Forbes’s article about H1B salaries to increase between 150k to 250k has created a wave of restlessness in the H1B community.
Some are extremely happy and some are worried about their jobs in the coronavirus situation.
The real fact though is that the salaries cannot be increased so easily by the government. The basic economics of a business tells that each job has its own pay scale decided by the market forces.
The only concern in the government right now is to reduce the unemployment rate in America. As for the article published by Forbes, the sources from the government tell them that the deep extreme anti-immigrant forces are trying to capitalize on the current 60 days Trump ban to extend it to a work visa too.
Here is the article if you want to read it.
Chances of Increasing Minimum H1B Salary?
In my opinion, the chances are hardly 5% that this proposal or the idea will make it to real life.
Business economics shows that when the cost of production gets higher in a country, the jobs start flowing out. No business wants to spend more on creating a product than their profit margins.
Hence, if the H1B’s minimum salary is increased to 150k for a software engineer and 250k for a Financial Manager as shown by Forbes in their sample New York’s Level 4 wage comparison, the brain drain is bound to happen.
New York Level 4 Wage data from Forbes
|Type of Occupation||Annual Salary – Level 4|
|Software Developer (Systems)||$144,976|
The real examples in front of us are all manufacturing jobs being moved to China and most of IT development being done at offshore locations in India.
Do not forget that Canada and Australia are attracting skilled people as more companies look to set up their development centers outside the US. They both offer faster employment-based permanent residency (green cards) than the USA.
The US is trying hard to create a competition between Americans and foreign workers with respect to wages but its not really possible unless H1Bs have the negotiating power which in turn can happen only if they get Green cards.
What If H1B Salaries Are Increased?
Lets assume that this proposal takes the flight and Trump indeed increases the minimum pay.
What will happen to your current job?
The chances are very high that all low paying jobs primarily offered by IT consulting companies like TCS, Infosys, Cognizant etc will be immediately moved to low cost offshore locations like Mexico, India and China.
I estimate the low wage bracket to be less than 100k per year.
The assumption that increasing minimum H1B pay to level 4 will open job opportunities for US citizens is flawed. Businesses usually either scrap the high-cost projects or get the work done from low cost locations.
Hence, 95% of jobs will probably leave US if this proposal is made a law.
Can Trump Change the Minimum H1B Wage?
The US president does have the authority to issue executive orders and issue orders requiring temporary increase in pay or recertification of LCAs but they can be challenged in court.
We have seen in the past that USCIS has been making policy changes to interpret H1B work visa laws differently. This has led to more strict guidelines and more documentation to get H1B extensions too.
Attorneys believe that this is being done to avoid going through the congress as H1B requirement would need a law change.
The same thing has been done with June 2020 visa bulletin where the wide-spread expectation was good progress in employment-based backlogged countries. Several immigration attorneys including Greg Siskind have voiced their disappointment and posed a question that it has been done intentionally by White house.