88 12.11 10.32 4.38 NA 7.42

1-2 Years................. New....................... 65.74 51.67 24.13 NA NA 47.18

Ongoing................... NA 134.46 129.80 59.59 NA 107.95

2-3 Years................. New....................... 2,007 1,820 829 NA NA 1,552

Ongoing................... NA 4,133 3,693 1,505 NA 3,110

Ongoing +................. NA NA 4,625 5,785 3,347 4,586

95 Percent.............................. <1 Year................... New....................... 21.30 25.64 13.26 NA NA 20.07

Ongoing................... 4.82 18.24 15.61 6.25 NA 11.23

1-2 Years................. New....................... 109.28 84.09 38.43 NA NA 77.27

Ongoing................... NA 224.73 212.31 95.55 NA 177.53

2-3 Years................. New....................... 3,386 3,075 1,405 NA NA 2,622

Ongoing................... NA 6,979 6,238 2,537 NA 5,251

Ongoing +................. NA NA 7,830 9,771 5,648 7,749

100 Percent (Final Wage Level).......... <1 Year................... New....................... 29.61 35.57 18.05 NA NA 27.74

Ongoing................... 6.99 25.12 21.56 8.30 NA 15.49

1-2 Years................. New....................... 158.13 119.63 54.32 NA NA 110.70

Ongoing................... NA 325.78 270.70 135.79 NA 244.09

2-3 Years................. New....................... 4,861 4,426 2,029 NA NA 3,772

Ongoing................... NA 10,022 8,983 3,653 NA 7,553

Ongoing +................. NA NA 11,258 14,056 8,135 11,150

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Step 3--project 10-year series of wage impacts incorporating

transition schedule. To project 10-year wage transfers the average

annual values from Exhibit 7 are used to construct a 10-year series

that incorporates the transition schedule and change in worker

population eligible for the two-step transition or three and a half

year transition. Based on data provided by USCIS there are

approximately 266,500 workers in backlog for a Green Card that

[[Page 3664]]

are on continuing H-1B visas and are therefore eligible for the three

and a half year transition. On average from FY 2018 to FY 2020 316,845

workers were approved annually by USCIS.\266\ Therefore, approximately

84 percent of applications are currently eligible for the three and a

half year transition and the remaining 16 percent will use the two-step

transition.\267\ Over time USCIS estimates that 30,000 workers would be

processed through the backlog every year resulting in a declining

population of workers eligible in each subsequent year for wages under

the three and a half year transition. The Department assumes that the

total population of applicants will not change, therefore the percent

of applicants applying to the H-1B visa program for two-step transition

wages (or the final wage level after the transition) will grow over

time and the population of workers eligible for wages under the three

and a half year transition will decline. A summary of this population

transition as well as the wage transition for each group is presented

in Exhibit 8.

---------------------------------------------------------------------------

\266\ Based on applying the average approval rate of USCIS LCA

and I-129 H-1B, H-1B1, and E-3 applications (35%) to the average of

annual certifications by DOL (905,271).

\267\ 84 percent derived from 266,500 workers divided by 316,845

total workers approved annually.

Exhibit 8--Wage and Population Transition for the Two Application Groups

----------------------------------------------------------------------------------------------------------------

Wage transition Population transition

-----------------------------------------------------------------

Year Months Three and a Three and a

Two-step half year Two-step (%) half year (%)

----------------------------------------------------------------------------------------------------------------

2021......................... Jan-Jun........ Baseline....... Baseline....... 16% 84%

Jul-Dec........ 90%............ 85%............ 16 84

2022......................... Jan-Jun........ 90%............ 85%............ 25 75

Jul-Dec........ Final Wage 90%............ 25 75

Level.

2023......................... Jan-Jun........ Final Wage 90%............ 35 65

Level.

Jul-Dec........ Final Wage 95%............ 35 65

Level.

2024......................... Jan-Jun........ Final Wage 95%............ 44 56

Level.

Jul-Dec........ Final Wage Final Wage * NA * NA

Level. Level.

2025-2030.................... ............... Final Wage Final Wage * NA * NA

Level. Level.

----------------------------------------------------------------------------------------------------------------

* Beginning July 1, 2024, the transitions are both complete and all workers are at the final wage level.

To illustrate the application of the wage and population

transitions to the average annual wages provided above in Exhibit 7 we

describe an example of this calculation for new applications in 2021.

Exhibit 9, below, provides an example calculation for new applicants in

2021 under the two-step transition wage (90 percent of final wage

levels).

Exhibit 9--Wage Impacts for Two-Step Transition Applicants in 2021

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Annual average wage impact * Adjustments Projected wage impact

Length Cohort: -------------------------------------------------------------------------------------------------------------------------------

<1 Year 1-2 Years 2-3 Years Transition Population <1 Year 1-2 Years 2-3 Years Total

(a) (b) (c) (d) (e) (f) = (a * d * (g) = (b * d * (h) = (c * d * (f + g + h)

e) e) e)

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Length Cohort: New

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2021............................................................ $13.16 $47 $1,552 50.60% 16% $1.07 $3.82 $125.62 $130.51

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Length Cohort: Ongoing

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2022............................................................ $7.42 $104 $3,110 50.60% 16% $0.60 $8.39 $251.82 $260.81

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Length Cohort: Ongoing +

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2023............................................................ NA NA $4,586 50.60% 16% NA NA $371.25 $371.25

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

* Average annual wage impacts from Exhibit 7 for 90 percent wage level transition group.

Average annual wage impacts for each length cohort represent a full

year of wage impacts, however the wage transition does not begin until

July 1, 2021. Therefore, the proportion of working days in July 1, 2021

through December 31, 2021 (50.6%) is used to adjust each length

cohort's average annual wage impact. A second adjustment is made to

account for the population transition (16% of the total applicant

population faces wages under the two-step transition in 2021).\268\

Ongoing wages from new applications in 2021 occur in 2022 and 2023.

Therefore, the estimates of ongoing wages from Exhibit 7 are included

in 2022 and 2023 and also adjusted by 2021 transition and population

adjustments (because these ongoing wages are associated with the 2021

new applicants).

---------------------------------------------------------------------------

\268\ See Exhibit 8 transition schedule.

---------------------------------------------------------------------------

This process was repeated for each year of 2021-2024 to account for

each new year of applicants (i.e., in 2022, under the two-step

transition, half of applicants have impacts at 90 percent of final wage

levels and half at the final wage levels). In addition, the population

of applicants under the two-step transition increases from 16 percent

in 2021 to 25 percent in 2022. From 2025 onwards all new applicants are

subject to the final wage levels.

Step 4--estimate total transfer payments. The Department determined

[[Page 3665]]

the total impact of the final rule by summing wage impacts from new

applicants in each year and ongoing wage impacts from new applicants in

prior years. The results of this is presented below in Exhibit 10.

Exhibit 10--Total Transfer Payments of the Final Rule

[2019$ millions]

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

<1 1-2 Years 2-3 Years

Cohort ---------------------------------------------------------------------------------------------------------------- Total

New Ongoing New Ongoing New Ongoing Ongoing +

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2021............................................................ $4 $0 $13 $0 $398 $0 $0 $416

2022............................................................ 13 2 46 29 1,495 782 0 2,368

2023............................................................ 20 7 79 103 2,674 2,992 1,150 7,026

2024............................................................ 26 11 101 178 3,451 5,356 4,419 13,542

2025............................................................ 28 14 111 226 3,772 6,911 7,903 18,964

2026............................................................ 28 15 111 244 3,772 7,553 10,201 21,924

2027............................................................ 28 15 111 244 3,772 7,553 11,150 22,872

2028............................................................ 28 15 111 244 3,772 7,553 11,150 22,872

2029............................................................ 28 15 111 244 3,772 7,553 11,150 22,872

2030............................................................ 28 15 111 244 3,772 7,553 11,150 22,872

-------------------------------------------------------------------------------------------------------------------------------

10-year Total............................................... 230 113 904 1,756 30,652 53,803 68,272 155,730

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The changes in prevailing wage rates constitute a transfer payment

from employers to employees. The Department estimates the total

transfer over the 10-year period is $130.83 billion and $105.16 billion

at discount rates of 3 and 7 percent, respectively. The annualized

transfer over the 10-year period is $15.34 billion and $14.97 billion

at discount rates of 3 and 7 percent, respectively.

