Immigration Policy Shift: How the New H-1B Wage Based Lottery Could Reshape Hiring
- Matthew Kolodziej
- Aug 14
- 3 min read
A major change to the H‑1B selection process has cleared White House review, signaling that the current random lottery could soon be replaced or heavily weighted by wage levels. This wage based selection system would prioritize petitions offering higher salaries, fundamentally altering how employers compete for foreign talent.
The proposal reflects both political and economic motivations. Proponents argue that tying selection odds to salary levels will protect U.S. workers’ wages, reduce the use of the H-1B program for low cost labor outsourcing, and attract top tier talent to industries like technology, engineering, and healthcare. Critics, however, warn that such a shift could disadvantage recent graduates and entry level foreign student workers, many of whom bring critical skills but command lower initial salaries, while favoring large corporations with deeper payroll budgets.
An Overview of Historical H-1B LCA Wage Level Distribution
Based on U.S. Department of Labor data and analysis of recent years*:
Level I (Entry-level): ~30%
Level II (Mid-level): ~50%
Levels III & IV (Senior-level): ~15%
This summary covers Labor Condition Applications (LCAs) filed from April 1 to June 30, with start dates in October of the same year, which likely include a mix of initial H-1B filings and extensions.
Economic Implications
The U.S. economy relies on vibrant, active businesses, which in turn depend on skilled entry-level foreign workers. Policies that raise the cost of hiring these workers, such as a wage-based H-1B lottery, could strain businesses and ultimately impact economic growth. Employers that rely on entry-level and mid-level foreign talent may face higher costs, potentially affecting sectors such as research labs, design firms, and emerging tech companies.
Regulatory Outlook and Legal Uncertainty
If finalized, the rule will be published in the Federal Register in the coming weeks, triggering a public comment period before implementation. While it could take months to finalize, the administration appears positioned to launch the system in time for the FY 2027 H-1B cap season, meaning employers have a narrow window to adapt their hiring and compensation strategies. Legal challenges are possible, given that similar rules introduced in 2021 were struck down or withdrawn following court challenges over their compliance with administrative law. However, the regulatory momentum and White House approval suggest this proposal has a strong chance of becoming reality.
Employer Action Plan: Strategies and Next Steps
A wage-weighted H-1B system will require many organizations to reassess how they hire and retain foreign talent, particularly at Level I and Level II prevailing wages. Key strategic considerations and actions include:
Assess and adjust compensation and roles by reviewing internal salary structures, comparing them against prevailing wage data, and restructuring positions where feasible to reach higher wage levels in the H-1B lottery.
Diversify visa and talent strategies by considering alternatives such as L-1, O-1, or other work authorization paths for roles unlikely to qualify under top wage tiers, while targeting niche or specialized skills and building early connections with candidates through OPT/STEM OPT pipelines.
The wage-based lottery represents more than a procedural change; it signals a shift where immigration compliance and compensation planning are increasingly intertwined. Employers that prepare early will be best positioned to navigate the transition without losing access to the global talent needed for growth.
If you have case-specific questions or wish to discuss H-1B policies with our team, please don’t hesitate to contact us.