Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, 3608-3674 [2021-00218]

Download as PDF 3608 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations by calling the toll-free Federal Information Relay Service at 1 (877) 889–5627. SUPPLEMENTARY INFORMATION: 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. 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 khammond on DSKJM1Z7X2PROD with RULES4 SUMMARY: VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 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 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). 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. 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 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 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. 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 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). 7 8 U.S.C. 1153(b)(2)(A). 8 8 CFR 204.5(k)(2). E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations degree of expertise significantly above that ordinarily encountered in the sciences, arts, or business.’’ 9 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 khammond on DSKJM1Z7X2PROD with RULES4 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 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 9 Id. 10 8 U.S.C. 1153(b)(3); 8 CFR 204.5(l). 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). 14 See 8 U.S.C. 1101(a)(15)(H)(i)(b), 1184(i). 11 8 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 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) 15 8 U.S.C. 1101(a)(15)(H)(i)(b1). U.S.C. 1101(a)(15)(E)(iii). 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). 19 20 CFR 656.10(c)(1). 16 8 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 3609 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 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 20 20 CFR 656.15(b)(1), 656.40(a). 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). 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. 21 See E:\FR\FM\14JAR4.SGM 14JAR4 3610 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 ‘‘[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 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 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 26 20 27 20 CFR 656.10(c)(1). CFR 656.30(b)(1). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 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. II. Prevailing Wage Background A. The Department’s Prevailing Wage Determination Methodology The Department has long relied on BLS OES data to establish prevailing 28 8 U.S.C. 1182(n)(1)(A)–(C), (t)(1)(A)–(C); 20 CFR 655.705(c)(1), 655.730(d). 29 20 CFR 655.731(a)(2). 30 Id. 31 Id. 32 20 CFR 655.731(a)(2)(ii)(A) through (C). 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. PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 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 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 35 Wage Methodology for the Temporary Nonagricultural Employment H–2B Program, 76 FR 3452, 3463 (Jan. 19, 2011). 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 E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 Level IV wage calculated as the mean wage of the highest paid upper twothirds 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 In order to implement the INA’s fourtier 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 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). 41 ETA Prevailing Wage Determination Policy Guidance, Nonagricultural Immigration Programs 7 (May 2005), available at https:// www.foreignlaborcert.doleta.gov/pdf/policy_nonag_ 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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. B. The Interim Final Rule On October 8, 2020, the Department published an Interim Final Rule (IFR) in the Federal Register, 85 FR 63872, 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/files/ETA/oflc/ pdfs/NPWHC_Guidance_Revised_11_2009.pdf. 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. PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 3611 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. 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 § 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. 48 See E:\FR\FM\14JAR4.SGM 8 U.S.C. 1182(p)(4). 14JAR4 3612 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 30day 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. 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 49 5 U.S.C. 553(b)(B). v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 50 Jifry 2004). 51 See 85 FR 63872, 63898–63902 (Oct. 8, 2020). 52 Order Granting Plaintiffs’ Motion for Partial Summary Judgment and Denying Defendants’ Cross-Motion, Chamber of Commerce, et al. v. DHS, VerDate Sep<11>2014 02:41 Jan 14, 2021 Jkt 253001 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. 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 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. 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). PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 this final rule based upon its compliance with the APA’s procedural requirements satisfied in the IFR. 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, E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 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’’). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 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 § § 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 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 3613 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 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 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.’’). 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.’’). E:\FR\FM\14JAR4.SGM 14JAR4 3614 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 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 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 70 8 U.S.C. 1182(a)(5)(A)(i). 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 § 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.’’). khammond on DSKJM1Z7X2PROD with RULES4 71 20 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 74 See Wage Methodology for the Temporary NonAgricultural 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). PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 entrylevel wage should be placed higher up within the identified range at approximately the 45th percentile. Based on private wage data and other VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 entrylevel 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, PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 3615 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3616 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 employers must ‘‘pay a premium to attract both domestic talent and foreignborn 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: • 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 76 See New American Economy, ‘‘About,’’ https:// www.newamericaneconomy.org/about. PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 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 highskilled 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, E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 onehalf 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 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 3617 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. 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 77 See https://www.grassley.senate.gov/news/ news-releases/bipartisan-group-lawmakers-proposereforms-skilled-non-immigrant-visa-programs. 78 Wage Methodology for the Temporary NonAgricultural 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/2020/data-on-display/educationpays.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 E:\FR\FM\14JAR4.SGM Continued 14JAR4 3618 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 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 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.’’). 82 Atlantic Council, Reforming US’ High-Skilled Guestworker Program, (2019), available at https:// www.atlanticcouncil.org/in-depth-research-reports/ report/reforming-us-high-skilled-immigrationprogram/; 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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, 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 ComputerRelated 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/files/document/reports/Characteristics_of_ Specialty_Occupation_Workers_H-1B_Fiscal_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-analysis/reports/ 2019/05/bulging-staff-cost-shrinking-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/2013/04/18/u-s-visa-bill-very-toughfor-indian-it/?mod=wsj_streaming_latest-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:873580003/Most-H-1B-workers-arepaid-less,-but-it-depends-on-the-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/media/doc/04-2213GuptaTestimony.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-visas-andprevailing-wage-levels/. PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 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. 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. 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 86 85 FR at 63,882. 