With the increases in prevailing wage levels under the final rule,

some employers may decide not to hire a U.S. worker or a foreign worker

on a temporary or permanent basis. The prevailing wage increase may

mitigate labor arbitrage and induce some employers to train and provide

more working hours to incumbent workers, resulting in no increase in

employment. The Department is unable to quantify the extent to which

these two factors will occur and therefore discusses them

qualitatively.

The labor economics literature has a significant volume of research

on the impact of wages on demand for labor. Of interest in the context

of the H-1B program is the long-run own-wage elasticity of labor demand

that describes how firms demand labor in response to marginal changes

in wages. There is significant heterogeneity in estimates of labor

demand elasticities that can depend on industry, skill-level, region,

and more.\269\ A commonly cited value of average long-run own-wage

elasticity of labor demand is -0.3.\270\ This would mean that a one

percent increase in wage would reduce demand for labor by 0.3 percent.

The average annual increase in wage transfers is anan 18.8 percent

increase in wage payments,\271\ which would imply a potential reduction

in labor demand by 5.64 percent (18.8 * .3). It is likely that U.S.

employers will pay higher wages to H-1B workers or replace them with

U.S. workers to the extent that is possible. However, we can

approximate that, if U.S. employers were limited in the ability to pay

higher wages and did reduce demand for workers in these roles, it would

reduce the transfer payment by approximately 5.64 percent. The annual

average undiscounted wage transfer estimate of $15.57 billion would

therefore be reduced to $14.69 billion.

---------------------------------------------------------------------------

\269\ For a full discussion of labor demand elasticity

heterogeneity see Lichter, A., Peichl, A., & Siegloch, S. (2015).

The own-wage elasticity of labor demand: A meta-regression analysis.

European Economic Review, 94-119: Retrieved from: https://www.econstor.eu/bitstream/10...9/1/dp7958.pdf .

\270\ This value is the best-guess in seminal work by Hamermesh,

D. H. (1993). Labor Demand. Princeton University Press. Values

around -0.3 have been further estimated by additional studies

including in meta-analysis studies as cited in footnote 10.

\271\ The average unadjusted total wages paid to employees

impacted by the final rule in the FY18-FY20 datasets is $225.5

billion. The average unadjusted total wages paid to those same

employees in the baseline in the FY18-FY20 datasets is $189.8

billion. This represents an 18.8 percent increase in wages. Not all

of these wages are paid due to USCIS approval rates, but the wages

would adjust proportionally (i.e., the percentage increase would

remain the same).

---------------------------------------------------------------------------

Non-Quantifiable Transfer Payments

This section discusses the non-quantifiable transfer payments

related to changes to the computation of the prevailing wage levels.

Specifically, the Department did not quantify transfer payments

associated with new certifications under the Permanent Labor

Certification Program because they are expected to be de minimis.

The PERM programs have a large proportion of certifications issued

annually to foreign beneficiaries that are working in the U.S. at the

time of certification and would have changes to wages under the final

rule prevailing wage. Prior to the PERM certification, these

beneficiaries are typically working under H-1B, H-1B1, and E-3

temporary visas and wage transfers for these PERM certifications are

therefore already factored into our wage transfer calculations for H-

1B, H-1B1, and E-3 temporary visas. Below, Exhibit 11 illustrates the

percentage of PERM certifications that are on H-1B, H-1B1, or E-3

temporary visas, the percent that are not on a temporary visa and/or

are not currently in the U.S. and would therefore enter on an EB-2 or

EB-3 visa, and all other visa classes.

Exhibit 11--PERM Certifications by Class of Admission, FY18-FY20

----------------------------------------------------------------------------------------------------------------

Average

Category FY18 FY19 FY20 percent of

total

----------------------------------------------------------------------------------------------------------------

Not on a temporary visa/not currently residing 10,047 9,841 9,166 10.1%

in the United States...........................

H-1B visa....................................... 74,454 63,976 58,390 68.0%

H-1B1 visa...................................... 109 81 83 0.1%

E-3 visa........................................ 471 280 280 0.4%

[[Page 3666]]

All other visa classifications*................. 24,469 12,907 18,128 21.5%

---------------------------------------------------------------

Total....................................... 109,550 87,085 86,047 100%

----------------------------------------------------------------------------------------------------------------

Other visa classes include: A1/A2, L-1, F-1, A-3, B-1, C-1, TN, C-3, E-2, B-2, D-1, D-2, H-4, O-1, E-1, EWI, J-

1, TPS, F-2, L-2, G-4, H-2A, G-1, G-5, H-1A, Parolee, P-1, J-2, H-3, I, M-1, R-1, O-2, M-2, P-3, O-3, VWT, TD,

P-2, P-4, Q, VWB, R-2, N, S-6, T-1, V-2, T-2, K-4, U-1.

Approximately 10 percent of PERM certifications are issued annually

by OFLC to foreign beneficiaries who do not currently reside in the

U.S. and would enter on immigrant visas in the EB-2 or EB-3 preference

category. Employment-based immigrant visa availability and

corresponding wait times change regularly for different preference

categories and countries. Foreign workers from countries with

significant visa demand consistently experience delays, at times over a

decade. Therefore, employers would not have wage obligations until, at

the earliest, the very end of the 10-year analysis period, and the

number of relevant certifications is a relatively small percent of all

PERM certifications; the Department therefore has not included

associated wage transfers in the analysis.

Benefits Discussion

This section discusses the non-quantifiable benefits related to

changes to the computation of the prevailing wage levels.

The Department's increase in the prevailing wages for the four wage

levels is expected to result in multiple benefits that the Department

is unable to quantify but discusses qualitatively. One benefit of the

final rule's increase in prevailing wages is the economic incentive to

increase employee retention, training, and productivity which will

increase benefits to both employers and U.S. workers. The increase in

prevailing wages is expected to induce employers--particularly those

using the permanent and temporary visa programs--to fill critical skill

shortages, to minimize labor costs by implementing retention

initiatives to reduce employee turnover, and/or to increase the number

of work hours offered to similarly employed U.S. workers. Furthermore,

for employers in the technology and health care sectors, this could

mean using higher wages to attract and hire the industry's most

productive U.S. workers and to provide them with the most advanced

equipment and technologies to perform their work in the most efficient

manner.

This high-wage, high-skill approach to minimizing labor costs is

commonly referred to as the ``efficiency wage'' theory in labor

economics--a well-established strategy that allows companies employing

high-wage workers to minimize labor costs and effectively compete with

companies employing low-wage workers. The efficiency wage theory

supports the idea that increasing wages can lead to increased labor

productivity because workers feel more motivated to work at higher wage

levels. Where these jobs offer wages that are significantly higher than

the wages and working conditions of alternative jobs, workers will have

a greater incentive to be loyal to the company, impress their

supervisors with the quality of their work, and exert an effort that

involves no shirking. Thus, if employers increase wages, some, or even

all, of the higher wage costs can be recouped through increased staff

retention, lower costs of supervision, and higher labor productivity.

Strengthening prevailing wages will also help promote and protect

jobs for American workers. By ensuring that the employment of any

foreign worker is commensurate with the wages paid to similarly

employed U.S. workers, the Department will be protecting the types of

white-collar, middle-class jobs that are critical to ensuring the

economic viability of communities throughout the country.

