- Companies face higher costs, may shift hiring
The US Department of Labor has released a draft proposal to raise the minimum wage, also known as the Prevailing Wage, for H-1B and related visa holders by an average of 30 per cent. The rule, titled ‘Improving Wage Protections’, is aimed at safeguarding jobs for American citizens and curbing the practice of hiring foreign workers at lower pay.
The proposal was introduced on March 27 and is open for public comment until May 26. If implemented, it could significantly reshape hiring across America’s tech industry.
Why This Rule Is Being Introduced
The core intent is to make it more expensive for American companies to hire foreign workers by raising the base salary floor. Under the proposal, an entry-level hire who previously earned around $73,000 (approximately Rs 61 lakh) per year would now need to be paid at least $97,000 (approximately Rs 81 lakh).
| Skill Level | Current Average Minimum Wage (Annual, USD) | Proposed New Minimum Wage (Annual, USD) | Hike |
|---|---|---|---|
| Entry Level / Freshers | $73,279 | $97,746 | 33.39% |
| Junior / Mid-Level | $98,987 | $1,23,212 | 24.47% |
| Experienced Professionals | $1,21,979 | $1,47,333 | 20.79% |
| Top-Level Experts | $1,44,202 | $1,75,464 | 21.68% |
What It Means For Companies
American firms will face higher costs for onboarding visa-holding employees. Indian IT services companies such as TCS, Infosys, and Wipro, which deploy large numbers of workers onsite in the US, will see their operational costs rise, putting pressure on profit margins. These companies may, in turn, pass on part of this financial burden to their clients. More broadly, firms are likely to shift their hiring preference toward American citizens over visa holders.
Why It Is Bad News For Indians
Indian students and entry-level foreign workers will find it harder to land jobs in the US under the new framework. Smaller companies and startups are unlikely to offer such salaries at the entry level. However, for those already working in the US with high skill levels, the rule could work in their favour. Employers will be required to increase their pay at the time of visa renewal.
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Mixed Reactions To The Proposal
The proposal has drawn a divided response. Supporters see it as a necessary correction to a wage floor that has remained stagnant for nearly two decades. Critics, however, warn that smaller companies may no longer be able to afford hiring foreign workers for entry-level roles if higher wage thresholds take effect.
This is not the first time such a change has been attempted. During his first term, the Trump administration tried in 2020 to revise prevailing wage rates without prior notice or public consultation. That move faced legal challenges and was eventually rolled back. This time, the administration is following the formal public comment process.
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