Federal Register, Volume 85 Issue 196 (Thursday, October 8, 2020)

[Federal Register Volume 85, Number 196 (Thursday, October 8, 2020)]
[Rules and Regulations]
[Pages 63872-63915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-22132]

[[Page 63871]]

Vol. 85

Thursday,

No. 196

October 8, 2020

Part VII

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; Interim Final Rule

Federal Register / Vol. 85, No. 196 / Thursday, October 8, 2020 /
Rules and Regulations

[[Page 63872]]

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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: Interim final rule; request for comments.

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SUMMARY: The Department of Labor (DOL or the Department) is amending
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, DOL is amending its
regulations governing permanent 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 update will allow DOL to more effectively ensure
that 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 interim final rule is effective on October 8, 2020. Written
comments and related material must be received on or before November 9,
2020.

ADDRESSES: You must submit comments, identified as DOL Docket No. ETA-
2020-0006, via https://beta.regulations.gov, a Federal E-Government
website that allows the public to find, review, and submit comments on
documents that agencies have published in the Federal Register and that
are open for comment. Simply type ``1205-AC00'' (in quotes) in the
Comment or Submission search box, click Go, and follow the instructions
for submitting comments.
Docket: For access to the docket and to read background documents
or comments received, go to the Federal e-Rulemaking Portal at https://beta.regulations.gov, referencing DOL Docket No. ETA-2020-0006. You may
also sign up for email alerts on the online docket to be notified when
comments are posted or a final rule is published.

FOR FURTHER INFORMATION CONTACT: For further information regarding 20
CFR parts 655 and 656, contact Brian D. Pasternak, Administrator,
Office of Foreign Labor Certification, Employment and Training
Administration, Department of Labor, Box #12-200, 200 Constitution
Avenue NW, Washington, DC 20210, telephone: (202) 513-7350 (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

A. Legal Framework

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 rule deals with the prevailing wage levels used
with respect to the labor certifications that the Secretary issues for
certain employment-based immigrants and the labor condition
applications (LCA) that the Secretary certifies in connection with the
temporary employment of foreign workers under the H-1B, H-1B1, and E-3
visa classifications.\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), (a)(15)(H)(i)(b),
(a)(15)(H)(i)(b1).
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1. 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 (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.\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

[[Page 63873]]

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)(3)(C), 1153(b)(2), 1201(g).
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2. Labor Condition Applications
The H-1B nonimmigrant visa program allows U.S. employers to
temporarily employ foreign workers in specialty occupations.
``Specialty occupation'' is defined by statute 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.\7\ 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,\8\ and the E-3 visa classification applies to foreign
workers in specialty occupations from Australia.\9\ The Secretary must
certify an LCA filed by the foreign worker's prospective U.S. employer
before the prospective employer may file a petition with DHS on behalf
of a foreign worker for H-1B, H-1B1, or E-3 nonimmigrant
classification.\10\ The LCA contains various attestations from the
employer about the wages and working conditions that it will provide
for the foreign worker.\11\
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\7\ See 8 U.S.C 1101(a)(15)(H)(i)(b), 1184(i).
\8\ 8 U.S.C. 1101(a)(15)(H)(i)(b1).
\9\ 8 U.S.C. 1101(a)(15)(E)(iii).
\10\ 8 U.S.C. 1101(a)(15)(E)(iii), (a)(15)(H)(i)(b),
(a)(15)(H)(i)(b1); 8 CFR 214.2(h)(2)(i)(E).
\11\ See generally 8 U.S.C. 1182(n), (t); 20 CFR part 655,
subpart H.
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B. Description of 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.\12\
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\12\ The current regulations were issued through a final rule
implementing the streamlined permanent labor certification program
through revisions to 20 CFR part 656 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).
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Prior to filing a labor certification application, the employer
must obtain a Prevailing Wage Determination (PWD) for its job
opportunity from OFLC's National Prevailing Wage Center (NPWC).\13\ 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.\14\ 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.\15\ In the absence of any of the above
sources, the NPWC will use the Bureau of Labor Statistics (BLS)
Occupational Employment Statistics (OES) survey to determine the
prevailing wage for the employer's job opportunity.\16\ 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.\17\
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\13\ 20 CFR 656.15(b)(1), 656.40(a).
\14\ See 20 CFR 656.40(b)(1).
\15\ See 20 CFR 656.40(b), (g).
\16\ See 20 CFR 656.40(b)(2).
\17\ 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.\18\ 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 ``[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.'' \19\
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\18\ 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.
\19\ 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 (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.\20\
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\20\ 20 CFR 656.30(b)(1).
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C. Description of 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

[[Page 63874]]

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.\21\
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\21\ 8 U.S.C. 1182(n)(1)(A)-(C), (t)(1)(A)-(C); 20 CFR
655.705(c)(1), 655.730(d).
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As relevant here, the prevailing wage must be determined as of the
time of the filing of the LCA.\22\ In contrast to the permanent labor
certification process, an employer is not required to obtain a PWD from
the NPWC.\23\ 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.\24\ 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).\25\
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\22\ 20 CFR 655.731(a)(2).
\23\ Id.
\24\ Id.
\25\ 20 CFR 655.731(a)(2)(ii)(A) through (C).
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An employer may not file an LCA more than six months prior to the
beginning date of the period of intended employment.\26\ Unless the LCA
is incomplete or obviously inaccurate, the Secretary must certify it
within seven working days of filing.\27\ 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.\28\ 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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\26\ 20 CFR 655.730.
\27\ 8 U.S.C. 1182(n)(1), (t)(2)(C); 20 CFR 655.740(a)(1).
\28\ 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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D. History and Current Use of the Four-Tiered OES Prevailing Wage
Structure

Historically, the Department relied on State Workforce Agencies
(SWAs) to determine prevailing wages for purposes of its
nonagricultural labor certification programs.\29\ To determine the
prevailing wage for a particular job opportunity, SWAs relied on wage
rates that were determined to be prevailing for the occupation and
locality under other Federal laws--e.g., wages issued for purposes of
the DBA or SCA--or when applicable, wages negotiated in a CBA.\30\ In
the absence of such wage determinations, SWAs determined prevailing
wages based on wage information obtained ``by purchasing available
published surveys or by conducting ad hoc surveys of employers in the
area of intended employment.'' \31\
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\29\ See, e.g., Miscellaneous Amendments, 32 FR 10932 (July 26,
1967).
\30\ See, e.g., id.
\31\ Labor Certification for the Permanent Employment of Aliens
in the United States; Implementation of New System, 67 FR 30466,
30479 (May 6, 2002).
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Beginning at least as early as the 1990s, users of the H-1B program
and permanent program users urged the Department to ``create a multi-
tiered wage structure to reflect the largely self-evident proposition
that workers in occupations that require sophisticated skills and
training receive higher wages based on those skills.'' \32\
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\32\ Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, 76 FR 3452, 3453 (Jan. 19, 2011).
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The Department first adopted a multi-tiered system to determine
prevailing wages for the nonagricultural labor certification programs
in 1995, when it issued General Administration Letter No. 4-95 (GAL 4-
95).\33\ As relevant here, GAL 4-95 directed SWAs to provide two wage
levels--entry and experienced--when they conducted prevailing wage
surveys for nonagricultural positions.\34\ Specifically, under this
guidance, wage rates issued under the DBA, SCA, or a collective
bargaining agreement continued to be controlling, if applicable, and,
when they were not, SWAs continued to conduct their own prevailing wage
surveys or use published wage surveys.\35\ However, under GAL 4-95,
when SWAs conducted such surveys, they had to distinguish between
entry-level positions and positions requiring several years of
experience, taking into account factors like the level of education and
experience required, complexity of the tasks performed, and level of
supervision and autonomy.\36\
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\33\ General Administration Letter No. 4-95 (May 18, 1995),
available at https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=485.
\34\ See id. at 5 (``The job related education, training and
experience requirements of an occupation are factors to be
considered in making prevailing wage determinations. A prevailing
wage survey and/or determination should distinguish between entry
level positions and those requiring several years of experience. At
a minimum, a distinction should be made based on whether or not the
occupation involved in the employer's job offer is entry level or at
the experienced level.''). As the Department later explained,
adoption of tiered wages was necessary for the H-1B and permanent
labor certification programs because job opportunities in these
programs ``reflect[] a wide range of experience, skills, and
knowledge which appropriately correspond to stratified wage
levels.'' Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3461 (Jan. 19, 2011).
\35\ GAL 4-95 at 1-2.
\36\ Id. at 5-6.
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In October 1997, the Department amended its prevailing wage
guidance to incorporate the wage component of the recently-expanded OES
survey.\37\ Specifically, pursuant to General Administration Letter No.
2-98 (GAL 2-98), SWAs continued to assign prevailing wage
determinations using wage rates issued under the DBA, SCA, or a CBA,
where applicable. But in the absence of such wages, the Department now
directed SWAs to use the OES survey (rather than conduct their own
prevailing wage survey or use other public or private wage
surveys).\38\ As described below, 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.\39\ To determine
the prevailing wage level applicable to a particular position, SWAs
considered the level of skill required by the employer, identified the
appropriate occupation, and selected the appropriate wage level.\40\
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\37\ 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.
\38\ GAL 2-98 at 1. Under this guidance, employers could still
make specific requests for prevailing wages based on different (non-
OES) wage data, provided it met certain requirements. Id. at 8. But
where an employer provided data that met applicable requirements,
that data was used only to determine the prevailing wage for
purposes of that employer's job opportunity, and not for subsequent
prevailing wage requests in that occupation. See id. at 9.
\39\ GAL 2-98 at 5.
\40\ Id. GAL 2-98 did not change the definition of the skill
levels that were first announced in GAL 4-95, but it did direct SWAs
to issue a level II wage in several additional contexts, including
cases in which state licensure was required for independent
performance of all of the duties encompassed by the occupation and
the job opportunity required such a worker. Id.

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[[Page 63875]]

GAL 2-98 was accompanied by a Memorandum of Understanding (MOU)
between ETA and BLS, wherein BLS agreed to provide, through its
cooperative agreements with the SWAs, two wage levels for each
occupational classification in areas of intended employment, where
available.\41\ Because the OES survey does not provide data about skill
differentials within Standard Occupational Classification (SOC) codes,
ETA established the entry and experienced skill levels mathematically.
Specifically, under the 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) and a
Level II wage calculated as the mean wage of the highest paid upper
two-thirds of workers (approximately the 67th percentile). 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 conduct any meaningful economic analysis to test its
validity.'' \42\ Rather, as the Department explained at the time, it
adopted this structure to ``insure the use of a consistent methodology
by all States'' in making prevailing wage determinations.\43\ The wage
structure adopted in 1998, which was developed without notice and
comment, has never been codified in the Department's regulations.
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\41\ 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).
\42\ 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).
\43\ GAL 2-98; see also Wage Methodology for the Temporary Non-
agricultural Employment H-2B Program, 76 FR 3452, 3464 (Jan. 19,
2011) (explaining that the Department moved to the OES in part due
to the ``inconsistencies that resulted from State to State in the
treatment of the same job opportunity, reflecting not the local
conditions but the quality of the surveyors and the collection
instruments used'' and because the Department determined that ``the
OES provides a more reliable and cost-effective means for producing
prevailing wage rates on a consistent basis across the country.'').
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In 2002, the Department issued additional guidance to SWAs
regarding the assignment of prevailing wage levels.\44\ In this
guidance, the Department stressed that skill levels should not be
assigned solely on the basis of the occupational classification because
``[a]ll OES/SOC codes encompass both level I and level II positions . .
. including managerial and professional jobs at the high end, and
assistant or helper codes at the low end.'' \45\ Rather, as the
guidance emphasized throughout, the employer's job description and the
nature of the work were the primary determinants of a wage level
determination. The Department directed SWAs to consider relevant
factors, such as ``the complexity of the job duties, the level of
judgment, the amount [and nature] of supervision, and the level of
understanding required to perform the job duties,'' and to a lesser
extent, factors like licensure requirements or the position's location
in the employer's hierarchy.\46\ Job duties alone could necessitate a
level II determination where, for example, they indicated the employee
would ``operate with little supervision, perform advanced []
procedures, and exercise great latitude of independent judgment.'' \47\
The Department also directed states to consider whether the job
opportunity required education or experience exceeding entry-level
occupational requirements and, reiterating GAL 2-98, explained that
``the wage rate for a job offer that requires an advanced degree
(Master's or Ph.D.)'' was to be considered level II if a lesser degree
was ``normally required for entry into the occupation.'' \48\
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\44\ Training and Employment Guidance Letter No. 5-02 (TEGL 5-
02): Clarification of Level I and Level II Skill Levels for the
Purposes of Prevailing Wage Determinations (Aug. 7, 2002), available
at https://oui.doleta.gov/dmstree/tegl/tegl2k2/tegl_05-02.htm.
\45\ Id. at 2.
\46\ Id.
\47\ Id. at 5 (referring to job opportunities for medical
residents that might otherwise be considered entry level).
\48\ Id. at 4.
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That same year, in response to a proposed rule amending the
permanent labor certification process, the Department received comments
criticizing it ``for arbitrarily dividing salary data into two wage
levels'' and ``suggest[ing] existing OES wage data would be more useful
if the number of wage levels were expanded to appropriately
differentiate among various occupational groupings.'' \49\ For example,
one commenter believed adoption of ``[m]ulti-tiered wage levels . . .
set for each occupation [would] better reflect `real world'
experience'' and stated that ``[a] two-tier wage level is unrealistic
where an entry level job by its nature requires considerable
independence (e.g., a teacher) or the salary for the second level is
markedly higher, e.g., post-doctoral research fellow, medical resident,
college instructor, marketing manager.'' \50\ Similarly, another
commenter expressed concern that use of just one upper-bound, level II
wage for ``all experienced workers create[d] gross inaccuracies at both
ends of the spectrum,'' and asserted that ``[m]ultiple levels allow for
a reasoned wage based upon years of experience and levels of
responsibility that reflect real world patterns.''
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\49\ Labor Certification for the Permanent Employment of Aliens
in the United States; Implementation of New System, 69 FR 77326,
77367 (Dec. 27, 2004).
\50\ Id. at 77370.
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The Department adopted the four-tier prevailing wage level
structure that is currently in effect in response to the H-1B Visa
Reform Act of 2004.\51\ As relevant here, the H-1B Visa Reform Act of
2004 amended section 212(p) of the INA to provide where the Secretary
of Labor uses, or makes available to employers, a governmental survey
to determine the prevailing wage, such survey shall provide at least 4
levels of wages commensurate with experience, education, and the level
of supervision. Where an existing government survey has only 2 levels,
2 intermediate levels may be created by dividing by 3 the difference
between the two levels offered, adding the quotient thus obtained to
the first level, and subtracting that quotient from the second
level.\52\
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\51\ Consolidated Appropriations Act, 2005, Public Law 108-447,
div. J, tit. IV, 423; 118 Stat. 2809 (Dec. 8, 2004).
\52\ 8 U.S.C. 1182(p)(4).
---------------------------------------------------------------------------

To implement this 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.'' \53\ The Department applied the formula in the
statute 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.\54\
---------------------------------------------------------------------------

\53\ ETA Prevailing Wage Determination Policy Guidance,
Nonagricultural Immigration Programs 7 (May 2005), available at
https://www.foreignlaborcert.doleta.gov/pdf/policy_nonag_progs.pdf.
\54\ See id. at 1.

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[[Page 63876]]

In 2010, the Department centralized the prevailing wage
determination process for nonagricultural labor certification programs
within OFLC's NPWC, eliminating SWAs' involvement in the process.\55\
In preparation for this transition, the Department issued new
Prevailing Wage Determination Policy Guidance for Nonagricultural
Immigration Programs (2009 Guidance).\56\ 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.
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\55\ 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).
\56\ 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 BLS 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.\57\ 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).\58\ 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.\59\ 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.
---------------------------------------------------------------------------

\57\ Id. at 1.
\58\ 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.
\59\ 2009 Guidance at 6.
---------------------------------------------------------------------------

II. Amendments To Adjust the Prevailing Wage Levels

A. Reasons for Adjusting the Prevailing Wage Levels

A primary purpose of the restrictions on immigration created by the
INA, both numerical and otherwise, is ``to preserve jobs for American
workers.'' \60\ 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.\61\ For the reasons
set forth below, the Department has determined that the way it
currently regulates 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 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 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.
---------------------------------------------------------------------------

\60\ Sure-Tan, Inc. v. N.L.R.B., 467 U.S. 883, 893 (1984).
\61\ 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.\62\ These protections were primarily designed ``to prevent
displacement of the American workforce'' by foreign labor.\63\ 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.'' \64\ 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 the enactment of IMMACT 90 and when
making subsequent changes to the H-1B program.\65\
---------------------------------------------------------------------------

\62\ 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).
\63\ Cyberworld Enter. Techs., Inc. v. Napolitano, 602 F.3d 189,
199 (3d Cir. 2010).
\64\ Caremax Inc v. Holder, 40 F. Supp. 3d 1182, 1187 (N.D. Cal.
2014).
\65\ 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.\66\ 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.'' \67\ 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.\68\
---------------------------------------------------------------------------

\66\ 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.'').
\67\ 8 U.S.C. 1182(n)(1)(A).
\68\ 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.'').

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

[[Page 63877]]

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 programs. Through the PERM
programs, 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.'' \69\
---------------------------------------------------------------------------

\69\ 8 U.S.C. 1182(a)(5)(A)(i).
---------------------------------------------------------------------------

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.\70\ In this
way, similar to its role in the H-1B program, the prevailing wage
requirement in the PERM programs furthers the statute's purpose of
protecting the interests of, and preserving job opportunities for
American workers.\71\ Effectuating this purpose is the principle
objective of the Department's regulatory scheme in the PERM
programs.\72\
---------------------------------------------------------------------------

\70\ 20 CFR 656.10(c)(1).
\71\ 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.' '').
\72\ 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 a full explanation
or economic justification for the way it currently calculates the
prevailing wage levels it uses in these foreign labor programs.\73\ The
INA requires that a government survey employed to determine the
prevailing wage provide wage levels commensurate with experience,
education, and level of supervision. However, it is clear that the
Department's current wage levels are not sufficiently set in accordance
with the relevant statutory factors. 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
need to fix this problem and ensure the wage levels are set in a manner
consistent with the INA is especially pressing now, given the elevated
unemployment and economic dislocation for U.S. workers caused by the
COVID-19 pandemic. 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.
---------------------------------------------------------------------------

\73\ 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 . . .'').
---------------------------------------------------------------------------

1. The Relationship Between the Prevailing Wage Levels, the OES Survey,
and the Statutory Framework Governing the Department's Foreign Labor
Programs
As noted, 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.'' \74\ 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.'' \75\ If an existing government survey produces only
two levels, the statute provides a formula to calculate two
intermediate levels.\76\ 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 differently, 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; and 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

[[Page 63878]]

hiring temporary foreign workers.'' \77\ 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.
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\74\ 8 U.S.C. 1182(n)(1)(A).
\75\ 8 U.S.C. 1182(p)(4).
\76\ Id.
\77\ 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).
---------------------------------------------------------------------------

To set an appropriate prevailing wage for an H-1B worker in a given
occupation, it is therefore appropriate to identify what types of U.S.
workers in the occupation have comparable levels of education,
experience, and responsibility to H-1B workers. To answer this
question, the place to start is the INA itself, which sets the minimum
qualifications an alien must have to obtain an H-1B visa. 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
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.\78\ 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.
---------------------------------------------------------------------------

\78\ See Consolidated Appropriations Act, 2005, Public Law 108-
447, div. J, tit. IV, Sec. 423; 118 Stat. 2809 (Dec. 8, 2004).
---------------------------------------------------------------------------

A review of this statutory framework and its interplay with the BLS
OES survey data that the Department uses to calculate prevailing wages
demonstrates that, while the OES survey is the best source 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
and also demonstrates the existing wage levels' inconsistency with the
INA.
At the outset, the Department notes that much of its assessment of
how best to adjust the prevailing wage levels gives special attention
to the H-1B program. 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.\79\ This, in combination with the fact
that, as explained below, 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 focus on the H-1B program. Because the wage structure
governs, and, for reasons explained below, will continue to govern
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.\80\ 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 is meant to address where there is the greatest
danger to U.S. workers' wages--hence the added focus on the H-1B
program. For the same reasons, and as elaborated on below, the
Department's analysis focuses on those occupations in which the vast
majority of H-1B workers are employed.
---------------------------------------------------------------------------

\79\ 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.
\80\ 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 closely
linked to the PERM programs that are also covered by the Department's
wage structure. A very substantial majority of workers covered by PERM
labor certification applications are already working in the U.S. as H-
1B nonimmigrants, and there is significant overlap in the types of
occupations in which H-1B and PERM workers are employed.\81\ It is also
clear that H-1B status often serves as a pathway to employment-based
green card status for many foreign workers.\82\ The programs have thus
long been regulated in connection with one another.\83\ 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.
---------------------------------------------------------------------------