There is some evidence that the existing prevailing wage levels

offer opportunities to use lower-cost alternatives to U.S. workers

doing similar jobs by offering at the two wage levels below the median

wage. For example, in FY 2019, 60 percent of H-1B workers were placed

at either the first or second wage level, meaning a substantial

majority of workers in the program could be paid wages well below the

median wage for their occupational classification.\272\ By setting the

Level I wage level at the 35th percentile, employers using the H-1B and

PERM programs will have less of an incentive to replace U.S. workers

doing similar jobs at lower wage rates when there are available U.S.

workers. This will increase earnings and standards of living for U.S.

workers. It also will level the playing field by reducing incentives to

replace similarly employed U.S. workers with a low-cost foreign

alternative.

---------------------------------------------------------------------------

\272\ Costa and Hira (2020), H-1B Visas and Prevailing Wage

Levels, Economic Policy Institute: Retrieved August 12, 2020 from

https://files.epi.org/pdf/186895.pdf .

---------------------------------------------------------------------------

In addition, because workers with greater skills tend to be more

productive, and as a result can command higher wages, raising the

prevailing wage levels will lead to the limited number of H-1B visas

going to higher-skilled foreign workers, which will likely increase the

spillover economic benefits associated with high-skilled immigration.

Finally, ensuring that skilled occupations are not performed at

below-market wage rates by foreign workers will provide greater

incentives for firms to expand education and job training programs.

These programs can attract and develop the skills of a younger

generation of U.S. workers to enter occupations that currently rely on

elevated levels of foreign workers.

4. Summary of the Analysis

Exhibit 12 below summarizes the costs and transfer payments of the

final rule. The Department estimates the annualized cost of the final

rule at $2.90 million and the annualized transfer payments (from H-1B,

H-1B1, and E-3 employers to workers) at $14.97 billion, at a discount

rate of 7 percent.\273\ The Department did not estimate any cost

savings. For the purpose of E.O. 13771, the annualized cost, when

perpetuated, is $1.86 million at a discount rate of 7 percent in 2016

dollars.

---------------------------------------------------------------------------

\273\ The reduction of the transfer payments in this final rule

compared to the IFR is likely understated due to the fact that the

Department used the 90th percentile instead of the 95th percentile

wage for the Level IV in analyzing the economic impact of the IFR.

This resulted in underestimation of the transfer payment in the IFR.

[[Page 3667]]

Exhibit 12--Estimated Monetized Costs and Transfer Payments of the Final

Rule

[2019$ millions]

------------------------------------------------------------------------

Transfer

Year Costs payments

------------------------------------------------------------------------

2021.................................... $4.33 $416

2022.................................... 2.46 2,368

2023.................................... 2.46 7,026

2024.................................... 2.46 13,542

2025.................................... 2.46 18,964

2026.................................... 2.46 21,924

2027.................................... 2.46 22,872

2028.................................... 2.46 22,872

2029.................................... 2.46 22,872

2030.................................... 2.46 22,872

-------------------------------

Undiscounted Total.................. 26.45 155,730

10-Year Total with a Discount Rate 23.47 130,830

of 3%..............................

10-Year Total with a Discount Rate 20.34 105,157

of 7%..............................

10-Year Average..................... 2.65 15,573

Annualized with a Discount Rate of 2.75 15,337

3%.................................

Annualized with a Discount Rate of 2.90 14,972

7%.................................

Perpetuated Net Costs with a 1.86

Discount Rate of 7% (2016$

Millions)..........................

------------------------------------------------------------------------

5. Regulatory Alternatives

The Department considered two alternatives to the chosen approach

of establishing the prevailing wage for Levels I through IV,

respectively, at approximately 35th percentile, the 45nd percentile,

the 72nd percentile, and the 90th percentile with a transition period.

First, the Department considered an alternative that would modify

the number of wage tiers from four levels to three levels. Under this

alternative, prevailing wages would be set for Levels I through III at

the 35th, 72nd, and 90th percentile, respectively. Modifying the number

of wage tiers to three levels would allow for more manageable wage

assignments that would be easier for employers and employees to

understand due to decreased complexity to matching wage tiers with

position experience. A three-tiered prevailing wage structure would

maintain the minimum entry-level and fully competent experience levels

and simplify the intermediate level of experience by combining the

current qualified and experienced distinctions. The Department prefers

the chosen methodology over this alternative because the chosen four-

tiered prevailing wage structure is likely to produce more accurate

prevailing wages than a three-tiered structure due to the ability to

have two intermediate wage levels. In addition, creating a three-tiered

prevailing wage structure would require a statutory change.

The Department considered a second alternative that would modify

the geographic levels for assigning prevailing wages for the SOC code

within the current four-tiered prevailing wage structure, which ranges

from local MSA or BOS areas to national, to a two-tiered geographic

area structure containing only statewide or national area estimates. By

assigning prevailing wages at a statewide or, where statewide averages

cannot be reported by the BLS, national geographic area, this second

alternative would again simplify the prevailing wage determination

process by reducing the number of distinct wage computations reported

by the BLS and provide employers with greater certainty regarding their

wage obligations, especially where the job opportunity requires work to

be performed in a number of different worksite locations within a state

or regional area. This process would also reduce variability in

prevailing wages within a state for the same occupations across time,

making prevailing wages more consistent and uniform. However, this

method would not account for wage variability that may occur within

states and that can account for within-state differences in labor

market dynamics, industry competitiveness, or cost of living.

The Department prefers the chosen methodology because it preserves

important differences in county and regional level prevailing wages and

better aligns with the statutory requirement that the prevailing wage

be the wage paid in the area of employment.

The Department received one comment on the regulatory alternatives

considered in the IFR. One commenter representing 23 organizations

suggested that the Department consider an alternative where data from

private sector compensation surveys is layered on top of BLS OES data

to provide more accurate prevailing wage data for certain occupations

and localities where private sector compensation surveys may have

coverage.

Supplementing BLS OES data from private sector compensation surveys

may result in an increased ability to quantitatively connect education,

experience, or employee responsibility with wages for certain

occupations and localities. However, this introduction of fidelity in

certain locales and not others could lead to inconsistent treatment of

wages in the same occupation in different geographic areas depending on

whether prevailing wages are based on BLS OES or the private sector

compensation survey. In addition, such an approach would reduce

transparency of prevailing wages by introducing additional complexity

in the wage determination as well as non-public data sources.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,

as amended by the Small Business Regulatory Enforcement Fairness Act of

1996, Public Law 104-121 (March 29, 1996), hereafter jointly referred

to as the RFA, requires that an agency prepare an initial regulatory

flexibility analysis (IRFA) when proposing, and a final regulatory

flexibility analysis (FRFA) when issuing, regulations that will have a

significant economic impact on a substantial number of small entities.

The agency is also required to respond to public comment.\274\ The

Chief Counsel for Advocacy of the Small Business Administration

submitted

[[Page 3668]]

public comment on the Initial Regulatory Flexibility Analysis (IRFA)

which is addressed below.

---------------------------------------------------------------------------

\274\ See 5 U.S.C. 604.

---------------------------------------------------------------------------

The Department believes that this final rule will have a

significant economic impact on a substantial number of small entities

and therefore the Department publishes this FRFA.

1. Objectives of and Legal Basis for the Final Rule

The Department has determined that new rulemaking is needed to

better protect the wages and job opportunities of U.S. workers,

minimize incentives to hire foreign workers over U.S. workers on a

permanent or temporary basis in the United States under the H-1B, H-

1B1, and E-3 visa programs and the PERM program, and further the goals

of Executive Order 13788, Buy American and Hire American. Accordingly,

this final rule revises the computation of wage levels under the

Department's four-tiered wage structure based on the OES wage survey

administered by the BLS to ensure that wages paid to immigrant and

nonimmigrant workers are commensurate with the wages of U.S. workers

with comparable levels of education, experience, and levels of

supervision in the occupation and area of employment.

