Trump admin pushes H 1B overhaul; new rule may reward top salaries, sideline outsourcing firms

The Donald Trump administration is moving to overhaul the H-1B visa allocation system, proposing the end of the long-standing lottery method in favour of a weighted selection process. On July 17, the Department of Homeland Security (DHS) submitted a proposal to the Office of Information and Regulatory Affairs detailing this shift, which would apply to the programme’s capped category.

Currently, 85,000 new H-1B visas are issued each year, including 20,000 set aside for applicants with a Master’s degree or higher from a US institution. Given the overwhelming number of applications, the US Citizenship and Immigration Services (USCIS) uses a random lottery to allocate visas — an approach that treats all applicants equally, regardless of skills or compensation.

The proposed rule aims to prioritise applicants based on additional criteria, though DHS has not yet disclosed full details. A key idea under discussion is ranking applications by salary, thereby favouring highly skilled professionals over lower-wage workers. Major tech firms like Amazon, Meta, and Microsoft, which typically flood the system with applications, could be affected by the shift.

Universities and nonprofit research institutions, which are exempt from the visa cap, will remain unaffected by the proposed changes.

A study conducted in January by Jeremy L Neufeld and the Institute for Progress found that replacing the random draw with a salary-based system could push the average first-time H-1B salary from $106,000 to $172,000. The shift would also increase the programme’s economic value by up to 88 per cent, while reducing the dominance of outsourcing firms that rely on low-wage foreign talent.

Indian nationals, who continue to dominate the programme, could be significantly impacted. In 2022, they received 77 per cent of approved H-1B visas. The trend held in FY23, with Indians accounting for 72.3 per cent of the 386,000 visas issued.