\81\ 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.
\82\ See Sadikshya Nepal, The Convoluted Pathway from H-1B to
Permanent Residency: A Primer, Bipartisan Policy Center (2020).
\83\ 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.''); Retention of EB-1, EB-2, and EB-3
Immigrant Workers and Program Improvements Affecting High-Skilled
Nonimmigrant Workers, 81 FR 82398 (November 18, 2016).
---------------------------------------------------------------------------

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.'' \84\ 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.'' \85\ 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

[[Page 63879]]

responsible positions relating to the specialty.'' \86\ 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.\87\ The Department's
regulations restate the statute's definition of specialty occupation
essentially verbatim.\88\
---------------------------------------------------------------------------

\84\ 8 U.S.C. 1101(a)(15)(H)(i)(b).
\85\ 8 U.S.C. 1184(i)(1).
\86\ 8 U.S.C. 1184(i)(2).
\87\ 8 CFR 214.2(h)(4)(iii)()(()((A) and C).
\88\ See 20 CFR 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.\89\ These aspects of
the definition play an important role in how the Department will use
data from the BLS OES survey to set appropriate prevailing wage levels.
---------------------------------------------------------------------------

\89\ 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 Department has long relied on OES data to establish prevailing
wage levels. That is because it 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. 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 1 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.\90\
---------------------------------------------------------------------------

\90\ Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3463 (Jan. 19, 2011).
---------------------------------------------------------------------------

Put simply, 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
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.
That said, 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'' \91\--the factors the INA requires the
Department to rely on in setting prevailing wage levels.\92\ Relatedly,
``there are factors in addition to skill level that can account for OES
wage variation for the same occupation and location.'' \93\ 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.\94\ 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.
---------------------------------------------------------------------------

\91\ Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, 80 FR 24146, 24155 (Apr. 29, 2015).
\92\ 8 U.S.C. 1182(p)(4).
\93\ Id. at 24159.
\94\ 8 U.S.C. 1182(n)(4)(A).
---------------------------------------------------------------------------

Similarly, the INA's definition of ``specialty occupation'' should
be accounted for in how the Department fits the OES survey into its
foreign labor programs. The 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.\95\ 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.
---------------------------------------------------------------------------

\95\ 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.\96\ 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.'' \97\ In other words, while common, a bachelor's degree-level
education, or its equivalent,

[[Page 63880]]

is not a prerequisite for working in the occupation. United States
Citizenship and Immigration Services (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.'' \98\ 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.\99\
---------------------------------------------------------------------------

\96\ 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.
\97\ Bureau of Labor Statistics, Occupational Outlook Handbook,
Computer Programmers, available at https://www.bls.gov/ooh/computer-and-information-technology/computer-programmers.htm.
\98\ See Innova Sols., Inc. v. Baran, 399 F. Supp. 3d 1004, 1015
(N.D. Cal. 2019).
\99\ 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.
---------------------------------------------------------------------------

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.\100\ USCIS has therefore concluded that the fact that an
individual works in that occupational classification does not
necessarily mean that he is working in a ``specialty occupation.''
\101\ 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.'' \102\ In other
words, if an occupation does not 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.\103\
---------------------------------------------------------------------------

\100\ 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.''
\101\ See Ajit Healthcare, 2014 WL 11412671, at 4.
\102\ Temporary Alien Workers Seeking Classification Under the
Immigration and Nationality Act, 56 FR 61111, 61113 (December 2,
1991) (emphasis added).
\103\ 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 \104\--provides
that such workers ``usually have a bachelor's degree in computer
science and strong computer programming skills.'' \105\ For Computer
Systems Analysts, which make up approximately 8.8 percent of all
certified LCAs,\106\ ``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.'' \107\ 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.\108\ 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.
---------------------------------------------------------------------------

\104\ 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.
\105\ Bureau of Labor Statistics, Occupational Outlook Handbook,
Software Developers, available at https://www.bls.gov/ooh/computer-and-information-technology/software-developers.htm.
\106\ 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.
\107\ 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.
\108\ 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

[[Page 63881]]

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.
This consideration also demonstrates the inconsistency of the
existing wage levels with the statutory and regulatory framework. As
noted above, the Department's first wage level is currently 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 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.'' \109\ As a worker's education and
skills increase, his wages are expected to as well.\110\ 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, the very bottom of
the wage distribution should be discounted in determining the
appropriate baseline along the OES wage distribution to establish the
entry-level wage under the four-tiered wage structure. Yet the existing
wage structure makes such workers a central component of the prevailing
wage calculation.\111\
---------------------------------------------------------------------------

\109\ Wage Methodology for the Temporary Non-Agricultural
Employment H-2B Program, Part 2, 78 FR 24047, 24051 (Apr. 24, 2013).
\110\ 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.
\111\ For example, the occupation of Software Developers, which
accounts for a large number of H-1B workers, does not, as explained
above, 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 directly contravenes the INA's requirement
that H-1B workers be paid wages commensurate with the wages paid to
U.S. workers with similar levels of education, experience, and
responsibility.
---------------------------------------------------------------------------

Similarly, the current 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.
The same reasons for discounting a portion of the workers at the
bottom of the OES wage distribution in order to compute appropriate
entry-level wages--because such workers are not similarly employed to
even the least skilled H-1B workers--also apply to the wages for the
EB-2 immigrant visa preference classification and the E-3 and H-1B1
nonimmigrant programs, for which the Department also uses the four-tier
prevailing wage structure.
The E-3 and H-1B1 visa classifications, like the H-1B
classification, have as a prerequisite for obtaining a visa that the
alien work in a specialty occupation.\112\ Thus those programs'
relation to the OES wage data is essentially identical to that of the
H-1B program.
---------------------------------------------------------------------------

\112\ See 8 U.S.C. 1184(i).
---------------------------------------------------------------------------

As for the EB-2 classification, the reasons for discounting the
lower end of the OES wage distribution for setting the baseline to
establish an entry-level wage for the classification are even more
apparent than they are for the specialty occupation programs. 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.'' \113\ USCIS regulations, in turn, define an ``advanced
degree'' means 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 is
customarily required by the specialty, the alien must have a United
States doctorate or a foreign equivalent degree.\114\
---------------------------------------------------------------------------

\113\ 8 U.S.C. 1153(b)(2)(A).
\114\ 8 CFR 204.5(k)(2).
---------------------------------------------------------------------------

The regulation goes on to define ``exceptional ability'' to mean
``a degree of expertise significantly above that ordinarily encountered
in the sciences, arts, or business.'' \115\
---------------------------------------------------------------------------

\115\ Id.
---------------------------------------------------------------------------

As is the case for H-1B nonimmigrants, the baseline, minimum
qualifications that an EB-2 immigrant must possess exceed the
educational and experiential requirements the OOH describes as
generally necessary to enter some of the most common SOC occupational
classifications in which EB-2 immigrants work. For example, the most
common occupation in which PERM labor certifications--of which
applications for EB-2 immigrants represent a substantial share--are
sought is Software Developers, which accounts for nearly 40 percent of
all approved PERM applications. As already noted, according to the OOH,
Software Developers ``usually have a bachelor's degree in computer
science and strong computer programming skills.'' \116\ A master's
degree, generally a prerequisite for receiving an EB-2 visa, is
therefore substantially above the typical, baseline qualifications
needed to work as a Software Developer. Similarly, a Software Developer
who satisfies the regulatory definition of ``exceptional ability''
would be, ipso facto, more highly skilled than the typical entry-level-
worker in that occupation. This pattern holds for most of the top
occupations into which PERM applications fall.\117\
---------------------------------------------------------------------------

\116\ Bureau of Labor Statistics, Occupational Outlook Handbook,
Software Developers, available at https://www.bls.gov/ooh/computer-and-information-technology/software-developers.htm.
\117\ See 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; Bureau of Labor Statistics,
Occupational Outlook Handbook, https://www.bls.gov/ooh/.
---------------------------------------------------------------------------

In sum, the eligibility criteria established by the INA for most of
the immigrant and nonimmigrant programs

[[Page 63882]]

to which the Department's prevailing wage levels apply set a higher
baseline for the minimum qualifications an alien must possess than the
minimum qualification requirements that exist for workers generally in
the most of the occupations in which these aliens most commonly work.
The H-1B, H-1B1, E-3, and EB-2 classifications are for workers with
specialized knowledge and skills and/or advanced degrees.\118\ Because
the INA requires that these workers be paid at least as much as U.S.
workers similarly employed--taking into account the experience,
education, and level of supervision of such workers--the prevailing
wage rates should be formulated based on the wages paid to U.S. workers
who similarly possess specialized knowledge and skills in their
occupations. Given that not every worker in a given OES occupation is
likely to meet that standard, and that workers at the lower end of the
wage distribution are also likely to be the workers with the lowest
levels of education and experience, the Department has determined it is
appropriate to discount the lower portion of the OES distribution in
setting the wage levels. The Department should instead identify where
within the distribution workers are to be found who possess the same
kinds of specialized education and experience possessed by aliens
working in the H-1B, H-1B1, E-3, and EB-2 classifications. The wages
paid to those U.S. workers can serve as the basis for appropriately
adjusting the prevailing wage levels to ensure the employment of
foreign workers does not adversely affect the wages and job
opportunities of U.S. workers.
---------------------------------------------------------------------------

\118\ The Department notes that its assessment of the
appropriateness of adjusting the prevailing wage levels in the
manner described by this rule with respect to the EB-3
classification is governed by distinct considerations, which are
described more fully below.
---------------------------------------------------------------------------

2. Adverse Effects of Current Prevailing Wage Levels
Beyond their inconsistency with the statutory scheme, the
Department has also evaluated evidence on how the existing prevailing
wage levels affect U.S. workers, and has concluded that the current
levels are harming the wages and job opportunities of U.S. workers, and
thus failing to serve the purposes of the INA's wage protections. This
is a separate and independent reason justifying the Department's
decision to adjust the existing levels. It also demonstrates that
whatever assumptions or analyses, left unarticulated, that may have
underlay the manner in which the current levels are set were seriously
flawed.
First, a number of studies indicate that many H-1B workers are
likely paid less than similarly employed U.S. workers in fields with
high H-1B utilization. Where the wages of foreign workers are lower
than those of U.S. workers, at least two harmful consequences to U.S.
workers are likely to follow. In particular, employers will, in some
instances, use H-1B workers to displace U.S. workers, and U.S. workers
will experience wage suppression. Anecdotal evidence and academic
research suggests that both consequences are being experienced by U.S.
workers because of the H-1B program, which further substantiates the
conclusion that wages for H-1B workers are, in some cases, materially
lower than they would be if the prevailing wage levels actually
resulted in H-1B wages commensurate with the wages paid to similarly
employed U.S. workers with comparable levels of education, experience,
and responsibility. Further demonstrating that the current prevailing
wage levels do not in many cases reflect market wage rates, data on the
actual wages paid by H-1B employers show that some firms do in fact pay
H-1B workers wages well above the prevailing wage rates generated
through application of the Department's four-tier wage structure. If
the prevailing wage levels were correctly approximating the wages
commanded by workers in the relevant labor markets, such significant
disparities between actual wages and the prevailing wage levels would
likely be less common. Such disparities also suggest that firms to
which the statute's actual wage clause does not apply can pay wages
well below what U.S. workers in the same labor market are paid. The
Department also considered various studies that suggest the employment
of H-1B workers has positive effects on the wages and job opportunities
of U.S. workers. While 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. Finally, the Department notes that the
evidence of the adverse effects of the existing prevailing wage levels
in the H-1B program also likely applies to the PERM programs.
To begin, a variety of studies and analyses demonstrate that the
current wage levels allow employers to pay H-1B workers wages far below
what their U.S. counterparts are paid.\119\ Most of these studies
compare median H-1B worker earnings in an occupation to median U.S.
worker earnings in the same occupation, without directly comparing
workers with the same levels of education, experience, and
responsibility. To some extent this limits the conclusions that can be
drawn from the comparison. That being said, if H-1B workers were truly
being used as a supplement to the U.S. workforce, then the wages H-1B
workers typically earn would likely not be significantly lower than the
wages of U.S. workers in these occupations. Indeed, because 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.
---------------------------------------------------------------------------

\119\ See, e.g., 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).
---------------------------------------------------------------------------

Studies on the subject often focus on the wages paid to H-1B
workers in computer-related occupations, in which nearly two-thirds of
all H-1B workers are employed.\120\ According to some estimates, H-1B
employees in information technology (IT) occupations earn wages that
are about 25 percent to 33 percent less than U.S. workers' wages, a gap
that appears to have persisted for more than two decades.\121\

[[Page 63883]]

Another analysis estimates that H-1B employees in computer science
occupations earn 9 percent less than U.S. workers.\122\ Although the
precise findings of wage differences are not uniform, the results
generally show meaningful wage differences in fields with high
proportions of H-1B workers. Notably, as would be expected, the same
phenomenon of markedly lower wages for H-1B workers are generally not
found in fields with lower proportions of H-1B workers.\123\
---------------------------------------------------------------------------

\120\ 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, (showing 66 percent of H-1B petitions
approved in FY2019 were for computer-related occupations).
\121\ 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).
\122\ 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.
\123\ See, e.g., American Immigration Council, The H-1B Visa
Program: A Primer on the Program and Its Impact on Jobs, Wages, and
the Economy (2020), available at https://www.americanimmigrationcouncil.org/sites/default/files/research/the_h-1b_visa_program_a_primer_on_the_program_and_its_impact_on_jobs_wages_and_the_economy.pdf; National Foundation for American Policy, H-1B
Visas by the Numbers: 2017-18, (2018), available at https://nfap.com/wp-content/uploads/2018/04/H-1B-Visas-By-The-Number-FY-2017.NFAP-Policy-Brief.April-2018.pdf.
---------------------------------------------------------------------------

One negative consequence that would be expected to occur if H-1B
workers could be paid less than their U.S. counterparts is that some
employers would use H-1B workers as a low-cost labor alternative to
displace U.S. workers--a result at odds with the purpose of the
statutory scheme. A significant body of research on how H-1B workers
are used by some firms suggests that is exactly what is occurring.\124\
Anecdotal evidence also demonstrates that H-1B workers are used as a
low-cost alternative to U.S. workers doing similar jobs. Media accounts
of U.S. workers being required to train their H-1B replacements
abound.\125\ In these cases, evidence that U.S. workers were required
to train their foreign replacements calls into question the rationale
for bringing in H-1B workers to fill the respective skilled positions
given that the positions were already filled. One likely motivation for
the replacement of U.S. workers with H-1B workers in these cases is
cost savings, as detailed in the reporting on the topic. When that is
the case, the displacement of U.S. workers by H-1B workers provides
further evidence that the current prevailing wage levels are set
materially below what similarly employed U.S. workers earn. If
prevailing wages were placed at the appropriate levels, the incentive
to prefer H-1B workers over U.S. workers would be significantly
diminished, and the practice of replacing U.S. workers with H-1B
workers would likely not be as prevalent as the reporting suggests it
is.
---------------------------------------------------------------------------

\124\ See, e.g., John Miano, Studies, Wages and Skill Levels for
H-1B Computer Workers, 2005 Low Salaries for Low Skills, Center for
Immigration Studies, (2007), available at https://cis.org/Report/Wages-and-Skill-Levels-H1B-Computer-Workers-2005; Patrick Thibodeau
& Sharon Machlis, U.S. law allows low H-1B wages; just look at
Apple, Computerworld, May 15, 2017, available at https://www.computerworld.com/article/3195957/us-law-allows-low-h-1b-wages-just-look-at-apple.html; Park, Haeyoun, ``How Outsourcing Companies
Are Gaming the Visa System,'' The New York Times, November 10, 2015,
https://www.nytimes.com/interactive/2015/11/06/us/outsourcing-companies-dominate-h1b-visas.html; National Research Council,
Building a Workforce for the Information Economy, (2001), available
at https://www.nap.edu/catalog/9830/building-a-workforce-for-the-information-economy.
\125\ ``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, September 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,
February 5, 2017, available at https://www.nytimes.com/2017/02/05/business/h-1b-visa-tech-cheers-for-foreign-workers.html.
---------------------------------------------------------------------------

Another likely harmful consequence for U.S. workers in cases where
H-1B workers can be paid below what comparable workers in the same
labor market are paid is wage suppression. Academic research indicates
that the influx of low-cost foreign labor into a labor market
suppresses wages, and this effect increases significantly as the number
of foreign workers increases.\126\ In particular, some research
suggests that a substantial increase in the labor supply due to the
presence of foreign workers reduces the wages of the average U.S.
worker by 3.2 percent, a rate that grew to 4.9 percent for college
graduates.\127\ More generally, though the economics literature is
mixed on the effects of higher-skilled foreign workers on overall job
creation, economic theory dictates that increasing the supply of
something above similar demand growth lowers prices. As a result, while
employing foreign workers at wages lower than their U.S. counterparts
may increase firms' profitability, a result that is not surprising if
current prevailing wage levels allow firms to replace domestic workers
with lower-cost foreign workers, such a practice also results in lower
overall wages, particularly in occupations where there are high
concentrations of foreign workers. A significant body of research
demonstrates that this phenomenon is likely occurring in the H-1B
program.
---------------------------------------------------------------------------

\126\ George Borjas, Immigration Economics (2014). Borjas's
research generally focuses on low-skilled immigrant labor, but the
basic economic conclusions his research draws, principally that
increases in labor supply lower wages, are applicable outside of the
context of low skilled immigration.
\127\ 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.
---------------------------------------------------------------------------

For starters, H-1B workers make up about 10 percent of the IT labor
force in the U.S.\128\ In certain fields, including Software
Developers, Applications (approximately 22 percent); Statisticians
(approximately 22 percent); Computer Occupations, all other
(approximately 18 percent); and Computer Systems Analysts
(approximately 12 percent), H-1B workers likely make up an even higher
percentage of the overall workforce.\129\ This high prevalence of H-1B
workers in these fields far exceeds the supply increase in the research
described above that found substantial increases in the labor supply
lower U.S. workers' earnings.\130\
---------------------------------------------------------------------------

\128\ 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 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.
\129\ These findings come from an analysis of data on H-1B
beneficiaries in FY19 from the United States Citizenship and
Immigration Services and the 2017 Occupational Employment Statistics
survey from the Bureau of Labor Statistics.
\130\ 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 (2003), pp. 1335-
1374, available at https://www.jstor.org/stable/25053941?seq=1.
---------------------------------------------------------------------------

One study compared winning and losing firms in the FY2006 and
FY2007 lotteries for H-1B visas by matching administrative data on
these lotteries to

[[Page 63884]]

administrative tax data on U.S. firms.\131\ The study found that
winning additional H-1B visas causes at most a moderate increase in
firms' overall employment that does not usually exceed the number of H-
1B workers hired, meaning that H-1Bs workers essentially crowd out
firms' employment of other workers. It also found evidence that
additional H-1B workers lead to lower average employee earnings and
higher firm profits.\132\ On the whole, the study concluded that the
current results of the H-1B program run counter to the program's
purpose, which is to allow for a limited number of workers with
specialized skills to work in the U.S. while ensuring that U.S.
workers' wages are not adversely affected.
---------------------------------------------------------------------------

\131\ Kirk Doran et al., The Effects of High-Skilled Immigration
Policy on Firms: Evidence from Visa Lotteries, (2016), available at
https://gspp.berkeley.edu/assets/uploads/research/pdf/h1b.pdf.
\132\ Supporting the argument that H-1B dependence increases
firms' profit margins is evidence showing that firms that rely on H-
1Bs can generate net profit margins of 20 percent to 25 percent in a
sector. Normal expected margins are 6 percent to 8 percent. See
Immigration Reforms Needed to Protect Skilled American Workers:
Hearing before the Senate Committee on the Judiciary (March 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/Hira%20Testimony.pdf.
---------------------------------------------------------------------------

Similarly, other studies have found that an influx of foreign
computer science workers suppresses wages for computer science workers
across the board.\133\ These lower wages crowd out U.S. workers into
non-computer science-based fields. In particular, the findings of these
studies ``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.'' \134\
---------------------------------------------------------------------------

\133\ 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. Additionally,
some argue that H-1B visas are in such high demand because it is
often cheaper to hire an H-1B employee than an American worker. 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.
Furthermore some studies show that heavy users of H-1Bs workers pay
their workers less than the median wages for the jobs they fill.
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/.
\134\ 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 authors
find that, in the absence of high-skilled immigrants (mostly H-1B
workers), wages for U.S. computer scientists would have been 2.6
percent to 5.1 percent higher and employment in computer science for
U.S. workers would have been 6.1 percent to 10.8 percent higher in
2001.
---------------------------------------------------------------------------

Other sources dispute the conclusion that existing prevailing wage
levels disadvantage U.S. workers.\135\ The Department acknowledges that
H-1B workers can and do, in many instances, earn the same or more than
similarly employed U.S. workers. However, the evidence described above
appears to contradict that this claim is universal across firms and
industries. The Department in its expertise views the studies, data,
testimony, and anecdotal evidence showing displacement and lowered
wages for U.S. workers in many cases as sufficient to demonstrate that
the H-1B prevailing-wage levels are in need of reform, even if in other
instances some firms do in fact pay H-1B workers wages comparable to
those of U.S. workers.
---------------------------------------------------------------------------