The Department is amending its regulations at Sections 656.40 and

655.731 to reflect the methodology the Department will use to determine

prevailing wages based on the BLS's OES survey for job opportunities in

the H-1B and PERM programs. The revised methodology will establish the

prevailing wage for Levels I through IV, respectively, at approximately

the 35th percentile, the 53rd percentile, the 72nd percentile, and the

90th percentile. In addition, the final rule allows for a transition

period by setting an interim year of wages at 90 percent of the above

wage levels for new H-1B visas, and a three and a half year transition

period of 85 percent, 90 percent, 95 percent of the above wage levels

for workers on track for lawful permanent residency (LPR).

The INA assigns responsibilities to the Secretary relating to the

entry and employment of certain categories of employment-based

immigrants and nonimmigrants. This rule relates to the labor

certifications that the Secretary issues for certain employment-based

immigrants and to the LCAs that the Secretary certifies in connection

with the temporary employment of foreign workers under the H-1B, H-1B1,

and E-3 visa classifications.\275\ The Department has a statutory

mandate to protect the wages and working conditions of similarly

employed U.S. workers from adverse effects caused by the employment of

foreign workers in the U.S. on a permanent or temporary basis.

---------------------------------------------------------------------------

\275\ See 8 U.S.C. 1101(a)(5), 1101(a)(15)(E)(iii),

1101(a)(15)(H)(i)(b), 1101(a)(15)(H)(i)(b1), 1182(n), 1182(t)(1),

1184(c).

---------------------------------------------------------------------------

2. The Agency's Response to Public Comments

The Department did not receive public comment on the IRFA.

3. Response to Comments by the Chief Counsel for Advocacy of the Small

Business Administration

The Department received a comment on the IRFA by the Chief Counsel

for Advocacy of the Small Business Administration that suggested the

Department underestimated the economic impacts of the IFR, and

therefore underestimated the significant impacts on small entities. The

comment suggested that the IFR underestimated impacts based on IFR RIA

Exhibits 5 and 6 which indicated a wage increase of $4,825 to $9,651

per worker and the comment provided examples from the Department's

online wage library showing examples of higher wage increases.

IFR RIA Exhibit 5 and Exhibit 6 contain illustrative wage data for

a particular SOC-code and area in BLS OES and do not reflect the

average impact of the IFR. They instead serve the purpose of

illustrating the Department's wage impact calculations. Wage increases

vary by SOC code and geographic area and therefore can be higher than

these examples. The analysis for the IFR estimated that workers facing

a wage increase (i.e., those that were offered less under the baseline

than required by the IFR) had an average increase of approximately

$27,000.

Under the final rule the Department revises its wage tier estimates

so that wages will be transitioned over a period of two to three and a

half years reducing impacts in some years. In addition, the final wage

levels (after transition) will be set at lower percentiles than the IFR

resulting in reduced wage obligations from the IFR, therefore reducing

impacts on small businesses. Finally, Department wage estimates are

based on DOL H-1B disclosure data. However, USCIS does not approve all

certifications contained in the disclosure data. As a result, the

estimated wage obligations for some small entities may be

overestimated, and the overall number of impacted small entities at all

levels of impact may be overestimated.

4. Description of the Number of Small Entities to Which the Final Rule

Will Apply

i. Definition of Small Entity

The RFA defines a ``small entity'' as a (1) small not-for-profit

organization, (2) small governmental jurisdiction, or (3) small

business. The Department used the entity size standards defined by SBA,

in effect as of August 19, 2019, to classify entities as small.\276\

SBA establishes separate standards for individual 6-digit NAICS

industry codes, and standard cutoffs are typically based on either the

average number of employees, or the average annual receipts. For

example, small businesses are generally defined as having fewer than

500, 1,000, or 1,250 employees in manufacturing industries and less

than $7.5 million in average annual receipts for nonmanufacturing

industries. However, some exceptions do exist, the most notable being

that depository institutions (including credit unions, commercial

banks, and non-commercial banks) are classified by total assets (small

defined as less than $550 million in assets). Small governmental

jurisdictions are another noteworthy exception. They are defined as the

governments of cities, counties, towns, townships, villages, school

districts, or special districts with populations of less than 50,000

people.\277\

---------------------------------------------------------------------------

\276\ Small Business Administration Table of Small Business Size

Standards Matched to North American Industry Classification System

Codes. (Aug. 2019), https://www.sba.gov/document/support...size-standards .

\277\ See http://www.sba.gov/advocacy/regulatoryflexibility-act

for details.

---------------------------------------------------------------------------

ii. Number of Small Entities

[[Page 3669]]

The Department collected employment and annual revenue data from

the business information provider Data Axle and merged those data into

the H-1B, H-1B1, and E-3 visa program disclosure data (H-1B disclosure

data) for FY 2019.\278\ This process allowed the Department to identify

the number and type of small entities using the H-1B program and their

annual revenues. A single employer can apply for H-1B workers multiple

times; therefore, unique employers were identified. The Department was

able to obtain data matches for 34,203 unique H-1B employers. Next, the

Department used the SBA size standards to classify 26,354 of these

employers (or 77.1 percent) as small.\279\ These unique small employers

had an average of 75 employees and average annual revenue of

approximately $18.61 million. Of these unique employers, 22,430 of them

had revenue data available from Data Axle. The Department's analysis of

the impact of this final rule on small entities is based on the number

of small unique employers (22,430 with revenue data).

---------------------------------------------------------------------------

\278\ The PERM program has a large proportion of certifications

issued annually to foreign beneficiaries that are working in the

U.S. at the time of certification. Prior to the PERM certification,

these beneficiaries are typically working under H-1B, H-1B1, and E-3

temporary visas. Therefore, the Department has not included

estimates for PERM employers in the IRFA, consistent with the

analysis and estimates contained in the E.O. 12866 section. The

Department considered PERM employers for purposes of calculating

one-time costs in the E.O. 12866 section but did not consider these

employers for purposes of cost transfers.

\279\ Small Business Administration, Table of Small Business

Size Standards Matched to North American Industry Classification

System Codes. (Aug. 2019), https://www.sba.gov/document/support...size-standards .

---------------------------------------------------------------------------

To provide clarity on the types of industries impacted by this

regulation, Exhibit 13 shows the number of unique H-1B small entity

employers with certifications in FY 2019 within the top 10 most

prevalent industries at the 6-digit and 4-digit NAICS code level.

Depending on when their employment period starts and the length of the

employment period (up to 3 years), small entities with certifications

in FY 2019 can have wage obligations in calendar years 2018 through

2023.

Exhibit 13--Number of H-1B and PERM Small Employers by NAICS Code

--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of employers

Description -----------------------------------------------------------------------------------------------

2018 2019 2020 2021 2022 2023

--------------------------------------------------------------------------------------------------------------------------------------------------------

6-Digit NAICS:

511210..................... Software Publishers.... 435 (12%) 1,570 (6%) 1,577 (6%) 1,555 (6%) 1,463 (6%) 119 (14%)

541511..................... Custom Computer 394 (11%) 1,149 (4%) 1,155 (4%) 1,141 (5%) 1,072 (5%) 95 (11%)

Programming Services.

621111..................... Offices of Physicians 132 (4%) 1,091 (4%) 1,097 (4%) 1,081 (4%) 998 (4%) 36 (4%)

(except Mental Health

Specialists).

541330..................... Engineering Services... 90 (3%) 973 (4%) 979 (4%) 965 (4%) 910 (4%) 13 (1%)

611310..................... Colleges, Universities, 106 (3%) 639 (2%) 644 (2%) 627 (2%) 588 (3%) 35 (4%)

and Professional

Schools.

541110..................... Offices of Lawyers..... 60 (2%) 606 (2%) 606 (2%) 596 (2%) 548 (2%) 13 (1%)

611110..................... Elementary and 43 (1%) 625 (2%) 621 (2%) 577 (2%) 508 (2%) 10 (1%)

Secondary Schools.

