When U.S. employers hire H-1B workers, one key element of the process is determining what wages those workers will earn, and how those wages compare to the wages of U.S. workers performing similar jobs within normal commuting distance of the proposed work site. This wage calculation is at the heart of the employment-based immigration system Congress devised to protect U.S. workers from unfair competition, while refraining from micromanaging the hiring decisions of U.S. employers.

There is an ongoing public debate about whether the current system is adequately achieving the goals of both protecting U.S. workers and ensuring that U.S. employers have the workers they need to succeed and grow the American economy. Many within the Trump administration have expressed a belief—contrary to what substantial research demonstrates —that foreign workers are being hired to undercut wages that would otherwise be paid to U.S. workers to perform the same tasks. This faulty line of reasoning may be driving legislative proposals, including those that would require all employers who hire highly-skilled temporary immigrant workers on H-1B visas to pay the median or mean wage for the occupation, irrespective of the education or experience the employer requires. Yet, underlying these proposed policy changes is a complex system of wage determinations.  Wage determinations can be inaccurate because they are based on data that is not specific enough to reflect important differences among workers in occupation, education, and skill level. If the prevailing wage determination is not a fair approximation of wages that are actually paid in the marketplace, then the system breaks down and wage parity between immigrants and natives could be undermined.

Knowing that an employer petitioning for an H-1B or immigrant worker was offering the same wages to both foreign high-skilled workers and comparable U.S. workers would mean that U.S. employers were choosing to hire foreign professionals because of their skill sets and availability to fill gaps in the workforce. Unfortunately, there is no government survey that collects the necessary data on wages within occupations, much less a survey that compiles data to calculate wage levels based on experience, education, or level of supervision. Thus, prevailing wages are calculated based on insufficient data and therefore may be contributing to confusion and frustrations on all sides of the debate about whether the employment based immigration system is working well.

Understanding how the government calculates prevailing wages is important, particularly as Congress and the administration discuss potential changes to the employment-based immigration system. Failing to appreciate the defects in the current prevailing wage determination system could render future reforms ineffectual.  Improving the quality of the data that is used to calculate prevailing wages could be a key component of developing effective high-skilled immigration reform efforts.