\135\ See, e.g., David Bier, 100% of H-1B Employers Offer
Average Market Wages--78% Offer More, Cato Institute, (2020),
available at https://www.cato.org/blog/100-h-1b-employers-offer-
average-market-wages-78-offer-more#:~:text=2020%209%3A37AM-
,100%25%20of%20H%2D1B%20Employers%20Offer%20Average,Market%20Wages%E2
%80%9478%25%20Offer%20More&text=The%20Economic%20Policy%20Institute%2
0(EPI,foreign%20workers%20in%20specialty%20occupations;Robert
Atkinson, H-1B Visa Workers: Lower-Wage Substitute, or Higher-Wage
Complement?, Information Technology & Innovation Foundation, (2010),
available at https://itif.org/publications/2010/06/10/h-1b-visa-workers-lower-wage-substitute-or-higher-wage-complement.
---------------------------------------------------------------------------

Relatedly, some sources suggest that attracting foreign workers
with specific, in-demand skills helps firms innovate and expand,
driving growth and higher overall job creation, which in turn leads to
more work opportunities for U.S. workers.\136\ The Department does not
dispute 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. However, H-1B workers' earnings data and
other research indicate that, in many cases, the existing wage levels
do not lead to these outcomes.\137\ Even though some employers pay H-1B
workers at rates comparable to what their U.S. counterparts are paid,
that does not change the conclusion that the existing prevailing wage
levels set a wage floor substantially below what similarly employed
U.S. workers make in many instances, which allows some firms to use H-
1B workers as a low-cost alternative to U.S. workers. And regardless,
while the Department is certainly in favor of measures that increase
economic growth and job creation, such outcomes are not the immediate
objectives of the INA's wage protections, and, in any event, must be
achieved in a manner consistent with the statute, which here requires
the Department to focus on ensuring that the H-1B program does not
impair wages and job opportunities of U.S. workers similarly employed.
In short, the fact that some firms use the program as intended and pay
H-1B workers the same or higher rates than similarly employed U.S.
workers does not reduce the Department's need to act to ensure that
this practice becomes more common, lessening the harms to U.S. workers
caused by the existing prevailing wage levels.
---------------------------------------------------------------------------

\136\ See American Immigration Council, The H-1B Visa Program: A
Primer on the Program and Its Impact on Jobs, Wages, and the
Economy, (2020), available at https://www.americanimmigrationcouncil.org/sites/default/files/research/the_h-1b_visa_program_a_primer_on_the_program_and_its_impact_on_jobs_wages_and_the_economy.pdf; National Foundation for American Policy, H-1B
Visas by the Numbers: 2017-18, (2018), available at https://nfap.com/wp-content/uploads/2018/04/H-1B-Visas-By-The-Number-FY-2017.NFAP-Policy-Brief.April-2018.pdf.
\137\ See, e.g., Sarah Pierce and Julia Gelatt, Evolution of the
H-1B: Latest Trends in a Program on the Brink of Reform, Migration
Policy Institute, (2018), available at https://www.migrationpolicy.org/research/evolution-h-1b-latest-trends-program-brink-reform; Center for Immigration Studies, H-1Bs: Still
Not the Best and Brightest, (2008), available at https://cis.org/Report/H1Bs-Still-Not-Best-and-Brightest.
---------------------------------------------------------------------------

Furthermore, given the annual numerical cap on some H-1B workers, a
level that is frequently exceeded by the number of petitions each year,
raising the prevailing wage levels to more accurately reflect what U.S.
workers with levels of education, experience, and responsibility
comparable to H-1B workers are paid should lead to more highly skilled
H-1B nonimmigrants entering the U.S. labor market, and thus enhance the
benefits of the program for U.S. workers identified by some studies.
This is because, if firms are required to pay H-1B workers wages that
accurately reflect what their U.S. counterparts earn, the firms would
be more likely to sponsor foreign workers whose value exceeds this
increased compensation. Given that workers' compensation tends to
reflect the value provided from skills demanded by a firm, higher
compensation should lead to workers with more specialized knowledge and
expertise receiving the limited number of H-1B visas. Because this
change in H-1B worker composition would limit applications to those
with the skills necessary to command higher compensation, it would
likely increase innovation and economic growth.

[[Page 63885]]

Some also argue that the presence of H-1B workers, even those with
wages lower than similarly employed U.S. workers, raises income for
U.S. workers because in some fields there is an apparent shortage of
U.S. Science, Technology, Engineering, and Math (STEM) workers.\138\ If
there are no available U.S. workers to fill a position, then a firm's
labor need goes unmet without substantial investment in worker
recruitment and training. Accordingly, importing needed workers allows
companies to innovate and grow, creating more work opportunities and
higher-paying jobs for U.S. workers.
---------------------------------------------------------------------------

\138\ See, e.g., The Border Security, Economic Opportunity, and
Immigration Modernization Act, S. 744: Hearing before the Senate
Committee on the Judiciary (April 22, 2013) (testimony of Brad
Smith, General Counsel of Microsoft), available at https://www.judiciary.senate.gov/imo/media/doc/04-22-13BradSmithTestimony.pdf.
---------------------------------------------------------------------------

While there are usually fewer U.S. graduates in STEM fields than
there are open positions in the fields, this simple observation tends
to ignore key characteristics of STEM workers, especially those in IT.
As some researchers have noted, in recent years, for every two students
who graduate from a U.S. university with a STEM degree, only one is
hired into a STEM job.\139\ This finding, along with other research on
U.S. workers' skills,\140\ calls into question, in some cases, the
scarcity of U.S. STEM workers that some claim drive employers' use of
H-1B workers.\141\
---------------------------------------------------------------------------

\139\ Questions for the Record submitted by Ronil Hira,
Associate Professor of Public Policy Rochester Institute of
Technology, Rochester, NY, to the Senate Judiciary Committee, April
2013, https://www.judiciary.senate.gov/imo/media/doc/042213QFRs-Hira.pdf.
\140\ The Bureau of Labor Statistics studied the STEM skills gap
and found varied results depending on geography, field, and other
factors. Though some fields clearly face a shortage of qualified
workers, this shortage is far from universal. See Yi Xue & Richard
C. Larson, STEM crisis or STEM surplus? Yes and yes, Monthly Labor
Review, U.S. Bureau of Labor Statistics, (2015), available at
https://doi.org/10.21916/mlr.2015.14.
\141\ Benedikt Herz & Thijs van Rens, Accounting for Mismatch
Unemployment, IZA, Discussion Paper No. 8884 (2015), available at
http://ftp.iza.org/dp8884.pdf; Thijs van Rens, The Skills Gap: Is it
a myth? Social Market Foundation and Competitive Advantage in the
Global Economy, (2015), available at http://www.smf.co.uk/wp-content/uploads/2015/12/SMF-CAGE-Policy-Briefing-Skills-Gap-Myth-Final.pdf.
---------------------------------------------------------------------------

As noted above, there are high concentrations of H-1B workers in
many STEM-related fields. The high number of H-1B workers in fields for
which U.S. workers study but in which they either choose not to work or
cannot find jobs suggests that H-1B workers are not being used where no
domestic workers can be found for the market rate, but rather are being
used to fill jobs with workers paid below the market rate.\142\
Further, while the wage effects from a lower cost labor alternative may
be minimal where the alternative only makes up a very small share of
the labor pool, the effects can become negative and more pronounced as
concentrations of foreign workers increase.\143\ Thus, the fact that 10
percent of the IT workforce consists of H-1B workers, in combination
with the fact that many U.S. IT graduates do not work in IT jobs,
supports the notion that firms use H-1B workers as low-cost labor, and
that this practice likely has a substantial harmful effect on U.S.
workers. Moreover, insofar as the H-1B program suppresses wages for
U.S. IT workers, it discourages U.S. students from entering the IT
field in the first place, thus perpetuating the ``skills gap.'' Basic
economic theory dictates that more U.S. students would likely enter the
IT field if IT jobs paid more.
---------------------------------------------------------------------------

\142\ Benedikt Herz & Thijs van Rens, Accounting for Mismatch
Unemployment, IZA, Discussion Paper No. 8884 (2015), available at
http://ftp.iza.org/dp8884.pdf; Thijs van Rens, The Skills Gap: Is it
a myth?, Social Market Foundation and Competitive Advantage in the
Global Economy, (2015), available at http://www.smf.co.uk/wp-content/uploads/2015/12/SMF-CAGE-Policy-Briefing-Skills-Gap-Myth-Final.pdf.
\143\ 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 (2003), pp. 1335-
1374, available at https://www.jstor.org/stable/25053941?seq=1.
---------------------------------------------------------------------------

In short, contrary to the H-1B program's goals, prevailing wage
levels that in many instances do not accurately reflect earning levels
of comparable U.S. workers have permitted some firms to displace rather
than supplement U.S. workers with H-1B workers. While allowing firms to
access high-skilled workers to fill specialized positions can help U.S.
workers' job opportunities in some instances, the benefits of this
policy diminish significantly when the prevailing wage levels do not
accurately reflect the wages of similarly employed workers in the U.S.
labor market. The resulting distortions from a poor calculation of the
prevailing wage allow some firms to replace qualified U.S. workers with
lower-cost foreign workers, which is counter to the purpose of the
INA's wage protections, and also lead to wage suppression for those
U.S. workers who remain employed.
That the existing prevailing wage levels likely do not reflect
actual market wage rates in many cases is further demonstrated by the
fact that some firms already pay wages to their H-1B workers that are
well above the applicable prevailing wage level. For example,
Microsoft's General Counsel testified before the Senate Judiciary
Committee in 2013 that at the company's headquarters, software
development engineers had a starting salary that was typically more
than 36 percent above the Level I wage, meaning they were being paid
wages slightly above the Department's Level III wage at that time.\144\
More recently, in Q3:2020, the Department's data show that many of the
largest users of the H-1B program pay in many cases wages well over 20
percent in excess of the prevailing wage rate set by the Department for
the workers in question.\145\ Table 2 below shows this trend with
respect to top H-1B employers.
---------------------------------------------------------------------------

\144\ See, e.g., The Border Security, Economic Opportunity, and
Immigration Modernization Act, S. 744: Hearing before the Senate
Committee on the Judiciary (April 22, 2013) (testimony of Brad
Smith, General Counsel of Microsoft), available at https://www.judiciary.senate.gov/imo/media/doc/04-22-13BradSmithTestimony.pdf.
\145\ ``Top 20 LCA/H-1B Employers based on Certifications, as of
6/30/2020,'' Employment and Training Administration, accessed August
2020.

Table 1--Top 20 H-1B Employers by LCAs Filed: Average Rate at Which the Wage Offered Exceeds the Prevailing Wage
----------------------------------------------------------------------------------------------------------------
Percentage of
worker
Average rate positions
Total LCAs at which the where wage
Top employers filed/worker wage offered offered
positions exceeds exceeds
requested prevailing prevailing
wage (percent) wage by over
20 percent
----------------------------------------------------------------------------------------------------------------
Qualcomm Technologies, Inc...................................... 701/38,533 5.74 9.70

[[Page 63886]]

Infosys Limited................................................. 7,615/21,627 6.53 11.08
Cognizant Technology Solutions US Corp.......................... 20,192/20,192 0.24 0.32
Deloitte Consulting, LLP........................................ 7,316/16,567 61.62 44.16
Amazon.com Services, LLC........................................ 9,175/12,560 93.93 68.38
Oracle America, Inc............................................. 543/12,269 0.48 0.55
Tata Consultancy Services Limited............................... 8,595/9,388 2.95 4.90
Zensar Technologies, Inc........................................ 130/9,207 1.03 0.77
NVIDIA Corporation.............................................. 396/8,977 4.69 8.33
Google, LLC..................................................... 8,669/8,669 71.73 58.60
Ernst & Young U.S., LLP......................................... 8,170/8,170 88.59 71.79
Facebook, Inc................................................... 3,583/7,674 24.71 47.92
Cisco Systems, Inc.............................................. 925/7,121 8.88 16.65
Qualcomm Atheros, Inc........................................... 115/7,110 6.05 15.65
Apple, Inc...................................................... 2,983/6,889 117.89 61.25
Microsoft Corporation........................................... 6,544/6,631 31.48 68.61
Western Digital Technologies, Inc............................... 267/6,621 12.30 21.72
ServiceNow, Inc................................................. 359/6,383 0.00 0.00
Computer Sciences Corporation................................... 231/6,034 0.44 1.30
Kforce, Inc..................................................... 584/5,786 1.16 1.71
-----------------------------------------------
Percent of National LCA/H-1B Totals......................... 19.2%/31.6% .............. ..............
Simple Average for the Top 20............................... .............. 27.02 25.67
----------------------------------------------------------------------------------------------------------------
Source: ``Top 20 LCA/H-1B Employers based on Certifications, as of 6/30/2020,'' Employment and Training
Administration, accessed August 2020.

If the Department's current prevailing wage levels accurately
reflected earnings for similarly employed U.S. workers, then these
major differences between actual wages paid to some H-1B workers and
the otherwise applicable prevailing wage levels would not be as common.
As noted previously, 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 possible wage rates generally
should approximate the going 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
a given 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 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.
In the PERM programs, recent Employment and Training Administration
data shows that the heaviest users of the programs also typically pay
wages well above the prevailing wage levels. Whereas the simple average
of the top 20 employers' wage offers over the prevailing wage is 27.02
percent for H-1B, it is 16.77 percent for PERM. And while the simple
average of cases with wages more than 20 percent above the prevailing
wage is 25.67 percent for H-1B, it is 30.59 percent for PERM, as shown
in Table 3.\146\
---------------------------------------------------------------------------

\146\ ``Top 20 LCA/H-1B Employers based on Certifications, as of
6/30/2020,'' Employment and Training Administration, accessed August
2020; ``Top 20 PERM Employers based on Certifications, as of 6/30/
2020,'' Employment and Training Administration, accessed August
2020.

[[Page 63887]]

Table 2--Top 20 PERM Employers Average of Wage Offered Over Prevailing Wage
----------------------------------------------------------------------------------------------------------------
PERM employers
-----------------------------------------------------------------------------------------------------------------
Percentage of
Average rate certified
at which the cases where
Total wage offered wage offered
Top twenty employers applications exceeds exceeds
certified prevailing prevailing
wage (percent) wage by over
20 percent
----------------------------------------------------------------------------------------------------------------
Amazon.com Services, Inc........................................ 2,389 3.27 6.86
Google LLC...................................................... 2,167 19.50 34.06
Facebook, Inc................................................... 1,204 40.57 68.11
Microsoft Corporation........................................... 1,114 27.71 48.56
Intel Corporation............................................... 939 2.08 2.88
Tata Consultancy Services Limited............................... 923 0.00 0.00
Cognizant Technology Solutions US Corporation................... 808 0.00 0.00
Apple, Inc...................................................... 697 37.85 69.30
HCL America, Inc................................................ 557 0.01 0.00
Capgemini America, Inc.......................................... 502 6.12 7.97
Ernst Young U.S. LLP............................................ 426 13.71 27.00
Cisco Systems................................................... 325 9.95 19.69
Amazon Web Services, Inc........................................ 316 2.81 5.70
Deloitte Consulting LLP......................................... 303 39.29 67.99
LinkedIn Corporation............................................ 282 40.74 72.34
Nvidia Corporation.............................................. 276 26.53 56.16
Salesforce.com.................................................. 265 32.72 67.17
Oracle America, Inc............................................. 263 14.96 28.52
VMWare, Inc..................................................... 258 12.43 21.71
Qualcomm Technologies........................................... 254 5.18 7.87
-----------------------------------------------
Percent of National PERM Totals............................. 21.6% .............. ..............
Simple Average for the Top 20............................... .............. 16.77 30.59
----------------------------------------------------------------------------------------------------------------
Source: ``Top 20 PERM Employers based on Certifications, as of 6/30/2020,'' Employment and Training
Administration, accessed August 2020.

Beyond the similarities between wages offered above the prevailing
wage levels in the H-1B and PERM programs, the Department notes that
the volume of research and literature on the wage effects of the PERM
programs is scant compared to that on the wage effects of the H-1B
program. That said, there are reasonable grounds to conclude that
adverse wage effects similar to those found in the H-1B program are
also caused in some instances by the employment of EB-2 and EB-3
immigrants.
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.\147\ 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.\148\ 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.\149\ 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.\150\ 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.\151\
---------------------------------------------------------------------------

\147\ dePape v. Trinity Health Sys., Inc., 242 F. Supp. 2d 585,
593 (N.D. Iowa 2003).
\148\ 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.'').
\149\ U.S. Citizenship and Immigration Services, H-1B
Authorized-to-Work Population Estimate (2020).
\150\ 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.
\151\ 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 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, be exempt from the
6-year period of authorized admission limitation if certain
requirements are

[[Page 63888]]

met.\152\ 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.\153\
---------------------------------------------------------------------------

\152\ See Public Law 107-273, 11030A(a), 116 Stat. 1836 (2002).
\153\ 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 in H-1B status.\154\ 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.\155\
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\154\ See Congressional Research Service, The Employment-Based
Immigration Backlog (2020).
\155\ See 8 U.S.C. 1152(a)(2); Abigail Hauslohner, The
employment green card backlog tops 800,000, most of them Indian. A
solution is elusive, Washington Post (December 17, 2019), available
at https://www.washingtonpost.com/immigration/the-employment-green-card-backlog-tops-800000-most-of-them-indian-a-solution-is-elusive/2019/12/17/55def1da-072f-11ea-8292-c46ee8cb3dce_story.html; 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 an immense demographic overlap between the
H-1B and PERM programs. For instance, 71.7 percent of all H-1B
petitions approved in FY2019 were for individuals born in India.\156\
Similarly, the vast majority of individuals waiting for adjudication of
EB-2- and EB-3-based adjustment of status applications are Indian
nationals.\157\ 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.
---------------------------------------------------------------------------

\156\ 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).
\157\ Congressional Research Service, The Employment-Based
Immigration Backlog (2020).
---------------------------------------------------------------------------

The upshot is that the H-1B and PERM programs are, in a variety of
ways, inextricably conjoined. The rules governing them 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 their wages are set based on the same methodology. It is
therefore a reasonable inference that evidence that the Department's
current wage levels under the four-tier structure result in
inappropriately low wage rates in some instances for H-1B workers also
holds true for the PERM programs.
3. Identifying the Appropriate Entry Level Wage
Having determined that the existing wage levels are not set based
on the wages paid to U.S. workers with the education, experience, and
levels of supervision comparable to those of similarly employed foreign
workers and are likely harming the wages and job opportunities of U.S.
workers, the Department must assess how the wage levels should be
adjusted. 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 is 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.
For the reasons explained above, the Department has determined
BLS's OES survey remains the best source of wage data to determine
prevailing wages in the H-1B, H-1B1, E-3, and PERM programs. However,
because the OES survey does not capture the actual skills or
responsibilities of the workers whose wages are being reported, it is
appropriate for the Department to rely on data outside the OES survey
to establish the wage levels applicable to these immigrant and
nonimmigrant visa programs, which encompass varying populations working
in hundreds of different occupational classifications. The Department
has therefore undertaken a comprehensive analysis concerning the types
of U.S. workers in the most common occupations in the programs that
have comparable levels of education, experience, and responsibility to
the foreign workers in these programs, and estimated how much those
U.S. workers earn. To identify the proper comparators, the Department
looked not only to the INA itself, which sets the minimum
qualifications foreign workers in the H-1B, H-1B1, and E-3 programs
must have to qualify for these visas, but, in order to draw a more
accurate comparison, demographic data about the types of workers who
actually work in the programs as well.
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 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 acute. To make this determination, the Department
has identified what it considers to be an analytically appropriate
proxy for approved entry-level workers for the specialty occupation and
EB-2 programs; consulted various, authoritative sources to determine
what similarly qualified workers in the U.S. who fit this profile are
paid; and identified where within the OES wage distribution these U.S.
workers' wages fall. That point in the distribution, which the
Department has estimated to be at approximately the 45th percentile,
serves as the appropriate entry-level wage for purposes of the
Department's four-tier wage structure.
In order to reach this estimate, the Department first identified an
analytically usable definition of the prototypical entry-level H-1B and
EB-2 workers. More specifically, the Department identified the
education and experience typically possessed by such workers, which, in
turn, was used to identify the wages paid to U.S. workers with similar
levels of