541310..................... Architectural Services. 23 (1%) 501 (2%) 503 (2%) 499 (2%) 464 (2%) 1 (0%)

541714..................... Research and 49 (1%) 444 (2%) 445 (2%) 435 (2%) 405 (2%) 13 (1%)

Development in

Biotechnology (except

Nanobiotechnology).

541614..................... Process, Physical 87 (2%) 394 (2%) 399 (2%) 392 (2%) 368 (2%) 25 (3%)

Distribution, and

Logistics Consulting

Services.

Other NAICS.................... ....................... 2,090 (60%) 1,7692 (69%) 17,755 (69%) 17,347 (69%) 15,755 (68%) 513 (59%)

4-Digit NAICS:

5112....................... Software Publishers.... 435 (12%) 1,570 (6%) 1,577 (6%) 1,555 (6%) 1,463 (6%) 119 (14%)

5413....................... Architectural, 121 (3%) 1,679 (7%) 1,689 (7%) 1,668 (7%) 1,568 (7%) 17 (2%)

Engineering, and

Related Services.

5415....................... Computer Systems Design 500 (14%) 1,518 (6%) 1,526 (6%) 1,507 (6%) 1,415 (6%) 120 (14%)

and Related Services.

5416....................... Management, Scientific, 300 (9%) 1,437 (6%) 1,448 (6%) 1,425 (6%) 1,313 (6%) 59 (7%)

and Technical

Consulting Services.

6211....................... Offices of Physicians.. 132 (4%) 1091 (4%) 1097 (4%) 1081 (4%) 998 (4%) 36 (4%)

5417....................... Scientific Research and 93 (3%) 659 (3%) 663 (3%) 650 (3%) 600 (3%) 28 (3%)

Development Services.

6113....................... Colleges, Universities, 106 (100%) 639 (2%) 644 (2%) 627 (2%) 588 (3%) 35 (4%)

and Professional

Schools.

5239....................... Other Financial 68 (2%) 635 (2%) 638 (2%) 628 (2%) 564 (2%) 16 (2%)

Investment Activities.

5411....................... Legal Services......... 61 (2%) 614 (2%) 614 (2%) 604 (2%) 555 (2%) 13 (1%)

5412....................... Accounting, Tax 41 (1%) 595 (2%) 598 (2%) 585 (2%) 551 (2%) 12 (1%)

Preparation,

Bookkeeping, and

Payroll Services.

Other NAICS.................... ....................... 1,652 (47%) 15,247 (59%) 15,287 (59%) 14,885 (59%) 13,464 (58%) 418 (48%)

--------------------------------------------------------------------------------------------------------------------------------------------------------

iii. Projected Impacts to Affected Small Entities

The Department has considered the incremental costs for small

entities from the baseline (the regulations governing permanent labor

certifications at 20 CFR part 656 and labor condition applications at

20 CFR part 655, subpart H) to this final rule. We estimated the cost

of (a) the time to read and review the final rule and (b) wage costs.

These estimates are consistent with those presented in the E.O. 12866

section.

The Department estimates that small entities using the H-1B

program, 22,430 unique employers would incur a one-time cost of $51.93

to familiarize themselves with the rule.280 281

---------------------------------------------------------------------------

\280\ $51.93 = 1 hour x $51.93, where $51.93 = $32.58 + ($32.58

x 42%) + ($32.58 x 17%).

\281\ The Department considered PERM employers for purposes of

calculating one-time costs in the E.O. 12866 section.

---------------------------------------------------------------------------

In addition to the total first-year cost above, each small entity

using the H-1B program may have an increase in annual wage costs due to

the revisions to the wage structure if they currently offer a wage

lower than the final rule's prevailing wage levels. For each small

entity, we calculated the likely annual wage cost as the sum of the

total final

[[Page 3670]]

rule wage minus the total baseline wage for each small entity

identified from the H-1B disclosure data in FY 2019. We added this

change in the wage costs to the total first-year costs to measure the

total impact of the final rule on the small entity. Small entities with

certifications in FY 2019 can have wage obligations in calendar years

2018 through 2023, depending on when their employment period starts and

the length of the employment period (up to 3 years). Because USCIS does

not approve all certifications, the estimated wage obligations for some

small entities may be overestimated. The Department is unable to

determine which small entities had certifications approved or not

approved by USCIS and therefore estimates the total wage obligation

with no adjustment for USCIS approval rates. As a result, estimates of

the total cost to small entities are likely to be inflated. The

Department sought public comments on how to best estimate which small

entities had certifications approved by USCIS but did not receive any

comments that discussed a method for estimating certification approval

by USCIS. Exhibit 14 presents the number of small entities with a wage

impact in each year, as well as the average wage impact per small

entity in each year.

Exhibit 14--Wage Impacts on H-1B Program Small Entities

--------------------------------------------------------------------------------------------------------------------------------------------------------

Proportion of revenue impacted 2018 2019 2020 2021 2022 2023

--------------------------------------------------------------------------------------------------------------------------------------------------------

Number of H-1B Small Entities with Wage Impacts......... 2,577 19,948 20,036 19,679 18,293 635

Average Wage Impact per Entity.......................... $14,178 $96,828 $183,463 $179,455 $92,531 $19,464

--------------------------------------------------------------------------------------------------------------------------------------------------------

The Department determined the proportion of each small entity's

total revenue affected by the costs of the final rule to determine if

the final rule would have a significant and substantial impact on small

entities. The cost impacts included estimated first-year costs and the

wage costs introduced by the final rule. Wage costs are based on the

final wage levels as these represent the largest annual impacts a small

entity would face (as opposed to wage impacts during the transition to

the final wage levels). The Department used a total cost estimate of 3

percent of revenue as the threshold for a significant individual impact

and set a total of 15 percent of small entities incurring a significant

impact as the threshold for a substantial impact on small entities.

The Department has used a threshold of three percent of revenues in

prior rulemakings for the definition of significant economic

impact.\282\ This threshold is also consistent with that sometimes used

by other agencies.\283\ The Department also maintains that 15 percent

of small entities experiencing a significant impact represents an

appropriate threshold to determine whether the rule has a substantial

impact on small entities generally. The Department has used the same

threshold in prior rulemakings for the definition of substantial number

of small entities.\284\

---------------------------------------------------------------------------

\282\ See, e.g., 79 FR 60634 (October 7, 2014, Establishing a

Minimum Wage for Contractors), 81 FR 39108 (June 15, 2016,

Discrimination on the Basis of Sex), and 84 FR 36178 (July 26, 2019,

Proposed Rule for Temporary Agricultural Employment of H-2A

Nonimmigrants in the United States).

\283\ See, e.g., 79 FR 27106 (May 12, 2014, Department of Health

and Human Services rule stating that under its agency guidelines for

conducting regulatory flexibility analyses, actions that do not

negatively affect costs or revenues by more than three percent

annually are not economically significant).

\284\ See, e.g., 79 FR 60633 (October 7, 2014, Establishing a

Minimum Wage for Contractors) and 84 FR 36178 (July 26, 2019,

Proposed Rule for Temporary Agricultural Employment of H-2A

Nonimmigrants in the United States).

---------------------------------------------------------------------------

Of the 22,430 unique small employers with revenue data, up to 13

percent of employers would have more than 3 percent of their total

revenue affected in 2019, up to 22 percent in 2020 and 2021, and up to

16 percent in 2022. Exhibit 15 provides a breakdown of small employers

by the proportion of revenue affected by the costs of the final rule.

