Brian D. Pasternak,
Administrator, Office of Foreign Labor Certification
Employment and Training Administration
Department of Labor
Room N-5311
200 Constitution Avenue NW
Washington, DC 20210

RE: Department of Labor, Employment and Training Administration, Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States, Notice of Proposed Rulemaking, DOL Docket No. ETA-2026-0001, RIN 1205-AC30 (March 27, 2026)

Dear Brian Pasternak:

The Economic Policy Institute (EPI) is a nonprofit, nonpartisan think tank established in 1986 to include the needs of low- and middle-income workers in economic policy discussions. EPI conducts research and analysis on the economic status of working America, proposes public policies that protect and improve the economic conditions of low- and middle-income workers—regardless of immigration status—and assesses policies with respect to how well they further those goals. EPI submits these comments on the Department of Labor’s (DOL) Notice of Proposed Rulemaking (NPRM) regarding the updated four-tiered wage structure for H-1B, H-1B1, and E-3 nonimmigrant workers and DOL permanent labor certifications for employment-based permanent immigrant visas (i.e. green cards) in the second and third employment-based preference categories (EB-2 and EB-3). EPI has researched, written, and commented extensively on the U.S. system for labor migration, including in particular, the H-1B program and other temporary work visa programs and green cards. EPI has published extensively on H-1B wage levels and employer usage and abuse of H-1B and other visa programs.1

EPI generally supports the main substance of the NPRM and believes it is an improvement as compared to the status quo for the current four-tiered wage structure for H-1B, and will also improve H-1B1 and E-3 nonimmigrant visas, and permanent labor certifications in EB-2 and EB-3, because the NPRM will make incremental progress towards ensuring that the wages of U.S. workers are safeguarded and that the Labor Condition Application (LCA) and PERM programs are not hijacked by employers as a loophole to underpay migrant workers according to U.S. wage standards. The proposal will also help disincentivize firms from using H-1B visas as a primary tool to outsource professional jobs and send them overseas.

However, as we will detail in this comment, we believe DOL should go beyond what the NPRM proposes by setting the wage floor—i.e. the Level I wage—at the 50^th percentile so that no H-1B, H-1B1, E-3, EB-2, or EB-3 jobs are ever certified at a wage that is below the local median wage for the occupation. If DOL implements such a rule in the final version of the regulation, the rule would address a major critique EPI has long held about the program, and which Members of Congress from both major parties have attempted to address through repeatedly proposed legislation that was first introduced nearly two decades ago.

It must also be noted at the outset of these comments that recent actions taken by DOL with respect to wages for migrant workers in temporary work visa programs have been inconsistent and confusing. While DOL is considering action proposed in this NPRM that will raise wage rates closer to true market rates for migrant workers in the H-1B, H-1B1, and E-3 visa programs, as well as those with labor certifications for EB-2 and EB-3 green cards, it is important to note that in October of 2025, DOL issued a new wage rule for the H-2A program that will cut wages dramatically for the migrant farmworkers in that program and unfairly charge them for lodging2—which, as EPI has estimated—will lead to a pay cut of roughly $2 billion for H-2A farmworkers and $3 billion for U.S. farmworkers per year.3 DOL should issue regulations that lead to improved labor standards and fair wages for all work visa programs, and not treat workers differently based on their education levels, occupations, and nationalities. All temporary migrant workers deserve to be paid fairly for their work, and no work visa programs should operate as loopholes that allow employers to legally underpay migrant workers.

The NPRM is an improvement on the status quo but DOL should amend the proposal to better protect workers

In general, the NPRM improves upon the current wage structure but should be further enhanced to better protect workers and align the program with congressional intent and the goals of the H-1B statute. The principal change made by the NPRM is to update the four prevailing wage levels required in the H-1B, H-1B1, and E-3 visa programs—temporary work visa programs for college-educated migrant workers—setting levels at higher percentiles in the Occupational Employment and Wage Statistics (OEWS) survey distribution of wages, in order to more adequately reflect market wage rates in the U.S. labor market. The NPRM also applies the new wage rates/percentiles to the permanent labor certification requirements for employment-based (EB) green cards in the EB-2 and EB-3 preference categories (sometimes referred to as the PERM process).4

The current and newly proposed wage level percentiles are as follows:

Table 1

As we have detailed in published research,5 the two lowest wage levels in the current wage computation method are below the local median wage according to the occupation and local area based on DOL wage survey data in the OEWS, allowing employers to undercut U.S. wage standards. The NPRM sets the lowest wage level at the 34^th percentile, previously the Level II wage, thereby continuing to permit employers to pay H-1B workers at below-market wage rates—but not at the absurdly low levels allowed by the current Level I wage at the 17^th percentile.

DOL’s faulty prevailing wage computation has cost foreign-born workers at least $6.56 billion annually (see NPRM Exhibit 1). Even that is likely to be a serious underestimate for two reasons. First, it does not account for the losses suffered by U.S. workers and students who have had their wages, job opportunities, and career development suppressed and undermined as a result of the current wage methodology. Second, it does not estimate the costs incurred due to foreign-born workers’ weakened bargaining power vis-à-vis their employment through nonimmigrant visa programs. Employers exert much more control over visa workers than U.S. workers and permanent residents. Foreign-born workers on nonimmigrant visas have less opportunity to, and are far less likely to, switch jobs. Switching jobs, or the threat of switching jobs, is fundamental to any worker’s ability to demand higher wages and better working conditions. Professor George Borjas estimates that, in fiscal year (FY) 2024, visa holders had an annual separation rate of 9.4%, less than half of comparable U.S. workers.6 Workers also face dire circumstances should they be terminated. They must find a new job within 60 days or else leave the United States. All these conditions place foreign-born workers in the H-1B, H-1B1, and E-3 visa programs in a much weaker position than similarly situated U.S. counterparts when bargaining for wages and working conditions. Simply put, foreign-born visa workers have fewer employment rights than U.S. citizens and permanent residents, and employers rationally take advantage of their relatively weak position when setting employment terms. Further, the agency has never enforced the Labor Condition Application’s (LCA) Working Conditions attestation, where employers promise to “not adversely affect the working conditions of workers similarly employed,” so employers disregard it.

In addition, the ability of H-1B workers to become lawful permanent residents and remain in the United States is entirely up to the whims of their employers. Even after working for an employer for six years in H-1B status, the employer has the power to decide if an H-1B worker can remain in the country—in many cases after an H-1B worker has established firm roots in the United States. That power keeps H-1B workers from complaining and asserting their employment rights. That leaves H-1B workers in a difficult position where they might decide, rationally, to abandon any demands for higher wages and better working conditions in exchange for the possibility of being sponsored for lawful permanent residence.

Prevailing wages must be raised sufficiently to compensate for this government-created labor market distortion, to protect both foreign-born workers with nonimmigrant visas and U.S. workers who already reside in the United States. 

DOL’s proposal to increase the wage-level percentiles is the best approach. It is straightforward and understandable to implement. The effects are easily modeled. Employers can respond to it predictably and effectively. It will improve the quality and skill mix of the pool of workers who are issued visas, pay those workers fairer salaries, and have fewer adverse impacts on the domestic workforce and labor supply. Recent results reported by United States Citizenship and Immigration Services (USCIS), from the fiscal year (FY) 2027 H-1B lottery, the first to use the new wage-level weighting process, show that a large majority of H-1B registrations selected met at least the 34th percentile threshold, 82%, while also increasing the share of F-1 advanced degree graduates selected from 57% to 71.5%.7 The latter demonstrates that concerns about this proposal shutting off the foreign student pipeline are overblown and misguided.

However, as noted above, the increases don’t go far enough. We believe that the Level I wage should be set no lower than the median (50th percentile) to effectively adjust for the non-compensated effects of limited job-switching, an absent or ineffective labor market test, weaker bargaining position, and non-enforcement of the actual wage requirement. Recent college graduates, especially those earning degrees in computer science and computer engineering, are facing the highest unemployment rates amongst all majors according to analysis by the New York Federal Reserve Bank, and the worst job market in recent memory according to dozens of media accounts.89 Most analysts and executives predict that artificial intelligence (AI) will only make that labor market segment even worse. Major firms have laid off thousands of workers, citing AI the reason they need fewer workers. Many of those same firms employ thousands of H-1B workers. AI is predicted to reduce labor demand especially of recent graduates, the very U.S. workers competing for Level I jobs. The rules should ensure that workers assigned at Level I wages have truly special skills and will not undercut opportunities for recent university graduates.

Analysis of the NPRM: “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States”

1. Raising wages for H-1B workers and permanent labor certifications will benefit migrant workers and protect wage standards for U.S. workers

For years, H-1B employers have been allowed to pay their H-1B workers at wage rates that do not reflect local market rates, by having an option to pay them at the two lowest permitted wage levels. Our 2020 report discusses the available data, the mechanics of the current rule, and why it is important to modify the H-1B wage levels to adequately reflect market wages and ensure that H-1B workers are paid fairly, and to preserve U.S. wage standards.10 In the report, we recommend that DOL prohibit any H-1B job from being certified at a wage that is below the local median for the occupation and region. In that respect, by proposing to set the lowest wage level (Level I) at the 34^th percentile, DOL’s NPRM fails to do enough to protect wage standards in H-1B jobs. In the report we also recommend that DOL prohibit downward pressure on wages at the national level by requiring that every H-1B job be certified at a wage that is no lower than the national median wage for the occupation.

Many commentators on this NPRM, especially from the business community, including universities, are likely to claim that raising wages for migrant workers and safeguarding U.S. wage standards will harm the U.S. economy. When the misleading rhetoric is stripped away, the employers who oppose higher wage percentiles for H-1B, H-1B1, and E-3 visas, and EB-2 and EB-3 green cards, are simply claiming, in essence, that employers will only hire workers in the LCA and PERM programs if they are underpaid relative to similarly situated U.S. workers, and portray higher wages as an obstacle to migration or to the hiring of adequate talent that will prevent them from being successful and innovating.

Accepting this argument leads to a race to the bottom in terms of labor standards and excuses the co-optation of the immigration system in order to pad corporate profits. And such a line of argumentation is not supported by the available evidence. In fact, many advocates on all sides of the current H-1B debate now agree that the current H-1B wage rules are undercutting U.S. wage standards and should be updated. Even previous staunch defenders of the status quo, such as those representing or funded by the tech industry, as well as representatives of major employer associations, now admit that U.S. wages and U.S. workers are being undercut via the current prevailing wage rule.11

Adequate labor standards are never a barrier to migration or economic success—instead, they are a prerequisite to fair treatment for the migrant workers who are recruited by employers into the U.S. labor market and similarly situated U.S. workers.

Under the current rule, the wages of H-1B workers are being kept artificially low. The higher wage levels in DOL’s NPRM are more reasonable and closer to reflecting market wages in particular occupations and specific geographic regions. In other words, DOL’s proposal will push wage levels toward market wages, meaning it will increase labor market efficiency. It will also improve the quality and skill mix of the pool of foreign-born workers who are hired, increasing the productivity and innovation spillovers that skilled immigration promises.

2. DOL should raise the wage percentiles so that Level I is set no lower than the 50^th percentile of total wages surveyed in an occupation and region and prohibit any LCA or PERM approval for a wage that is lower than the national average for the occupation

The purpose of the H-1B and related programs is to “help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce.”12 Specialized skills should command high wages; such skills are typically a function of inherent capability, education level, and experience. It would be reasonable to expect that these workers should receive wages higher than the local median wage. One would therefore expect most H-1B positions to be assigned as Level IV (the only current wage level above the median), but as DOL and USCIS data show, H-1B employers as a whole assign only a very small minority of H-1B positions as Level IV, usually roughly 15% or less in recent fiscal years, while as DOL notes in the NPRM, 63% of H-1B positions were assigned at Levels I and II. For all LCA programs, DOL notes in the NPRM that in FY 2024, 16% of all LCA positions were certified at Level IV. At the USCIS petition level, Level IV wages are even less common: data disclosed by USCIS shows that in 2019 and 2020, only 4% of approved petitions for new employment under the regular cap were assigned at Level IV and only 2% of approved new H-1B petitions under the advanced degree exemption cap were assigned at Level IV.13 We also know from more recent data from DHS that the five-year average of H-1B registrations at Level IV was just 5% over the FY 2020 to 2024 period.14

The data presented in our reports over the past decade and a half and more recently, the data reported by USCIS on the distribution of H-1B petitions by wage level, all point to the obvious fact that nearly all H-1B employers, but especially the largest employers, use the H-1B program either to hire relatively lower-wage workers (relative to the wages paid to other workers in their occupation) who possess ordinary skills or to hire skilled workers and pay them less than the true market value of their work. Either possibility raises important policy questions about the use and allocation of H-1B visas.

By setting two of the H-1B prevailing wage levels so low relative to the median and not requiring that firms pay at least market wages to H-1B workers, DOL has incentivized firms to earn extraordinary profits by legally hiring much-lower-paid H-1B workers instead of workers earning at least the local median wage. The fact that firms earn those profits through poorly crafted wage rules and by underpaying H-1B workers—instead of by offering a better or more innovative product or service—means DOL has, in effect, made wage arbitrage a feature of the H-1B program. And as the wage-level data we have reported on and cited here clearly shows, nearly all H-1B employers are exploiting these H-1B wage rules in order to pay below-median wages.15 We believe the evidence is clear that these firms are not using the H-1B program sparingly to hire truly specialized workers, nor are they using it only when U.S. workers are unavailable. Given the business models and occupations, it is likely that the H-1B1 and E-3 programs are being abused similarly.

So how should DOL set a wage rule that guards against this and complies with the statutory requirement to prevent adverse effects on wages and working conditions?

The existing statutory language that sets out the H-1B prevailing wage requires four H-1B wage levels, but it does not prescribe specific percentiles, and no law requires DOL to set any of these prevailing wage levels below the local median wage. To ensure that H-1B workers possess specialized skills and are fairly paid, and to protect local wage standards and eliminate wage arbitrage as a feature of the H-1B program, DOL should issue a final rule that sets the lowest (Level I) wage for the LCA programs and EB-2 and EB-3 green cards at the 50th percentile for the occupation and local area, at least, and require that wage offers to workers in the LCA and EB-2 and EB-3 programs never be lower than the national median wage for the occupation, in order to prevent downward pressure on wages nationwide.

Requiring and enforcing above-median wages for H-1B and other LCA and PERM program workers would disincentivize the hiring of workers with nonimmigrant visas and green cards as a money-saving exercise, ensuring that companies will use the program as intended—i.e., to bring in workers who have special skills—instead of using them as a way to hire underpaid indentured workers for jobs that require at least a college degree.

3. DOL should set the updated wage percentiles at the 50^th, 62^nd, 75^th, and 90^th percentiles according to the total surveyed wages for the occupation and local area in the OEWS

As noted and discussed above, the lowest wage level, Level I, should be set no lower than at the 50^th percentile. Instead of the proposed four wage levels in the NPRM, DOL should set the lowest wage level, Level I, at the median wage (at the 50^th percentile), Level II at the 62^nd percentile, Level III at the 75^th percentile, and Level IV at the 90^th percentile—according to the overall distribution of OEWS wages for each occupation and region. (See table below.)