[[Page 63889]]

experience and education. Looking to the wages of such U.S. workers to
adjust the entry-level wage paid to foreign workers is highly
consistent with the statutory scheme.
After consulting the statutory criteria for who qualifies for the
relevant visa classifications, as well as the demographic
characteristics of actual H-1B nonimmigrants, the Department has
determined that an individual with a master's degree and little-to-no
work experience is the appropriate comparator for entry-level workers
in the Department's PERM and specialty occupation programs for purposes
of estimating the percentile at which such workers' wages fall within
the OES wage distribution.
To begin with, the statutory criteria for who can qualify as an EB-
2 worker provides 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.\158\
Possession of an advanced degree is thus a meaningful baseline with
which to describe entry-level workers in the EB-2 classification.
---------------------------------------------------------------------------

\158\ 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 above, 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.\159\ 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.\160\ Further, the statute requires that the individual be
working in a job that requires that application of ``highly specialized
knowledge.'' \161\ Again, this means that for the H-1B program the
possession of a 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.
---------------------------------------------------------------------------

\159\ 8 U.S.C. 1184(i).
\160\ See Chung Song Ja Corp. v. U.S. Citizenship & Immigration
Servs., 96 F. Supp. 3d 1191, 1197-98 (W.D. Wash. 2015).
\161\ 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. This is because, 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.
Further, the demographic characteristics of H-1B workers suggests
that many entry-level workers in the program are master's degree
holders with limited work experience. 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.\162\ 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.\163\ 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.\164\
---------------------------------------------------------------------------

\162\ 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.
\163\ This analysis is based on data from U.S. Citizenship and
Immigration Services about the demographic characteristics of H-1B
workers.
\164\ 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.\165\
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.
---------------------------------------------------------------------------

\165\ 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.
---------------------------------------------------------------------------

The Department notes that its description of individuals with
master's degrees and little-to-no work experience as appropriate
comparators for entry-level workers in the Department's foreign labor
programs for purposes of setting the proper Level I wage is not
inconsistent with how the Department makes prevailing wage
determinations under its 2009 Guidance. Many job opportunities that
result in a Level I wage determination of course do not require a
master's degree as the minimum qualification for the position. The
Department is not changing that aspect of its guidance. Rather, the
Department has decided, for the reasons given above, to rely on
master's degree holders as an analytically useable proxy for the types
of workers who actually fill many entry-level positions in the H-1B and
PERM programs and who likely satisfy the key, baseline statutory
qualification requirements for entry into the programs--namely the
possession of specialized knowledge or an advanced degree--in order to
identify where the first of four levels should fall along the OES wage
distribution. This reflects how employers actually fill jobs for which
workers are sought, not necessarily how job descriptions are used to
assign wage levels for each individual job opportunity to provide a
prevailing wage determination at the

[[Page 63890]]

beginning of the labor certification process, which often occurs before
the identity and actual qualifications of the worker who will fill the
position are known. Giving some weight to the actual characteristics of
entry-level workers in the programs furthers the purpose of the
statute, which is designed to ensure that foreign workers make at least
as much as similarly employed U.S. workers with comparable levels of
education, experience, and responsibility.
Further, practice in the H-1B program shows that a significant
number of H-1B workers are placed at the first wage level, which
demonstrates that the Department's focus on specialty occupation
requirements in setting an entry-level wage is also consistent with how
workers are presently classified for prevailing wage purposes under the
2009 Guidance. In FY2019, 14.4 percent of all worker positions on LCAs
were for entry-level positions. This cohort includes LCAs filed for
some of the most common H-1B occupations, including Software
Developers, 19.4 percent of which were placed at the first wage level;
Computers Systems Analysts, 4.8 percent of which were placed at the
first wage level; and Computer Occupations, 7 percent of which were
placed at the first wage level. As discussed previously, these
occupations, as described in the OOH, likely include some workers at
the lower end of the OES distribution who are not performing work that
would fall within the INA's definition of ``specialty occupation.''
Thus, many workers in the H-1B program that have master's degrees or
some other qualification that satisfies the INA's baseline, specialized
knowledge requirement--a level of expertise that makes them more highly
skilled than a portion of workers at the bottom end of the OES
distribution for many occupations--also work in positions that fit
within the entry-level classification as currently administered by the
Department under its 2009 Guidance.
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 from the 2016,
2017, and 2018 Current Population Surveys (CPS) \166\ 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 National Science Foundation (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.
---------------------------------------------------------------------------

\166\ The Current Population Survey (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.
---------------------------------------------------------------------------

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.\167\ 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.
---------------------------------------------------------------------------

\167\ 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.
---------------------------------------------------------------------------

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.\168\ 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.\169\
---------------------------------------------------------------------------

\168\ 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.
\169\ 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'').
---------------------------------------------------------------------------

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 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 has
decided that the most appropriate course is 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

[[Page 63891]]

results in the entry-level wage being placed at approximately the 45th
percentile.
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.\170\ 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.
---------------------------------------------------------------------------

\170\ 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 one thing, 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 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 suggests
that the entry-level wage should be placed 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. As noted previously, H-
1B nonimmigrants make up about 10 percent of the total IT labor force
in the U.S.\171\ In certain fields, including

[[Page 63892]]

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.\172\
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\171\ 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.
\172\ 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 weighs in favor of the
Department's decision to set the entry-level wage at the higher end of
the identified wage range. To do otherwise 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 current, flawed
wage rates.\173\
---------------------------------------------------------------------------

\173\ 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 24047, 24051 (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.''\174\ This consideration supports the Department's decision
about how the entry-level wage should be set. Giving due weight to the
purpose of the statutory scheme means, in the Department's judgment,
resolving uncertainties so as to eliminate the risk of adverse effects
on U.S. workers' wages and job opportunities. That means favoring the
higher end of the wage range.
---------------------------------------------------------------------------

\174\ 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 concludes that, within the portion of the
OES wage distribution identified as likely consisting of U.S. workers
with levels of education and experience similar to prototypical entry-
level H-1B and EB-2 workers, the first wage level should be placed at
the higher end. Each of the considerations described above--the
relative strength of the NSF surveys as compared to the CPS data in
serving the purpose of the Department's analysis; the likely distortion
of both survey datasets caused by the presence of lower-paid foreign
workers in the relevant labor markets; and the purposes of the INA's
wage protections--alone would strongly countenance in favor of using
the higher end of the identified wage range. In combination, they make
the option of focusing on the upper portion of the range particularly
compelling.
The wage range spans from the 32nd percentile to the 49th
percentile. What accounts for the upper half of this range is
approximately the fifth decile of the OES distribution. The arithmetic
mean of the wages of workers similarly employed to entry-level H-1B and
EB-2 workers, taking into account the experience and education of the
types of workers who actually fill entry-level positions in these
programs, is thus the mean of the fifth decile, or approximately the
45th percentile. This point within the distribution will govern the
wages of workers placed at the first wage level and allows for a
statistically meaningful calculation.
4. The Second, Third, and Fourth Wage Levels
Having concluded that the entry-level wage should be adjusted to
the 45th percentile, the Department turns to explaining the manner in
which the remaining three prevailing wage levels will be modified. The
Department has determined that the upper-most level will be adjusted to
the mean of the upper decile of the OES wage distribution, or
approximately the 95th percentile, to reflect the wages of the most
competent, experienced, and skilled workers in any given occupation.
The intermediate wage levels will continue to be calculated in
accordance with 8 U.S.C. 1182(p)(4), which yields second and third wage
levels at the 62nd and 78th percentiles, respectively.
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.\175\ Again, as noted above, 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.
---------------------------------------------------------------------------

\175\ 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.\176\ 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
FY19, for example, the most highly compensated

[[Page 63893]]

H-1B nonimmigrants employed as Computer Systems Analysts command 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 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.
---------------------------------------------------------------------------

\176\ 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.\177\ 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.
---------------------------------------------------------------------------

\177\ 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 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.\178\
---------------------------------------------------------------------------

\178\ 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. The uppermost wage level should, in accordance with the
INA, therefore be calculated by taking the arithmetic mean of the wages
paid to the most highly paid workers in the OES distribution. In
consequence, the Department has determined that the fourth wage level
should be calculated as the mean of the upper decile of the OES
distribution, or approximately the 95th percentile. This calculation
ensures that the fourth wage level is based on the wages paid to
workers with the most advanced skills and competence in an occupation,
while using a sample of workers to identify an average wage
sufficiently large to allow for a statistically meaningful calculation.
The Department 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.'' \179\ 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.\180\
---------------------------------------------------------------------------

\179\ 8 U.S.C. 1182(p)(4).
\180\ 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.
---------------------------------------------------------------------------

The statutory formula was designed by Congress specifically for use
in the Department's high-skilled immigrant and nonimmigrant programs,
and provides for an efficient way of calculating evenly-spaced,
intermediate wage rates between the lower bound and upper bound of the
Department's wage structure.\181\ Creating new wage levels, as opposed
to adjusting the field values within the existing levels produced by
BLS (as the Department is doing here) would potentially result in less
reliable statistical data and be unlikely to yield intermediate wage
rates meaningfully different from those generated by operation of the
statute. Further, the adjustments the Department is making to the two
existing wage levels provided by the BLS OES survey preserve the same
segmentation as the previous first and fourth wage level values--
meaning they will continue to fall approximately 50 percentiles apart
within the OES distribution and will thus preserve the intermediate
level segmentation contemplated by the statute. Using the INA's formula
to generate intermediate wage levels therefore continues to be, in the
Department's judgment, the appropriate method to complete the
prevailing wage structure.
---------------------------------------------------------------------------

\181\ See Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3462 (January 19, 2011).
---------------------------------------------------------------------------

The Department applies the statutory formula as follows: The
difference between the two levels provided by the OES survey data is 50
percentiles. Dividing this by three yields a quotient of 16.67. This
quotient, added to the value of the Level I wage at the 45th
percentile, yields a Level II wage at approximately the 62nd
percentile. When subtracted from the value of the Level IV wage at the
95th percentile, the quotient yields a Level III wage at approximately
the 78th percentile of the OES distribution.
The Department acknowledges that the existing wage levels--set at
approximately the 17th, 34th, 50th, and 67th percentiles--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.

[[Page 63894]]

Adjusting the levels to the 45th, 62nd, 78th, and 95th percentiles
represents a significant change, and may result in some employers
modifying their use of the H-1B and PERM programs. It will also likely
result in higher personnel costs for some employers, as detailed below.
However, to the extent employers have reliance interests in the
existing levels, the Department has determined that 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.
5. The EB-3 Immigrant Classification
As noted previously, the Department's four-tier wage structure is
used to set the prevailing wage in five different immigrant and
nonimmigrant programs. Having explained the Department's reasoning for
how the adjusted wage levels are appropriate for the programs that
consist of more 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--the Department now turns to
explaining the appropriateness of using those same wage levels for the
EB-3 classification, which consists of lower-skilled workers,
professionals with bachelor's degrees, and individuals capable of
performing unskilled labor. The Department concludes that the adjusted
wage levels under the four-tiered structure also satisfy the statutory
requirement that the wage levels be set based on experience, education,
and level of supervision with respect to the EB-3 classification,
taking into account the statutory and regulatory purposes of protecting
U.S. workers from displacement and adverse wage effects.
At the outset, the Department notes that the close connections
between the EB-3 classification and the other programs covered by the
Department's wage structure make it inadvisable and impractical to
treat the EB-3 classification differently. As detailed above, 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.\182\ 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.\183\ These considerations make it
important to treat the EB-3 classification the same as the EB-2 and H-
1B programs. The question then devolves to whether the EB-3
classification is properly accounted for by the adjusted wage levels.
The Department believes it is.
---------------------------------------------------------------------------

\182\ See Musunuru v. Lynch, 831 F.3d 880, 885 (7th Cir. 2016)
(describing a person applying for both EB-2 and EB-3 status).
\183\ 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).
---------------------------------------------------------------------------

The Department acknowledges that applying the four-tier wage
structure in five different immigrant and nonimmigrant programs with
varying populations, and across hundreds of different occupational
classifications presents inherent challenges. The breadth of
occupations to which the wage levels apply means that the prevailing
wages established by the wage structure will not be perfectly tailored
to the circumstances of each individual job opportunity.\184\ The
Department has sought to address this challenge by focusing much of its
analysis on the programs and occupations that represent the largest
share of the immigrant and nonimmigrant populations covered by the
four-tier wage structure. Doing so is, in the Department's judgment,
the approach to addressing variations across the programs that is most
consistent with the INA. The wage protections in the H-1B and PERM
programs are designed to guard against the displacement of, or adverse
effect on U.S. workers caused by the employment of foreign labor.\185\
As noted above, the risk that the presence of lower-wage foreign
workers in a labor market will undercut U.S. workers' wages and job
opportunities is greatest when there are larger concentrations of such
workers.\186\ Adjusting the wage levels with particular attention to
those occupations and visa classifications with the largest numbers of
foreign workers therefore puts the focus on addressing the danger the
statutory scheme is intended to guard against--adverse effects on U.S.
workers--where it is most acute.
---------------------------------------------------------------------------

\184\ Cf. Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3461 (Jan. 19, 2011).
\185\ See, e.g., Cyberworld Enter. Techs., Inc. v. Napolitano,
602 F.3d 189, 199 (3d Cir. 2010).
\186\ George Borjas, Immigration Economics, 2014.
---------------------------------------------------------------------------

Thus, as previously explained, in ascertaining the wages paid to
U.S. workers similarly employed to H-1B workers, the Department's
analysis focused, to the greatest extent possible, on those occupations
that account for 1 percent or more of the total H-1B population, and
which also account for a significant share of the PERM population.\187\
Similarly, the Department has given due weight in its analysis of where
to set the prevailing wage levels to the fact that the EB-3
classification represents an exceedingly small share of the overall
foreign worker population covered by the wage structure. The H-1B
program is America's largest guest worker program.\188\ In FY2017, the
Department of Homeland Security approved 365,682 H-1B petitions.\189\
That same year, 19,432 workers were admitted for lawful permanent
residence in the EB-2 classification.\190\ A total of only 18,115 EB-3
immigrant workers were admitted that year. Thus, the EB-3 program
accounts for, at most, approximately 5 to 10 percent of the total
immigrant and nonimmigrant population governed by the four-tier wage
structure that is admitted or otherwise provided status in any given
year.\191\ That does not

[[Page 63895]]

mean that the Department has not given full consideration to the EB-3
classification in assessing how best to adjust the wage levels. It only
means that the Department has appropriately weighed the size of the
program, and therefore the risk it poses to U.S. workers, in
identifying a solution to the adverse effects caused by the existing
wage levels--an approach the Department regards as the best way to take
into account the variations across the programs covered by the wage
structure in effectuating the purpose of the INA's wage protections.
---------------------------------------------------------------------------

\187\ In some instances, particularly when analyzing the NSF
data, the Department was constrained in its ability to analyze wages
for all top H-1B occupations because of discrepancies between how
the NSF and BLS surveys classify workers by occupation.
\188\ Nicole Torres, The H-1B Debate, Explained, Harvard
Business Review (May 4, 2017), available at https://hbr.org/2017/05/the-h-1b-visa-debate-explained.
\189\ https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2018.pdf.
\190\ 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.
\191\ The Department notes that the total number of approved H-
1B petitions ``exceeds the number of individual H-1B workers
sponsored because of the different types of petitions that can be
filed (e.g., requests for concurrent employment with another
employer, requests for extension of stay, amended petitions).'' U.S.
Citizenship and Immigration Services, Characteristics of H-1B
Specialty Occupation Workers Fiscal Year 2018 Annual Report to
Congress October 1, 2017-September 30, 2018, (2020), available at
https://www.uscis.gov/sites/default/files/document/reports/Characteristics_of_Specialty_Occupation_Workers_H-1B_Fiscal_Year_2018.pdf. The filing of these types of petitions
means that some nonimmigrants are counted multiple times in the
total number of approved petitions. The total number of petitions
for initial employment in FY17 was 108,101. However, that number
does not account for the petitions filed on behalf of H-1B
nonimmigrants to extend their status, and thus undercounts the total
number of actual H-1B workers who were authorized to work in FY17.
---------------------------------------------------------------------------

After assessing the nature of the EB-3 immigrant population, the
Department has determined that the adjusted wage levels under the four-
tiered structure adequately take into account the experience,
education, and level of supervision of EB-3 workers, in light of the
purpose of the INA's wage safeguards. 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.'' \192\ For
each of these classifications, the revised wage levels, set at
approximately the 45th, 62nd, 78th, and 95th percentiles, provide an
appropriate method for calculating the prevailing wage.
---------------------------------------------------------------------------

\192\ 8 U.S.C. 1153(b)(3); 8 CFR 204.5(l).
---------------------------------------------------------------------------

As to the lower-skill classifications, the Department has
previously recognized that lower-skilled workers are less likely to
vary in the wages they are paid based on differences in skill
levels.\193\ This is because skill levels themselves are less likely to
vary in such occupations. A job that requires limited skills, such as
can be acquired through two years of training or less, can likely be
performed with similar proficiency by someone with lower levels of
education and experience as by someone with greater experience and
education.\194\ Meaningful differentiation between workers based on
skills in such occupations is therefore reduced. From this, the
Department has previously concluded that setting prevailing wages for
lower-skilled workers closer to the mean of the overall OES wage
distribution is a more appropriate way of guarding against adverse wage
effects.\195\ Since most workers in lower-skilled occupations have
similar levels of skill, a wage that approximates the average wage for
all workers in the occupation is more likely to ensure that similarly
employed workers make similar wages.
---------------------------------------------------------------------------

\193\ See Wage Methodology for the Temporary Non-agricultural
Employment H-2B Program, 76 FR 3452, 3461 (January 19, 2011).
\194\ Id. at 3458.
\195\ Id. at 3459.
---------------------------------------------------------------------------

That reasoning holds true for the lower-skilled classifications in
the EB-3 immigrant visa preference category, which include workers
whose jobs are unskilled or require two years of training. These
workers are far more likely to fall within the lower two wage levels
given their relative lack of education and experience. Under the new
wage levels, they will thus likely be placed at either the 45th or the
62nd percentiles of the OES wage distributions. Both levels, while not
perfectly tailored to the lower-skilled component of the EB-3
classification, fall near the middle part of the wage distribution, and
are therefore generally appropriate for lower-skilled workers.
For separate reasons, the Department concludes that the newly
adjusted wage levels also adequately satisfy the Department's
obligations in setting the wage levels under the INA with respect to
EB-3 professionals. Unlike lower-skilled EB-3 workers, professionals
with bachelor's degrees in the EB-3 classification do possess a level
of skill that allows for greater differentiation within the occupation.
It is also the case that such workers will likely generally have lower
levels of education and experience than EB-2 workers, who are required
to possess a master's degree or higher. An entry-level wage at the 45th
percentile, while more closely tailored to the education and experience
of an EB-2 or H-1B worker, may be on the higher end for an EB-3
professional in some cases.\196\ But other considerations demonstrate
the appropriateness of the 45th percentile of the OES wage distribution
as the entry-level wage for such workers.
---------------------------------------------------------------------------

\196\ The Department also notes that, in some cases, EB-3
workers may in fact have higher levels of formal education than H-1B
workers, given that H-1B workers can demonstrate specialized
knowledge through experience and training, whereas possession of a
bachelor's degree is required for all EB-3 immigrants. See
Employment-Based Immigrants, 56 FR 60897, 60900 (Nov. 29, 1991).
---------------------------------------------------------------------------

The Department emphasizes that the labor certification process in
the PERM programs is designed to ensure that there are not available
and willing U.S. workers and that the wages and the wages and working
conditions of U.S. workers will not be adversely affected by the
employment of the immigrant worker(s). From when the INA was first
enacted, its labor certification provisions were designed ``to provide
strong safeguards for American labor and to provide American labor
protection against an influx of aliens entering the United States for
the purpose of performing skilled or unskilled labor where the economy
of individual localities is not capable of absorbing them at the time
they desire to enter this country.'' \197\ The availability of U.S.
workers to fill jobs for which foreign workers are sought, being a
guiding consideration behind the INA's wage protections, is also an
appropriate consideration in determining the adequacy of the prevailing
wage levels for EB-3 professionals.
---------------------------------------------------------------------------

\197\ Econo Inn Corp. v. Rosenberg, 145 F. Supp. 3d 708, 713
(E.D. Mich. 2015) (quoting H.R. Rep. No. 1365, 82nd Cong. 2nd
Session (1952)).
---------------------------------------------------------------------------

Within the U.S. workforce, the credentials associated with the EB-3
professional classification are significantly more common than the
credentials associated with the EB-2 classification. As of 2019, 36
percent of people age 25 and older in the United States possessed a
bachelor's degree or higher.\198\ That is compared to only 13.4 percent
of native-born Americans and 14.1 percent of the foreign born
population who possess an advanced degree, such as a master's degree or
doctorate.\199\ It follows that employers seeking to recruit
individuals with only a bachelor's degree should be more likely to find
qualified and available U.S. workers than if they are recruiting for a
position that requires a master's degree. The pool of available workers
in such cases is significantly larger.
---------------------------------------------------------------------------

\198\ United States Census Bureau, U.S. Census Bureau Releases
New Educational Attainment Data, available at https://www.census.gov/newsroom/press-releases/2020/educational-attainment.html.
\199\ Id.
---------------------------------------------------------------------------

As noted above, the Department is required to determine and certify
that ``there are not sufficient workers who are able, willing,
qualified'' and available to fill the position for which an EB-3 worker
is sought.\200\ This requirement is critical to the INA's ``core
objective[[hairsp]] [of] balanc[ing] certain industries' temporary need
for foreign

[[Page 63896]]

workers against a policy interest in protecting U.S. workers' jobs,
salaries, and working conditions.'' \201\ How to strike that balance
turns on a variety of considerations, including the likely availability
of U.S. workers for a given position. Where the nature of the labor
market is such that U.S. workers are more likely to be readily found,
it is appropriate that the Department have extra assurance that no
qualified U.S. workers are available to fill a position before
certifying as much. In the case of EB-3 professionals, the adjusted
wage levels, which may in some cases place a slight premium on the
wages paid to professionals with bachelor's degrees, are thus
appropriately tailored to the circumstances of the EB-3 immigrant visa
preference category. Because U.S. workers with bachelor's degrees are
more common, placing some premium on the wage offered for these kinds
of workers during the labor certification recruitment process helps
advance the purpose of the INA's wage protections and provides the
necessary extra assurance to the Department that U.S. workers with
comparable levels of education, experience, and responsibility are not
available. This approach is also entirely consistent with the
Department's authority to prevent adverse effects on similarly employed
U.S. workers.\202\
---------------------------------------------------------------------------

\200\ 8 U.S.C. 1182(a)(5)(A)(i)(I).
\201\ Comite de Apoyo a los Trabajadores Agricolas v. Solis, 933
F. Supp. 2d 700, 712 (E.D. Pa. 2013).
\202\ Cf. Williams v. Usery, 531 F.2d 305, 306 (5th Cir. 1976)
(``Even if desirable, the Secretary has no authority to set a wage
rate on the basis of attractiveness to workers. His authority is
limited to making an economic determination of what rate must be
paid all workers to neutralize any `adverse effect' resultant from
the influx of temporary foreign workers.'').
---------------------------------------------------------------------------

Finally, the Department notes that continuing to employ the same
wage structure in this manner across both the H-1B and PERM programs
advances the Department's interest in administrative consistency and
efficiency. As noted already, there is significant overlap between the
H-1B and PERM programs. In FY2019, 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.\203\ Further, the
top ten most common H-1B occupations include seven of the ten most
common PERM occupations. Through the third quarter of FY2020, 80
percent of PERM cases were for jobs in Job Zones 4 and 5 \204\--the
most highly skilled job categories, which also account for 94 percent
of all H-1B cases.\205\ In sum, the close connection between the types
of jobs and aliens that are covered by the two programs further
supports using the same wage structure for both the PERM and H-1B
programs.
---------------------------------------------------------------------------

\203\ 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.
\204\ 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.
\205\ 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.
---------------------------------------------------------------------------

For these reasons, the Department has concluded that using the
adjusted wage levels for the EB-3 preference category is in keeping
with the relevant statutory considerations that govern how the
Department sets prevailing wage levels.