Exhibit 15--Cost Impacts as a Proportion of Total Revenue for Small Entities

--------------------------------------------------------------------------------------------------------------------------------------------------------

Proportion of revenue impacted 2018 2019 2020 2021 2022 2023

--------------------------------------------------------------------------------------------------------------------------------------------------------

<1%..................................................... 2,689 (88%) 16,418 (75%) 13,286 (61%) 13,286 (61%) 13,705 (69%) 699 (95%)

1%-2%................................................... 168 (6%) 1,884 (9%) 2,349 (11%) 2,349 (11%) 2,013 (10%) 23 (3%)

2%-3%................................................... 70 (2%) 847 (4%) 1314 (6%) 1314 (6%) 1036 (5%) 5 (1%)

3%-4%................................................... 22 (1%) 503 (2%) 794 (4%) 794 (4%) 567 (3%) 1 (0%)

4%-5%................................................... 24 (1%) 325 (1%) 549 (3%) 549 (3%) 372 (2%) 2 (0%)

>5%..................................................... 69 (2%) 2,036 (9%) 3,352 (15%) 3,352 (15%) 2,172 (11%) 7 (1%)

-----------------------------------------------------------------------------------------------

Total >3%........................................... 115 (4%) 2,864 (13%) 4,695 (22%) 4,695 (22%) 3,111 (16%) 10 (1%)

--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Projected Reporting, Recordkeeping, and Other Compliance

Requirements of the Final Rule

The final rule does not have any reporting, recordkeeping, or other

compliance requirements impacting small entities.

6. Steps the Agency Has Taken To Minimize the Significant Economic

Impact on Small Entities

The RFA directs agencies to assess the effects that various

regulatory alternatives would have on small entities and to consider

ways to minimize those effects. Accordingly, the Department considered

two regulatory alternatives to the chosen approach of establishing the

prevailing wage for Levels I through IV, respectively, at approximately

the 35th percentile, the 53rd percentile, the 72nd percentile, and the

90th percentile with a transition period.

First, the Department considered an alternative that would modify

the number of wage tiers from four levels to three levels. Under this

alternative, the Department attempted to set the prevailing wages for

Levels I through III,

[[Page 3671]]

respectively, at the 35th, 72nd, and 90th percentile. Modifying the

number of wage tiers to three levels would allow for more manageable

wage assignments that would be easier for small entities and their

employees to understand due to decreased complexity to matching wage

tiers with position experience. The Department decided not to pursue

this alternative because the chosen four-tiered wage methodology is

likely to be more accurate than the three-tiered wage level because it

has two intermediate wage levels. In addition, creating a three-tiered

wage level would require a statutory change. Although the Department

recognizes that legal limitations prevent this alternative from being

actionable, the Department nonetheless presents it as a regulatory

alternative in accord with OMB guidance.\285\

---------------------------------------------------------------------------

\285\ OMB Circular A-4 advises that agencies ``should discuss

the statutory requirements that affect the selection of regulatory

Approach. If legal constraints prevent the selection of a regulatory

action that best satisfies the philosophy and principles of

Executive Order 12866, [agencies] should identify these constraints

and estimate their opportunity cost. Such information may be useful

to Congress under the Regulatory Right-to-Know Act.''

---------------------------------------------------------------------------

The Department considered a second alternative that attempted to

modify the geographic levels for assigning prevailing wages for the

occupation from the current four-tiered structure, which ranges from

local MSA or BOS areas to national, to a two-tiered structure

containing statewide or national levels. By assigning prevailing wages

at a statewide or national level (depending on whether statewide

averages can be reported by BLS), this second alternative attempted to

simplify the prevailing wage determination process by reducing the

number of distinct wage computations reported by the BLS. It would also

provide small entities with greater certainty regarding their wage

obligations, especially where the job opportunity requires work to be

performed in a number of different worksite locations within a State or

regional area. The Department decided not to pursue this alternative

because the chosen methodology preserves important differences in

county and regional level prevailing wages, and because it would

require a statutory change.

C. Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among

other things, to curb the practice of imposing unfunded Federal

mandates on State, local, and tribal governments. Title II of UMRA

requires each Federal agency to prepare a written statement assessing

the effects of any Federal mandate in a proposed or final agency rule

that may result in a $100 million or more expenditure (adjusted

annually for inflation) in any one year by State, local, and tribal

governments, in the aggregate, or by the private sector. The inflation-

adjusted value equivalent of $100 million in 1995 adjusted for

inflation to 2019 levels by the Consumer Price Index for All Urban

Consumers (CPI-U) is approximately $168 million based on the Consumer

Price Index for All Urban Consumers.\286\

---------------------------------------------------------------------------

\286\ See U.S. Bureau of Labor Statistics, Historical Consumer

Price Index for All Urban Consumers (CPI-U): U.S. City Average, All

Items, available at https://www.bls.gov/cpi/tables/suppl...i-u-202003.pdf (last visited June 2, 2020).

Calculation of inflation: (1) Calculate the average monthly CPI-

U for the reference year (1995) and the current year (2019); (2)

Subtract reference year CPI-U from current year CPI-U; (3) Divide

the difference of the reference year CPI-U and current year CPI-U by

the reference year CPI-U; (4) Multiply by 100 = [(Average monthly

CPI-U for 2019 - Average monthly CPI-U for 1995)/(Average monthly

CPI-U for 1995)] * 100 = [(255.657 - 152.383)/152.383] * 100 =

(103.274/152.383) * 100 = 0.6777 * 100 = 67.77 percent = 68 percent

(rounded).

Calculation of inflation-adjusted value: $100 million in 1995

dollars * 1.68 = $168 million in 2019 dollars.

---------------------------------------------------------------------------

While this final rule may result in the expenditure of more than

$100 million by the private sector annually, the rulemaking is not a

``Federal mandate'' as defined for UMRA purposes.\287\ The cost of

obtaining prevailing wages, preparing labor condition and certification

applications (including all required evidence) and the payment of wages

by employers is, to the extent it could be termed an enforceable duty,

one that arises from participation in a voluntary Federal program,

applying for immigration status in the United States.\288\ This final

rule does not contain such a mandate. The requirements of Title II of

UMRA, therefore, do not apply, and DOL has not prepared a statement

under UMRA. Therefore, no actions were deemed necessary under the

provisions of the UMRA.

---------------------------------------------------------------------------

\287\ See 2 U.S.C. 658(6).

\288\ See 2 U.S.C. 658(7)(A)(ii).

---------------------------------------------------------------------------

D. Congressional Review Act

The Office of Information and Regulatory Affairs, of the Office of

Management and Budget, has determined that this final rule is a major

rule as defined by 5 U.S.C. 804, also known as the ``Congressional

Review Act,'' as enacted in section 251 of the Small Business

Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, 110

Stat. 847, 868, et seq.

E. Executive Order 13132 (Federalism)

This final rule would not have substantial direct effects on the

states, on the relationship between the national government and the

states, or on the distribution of power and responsibilities among the

various levels of government. Therefore, in accordance with section 6

of Executive Order 13132, it is determined that this final rule does

not have sufficient federalism implications to warrant the preparation

of a federalism summary impact statement.

F. Executive Order 12988 (Civil Justice Reform)

This final rule meets the applicable standards set forth in

sections 3(a) and 3(b)(2) of Executive Order 12988.

G. Regulatory Flexibility Executive Order 13175 (Consultation and

Coordination With Indian Tribal Governments)

This final rule does not have ``tribal implications'' because it

does not have substantial direct effects on one or more Indian tribes,

on the relationship between the Federal Government and Indian tribes,

or on the distribution of power and responsibilities between the

Federal Government and Indian tribes. Accordingly, E.O. 13175,

Consultation and Coordination with Indian Tribal Governments, requires

no further agency action or analysis.

H. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501, et seq.,

and its attendant regulations, 5 CFR part 1320, require the Department

to consider the agency's need for its information collections and their

practical utility, the impact of paperwork and other information

collection burdens imposed on the public, and how to minimize those

burdens. This final rule does not require a collection of information

subject to approval by OMB under the PRA, or affect any existing

collections of information.

List of Subjects

20 CFR Part 655

Administrative practice and procedure, Australia, Chile,

Employment, Employment and training, Immigration, Labor, Migrant labor,

Wages.

20 CFR Part 656

Administrative practice and procedure, Employment, Foreign workers,

Labor, Wages.