Table 2

These levels would ensure that no LCA or EB-2 or EB-3 positions are certified at a wage that is below the overall local median wage for an occupation, which in turn will prevent downward pressure on U.S. wage rates in such occupations. An additional benefit of using the 50^th, 62^nd, 75^th, and 90^th percentiles, as DOL points out, is “that they are close to dividing the upper half of the distribution equally.”16

4. DOL’s experience benchmarking proposal is inferior to the NPRM’s core proposal on wage levels and should not be implemented

The NPRM requests comments on ‘experience benchmarking’ as an alternative computational method to the core proposal of Level I at the 34^th percentile, Level II at the 52^nd, Level III at the 70^th, and Level IV at the 88^th percentile, based on the overall OEWS wages by occupation and region. We believe that this experience benchmarking alternative is significantly inferior to the core proposal and urge DOL to reject it for four main reasons. First, the methodological description is insufficient to evaluate, with just two pages of text. This is especially troublesome since it is an entirely novel method of setting prevailing wages that has never been rigorously tested or examined. It will impact literally millions of workers and hundreds of thousands of employers. To our knowledge, Mincer equations have never been used to this large an extent for setting wages in any government program. Second, the data necessary to calculate prevailing wages do not exist; they must be synthesized through estimation procedures after marrying two distinct surveys that were never designed for these purposes. Are the sample sizes sufficient? There’s no exploration of these potential flaws in the NPRM. Third, the method biases against women. The method does not directly measure experience; instead, it estimates experience by the age of the candidate. Women are more likely than men to have gaps in their labor force participation. The agency does not provide a method for adjusting the calculations based on gender. Fourth, this method would surely fuel age discrimination by allowing firms to legally pay younger H-1B workers less than U.S. workers doing the same job. Professor Norman Matloff, one of the leading scholars of the H-1B program, has repeatedly expressed concerns that firms prefer to hire H-1B workers because they are younger, and therefore lower-paid, than equivalent Americans.17 The government would be endorsing such behavior by adopting experience benchmarking.

More broadly, adopting benchmarking to set prevailing wages rests on the assumption that labor markets are highly segregated by age and educational attainment. Is it true that a 28-year-old does not compete with a 35-year-old? Is it true that someone with a master’s degree does not compete with someone with a bachelor’s degree? The DOL provides no evidence to test this hypothesis with a single occupation or example, let alone whether it would hold across the roughly 400 occupations eligible for visa programs covered by this NPRM.

The example provided in the NPRM, of an accountant working in Dayton, Ohio, illustrates the difficulty for anyone to assess the accuracy of the procedure.

If ACS data and Mincer wage equation estimated that U.S. accountants with 10 years of experience and a master’s degree typically earn 20 percent more than the median accountant nationwide, the Experienced Benchmarked ratio for that education-experience combination in accounting would be expressed as a wage premia factor of 1.2. Then, to compute the Level I prevailing wage for an employer seeking visa labor certification to employ an alien worker as an accountant in Dayton, Ohio, with 10 years of experience and a master’s degree, the Department would take the OEWS 50th percentile for accountants in the Dayton MSA (currently $78,710) and multiply it by 1.2, yielding an experience-benchmarked Level I prevailing wage of $94,452. The Level II prevailing wage would apply the same 1.2 ratio to the OEWS 62nd percentile; Level III to the 75th percentile; and Level IV to the 90th percentile.18

This hypothetical example presents several shortcomings.

First, we encounter problems with identifying the data. The NPRM reports the OEWS 50^th percentile wage in Dayton MSA of $78,710. We are unable to validate this wage using the OFLC Wage Search page.19 The OEWS 50^th percentile wage (current Level III) for the occupation is shown below, with the results listed for three different years of data available in the database:

Occupations: SOC 13-2011.00 – Accountants and Auditors
Location: Dayton OH BLS Areas Montgomery County
Series: All Industries

7/2023-6/2024 Level III Wage: $77,251.00
7/2024-6/2025 Level III Wage: $82,576.00
7/2025-6/2026 Level III Wage: $86,403.00

Further, based on the absence of data and sparse description of the methodology, there’s no way for us, or anyone else, to test or examine the method used to calculate the wage premia/discount using the Mincer equations. The “hypothetical” example claims a premia of 20%, but it is unclear whether this result comes from real calculation or if it’s a fabrication created to illustrate a point. If it is the latter, that raises serious questions about the agency’s ability to implement experience benchmarking across hundreds of occupations, thousands of locations, four skill levels, and a half-dozen educational levels.

More importantly, is the example, and its wage outcomes, representative of the universe of covered workers and the U.S. workers they compete with? The evidence shows that this hypothetical example is neither typical of H-1B workers nor their U.S. counterparts. The description of experience benchmarking does not investigate its implications, but such testing is fundamental to validating the method across occupations, locations, and skill levels. The hypothetical worker has 10 years of experience, which, if they had no gaps in labor force participation, would put them at 34 years old. A 34-year-old worker is older than most new H-1B workers approved for initial employment, ranking near the 68^th percentile by age.20 We also know that this worker is not typical of U.S. accountants. Most practicing accountants hold no more than a bachelor’s degree, 59%, and are older—with a median age of 45—than this candidate.21 The example raises many more questions than it answers.

The median age of all H-1B workers approved for initial employment is approximately 31, whereas the median age of an American worker in an H-1B eligible occupation is approximately 40, even in STEM occupations.22 H-1B workers are generally significantly younger than the typical U.S. worker with whom they compete. Experience benchmarking would favor H-1B workers by offering them a significant wage discount, based on the Mincer method, over the U.S. workers with whom they compete. The upshot is that experience benchmarking would surely fuel age discrimination in these labor markets.

It is likely that experience benchmarking would yield substantial wage discounts (premia ratios <1.0) for H-1B workers, compared with the NPRM’s core approach. But we simply do not know because DOL has not compared the wage outcomes between experience benchmarking and raising the wage level percentiles. DOL has not published experience benchmarking wage tables for every occupation, geography, skill level, experience, and education.

One think tank, the Institute for Progress (IFP), a supporter of the experience benchmarking alternative, attempted to simulate the method using FY 2024 approved petitions and found that experience benchmarking wages for most H-1B workers are substantially lower than the NPRM’s core proposal. Contrary to IFP, we believe experience benchmarking should be rejected, in part for that reason. See its report, specifically the scatterplot chart “Blind Benchmarking misses underpaid H-1B workers” on page 20, where the number of red dots (i.e., experience benchmarking yields a lower prevailing wage than NPRM core proposal) far outnumbers the green dots (i.e., experience benchmarking yields a higher prevailing wage than NPRM core proposal).23 Even these analysts admit they don’t know whether their calculations are consistent with DOL’s sparse description of experience benchmarking. If this think tank’s analysis is roughly correct or on the right track, then experience benchmarking will yield much lower prevailing wages than the core NPRM proposal. If this is true, then the experience benchmarking method undermines the goals of this rulemaking.

In its justification for considering experience benchmarking, the NPRM states that “the methodology employed under the current rule may allow positions to be classified at wage levels that are less comparable to the actual education and experience of the alien worker.” Experience benchmarking, on the other hand, would “address this limitation by comparing the sponsored alien worker’s wage to the wages earned by U.S. workers with comparable education and experience…”24

But elsewhere, the NPRM undermines the case for experience benchmarking by noting that educational attainment is often a poor determinant of wages:

an examination of the top end of the wage distribution within the H–1B program shows that, for H–1B nonimmigrants with graduate and bachelor’s degrees, the association between education and income level begins to break down to some extent. An analysis of the highest earners within the H–1B program reveals that H–1B workers—particularly those with bachelor’s and graduate degrees—can be among the most skilled and capable in their fields. Interestingly, at this top end of the wage distribution, the typical link between education level and income begins to weaken. Among the most highly compensated H–1B workers, the higher the income level, the more likely the alien worker only has a bachelor’s degree.25 (Emphasis added.)

While skill-level misclassification is a major problem, experience benchmarking is the wrong solution because it creates new, unnecessary loopholes. Instead, as we describe below, we recommend that you require employers document their Prevailing Wage Determination (PWD) aligned with the National Prevailing Wage Center (NPWC) guidance and provide it for inspection.

The NPRM’s core proposal—the 34^th, 52^nd, 70^th, and 88^th percentiles based on the overall OEWS wages by occupation and region—coupled with skill classification oversight and accountability, better achieves the program goals than the experience benchmarking proposal discussed in the NPRM.

5. DOL should calculate an additional amount of compensation based on available data on the cost of benefits for workers in private industry and add a reasonable amount to the required prevailing wage

While we believe utilizing the OEWS data set and wage percentiles within the distribution is reasonable and preferable to other data sources and methods, the OEWS falls very short in terms of providing a holistic and realistic picture of what U.S. workers earn in H-1B occupations, as well as those in other LCA programs and PERM programs, by virtue of not including fringe benefits. We urge that DOL also calculate an additional amount of compensation based on available data on the cost of benefits for workers in private industry. If employers do not have to provide fringe benefits to the college-educated migrant workers they recruit or reasonable compensation that accounts for those fringe benefits, that will result in employers underpaying or undercompensating workers with visas vis-à-vis their U.S. worker counterparts, thereby causing adverse effects on workers in occupations covered by H-1B and the other LCA programs. The fissuring of the U.S. workforce has been abetted in part by employers practicing benefits’ arbitrage—in other words, employers seeking a workforce they do not need to provide benefits for—the H-1B, H-1B1, E-3, EB-2, and EB-3 program should not facilitate it.

Davis Bacon and Service Contract Act wage determinations—which are both valid wage sources for determining H-1B wage rates under current H-1B rules—include an additional hourly monetary value that is owed to the worker in “fringe benefits.” Under both Acts, the employer must pay the fringe benefits either in the form of a permissible fringe benefit listed by the applicable Act, or any combination of benefits thereof, or with an equivalent cash payment.26 The lack of any fringe benefits in OEWS prevailing wage determinations27 constitutes a severe deficiency in the OEWS wage data that conflicts with and undermines the statutory requirement that the H-1B prevailing wage will not adversely affect the wages and working conditions of similarly employed U.S. workers. 

Reliance on the OEWS to determine prevailing wages—without an adjustment for fringe benefits—is not an adequate method to set prevailing wages for LCA and PERM programs. If the prevailing wages and benefits for a particular occupation in a particular Metropolitan Statistical Area (MSA) are, for example, $30 per hour plus $10 per hour in leave, pension, and health benefit costs, but DOL determines the prevailing wage to be simply $30, U.S. workers will be adversely impacted. Employers will be encouraged to hire H-1B workers instead of U.S. workers, saving themselves $10 in benefit costs per hour and putting downward pressure on the locally prevailing compensation. Hiring H-1B workers at $30 an hour for example, with no benefits, would allow employers to underprice labor by 30%—which is the average benefit share of total compensation costs for private industry workers28—and it could encourage employers to replace U.S. workers with H-1B workers, or hire H-1B workers instead of U.S. workers, since employers are not required to recruit and hire U.S. workers before hiring H-1B workers. H-1B workers and those employed through other LCA programs cannot be expected to complain about this or have the bargaining power to negotiate adequate fringe benefits, because their employers control and have near-total power over their immigration status, and some workers will be also willing to accept the lower compensation, because it will likely be far more than they could earn in their country of origin.

BLS already collects the necessary data to determine the appropriate amount of fringe benefits that should be required as a supplement to the OEWS wages used to set a prevailing wage. The Employer Costs for Employee Compensation (ECEC) report from the Bureau of Labor Statistics (BLS) “provides the average employer cost for wages and salaries as well as benefits per employee hour worked” for workers in the civilian economy.29 The ECEC reports the total average wages and benefits paid by employers and lists these data as they correspond to broad occupational employment categories. These data are also differentiated according to the average amount paid for the major categories of fringe benefits: paid leave, supplemental pay, insurance, retirement and savings and legally required benefits. The ECEC also reports the average total compensation, wages and salaries, and total costs of fringe benefits paid by employers, broken down by geographic region, census division, and locality.30

Using the aforementioned data sets from the ECEC, DOL can determine the appropriate level of fringe benefits that must be offered and paid to LCA and PERM program workers. The ECEC provides data on health and retirement benefits, and wages and wage-related pay such as paid leave and supplemental pay. The wages reflected in the OEWS survey capture the wages and wage-related parts of total compensation. Employers paying wages will already be paying the ‘legally required’ payroll taxes. Therefore, the compensation missing from the OEWS wage rates is the cost of retirement and health benefits, which are about 11% of private sector compensation. The amount of pay reflecting these benefits that employers of LCA and PERM program workers should pay can easily be determined by taking the ratio of the sum of health and retirement benefits to the wages paid (the sum of wages, paid leave and supplemental pay). This can be determined for a broad occupational grouping and perhaps done at a regional level as well. This ratio when multiplied by the OEWS wage shows the amount of benefits that would be comparable to that earned in the private sector or civilian sector.

Although the occupational groups and geographic areas listed and reported in the ECEC are not as numerous and detailed as those in the OEWS’s occupational categories and geographical areas, this should not deter the DOL from utilizing these data to calculate the percentage of wages that should be added on as fringe benefits to the OEWS wage. Only a percentage to be added on must be determined – not an exact dollar amount. 

Thus, the ECEC data are sufficient to provide DOL–by region and broad occupational group–an average level of insurance and retirement benefits received by employees in that job and in that area. Following precedent from the DBA and SCA, the fringe benefits could be paid by the employer through any combination of a variety of options, such as paid leave, health and life insurance, retirement and savings accounts, etc., or the employer could simply pay the benefits in cash.

Unfortunately, there is very little transparency regarding whether employers using the H-1B, H-1B1, E-3, and EB-2 and EB-3 programs are offering fringe benefits, or to what extent. A requirement that these fringe benefits be offered to LCA and PERM program workers would ensure that the wages and working conditions of similarly employed workers are not adversely impacted. 

The current DOL compliance guidance on benefits for H-1B workers encourages benefits arbitrage through outsourcing and fissuring. The Wage and Hour Division fact sheet on the subject (#62L) reads, “The employer must offer benefits to H-1B workers on the same basis, and in accordance with the same criteria, as the benefits the employer provides to similarly employed U.S. workers.”31 By defining similarly employed workers as restricted only to those directly employed by the H-1B employer, DOL is encouraging benefits arbitrage by outsourcing firms, which can offer substandard benefits to all its employees and still comply with this interpretation of the H-1B rules.

6. DOL should prohibit employer-provided private wage surveys from being used as alternative sources of wage data to set prevailing wages

Under the main H-1B prevailing wage regulation language at 20 C.F.R. §655.731, an employer has a number of options at their disposal to determine a prevailing wage for an LCA. In other words, the OEWS wage levels are just one of the available options. The employer may use one of the following sources to establish a prevailing wage: the OEWS wage, the wage set in an applicable Collective Bargaining Agreement, an applicable wage set by the Davis-Bacon Act or McNamara-O’Hara Service Contract Act, an Office of Foreign Labor Certification National Processing Center prevailing wage determination, or a wage set by an independent authoritative source or another legitimate source of wage data. However, if the employer is paying a higher wage to similarly situated U.S. workers that it already employs, then it must pay the H-1B worker same higher “actual wage,” that it is paying the U.S. worker. (Specifically defined as “the wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question.”)