B. Explanation of Amendments To Adjust the Prevailing Wage Levels

In light of the foregoing, the Department is amending its
regulations at part 20, sections 656.40 and 655.731 to reflect the new
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.'' \206\ The amendments are also consistent with the
aims of the Presidential ``Proclamation Suspending Entry of Aliens Who
Present a Risk to the U.S. Labor Market Following the Coronavirus
Outbreak'' (Proclamation). This Proclamation found that the entry of
additional foreign workers in certain immigrant and nonimmigrant
classifications ``presents a significant threat to employment
opportunities for Americans affected by the extraordinary economic
disruptions caused by the COVID-19 outbreak.'' \207\ Section 5 of the
Proclamation directed the Secretary of Labor to, ``as soon as
practicable, and consistent with applicable law, consider promulgating
regulations or take other appropriate action . . . to ensure that the
presence in the United States of aliens who have been admitted or
otherwise provided a benefit . . . pursuant to an EB-2 or EB-3
immigrant status or an H-1B nonimmigrant visa does not disadvantage
United States workers.''
---------------------------------------------------------------------------

\206\ See Exec. Order 13788, 82 FR 18837 (Apr. 18, 2017).
\207\ See Proclamation No. 10052, 85 FR 38263 (June 22, 2020).
---------------------------------------------------------------------------

Although the amendments discussed below will extend beyond the
duration of the Proclamation, the threats described in the Proclamation
highlight the urgent need for strengthening wage protections in these
programs to support the economic recovery. A core part of the
Department's mission is to promote opportunities for profitable
employment and ensure fair wages and working conditions for U.S.
workers. This responsibility includes ensuring that U.S. workers
similarly employed to foreign workers are not adversely affected by the
employment of foreign workers on a permanent or temporary basis in the
U.S., as required by the INA.
This rule will only apply 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. The Department will not apply the new
regulations to any previously-approved prevailing wage determinations,
permanent labor certification applications, or LCAs, either through
reopening or through issuing supplemental prevailing wage
determinations or through notices of suspension, invalidation, or
revocation.
1. Amending the Computation of the Wage Levels Based on the OES in the
Permanent Labor Certification Program (20 CFR 656.40)
The Department is revising paragraphs (a), (b)(2), and (3) of 20
CFR 656.40. The most substantial changes are those made to paragraphs
(b)(2). First, the Department has amended Sec. 656.40(b)(2) by adding
new paragraphs (b)(2)(i) and (ii) to codify the practice of using four
wage levels and to specify the manner in which the wage levels are
calculated. Specifically, new paragraph (b)(2)(i) stipulates that ``The
BLS shall provide the OFLC Administrator with the OES wage data by
occupational classification and geographic area,'' and goes on to
specify the four new levels (Levels I through IV) to be applied.
New paragraph (b)(2)(i)(A) describes the Level I Wage. This first
wage level--currently calculated as the mean of the bottom third of the
OES wage

[[Page 63897]]

distribution--will now be calculated as the mean of the fifth decile of
the wage distribution for the most specific occupation and geographic
area available. Roughly speaking, this means that the first wage level
will be adjusted from the 17th percentile to the 45th percentile of the
relevant OES wage distribution.
Next, new paragraph (b)(2)(i)(D) provides that the Level IV Wage--
currently calculated as the mean of the upper two thirds of the OES
wage distribution--will now be calculated as the mean of the upper
decile of the distribution for the most specific occupation and
geographic area available. This means the fourth wage level will
increase approximately from the 67th percentile to the 95th percentile
of the relevant OES 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.\208\ Thus, new paragraph (b)(2)(i)(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)(i)(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 62nd and 78th percentiles, respectively, as
compared to the current computation, which places Level II at
approximately the 34th percentile and Level III at approximately the
50th percentile.
---------------------------------------------------------------------------

\208\ 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.'').
---------------------------------------------------------------------------

The newly created paragraph (b)(2)(ii) states that 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
rates produced under the new paragraph (b)(2)(i) of section 656.40 as a
notice posted on the OFLC website. This continues the Department's
practice of having the OFLC Administrator to announce, via a notice of
implementation, updates to OES wage data. Currently, OFLC publishes a
routine announcement each year implementing updated OES prevailing
wages for the new wage year and discussing any other significant
related updates, including changes to OES survey areas and relevant
updates to the SOC system. These announcements also serve as notice to
employers of changes they need to make to the wage information on
applications to reflect the changes to the OES. This IFR codifies the
current publication practice in the regulations at section
656.40(b)(2)(ii).
The new regulation aligns with OFLC's current practice for
notifying employers directly, rather than through the Federal Register,
because the administrative burden of contacting employers directly is
less than publishing multiple prevailing wage rates in the Federal
Register. The Department has determined that the increased transparency
resulting from publishing these updates via a notice on OFLC's website,
at least once in a calendar year, will provide clear expectations for
employers to meet their prevailing wage obligations in the coming year,
prior to filing an application for permanent employment certification.
Further revisions to paragraph (b)(2) 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 provide that 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 OES
survey, in accordance with paragraph (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).
Revisions to paragraph (a) remove an out-of-date reference,
explained further below, to SWAs' role in the prevailing wage
determination process. The changes to paragraph (b)(3) account for the
elimination of the reference to the ``arithmetic mean'' in (b)(2).
2. Amending the Wage Requirement for LCAs in the H-1B, H-1B1, and E-3
Visa Classifications (20 CFR 655.731)
The Department amends section 655.731 by making technical revisions
to paragraph (a)(2)(ii)(A) to remove another out-of-date reference to
SWAs' role in the prevailing wage determination process. 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 regional NPC. The regulatory text is amended to
reflect the current practice and to provide for operational
flexibilities in the future with respect to where PWD requests are
processed.
The Department also revises the language in section 655.731 to more
clearly explain that it will use BLS's OES survey to determine the
prevailing wages under this paragraph and has added a sentence to
specify that these determinations will be made in a manner consistent
with the amended section 656.40(b)(2).
The revised language in paragraphs (a)(2)(ii) introductory text,
(a)(2)(ii)(A) introductory text, 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)).
The new language also removes 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
revised language also corrects 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
survey. An NPC will determine the wage in accordance with secs. 212(n)
and 212(t) of the INA and in a manner consistent with the newly revised
section 656.40(b)(2).

[[Page 63898]]

III. Statutory and Regulatory Requirements

A. Good Cause To Forgo Notice and Comment Rulemaking

The Administrative Procedure Act (APA) 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.'' \209\ Under the APA,
notice and comment is deemed ``impracticable'' when an agency ``cannot
both follow section 553 and execute its statutory duties,'' \210\ while
the ``public interest'' prong ``connotes a situation in which the
interest of the public would be defeated by any requirement of advance
notice.'' \211\ Generally, 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.'' \212\ While
emergency situations are the most common circumstances in which good
cause is invoked, the infliction of real harm that would result from
delayed action even absent an emergency can be sufficient grounds to
issue a rule without undergoing prior notice and comment.\213\
---------------------------------------------------------------------------

\209\ 5 U.S.C. 553(b)(B).
\210\ Nat. Res. Def. Council, Inc. v. Evans, 316 F.3d 904, 911
(9th Cir. 2003); see also Riverbend Farms, Inc. v. Madigan, 958 F.2d
1479, 1485 (9th Cir. 1992) (``The existence of the good cause
exception is proof that Congress intended to let agencies depart
from normal APA procedures where compliance would jeopardize their
assigned missions.''); Kollett v. Harris, 619 F.2d 134, 145 (1st
Cir. 1980) (`` `Impracticable' means a situation in which the due
and required execution of the agency functions would be unavoidably
prevented by its undertaking public rule-making proceedings.'').
\211\ Utility Solid Waste Activities Grp. v. E.P.A., 236 F.3d
749, 755 (D.C. Cir. 2001); see also N.C. Growers Ass'n v. United
Farm Workers, 702 F.3d 755, 767 (4th Cir. 2012).
\212\ Jifry v. FAA, 370 F.3d 1174, 1179 (D.C. Cir. 2004); see
also U.S. Corp. v. U.S. E.P.A., 595 F.2d 207, 214 (5th Cir. 1979)
(``It is an important safety valve to be used where delay would do
real harm.'').
\213\ Nat. Res. Def. Council, Inc. v. Evans, 316 F.3d 904, 911
(9th Cir. 2003) (``[W]e have observed that notice and comment
procedures should be waived only when `delay would do real harm.' .
. . `Emergencies, though not the only situations constituting good
cause, are the most common.' '') (citations omitted); see also
Buschmann v. Schweiker, 676 F.2d 352, 357 (9th Cir. 1982) (``The
notice and commend procedures in Section 553 should be waived only
when `delay would do real harm' . . . The good cause exception is
essentially an emergency procedure.'') (citations omitted).
---------------------------------------------------------------------------

Here, two different circumstances are present that satisfy the
APA's good cause criteria. First, the shock to the labor market caused
by the widespread unemployment resulting from the coronavirus public
health emergency has created exigent circumstances that threaten
immediate harm to the wages and job prospects of U.S. workers. The
INA's wage protections are meant to ensure that the employment of
foreign workers does not have an adverse impact on similarly employed
U.S. workers. But the flaws in the existing wage levels--which were
promulgated through guidance and without meaningful economic
justification, are inconsistent with the statute, and serve as the
source of adverse labor effects on U.S. workers even under normal
economic conditions--can only exacerbate, and severely so, the dangers
posed to U.S. workers by recent mass lay-offs unless immediate action
is taken. Keeping in place the current levels is untenable, and any
delay in issuing this rule is contrary to the public interest. Notice
and comment procedures in these circumstances would make it
impracticable for the Department to fulfill its statutory mandate and
carry out the ``due and required execution of [its] agency functions''
to protect U.S. workers.\214\
---------------------------------------------------------------------------

\214\ Kollet, 619 F.2d at 145.
---------------------------------------------------------------------------

Separately, even absent the emergency labor market conditions
caused by the coronavirus pandemic, providing the public an opportunity
to comment before the adjustments to the wage levels take effect is
contrary to the public interest insofar as it would impede the
Department's ability to solve the problems this interim final rule is
meant to address. Advance notice of the intended changes would create
an opportunity, and the incentives to use it, for employers to attempt
to evade the adjusted wage requirements. This constitutes a situation
where the public's interest is ``defeated by any requirement of advance
notice'' and also justifies the Department's decision to forgo notice
and comment before issuing the rule.\215\
---------------------------------------------------------------------------

\215\ Utility Solid Waste Activities Grp. 236 F.3d at 755.
---------------------------------------------------------------------------

Preventing Fiscal Harm to U.S. Workers
To begin, an agency may invoke the good cause exception where the
serious harm to be prevented is fiscal or economic in nature,
particularly in cases where the agency is acting to prevent fiscal harm
to third parties.\216\ In this instance, serious fiscal harm would
befall U.S. workers absent immediate action by the Department because
the wage and employment risks, already immense, posed to workers by
recent mass lay-offs are greatly compounded by the inappropriately low
prevailing wage rates.
---------------------------------------------------------------------------

\216\ Sorenson Commc'ns, Inc. v. F.C.C., 755 F.3d 702, 707 (D.C.
Cir. 2014) (explaining that ``no particular catechism is necessary
to establish good cause. . .''); Nat'l Venture Capital Ass'n v.
Duke, 291 F. Supp. 3d 5, 18 (D.D.C. 2017) (explaining that
preventing fiscal harm is most likely to justify good cause when it
is harm ``to third parties, not the government''); Am. Fed'n of
Gov't Emp., AFL-CIO v. Block, 655 F.2d 1153, 1157 (D.C. Cir. 1981)
(finding good cause where ``the absence of specific and immediate
guidance from the Department [of Agriculture] in the form of new
standards would have forced reliance by the Department upon
antiquated guidelines, thereby creating confusion among field
administrators, and caused economic harm . . .'').
---------------------------------------------------------------------------

On January 31, 2020, the Secretary of the Department of Health and
Human Services declared a public health emergency under section 319 of
the Public Health Service Act (42 U.S.C. 247d) in response to the
Coronavirus Disease 2019 (COVID-19) outbreak.\217\ This was followed on
March 13th by the President's declaration of a National Emergency
concerning the COVID-19 outbreak, retroactive to March 1, 2020, to
control the spread of the virus in the U.S.\218\
---------------------------------------------------------------------------

\217\ Department of Health and Human Services, Determination
that a Public Health Emergency Exists, https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx (last reviewed
Jan. 31, 2020). See also Determination of Public Health Emergency,
85 FR 7316 (Feb. 7, 2020).
\218\ Proclamation No. 9994, 85 FR 15337 (Mar. 18, 2020).
---------------------------------------------------------------------------

On April 22, 2020, the President issued Proclamation 10014,
Proclamation Suspending Entry of Immigrants Who Present Risk to the
U.S. Labor Market During the Economic Recovery Following the COVID-19
Outbreak (Proclamation 10014).\219\ Proclamation 10014 suspended the
entry of aliens in various immigrant classifications, including EB-2
and EB-3 classifications, on the grounds that ``the United States faces
a potentially protracted economic recovery with persistently high
unemployment if labor supply outpaces labor demand.'' \220\ The
President found that, once admitted, these immigrants are granted
``open market'' employment documents, which allow them ``immediate
eligibility to compete for almost any job, in any sector of the
economy,'' meaning it is especially difficult to ``protect already
disadvantaged and unemployed Americans from the threat of competition
for scarce jobs from new lawful permanent residents by directing those
new residents to particular economic sectors with a demonstrated need
not met by the existing labor supply.'' \221\ Based on his findings,
the President concluded that the entry of

[[Page 63899]]

aliens in these immigrant visa categories would be detrimental to the
interests of the U.S. given that ``[e]xisting immigrant visa processing
protections are inadequate for recovery from the COVID-19 outbreak.''
\222\ Proclamation 10014 further required the Secretary of Labor and
the Secretary of Homeland Security, in consultation with the Secretary
of State, to review nonimmigrant programs and recommend other measures
appropriate to ``stimulate the United States economy and ensure the
prioritization, hiring, and employment of United States workers.''
\223\
---------------------------------------------------------------------------

\219\ Proclamation No. 10014, 85 FR. 23441 (Apr. 22, 2020).
\220\ Id.
\221\ Id.
\222\ Id.
\223\ Id. at 23442.
---------------------------------------------------------------------------

On June 22, 2020, the President issued a Proclamation Suspending
Entry of Aliens Who Present a Risk to the U.S. Labor Market Following
the Coronavirus Outbreak.\224\ Subject to certain exceptions, the
Proclamation restricts the entry of certain immigrants and
nonimmigrants, including certain H-1B nonimmigrants and EB-2 and EB-3
immigrants, into the U.S. through December 31, 2020, as their entry
would be detrimental to the interests of the U.S. The Proclamation
notes that ``between February and April of 2020 . . . more than 20
million United States workers lost their jobs in key industries where
employers are currently requesting H-1B and L workers to fill
positions.'' \225\ It further explained that ``American workers compete
against foreign nationals for jobs in every sector of our economy,
including against millions of aliens who enter the United States to
perform temporary work,'' and that while, ``[u]nder ordinary
circumstances, properly administered temporary worker programs can
provide benefits to the economy,'' because of the ``extraordinary
circumstances of the economic contraction resulting from the COVID-19
outbreak, certain nonimmigrant visa programs authorizing such
employment pose an unusual threat to the employment of American
workers.'' \226\
---------------------------------------------------------------------------

\224\ Proclamation 10052, 85 FR 38263 (June 25, 2020); see also
Proclamation 10054, 85 FR 40085 (July 2, 2020).
\225\ Proclamation 10052, 85 FR 38263, 38263-264.
\226\ Id.
---------------------------------------------------------------------------

The Proclamation only suspends and limits new entries into the
United States by aliens who did not have valid visas and required
travel documents on the effective date of the Proclamation. It does not
address potential harms to U.S. workers caused by the employment of
foreign workers already in the country. Section 5(b) of the
Proclamation, however, directs the Department of Labor as soon as
practicable consider promulgating regulations or take other appropriate
action to ensure that the presence in the United States of aliens who
have been admitted or otherwise provided a benefit, or who are seeking
admission or a benefit, pursuant to an EB-2 or EB-3 immigrant visa or
an H-1B nonimmigrant visa does not disadvantage United States workers
in violation of section 212(a)(5)(A) or (n)(1) of the INA (8 U.S.C.
1182(a)(5)(A) or (n)(1)).\227\
---------------------------------------------------------------------------

\227\ Id. at 38266.
---------------------------------------------------------------------------

Accordingly, the issuance of this interim final rule, designed to
ensure that U.S workers are not disadvantaged by the employment of
aliens already present in the United States as the nation continues its
economic recovery, is consistent with the aims of the Proclamation, and
mitigates aspects of the danger to U.S. workers caused by recent shocks
to the labor market and the employment of foreign workers not fully
addressed by the Proclamation.
Notwithstanding the ongoing COVID-19 emergency, hiring in the U.S.
has increased, with continued hiring across all sectors of the economy
anticipated. Despite these gains, unemployment remains significantly
above the historically low levels seen prior to the emergence of COVID-
19 and the resultant economic emergency. As states continue to reopen
their economies and the pace of hiring accelerates, U.S. workers will
still face risks to their wages and job opportunities. It is therefore
imperative that the Department take immediate action to ensure that
U.S. workers' current and future wages and job prospects are protected.
As noted above, a substantial body of evidence shows that the
Department's current prevailing wage rates, which govern, in many
cases, the wages that employers offer when recruiting for U.S. workers
and pay when employing foreign workers, have long been set below the
rates at which similarly employed U.S. workers are paid, and that these
rates are inconsistent with the statutory scheme. Even during normal
economic circumstances this is likely to result in adverse effects on
the wages and job opportunities of U.S. workers. Under the high
unemployment rates experienced in the U.S. labor market this year,
which reached 14.7 percent in April, a rate not seen since the Great
Depression, and remain elevated, the existing flawed and arbitrary wage
levels pose an immediate threat to the livelihoods of U.S.
workers.\228\
---------------------------------------------------------------------------

