In a letter to the US Department of Labor (DOL), the US Small Business Administration (SBA) has called for a proposed H1B visa wage hike to be delayed. In September, Workpermt.com reported that the DOL had requested that wages paid to H1B visa holders be increased in an effort to deter companies from relying on migrant labor.
A statement issued by the SBA said: “Advocacy is concerned this interim final rule, which will cost employers over $198 billion over a 10-year period, according to DOL’s analysis, will have a disproportionate impact on small businesses.”
The SBA argued that increasing salaries would hit smaller businesses hard because they will be unable to afford wage rises and would therefore miss out on skilled migrant workers.
Pricing H1B visa workers out
The National Foundation for American Policy said that the DOL’s proposal is ‘designed to price H1B visa workers out of the labor market.’
With small businesses already struggling to stay afloat amid the impact of the coronavirus pandemic, the SBA is urging the DOL to delay the rule by a minimum of 30 days. The SBA said: “This will give small businesses the opportunity to comment on why the rule has negative implications for them.”
The SBA, a US government agency that supports entrepreneurs and small businesses, claims that the new proposals would force many small firms to increase wages by as much as 50%, increasing the cost burden on companies that are already struggling.
In their letter to the DOL, sent on November 9, the SBA said: “This rule will make it even more expensive to hire foreign talent and will have a negative impact on the ‘startup ecosystem’ and small businesses.”
The letter claims that the DOL has not given ‘enough justification for the immediate need to hike H1B wages because its argument for protecting American jobs does not have enough basis.’
Job vacancies rising
Additionally, the letter highlights that job openings among the ‘qualified workforce’ are increasing. According to the SBA, as of October 2 there were 650,000 job vacancies in the US that required a bachelor’s degree or above, representing a 4.7% increase compared with May 2020.
Meanwhile, the SBA also argued that H1B wage hikes would increase compliance costs for smaller businesses by as much as 3% of their total revenue in 2020 – 2021.
The SBA said: “Small businesses would be shut out of the H1B visa program for new workers, making it difficult to innovate and grow their operations.”
In October, the ITServe Alliance – a group of non-profit IT firms – filed a lawsuit against the wage hike rule in a New Jersey district court.
The Alliance said: “There is no basis for this IFR to be issued. It is going to drive hundreds of thousands of jobs to off-shore markets. Instead of helping with job creation and economic growth in the middle of the pandemic and recession, these agencies are hurting the small businesses that are at the forefront of rebuilding the economy.”
H1B1 and E3 visas targeted
In addition to H1B visa wage hikes, the DOL has proposed increases for the H1B1 visa – a variant of the H1B visa, which is reserved for nationals of Chile and Singapore – and the E3 visa, which is reserved for citizens of Australia.
The Department of Labor determines wage levels in every state for each occupation. For H1B workers, there are four wage levels with level one being entry level workers and level 4 being workers with years of experience.
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