[[Page 3672]]

DEPARTMENT OF LABOR

Accordingly, for the reasons stated in the preamble, the Department

of Labor amends parts 655 and 656 of Chapter V, Title 20, Code of

Federal Regulations, as follows:

PART 655--TEMPORARY EMPLOYMENT OF FOREIGN WORKERS IN THE UNITED

STATES

0

1. The authority citation for part 655 is revised to read as follows:

Authority: Section 655.0 issued under 8 U.S.C.

1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) and (ii), 8 U.S.C.

1103(a)(6), 1182(m), (n), (p), and (t), 1184(c), (g), and (j), 1188,

and 1288(c) and (d); sec. 3(c)(1), Pub. L. 101-238, 103 Stat. 2099,

2102 (8 U.S.C. 1182 note); sec. 221(a), Pub. L. 101-649, 104 Stat.

4978, 5027 (8 U.S.C. 1184 note); sec. 303(a)(8), Pub. L. 102-232,

105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 323(c), Pub. L. 103-

206, 107 Stat. 2428; sec. 412(e), Pub. L. 105-277, 112 Stat. 2681 (8

U.S.C. 1182 note); sec. 2(d), Pub. L. 106-95, 113 Stat. 1312, 1316

(8 U.S.C. 1182 note); 29 U.S.C. 49k; Pub. L. 107-296, 116 Stat.

2135, as amended; Pub. L. 109-423, 120 Stat. 2900; 8 CFR

214.2(h)(4)(i); 8 CFR 214.2(h)(6)(iii); and sec. 6, Pub. L. 115-218,

132 Stat. 1547 (48 U.S.C. 1806).

Subpart A issued under 8 CFR 214.2(h).

Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c),

and 1188; and 8 CFR 214.2(h).

Subpart E issued under 48 U.S.C. 1806.

Subparts F and G issued under 8 U.S.C. 1288(c) and (d); sec.

323(c), Public Law 103-206, 107 Stat. 2428; and 28 U.S.C. 2461 note,

Public Law 114-74 at section 701.

Subparts H and I issued under 8 U.S.C. 1101(a)(15)(H)(i)(b) and

(b)(1), 1182(n), (p), and (t), and 1184(g) and (j); sec. 303(a)(8),

Public Law 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec.

412(e), Public Law 105-277, 112 Stat. 2681; 8 CFR 214.2(h); and 28

U.S.C. 2461 note, Public Law 114-74 at section 701.

Subparts L and M issued under 8 U.S.C. 1101(a)(15)(H)(i)(c) and

1182(m); sec. 2(d), Public Law 106-95, 113 Stat. 1312, 1316 (8

U.S.C. 1182 note); Public Law 109-423, 120 Stat. 2900; and 8 CFR

214.2(h).

0

2. Amend Sec. 655.731 by revising paragraphs (a)(2)(ii) introductory

text, (a)(2)(ii)(A) introductory text, and (a)(2)(ii)(A)(2) to read as

follows:

Sec. 655.731 What is the first LCA requirement, regarding wages?

* * * * *

(a) * * *

(2) * * *

(ii) If the job opportunity is not covered by paragraph (a)(2)(i)

of this section, the prevailing wage shall be based on the wages of

workers similarly employed as determined by the wage component of the

Bureau of Labor Statistics (BLS) Occupational Employment Statistics

Survey (OES) in accordance with 20 CFR 656.40(b)(2)(i); a current wage

as determined in the area under the Davis-Bacon Act, 40 U.S.C. 276a et

seq. (see 29 CFR part 1), or the McNamara-O'Hara Service Contract Act,

41 U.S.C. 351 et seq. (see 29 CFR part 4); an independent authoritative

source in accordance with paragraph (a)(2)(ii)(B) of this section; or

another legitimate source of wage data in accordance with paragraph

(a)(2)(ii)(C) of this section. If an employer uses an independent

authoritative source or other legitimate source of wage data, the

prevailing wage shall be the arithmetic mean of the wages of workers

similarly employed, except that the prevailing wage shall be the median

when provided by paragraphs (a)(2)(ii)(A), (b)(3)(iii)(B)(2), and

(b)(3)(iii)(C)(2) of this section. The prevailing wage rate shall be

based on the best information available. The following prevailing wage

sources may be used:

(A) OFLC National Processing Center (NPC) determination. The NPC

shall receive and process prevailing wage determination requests in

accordance with these regulations and Department guidance. Upon receipt

of a written request for a PWD, the NPC will determine whether the

occupation is covered by a collective bargaining agreement which was

negotiated at arm's length, and, if not, determine the wages of workers

similarly employed using the wage component of the BLS OES and

selecting an appropriate wage level in accordance with 20 CFR

656.40(b)(2)(i), unless the employer provides an acceptable survey. The

NPC shall determine the wage in accordance with secs. 212(n), 212(p),

and 212(t) of the INA and in a manner consistent with 20 CFR

656.40(b)(2). If an acceptable employer-provided wage survey provides

an arithmetic mean then that wage shall be the prevailing wage; if an

acceptable employer-provided wage survey provides a median and does not

provide an arithmetic mean, the median shall be the prevailing wage

applicable to the employer's job opportunity. In making a PWD, the NPC

will follow 20 CFR 656.40 and other administrative guidelines or

regulations issued by ETA. The NPC shall specify the validity period of

the PWD, which in no event shall be for less than 90 days or more than

1 year from the date of the determination.

* * * * *

(2) If the employer is unable to wait for the NPC to produce the

requested prevailing wage for the occupation in question, or for the CO

and/or the BALCA to issue a decision, the employer may rely on other

legitimate sources of available wage information as set forth in

paragraphs (a)(2)(ii)(B) and (C) of this section. If the employer later

discovers, upon receipt of the PWD from the NPC, that the information

relied upon produced a wage below the final PWD and the employer was

not paying the NPC-determined wage, no wage violation will be found if

the employer retroactively compensates the H-1B nonimmigrant(s) for the

difference between the wage paid and the prevailing wage, within 30

days of the employer's receipt of the PWD.

* * * * *

PART 656--LABOR CERTIFICATION PROCESS FOR PERMANENT EMPLOYMENT OF

ALIENS IN THE UNITED STATES

0

3. The authority citation for part 656 is revised to read as follows:

Authority: 8 U.S.C. 1182(a)(5)(A), 1182(p); sec.122, Pub. L.

101-649, 109 Stat. 4978; and Title IV, Pub. L. 105-277, 112 Stat.

2681.

0

4. Amend Sec. 656.40 by revising paragraphs (a) and (b)(2) and (3) to

read as follows:

Sec. 656.40 Determination of prevailing wage for labor certification

purposes.

(a) Application process. The employer must request a PWD from the

NPC, on a form or in a manner prescribed by OFLC. The NPC shall receive

and process prevailing wage determination requests in accordance with

these regulations and with Department guidance. The NPC will provide

the employer with an appropriate prevailing wage rate. The NPC shall

determine the wage in accordance with sec. 212(p) of the INA. Unless

the employer chooses to appeal the center's PWD under Sec. 656.41(a)

of this part, it files the Application for Permanent Employment

Certification either electronically or by mail with the processing

center of jurisdiction and maintains the PWD in its files. The

determination shall be submitted to the CO, if requested.

(b) * * *

(2) If the job opportunity is not covered by a CBA, the prevailing

wage for labor certification purposes shall be based on the wages of

workers similarly employed using the wage component of the Bureau of

Labor Statistics (BLS) Occupational Employment Statistics Survey (OES)

in accordance with subparagraph (b)(2)(i), unless the employer provides

an acceptable survey under paragraphs (b)(3) and (g) of this section or

elects to utilize a wage permitted under paragraph (b)(4) of this

section.

(i) The BLS shall provide the OFLC Administrator with the OES wage

data

[[Page 3673]]

by occupational classification and geographic area, which is computed

and assigned at levels set commensurate with the education, experience,

and level of supervision of similarly employed workers, as determined

by the Department.