\228\ Bureau of Labor Statistics, Civilian Unemployment Rate,
https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm.
---------------------------------------------------------------------------

More particularly, if, as the economy recovers, the existing wage
levels remain in place, at least two negative consequences for U.S.
workers are likely to occur. First, employers seeking to employ EB-2
and EB-3 workers, as well as, in some cases, H-1B nonimmigrants, are
required to use prevailing wage rates to recruit U.S. workers before
they are permitted to employ foreign workers. The provision of
improperly low prevailing wage determinations under the existing wage
level computations therefore means that U.S. workers reentering the
workforce will not, in some cases, be offered wages commensurate with
their education and experience. In such cases where an employer's job
advertisement includes a wage rate for a position that does not
accurately reflect the wage rate that should be paid, U.S. workers may
be less likely to apply for the position.
Relatedly, the current wage level computations may adversely affect
the wages and job opportunities of U.S. workers by allowing employers
to pay wages to foreign workers at a rate below the market rate for
similarly employed U.S. workers. This can result in either employers
preferring to hire foreign workers over U.S. workers, or result in wage
suppression for U.S. workers. These problems, in turn, can also impede
U.S. workers' return to the workforce at income levels comparable to
what they were making before the downturn.
Both delays in workers returning to the workforce and their doing
so at wages below what they were making before being laid off can have
severe immediate and long term adverse effects on workers' wellbeing.
Extensive academic research shows that mass lay-offs that occur during
times of elevated unemployment have dramatic and persistent
consequences for individuals' earnings for years following the lay-off
event.\229\ This is because workers who become unemployed during an
economic recession often have to accept employment at lower wages than
they were making before the recession, or will remain unemployed for
extended periods of time, which exacerbates the negative wage effects,
also known as wage scarring, that result from lay-offs.\230\ Some
studies have found that

[[Page 63900]]

workers laid off during a recession may experience negative wage
effects for as long as 20 years after the lay-off event, and may have
average wage growth over their lifetimes that is 14.7 percent lower
than what they would have otherwise enjoyed.\231\
---------------------------------------------------------------------------

\229\ Steven Davis & Till von Wachter, Recessions and the Costs
of Job Loss, The Brookings Institution (2011), available at https://www.brookings.edu/wp-content/uploads/2011/09/2011b_bpea_davis.pdf
(finding that
\230\ Ben Leubsdorf, Six Ways the Recession Inflicted Scars on
Millions of Unemployed Americans, Wall Street Journal (May 10,
2016), available at https://blogs.wsj.com/economics/2016/05/10/six-ways-the-recession-inflicted-scars-on-millions-of-unemployed-americans/.
\231\ Justin Barnette & Amanda Michaud, Wage Scars and Human
Capital Theory, available at https://ammichau.github.io/papers/JBAMWageScar.pdf; Daniel Cooper, The Effect of Unemployment Duration
on Future Earnings and Other Outcomes, Federal Reserve Bank of
Boston (2014).
---------------------------------------------------------------------------

Further, now is a critical moment for mitigating against the threat
of these wage scarring effects. Without interventions to help U.S.
workers, as many as 8 million individuals laid off earlier this year
may reach 27 weeks or more of unemployment starting in October 2020.
Unemployment of this duration, known as long term unemployment, is the
point at which the risk of wage scarring and other adverse employment
effects of unemployment becomes especially acute.\232\
---------------------------------------------------------------------------

\232\ See Bureau of Labor Statistics, An Analysis of Long-Term
Unemployment (2016), available at https://www.bls.gov/opub/mlr/2016/article/pdf/an-analysis-of-long-term-unemployment.pdf.
---------------------------------------------------------------------------

The reforms to the prevailing wage levels that the Department is
undertaking in this rulemaking--changes that the Department
acknowledges should have been undertaken years ago--have therefore
become urgently needed. U.S. workers, in the millions, have already
experienced one of the most significant, mass lay-off events in U.S.
history.\233\ Ensuring that these workers can quickly return to work at
wages equal to or greater than what they were making before being laid
off is critical to reducing the long-term wage scarring effects of mass
unemployment. In the Department's expert judgment, and based on its
review of the evidence of the effects of the current wage levels, the
existing levels are impeding and will continue to impede, to a
significant degree, many U.S. workers' ability to return to well-
compensated employment given that the current levels have, in many
instances, a suppressive effect on U.S. workers' wages and allow
employers to prefer foreign labor as a lower-cost labor alternative.
Preserving the existing levels, a flawed policy even under ordinary
economic conditions, is untenable as the U.S. continues through
critical stages of its recovery from the labor market shocks of the
coronavirus public health emergency. Immediate corrective action is
therefore required to ensure that the Department's regulations are,
consistent with their purpose, safeguarding the well-being of U.S.
workers at a moment when workers are highly vulnerable to extreme
vicissitudes in the labor market. Any delay in taking this action would
mean not only that the Department was failing to protect the wages and
job opportunities of U.S. workers, but, worse still, that its
application of the existing, faulty wage levels during the recovery
would be an active source of harm exacerbating the long term
consequences of the public health emergency for workers'
livelihoods.\234\
---------------------------------------------------------------------------

\233\ Bureau of Labor Statistics, Unemployment rate rises to
record high 14.7 percent in April 2020 (May 13, 2020), available at
https://www.bls.gov/opub/ted/2020/unemployment-rate-rises-to-record-high-14-point-7-percent-in-april-2020.htm?view_full.
\234\ See Nat'l Fed'n of Fed. Emp. v. Devine, 671 F.2d 607, 611
(D.C. Cir. 1982) (finding good cause was properly invoked where
under prior regulations ``the agency would have been compelled to
take action which was not only impracticable but also potentially
harmful.'').
---------------------------------------------------------------------------

It is of course true that, even with appropriately set wage levels,
some degree of wage scarring would occur for U.S. workers in any mass
lay-off event. The regulatory changes produced by this rule will not
alleviate all the adverse effects associated with the current downturn,
and some level of wage scarring is likely to be associated with any
recessionary period. The recent shocks to the labor market, however,
bring the Department's invocation of good cause well within the
admittedly narrow bounds of section 553(b)(B).\235\ The Department is
not seeking to use section 553(b)(B) as an ``escape clause'' from
notice and comment requirements that would apply whenever, in the
Department's view, a regulatory change would advance good policy
aims.\236\ Rather, the Department finds good cause here under
extraordinary circumstances brought about by the unique confluence of a
public health emergency of a kind not experienced in living memory, its
impact on the labor market, and the aggravating effect the Department's
arbitrary current wage levels are likely having on the harms
experienced by U.S. workers under current economic conditions.
---------------------------------------------------------------------------

\235\ See Am. Iron & Steel Inst. v. E.P.A., 568 F.2d 284, 292
(3d Cir. 1977).
\236\ United States v. Garner, 767 F.2d 104, 120 (5th Cir.
1985).
---------------------------------------------------------------------------

It is also clear that the change worked by this rule going
immediately into effect directly and substantially addresses the harm
the Department has determined poses an ongoing and grave danger to U.S.
workers. As noted above, the Proclamation temporarily suspends entry of
new H-1B and PERM workers, but does not affect those workers currently
in the United States pursuant to an earlier admission into the U.S. Yet
the presence of such workers in the labor market is substantial and
should not be overlooked. For example, in recent years, over 80 percent
of all foreign workers granted EB-2 and EB-3 status in a given year are
adjustment of status cases, meaning they were already present in the
U.S. before being granted an employment-based green card. In other
words, one of the biggest risks U.S. workers face from having to
compete with EB-2 and EB-3 immigrants recruited and paid at
inappropriately low wage levels comes from workers who are already
present in the U.S. The adjustments the Department is making to the
prevailing wage levels will therefore have an immediate and substantial
impact as U.S. employers recruit for and employ EB-2 and EB-3 workers
even with the Proclamation in place and help mitigate the short and
long term adverse wage effects caused by the existing wage levels as
the economy recovers.
Similarly, in FY2019, 249,476 of H-1B petitions for continuing
employment, i.e. petitions for workers already present in the U.S.,
were approved out of the 388,403 total approved petitions.\237\ Thus,
as with EB-2 and EB-3 immigrants, a substantial number of H-1B
nonimmigrants who will be affected by the adjusted wage levels are
already in the United States. Ensuring that they are paid an
appropriate wage, even with the Proclamation in effect, in order to
reduce the wage scarring and other adverse employment consequences of
the coronavirus public health emergency to U.S. workers is therefore an
urgent and important priority for the Department that demands immediate
corrective action.
---------------------------------------------------------------------------

\237\ 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, (showing 66 percent of H-1B petitions
approved in FY2019 were for computer-related occupations). Per
USCIS, ``continuing employment'' refers to ``extensions, sequential
employment and concurrent employment, which are filed for aliens
already in the United States.''
---------------------------------------------------------------------------

Simply put, millions of U.S. workers, many of whom work in
industries that employ large numbers of H-1B and employment-based
immigrants, lost their jobs over the past six months. This

[[Page 63901]]

kind of mass lay-off event can and often does result in wage scarring,
meaning immediate and long term adverse consequences for workers'
wages. The scale of the mass layoffs recently experienced makes the
current risk of wage scarring especially acute, which is further
compounded by flaws in the Department's existing wage levels for these
foreign labor programs. Even under ordinary economic conditions the
wage levels likely result, in many instances, in adverse effects on the
wages and job prospects of U.S. workers. In light of the recent and
unprecedented shocks to the labor market, keeping the existing levels
in place is entirely untenable if the Department is to mitigate to the
fullest extent possible against the threat to the livelihoods of U.S.
workers caused by the pandemic. Immediate action is needed as the
economy continues through critical stages of its recovery. Congress
charged the Department, and more specifically, the Secretary, with
ensuring the employment of foreign workers does not adversely affect
similarly employed U.S. workers. Without the issuance of this rule, the
Department is hindered in its ability to meet its statutory mandate and
thus has appropriately found that notice and comment procedures in this
instance would be impracticable and contrary to the public interest.
Preventing Evasion of the New Wage Rates
Beyond the immediate and long term harm to U.S. workers' wages and
job opportunities that would result from delay in changes to the wage
levels, the Department is also justified in bypassing notice and
comment to prevent the evasion by employers of the new wage
requirements that would likely result from announcing a change to the
levels in advance of the change taking effect. Forgoing notice and
comment is permitted under circumstances where advance notice of a rule
and its delayed effectiveness would result in significant, changed
behavior by private parties to evade the rule, or that would otherwise
result in harmful market distortions.\238\ For example, where a rule
would effect a price freeze, invoking good cause to bypass notice and
comment has been justified on the grounds that ``[h]ad advance notice
issued, it is apparent that there would have ensued a massive rush to
raise prices and conduct `actual transactions'--or avoid them--before
the freeze deadline.'' \239\ Similarly, courts have found good cause
was properly invoked where the announcement of a price increase to take
effect at a future date would have likely resulted in producers
withholding their product ``from the market until such time as they
could take advantage of the price increase.'' \240\ Advance notice of
the new rule in such cases contravenes the public interest because it
would result in private parties evading or being able to improperly
take advantage of regulatory changes, thereby undermining their
effectiveness and exacerbating the very harm the changes are meant to
ameliorate.\241\
---------------------------------------------------------------------------

\238\ See Mobil Oil Corp. v. Dep't of Energy, 728 F.2d 1477,
1492 (Temp. Emer. Ct. App. 1983) (``On a number of occasions,
however, this court has held that, in special circumstances, good
cause can exist when the very announcement of a proposed rule itself
can be expected to precipitate activity by affected parties that
would harm the public welfare.'').
\239\ DeRieux v. Five Smiths, Inc., 499 F.2d 1321, 1332 (Temp.
Emer. Ct. App. 1974).
\240\ Nader v. Sawhill, 514 F.2d 1064, 1068 (Temp. Emer. Ct.
App. 1975).
\241\ U.S. Steel Corp. v. U.S. E.P.A., 595 F.2d 207, 214 n.15
(5th Cir. 1979) (``Use of the exception has repeatedly been
approved, for example, in cases involving government price controls,
because of the market distortions caused by the announcement of
future controls.'').
---------------------------------------------------------------------------

The same holds true for the Department's adjustments to the
prevailing wage levels. Under the INA, the Department is required to
approve an LCA within seven days of when the application is filed.\242\
Further, employers have discretion as to when they file LCAs with the
Department. The only limitation is that they are not permitted to file
an LCA earlier than six months before the beginning date of the period
of intended employment.\243\ The Department therefore receives LCAs
throughout the year in large numbers, at times that are, to some
extent, of employers' choosing, including a substantial number during
the period that would coincide with the submission of public comment
and finalization of this rule if it were not issued as an interim final
rule. For example, during the six month periods beginning in September
for fiscal years 2017, 2018, and 2019, the Department received, on
average, 147,123 LCAs.
---------------------------------------------------------------------------

\242\ 8 U.S.C. 1182(n)(1).
\243\ 20 CFR 655.730(b).
---------------------------------------------------------------------------

The limited discretion the Department has with respect to how
quickly it reviews LCAs, in combination with the leeway employers have
on when they file, as well as historical filing patterns, show that
advance notice of the wage level changes effected by this rule could
result in the kind of ``massive rush'' to evade price changes--in this
case changes to the price employers must pay for foreign labor--that
have repeatedly been found to justify bypassing notice and
comment.\244\ The scale of the wage change achieved by this rule, and
the fact that an LCA, once approved, can be and often is valid for
multiple years, means that the incentive for employers to change their
filing behavior and, to the greatest extent possible, thereby secure
wages at the current low levels for extended periods of time is
substantial, and would very likely result in a spate of LCA filings
during a comment period.\245\ Even leaving aside the potential
administrative burden this increase in filing may place on the
Department's operations, the harm it would cause to the public interest
is clear. Allowing employers to lock in for extended periods prevailing
wage rates that the Department has determined often result in adverse
effects on U.S. workers' wages and job opportunities would prolong the
very problem--made exigent by the current state of the labor market--
that the Department is seeking to address through this rule.\246\ This
on its own is sufficient reason for the Department to bypass notice and
comment in order to safeguard the public interest.
---------------------------------------------------------------------------

\244\ DeRieux v. Five Smiths, Inc., 499 F.2d 1321, 1332 (Temp.
Emer. Ct. App. 1974).
\245\ Cf. Carpenters 46 Cty. Conference Bd. v. Constr. Indus.
Stabilization Comm., 393 F. Supp. 480, 501 (N.D. Cal. 1975) (finding
that an agency lacked good cause to bypass notice and comment on the
grounds that private ``parties would not be expected to alter their
conduct in such a way as to frustrate the purposes of the Program in
response to announcement of the proposed `Substantive Policies.'
Indeed, the improbability of any change in conduct based upon the
`Substantive Policies' underscores the fact that they did not impose
any obligations on anybody that could stimulate evasive conduct.'').
\246\ See Mobil Oil Corp. v. Dep't of Energy, 728 F.2d 1477,
1492 (Temp. Emer. Ct. App. 1983).
---------------------------------------------------------------------------

For the foregoing reasons, each of which is independently
sufficient to justify bypassing notice and comment, the regulatory
change made by this interim final rule is urgently needed. Although the
Department acknowledges that the good cause exception is ``narrowly
construed and only reluctantly countenanced,'' the Department has
appropriately invoked the exception in this case.\247\ Both to ensure
that the Nation continues through critical stages of its economic
recovery without severely disadvantaging U.S. workers or affecting
their current or future wages and to avoid creating opportunities for
employers to evade the new wage requirements, the Department is issuing
this interim final rule without providing

[[Page 63902]]

a prior opportunity for comment before the rule takes effect.
---------------------------------------------------------------------------

\247\ Tenn. Gas Pipeline Co. v. FERC, 969 F.2d 1141, 1144 (D.C.
Cir. 1992).
---------------------------------------------------------------------------

The APA also authorizes agencies to make a rule effective
immediately, upon a showing of good cause, instead of imposing a 30-day
delay.\248\ The good cause exception to the 30-day effective date
requirement is easier to meet than the good cause exception for
foregoing notice and comment rulemaking.\249\ For the same reasons set
forth above, the Department also concludes that it has good cause to
dispense with the 30-day effective date requirement.
---------------------------------------------------------------------------

\248\ 5 U.S.C. 553(d)(3).
\249\ Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1485 (9th
Cir. 1992); Am. Fed'n of Gov't Emps., AFL-CIO v. Block, 655 F.2d
1153, 1156 (D.C. Cir. 1981); U.S. Steel Corp. v. EPA, 605 F.2d 283,
289-90 (7th Cir. 1979).
---------------------------------------------------------------------------

In accordance with the above authorities, the Department is
bypassing notice and comment requirements of 5 U.S.C. 553(b) and (c) to
urgently respond to the economic crisis resulting from COVID-19. This
rule is being issued as an interim final rule, and the Department
requests public input on all aspects of the rule. Instead of issuing a
notice of proposed rulemaking, the Department is taking post-
promulgation comments and will review and consider the public comments
before issuing a final rule.

B. 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 IFR, 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 IFR 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 IFR. Section
III.B.4 summarizes the estimated first-year and 10-year total and
annualized costs, perpetuated costs, and transfer payments of the IFR.
Finally, section III.B.5 describes the regulatory alternatives that
were considered during the development of the IFR.
Summary of the Analysis
The Department expects that the IFR will result in costs and
transfer payments. As shown in Exhibit 1, the IFR will have an
annualized cost of $3.06 million and a total 10-year cost of $21.51
million at a discount rate of 7 percent in 2019 dollars.\250\ The IFR
will result in annualized transfer payments of $23.5 billion and total
10-year transfer payments of $165.1 billion at a discount rate of 7
percent in 2019 dollars.\251\ When the Department uses a perpetual time
horizon to allow for cost comparisons under E.O. 13771, the annualized
cost of this IFR is $1.95 million at a discount rate of 7 percent in
2016 dollars.\252\
---------------------------------------------------------------------------

\250\ The IFR will have an annualized net cost of $2.91 million
and a total 10-year cost of $24.79 million at a discount rate of 3
percent in 2019 dollars.
\251\ The IFR will result in annualized transfer payments of
$23.25 billion and total 10-year transfer payments of $198.2 billion
at a discount rate of 3 percent in 2019 dollars.
\252\ To comply with E.O. 13771 accounting, the Department
multiplied the initial and then constant rule familiarization costs
(initial cost of $4,709,218; constant costs of $2,578,885 in 2019$)
by the GDP deflator (0.94242) to convert the cost to 2016 dollars
(initial cost of $4,438,062; constant costs of $2,430,393 in 2019$).
The Department used this result to determine the perpetual
annualized cost ($2,561,735) at a discount rate of 7 percent in 2016
dollars. Assuming the rule takes effect in 2020, the Department
divided $2,561,735 by 1.07\4\, which equals $1,954,336. This amount
reflects implementation of the rule in 2020.

Exhibit 1--Estimated Monetized Costs and Transfer Payments of the IFR
[2019 $ millions]
------------------------------------------------------------------------
Transfer
Costs payments
------------------------------------------------------------------------
10-Year Total with a Discount Rate of 3% $24.79 $198,292
10-Year Total with a Discount Rate of 7% 21.51 165,090
Annualized at a Discount Rate of 3%..... 2.91 23,246
Annualized at a Discount Rate of 7%..... 3.06 23,505
-------------------------------
Perpetuated Costs * with a Discount .............. 1.95
Rate of 7% (2016 $ Millions).......
------------------------------------------------------------------------

[[Page 63903]]

The total cost associated with the IFR 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.\253\ See the costs and
transfer payments subsections of section III.B.3 (Subject-by-Subject
Analysis) below for a detailed explanation.
---------------------------------------------------------------------------

\253\ As explained, infra, the Department did not quantify
transfer payments associated with 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 IFR. The Department describes them qualitatively in
section III.B.3 (Subject-by-Subject Analysis). The Department invites
comments regarding the assumptions, data sources, and methodologies
used to estimate the costs and transfer payments from this IFR. The
Department invites public comment on any additional benefits or costs
that could result from this IFR.
1. Need for Regulation
The Department has determined that new rulemaking is urgently
needed to more effectively protect the recruitment and wages of U.S.
workers, eliminate any 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.
In addition, this IFR is consistent with the aims of the
Presidential ``Proclamation Suspending Entry of Aliens Who Present a
Risk to the U.S. Labor Market Following the Coronavirus Outbreak,''
\254\ which determined that the entry of additional foreign workers in
certain immigrant and nonimmigrant classifications ``presents a
significant threat to employment opportunities for Americans affected
by the extraordinary economic disruptions caused by the COVID-19
outbreak.'' Section 5 of the Proclamation directs the Secretary of
Labor to, ``as soon as practicable, and consistent with applicable law,
consider promulgating regulations or take other appropriate action . .
. to ensure that the presence in the United States of aliens who have
been admitted or otherwise provided a benefit . . . pursuant to an EB-2
or EB-3 immigrant status or an H-1B nonimmigrants visa does not
disadvantage United States workers.'' \255\
---------------------------------------------------------------------------

\254\ Proclamation 10052 of June 22, 2020, Suspension of Entry
of Immigrants and Nonimmigrants Who Present a Risk to the United
States Labor Market During the Economic Recovery Following the 2019
Novel Coronavirus Outbreak, 85 FR 38263 (June 25, 2020); see also
Proclamation 10054 of June 29, 2020, Amendment to Proclamation
10052, 85 FR 40085 (July 2, 2020).
\255\ Id.
---------------------------------------------------------------------------

The Department is therefore amending its regulations at Sections
656.40 and 655.731 to reflect 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 expose how the application of the current wage
levels for the four-tier OES prevailing wage structure fail to produce
prevailing wages at a level consistent with the wages of U.S. workers
similarly employed, and has a suppressive effect on the wages of
similarly employed U.S. workers. The Department has a statutory mandate
to protect the wages and working conditions of similarly employed U.S.
workers from adverse effect caused by the employment of foreign workers
in the United States on a permanent or temporary basis. The regulatory
changes contained in this IFR are urgently needed as the country
continues to recover from the economic crisis caused by the COVID-19
public health emergency in order to more effectively protect the
recruitment and wages of U.S. workers and eliminate any economic
incentive or advantage in hiring foreign workers on a permanent or
temporary basis in the United States through these visa programs.
2. Analysis Considerations
The Department estimated the costs and transfer payments of the IFR
relative to the existing baseline (i.e., the current practices for
complying, at a minimum, with 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 IFR (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 IFR. The
number of affected entities is calculated using OFLC performance data
from fiscal years (FYs) 2018 and 2019. The Department uses them
throughout this analysis to estimate the costs and transfer payments of
the IFR.
---------------------------------------------------------------------------

\256\ The total unique LCA employers in 2018 and 2019 were
64,875 and 64,049, respectively.
\257\ The total number of worker positions associated with LCA
certifications that use OES prevailing wages in 2018 and 2019 were
1,023,552 and 908,218, respectively.
\258\ The unique employers in 2018 and 2019 were 28,856 and
23,596, respectively.