Therefore, employers do not need to use the OFLC’s calculated levels from OEWS data to determine a prevailing wage for an LCA or permanent labor certification application. The NPRM would improve the longstanding problems in how the prevailing wage is determined when using the OFLC-generated OEWS wage rates, but in the NPRM, DOL states that it considered whether to prohibit—but ultimately decided to permit—the continued use of an independent authoritative source or another legitimate source of wage data, which includes private wage surveys provided by employers and accepted by DOL. Standards for such alternative sources of wage data are described in 20 CFR § 655.731. In our 2020 report, we showed in Table 1 that in 2019, at least 9% of all certified wages for H-1B positions on LCAs were set by a private wage survey or other source accepted by the OFLC as legitimate.32

We strongly urge DOL to eliminate the use of private wage surveys provided by employers for setting wage rates in the LCA programs or for EB-2 and EB-3 green cards. While the share of LCAs approved with wages set by private wages surveys is relatively small at the moment, it is likely that the use, and abuse, of private wage surveys will expand substantially after publication of a final rule that is consistent with the wage level percentiles proposed in the NPRM. This will occur because employers will be motivated to use private surveys as a loophole to avoid paying the new higher wage percentiles.

DOL’s justification for continuing to allow private wage surveys is based on an analysis that is confusing. On the one hand, the agency claims that private surveys yield a wage 20% higher on average than the OEWS equivalent, but also says that wage surveys are necessary for niche or very specialized markets where, “occupations [are] not well represented in OEWS datasets.”33 The two claims are in contradiction. If a private wage survey is used to establish a wage in a niche job market, presumably not covered by the OEWS, then how can DOL feasibly calculate the differences? Footnote 211 in the NPRM does not provide sufficient detail to test this claim.

If DOL does not immediately eliminate the use of private surveys, it should at least ensure that usage of such surveys are rare and approved in only exceptional cases. Employers should be required to provide extensive documentation and justification for why the OEWS is an inadequate data source for determining the prevailing wage.

The recent history of the use of private wage surveys to set wages in the H-2B visa program—a temporary work visa program for lower-wage jobs outside of agriculture including in landscaping, forestry, hospitality, and construction—is instructive and should inform DOL’s review of wage surveys and other sources of wage data for setting H-1B wages. The evidence is clear in the H-2B context that when employers use private wages surveys, they primarily use them to pay lower wages than would otherwise be required.

In 2013 when DOL raised the minimum H-2B prevailing wage from the 17^th wage percentile to the mean wage for the occupation and local area, H-2B employers immediately and en masse, shifted their business model to use private wage surveys to set H-2B wage rates at below-average wage rates. Evidence revealed in federal litigation clearly suggests that the shift to the use of private wage surveys was a systematic response to higher wage rates, and one that was clearly successful. Specifically, in the nine months beginning soon after the H-2B wage rule was updated—between July 1, 2013, and March 31, 2014—employers increased their submissions of private wage surveys for H-2B prevailing wage determinations by 3,182%, as compared with the 12 months leading up to the federal court decision that invalidated the previous H-2B wage rule. In 21.1% of those prevailing wage determinations set by private wage surveys, the certified H-2B wage was lower than the previous prevailing wage system where the Level I H-2B prevailing wage was set at the 17th percentile wage by occupation and local area, according to OFLC-generated OEWS wage survey data, and 94.4% of the determinations were for a wage that was lower than the Level II wage, at the 34th percentile.34 Despite the fact that the H-2B prevailing wage has been set at the local average wage and DOL restricted the use of private wage surveys in 2015, they are still commonly used and successful at lowering wages for H-2B workers. One clear example of this which has been detailed, is a group of H-2B workers employed as crabpickers in Maryland—they earned roughly 25% less per hour than they should have been paid according to the local corresponding OEWS wage.35

The downside risk of continuing to allow private wage surveys—creating loopholes and administrative burdens—outweighs the risk to workers that the OEWS prevailing wage results in lower wages. If DOL’s calculations are accurate, employers should welcome the elimination of private wage surveys because the OEWS provides lower wage requirements and reduced costs in terms of purchasing survey data and/or conducting entirely new surveys.

7. If DOL considers permitting the use of employer provided private wage surveys, it should first conduct a detailed analysis of their usage and impact on H-1B wage rates, make the findings public, and issue a separate NPRM focused solely on private wage surveys

In order to promote transparency and comport with the statutory requirement that H-1B employers “will provide working conditions for [H-1B workers] that will not adversely affect the working conditions of workers similarly employed,”36 DOL should immediately prohibit the use of private wages surveys. However if DOL wishes to still consider their usage, DOL should conduct a study to benchmark the use of alternative wage data and especially private wage surveys against the OFLC-generated OEWS prevailing wages, to identify whether there are any systematic biases in such sources. If such biases are found, DOL could propose a new NPRM with additional guidance and safeguards to ensure that the alternative wage sources are not undermining U.S. wage standards. DOL should also conduct an analysis on the occupations that have been approved for wage setting with private wages surveys, to examine which occupations employers are claiming to be so unique that they do not fit within the definitions of over 800 occupations available in BLS’s Standard Occupational Codes, as well as analyze whether private wage surveys have negatively impacted conditions for H-1B workers and similarly situated workers.

It is important to note that, while in the aggregate, the use of private wage surveys is roughly 6.5% according to the NPRM, we know from our own reviews of LCA disclosure data that some firms rely on private wage surveys extensively. DOL should examine how private wage surveys vary across firms, industries, and occupations. Firms that rely on private wage surveys for more than 3% of the positions in their LCAs should be scrutinized and audited to ensure they are not being utilized to undercut the standards set by OEWS wage data. 

8. DOL must put measures in place that would prevent employer misclassification of H-1B workers at the wrong wage levels

As noted earlier, the NPRM requires that minimum H-1B, H-1B1, E-3, EB-2, and EB-3 salaries are set at more realistic wage rates that reflect the local market rates for the jobs they fill. While each wage level is intended to correspond to the position description, in practice the employer has substantial discretion choosing the skill level and DOL does not verify that a prevailing wage is appropriate unless a lawsuit or a complaint is filed by a worker. Such complaints are unlikely since it would require a migrant worker to blow the whistle on their own employer, the same employer that controls the worker’s visa status and ability to remain in the United States. We are unaware of any cases in which DOL has investigated an LCA-stage misclassification of an H-1B wage level, but there have been reports of, for example, H-1B employers receiving approval for LCAs that certify they will pay employees at the same prevailing wage level despite having job titles that clearly warrant different wage levels.

Simply put, employer selection of skill levels should be anchored to the actual duties of the position and verified by DOL and USCIS. There is no reason to allow employers to identify a skill level on a whim. If DOL does not fix this obvious problem, then the NPRM’s core objective of eliminating wage arbitrage will be undermined.

Skill level misclassification and inconsistencies undermine good governance of the H-1B program. Even a cursory examination of the LCA and I-129 data shows that such misclassifications, whether purposeful or inadvertent, are common. For example, positions with job titles leading with ‘senior’ are frequently misclassified as Level I. And even within the same employer, identical job titles are classified under different skill levels.

Yet the effectiveness of this NPRM hinges on ensuring that employers properly and consistently classify their positions at the correct skill level. DOL should take two actions. First, it should update and expand the NPWC’s Prevailing Wage Determination Policy Guidance.37 Second, it must hold employers accountable for their skill level selections.

The policy guidance should be rewritten and expanded so that it not only serves PWD adjudicators but also all employers, whether they use the OEWS or a private wage survey to determine the prevailing wage. The document should clarify skill level classification and serve as compliance guidance for all employers. The most recent NPWC policy guidance, published in 2009, is obviously inadequate and outdated. Employers are not effectively or consistently interpreting and identifying skill levels. The description of each skill level, Levels I through IV, consists of a single paragraph of ambiguous language. For example, how many years of experience should Level II consist of? Can an employer’s position that requires two to three years of experience ever be classified as Level I (Entry-Level)? If a worker with a master’s degree is filling a position that typically requires only a bachelor’s degree, can they be bumped up in skill level?

All employers should be required to follow the five-step Prevailing Wage Determination process outlined on pages 9 through 13 to identify the position’s skill level. Employers should be required to document and retain those records for inspection by USCIS when the I-129 petition for the LCA is filed. This will ensure consistent skill level identification within and across companies whether the firm uses the OEWS, private wage survey, a CBA, or requests a PWD.

Then USCIS should ensure that the worker being placed in the position is not overqualified in terms of education and experience for the position’s skill level.

Consider this example: A well-known firm received approval for two different LCAs at the same wage level (Level II), even though one LCA had the job title Senior Software Engineer and the other had the job title Software Engineer.38 The firm, a major employer of H-1B workers, is not accounting for differences in skill levels as evident from its own job titles when selecting the wage level for the LCA. Both engineers and senior engineers are receiving the exact same salary and wage level, and they are approved by DOL with zero scrutiny. Using the DOL Prevailing Wage Determination Policy Guidance, the LCAs in this case should be instantly flagged by identifying keywords such as senior, head, chief, and lead in job titles, and should be checked to determine whether the prevailing wage levels are appropriate. This example underscores a broader need for DOL to create a more robust compliance system to ensure employers do not misclassify workers at inappropriate wage levels. Our own cursory review has found hundreds of similar examples.

As a result, the LCA and petition process should be updated so that DOL reviews the qualifications of individual workers before USCIS approves a petition, to ensure that wage levels match up with the age, education, and experience of the workers being hired through the LCA and PERM programs. While USCIS currently performs this role to some extent, its adjudicators lack expertise in wage-and-hour issues and do not have the same mandate to protect labor standards as DOL staff. Therefore, these functions should be undertaken by the proper agency. DOL and USCIS already have a mandate to cooperate on H-1B applications and enforcement; a memorandum of understanding between the Secretaries of Homeland Security and Labor could detail a process where DOL plays a prominent role in ensuring that H-1B workers are classified at the appropriate wage levels. Published guidance from DOL on skill levels that is more detailed, clearer, and more realistic would also be helpful for everyone involved—employers and adjudicators alike.

9. DOL has failed to enforce the “actual wage” component of the H-1B prevailing wage rule and should begin enforcing it immediately

Under the prevailing wage statute, although an employer has several options at their disposal to determine a prevailing wage for an LCA, they must offer the higher of either the prevailing wage or the “actual wage,” which the corresponding regulation at 20 C.F.R. §655.731 defines as “the wage rate paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question.”

DOL has not exercised its authority to enforce the actual wage requirement. This is a wasted opportunity for one of the most important tools DOL has at its disposal to hold employers accountable for required wages. In order to ensure that H-1B employers are not undercutting the wage rates they pay H-1B workers, DOL should immediately begin enforcing this requirement.

In late 2021, we published a report detailing how thousands of skilled migrants with H-1B visas working as subcontractors at well-known corporations like Disney, FedEx, Google, and others appear to have been underpaid by one firm to the tune of at least $95 million in one single year.39 The victims likely included not only the H-1B workers but also the U.S. workers who were either displaced or whose wages and working conditions were degraded when employers were allowed to underpay skilled migrant workers with impunity. The workers in question were employed by HCL Technologies, an India-based IT staffing firm that earned $11 billion in revenue in 2020. HCL is consistently one of the top 20 H-1B employers and appears to have engaged in the systematic and strategic wage theft of its H-1B workers by exploiting the lax to nonexistent enforcement of the actual wage requirement. According to its own internal documents, HCL targeted its new H-1B hires expressly based on the spread between what it paid its own U.S. employees versus what it pays its own H-1B workers.

The report discusses our analysis of an internal HCL document, released as part of a whistleblower lawsuit against the firm. The document suggests that HCL—and perhaps other firms with similar business models—are not paying the legally required amount that corresponds to what is being paid to U.S. worker employees at HCL. The HCL document revealed that the large-scale illegal underpayment of H-1B workers that appears to be occurring is a core part of the HCL’s competitive strategy, and likely facilitated $95 million in stolen wages from HCL’s H-1B employees in just one year. Such abuses are surely widespread among H-1B employers because DOL has done virtually nothing to ensure program integrity by enforcing the H-1B wage rules, in particular the actual wage rule.

DOL could easily begin enforcing the actual wage provision by requiring H-1B employers to submit evidence documenting the wage rates paid to U.S. workers who are similarly employed in occupations for which the employer is also hiring H-1B workers. Employers must already “keep records for how they calculate the actual wages.” To our knowledge, DOL has never initiated an investigation regarding compliance with the “actual wage” provision of the law. The DOL Secretary should exercise their authority to inspect the actual wages paid by H-1B employers. The Secretary can do so without a complaint from a worker, under their authority to certify investigations, and should do so if presented with credible evidence of violations. DOL should provide clear compliance guidance for the actual wage provision and then require that H-1B employers attest to the wage rates they pay similarly situated U.S. workers and include them in the LCA documentation, and DOL should conduct audits of employers on a regular basis to ensure compliance. The audits could begin with the employers that hire large numbers of H-1B workers, for example, those that employ more than 25 H-1B workers, as well as H-1B dependent firms.

Secondary employers should also be required to submit LCAs and evidence documenting the wage rates paid to U.S. workers in the occupations that H-1B workers will be hired for through an outsourcing firm. Otherwise, some H-1B outsourcing firms—which almost exclusively pay H-1B workers at the two lowest wage levels, and employ H-1B and L-1 workers almost exclusively—will be able to game the system by using the actual wage paid to their own employees to meet the requirement, and not the employees of the secondary employer, where the H-1B workers will be placed—and where wages paid to the U.S. workforce are likely to be higher.

