The US Department of Labor has proposed a major overhaul of the wage rules governing H-1B visas, potentially pushing the minimum salaries employers must offer foreign workers significantly higher. The proposal
could raise the prevailing-wage benchmark by roughly 21 per cent to 33 per cent, depending on the skill level of the job, with entry-level positions facing the biggest increase.
For thousands of Indian professionals who rely on the H-1B route to work in the US, the change could have an impact well beyond their paycheques. While higher wage floors could mean better salaries for those who are hired, employers could also become more cautious about sponsoring lower-paid or entry-level foreign workers.
What Is H-1B Visa?
The H-1B is a temporary US work visa that allows American employers to hire foreign professionals for specialised jobs, particularly in areas such as technology, engineering, finance, healthcare and other highly skilled occupations.
The programme has an annual cap of 65,000 visas, with another 20,000 slots available for foreign nationals holding qualifying US advanced degrees.
Indian professionals have traditionally been among the biggest beneficiaries of the programme, particularly in the technology sector.
But the US government has long maintained that H-1B workers should not be used to undercut American employees. That is where the concept of the prevailing wage comes in.
What Was The Old Wage System?
Under the existing system, the Department of Labor uses wage data from the Bureau of Labor Statistics to establish four wage levels for different occupations and locations.
Broadly, the four levels correspond to increasing levels of experience and expertise.
- Level I: Entry-level
- Level II: Qualified
- Level III: Experienced
- Level IV: Fully competent or highly experienced
The current methodology places these levels at approximately the 17th, 34th, 50th and 67th percentiles of wages for workers in a particular occupation and geographic area.
An H-1B employer cannot simply pay whatever salary it wants. It generally has to pay the worker at least the higher of the applicable prevailing wage or the employer’s actual wage for similarly employed workers.
The prevailing wage itself is essentially a wage floor designed to ensure that bringing in a foreign worker does not adversely affect the wages and working conditions of similarly employed Americans.
What Is Changing?
The Labor Department’s proposed rule would move all four wage levels substantially higher.
That translates into estimated increases of about 33.4 per cent for Level I, 24.5 per cent for Level II, 20.8 per cent for Level III and 21.7 per cent for Level IV compared with the existing prevailing-wage methodology.
This is why the proposal is being described as a roughly 30 per cent H-1B wage hike, although it is important to understand that this does not mean every H-1B worker will automatically receive a 30 per cent salary increase. The actual dollar impact will depend on the worker’s occupation, experience level and location.
Why Is The US Proposing An H-1B Wage Hike?
The Labor Department says the existing system does not adequately align wages paid to foreign workers with those earned by similarly situated American workers.
Its stated objective is to reduce incentives for employers to hire foreign workers at lower wages and to protect the wages and job opportunities of US workers.
The department has also cited wage disparities between H-1B workers and comparable US workers. An analysis cited in the proposed rule found that H-1B workers were paid roughly $10,000 less on average than comparable US workers, although the size of the gap varied by occupation.
How This Could Affect Indian Workers
The immediate attraction is that Indians who secure H-1B jobs could potentially command higher salaries. However, an employer that previously found it economical to hire an entry-level foreign worker may reconsider if the wage floor rises substantially. The biggest proposed jump is at Level I, where the benchmark would move from the 17th to the 34th percentile.
That could make entry-level H-1B sponsorship more expensive and potentially encourage companies to recruit locally, automate certain roles or move some work outside the US.
This could be particularly significant for Indian IT companies and young professionals hoping to begin their US careers through H-1B sponsorship.
The wage proposal does not exist in isolation. The Trump administration has already moved towards making the H-1B system favour higher-paid and higher-skilled workers. A final rule taking effect in February 2026 introduced a weighted selection system that gives higher-paid positions a greater chance in the H-1B selection process, while retaining opportunities across wage levels.
The administration has also proposed a $103,265 fee for cap-subject H-1B petitions, on top of existing fees. That proposal is currently subject to public comment.
Together, these measures point towards a very different H-1B landscape, one where employers may increasingly have an incentive to sponsor workers who command higher salaries and possess more specialised skills.
There is also an alternative methodology under consideration that would calculate wage benchmarks by taking workers’ education and experience into account. Under that alternative, the wage levels would be set at the 50th, 62nd, 75th and 90th percentiles respectively.