Exhibit 2--Number of Affected Entities by Type
[FY 2018-2019 average]
------------------------------------------------------------------------
Entity type Number
------------------------------------------------------------------------
Unique H-1B Program Certified Employers \256\........... 64,462
H-1B Program Certified Worker Positions with Prevailing 965,885
Wage Set by OES \257\..................................
Unique PERM Employers \258\............................. 26,226
------------------------------------------------------------------------

[[Page 63904]]

Estimated Number of Workers and Change in Hours
The Department presents the estimated average number of 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 IFR. 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
IFR. The Department used the BLS mean hourly wage rate for private
sector human resources specialists.\259\ We adjust the wage rates to
reflect total compensation, which includes non-wage factors such as
overhead and fringe benefits (e.g., health and retirement benefits). We
use an overhead rate of 17 percent \260\ 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 use a fringe
benefits rate of 42 percent.\261\
---------------------------------------------------------------------------

\259\ 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.
\260\ 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.
\261\ 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 used the hourly compensation rates presented in
Exhibit 3 throughout this analysis to estimate the labor costs for each
provision.

Exhibit 3--Compensation Rates
[2019 dollars] \262\
----------------------------------------------------------------------------------------------------------------
Hourly
Position Base hourly Loaded wage factor 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
---------------------------------------------------------------------------

\262\ Numbers may slightly differ due to rounding.
---------------------------------------------------------------------------

The Department's analysis below covers the estimated costs and
transfer payments of the IFR. 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 IFR.
Costs
The following section describes the costs of the IFR.
Rule Familiarization
When the IFR 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 will impose 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 (90,688) number of unique employers
requesting H-1B certifications and PERM certifications in FY18 (64,875
+ 28,856 = 93,731) and FY19 (64,049 + 23,596 = 87,645). The average
number of unique H-1B and PERM employers (90,688) was multiplied by the
estimated amount of time required to review the rule (1 hour).\263\
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 $4,709,218 in the first
year after the IFR takes effect. Each year after the first year the
same calculation is done for the number of new unique employers
requesting H-1B and PERM certifications (34,164 H-1B + 15,499 PERM =
49,663) in FY19.\264\ This calculation results in a continuing annual
undiscounted cost of $2.58 million in years 2-10 of the analysis. The
one-time and continuing cost yields a total average annual undiscounted
cost of $2.79 million. The annualized cost over the 10-year period is
$2.91 million and $3.06 million at discount rates of 3 and 7 percent,
respectively.
---------------------------------------------------------------------------

\263\ This estimate reflects the nature of the IFR. As an IFR to
amend parts of an existing regulation, rather than to create a new
rule, the 1-hour estimate assumes a high number of readers familiar
with the existing regulation.
\264\ FY19 is the only full year of data with new unique
entities. In Q1-Q3 of FY20 has a partial year the same percentage of
total employers are new as FY19.
---------------------------------------------------------------------------

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 levels result in prevailing wage rates for H-1B 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 high-skilled 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 situated workers in the U.S. labor market. The resulting
distortions from a poor calculation of the prevailing wage allow some
firms to replace qualified U.S. workers with lower-cost foreign
workers.
Therefore, the Department is amending Sec. 656.40(b) by codifying
the practice of using four prevailing wage levels and the computations
of those wage levels. Specifically, new paragraph (b)(2)(i) stipulates
that the ``prevailing wage shall be provided by the OFLC

[[Page 63905]]

Administrator at four levels.'' This paragraph specifies the four new
levels (Levels I through IV) to be applied. Level I--currently
calculated as the mean of the bottom third of the OES wage
distribution--will be calculated as the mean of the fifth decile of the
wage distribution. Roughly speaking, this means that the Level I
prevailing wage will be adjusted from the 17th percentile to the 45th
percentile. Level IV--currently calculated as the mean of the upper two
thirds of the OES wage distribution--will now be calculated as the mean
of the upper decile of the distribution. This means the fourth wage
level will increase approximately from the 67th percentile to the 95th
percentile.
Consistent with the formula provided in the INA, Level II 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. Level
III 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 prevailing wage at approximately
the 62nd percentile and a Level III prevailing wage at approximately
the 78th percentile, as compared to the current computation, which
places Level II at approximately the 34th percentile and Level III at
approximately the 50th percentile.
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 and 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 would occur from
implementation of the prevailing wage computation changes contained in
the IFR. It is expected that the increase in prevailing wages under the
IFR will induce 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 FY2014
through FY2020, 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 situated 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 design 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.
The IFR is still inducing a wage transfer under these cases where
U.S. workers are employed instead of H-1B workers and 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 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 U.S. worker or 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 measure accurately the efficiency gains or losses to
the U.S. labor market created by the new prevailing wage system. While
the Department discusses this potential impact qualitatively, it
welcomes comments on how to estimate changes to efficiency from the new
prevailing wage levels.
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 IFR 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 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. The IFR 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, the second year new and continuing certifications from
year 1 will be impacted, and 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 cohort based on FY 2018-FY 2020 data. Those cohorts
are: Certifications lasting less than 1 year, certifications lasting 1-
2 years, and certifications lasting 2-3 years.
H-1B, H-1B1, or E-3 applications certified by the Department do not
necessarily result in employment and employer wage obligations. After
obtaining a certification, employers 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 that were based on other approved
sources to determine the prevailing wage (e.g., Collective Bargaining
Agreements, employer-provided surveys). In FY 2020, approximately 92
percent of workers associated with H-1B, H-1B1, and E-3 certifications
had prevailing wages based on the OES survey. Therefore, we adjusted
the USCIS approvals downward by 8 percent, and then computed the
approval rates. 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 63906]]

and approval rate.\265\ 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.\266\
---------------------------------------------------------------------------

\265\ 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.
\266\ 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 Percent USCIS Percent percent
LCA certified approved \+\ approved LCA certified approved \+\ 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
IFR, 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.\267\ In order to estimate wages
for the new IFR levels of 45th, 62nd, 78th, and 95th percentiles, the
Department linearly interpolated between relevant percentiles for
reported wages at each SOC code and geographic area combination.\268\
For the 95th percentile, the Department used OES wages reported for the
90th percentile at each SOC code and geographic area combination.
---------------------------------------------------------------------------

\267\ 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.
\268\ For example, if OES reports a wage of $30 per hour at the
25th percentile and $40 per hour at the 50th percentile then the
45th percentile is interpolated as $30 + ($40-$30) * ((45-25)/(50-
25)) = $38 per hour.
---------------------------------------------------------------------------

For an illustrative example in Exhibit 5, to calculate projected
wage impacts under the IFR, 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 the particular SOC and the geographic
area combination. The examples in Exhibit 5 set forth how the
Department calculated the IFR wage impact for an individual case of
each length cohort.

Exhibit 5--Prevailing Wage Under the IFR
[Example cases]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Number of Number of USCIS
Number of Prevailing hours hours hours Total wages Total wages Total wages Total wages approval Adjusted
Length cohort certified wage (hour) worked in worked in worked in 2018 2019 2020 2018-2020 rate total wages
workers 2018 2019 2020 (percent)
(a) (b) (c) (d) (e) (a * b * (a * b * (a * b * (f + g + (j) (i * j)
c) = (f) d) = (g) e) = (h) h) = (i)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<1 Year.......................................... 100 $39.56 648 1032 0 $2,563,488 $4,082,592 $0 $6,646,080 19 $1,262,755
1-2 Years........................................ 100 27.13 1048 1032 0 2,843,224 2,799,816 0 5,643,040 25 1,410,760
2-3 Years........................................ 100 27.92 528 2080 1568 1,474,176 5,807,360 4,377,856 11,659,392 18 2,098,691
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

After the total wages for the IFR was determined, the wage
calculation under the current offered wage levels was calculated. The
currently offered wage is always equal to or greater than the current
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 IFR: 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 USCIS
Number of Prevailing Prevailing hours hours hours Total wages Total wages Total wages Total wages approval Adjusted
Length cohort certified wage (year) wage worked in worked in worked in 2018 2019 2020 2018-2020 rate total wages
workers 2018 2019 2020 (percent)
(a) (b) (b/2080) = (d) (e) (f) (a * c * (a * c * 2020 (a * c (g + h + (k) (j * k)
(c) d) = (g) e) = (h) * f) = (i) i) = (j)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<1 Year............................. 100 $77,459.00 $37.24 648 1032 0 $2,413,146 $3,843,158 $0 $6,256,304 19 $1,188,698
1-2 Years........................... 100 50,316.00 24.19 1048 1032 0 2,535,152 2,496,448 0 $5,031,600 25 1,257,900
2-3 Years........................... 100 48,432.00 23.28 528 2080 1568 1,229,428 4,843,200 3,651,028 9,723,655 18 1,750,258
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Once the baseline offered wage was obtained, the Department
estimated the wage impact of the IFR prevailing wage levels by
subtracting the baseline offered wage for each calendar year from the
IFR prevailing wage. The total wage impact was then multiplied by the
average USCIS petition beneficiary approval rate for the state of
intended employment. Estimating wage impacts is calculated here for the
examples in Exhibits 5 and 6, above. For the length cohort less than 1
year, the impact in 2018 was $28,565 (($2,563,488-$2,413,146) * 0.19)
and

[[Page 63907]]

$45,492 in 2019 (($4,082,592-$3,843,158) * 0.19). For the length cohort
of 1-2 years, the impact in 2018 was $77,018 (($2,843,224-$2,535,152) *
0.25), and in 2019 was $75,842 (($2,799,816-$2,496,448) * 0.25). The
example for length cohort 2-3 years had wage impacts in 2018, 2019, and
2020. In the 2018 the wage impact was $44,055 (($1,474,176-$1,229,428)
* 0.18), $173,549 in 2019 (($5,807,360-$4,843,200) * 0.18), and
$130,829 in 2020 (($4,377,856-$3,651,028) * 0.18).
To base the estimated wage impacts on three years of data, and to
include the most recent data (i.e., FY 2020), this process was done for
each certification using the FY 2018-FY 2020 certification data. FY
2020 certification data only consists of three quarters of data as of
the publication date of this IFR. Therefore, to estimate wage transfers
for three full years of data, FY 2020 Q4 data was simulated based on FY
2019 data. The Department used the Employment Cost Index (ECI) to
inflate the FY 2019 Q4 total wage impacts by length cohort to be
representative of the potential FY 2020 Q4 total wage impacts. The most
recent annual growth rate of the ECI, from June 2019 to June 2020 (2.7
percent), was used to inflate the 2019 Q4 total wage impacts. Total
wage impacts were inflated in each calendar year for each length
cohort, separated by whether the wages in each calendar year and cohort
were paid to new workers for the first time in that year, or if the
wages were being paid to workers whose employment was continuing from
prior calendar years. The estimated FY 2020 Q4 wage impacts were summed
with the FY 2020 Q1-Q3 wage impacts to create an estimate of the total
wage impact for the fiscal year.
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 a 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.\269\
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 the number of workers associated with
the certification that does not match. 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 wage impacts are then estimated to
the calculated wage impact to produce a final total wage impact for
each cohort in each calendar year.
---------------------------------------------------------------------------

\269\ In FY 2018, 6 percent of certifications do not match, in
FY 2019 9 percent, and FY 2020 6 percent.
---------------------------------------------------------------------------

The Department determined the total impact of the IFR prevailing
wage levels for each length cohort in each calendar year by summing the
wage impacts for all certifications in each year and averaging the
totals. The wage impacts for each cohort and calendar year are
presented in Exhibit 7. Some calendar years do not have values because
the cohort, based on FY 2018-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--Estimated Wage Transfers (FY18-FY20 Data)
[Million 2019$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual
CY 18 CY 19 CY 20 CY 21 CY 22 average
--------------------------------------------------------------------------------------------------------------------------------------------------------
<1 Year:
New................................................. $24.8 $16.8 $17.2 N/A N/A $19.6
Continuing.......................................... 7.0 13.5 8.3 4.2 N/A 8.3
1-2 Years:
New................................................. 86.2 61.7 54.0 N/A N/A 67.3
Continuing.......................................... N/A 144.6 119.6 75.4 N/A 113.2
2-3 Years:
New................................................. 6,965 3,502 2,806 N/A N/A 4,424
Continuing.......................................... N/A 13,910 7,401 5,655 N/A 8,989
Continuing 3+....................................... N/A N/A 15,790 14,031 8,794 12,872
--------------------------------------------------------------------------------------------------------------------------------------------------------

The annual average for each length cohort is used to produce the
total transfers over the 10-year horizon. Each cohort enters in each
year and has continuing wage impacts based on its cohort length.
Therefore, in years 3-10 (2023-2030), the annual wage impact is equal
to the sum of each cohort's annual average. This series is presented
below in Exhibit 8.

Exhibit 8--Total Transfer Payments of the IFR
[2019$ millions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
<1 1-2 Years 2-3 Years
Cohort ---------------------------------------------------------------------------------------------------------------- Total
New Continuing New Continuing New Continuing Continuing 3+
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2021............................................................ $19.6 $0.0 $67.3 $0.0 $4,424 $0 $0 $4,511

[[Page 63908]]

2022............................................................ 19.6 8.3 67.3 113 4,424 8,989 0 13,621
2023............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
2024............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
2025............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
2026............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
2027............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
2028............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
2029............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
2030............................................................ 19.6 8.3 67.3 113 4,424 8,989 12,872 26,493
-------------------------------------------------------------------------------------------------------------------------------
10-year total............................................... 196 74 673 1,019 44,245 80,898 102,973 230,077
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 $198.29 billion and $165.09 billion
at discount rates of 3 and 7 percent, respectively. The annualized
transfer over the 10-year period is $23.25 billion and $23.5 billion at
discount rates of 3 and 7 percent, respectively.
With the increases in prevailing wage levels under this IFR, 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.\270\ A commonly cited value of average long-run own-wage
elasticity of labor demand is -0.3.\271\ 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 a 25.8 percent
increase in wage payments,\272\ which would imply a potential reduction
in labor demand by 7.74 percent (25.8 * .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, it would reduce the transfer
payment by approximately 7.74 percent. The annual average undiscounted
wage transfer estimate of $23.0 billion would therefore be reduced to
$21.2 billion.
---------------------------------------------------------------------------

\270\ 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.
\271\ 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.
\272\ The average unadjusted total wages paid to employees
impacted by the IFR in the FY18-FY20 datasets is $209.1 billion. The
average unadjusted total wages paid to those same employees in the
baseline in the FY18-FY20 datasets is $263.2 billion. This
represents a 25.8 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 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 IFR
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 9 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 9--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 5,311 9.7
in the United States...........................
H-1B visa....................................... 74,454 63,976 44,887 71.7
H-1B1 visa...................................... 109 81 54 0.1
E-3 visa........................................ 471 280 160 0.3
All other visa classifications *................ 24,469 12,907 10,520 18.1
---------------------------------------------------------------

[[Page 63909]]

Total....................................... 109,550 87,085 60,932 100
----------------------------------------------------------------------------------------------------------------
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.

About 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
IFR'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 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 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.\273\ By setting the Level I
wage level at the 45th 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.
---------------------------------------------------------------------------

\273\ 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 10 below summarizes the costs and transfer payments of the
IFR. The Department estimates the annualized cost of the IFR at $3.06
million and the annualized transfer payments (from H-1B, H-1B1, and E-3
employers to workers) at $23.5 billion, at a discount rate of 7
percent. The Department did not estimate any cost savings. For the
purpose of E.O. 13771, the annualized cost, when perpetuated, is $1.95
million at a discount rate of 7 percent in 2016 dollars.

[[Page 63910]]

Exhibit 10--Estimated Monetized Costs and Transfer Payments of the IFR
[2019$ millions]
------------------------------------------------------------------------
Transfer
Costs payments
------------------------------------------------------------------------
2021.................................... $4.71 $4,511
2022.................................... 2.58 13,621
2023.................................... 2.58 26,493
2024.................................... 2.58 26,493
2025.................................... 2.58 26,493
2026.................................... 2.58 26,493
2027.................................... 2.58 26,493
2028.................................... 2.58 26,493
2029.................................... 2.58 26,493
2030.................................... 2.58 26,493
-------------------------------
Undiscounted Total.................. 27.92 230,077
10-Year Total with a Discount Rate 24.79 198,292
of 3%..............................
10-Year Total with a Discount Rate 21.51 165,090
of 7%..............................
10-Year Average..................... 2.79 23,008
Annualized with a Discount Rate of 2.91 23,246
3%.................................
Annualized with a Discount Rate of 3.06 23,505
7%.................................
Perpetuated Net Costs with a .............. 1.95
Discount Rate of 7% (2016$
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 the 45th percentile, the 62nd
percentile, the 78th percentile, and the 95th percentile.
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 45th, 75th, and 95th 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 also seeks
public comments to help us to identify any other regulatory
alternatives that should be considered.

C. 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), requires Federal agencies
engaged in rulemaking to consider the impact of their proposals on
small entities, consider alternatives to minimize that impact, and
solicit public comment on their analyses. The RFA requires the
assessment of the impact of a regulation on a wide range of small
entities, including small businesses, not-for-profit organizations, and
small governmental jurisdictions. Agencies must perform a review to
determine whether a proposed or final rule would have a significant
economic impact on a substantial number of small entities. 5 U.S.C.
603, 604. If the determination is that it would, the agency must
prepare a regulatory flexibility analysis as described in the RFA. Id.
However, if an agency determines that a proposed or final rule is
unlikely to have a significant economic impact on a substantial number
of small entities, the RFA provides that the head of the agency may so
certify and a regulatory flexibility analysis is not required.\274\ The
certification must include a statement providing the factual basis for
this determination, and the reasoning should be clear.
---------------------------------------------------------------------------

\274\ See 5 U.S.C. 605.
---------------------------------------------------------------------------

The Department expects that this IFR will likely have a significant
economic impact on a substantial number of small entities and is
therefore publishing this Initial Regulatory Flexibility Analysis
(IRFA), as required by the RFA. The Department invites public comment
on all aspects of this IRFA, including the estimates related to the
number of small entities affected by the IFR and expected

[[Page 63911]]

costs. The Department also invites public comment on whether viable
alternatives exist that would reduce the burden on small entities while
remaining consistent with statutory requirements and the objectives of
the IFR.
1. Why the Department Is Considering Action
The Department has determined that new rulemaking needed to will
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. In addition,
this IFR is consistent with the aims of the Presidential ``Proclamation
Suspending Entry of Aliens Who Present a Risk to the U.S. Labor Market
Following the Coronavirus Outbreak,'' which found that the entry of
additional foreign workers in certain immigrant and nonimmigrant
classifications ``presents a significant threat to employment
opportunities for Americans affected by the extraordinary economic
disruptions caused by the COVID-19 outbreak.'' Accordingly, this IFR
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.
2. Objectives of and Legal Basis for the IFR
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 45th percentile, the 62nd percentile, the 78th percentile, and the
95th percentile.
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. This, in
turn, will protect jobs of U.S. workers as a part of responding to the
coronavirus public health emergency, and facilitate the Nation's
economic recovery.
---------------------------------------------------------------------------

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

3. Estimating the Number of Small Entities Affected by the Rulemaking
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.\276\ 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.\277\ 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 IFR on small entities is based on the number of
small unique employers (22,430 with revenue data).
---------------------------------------------------------------------------

\276\ 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.
\277\ 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.
---------------------------------------------------------------------------

To provide clarity on the types of industries impacted by this
regulation, Exhibit 11 shows the number of unique H-1B small entity
employers with certifications in FY 2019 within the top 10 most
prevalent industries at the 6-digit and 4-digit NAICS code level.
Depending on when their employment period starts and the length of the
employment period (up to 3 years), small entities with certifications
in FY 2019 can have wage obligations in calendar years 2018 through
2023,three.