10. DOL should require secondary employers of H-1B workers to attest that they will not adversely affect wages and working conditions

Outsourcing companies are using the H-1B program to underpay H-1B workers, replace U.S. workers, and send tech jobs abroad. Typically, in this scenario, H-1B workers do computer and engineering work at the office of a U.S. employer but are employed by an outsourcing company, some of which are based abroad or have major operations abroad.40 The many reported cases of U.S. workers being laid off and replaced by H-1B workers have all been facilitated by this arrangement. In multiple incidents, the H-1B workers have been hired with annual wages of around $30,000 to $40,000 less than the workers they have replaced. Before they are laid off, the U.S. workers are often forced to train their own H-1B replacements as a condition of their severance packages; this is euphemistically known as “knowledge transfer.” Major, profitable U.S. employers like Disney and Toys “R” Us—as well as public employers and institutions like the University of California and Southern California Edison—have laid off thousands of U.S. workers who were forced to train their own replacements. Eventually, many of the outsourced jobs filled by H-1B workers get moved offshore.41

Contrary to the popular narrative proffered by corporations that support expanding and deregulating the H-1B visa program—the staffing firms that use H-1B visas are not using them to keep technology jobs in the United States—instead they are using them precisely to facilitate the offshoring of as many of those jobs as they can. That is in fact, the business model of those firms. News reports, including from the New York Times and Bloomberg, have shown that outsourcing companies “game the system” in order to obtain a high share of H-1B visas, which leaves fewer available for the firms that directly employ H-1B workers.42

The outsourcing/staffing model of employment generally may increase the incidence of labor and employment law violations by separating the main beneficiary of the labor provided by H-1B workers—the third-party firm that hires the outsourcing firm, i.e. the “lead” employer—from the H-1B workers who perform the work. Firms that rely on outsourced H-1B workers are a textbook example of what former DOL Wage and Hour administrator David Weil calls a “fissured” workplace, where the relationship between the worker and the lead employer is fissured, or broken, via the use of a temp agency or subcontractor43 (in this case the temp agency or subcontractors are the H-1B outsourcing firms). Research shows that fissuring leads to a wage penalty for workers who are subcontracted, employed as temps, and work for staffing firms,44 in part because the subcontractor keeps a percentage of the wages earned by the workers. It is also common knowledge that employers use this model to avoid paying for benefits like health care, retirement funds, and to avoid liability for labor violations. Because the staffing and outsourcing model contributes to the fissuring of the labor market, it should not be allowed as part of the U.S. immigration system—not in H-1B or in any other temporary or permanent immigration programs.

One way to address the abuses of the outsourcing/staffing firms, which operate as secondary employers, would be to issue policy guidance and update the appropriate DOL ETA application forms so that secondary employers to which H-1B workers are outsourced will be required to file Labor Condition Applications with DOL. Such guidance, which was considered in 2021 but then abandoned,45 would close the loophole that allows firms like Disney and Southern California Edison to replace its U.S. employees with H-1B workers by employing them through an outsourcing firm.46 Using Disney as an example, implementing this rule would require client firms like Disney—that benefit and profit from hiring outsourcers—to acknowledge their employment relationship with H-1B workers who are employed by outsourcers like Infosys and Tata, by requiring Disney to file its own LCA. By doing so, Disney would attest that hiring the H-1B worker through the outsourcer is not adversely affecting the wages and working conditions of the Disney workforce.

11. DOL should publish Labor Condition Application and permanent labor certification data in real-time on a central database

DOL publishes detailed LCA and permanent labor certification (PERM) disclosure data, but it is typically lagged by at least one quarter, and often much longer. The agency should publish LCA and PERM public access file applications in real-time to enable U.S. workers to apply for these positions. This would enhance the integrity of the programs and better align them to their purposes by ensuring that workers hired with temporary visas and green cards are filling true labor shortages.

U.S. workers have long complained loudly that employers hide job openings from them, reserving them for visa holders and PERM applicants. Even when those jobs are advertised, as is required by the PERM labor certification process, they are often placed in obscure locations. Workers call such job advertisements “fake job postings.” A recent ProPublica investigation has referred to the practice as “The Tech Recruitment Ruse.”47

The agency already collects the data and publishes it regularly on the OFLC disclosure data. But even a one-quarter year lag time renders it useless for job seekers. Publishing it in real-time would unlock enormous value for workers at little or no cost to the government or employers.

12. DOL had the requisite legal authority to update the H-1B prevailing wage levels

As discussed in detail in our 2020 report, DOL has the requisite legal authority to change the H-1B prevailing wage levels to an appropriate rate that protects wage standards and prevents adverse effects on U.S. workers in H-1B occupations. No analyst or commentator has credibly argued otherwise. For far too long, the H-1B wage levels have been set at an artificially low level that undercuts U.S. wage standards, therefore, it is reasonable for DOL to increase the minimum wage levels so that Level I is no lower than the local median wage.

13. DOL should expand the LCA process to include a front-end screening process that reviews the labor and employment law records of employers; those that have violated certain laws in the previous five years should be prohibited from hiring through the H-1B program

In a previous comment to the Department of Homeland Security (DHS), regarding the 2023 H-1B “modernization” rule,48 we recommended that DHS should expand the H-1B Registration System to include a front-end screening process that reviews the labor and employment law records of employers. If employers have violated certain laws, they should be prohibited from hiring through the H-1B program. We further recommended that DHS should consult with DOL to develop a list of key applicable laws and operate the system jointly with DOL, and ideally, also operate the updated registration process jointly, with DOL screening employer records through the LCA process. We reiterate that recommendation here and urge DOL to take steps to exclude lawbreaking employers that violate labor, employment, and immigration laws. While we realize our comment will only be read by DOL, we nevertheless include our discussion about DHS’s role in this process because we believe DOL and DHS should work in tandem to reduce labor and employment violations in the H-1B program.

In the 2023 proposed rule, Modernizing H-2 Program Requirements, Oversight, and Worker Protections,49 DHS proposed to create or expand several additional bars to approval of new petitions filed by H-2 petitioners who have previously committed legal violations related to the H-2 programs. EPI submitted comments generally supporting the proposed changes, which were adopted as a final rule.50 Although they fail to go far enough on their own, if adequately implemented the provisions will help curb abusive employers’ exploitation of the H-2 programs and will level the playing field for employers that obey the law. EPI additionally commented that employers that commit serious violations repeatedly should be permanently banned from the H-2 programs, as they have demonstrated their inability or unwillingness to comply with the programs’ requirements.

In those comments EPI further recommended that the DHS strengthen section 214.2(h)(10)(iii)(3), which addresses violations of “any applicable employment-related laws and regulations” by expanding it to include a number of other violations and making denial of petitions mandatory—rather than discretionary—if employers have violated any of those laws in the preceding five years.51 

We believe DHS should consider similar provisions for employers seeking to hire through the H-1B program because there have been numerous credible accusations of lawbreaking against H-1B employers, as well as investigations and litigation, finding that H-1B employers and recruiters that have been guilty of wage theft, financial bondage, and even human trafficking. The reality is that DOL has limited resources and has interpreted its authority to investigate H-1B employers as constrained, and it is difficult in practice for H-1B workers to come forward and complain themselves about employer lawbreaking—because they could face retaliation and lose their status, and possibly the opportunity to become lawful permanent residents—which means DOL likely receives fewer complaints than they otherwise would. And even when DOL does receive complaints, as numerous reports have shown, DOL often lacks the resources to investigate and take action against lawbreaking employers.52

Thus, at a minimum, to keep lawbreaking employers out of the H-1B program, DHS should have its own list of legal violations and deny any petition for an employer that has violated any of the laws on the list in the preceding five years. That would act as a backstop to prevent lawbreaking employers from hiring through the H-1B program. At present, as DHS rightly points out in the November 2023 Modernizing H-2 Program NPRM, even some of the worst violators of the law are allowed to recruit and hire H-2 workers. We know that this is also the case in the H-1B program. In fact, in the H-1B program, some of the biggest users of the program are also the most egregious violators, receiving thousands of H-1B petition approvals per year. And then after they violate the law, H-1B employees are afraid to complain to authorities because their immigration status is tied to their employer, and even if they are brave enough to lodge a complaint, as noted above, DOL may lack the resources to investigate violations and hold the employer accountable.

As EPI also recommended in the H-2 NPRM, DHS should go further to implement this by also cooperating with DOL to develop a front-end screening process that takes place at the labor condition application (LCA) stage, to vet the labor and employment law records of employers before they can be allowed to hire through the H-1B program. In multiple EPI reports and in comments in response to NPRMs, EPI has made a similar proposal—namely, that a front-end screening process should be created to prohibit employers with track records of wage and hour, labor, immigration, and other legal violations from hiring through the H visa programs.

To make a front-end screening process a reality, ideally, DOL should require employers to register for eligibility to use the H-1B program at the LCA stage, so employer records on compliance with labor and employment laws can be screened up front, before getting to the registration or petition stage. DOL could set up a registration process in which employers list basic information about their business and the purported need for H-1B workers (as is already done via the DOL temporary labor certification forms). As part of that new process, employers could be required to attest, under penalty of perjury and of being banned from hiring through the H-1B and other visa programs, that they have not been found to have violated any of the listed labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking, or anti-discrimination laws during the past five years. DOL could then attempt to verify by cross-referencing enforcement data and other relevant records—and could cooperate with other worker protection agencies like the NLRB and EEOC—and ultimately certify employers that have not violated the applicable laws.

To break established patterns of abuse, employers that have violated any labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking or anti-discrimination laws should be prohibited from submitting an LCA (or having their LCA approved) and ultimately not be allowed to hire H-1B workers. Employers that have clean records and an LCA approved by DOL could then continue on with the petition process at USCIS.

Given the present and likely future reality that WHD and other worker protection agencies will continue to be vastly underfunded and understaffed,53 such a screening process on the front end of the H-1B application process could act as a useful and efficient tool to prevent legal violations without WHD having to go through lengthy and costly investigations on the back end, after workers have arrived in the United States and been robbed or otherwise exploited.

At the petition level, if a new screening process at DOL is not created that takes place before or as part of the LCA process, DHS should, at a minimum and as noted above, build on proposed section 8 C.F.R. 214.2(h)(10)(iii)(B) for H-2 petitions by creating a list of key labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking, and anti-discrimination laws, the violation of which would establish strong evidence that an employer does not treat their employees well and is unlikely to follow employment and immigration laws with respect to their H-1B employees. Although this would work best in tandem with a front-end screening process at the LCA stage, DHS could make significant progress in keeping lawbreaking employers out of the H-1B programs by mandating that any employer that has violated any of the listed laws will be prohibited from having a petition approved for hiring H-1B workers.

Another option would be for DHS to modify the existing H-1B Registration System so that it also screens the records of employers. That way DHS could use it to both manage the annual cap and to assess and certify whether employers are eligible to hire through H-1B based on their past legal violations. Employers could be required to attest, under penalty of perjury and of being banned from hiring through the H-1B and other visa programs, that they have not been found to have violated any of the listed labor, employment, wage and hour, immigration, civil rights, disability, anti-trafficking, or anti-discrimination laws during the past five years. USCIS could work to verify the employer attestation, although ideally DOL should partner with to do this, by cross-referencing DOL enforcement data and other relevant records—preferably also in partnership with other worker protection agencies like the NLRB and EEOC—and would then ultimately certify employers that have not violated the applicable laws, allowing them to continue with the registration process.

Conclusion

The H-1B visa program is the largest temporary work visa program in the United States and an important pathway into the U.S. labor market for skilled migrants from around the world—but a pathway that has serious deficiencies when it comes to the workplace rights of migrant workers and for preserving U.S. labor standards. While less is known about the other LCA programs, H-1B1 and E-3, they have even fewer applicable rules in place to protect workers, which likely means they are having similar impacts on worker rights and labor standards. By issuing this NPRM, DOL has taken an important first step towards reversing decades of artificially depressed wage rates for H-1B workers, and for making the prevailing wage methodology rules consistent across the other LCA programs and for EB-2 and EB-3 green cards. This will benefit other similarly situated workers and simplify and streamline the prevailing wage determination process. Nevertheless, as our comment recommends, more must be done—in this rulemaking and other executive actions—to improve the effectiveness of the updated prevailing wage rates and on enforcement in the LCA and PERM programs, in order to safeguard U.S. wages and labor standards.

Daniel Costa
Director of Immigration Law and Policy Research
Economic Policy Institute
Washington, DC

Ron Hira, Ph.D., P.E.
Associate Professor
Department of Political Science
Howard University

Endnotes

1. See for example, Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020; Ron Hira and Daniel Costa, New evidence of widespread wage theft in the H-1B visa program: Corporate document reveals how tech firms ignore the law and systematically rob migrant workers, Economic Policy Institute, December 9, 2021.

2. Employment and Training Administration, Adverse Effect Wage Rate Methodology for the Temporary Employment of H-2A Nonimmigrants in Non-Range Occupations in the United States, Interim Final Rule, request for comments, U.S. Department of Labor, 20 CFR Part 655, DOL Docket No. ETA-2025-0008, RIN 1205-AC24 (October 2, 2025).

3. Daniel Costa and Ben Zipperer, “Trump’s new H-2A wage rule will radically cut the wages of all farmworkers: New estimates show farmworkers stand to lose $4.4 to $5.4 billion annually under DOL’s updated Adverse Effect Wage Rate,” Working Economics blog (Economic Policy Institute) November 26, 2025; for additional discussion and background, see Daniel Costa, “EPI comment on DOL’s 2025 Interim Final Rule modifying the AEWR methodology for H-2A farmworkers,” Public Comments, Economic Policy Institute, December 1, 2025.

4. PERM stands for Program Electronic Management Review, and is the first step for employers who wish to sponsor an employee for permanent residence in the United States through the EB-2 and EB-3 categories.

5. See for example, Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.

6. George Borjas, The H-1B Wage Gap, Visa Fees, and Employer Demand, NBER working paper 34793, March 2026. See pages 3-4.

7. USCIS, X.com post, May 21, 2026 at 1:37 PM, https://x.com/USCIS/status/2057561453373399339

8. https://www.newyorkfed.org/research/college-labor-market#–:explore:outcomes-by-major

9. Here are just a sample of some of the recent news accounts in major media outlets: Katherine Bindley, “The ‘Great Hesitation’ That’s Making It Harder to Get a Tech Job,” Wall Street Journal, May 18, 2025; Christopher Rugaber, “Unemployment among young college graduates outpaces overall US joblessness rate,” Associated Press, June 26, 2025; Sydney Ember, “Young Graduates Face the Grimmest Job Market in Years,” NY Times, March 24, 2026.

10. Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.

11. See for example, Connor O’Brien, Jeremy Neufeld, and Amy Nice, A Prescription for Fixing the Prevailing Wage System: Replacing Blind Benchmarking with Experience Benchmarking, Institute for Progress, March 27, 2026.

12. See Overview section in Wage and Hour Division, “H-1B Program,” web page on the U.S. Department of Labor website.

13. U.S. Department of Homeland Security, U.S. Citizenship and Immigration Services, Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions, 86 Fed. Reg. 1676, at 1720, Table 7, June 8, 2021.

14. See Table 12 in Department of Homeland Security, Weighted Selection Process for Registrants and Petitioners Seeking To File Cap-Subject H–1B Petitions, Notice of proposed rulemaking, CIS Docket No. 2820-25, DHS Docket No. USCIS-2025-0040, RIN: 1615-AD01 (September 24, 2026).

15. See for example, Daniel Costa and Ron Hira, H-1B Visas and Prevailing Wage Levels: A Majority of H-1B Employers—Including Major U.S. Tech Firms—Use the Program to Pay Migrant Workers Well Below Market Wages, Economic Policy Institute, May 4, 2020.

16. NPRM at 15490.

17. Norman Matloff, “H-1B Visas Are Transforming America,” Compact, October 8, 2025; Norman Matloff, Are foreign students the ‘best and brightest’? Data and implications for immigration policy, Economic Policy Institute, Briefing Paper #356, February 28, 2013.

18. NPRM at 15490.

19. Office of Foreign Labor Certification, OFLC Wage Search, last visited on May 23, 2026.

20. United States Citizenship and Immigration Services, Characteristics of H-1B Specialty Occupation Workers, Fiscal Year 2024 Annual Report to Congress, October 1, 2023 – September 30, 2024, U.S. Department of Homeland Security, April 29, 2025.