(ii) Except as provided under paragraph (b)(2)(iii) of this

section, the prevailing wage shall be provided by the OFLC

Administrator at the following four levels:

(A) The Level I Wage shall be computed as the 35th percentile of

the OES wage distribution and assigned for the most specific occupation

and geographic area available.

(B) The Level II Wage shall be determined by first dividing the

difference between Levels I and IV by three and then adding the

quotient to the computed value for Level I and assigned for the most

specific occupation and geographic area available.

(C) The Level III Wage shall be determined by first dividing the

difference between Levels I and IV by three and then subtracting the

quotient from the computed value for Level IV and assigned for the most

specific occupation and geographic area available.

(D) The Level IV Wage shall be computed as the 90th percentile of

the OES wage distribution and assigned for the most specific occupation

and geographic area available. Where the Level IV Wage cannot be

computed due to wage values exceeding the uppermost interval of the OES

wage interval methodology, the OFLC Administrator shall determine the

Level IV Wage using the current hourly wage rate applicable to the

highest OES wage interval for the specific occupation and geographic

area, or the arithmetic mean of the wages of all workers for the most

specific occupation and geographic area available, whichever is

highest.

(iii) Transition Wage Rates:

(A) For the period from the effective date of this rule through

June 30, 2021, the prevailing wage shall be provided by the OFLC

Administrator at the following four levels:

(1) The Level I Wage shall be computed as the arithmetic mean of

the lower one-third of the OES wage distribution and assigned for the

most specific occupation and geographic area available.

(2) The Level IV Wage shall be computed as the arithmetic mean of

the upper two-thirds of the OES wage distribution and assigned for the

most specific occupation and geographic area available.

(3) The Level II Wage and Level III Wage shall be determined by

applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of

this section to the Level I and Level IV values in paragraphs

(b)(2)(iii)(A)(1) and (2) of this section.

(B) For the period from July 1, 2021, through June 30, 2022, the

prevailing wage shall be provided by the OFLC Administrator at the

following four levels:

(1) The Level I Wage shall be 90 percent of the wage provided under

paragraph (b)(2)(ii)(A) of this section, or the wage provided under

paragraph (b)(2)(iii)(A)(1) of this section, whichever is higher.

(2) The Level IV Wage shall be 90 percent of the wage provided

under paragraph (b)(2)(ii)(D) of this section, or the wage provided

under paragraph (b)(2)(iii)(A)(2) of this section, whichever is higher.

(3) The Level II Wage and Level III Wage shall be determined by

applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of

this section to the wages established under paragraphs

(b)(2)(iii)(B)(1) and (3) of this section.

(C) Notwithstanding any other provision of this section, if the

employer submitting the Form ETA-9035/9035E, Labor Condition

Application for Nonimmigrant Workers and, as applicable, the Form ETA-

9141, Application for Prevailing Wage Determination, will employ an H-

1B nonimmigrant in the job opportunity subject to the Labor Condition

Application for Nonimmigrant Workers who was, as of October 8, 2020,

the beneficiary of an approved Immigrant Petition for Alien Worker, or

successor form, or is eligible for an extension of his or her H-1B

status under sections 106(a) and (b) of the American Competitiveness in

the Twenty-first Century Act of 2000 (AC21), Public Law 106-313, as

amended by the 21st Century Department of Justice Appropriations

Authorization Act, Public Law 107-273 (2002), and the H-1B nonimmigrant

is eligible to be granted immigrant status but for application of the

per country limitations applicable to immigrants under paragraphs

203(b)(1), (2), and (3) of the INA, or remains eligible for an

extension of the H-1B status at the time the Labor Condition

Application for Nonimmigrant Workers is filed:

(1) For the period from July 1, 2021, through June 30, 2022, the

prevailing wage shall be provided by the OFLC Administrator at the

following four levels:

(i) The Level I Wage shall be 85 percent of the wage provided under

paragraph (b)(2)(ii)(A) of this section, or the wage provided under

paragraph (b)(2)(iii)(A)(1) of this section, whichever is higher.

(ii) The Level IV Wage shall be 85 percent of the wage provided

under paragraph (b)(2)(ii)(D) of this section, or the wage provided

under paragraph (b)(2)(iii)(A)(2) of this section, whichever is higher.

(iii) The Level II Wage and Level III Wage shall be determined by

applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of

this section to the wages established under paragraphs

(b)(2)(iii)(C)(1)(i) and (ii) of this section.

(2) For the period from July 1, 2022, through June 30, 2023, the

prevailing wage shall be provided by the OFLC Administrator at the

following four levels:

(i) The Level I Wage shall be 90 percent of the wage provided under

paragraph (b)(2)(ii)(A) of this section, or the wage provided under

paragraph (b)(2)(iii)(C)(1)(i) of this section, whichever is higher.

(ii) The Level IV Wage shall be 90 percent of the wage established

under paragraph (b)(2)(ii)(D) of this section, or the wage established

under paragraph (b)(2)(iii)(C)(1)(ii) of this section, whichever is

higher.

(iii) The Level II Wage and Level III Wage shall be determined by

applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of

this section to the wages established under paragraphs

(b)(2)(iii)(C)(2)(i) and (ii) of this section.

(3) For the period from July 1, 2023, through June 30, 2024, the

prevailing wage shall be provided by the OFLC Administrator at the

following four levels:

(i) The Level I Wage shall be 95 percent of the wage provided under

paragraph (b)(2)(ii)(A) of this section, or the wage provided under

paragraph (b)(2)(iii)(C)(2)(i) of this section, whichever is higher.

(ii) The Level IV Wage shall be 95 percent of the wage provided

under paragraph (b)(2)(ii)(D) of this section, or the wage provided

under paragraph (b)(2)(iii)(C)(2)(ii) of this section, whichever is

higher.

(iii) The Level II Wage and III Wage shall be determined by

applying the formulae provided in paragraphs (b)(2)(ii)(B) and (C) of

this section to the wages established under paragraphs

(b)(2)(iii)(C)(3)(i) and (ii) of this section.

(4) Beginning July 1, 2024, the prevailing wage shall be provided

by the OFLC Administrator in accordance with the computations under

paragraph (b)(2)(ii) of this section.

(5) Where the Level I Wage or Level IV Wage provided under

paragraphs

[[Page 3674]]

(b)(2)(iii)(C)(1) through (3) of this section exceeds the Level I Wage

or Level IV Wage provided under paragraph (b)(2)(ii) of this section in

a given period, the Level I Wage or Level IV Wage for that period shall

be the wage provided under paragraph (b)(2)(ii), and the Level II Wage

and Level III Wage for that period shall be adjusted by applying the

formulae provided in paragraphs (b)(2)(ii)(B) and (C) of this section.

(D) Where a Level IV Wage provided under paragraph (b)(2)(iii) of

this section cannot be computed due to wage values exceeding the

uppermost interval of the OES wage interval methodology, the OFLC

Administrator shall determine the Level IV Wage using the current

hourly wage rate applicable to the highest OES wage interval for the

specific occupation and geographic area or the arithmetic mean of the

wages of all workers for the most specific occupation and geographic

area available, whichever is highest.

(iv) The OFLC Administrator will publish, at least once in each

calendar year, on a date to be determined by the OFLC Administrator,

the prevailing wage levels under paragraphs (b)(2)(ii) and (iii) of

this section as a notice posted on the OFLC website.

(3) If the employer provides a survey acceptable under paragraph

(g) of this section, the prevailing wage for labor certification

purposes shall be the arithmetic mean of the wages of workers similarly

employed in the area of intended employment. If an otherwise acceptable

survey provides a median and does not provide an arithmetic mean, the

prevailing wage applicable to the employer's job opportunity shall be

the median of the wages of workers similarly employed in the area of

intended employment.

* * * * *

Signed in Washington, DC.

John P. Pallasch,

Assistant Secretary for Employment and Training, Labor.

[FR Doc. 2021-00218 Filed 1-13-21; 8:45 am]

BILLING CODE P