87 Id. E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 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/media/doc/ HiraTestimony.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/media/doc/04-2213GuptaTestimony.pdf. 89 ‘‘Visa Abuses Harm American Workers,’’ The New York Times, June 16, 2016, available at http:// www.nytimes.com/interactive/opinion/ editorialboard.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/us/last-taskafter-layoff-at-disney-train-foreignreplacements.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/ us/toys-r-us-brings-temporary-foreign-workers-tous-to-move-jobs-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/hiltzik/la-fi-hiltzik-20150222column.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/business/h-1b-visa-tech-cheers-forforeign-workers.html. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 understanding of the effects of the old wage methodology. The Department also views evidence about the realworld consequences of its wage methodology on U.S. workers, as shown in news reports, as important information that should not be ignored. 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 entrylevel 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 90 85 FR at 63,882, 63,884. 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). 91 An PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 3619 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. 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’ 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). 94 85 FR at 63,882. E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3620 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. 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 95 Id. at 63,883. 96 Id. at FR at 63,882. 97 Id. at 63,884. 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:// VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 www.judiciary.senate.gov/imo/media/doc/04-22-13 BradSmithTestimony.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. 101 85 FR at 63,884. PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 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. 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 102 8 U.S.C. 1182(a)(5)(A)(i)(II). U.S.C. 1182(n)(1)(A)(i). 104 Hussion v. Madigan, 950 F.2d 1546, 1554 (11th Cir. 1992). 103 8 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 105 See PO 00000 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 63872 FR 63885–87. Frm 00015 Fmt 4701 Sfmt 4700 3621 Continued E:\FR\FM\14JAR4.SGM 14JAR4 3622 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 employmentbased 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 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. 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 EmploymentBased 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-statistics/yearbook/2017/table7. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 applications filed with the Department have been for H–1B nonimmigrants.111 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 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 This system results in significant overlap in the principal uses of the H– 111 Office of Foreign Labor Certification, Permanent Labor Certification Program—Selected Statistics, FY 19, available at https://www.dol.gov/ sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_ Statistics_FY2019_Q4.pdf. 112 See Public Law 107–273, § 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.’’). 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/travel/en/legal/visa-law0/ visa-bulletin/2020/visa-bulletin-for-september2020.html. PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 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. 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 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/files/document/reports/Characteristics_of_ Specialty_Occupation_Workers_H-1B_Fiscal_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). E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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’’ VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 3623 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3624 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 postsecondary 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 onethird 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 ACWIAeligible 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.’’ VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 A trade association stated that no employer sets compensation above the occupational median wage for all entrylevel workers ‘‘completing graduate or professional degrees with little professional experience.’’ The commenter asserted the Department provided no evidence indicating a nearmedian 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 118 8 119 8 PO 00000 U.S.C. 1182(n)(1)(A). U.S.C. 1182(p)(4). Frm 00018 Fmt 4701 Sfmt 4700 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. 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. 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 § 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 120 Id. 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). E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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). 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 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. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 entrylevel 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 entrylevel workers in the program are 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. PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 3625 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 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 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/blogs/randomsamplings/2013/02/acquiring-work-experiencewith-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/ 2015/article/wage-differences.htm. 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/files/document/reports/Characteristics_of_ Specialty_Occupation_Workers_H-1B_Fiscal_Year_ 2019.pdf. E:\FR\FM\14JAR4.SGM 14JAR4 3626 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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. 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 entrylevel workers in the EB–2 classification. 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. As with aliens in the EB–2 classification, looking to the earnings of individuals with a master’s degree 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 . . .’’). 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). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 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 entrylevel 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 E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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. 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 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 132 See Consolidated Appropriations Act, 2005, Public Law 108–447, div. J, tit. IV, § 423; 118 Stat. 2809 (Dec. 8, 2004). 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. § 655.715. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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. For example, a common occupational classification in which H–1B nonimmigrants work is Computer 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.’’). 139 U.S. Bureau of Labor Statistics, Standard Occupational Classification, https://www.bls.gov/ soc/. PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 3627 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.gov/pdf/ PerformanceData/2019/H-1B_Selected_Statistics_ FY2019_Q4.pdf. 141 Bureau of Labor Statistics, Occupational Outlook Handbook, Computer Programmers, available at https://www.bls.gov/ooh/computerand-information-technology/computerprogrammers.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/files/document/reports/Characteristics_of_ Specialty_Occupation_Workers_H-1B_Fiscal_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 E:\FR\FM\14JAR4.SGM Continued 14JAR4 3628 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 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-informationtechnology/computer-systems-analysts.htm; Bureau of Labor Statistics, Occupational Outlook Handbook, Food Service Managers, available at https://www.bls.gov/ooh/management/food-servicemanagers.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. 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-informationtechnology/computer-programmers.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. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 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). 149 Office of Foreign Labor Certification, H–1B Temporary Specialty Occupations Labor Condition Program—Selected Statistics, FY 2019, available at https://www.foreignlaborcert.doleta.gov/pdf/ PerformanceData/2019/H-1B_Selected_Statistics_ FY2019_Q4.pdf 150 Bureau of Labor Statistics, Occupational Outlook Handbook, Software Developers, available at https://www.bls.gov/ooh/computer-andinformation-technology/software-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.gov/pdf/ PerformanceData/2019/H-1B_Selected_Statistics_ FY2019_Q4.pdf 152 Bureau of Labor Statistics, Occupational Outlook Handbook, Computer Systems Analysts, available at https://www.bls.gov/ooh/computerand-information-technology/computer-systemsanalysts.htm 153 See Office of Foreign Labor Certification, H– 1B Temporary Specialty Occupations Labor Condition Program—Selected Statistics, FY 2019, PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 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. 