21. U.S. Bureau of Labor Statistics, Table 5.3 Educational attainment for workers 25 years and older by detailed occupation, 2022–23 (Percent), Employment Projections, U.S. Department of Labor, retrieved May 23, 2026; U.S. Bureau of Labor Statistics, Table 11b. Employed people by detailed occupation and age, Labor Force Statistics from the Current Population Survey, U.S. Department of Labor, retrieved May 23, 2026.

22. U.S. Bureau of Labor Statistics, Table 11b. Employed people by detailed occupation and age, Labor Force Statistics from the Current Population Survey, U.S. Department of Labor, retrieved May 23, 2026.

23. Connor O’Brien, Jeremy Neufeld, and Amy Nice, A Prescription for Fixing the Prevailing Wage System: Replacing Blind Benchmarking with Experience Benchmarking, Institute for Progress, March 27, 2026. PDF available here: https://ifp.org/wp-content/uploads/IFP_Prevailing_Wage_Experience_Benchmarking_.pdf

24. NPRM at 15490.

25. NPRM at 15474.

26. For the Davis-Bacon Act, see 40 USC §3141(2); and the Service Contract Act at 41 USC §351(a)(2).

27. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Employment Wage Statistics, Frequently Asked Questions, at Section C, Number 8.

28. Bureau of Labor Statistics, U.S. Department of Labor, Employer Costs for Employee Compensation – December 2025, March 20, 2026.

29. Bureau of Labor Statistics, U.S. Department of Labor, Employer Costs for Employee Compensation – December 2025, March 20, 2026.

30. See tables, Bureau of Labor Statistics, U.S. Department of Labor, Employer Costs for Employee Compensation – December 2025, March 20, 2026.

31. Wage and Hour Division, “Fact Sheet #62L: What benefits must be offered to H-1B workers,” U.S. Department of Labor, Revised July 2008.

32. Daniel Costa and Ron Hira, H-1B visas and prevailing wage levels: A majority of H-1B employers—including major U.S. tech firms—use the program to pay migrant workers well below market wages, Economic Policy Institute, May 4, 2020.

33. NPRM at 15479.

34. See discussion of the 2013 Interim Final Rule setting the H-2B prevailing wage methodology in Daniel Costa, The H-2B temporary foreign worker program: For labor shortages or cheap, temporary labor? Economic Policy Institute, January 19, 2016.

35. Daniel Costa, “H-2B crabpickers are so important to the Maryland seafood industry that they get paid $3 less per hour than the state or local average wage,” Working Economics (Economic Policy Institute blog), May 26, 2017.

36. 8 U.S.C. 1182 (n)(1)(A)(i)(II).

37. Employment and Training Administration, Prevailing Wage Determination Policy Guidance, Nonagricultural Immigration Programs, U.S. Department of Labor, Revised November 2009.

38. Ethan Baron, “H-1B: Uber snatches up more foreign-worker visas as it lays off hundreds of employees,” Mercury News, October 17, 2019.

39. Ron Hira and Daniel Costa, New evidence of widespread wage theft in the H-1B visa program: Corporate document reveals how tech firms ignore the law and systematically rob migrant workers, Economic Policy Institute, December 9, 2021. See also, news coverage of our report, for example, Lauren Kaori Gurley, “Analysis Claims Migrant Tech Workers Have Been Underpaid by Tens of Millions,” Vice News, December 9, 2021.

40. See for example, Senator Richard Durbin, “How American Jobs are Outsourced,” YouTube.com video, April 16, 2016.

41. See for example, Stef Kight, “U.S. companies are forcing workers to train their own foreign replacements,” Axios, December 29, 2019; Julia Preston, “Pink Slips at Disney. But First, Training Foreign Replacements,” New York Times, June 3, 2015; Julia Preston, “Toys ‘R’ Us Brings Temporary Foreign Workers to U.S. to Move Jobs Overseas,” New York Times, September 29, 2015; Michael Hiltzik, “How the University of California Exploited a Visa Loophole to Move Tech Jobs to India,” Los Angeles Times, January 6, 2017; Patrick Thibodeau, “Southern California Edison IT Workers ‘Beyond Furious’ over H-1B Replacements,” Computerworld, February 5, 2015.

42. Eric Fan, Zachary Mider, Denise Lu, and Marie Patino, “How thousands of middlemen are gaming the H-1B program,” Bloomberg, July 31, 2024; Julia Preston, “Large Companies Game H-1B Visa Program, Costing the U.S. Jobs,” New York Times, November 10, 2015.

43. David Weil, The Fissured Workplace: How Work Became So Bad for So Many and What Can Be Done to Improve It, Harvard, 2014.

44. A number of studies show a wage penalty for subcontracted/outsourced workers. For example, see Arindrajit Dube and Ethan Kaplan, “Does Outsourcing Reduce Wages in the Low-Wage Service Occupations? Evidence from Janitors and Guards,” Cornell University ILR Review. January 1, 2010); Deborah Goldschmidt and Johannes Schmieder, “The Rise of Domestic Outsourcing and the Evolution of the German Wage Structure,” The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), 2017, pages 1165-1217; Andres Drenik, Simon Jäger, Pascuel Plotkin, and Benjamin Schoefer “Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data,” Econometrics Laboratory, University of California, Berkeley, September 2020.

45. Employment and Training Administration, U.S. Department of Labor, “U.S. Department of Labor revises interpretation, issues new guidance clarifying filing, compliance requirements in H-1B visa program,” Press Release Number 21-97-NAT, January 15, 2021.

46. Julia Preston, “Pink Slips at Disney. But First, Training Foreign Replacements,” New York Times, June 3, 2015.

47. Alec MacGillis, “The Tech Recruitment Ruse That Has Avoided Trump’s Crackdown on Immigration,” ProPublica, June 3, 2025.

48. Daniel Costa and Ron Hira, “EPI comments on DHS’s “Modernizing H-1B” proposed rule,” Public Comments, Economic Policy Institute, December 22, 2023; commenting on U.S. Department of Homeland Security, Modernizing H-1B Requirements, Providing Flexibility in the F-1 Program, and Program Improvements Affecting Other Nonimmigrant Workers, Notice of proposed rulemaking, CIS No. 2745-23, DHS Docket No. USCIS-2023-0005, RIN: 1615-AC70, 88 Fed. Reg. 72870 (October 23, 2023).

49. U.S. Department of Homeland Security, Modernizing H-2 Program Requirements, Oversight, and Worker Protections, Notice of Proposed Rulemaking, CIS No. 2740-23 and DHS Docket No. USCIS-2023-0012, RIN: 1615-AC76, 88 Fed. Reg. 65040 (September 20, 2023).

50. U.S. Department of Homeland Security, Modernizing H-2 Program Requirements, Oversight, and Worker Protections, Final Rule, CIS No. 2740-23; DHS Docket No. USCIS-2023-0012, RIN 1615-AC76, 89 Fed Reg. 103202 (December 18, 2024).

51. See EPI comment on the H-2 programs in the comment submitted to DHS in November 2023; Daniel Costa, EPI comments on DHS’s proposed rule on “Modernizing H-2 Program Requirements, Oversight, and Worker Protections,” Economic Policy Institute, November 20, 2023.

52. See for example, Rebecca Rainey, “Inadequate Labor Department Resources Stymie Enforcement Efforts,” Bloomberg Law, November 7, 2023.

53. See for example, AFL-CIO, Workers’ Rights Ice’d Out, February 25, 2026; Rebecca Rainey, “Trump’s Federal Workforce Cuts Hit Labor Department Enforcement,” Bloomberg Law, Feb. 24, 2025; Daniel Costa, Josh Bivens, Ben Zipperer, and Monique Morrissey, The U.S. benefits from immigration but policy reforms needed to maximize gains: Recommendations and a review of key issues to ensure fair wages and labor standards for all workers, October 4, 2024 (see Figure J); Daniel Costa and Philip Martin, Record-low number of federal wage and hour investigations of farms in 2022: Congress must increase funding for labor standards enforcement to protect farmworkers, Economic Policy Institute, August 22, 2023; Ihna Mangundayao, Celine McNicholas, and Margaret Poydock, “Worker protection agencies need more funding to enforce labor laws and protect workers,” Working Economics blog (Economic Policy Institute), July 29, 2021.

Key takeaways:

• Affordability is not just about prices; it’s the outcome of a race between income growth and price inflation. When income growth is slower than price inflation, affordability worsens. When income growth is faster, affordability improves.
• Focusing just on prices is bad for understanding how the economy works and how it has performed in the recent past, and it leads to an overly restrictive policy menu for improving families’ affordability.
• Policy can more reliably address income growth for typical families. This growth has been stunted for decades by the rise of inequality. Closing this gap by ensuring more equitable distribution of future growth is the strongest tool we have for improving affordability.

Affordability has been the policy buzzword of recent years. Much of the affordability discourse—both among policymakers and the public—has focused near-exclusively on prices as the big affordability problem. But affordability is not a problem of high prices, instead it’s the outcome of a race between incomes and prices. And the reason typical families have faced an affordability crunch in recent decades is not because prices have grown exceptionally fast, it’s because incomes for the vast majority have grown too slowly. This income growth has been suppressed mostly by rising inequality that has put a growing wedge between overall economic growth and the income growth of typical families.

Getting the drivers of affordability right is important—it’s not just quibbling. If you only examine price growth and try to infer what has happened to affordability over periods of economic history, you’ll usually get the story wrong. And if policymakers only look at how to change the trajectory of prices while ignoring what they can do to change the trajectory of incomes, they will be far less effective in providing useful relief to U.S. families. There are far more ways to use policy to raise incomes in a targeted and effective way than there are to suppress price growth.

Below, we provide some more background on why analyses of affordability need to include incomes, why policymakers have much more scope to raise incomes in a useful way as opposed to pushing down prices, and why focusing just on prices can obscure whether affordability has improved or worsened.

Why do prices dominate today’s affordability debates?

In modern capitalist economies, prices rise essentially every year (though at quite different rates), but so do incomes. Determining what has happened to families’ ability to afford a decent and secure life requires looking at measures that take into account both sides of the affordability equation, such as real (inflation-adjusted) income growth. Nobody really disputes this. After all, Americans could buy a new car for $600 in the 1930s, but nobody thinks society was generally richer back then.

The narrow focus on prices in assessing one’s own economic struggles likely stems from several factors.

First, inflation was very fast in the early 2020s. Americans hadn’t experienced inflation rates that high in decades, and they didn’t like them, so prices remain front of mind for many.

Second, it is true that price changes can dominate what happens to real incomes over very short time periods (say a year or less). This recognition is why we can be so sure that the oil price shock inflicted by the U.S. bombing of Iran is going to be so damaging to U.S. families. The rise in oil prices so far this year has likely baked in at least a 1.5% increase in inflation over the next 6–12 months. In 2025, real wage growth for the large majority of workers was slower than 1.5% (which was the outcome of roughly 4% nominal wage growth minus 2.5% inflation). Given this, a sharp and unexpected 1.5% jump in prices will likely erase any prospective real wage gains for workers in 2026.

Finally, it has been noted that many Americans see wage gains as something they accomplished themselves through hard work, while prices are out of their immediate control. Inflation is hence seen as damage done to them and something they need relief from. But this is mostly wrong—policy choices impact wage growth at least as much as inflation, and the most effective policy relief for living standards will come through measures that raise wages, not restrain prices.

Policy can target incomes more effectively and precisely than prices

One person’s income is another person’s cost, which means prices are a bundle of different stakeholders’ incomes. The bill you pay at the grocery store must cover payments the store makes to its shareholders, the salary of the CEO and managers, the wages of cashiers, and the cost of buying food from producers. We don’t want all these incomes to be forced down. Given extreme levels of inequality in the U.S., we would likely be fine with lower CEO pay and payments to shareholders, but we would want wages of cashiers and many in the food production supply chain to rise. Efforts to simply clamp down on this price will have uncertain effects on incomes.

In the jargon of economists, focusing on prices is sector-based policy but to genuinely improve affordability we need factor-based policies, where factors of production like capital, rank-and-file workers, and corporate management can be specifically targeted by policies that aim to raise or restrain their incomes.

Fortunately, there are many good policy options for targeted affordability policy specifically toward low- and middle-income families. Incomes for these families—and for anybody without dynastic wealth—are dominated by wages and public benefits. We talk about each of these in turn below.

Boosting public benefits is affordability policy

Public benefits are entirely under policymakers’ control. If policymakers really cared about the affordability of groceries or health care or energy, they could boost benefits for food stamps, Medicaid, and the low-income heating energy assistance program. These programs currently deliver needed assistance to tens of millions of families to make life more affordable—and they do this with vanishingly small administrative costs, meaning they are highly efficient. Yet all of these programs are slated for steep cuts in the coming decade due to the Republican tax and spending megabill passed in 2025. This bill will inflict large damage to the most vulnerable families’ ability to afford decent and secure lives.

Further, Congress and the Trump administration chose to not extend the Biden administration’s more-generous subsidies for people to buy health insurance through the marketplace exchanges of the Affordable Care Act. The failure to extend these subsidies—even after a full federal government shutdown engineered by congressional Democrats aimed at prioritizing this issue—means that average out-of-pocket costs will double for those buying insurance in the exchanges.

Besides just reversing these cuts, making the U.S. welfare state more robust could also greatly boost the affordability of a decent life. Things like making health coverage more universal with lower out-of-pocket costs, reforming unemployment insurance to make it more protective, and providing all families with children a generous universal child allowance could dramatically improve affordability.

Policy can boost affordability through higher wages as well

The link between policy changes and wage growth is slightly less direct than for public benefits, but it remains very strong. Capitalist labor markets are inherently tilted toward employers and against workers. The only periods of history that have seen strong and equal rates of wage growth across the workforce have been periods where policy supported institutions that boosted workers’ leverage with employers.

The 30 years after World War II saw the creation of policies and institutions that successfully spread the gains from rising productivity equitably among workers up and down the wage distribution, with low- and middle-wage workers seeing growth rates as fast as high-wage workers. This equitable distribution of wage growth was a crucial way that income growth more broadly was kept equitable in this period.

Since 1979, however, these institutions have been steadily attacked and weakened with no new institutions being stood up to take their place in ensuring an equitable distribution of economic growth. The result has been that wages and incomes of typical families have lagged far behind average income and wage growth (or productivity). The wedge between income growth experienced by the vast majority of families and average growth is simply income being generated in the economy that is not helping typical families’ affordability struggles. Instead, it is income being funneled reliably away to the top.

There’s no reason that the institutions that equalized wage growth cannot be built back up and modernized.

The federal minimum wage is the most obvious policy institution for raising wages at the low end of the labor market. Raising the federal minimum wage from its current shamefully low $7.25 would directly boost affordability for tens of millions of workers. In the middle of the wage distribution, unions have proven to be the institution that has historically counteracted employer power and given typical workers increased leverage. However, unions are in a far weaker position today relative to their high points because of intentional policy choices—specifically because policymakers failed to act to curb employers’ growing hostility (and often their illegal activities) toward union organizing. If stronger policy boosted union density, unions would raise wages for both members and non-members alike.