Exhibit 11--Number of H-1B Small Employers by NAICS Code
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of employers
Description -----------------------------------------------------------------------------------------------
2018 2019 2020 2021 2022 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
6-Digit NAICS:
511210..................... Software Publishers.... 468 (13%) 1,570 (6%) 1,578 (6%) 1,557 (6%) 1,477 (6%) 127 (14%)
541511..................... Custom Computer 413 (11%) 1,149 (4%) 1,155 (4%) 1,141 (5%) 1,082 (5%) 101 (11%)
Programming Services.
621111..................... Offices of Physicians 138 (4%) 1,092 (4%) 1,097 (4%) 1,082 (4%) 1,004 (4%) 34 (4%)
(except Mental Health
Specialists).
541330..................... Engineering Services... 94 (3%) 971 (4%) 977 (4%) 964 (4%) 913 (4%) 13 (1%)
611310..................... Colleges, Universities, 104 (3%) 637 (2%) 644 (2%) 627 (2%) 588 (3%) 39 (4%)
and Professional
Schools.
541110..................... Offices of Lawyers..... 58 (2%) 607 (2%) 606 (2%) 596 (2%) 549 (2%) 13 (1%)
611110..................... Elementary and 45 (1%) 625 (2%) 621 (2%) 577 (2%) 509 (2%) 11 (1%)
Secondary Schools.
541310..................... Architectural Services. 24 (1%) 501 (2%) 503 (2%) 499 (2%) 465 (2%) 1 (0%)
541714..................... Research and 53 (1%) 444 (2%) 445 (2%) 437 (2%) 411 (2%) 15 (2%)
Development in
Biotechnology (except
Nano biotechnology).

[[Page 63912]]

541614..................... Process, Physical 89 (2%) 394 (2%) 399 (2%) 392 (2%) 369 (2%) 25 (3%)
Distribution, and
Logistics Consulting
Services.
---------------------------------------------------------
Other NAICS 2,197 (60%) 17,695 (69%) 17,755 (69%) 17,395 (69%) 15,841 (68%) 556 (59%)
--------------------------------
4-Digit NAICS:
5112....................... Software Publishers.... 468 (13%) 1,570 (6%) 1,578 (6%) 1,557 (6%) 1,477 (6%) 127 (14%)
5413....................... Architectural, 128 (3%) 1,677 (7%) 1,687 (7%) 1,667 (7%) 1,572 (7%) 17 (2%)
Engineering, and
Related Services.
5415....................... Computer Systems Design 521 (14%) 1,518 (6%) 1,526 (6%) 1,508 (6%) 1,427 (6%) 128 (14%)
and Related Services.
5416....................... Management, Scientific, 320 (9%) 1,437 (6%) 1,449 (6%) 1,427 (6%) 1,318 (6%) 70 (7%)
and Technical
Consulting Services.
6211....................... Offices of Physicians.. 138 (4%) 1,092 (4%) 1,097 (4%) 1,082 (4%) 1,004 (4%) 34 (4%)
5417....................... Scientific Research and 101 (3%) 660 (3%) 663 (3%) 652 (3%) 606 (3%) 28 (3%)
Development Services.
6113....................... Colleges, Universities, 104 (100%) 637 (2%) 644 (2%) 627 (2%) 588 (3%) 39 (4%)
and Professional
Schools.
5239....................... Other Financial 73 (2%) 635 (2%) 638 (2%) 629 (2%) 572 (2%) 21 (2%)
Investment Activities.
5411....................... Legal Services......... 59 (2%) 615 (2%) 614 (2%) 604 (2%) 556 (2%) 13 (1%)
5412....................... Accounting, Tax 41 (1%) 596 (2%) 599 (2%) 589 (2%) 558 (2%) 12 (1%)
Preparation,
Bookkeeping, and
Payroll Services.
---------------------------------------------------------
Other NAICS 1,730 (47%) 15,248 (59%) 15,285 (59%) 14,925 (59%) 13,530 (58%) 446 (48%)
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Compliance Requirements of the IFR, Including Reporting and
Recordkeeping
The Department has considered the incremental costs for small
entities from the baseline (i.e., the current practices for complying,
at a minimum, with the regulations governing permanent labor
certifications at 20 CFR part 656 and labor condition applications at
20 CFR part 655, subpart H) to this IFR. We estimated the cost of (a)
the time to read and review the IFR and (b) wage costs. These estimates
are consistent with those presented in the E.O. 12866 section.
5. Calculating the Impact of the IFR on Small Entities
The Department estimates that small entities using the H-1B
program, 22,430 unique employers would incur a one-time cost of $51.93
to familiarize themselves with the rule.^{278 279}
---------------------------------------------------------------------------

\278\ $51.93 = 1 hour x $51.93, where $51.93 = $32.58 + ($32.58
x 42%) + ($32.58 x 17%).
\279\ The Department considered PERM employers for purposes of
calculating one-time costs in the E.O. 12866 section.
---------------------------------------------------------------------------

In addition to the total first-year cost above, each small entity
using the H-1B program may have an increase in the annual wage costs
due to the revisions to the wage structure if they currently offer a
wage lower than the IFR prevailing wage levels. For each small entity,
we calculated the likely annual wage cost as the sum of the total IFR
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 IFR 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 seeks public
comments on how to best estimate which small entities had
certifications approved by USCIS. Exhibit 12 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 12--Wage Impacts on H-1B Program Small Entities
----------------------------------------------------------------------------------------------------------------
Proportion of revenue impacted 2018 2019 2020 2021 2022 2023
----------------------------------------------------------------------------------------------------------------
Number of H-1B Small Entities with 2,790 20,418 20,503 20,158 18,756 717
Wage Impacts.....................
Average Wage Impact per Small $14,664 $110,504 $216,187 $212,130 $112,563 $19,044
Entity...........................
----------------------------------------------------------------------------------------------------------------

The Department determined the proportion of each small entity's
total revenue affected by the costs of the IFR to determine if the IFR
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 IFR. The Department used a total cost estimate of 3
percent of revenue as the threshold for a significant individual
impact, and assumed that 15 percent of small entities incurring a
significant impact as the threshold for a substantial impact on small
entities generally.

[[Page 63913]]

The Department has used a threshold of three percent of revenues in
prior rulemakings for the definition of significant economic
impact.\280\ This threshold is also consistent with that sometimes used
by other agencies.\281\ The Department also believes that its
assumption that 15 percent of small entities will be substantially
affected experiencing a significant impact to determine whether the
rule has a substantial impact on small entities is appropriate. The
Department has used the same threshold in prior rulemakings for the
definition of substantial number of small entities.\282\
Of the 22,430 unique small employers with revenue data, up to 16
percent of employers would have more than 3 percent of their total
revenue affected in 2019, 28 percent in 2020 and 2021, and up to 21
percent in 2022. Exhibit 13 provides a breakdown of small employers by
the proportion of revenue affected by the costs of the IFR.

Exhibit 13--Cost Impacts as a Proportion of Total Revenue for Small Entities
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proportion of revenue impacted 2018 2019 2020 2021 2022 2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
<1%..................................................... 2,708 (85%) 15,098 (69%) 11,748 (54%) 11,748 (54%) 12,411 (62%) 737 (94%)
1%-2%................................................... 232 (7%) 2,215 (10%) 2,475 (11%) 2,475 (11%) 2,274 (11%) 18 (2%)
2%-3%................................................... 75 (2%) 1,119 (5%) 1,464 (7%) 1,464 (7%) 1,182 (6%) 10 (1%)
3%-4%................................................... 64 (2%) 615 (3%) 965 (4%) 965 (4%) 730 (4%) 8 (1%)
4%-5%................................................... 29 (1%) 429 (2%) 674 (3%) 674 (3%) 568 (3%) 1 (0%)
>5%..................................................... 89 (3%) 2,538 (12%) 4,363 (20%) 4,363 (20%) 2,815 (14%) 10 (1%)
-----------------------------------------------------------------------------------------------
Total >3%........................................... 182 (6%) 3,582 (16%) 6,002 (28%) 6,002 (28%) 4,113 (21%) 19 (2%)
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Relevant Federal Rules Duplicating, Overlapping, or Conflicting With
the IFR
The Department is not aware of any relevant Federal rules that
conflict with this IFR.
---------------------------------------------------------------------------

\280\ 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).
\281\ 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).
\282\ 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).
---------------------------------------------------------------------------

7. Alternative to the IFR
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 45th percentile, the 62nd percentile, the 78th percentile, and the
95th percentile.
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, respectively, at the 45th, 75th, and 95th
percentile. Modifying the number of wage tiers to three levels would
allow for more manageable wage assignments that would be easier for
small entities and their employees to understand due to decreased
complexity to matching wage tiers with position experience. The
Department decided not to pursue this alternative because the chosen
four-tiered wage methodology is likely to be more accurate than the
three-tiered wage level because it has two intermediate wage levels. In
addition, creating a three-tiered wage level would require a statutory
change. Although the Department recognizes that legal limitations
prevent this alternative from being actionable, the Department
nonetheless presents it as a regulatory alternative in accord with OMB
guidance.\283\
---------------------------------------------------------------------------

\283\ OMB Circular A-4 advises that agencies ``should discuss
the statutory requirements that affect the selection of regulatory
Approach. If legal constraints prevent the selection of a regulatory
action that best satisfies the philosophy and principles of
Executive Order 12866, [agencies] should identify these constraints
and estimate their opportunity cost. Such information may be useful
to Congress under the Regulatory Right-to-Know Act.''
---------------------------------------------------------------------------

The Department considered a second alternative that attempted to
modify the geographic levels for assigning prevailing wages for the
occupation from the current four-tiered structure, which ranges from
local MSA or BOS areas to national, to a two-tiered structure
containing statewide or national levels. By assigning prevailing wages
at a statewide or national level (depending on whether statewide
averages can be reported by BLS), this second alternative attempted to
simplify the prevailing wage determination process by reducing the
number of distinct wage computations reported by the BLS. It would also
provide small entities with greater certainty regarding their wage
obligations, especially where the job opportunity requires work to be
performed in a number of different worksite locations within a state or
regional area. The Department decided not to pursue this alternative
because the chosen methodology preserves important differences in
county and regional level prevailing wages, and it would require a
statutory change.
The Department invites public comments on these alternatives and
other alternatives to reduce the burden on small entities while
remaining consistent with the objectives of the proposed rule.

D. Unfunded Mandates Reform Act

The Unfunded Mandates Reform Act of 1995 (UMRA) is intended, among
other things, to curb the practice of imposing unfunded Federal
mandates on State, local, and tribal governments. Title II of UMRA
requires each Federal agency to prepare a written statement assessing
the effects of any Federal mandate in a proposed or final agency rule
that may result in a $100 million or more expenditure (adjusted
annually for inflation) in any one year by State, local, and tribal
governments, in the aggregate, or by the private sector. The inflation-
adjusted value equivalent of $100 million in 1995 adjusted for
inflation to 2019 levels by the Consumer Price Index for All Urban
Consumers (CPI-U) is approximately $168 million based on the Consumer
Price Index for All Urban Consumers.\284\
---------------------------------------------------------------------------

\284\ 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.

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

[[Page 63914]]

While this IFR 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.\285\ 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.\286\ This IFR
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.
---------------------------------------------------------------------------

\285\ See 2 U.S.C. 658(6).
\286\ See 2 U.S.C. 658(7)(A)(ii).
---------------------------------------------------------------------------

E. Congressional Review Act

The Office of Information and Regulatory Affairs, of the Office of
Management and Budget, has determined that this IFR 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. In the preceding APA section of this preamble, the
Department explained that it has for good cause found that notice and
public procedure thereon are impracticable and contrary to the public
interest. Accordingly, this rule shall take effect immediately, as
permitted by 5 U.S.C. 808(2).

F. Executive Order 13132 (Federalism)

This IFR 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 IFR does not have
sufficient federalism implications to warrant the preparation of a
federalism summary impact statement.

G. Executive Order 12988 (Civil Justice Reform)

This IFR meets the applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988.

H. Regulatory Flexibility Executive Order 13175 (Consultation and
Coordination With Indian Tribal Governments)

This IFR 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.

I. 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 IFR 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.

DEPARTMENT OF LABOR

Accordingly, for the reasons stated in the preamble, the Department
of Labor amends parts 655 and 656 of chapter V, title 20, Code of
Federal Regulations, as follows:

PART 655--TEMPORARY EMPLOYMENT OF FOREIGN WORKERS IN THE UNITED
STATES

0
1. The authority citation for part 655 is revised to read as follows:

Authority: Section 655.0 issued under 8 U.S.C.
1101(a)(15)(E)(iii), 1101(a)(15)(H)(i) and (ii), 8 U.S.C.
1103(a)(6), 1182(m), (n), (p), and (t), 1184(c), (g), and (j), 1188,
and 1288(c) and (d); sec. 3(c)(1), Pub. L. 101-238, 103 Stat. 2099,
2102 (8 U.S.C. 1182 note); sec. 221(a), Pub. L. 101-649, 104 Stat.
4978, 5027 (8 U.S.C. 1184 note); sec. 303(a)(8), Pub. L. 102-232,
105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec. 323(c), Pub. L. 103-
206, 107 Stat. 2428; sec. 412(e), Pub. L. 105-277, 112 Stat. 2681 (8
U.S.C. 1182 note); sec. 2(d), Pub. L. 106-95, 113 Stat. 1312, 1316
(8 U.S.C. 1182 note); 29 U.S.C. 49k; Pub. L. 107-296, 116 Stat.
2135, as amended; Pub. L. 109-423, 120 Stat. 2900; 8 CFR
214.2(h)(4)(i); 8 CFR 214.2(h)(6)(iii); and sec. 6, Pub. L. 115-218,
132 Stat. 1547 (48 U.S.C. 1806).
Subpart A issued under 8 CFR 214.2(h).
Subpart B issued under 8 U.S.C. 1101(a)(15)(H)(ii)(a), 1184(c),
and 1188; and 8 CFR 214.2(h).
Subpart E issued under 48 U.S.C. 1806.
Subparts F and G issued under 8 U.S.C. 1288(c) and (d); sec.
323(c), Pub. L. 103-206, 107 Stat. 2428; and 28 U.S.C. 2461 note,
Pub. L. 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),
Pub. L. 102-232, 105 Stat. 1733, 1748 (8 U.S.C. 1101 note); sec.
412(e), Pub. L. 105-277, 112 Stat. 2681; 8 CFR 214.2(h); and 28
U.S.C. 2461 note, Pub. L. 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), Pub. L. 106-95, 113 Stat. 1312, 1316 (8 U.S.C.
1182 note); Pub. L. 109-423, 120 Stat. 2900; and 8 CFR 214.2(h).

0
2. Amend Sec. 655.731 by revising paragraphs (a)(2)(ii) introductory
text, (a)(2)(ii)(A), and (a)(2)(ii)(A)(2) to read as follows:

Sec. 655.731 What is the first LCA requirement, regarding wages?

* * * * *
(a) * * *
(2) * * *
(ii) If the job opportunity is not covered by paragraph (a)(2)(i)
of this section, the prevailing wage shall be based on the wages of
workers similarly employed as determined by the wage component of the
Bureau of Labor Statistics (BLS) Occupational Employment Statistics
Survey (OES) in accordance with 20 CFR 656.40(b)(2)(i); a current wage
as determined in the area under the Davis-Bacon Act, 40 U.S.C. 276a et
seq. (see 29 CFR part 1), or the McNamara-O'Hara Service Contract Act,
41 U.S.C. 351 et seq. (see 29 CFR part 4); an independent authoritative
source in accordance with paragraph (a)(2)(ii)(B) of this section; or
another legitimate source of wage data in accordance with paragraph
(a)(2)(ii)(C) of this section. If an employer uses an independent
authoritative source or other legitimate source of wage data, the
prevailing wage shall be the arithmetic

[[Page 63915]]

mean of the wages of workers similarly employed, except that the
prevailing wage shall be the median when provided by paragraphs
(a)(2)(ii)(A), (b)(3)(iii)(B)(2), and (b)(3)(iii)(C)(2) of this
section. The prevailing wage rate shall be based on the best
information available. The following prevailing wage sources may be
used:
(A) OFLC National Processing Center (NPC) determination. The NPC
shall receive and process prevailing wage determination requests in
accordance with these regulations and Department guidance. Upon receipt
of a written request for a PWD, the NPC will determine whether the
occupation is covered by a collective bargaining agreement which was
negotiated at arm's length, and, if not, determine the wages of workers
similarly employed using the wage component of the BLS OES and
selecting an appropriate wage level in accordance with 20 CFR
656.40(b)(2)(i), unless the employer provides an acceptable survey. The
NPC shall determine the wage in accordance with secs. 212(n), 212(p),
and 212(t) of the INA and in a manner consistent with 20 CFR
656.40(b)(2). If an acceptable employer-provided wage survey provides
an arithmetic mean then that wage shall be the prevailing wage; if an
acceptable employer-provided wage survey provides a median and does not
provide an arithmetic mean, the median shall be the prevailing wage
applicable to the employer's job opportunity. In making a PWD, the NPC
will follow 20 CFR 656.40 and other administrative guidelines or
regulations issued by ETA. The NPC shall specify the validity period of
the PWD, which in no event shall be for less than 90 days or more than
1 year from the date of the determination.
* * * * *
(2) If the employer is unable to wait for the NPC to produce the
requested prevailing wage for the occupation in question, or for the CO
and/or the BALCA to issue a decision, the employer may rely on other
legitimate sources of available wage information as set forth in
paragraphs (a)(2)(ii)(B) and (C) of this section. If the employer later
discovers, upon receipt of the PWD from the NPC, that the information
relied upon produced a wage below the final PWD and the employer was
not paying the NPC-determined wage, no wage violation will be found if
the employer retroactively compensates the H-1B nonimmigrant(s) for the
difference between wage paid and the prevailing wage, within 30 days of
the employer's receipt of the PWD.
* * * * *

PART 656--LABOR CERTIFICATION PROCESS FOR PERMANENT EMPLOYMENT OF
ALIENS IN THE UNITED STATES

0
3. The authority citation for part 656 is revised to read as follows:

Authority: 8 U.S.C. 1182(a)(5)(A), 1182(p); sec.122, Pub. L.
101-649, 109 Stat. 4978; and Title IV, Pub. L. 105-277, 112 Stat.
2681.

0
4. Amend Sec. 656.40 by revising paragraphs (a) and (b)(2) and (3), to
read as follows:

Sec. 656.40 Determination of prevailing wage for labor certification
purposes.

* * * * *
(a) Application process. The employer must request a PWD from the
NPC, on a form or in a manner prescribed by OFLC. The NPC shall receive
and process prevailing wage determination requests in accordance with
these regulations and with Department guidance. The NPC will provide
the employer with an appropriate prevailing wage rate. The NPC shall
determine the wage in accordance with sec. 212(p) of the INA. Unless
the employer chooses to appeal the center's PWD under Sec. 656.41(a),
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 paragraph (b)(2)(i) of this section, 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 by occupational classification and geographic area, which is
computed and assigned at four levels set commensurate with the
education, experience, and level of supervision of similarly employed
workers, as determined by the Department. Based on this determination,
the prevailing wage shall be provided by the OFLC Administrator at four
levels:
(A) The Level I Wage shall be computed as the arithmetic mean of
the fifth decile 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 Level 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 Level 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 arithmetic mean of
the upper decile of the OES wage distribution and assigned for the most
specific occupation and geographic area available.
(ii) 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 paragraph (b)(2)(i) of this section as
a notice posted on the OFLC website.
(3) If the employer provides a survey acceptable under paragraph
(g) of this section, the prevailing wage for labor certification
purposes shall be the arithmetic mean of the wages of workers similarly
employed in the area of intended employment. If an otherwise acceptable
survey provides a median and does not provide an arithmetic mean, the
prevailing wage applicable to the employer's job opportunity shall be
the median of the wages of workers similarly employed in the area of
intended employment.
* * * * *

John Pallasch,
Assistant Secretary for Employment and Training, Labor.
[FR Doc. 2020-22132 Filed 10-6-20; 4:15 pm]
BILLING CODE 4510-FN-P