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 available at https:// www.foreignlaborcert.doleta.gov/pdf/ PerformanceData/2019/H-1B_Selected_Statistics_ FY2019_Q4.pdf; O*NET Online, https:// www.onetonline.org/. E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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.154 154 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-statistics/yearbook/2017/table7; VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 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/files/document/foia/Characteristics_ of_H-1B_Specialty_Occupation_Workers_FY17.pdf. 155 Cf. Wage Methodology for the Temporary Nonagricultural 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.’’). 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/ files/ETA/oflc/pdfs/PERM_Selected_Statistics_ 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 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 3629 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. 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 fourtier wage structure. While this does not 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/files/ETA/oflc/pdfs/PERM_Selected_ Statistics_FY2019_Q4.pdf. E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3630 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 programspecific 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. For several reasons, the Department has also determined that occupationspecific 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 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). PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. 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 In utilizing an independent authoritative source, the Department requires employers to follow the Department guidance, which explains the standards contained in the 163 8 U.S.C. 1182(n)(1)(A)(i)(II). CFR 655.731(a)(2)(ii)(B) and (C). 165 20 CFR 655.715. 166 20 CFR 655.731(b)(3)(iii)(B)(1)–(4). 164 20 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 3631 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. 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. 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 occupationspecific wage structures. 167 Employment and Training Administration; Prevailing Wage Determination Policy Guidance, Nonagricultural Immigration Programs (Revised Nov. 2009), available at https://www.dol.gov/sites/ dolgov/files/ETA/oflc/pdfs/NPWHC_Guidance_ Revised_11_2009.pdf. 168 20 CFR 655.731(b)(3)(iii)(C). 169 20 CFR 655.731 (b)(3)(iii)(C)(4). 3. The IFR Wages and Market Wage Rates PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 Summary of Comments The most common concern raised by commenters on this subject was that prevailing wages under the IFR’s E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3632 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 companywide 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.’’ PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 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 postdoctoral 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. E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 3633 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 E:\FR\FM\14JAR4.SGM 14JAR4 3634 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 ‘‘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 wellfunctioning 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 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 entrylevel 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. 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 entrylevel 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.171 170 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. 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– E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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. 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 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 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. 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/files/document/reports/Characteristics_of_ Specialty_Occupation_Workers_H-1B_Fiscal_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’’). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 3635 would not qualify as similarly employed to even the least skilled H–1B workers and are thus not appropriate comparators for identifying an entrylevel 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. 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 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. E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3636 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 entrylevel 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 entrylevel 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 VerDate Sep<11>2014 01:33 Jan 14, 2021 Jkt 253001 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 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 lower175 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/empby-detailed-occupation.htm; United States Citizenship and Immigration Services, H–1B Authorized-to-Work Population Estimate, (2020), available at https://www.uscis.gov/sites/default/ files/document/reports/USCIS%20H1B%20Authorized%20to%20Work%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/files/document/reports/ Characteristics_of_Specialty_Occupation_Workers_ H-1B_Fiscal_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. PO 00000 Frm 00030 Fmt 4701 Sfmt 4700 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 Finally, the purpose of the relevant INA authorities, particularly the prevailing wage requirement, also weighs in favor of adjusting the entrylevel 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. 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 177 Wage Methodology for the Temporary Nonagricultural 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 NonAgricultural Employment H–2B Program, Part 2, 78 FR 24,047, 24,051 (Apr. 24, 2013). 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). E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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, NYNJ-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 WorthArlington, 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 YorkNewark-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 WorthArlington, 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. OES code khammond on DSKJM1Z7X2PROD with RULES4 Job Electrical Engineer .......................................... Computer Programmer ................................... Financial Analyst ............................................. 17–2017 15–1251 13–2098 Software Developer ........................................ 15–1256 Information Security Analyst ........................... Software Developer ........................................ Electrical Engineer .......................................... 15–1212 15–1256 17–2071 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 PO 00000 Frm 00031 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-NapervilleElgin, 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-CambridgeNashua, 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 below Metro San Jose-Sunnyvale-Santa Clara, CA ........... Chicago-Naperville-Elgin, IL-IN-WI MSA ....... New York-Newark-Jersey City, NY-NJ-PA MSA. New York-Newark-Jersey City, NY-NJ-PA MSA. Chicago-Naperville-Elgin, IL-IN-WI MSA ....... Los Angeles-Long Beach-Anaheim, CA ........ Los Angeles-Long Beach-Anaheim, CA ........ 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. Fmt 4701 Sfmt 4700 3637 Percentile above Less than 10 32 10 ........................ 33 11 14 15 16 11 21 17 12 22 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3638 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations be found. From this, the Department draws two conclusions. First, the IFR’s determination that wages paid to workers similarly employed to entrylevel 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 entrylevel 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 179 See 20 CFR 655.731(b)(3)(iii)(B) and (C); § 656.40(g). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 entrylevel 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 180 Bureau of Labor Statistics, Occupational Outlook Handbook, Computer Programmers, available at https://www.bls.gov/ooh/computerand-information-technology/computerprogrammers.htm. PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 the lower end of the OES distribution found among commenters’ data. 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 entrylevel wage based on available data and E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 highskilled 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 entrylevel wage at a lower point within the range is one way to ensure that does not occur. 