Low- and middle-wage workers also benefit enormously from a determined effort to keep unemployment low for extended periods of time. In recent decades, policymakers have tolerated excess unemployment to keep inflation in check, but this is far too costly a strategy to keep potential inflation in check. Besides locking out millions of willing workers from job opportunities, long periods of excess unemployment were periods when real (inflation-adjusted) wage growth became literally stagnant.

Policymakers often seem skeptical of the effectiveness of these wage-boosting policies, arguing that the effects are too indirect and will take too long to provide benefits to workers. It’s true that efforts to boost unionization and sustain full employment will take some time to push up wages. But they will do this reliably. Further, many policies advanced in the name of reducing prices would also take a long time to come to fruition. For example, calls to tighten antitrust restrictions against corporate mergers and to break up established monopolies often have lots of merit. However, they are not policies that happen instantly and have purely predictable effects.

Focusing too hard on prices can obscure when affordability is actually improving

Finally, one key reason to broaden the affordability debate beyond prices is simply to make sure the public and policymakers can correctly identify periods of improvement or degradation of affordability. As an example of how focusing only on prices can lead to an incorrect diagnosis of affordability trends, take the example of two five-year stretches in recent economic history, both measured from a business cycle peak and going five years forward from there: In the years between 2007 and 2012, annual inflation averaged 1.8% and peaked at 5.5%, while between 2019 and 2024, inflation averaged 4.2% and peaked at 9%. Based on price growth alone, one would expect affordability to have eroded more rapidly in that second period, and indeed the popular narrative is that the early 2020s inflation was particularly destructive for affordability.

But between 2007 and 2012, the nation’s unemployment rate averaged 8.3%, while it averaged less than 5% between 2019 and 2024. After 2007, it took 93 months to re-attain the pre-recession unemployment rate, while it took just 29 months after the 2019 business cycle peak. In short, the labor market was far stronger in the second period.

And when it comes to real (inflation-adjusted) wage growth, the second period—largely because of its lower unemployment—saw far better outcomes than the first. In the 2019–2024 period, inflation-adjusted wages for low-wage workers (those at the 10th percentile) and the median worker rose by a cumulative 15.3% and 5.8%, respectively. In short, contrary to most conventional wisdom, affordability improved in this time. Between 2007 and 2012, real wages outright fell for both low-wage and median workers. Even with very slow inflation, affordability was demonstrably worse in that earlier period.

Figure A

More recently, inflation averaged slightly lower in 2025 (2.5%) than 2024 (2.9%). Yet for many workers—and particularly low-wage workers—2025 saw weaker (or even negative) real wage growth. This is largely due to some slight cooling in the labor market as unemployment rose from 4.0% to 4.4% over the course of 2025. Hence, even as inflation decelerated, the cooling labor market led to an even faster deceleration in nominal wages, which meant that affordability worsened for many workers.

Figure B

Reducing inequality is the key to improving affordability

Because many policymakers believe that affordability concerns are a new problem caused by inflation of recent years, they are now on a frenzied search for new and creative solutions to this price problem. But because the real affordability problem for U.S. families did not emerge in the past few years (remember, affordability was improving in the five years before 2025) and because the genuine long-run problem of affordability was about the inequality of income and wage growth, not excess inflation, most of these new and creative solutions just won’t hit the mark.

It’s understandable why many policymakers seem frustrated with being reminded of the long-diagnosed problem of inequality and the proven remedies—such as sustained full employment, higher wage standards like minimum wages, protecting workers’ fundamental rights to organize unions and bargain collectively, and a more robust welfare state.

Some, of course, just don’t believe in some of these solutions, while many who do would argue that these proven remedies are politically unrealistic in the current moment. But because the real affordability problem is an inequality problem that requires those at the top of the income and wealth scales having to accept less growth going forward (less than the stratospheric gains they’ve gotten used to, it should be said), any genuine solution is going to seem impossible in today’s political system that is dominated by the wealthiest families and corporations. Any policy—whether old and well-tested or new and creative—that actually aims to redistribute income, wealth, and power away from where it sits today will face a wall of opposition that must be politically overcome one way or the other. There’s no “one weird trick” where you can develop a policy creative and neat enough that it will somehow fool the rich and powerful about what its end result will be. And if the end result of the new and creative policy does not threaten the prerogatives of the rich, it’s not a real solution.

Today’s affordability concerns are indeed rooted in objective facts about the material circumstances of middle- and working-class families in the United States. Precisely because of this, they deserve more serious analysis and policy responses than they have been getting. This means focusing more on incomes than prices, and it means being clear-eyed that it has been the upward redistribution of income to the top—abetted by policy decisions—that is the drag on typical families’ affordability. Until solutions address that, they’re mostly just noise.

Key takeaways:

• Income inequality has skyrocketed since 1979 because of intentional policy choices that suppressed wages for typical families to accelerate income growth at the top.
• Middle-class household incomes would be roughly $30,000 higher today if their incomes had simply kept pace with average income growth since 1979.
• Recognizing that today’s affordability problems are overwhelmingly inequality problems is the key to constructing the right policy solutions.
  • As a start, protecting workers’ right to organize unions, fostering long periods of very low unemployment, and keeping minimum wages high will help typical families claim their fair share of income growth.

When most people—including policymakers—complain about a lack of affordability, they think of prices being too high. But affordability is the outcome of a race between prices and incomes. After all, goods and services were a lot cheaper 90 years ago during the Great Depression, but we all know that nearly everybody is richer today than their peers back then. Bringing incomes into the affordability picture makes for better understanding and better policy.

New Congressional Budget Office (CBO) data show that rising income inequality is the main reason that affordability feels out of reach for too many U.S. families. For more than four decades, most of the income growth in the U.S. economy has been funneled to those at the very top, leaving typical families with far less than their proportionate share of the economy’s gains. If middle-class household incomes had simply kept pace with average income growth since 1979, their pay would be roughly $30,000 higher today. If we account for taxes and government transfers, incomes would still be $19,000 higher today for these middle-class households. Think of this gap as an “inequality tax”: the amount that rising inequality has cost the typical U.S. family. Life would be much more affordable for these families today if they hadn’t been hit by this inequality tax.

This inequality is not the result of competitive markets fairly rewarding people’s skills and hard work. Instead, it resulted from an intentional policy campaign of wage suppression. Labor markets in capitalist economies are inherently tilted toward employers. Fair pay and broadly shared prosperity only materialize when policy affirmatively aims to correct this power imbalance. This can happen—policy choices that bolstered workers’ leverage and bargaining power in labor markets kept growth fast and equal for decades following World War II, for example. But lawmakers rolled back these policies at the behest of capital owners and corporate managers.  

The latest CBO inequality data make the scale of this policy shift visible. Figure A shows the distribution of market income growth for non-elderly households by income group since 1979. We use market income to look at pre-tax, pre-transfer outcomes to assess the equality of outcomes generated by markets. We isolate non-elderly incomes because older households tend to have very low market incomes and these older households have grown as a share over time—so we don’t want any poor performance of market incomes documented here to simply be the outcome of natural population aging. Among this non-elderly group, the top 1% have captured a hugely disproportionate share of market income growth. Between 1979 and 2022, market income for the top 1% grew 277% (from $784,573 to $2.958 million) compared with just 26% growth for the middle fifth of households (from $76,359 to $96,335). This lopsided growth is the root of America’s affordability problem. Even as the economy grew and average incomes rose, typical families fell further behind those at the top who captured most of income growth.

Figure B shows the inequality tax over time, plotting actual market income for the middle fifth of households against what their income would have been if it had grown at the same rate as overall average income. By 2022, the inequality tax reached $30,676 per household, meaning middle-class families are forgoing that much income each year because of rising inequality. The gap has widened steadily since 1979, a sign that the affordability problem facing typical families is not a recent development but rather the cumulative result of decades of policies that have shifted income upward.

Because market income for middle-class families is driven predominantly by labor income, the inequality tax in Figure B reflects the consequences of decades of wage suppression. Of course, the United States has a system of taxes and means-tested transfers (safety net programs like Medicaid and food stamps, for example) that leads to post-tax and transfer income being more equal than market income in any given year. But the tax and transfer system did not ramp up in importance as market income inequality grew after 1979, and even after accounting for its effects, inequality increased significantly. Figure C shows that even when using post-tax and transfer income, the inequality tax remained substantial at $19,320 per middle fifth household in 2022.

Figure D shows who loses and who gains from rising inequality. While the inequality tax cost middle-income families $19,320 in 2022, families at the very top benefited enormously. The 96th to 99th percentiles gained about $88,000 from rising inequality, while the top 1% gained $1.1 million in 2022.

Perhaps surprisingly, the lowest quintile also slightly gained. For this group, lower taxes and higher levels of means-tested benefits counterbalanced a significant loss of market income due to inequality (their market income inequality tax would be around $4,000). The greater fiscal transfers to the bottom fifth are an under-recognized policy achievement of recent decades. It is also an achievement under constant threat, with the latest one being the large cuts to Medicaid and food stamps coming because of the Republican tax and spending bill that passed in 2025.

Figure D

U.S. families’ feeling that life is less affordable than it should be is grounded in objective realities about how the economy has failed them. And it’s understandable why so many of these families think about prices, which they see as the final barrier between them and being able to obtain what they need for a good life, whether the price is for a gallon of gas or a loaf of bread or a monthly health insurance premium.

But the forces causing this affordability crunch are far larger than any given set of prices. Instead, they are mostly the forces that led to rising income inequality by intentionally suppressing the power of workers in labor markets. This wage suppression meant that middle-class income growth was never going to outpace inflation consistently enough to ensure steadily improving economic security.

In short, today’s affordability problems are overwhelmingly inequality problems. Recognizing this fact is the key to constructing the right policy solutions. As a start, protecting workers’ right to organize unions, fostering long periods of very low unemployment, and keeping minimum wages high will help typical families claim their fair share of income growth.

Once the Assembly’s bill reached her desk, Virginia Governor Abigail Spanberger had the opportunity to strengthen it or sign it into law. Instead, Governor Spanberger put forward her own heavily amended version of the bill last week, weakening the proposed collective bargaining framework so extensively that her version would lock Virginia into an unstable, ineffective system in which collective bargaining would remain merely “optional” and where employers and workers would remain perpetually uncertain about what rules might apply to them from year to year depending on what appointees of future governors might decide. The governor’s amended bill will now be considered by the Assembly in its one-day veto session this week. Below, we analyze some of the many substantive differences between the Assembly bill and the governor’s bill, as well as the likely economic impacts.

Virginia’s ability to reap economic benefits of collective bargaining will depend on strength of any new law 

EPI has previously analyzed the economic importance of strengthening collective bargaining rights in Virginia, where the state’s long-standing ban on public-sector collective bargaining has suppressed workers’ wages and union membership. Our most recent analysis showed that state and local government employees in Virginia earn, on average, 26.7% less than private-sector peers with similar education and experience. Virginia’s public-sector pay gap is the second highest in the nation while its public-sector unionization rate (at 14.1%) is the fourth lowest, outcomes that our 50-state data show are closely correlated with the strength or weakness of a state’s collective bargaining laws. Recent EPI research further shows that beyond helping states narrow public-sector pay gaps and improve conditions for directly affected workers and the public they serve, stronger collective bargaining laws are highly correlated with widely shared benefits including higher wages, more equitable state economies, and healthier democracies.

State public-sector collective bargaining laws are complex and highly variable. In our prior research, we grouped state laws into three categories based on assessment of whether collective bargaining is:

1) illegal: state law prohibits public employers and unionized workers from entering into collective bargaining agreements.

2) permitted: collective bargaining is “optional” insofar as it is allowed in certain jurisdictions but occurs only if both parties agree to engage in it; whether parties are required to negotiate over wages or other terms and conditions of work is not defined in state law.

3) required: once a group of workers has gone through the process of forming a legally certified union, employers have a “duty to bargain” over pay (at a minimum), and there is a specified process for both parties to follow in negotiating to reach agreements that result in a legally binding collective bargaining agreement.

Currently, Virginia’s collective bargaining law straddles the first two categories: collective bargaining is illegal for units of state government in Virginia, but the state has recently (since 2021) permitted local governments to enact their own collective bargaining systems.

As shown in Table 1, data show that average public-sector pay gaps vary across states depending on the strength of their collective bargaining laws. Virginia’s large public-sector pay gap is an extreme outlier, currently exceeding even the average among all states with the weakest laws (where collective bargaining is illegal).

Table 1

Governor’s bill deletes essential elements of a strong collective bargaining system

Virginia lawmakers now face a choice between two dramatically different visions for collective bargaining: an Assembly bill that would move Virginia into the stronger “required” category, and the governor’s substitute bill that would lock Virginia into the weaker “permitted” category.

The Assembly’s collective bargaining bill includes clear language recognizing the rights of public employees to choose whether to unionize; setting forth consistent rules, timelines, and processes for workers and employers to follow for union elections and contract negotiations; and establishing a new, independent state labor board to support and administer the new framework across all covered state and local jurisdictions. The Assembly bill also has limitations—for example, it falls short of equalizing rights of all public employees by excluding most higher education workers—but it does provide a clear, strong roadmap for implementing a robust, effective collective bargaining system modeled on proven best practices from other states to serve as a solid foundation for Virginia to build on.

The governor’s amended version of the bill weakens all these key elements of the statutory framework proposed by the Assembly and the proposed labor board’s role in enforcing a clear statutory framework. In many important sections of the bill, the governor’s amendments include changing the word “shall” to the word “may”—a critical change that converts entire sections of statutory rules and requirements into mere suggestions, rather than legally enforceable expectations applying equally to all workers and employers. Another repeated pattern throughout the governor’s bill is the deletion and replacement of a host of detailed statutory guidelines with directives that such guidelines should instead be “determined by the board” or that the board “shall adopt regulations” to answer critical questions about workers’ rights and employer obligations in the unionization and collective bargaining process.

Table 2 summarizes just a few of the key differences between the Assembly bill and the governor’s bill. The Assembly bill proposes a framework similar to those successfully implemented in many other states, including statutory language defining the topics parties are required to negotiate over, clear rules for union elections and negotiations procedures, and binding arbitration to ensure that negotiations will eventually conclude with a contract settlement. These standard elements are essential to a strong, effective collective bargaining system that enables workers to have an equal voice at the bargaining table—but the governor’s bill removes all of these elements.

Table 2

The stark contrast between the scope of bargaining as defined in the Assembly bill versus the governor’s bill is especially salient. The strength of any collective bargaining system depends on clear, consistent rules for which topics unions and employers must be willing to discuss in negotiations and which subjects must (or may) legally be incorporated into a collective bargaining agreement. When subjects of bargaining are “permitted” but not required, parties may try to pick and choose what to discuss, one party may refuse to negotiate over matters that are important to the other, and non-mandatory topics are generally not considered as part of arbitration procedures and often therefore never get included in final contracts. Alarmingly, the governor’s bill leaves the scope of bargaining completely undetermined, giving the labor board discretion to determine when and whether it is “appropriate” to require parties to negotiate even over topics as basic as wages.

This change alone would lead us to categorize the governor’s bill as a model for “permitting” (but not requiring) collective bargaining, making it unlikely to significantly narrow Virginia’s public-sector pay gap or achieve other important economic outcomes associated with stronger collective bargaining laws. As shown above in Table 1, workers in states where collective bargaining is “permitted” but not required continue to experience pay gaps far above average (and far greater than in most states with strong collective bargaining laws).

At a minimum, any collective bargaining legislation in Virginia should be measured against the status quo and whether it represents progress toward achieving full and equal collective bargaining for all workers. Here, the governor’s bill falls woefully short and could even represent a step backwards for some workers. At best, the governor’s bill would lock Virginia into a system where collective bargaining becomes “permitted” for more workers than are currently covered by local collective bargaining ordinances. At worst—depending on rules yet to be determined by a future labor board—the governor’s bill could erode existing rights of some local government workers who might find themselves in the future governed by weaker state collective bargaining procedures than those they’ve been able to win at the local level since 2021.

The governor’s bill includes additional significant changes too numerous to cover in detail here. Among other notable amendments that weaken the proposed framework for collective bargaining or its implementation, the governor’s bill:

• delays application of the new law to January 1, 2030, for local governments
• excludes Virginia Port Authority workers from coverage
• maintains exclusion of most higher education workers from coverage (including faculty, professional staff, researchers, graduate assistants, etc.) and specifies that this exclusion extends to health care workers at university hospitals and health care facilities

In the short term, the numerous exclusions, delays, and weaknesses introduced or expanded by the governor’s bill would leave Virginia workers with a limited patchwork of different rights covering different localities and occupations. In the long term, this would create permanent uncertainty about whether and when various rules covering particular groups of workers might be changed by the labor board.

It’s clear that the fight to ensure every employee in Virginia has a voice on the job has only just begun. Collective bargaining is a fundamental right, not intended to be left up to the whims of individual local elected officials or to-be-determined future members of a new state labor board. Collective bargaining is both a labor issue and a civil rights issue, as NAACP Virginia State Conference leaders recently pointed out. Nowhere is this clearer than in Virginia, where the denial of collective bargaining rights to generations of workers is directly rooted in a history of white supremacist backlash against Black worker organizing. Virginia lawmakers still have a chance to enact meaningful collective bargaining legislation in 2026, but doing so will first require rejecting the damaging amendments put forward by Governor Spanberger.

Related: Why the U.S. needs a $17 minimum wage • Why eliminate the tipped minimum wage

Interactive

Summary

Roughly 30,000 farmworkers in Colorado, including 4,400 migrant workers recruited by Colorado employers through the H-2A visa program, are treated unfairly under federal and state law. While Colorado took an important step when the state’s overtime law was reformed to make farmworkers eligible—acknowledging the racist policy enshrined in the federal Fair Labor Standards Act that excluded farmworkers from overtime pay—the law nevertheless continues to treat farmworkers unfairly with limited overtime protections compared to those provided to other workers in Colorado.

Farmworkers are some of the lowest-paid employees in the entire U.S. labor market and suffer from high rates of occupational injuries and death. As discussed in this commentary, growth in farmworkers’ very low wages has tracked very similarly to wage growth of other low-wage workers in recent decades. Yet farmworkers must work dramatically more hours than workers out side of agriculture before they can receive any premium for working long hours. There is no economic justification for this unequal treatment. Further evidence for this is the fact that according to the U.S. Department of Agriculture (USDA), labor costs as a share of farm income have not increased in two decades.1

This commentary explains and shows that:

• Overtime pay for farmworkers increases productivity and protects employees from being overworked.
• Farmworkers nationwide earned some of the lowest wage rates in the entire U.S. labor market and only three-fifths of what non-farm workers earn.
• Farmworkers in Colorado earn very low wages—half the average wage earned by all workers in Colorado.
• Wage growth over the past 20 years for farmworkers nationwide has been almost identical to wage growth for other low-wage workers outside of agriculture.
• Real wage growth for farmworkers in Colorado has averaged only 1.5% per year between 2010 and 2024.
• The number of Colorado farms has increased significantly over the past 15 years, suggesting a successful and growing industry in the state.
• California overtime pay standards cover more farmworkers than in Colorado, and outcomes there have shown that providing farmworkers with overtime pay protections on par with those applicable to workers outside of agriculture can be achieved without negatively impacting the farm industry.

If SB 26-121 becomes law, the resulting overtime threshold would further degrade standards for some of the lowest-paid and most vulnerable workers in the U.S. labor market, without improving productivity or benefitting the state’s economy. Farmworkers deserve better: they deserve equal rights and equal pay. While there is some cost to paying workers overtime, keeping the threshold where it is or taking it to 40 hours per week will be partially offset with productivity gains and will benefit farmworkers—most of whom are not employed year-round—by relieving some of the pressure they feel to work as many additional hours as possible, to the detriment of their health, safety, and family life—and possibly to the quality of the nation’s food supply.

Introduction

Farm labor is hard work that sometimes requires very long hours. When it does, workers deserve to be paid fairly for their time. The reason a 40-hour overtime threshold for farmworkers is not already the law should make us wince: When the federal law that governs overtime pay was written in the 1930s, it excluded two job categories that were overwhelmingly held by African Americans—farm laborers and domestic workers. States now have an opportunity to right this historic wrong and level the playing field for all workers

Overtime pay for farmworkers increases productivity and protects employees from being overworked

How do farm owners accommodate paying higher weekly wages when they ask their employees to work overtime? There is of course, some expense associated with overtime pay for farmworkers. But it’s not a dollar-for-dollar cost, so the impact is ultimately modest. The reason is increased productivity.

As we have seen in many other instances, when employers are required to pay higher wages, they make a bigger effort to increase the efficiency of the workplace. We’ve seen this when the minimum wage has been increased. We’ve seen it in unionized businesses. And we’ve seen it already on farms in states like New York and California, when farm owners were required to pay overtime.

What does an increase in productivity on farms look like?

Farm owners may invest in equipment that makes work easier and faster for workers. They may also find ways to organize work that is more effective. Paying overtime provides a real incentive for that. And, overtime pay will reduce the cost of recruitment and training, because it will reduce turnover. That’s something farm operators should value since most claim there are too few farmworkers available to fill open positions.

But importantly, it will also ensure that farmworkers do not work excessive hours just to make enough to survive. Farmworkers in Colorado earn wages that are not much above the state minimum wage, and because of the seasonality of farm work, most are not even able to earn those low wages year-round, reducing their earnings even further. Since farmworkers are not able to earn a living wage year-round, they will feel pressure to work additional hours, to the detriment of their health, safety, and family life—and possibly to the quality of the nation’s food supply.

Colorado’s current overtime threshold is also very different than the one in a state like California. In California, farmworkers earn time-and-a-half overtime after 8 hours in a day or 40 hours in a week.2 They also earn double their regular rate of pay after working 12 hours in a day. Colorado’s overtime threshold has no daily limit, only a weekly one. Even with the additional coverage of overtime for California farmworkers, the number of farm establishments has held steady in the state: going from 16,408 in 2015, the year before the California overtime law was passed, to 16,416 in 2024—suggesting that farms have not been negatively impacted and are still able to operate successfully in the nation’s largest agricultural state.3 

Farmworkers earned some of the lowest wage rates in the entire U.S. labor market in 2024 and only three-fifths of what non-farm workers earn

It is important to discuss and contextualize the wages of the 2.2 million farmworkers in the United States,4 roughly 350,000 of whom are crop farmworkers employed through the H-2A visa program.5 DOL’s National Agricultural Workers Survey (NAWS) shows that two-thirds of non-H-2A crop farmworkers are foreign-born, and that one-third are U.S.-born citizens.6

The agricultural industry has made numerous claims about skyrocketing and unsustainable wage growth for farmworkers, and the industry has lobbied at the state and federal level, pushing for federal actions by the executive branch and legislation to artificially restrain wage growth in the industry. As this letter discusses, many of the major claims made by the industry are not supported by the available evidence.

The most reliable data on farmworker earnings comes from the U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS), which conducts the Farm Labor Survey (FLS), the results of which were, until recently, published twice a year in USDA’s Farm Labor report series, with data reported for reference weeks in January, April, July, and October.7 On August 28, 2025, USDA announced that it would discontinue its data collection program and reports, including the FLS,8 thus making 2024 the final full year for which FLS data are available. Before October 2025, FLS data was used by the U.S. Department of Labor (DOL) to set the Adverse Effect Wage Rate (AEWR) for most migrant farmworkers hired in the H-2A program. DOL based the AEWR on the average hourly earnings of nonsupervisory field and livestock workers, as reported by farm operators and by region in the FLS. DOL used the FLS data to set H-2A wages so they reflect current real-world trends in the farm labor market.

The FLS data up to 2024 data show that while there have been some documented real increases over the past three decades, they have not been unreasonably large increases, and they have occurred in a broader context where the wages of farmworkers are extremely low by any measure, even when compared with the hourly earnings of comparable non-farm workers, as well as when compared with average wages for all workers in the United States, and workers with the lowest levels of education (see Figure A).

Figure A

In 2024, the average earnings of all nonsupervisory farmworkers (i.e., combined field and livestock workers in the FLS) was $18.12 per hour. The average farmworker hourly wage in 2024 was just half (52%) of the average hourly wage for all workers in the United States in 2024, which was $34.27 per hour.9 The average farmworker hourly wage in Colorado was less than the national farmworker average, at just $17.84 per hour.

The average hourly wage for production and nonsupervisory non-farm workers—the most appropriate cohort of nonagricultural workers to compare with farmworkers—was $27.56, according to the Current Employment Statistics from the Bureau of Labor Statistics (BLS). In other words, farmworkers earning the national average earned just under 60% of what production and nonsupervisory workers outside of agriculture earned, or three-fifths. In 2024, the farmworker wage gap remained substantial and virtually unchanged from the previous three years. USDA’s ERS shows that between 1990 and 2023, the gap slowly narrowed from 50% to 60% and has described the wage gap between farmworker and nonfarm worker wages as “still substantial, but it is slowly shrinking.”10 

Farmworkers have very low levels of educational attainment and their wages are comparable to workers in other industries with similar educational attainment. According to the NAWS, 27% completed the 10th, 11th, or 12th grade, and only 16% completed some education beyond high school.11 Farmworkers earn the same or less than the two groups of non-farm workers with the lowest levels of education in the United States: Farmworkers earned 10 cents an hour more than the average wage earned by workers without a high school diploma ($18.02), but earned $5.61 less per hour than the average wage earned by workers with only a high school diploma ($23.73). Farmworkers in Colorado earned less than workers without a high school diploma ($17.84 vs $18.02).

Farmworkers in Colorado earn very low wages—half the average wage earned by all workers in Colorado

There are roughly 30,000 farmworkers in Colorado, including 4,400 migrant workers recruited by Colorado employers through the H-2A visa program. As noted above, in 2024, at the state level in Colorado, USDA’s FLS shows that the average hourly wage for farmworkers in Colorado (the combined average wage for field and livestock workers) was $17.84. Figure A also shows that the average wage for all workers in Colorado in 2024 was $33.63, according to the Occupational Employment and Wage Statistics (OEWS) of the Bureau of Labor Statistics.12 In other words, farmworkers just earned 53%, roughly half, of the average wage that all Colorado workers earned.13 And as noted above, most farmworkers are not employed year-round. Despite these extremely low wages, farmworkers in Colorado work in some of the most difficult and dangerous conditions while providing an essential function for the economy and state. Thus they deserve more protections under the overtime law, not fewer.

Industry claims about the increases in farmworker wages ignore the fact that wage growth over the past 20 years has been almost identical to wage growth for other low wage workers

The value and the rate of increase of the Adverse Effect Wage Rage (AEWR) for H-2A farmworkers has become a hot-button issue and many claims about its impact have been made over the years by representatives of industry. These are relevant to examine because the AEWR wages up until 2025 represented the wages that farm operators reported they were paying to their farmworkers in response to the USDA’s Farm Labor Survey. Thus, they represent the best data available on average farm wages at the national and regional level.

Many of the claims about wage growth for farmworkers made by industry advocates and even the U.S. Department of Labor (DOL) about year-to-year increases often do not adjust for inflation, which overstates the actual increase in terms of its dollar value. This is a basic mistake that misleads—and it misleads particularly during times of relatively rapid inflation, like the post-pandemic period. DOL echoes these misleading claims from industry advocates and makes their own false claim in the preamble to the October 2025 AEWR Interim Final Rule, making the year-over-year increases in farmworker wages seem greater than they truly are. DOL notes that the national average AEWR—i.e., the average combined field and livestock worker wage reported by farm operators nationwide—has more than doubled in nominal terms over 20 years from $8.56 in 2005 to $17.74 in 2025.14 But DOL’s own CPI Inflation Calculator adjusts the value of $8.56 in September 2005 to $13.99 in September 2025, resulting in a real increase of just over one-quarter over two decades, at 26.8%, which over that period averages out to just 1.2% per year.

If we examine the same period for other low-wage workers in nominal terms, we also see that wage growth for farmworkers as represented by the AEWR, is in line with—nearly identical to—nominal wage growth for other low wage workers in the United States. Figure B below shows annualized wage growth for workers paid at the 20^th percentile wage, as well as the median wage for workers with less than a high school education—both of which are good measures for typical low-wage workers. Both saw annual nominal wage growth that was at 3.5% between 2005-2025, the period that DOL identifies. Farmworkers earning the national average farmworker wage—over that same period saw annualized wage growth of 3.7%, nearly identical to other typical low-wage workers. Thus, DOL’s main example in its H-2A wage regulation of runaway wage growth for farmworkers does not hold water.

Figure B

Real wage growth for farmworkers in Colorado has averaged only 1.5% per year between 2010 and 2024

While Figure B looked at nominal wage growth over the past 20 years, EPI has previously calculated the total real wage growth for farmworkers (i.e., after adjusting for inflation) in every state between 2010 and 2024.15 We found that in Colorado, the average farmworker wage in 2010 was $14.51 (adjusted to 2024 dollars), growing to $17.84 fifteen years later in 2024. This amounts to a total increase of $3.33 over 15 years (in 2024 dollars), or 22.9%. Farmworkers in Colorado averaged a real wage increase of 1.5% per year over the 15-year period.

The number of Colorado farms has increased significantly over the past 15 years, suggesting a successful agricultural industry in the state

One common argument from farm operators is that if the wages of farmworkers are too high, those high wages will put them out of business. But according to the BLS’s Quarterly Census of Employment and Wages (QCEW), the number of agricultural establishments in Colorado has increased significantly over the past 15 years. QCEW data show that the number of agricultural establishments in Colorado averaged 1,412 between 2010 and 2012. By 2024, the number of agricultural establishments had increased to 1,812, an increase of 28.3%. The 2022-2024 average number of agricultural establishments was 1,856.16

Agribusiness representatives may claim that agricultural establishments in Colorado will be forced to close or will decide to move their operations to other U.S. states because of higher labor costs associated with farmworkers being entitled to overtime pay, but the reality is that the number of agricultural establishments has been increasing steadily, even as farmworker wages have risen modestly, suggesting that both farm owners and farmworkers can mutually benefit from a growing industry.