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 181 See 144 Cong. Rec. S12741–04, 144 Cong. Rec. S12741–04, S12749, 1998 WL 734046. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 entrylevel 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 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 3639 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 entrylevel 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 entrylevel 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 entrylevel 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 E:\FR\FM\14JAR4.SGM 14JAR4 3640 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 MSA Occupation Atlanta-Sandy Springs-Roswell, GA ................... Atlanta-Sandy Springs-Roswell, GA ................... Austin-Round Rock, TX ...................................... Austin-Round Rock, TX ...................................... Chicago-Naperville-Elgin, IL-IN-WI ..................... Chicago-Naperville-Elgin, IL-IN-WI ..................... San Jose-Sunnyvale-Santa Clara, CA ............... San Jose-Sunnyvale-Santa Clara, CA ............... Seattle-Tacoma-Bellevue, WA ............................ Seattle-Tacoma-Bellevue, WA ............................ Web Developer ............ Electrical Engineer ....... Web Developer ............ Electrical Engineer ....... Web Developer ............ Electrical Engineer ....... Web Developer ............ Electrical Engineer ....... Web Developer ............ Electrical 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 entrylevel wage, and that some point even higher up in the distribution might be appropriate. The purpose of having a VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 Level 1 ¥$11,648 ¥11,635 ¥4,235 ¥2,732 ¥27,280 ¥9,720 ¥9,157 ¥5,420 ¥20,876 ¥16,485 Level 2 ¥13.1% ¥12.6% ¥5.9% ¥3.0% ¥29.6% ¥10.5% ¥10.2% ¥4.5% ¥14.6% ¥14.1% ¥$12,370 ¥13,743 ¥7,805 ¥9,165 ¥29,138 ¥15,301 ¥11,963 ¥18,039 ¥11,477 ¥21,561 Level 3 ¥11.6% ¥11.6% ¥8.2% ¥7.6% ¥25.6% ¥13.2% ¥10.0% ¥11.1% ¥7.2% ¥14.8% 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 PO 00000 Frm 00034 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, ILIN-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). Fmt 4701 Sfmt 4700 ¥$13,114 ¥15,851 ¥11,355 ¥15,576 ¥30,974 ¥20,881 ¥14,769 ¥30,680 ¥2,078 ¥26,617 Level 4 ¥10.6% ¥11.0% ¥9.5% ¥10.5% ¥22.9% ¥15.1% ¥9.9% ¥15.0% ¥1.2% ¥15.2% ¥$13,836 ¥17,960 ¥14,926 ¥22,009 ¥32,831 ¥26,462 ¥17,576 ¥43,299 7,322 ¥31,693 ¥9.8% ¥10.6% ¥10.5% ¥12.4% ¥20.9% ¥16.4% ¥9.9% ¥17.6% 3.8% ¥15.4% 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 § 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 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 3641 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 twoyear 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 E:\FR\FM\14JAR4.SGM 14JAR4 3642 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations unreasonable change to those terms and conditions of employment. khammond on DSKJM1Z7X2PROD with RULES4 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 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. PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 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 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.’’). E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. 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 highskilled 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. 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 187 See 144 Cong. Rec. S12741–04, 144 Cong. Rec. S12741–04, S12749, 1998 WL 734046. 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). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 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 The Department notes that changes to the minimum wage or overtime 190 Select Specialty Hosp.-Akron, LLC v. Sebelius, 820 F. Supp. 2d 13, 24 (D.D.C. 2011). 191 https://www.dol.gov/agencies/whd/minimumwage/history. 192 Id. 193 https://www.dol.gov/agencies/whd/minimumwage/state. 194 See 20 CFR 655.211(d). 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. PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 3643 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3644 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 entrylevel 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 PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 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 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 wagepayment 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. 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 199 It should be noted that this is a finite issue that exists only until current workers’ visas expire. 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.’’). E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. 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. 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 203 See 20 CFR 655.731(a)(1); 20 CFR 655.715. FR 80193 (Dec. 20, 2000). 205 20 CFR 655.731(a)(1). 206 65 FR 80193. 204 65 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 similarly employed current workers are making. 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 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 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). 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. PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 3645 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. 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 employmentbased 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 E:\FR\FM\14JAR4.SGM 14JAR4 3646 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 employmentbased 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 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 EmploymentBased 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). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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. 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. 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 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-statistics/yearbook/2017/table7. 215 Office of Foreign Labor Certification, Permanent Labor Certification Program—Selected Statistics, FY 19, available at https://www.dol.gov/ sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_ Statistics_FY2019_Q4.pdf. 216 See Public Law 107–273, 11030A(a), 116 Stat. 1836 (2002). 217 Id. 218 See 8 U.S.C. 1152(a)(2); U.S. Department of State, Visa Bulletin For September 2020, https:// travel.state.gov/content/travel/en/legal/visa-law0/ visa-bulletin/2020/visa-bulletin-for-september2020.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.’’). 220 S. Rep. 106–260, 22. PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations within the United States, thus limiting the disruption to American businesses.’’ 221 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 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. 221 Id. 222 Employment Authorization for Certain H–4 Dependent Spouses, 80 FR 10284, 10289–90. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 3647 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 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 223 See https://travel.state.gov/content/travel/en/ legal/visa-law0/visa-bulletin/2021/visa-bulletin-foroctober-2020.html. 224 (RIA Data). 225 See 8 U.S.C. 1154(j). E:\FR\FM\14JAR4.SGM 14JAR4 3648 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations before such notice was provided have the most compelling reliance interests in the prior wage methodology. 5. Wage Data and Sources khammond on DSKJM1Z7X2PROD with RULES4 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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, profitsharing 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 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 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. 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 226 https://www.bls.gov/oes/2016/may/methods_ statement.pdf (accessed December 4, 2020). E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 entrylevel 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 3649 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 3650 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 227 Wage Methodology for the Temporary Nonagricultural Employment H–2B Program, 76 FR 3452, 3463 (Jan. 19, 2011). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 of wage data for use in various foreign labor programs. 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 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. 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 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)). 229 Wage Methodology for the Temporary NonAgricultural 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). PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 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 entrylevel 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 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. E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 234 20 PO 00000 CFR 655.731(a)(2)(ii)(B) and (C). Frm 00045 Fmt 4701 Sfmt 4700 3651 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 CodeSOC 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 E:\FR\FM\14JAR4.SGM 14JAR4 3652 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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. 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 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. 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. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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. 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 237 This analysis is based on data provided by U.S. Citizenship and Immigration Services and 2019 OFLC Disclosure Data. PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 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 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 238 Andy Oram & Greg Wilson, Making Software: What Really Works, and Why We Believe It (2010). E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 3653 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.240 239 8 U.S.C. 1182(p)(4). 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 240 BLS E:\FR\FM\14JAR4.SGM Continued 14JAR4 3654 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 meanbased 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 nonnot 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. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 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 241 20 242 Id. PO 00000 CFR 655.731 (b)(3)(iii). at 655.731 (b)(3)(iii)(C)(4). Frm 00048 Fmt 4701 Sfmt 4700 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 E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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. 243 See Exec. Order 13788, 82 FR 18,837 (Apr. 18, 2017). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 § 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 PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 3655 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. 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 § 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 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.’’). E:\FR\FM\14JAR4.SGM 14JAR4 3656 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 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 § 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 § 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 § 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- VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 3657 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 E:\FR\FM\14JAR4.SGM 14JAR4 3658 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 10year 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 EXHIBIT 1—ESTIMATED MONETIZED COSTS AND TRANSFER PAYMENTS OF THE FINAL RULE [2019 $ millions] Costs 10-Year Total with a Discount Rate of 3% .............................................................................................................. 10-Year Total with a Discount Rate of 7% .............................................................................................................. Annualized at a Discount Rate of 3% ..................................................................................................................... Annualized at a Discount Rate of 7% ..................................................................................................................... Perpetuated Costs* with a Discount Rate 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. 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). khammond on DSKJM1Z7X2PROD with RULES4 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 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 10year transfer payments of $130.83 billion at a discount rate of 3 percent in 2019 dollars. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 $23.47 20.34 2.75 2.90 ........................ Transfer payments $130,830 105,157 15,337 14,972 1.86 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 fourtier 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. 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 1.074, which equals $1,855,232. This amount reflects implementation of the rule in 2020. 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. PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 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. E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3659 EXHIBIT 2—NUMBER OF AFFECTED ENTITIES BY TYPE [FY 2018–2020 average] Entity type Number Unique H–1B Program Certified Employers 249 .................................................................................................................................. H–1B Program Certified Worker Positions with Prevailing Wage Set by OES 250 ............................................................................. Unique PERM Employers 251 .............................................................................................................................................................. Estimated Number of Workers and Change in Hours 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 nonwage 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 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 58,750 904,445 24,563 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. EXHIBIT 3—COMPENSATION RATES [2019 dollars] 255 Position khammond on DSKJM1Z7X2PROD with RULES4 HR Specialist ....................................................................... Base hourly wage rate Fringe rate Overhead costs Hourly compensation rate (a) (b) (c) d=a+b+c $32.58 $13.81 ($32.58 × 0.42) $5.54 ($32.58 × 0.17) $51.93 3. Subject-by-Subject Analysis Costs 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. The following section describes the costs of the final rule. 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 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. 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?D=EPA-HQOPPT-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. 255 Numbers may slightly differ due to rounding. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 Rule Familiarization PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 E:\FR\FM\14JAR4.SGM 14JAR4 3660 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. Transfer Payments Quantifiable Transfer Payments khammond on DSKJM1Z7X2PROD with RULES4 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 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 1hour 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). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 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 § 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 § 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 nonpecuniary 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 twostep 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 259 Not all E–3 applicants need to file an I–129 with USCIS. PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 3661 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 threeyear 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. 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, employerprovided 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, E:\FR\FM\14JAR4.SGM 14JAR4 3662 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 EXHIBIT 4—LCA AND I–129 H–1B, H–1B1, AND E–3 APPROVALS AND DENIALS FY 2018 LCA certified Total .............................................................. New ............................................................... Continuing * ................................................... FY 2019 Percent approved USCIS approved + 1,023,552 423,174 600,378 308,147 80,855 227,292 LCA certified 30 19 38 908,218 378,175 530,043 Average percent approved Percent approved USCIS approved + 368,811 132,965 235,846 41 35 44 35 27 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). 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] Length cohort Number of certified workers Prevailing wage (hour) Number of hours worked in 2018 (a) (b) (c) <1 Year ................................. 1–2 Years .............................. 2–3 Years .............................. 100 100 100 $44.27 34.76 27.37 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 Number of hours worked in 2019 Number of hours worked in 2020 Total wages 2018 Total wages 2019 Total wages 2020 Total wages 2018–2020 USCIS approval rate (d) (e) (a*b*c) = (f) (a*b*d) = (g) (a*b*e) = (h) (f+g+h) = (i) (j) $2,868,437 0 1,445,030 $4,568,251 7,230,496 5,692,544 $0 7,230,496 5,692,544 $7,436,688 14,460,992 12,830,118 648 0 528 1,032 2,080 2,080 0 2,080 2,080 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 Adjusted total wages (i*j) 33% 49 31 $2,444,080 7,097,181 4,002,637 (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] Length cohort khammond on DSKJM1Z7X2PROD with RULES4 <1 Year ......... 1–2 Years ...... 2–3 Years ...... Number of certified workers Prevailing wage (year) Prevailing wage Number of hours worked in 2018 Number of hours worked in 2019 Number of hours worked in 2020 Total wages 2018 Total wages 2019 Total wages 2020 Total wages 2018–2020 USCIS approval rate Adjusted total wages (a) (b) (b/2080) = (c) (d) (e) (f) (a*c*d) = (g) (a*c*e) = (h) (a*c*f) = (i) (g+h+i) = (j) (k) (j*k) $2,413,146 0 1,113,014 $3,843,158 4,116,300 4,384,600 100 100 100 $77,459 41,163 43,846 $37.24 19.79 21.08 648 0 528 1,032 2,080 2,080 0 2,080 2,080 $0 4,116,300 4,384,600 $6,256,304 8,232,600 9,882,214 33% 49 31 $2,056,144 4,040,404 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 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-and-studies/h-1bemployer-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. 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. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 3663 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. 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 85 Percent ............ <1 Year ................ 1–2 Years ............. 2–3 Years ............. 90 Percent ............ <1 Year ................ 1–2 Years ............. 2–3 Years ............. 95 Percent ............ <1 Year ................ 1–2 Years ............. 2–3 Years ............. 100 Percent (Final Wage Level). <1 Year ................ 1–2 Years ............. khammond on DSKJM1Z7X2PROD with RULES4 2–3 Years ............. CY18 CY19 CY20 Annual average $7.89 1.28 29.58 NA 831 NA NA 13.92 2.88 65.74 NA 2,007 NA NA 21.30 4.82 109.28 NA 3,386 NA NA 29.61 $9.06 7.11 24.59 59.89 742 1,711 NA 16.71 12.11 51.67 134.46 1,820 4,133 NA 25.64 18.24 84.09 224.73 3,075 6,979 NA 35.57 $5.21 5.96 12.43 61.09 352 1,522 1,901 8.85 10.32 24.13 129.80 829 3,693 4,625 13.26 15.61 38.43 212.31 1,405 6,238 7,830 18.05 NA 2.89 NA 30.43 NA 644 2,386 NA 4.38 NA 59.59 NA 1,505 5,785 NA 6.25 NA 95.55 NA 2,537 9,771 NA NA NA NA NA NA NA 1,404 NA NA NA NA NA NA 3,347 NA NA NA NA NA NA 5,648 NA $7.39 4.31 22.20 50.47 642 1,292 1,897 13.16 7.42 47.18 107.95 1,552 3,110 4,586 20.07 11.23 77.27 177.53 2,622 5,251 7,749 27.74 Ongoing ................ New ...................... Ongoing ................ New ...................... Ongoing ................ Ongoing + ............ 6.99 158.13 NA 4,861 NA NA 25.12 119.63 325.78 4,426 10,022 NA 21.56 54.32 270.70 2,029 8,983 11,258 8.30 NA 135.79 NA 3,653 14,056 NA NA NA NA NA 8,135 15.49 110.70 244.09 3,772 7,553 11,150 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 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. 23:58 Jan 13, 2021 CY22 New ...................... Ongoing ................ New ...................... Ongoing ................ New ...................... Ongoing ................ Ongoing + ............ New ...................... Ongoing ................ New ...................... Ongoing ................ New ...................... Ongoing ................ Ongoing + ............ New ...................... Ongoing ................ New ...................... Ongoing ................ New ...................... Ongoing ................ Ongoing + ............ New ...................... Step 3—project 10-year series of wage impacts incorporating transition schedule. To project 10-year wage transfers the average annual values from VerDate Sep<11>2014 CY21 Jkt 253001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 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 E:\FR\FM\14JAR4.SGM 14JAR4 3664 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. EXHIBIT 8—WAGE AND POPULATION TRANSITION FOR THE TWO APPLICATION GROUPS Wage transition Year Population transition Months 2021 ................................ 2022 ................................ 2023 ................................ 2024 ................................ 2025–2030 ...................... Jan–Jun ........................... Jul–Dec ........................... Jan–Jun ........................... Jul–Dec ........................... Jan–Jun ........................... Jul–Dec ........................... Jan–Jun ........................... Jul–Dec ........................... .......................................... Two-step (%) Two-step Three and a half year Baseline .......................... 90% ................................. 90% ................................. Final Wage Level ............ Final Wage Level ............ Final Wage Level ............ Final Wage Level ............ Final Wage Level ............ Final Wage Level ............ Baseline .......................... 85% ................................. 85% ................................. 90% ................................. 90% ................................. 95% ................................. 95% ................................. Final Wage Level ............ Final Wage Level ............ Three and a half year (%) 16% 16 25 25 35 35 44 * NA * NA 84% 84 75 75 65 65 56 * NA * NA * 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 * Length Cohort: Adjustments Projected wage impact <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 * e) (g) = (b * d * e) (h) = (c * d * e) (f + g + h) Length Cohort: New 2021 .............................. $13.16 $47 $1,552 50.60% 2022 .............................. $7.42 $104 $3,110 50.60% 16% $1.07 $3.82 $125.62 $130.51 $0.60 $8.39 $251.82 $260.81 NA NA $371.25 $371.25 Length Cohort: Ongoing 16% Length Cohort: Ongoing + 2023 .............................. NA NA $4,586 50.60% 16% khammond on DSKJM1Z7X2PROD with RULES4 * 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). This process was repeated for each year of 2021–2024 to account for each 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. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 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 268 See E:\FR\FM\14JAR4.SGM Exhibit 8 transition schedule. 14JAR4 3665 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Ongoing New Ongoing New Ongoing Ongoing + .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. .................................. $4 13 20 26 28 28 28 28 28 28 $0 2 7 11 14 15 15 15 15 15 $13 46 79 101 111 111 111 111 111 111 $0 29 103 178 226 244 244 244 244 244 $398 1,495 2,674 3,451 3,772 3,772 3,772 3,772 3,772 3,772 $0 782 2,992 5,356 6,911 7,553 7,553 7,553 7,553 7,553 $0 0 1,150 4,419 7,903 10,201 11,150 11,150 11,150 11,150 $416 2,368 7,026 13,542 18,964 21,924 22,872 22,872 22,872 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. Non-Quantifiable Transfer Payments This section discusses the nonquantifiable 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 khammond on DSKJM1Z7X2PROD with RULES4 Category FY18 Not on a temporary visa/not currently residing in the United States .............. H–1B visa ........................................................................................................ H–1B1 visa ...................................................................................................... E–3 visa ........................................................................................................... 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/10419/ 93299/1/dp7958.pdf. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 10,047 74,454 109 471 270 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– PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 FY19 9,841 63,976 81 280 FY20 9,166 58,390 83 280 Average percent of total 10.1% 68.0% 0.1% 0.4% 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). E:\FR\FM\14JAR4.SGM 14JAR4 3666 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations EXHIBIT 11—PERM CERTIFICATIONS BY CLASS OF ADMISSION, FY18–FY20—Continued Category FY18 FY19 FY20 Average percent of total 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. khammond on DSKJM1Z7X2PROD with RULES4 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 nonquantifiable 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 wellestablished 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 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. 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 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. 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 highskilled immigration. Finally, ensuring that skilled occupations are not performed at belowmarket 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 $1.86 million at a discount rate of 7 percent in 2016 dollars. the Level IV in analyzing the economic impact of the IFR. This resulted in underestimation of the transfer payment in the IFR. E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3667 EXHIBIT 12—ESTIMATED MONETIZED COSTS AND TRANSFER PAYMENTS OF THE FINAL RULE [2019$ millions] Year khammond on DSKJM1Z7X2PROD with RULES4 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Costs Transfer payments ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... ......................................................................................................................................................................... $4.33 2.46 2.46 2.46 2.46 2.46 2.46 2.46 2.46 2.46 $416 2,368 7,026 13,542 18,964 21,924 22,872 22,872 22,872 22,872 Undiscounted Total ........................................................................................................................................... 10-Year Total with a Discount Rate of 3% ...................................................................................................... 10-Year Total with a Discount Rate of 7% ...................................................................................................... 10-Year Average .............................................................................................................................................. Annualized with a Discount Rate of 3% ........................................................................................................... Annualized with a Discount Rate of 7% ........................................................................................................... Perpetuated Net Costs with a Discount Rate of 7% (2016$ Millions) ............................................................. 26.45 23.47 20.34 2.65 2.75 2.90 155,730 130,830 105,157 15,573 15,337 14,972 1.86 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 threetiered 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 MSA or BOS areas to national, to a twotiered 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 PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 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 274 See E:\FR\FM\14JAR4.SGM 5 U.S.C. 604. 14JAR4 3668 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 public comment on the Initial Regulatory Flexibility Analysis (IRFA) which is addressed below. 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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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. 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 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). PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 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 ii. Number of Small Entities 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--table-size-standards. 277 See http://www.sba.gov/advocacy/ regulatoryflexibility-act for details. E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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). 3669 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 6digit 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 6-Digit NAICS: 511210 ........... 541511 ........... 621111 ........... 541330 ........... 611310 ........... 541110 611110 541310 541714 ........... ........... ........... ........... 541614 ........... Other NAICS ......... 4-Digit NAICS: 5112 ............... 5413 ............... 5415 ............... 5416 ............... 6211 ............... 5417 ............... 6113 ............... 5239 ............... 5411 ............... 5412 ............... khammond on DSKJM1Z7X2PROD with RULES4 Other NAICS ......... Software Publishers .............................. Custom Computer Programming Services. Offices of Physicians (except Mental Health Specialists). Engineering Services ............................ Colleges, Universities, and Professional Schools. Offices of Lawyers ................................ Elementary and Secondary Schools .... Architectural Services ........................... Research and Development in Biotechnology (except Nanobiotechnology). Process, Physical Distribution, and Logistics Consulting Services. ............................................................... Software Publishers .............................. Architectural, Engineering, and Related Services. Computer Systems Design and Related Services. Management, Scientific, and Technical Consulting Services. Offices of Physicians ............................ Scientific Research and Development Services. Colleges, Universities, and Professional Schools. Other Financial Investment Activities .... Legal Services ...................................... Accounting, Tax Preparation, Bookkeeping, and Payroll Services. ............................................................... 2019 2020 2021 2022 2023 435 (12%) 394 (11%) 1,570 (6%) 1,149 (4%) 1,577 (6%) 1,155 (4%) 1,555 (6%) 1,141 (5%) 1,463 (6%) 1,072 (5%) 119 (14%) 95 (11%) 132 (4%) 1,091 (4%) 1,097 (4%) 1,081 (4%) 998 (4%) 36 (4%) 90 (3%) 106 (3%) 973 (4%) 639 (2%) 979 (4%) 644 (2%) 965 (4%) 627 (2%) 910 (4%) 588 (3%) 13 (1%) 35 (4%) 606 625 501 444 606 621 503 445 596 577 499 435 548 508 464 405 13 10 1 13 60 43 23 49 (2%) (1%) (1%) (1%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (2%) (1%) (1%) (0%) (1%) 87 (2%) 394 (2%) 399 (2%) 392 (2%) 368 (2%) 25 (3%) 2,090 (60%) 1,7692 (69%) 17,755 (69%) 17,347 (69%) 15,755 (68%) 513 (59%) 435 (12%) 121 (3%) 1,570 (6%) 1,679 (7%) 1,577 (6%) 1,689 (7%) 1,555 (6%) 1,668 (7%) 1,463 (6%) 1,568 (7%) 119 (14%) 17 (2%) 500 (14%) 1,518 (6%) 1,526 (6%) 1,507 (6%) 1,415 (6%) 120 (14%) 300 (9%) 1,437 (6%) 1,448 (6%) 1,425 (6%) 1,313 (6%) 59 (7%) 132 (4%) 93 (3%) 1091 (4%) 659 (3%) 1097 (4%) 663 (3%) 1081 (4%) 650 (3%) 998 (4%) 600 (3%) 36 (4%) 28 (3%) 106 (100%) 639 (2%) 644 (2%) 627 (2%) 588 (3%) 35 (4%) 68 (2%) 61 (2%) 41 (1%) 635 (2%) 614 (2%) 595 (2%) 638 (2%) 614 (2%) 598 (2%) 628 (2%) 604 (2%) 585 (2%) 564 (2%) 555 (2%) 551 (2%) 16 (2%) 13 (1%) 12 (1%) 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 onetime cost of $51.93 to familiarize themselves with the rule.280 281 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 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--table-size-standards. 280 $51.93 = 1 hour × $51.93, where $51.93 = $32.58 + ($32.58 × 42%) + ($32.58 × 17%). 281 The Department considered PERM employers for purposes of calculating one-time costs in the E.O. 12866 section. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 E:\FR\FM\14JAR4.SGM 14JAR4 3670 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 Number of H–1B Small Entities with Wage Impacts ...................................... Average Wage Impact per Entity ............. 2,577 $14,178 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 2019 2020 19,948 $96,828 20,036 $183,463 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 2021 19,679 $179,455 2022 18,293 $92,531 2023 635 $19,464 Department has used the same threshold in prior rulemakings for the definition of substantial number of small entities.284 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 2020 2021 2022 2023 <1% .......................................................... 1%–2% ..................................................... 2%–3% ..................................................... 3%–4% ..................................................... 4%–5% ..................................................... >5% .......................................................... 2,689 (88%) 168 (6%) 70 (2%) 22 (1%) 24 (1%) 69 (2%) 16,418 (75%) 1,884 (9%) 847 (4%) 503 (2%) 325 (1%) 2,036 (9%) 13,286 (61%) 2,349 (11%) 1314 (6%) 794 (4%) 549 (3%) 3,352 (15%) 13,286 (61%) 2,349 (11%) 1314 (6%) 794 (4%) 549 (3%) 3,352 (15%) 13,705 (69%) 2,013 (10%) 1036 (5%) 567 (3%) 372 (2%) 2,172 (11%) 699 (95%) 23 (3%) 5 (1%) 1 (0%) 2 (0%) 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. khammond on DSKJM1Z7X2PROD with RULES4 2019 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). VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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, 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). PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 E:\FR\FM\14JAR4.SGM 14JAR4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 fourtiered 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 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. khammond on DSKJM1Z7X2PROD with RULES4 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 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.’’ VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 inflationadjusted 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 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. 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. 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/supplemental-files/ historical-cpi-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. 287 See 2 U.S.C. 658(6). 288 See 2 U.S.C. 658(7)(A)(ii). PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 3671 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. E:\FR\FM\14JAR4.SGM 14JAR4 3672 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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 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). 2. Amend § 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: ■ § 655.731 What is the first LCA requirement, regarding wages? khammond on DSKJM1Z7X2PROD with RULES4 * * * * * (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); VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 employerprovided 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 PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 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 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. 4. Amend § 656.40 by revising paragraphs (a) and (b)(2) and (3) to read as follows: ■ § 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 § 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 E:\FR\FM\14JAR4.SGM 14JAR4 khammond on DSKJM1Z7X2PROD with RULES4 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 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. VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 (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 PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 3673 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 E:\FR\FM\14JAR4.SGM 14JAR4 3674 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations khammond on DSKJM1Z7X2PROD with RULES4 (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 VerDate Sep<11>2014 23:58 Jan 13, 2021 Jkt 253001 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 PO 00000 Frm 00068 Fmt 4701 Sfmt 9990 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 E:\FR\FM\14JAR4.SGM 14JAR4

Agencies

[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

[[Page 3609]]

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

[[Page 3610]]

``[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).
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    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).
---------------------------------------------------------------------------

    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

[[Page 3611]]

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.
---------------------------------------------------------------------------

    \41\ ETA Prevailing Wage Determination Policy Guidance, 
Nonagricultural Immigration Programs 7 (May 2005), available at 
https://www.foreignlaborcert.doleta.gov/pdf/policy_nonag_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/files/ETA/oflc/pdfs/NPWHC_Guidance_Revised_11_2009.pdf.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

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

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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'').
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.'').
---------------------------------------------------------------------------

    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.'').
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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:
---------------------------------------------------------------------------

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

     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.
---------------------------------------------------------------------------

    \77\ See https://www.grassley.senate.gov/news/news-releases/bipartisan-group-lawmakers-propose-reforms-skilled-non-immigrant-visa-programs.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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/2020/data-on-display/education-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.'').
---------------------------------------------------------------------------

    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-depth-research-reports/report/reforming-us-high-skilled-immigration-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/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_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-analysis/reports/2019/05/bulging-staff-cost-shrinking-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/2013/04/18/u-s-visa-bill-very-tough-for-indian-it/?mod=wsj_streaming_latest-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:873580003/Most-H-1B-workers-are-paid-less,-but-it-depends-on-the-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/media/doc/04-22-13GuptaTestimony.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-visas-and-prevailing-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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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/media/doc/HiraTestimony.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/media/doc/04-22-13GuptaTestimony.pdf.
    \89\ ``Visa Abuses Harm American Workers,'' The New York Times, 
June 16, 2016, available at http://www.nytimes.com/interactive/opinion/editorialboard.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/us/last-task-after-layoff-at-disney-train-foreign-replacements.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/us/toys-r-us-brings-temporary-foreign-workers-to-us-to-move-jobs-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/hiltzik/la-fi-hiltzik-20150222-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/business/h-1b-visa-tech-cheers-for-foreign-workers.html.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \94\ 85 FR at 63,882.
    \95\ Id. at 63,883.
    \96\ Id. at FR at 63,882.
    \97\ Id. at 63,884.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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/media/doc/04-22-13BradSmithTestimony.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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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.

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

[[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\
---------------------------------------------------------------------------

    \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-statistics/yearbook/2017/table7.
    \111\ Office of Foreign Labor Certification, Permanent Labor 
Certification Program--Selected Statistics, FY 19, available at 
https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.'').
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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/travel/en/legal/visa-law0/visa-bulletin/2020/visa-bulletin-for-september-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/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_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/blogs/random-samplings/2013/02/acquiring-work-experience-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/2015/article/wage-differences.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/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_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.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf.
    \141\ Bureau of Labor Statistics, Occupational Outlook Handbook, 
Computer Programmers, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-programmers.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/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_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-information-technology/computer-systems-analysts.htm; Bureau of 
Labor Statistics, Occupational Outlook Handbook, Food Service 
Managers, available at https://www.bls.gov/ooh/management/food-service-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.

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

[[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\
---------------------------------------------------------------------------

    \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-information-technology/computer-programmers.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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \149\ Office of Foreign Labor Certification, H-1B Temporary 
Specialty Occupations Labor Condition Program--Selected Statistics, 
FY 2019, available at https://www.foreignlaborcert.doleta.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf
    \150\ Bureau of Labor Statistics, Occupational Outlook Handbook, 
Software Developers, available at https://www.bls.gov/ooh/computer-and-information-technology/software-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.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf
    \152\ Bureau of Labor Statistics, Occupational Outlook Handbook, 
Computer Systems Analysts, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-systems-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.gov/pdf/PerformanceData/2019/H-1B_Selected_Statistics_FY2019_Q4.pdf; O*NET 
Online, https://www.onetonline.org/.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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-statistics/yearbook/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/files/document/foia/Characteristics_of_H-1B_Specialty_Occupation_Workers_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.'').
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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/files/ETA/oflc/pdfs/PERM_Selected_Statistics_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/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
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    \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.
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    \167\ Employment and Training Administration; Prevailing Wage 
Determination Policy Guidance, Nonagricultural Immigration Programs 
(Revised Nov. 2009), available at https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/NPWHC_Guidance_Revised_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/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_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'').
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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-by-detailed-occupation.htm; United States 
Citizenship and Immigration Services, H-1B Authorized-to-Work 
Population Estimate, (2020), available at https://www.uscis.gov/sites/default/files/document/reports/USCIS%20H-1B%20Authorized%20to%20Work%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/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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-information-technology/computer-programmers.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.
---------------------------------------------------------------------------

    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\
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    \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.
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    \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.
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    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).
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    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\
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    \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\
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    \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-statistics/yearbook/2017/table7.
    \215\ Office of Foreign Labor Certification, Permanent Labor 
Certification Program--Selected Statistics, FY 19, available at 
https://www.dol.gov/sites/dolgov/files/ETA/oflc/pdfs/PERM_Selected_Statistics_FY2019_Q4.pdf.
---------------------------------------------------------------------------

    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/travel/en/legal/visa-law0/visa-bulletin/2020/visa-bulletin-for-september-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\
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    \223\ See https://travel.state.gov/content/travel/en/legal/visa-law0/visa-bulletin/2021/visa-bulletin-for-october-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).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \243\ See Exec. Order 13788, 82 FR 18,837 (Apr. 18, 2017).
---------------------------------------------------------------------------

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.'').
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    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\
---------------------------------------------------------------------------

    \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?D=EPA-HQ-OPPT-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-and-studies/h-1b-employer-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/10419/93299/1/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.
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    \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--table-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. 1