Conclusion: The Colorado legislature should not further degrade standards on farms by expanding the 56-hour overtime threshold—and should instead provide farmworkers with equal rights in the workplace by providing them overtime after 40 hours

The annual average real wage growth of 1.5% per year over 15 years represents moderate wage growth for farmworkers and suggests a relatively tight labor market for farmworkers. However, it represents little improvement in job quality for workers that have been exempted from key labor laws and wage and hour standards, who frequently toil for long hours in difficult conditions without any pay premium, and who consequently still earn only 50% to 60% of the wage earned by comparable nonsupervisory workers outside of agriculture (see Figure A and discussion above). It would take many more years of comparatively faster wage growth for farmworkers to begin to approach even three-fourths of what nonsupervisory workers earn outside of agriculture.

Further degrading standards for some of the lowest-paid and most vulnerable workers in the U.S. labor market will not improve productivity or benefit the state’s economy; it will do the opposite, taking money out the pockets of workers who live paycheck to paycheck and spend those earnings on necessary goods and services. All while making a minimal impact on the overall share of farm income that farm operators spend on workers’ wages.

Instead of passing SB 26-121, the state legislature should set a reasonable minimum standard for the wages paid to farmworkers, and that standard should be no different than the standard set for most other workers in Colorado, which is a 40-hour overtime threshold.

Endnotes 

1. Economic Research Service, “Labor Cost Share of Total Gross Revenues,” in “Farm Labor,” U.S. Department of Agriculture, Updated November 18, 2025.

2. See Department of Industrial Relations, “Overtime for Agricultural Workers,” State of California, last updated October 2023.

3. See Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Series Id: ENU5100020511, Series Title: Number of Establishments in Private NAICS 11 Agriculture, forestry, fishing and hunting, for all establishment sizes in California – Statewide; Owner: Private, for 2010-24.

4. As counted by the latest Census of Agriculture from the U.S. Department of Agriculture, 2022.

5. See Daniel Costa and Ben Zipperer, “Trump’s new H-2A wage rule will radically cut the wages of all farmworkers: New estimates show farmworkers stand to lose $4.4 to $5.4 billion annually under DOL’s updated Adverse Effect Wage Rate,” Working Economics blog (Economic Policy Institute), November 26, 2025.

6. Wenson Fung, Kimberly Prado, Amanda Gold, Andrew Padovani, Daniel Carroll, and Emily Finchum-Mason, Findings from the National Agricultural Workers Survey (NAWS) 2021–2022: A Demographic and Employment Profile of United States Crop Workers, Research Report no. 17, JBS International for the Employment and Training Administration, U.S. Department of Labor. September 2023.

7. See National Agricultural Statistics Service, “Agricultural (Farm) Labor,” for more background and to access Farm Labor Reports, U.S. Department of Agriculture.

8. Federal Policy Watch, “USDA ends the Agricultural (Farm) Labor Survey, the U.S.’s only survey of agricultural employers,” Economic Policy Institute, September 3, 2025.

9. Economic Policy Institute, State of Working America Data Library, “Hourly wage, average – Average real hourly wage (2024$),” 2025.

10. Economic Research Service, “Wages of Hired Farmworkers” in “Farm Labor,” U.S. Department of Agriculture, Updated November 18, 2025.

11. Wenson Fung, Kimberly Prado, Amanda Gold, Andrew Padovani, Daniel Carroll, and Emily Finchum-Mason, Findings from the National Agricultural Workers Survey (NAWS) 2021–2022: A Demographic and Employment Profile of United States Crop Workers, Research Report no. 17, JBS International for the Employment and Training Administration, U.S. Department of Labor. September 2023.

12. https://data.bls.gov/oes/#/area/0800000

13. A note about the data: The wage cited is for Colorado farmworkers in USDA’s FLS represents the wage reported for the Mountain II region, which surveys farm operators in Colorado, Nevada, Utah. USDA’s FLS conducts wage surveys by multistate region, except for California which USDA surveys as its own individual region.

14. Employment and Training Administration, Adverse Effect Wage Rate Methodology for the Temporary Employment of H-2A Nonimmigrants in Non-Range Occupations in the United States, U.S. Department of Labor, Interim Final Rule, 90 Fed. Reg. 47914, at 47923 (October 2, 2025).

15. See Table 1 in Daniel Costa, EPI comment on DOL’s 2025 Interim Final Rule modifying the AEWR methodology for H-2A farmworkers, Economic Policy Institute, December 1, 2025.

16. See Quarterly Census of Employment and Wages, Bureau of Labor Statistics, Series Id: ENU5100020511, Series Title: Number of Establishments in Private NAICS 11 Agriculture, forestry, fishing and hunting, for all establishment sizes in Colorado – Statewide; Owner: Private, for 2010-24.

Table 1

The benefits of raising the minimum wage

Raising the minimum wage is a research-backed policy that increases earnings for low-wage workers without causing increases in unemployment or other negative economic side effects. A strong wage floor is also a powerful tool for making a more equitable economy. Almost two-thirds of the workers who would be affected by SQ 832 are women (63.3%). The policy would also disproportionately benefit workers of color. Hispanic workers make up 18.2% of the affected workers, compared with 11.0% of the total Oklahoma workforce. Black workers would be 10.6% of affected workers, while only making up 7.1% of the workforce (see Table 3).

The policy would also provide critical support to workers experiencing significant economic insecurity. Nearly three-fifths (59.3%) of the affected workers have incomes below 200% of the poverty line. Research shows that raising the minimum wage significantly reduces poverty, even as higher wages simultaneously reduce some workers’ and families’ eligibility for, and reliance on, public assistance programs.

A higher minimum wage would help combat the affordability crisis

While dozens of states and cities have passed minimum wage increases over the past 15 years, Oklahoma is one of 20 states that still uses the dismally low federal minimum wage of $7.25 an hour. Policymakers have not raised the federal minimum wage since July 2009, meaning that as prices throughout the economy have risen, the buying power of a paycheck at the federal minimum wage has fallen—substantially. Adjusting for inflation, the federal minimum wage is worth 30% less than it was in 2009. In fact, since 2025, the federal minimum wage has officially been a poverty-level wage under the Department of Health and Human Services’ guidelines. The stagnant federal minimum wage is one example of how economic policy in recent decades has suppressed workers’ wage growth, squeezing them as prices have continued to rise and creating the affordability crisis.

Fortunately, SQ 832 would not only raise the state minimum wage to more adequate levels, but also automatically adjust it for inflation beginning in 2030. Twenty-one states already use these automatic increases to ensure that low-wage workers don’t lose ground over time as prices rise.

SQ 832 would go a long way toward improving conditions for the lowest-paid workers in the state as they contend with rising housing, energy, and health insurance costs. However, the reality is that most Oklahoma workers face higher living costs than can be supported by a $15-per-hour wage. Figure A shows estimates of a living wage for a single adult in different Oklahoma metro areas using EPI’s Family Budget Calculator. All Oklahoma metro areas have living wages above $16 an hour. Workers in Tulsa, Oklahoma City, and Lincoln County must earn at least $18 an hour to meet the Family Budget Calculator threshold. Even the lowest-cost county in the state (McIntosh County, not shown) has a living wage greater than $15 an hour.

Figure A

SQ 832’s $15 target would help hundreds of thousands of Oklahoma workers earn closer to a living wage and put Oklahoma’s wage standards more in line with many other states. As of January 2026, 17 states and the District of Columbia had at least a $15 minimum wage—including states such as Arizona, Missouri, and Nebraska.

Lawmakers and voters in many states have adopted higher state and local minimum wages both in response to federal inaction and because economic research has reached a strong consensus that raising the minimum wage, at least to levels attempted thus far, has not caused any measurable harm to employment.  

A $15 minimum wage in Oklahoma is not an outlier compared with policies in other states, even after accounting for differences in the labor markets of different jurisdictions. Economists use the minimum-to-median wage ratio (sometimes called the Kaitz index) to assess the “bite” or strength of the wage floor relative to wage levels in the area where the policy is taking place. This measure allows us to see how a $15 minimum wage compares in New York and Oklahoma, where the overall distribution of wages is substantially different. Most minimum wage research has studied policies with minimum-to-median wage ratios of .67 or less (i.e., a minimum wage raised as high as two-thirds the median wage in the same jurisdiction.) Table 2 shows the current and projected path of Oklahoma’s minimum-to-median wage ratio if SB 832 passes. The ratio would grow as the policy goes into effect, but it would likely never exceed 60%—meaning it is solidly in the range of policies that economists have studied and found no negative effect on employment.

Table 2

Oklahoma’s current minimum wage suppresses pay for workers

Establishing and periodically raising a strong wage floor is necessary to counteract employers’ excess market power over workers, which keeps wages lower than they would be in a truly competitive market. Workers face a multitude of barriers which provide wage-setting leverage for employers. Workers often have limited information about wages and work policies at alternative employers and can be constrained in their job choices by limited transportation options or the need to maintain specific schedules for child care and other family needs. Low-wage workers typically have less financial ability than higher-wage workers to overcome these obstacles, and are more likely to encounter take-it-or-leave-it wage offers that prevent them from negotiating pay. These challenges (sometimes called “frictions”) add up, providing leverage for employers to pay lower wages than workers need—and lower than what is optimal for the local economy.

Oklahoma’s weak wage floor suppresses pay for hundreds of thousands of workers. The state has the third-highest share of workers earning less than $15 an hour (21%). Although there are relatively few workers who earn exactly $7.25 an hour, one undervalued benefit of a strong wage floor is that it supplies upwards pressure on the wages of low-wage workers who earn more than the minimum wage. These “spillover effects” mean that workers above the new minimum wage threshold also see wage increases as employers adjust other workers’ pay to maintain wage ladders and preserve seniority.

Oklahomans have a consequential opportunity to strengthen the wage floor and deliver a meaningful raise to hundreds of thousands of workers. A $15 minimum wage is evidence-backed, both by rigorous economic research and the recent experience of many other states. SQ 832 would support families as they struggle with the affordability crisis and generate lasting improvements to the health and equity of the economy.

Table 3

Key takeaways

• EPI’s updated Family Budget Calculator shows how much income it takes to afford basic expenses in every metro area and county across the United States in 2025.
• The Family Budget Calculator can be used to assess a living-wage level and shows that states like Oklahoma need a higher minimum wage. The state’s minimum wage falls short by over $12 an hour in meeting a one-person budget in the state’s lowest cost county.
• Voters in Oklahoma will have the chance to raise their state’s minimum wage this summer, which will help low-wage workers better achieve a decent standard of living.
• As of 2025, there is no county or metro area in the country where a minimum-wage worker is paid enough to meet the requirements of their local family budget on their wages alone.

Now updated with 2025 data, EPI’s widely cited Family Budget Calculator (FBC) shows what it takes to make ends meet for different family types in all counties and metro areas in the United States. For more than 20 years, we have calculated family budgets for basic expenses like housing, food, health care, child care, transportation, other necessities, and taxes. In doing so, we create a more location-specific and realistic assessment of cost of living than traditional poverty thresholds.

We use government-provided data where possible and stay up to date with changes in policy and data availability. Because of this, and due to related changes in methodology, we don’t recommend comparing budgets over time. For more details on the construction of EPI’s family budgets and all of the datasets we use, see the full methodology. For a video tutorial on how to use the FBC, see here. The full dataset is downloadable here.

Example case: Most and least expensive metro areas in Oklahoma

Using family budgets in Oklahoma as an example, Figure A compares each budget component for one-parent, one-child and two-parent, two-child families in the state’s least expensive (Fort Smith) and most expensive (Tulsa) metro areas. Technically, the city of Fort Smith is located in Arkansas, but the metro area crosses into Oklahoma.

Costs for a one-parent, one-child family budget vary from $61,928 in Fort Smith to $73,678 in Tulsa, with housing and transportation being two of the largest costs. In areas with limited access to public transit, the costs of buying, maintaining, and driving a car can be a large burden.

Food, health care, and child care are considerably more expensive for larger families. For a two-parent, two-child family, the total cost of affording a basic standard of living ranges from $87,994 in Fort Smith to $103,642 in Tulsa. The largest difference between Fort Smith and Tulsa is the cost of child care, which is 50% more expensive in Tulsa.

Figure A

The Family Budget Calculator can be used to calculate living wages

The FBC has been cited by living-wage advocates, private employers, academics, and policymakers who are looking for comprehensive measures of economic security. EPI’s family budget tool is also frequently used to gauge the adequacy of labor earnings, and we are often asked how to construct a living-wage standard from our family budget numbers. Doing so requires making choices and assumptions about how a family’s needs could or should be met that will result in different “living wage” values. For instance, health care expenses could be covered primarily by families, employers, or public programs (such as Medicare or through premium subsidies in the health insurance marketplace). We provide a user’s guide to translate our FBC data into living wages.

The FBC can be used to roughly calculate the hourly wage necessary to meet a family budget through labor market income alone. For a full-time, year-round worker providing for themselves and their family, we simply divide the required budget by 2,080 (40 hours a week multiplied by 52 weeks a year) to get an hourly wage equivalent. The full dataset of living-wage options is downloadable here.

Example case: McIntosh County

McIntosh County—located in Muscogee (Creek) Tribal Jurisdiction—is the lowest cost county in Oklahoma for single adult households. Figure B shows that a full-time, year-round adult worker without children would need to be paid $19.99 per hour to meet the requirements of their $41,577 budget to attain a modest yet adequate standard of living. The current minimum wage in Oklahoma—$7.25 an hour—falls short by $12.74 per hour, or $26,500 annually. In other words, minimum wage workers are paid less than 40% of what they need to afford to live, even in the least expensive county in Oklahoma.

One common benchmark for setting living wages is that an adult working full time should be able to support themselves and one child. In McIntosh County, a worker with one child would need to be paid $30.99 per hour to afford an annual budget of $64,456. This means that Oklahoma’s current minimum wage is $23.74 per hour lower than a living wage, or almost $49,400 annually.

These basic calculations assume that all income comes from wages, but wages are not the only resource available to families. If an employer offers health insurance or the state subsidizes child care, the wage needed to meet a basic family budget would be reduced, as shown in Figure B. Conversely, if reasonable savings for retirement, college, or emergencies are considered critical budget items, then the living wage required would be even greater.

Figure B

Oklahoma needs a higher minimum wage

Our Family Budget Calculator highlights the need for a higher minimum wage in Oklahoma. The state still follows the dismally low federal minimum wage, which Congress has not updated since 2009 despite 44.1% cumulative inflation since then. At $7.25 per hour, the federal minimum wage is not high enough to keep workers out of poverty, much less provide a modest yet adequate standard of living.

It’s time for Oklahoma to pass a minimum wage increase that can support workers and their families across the state, and residents are ready for the change. In 2024, more than 157,000 Oklahomans signed a petition to request a statewide election to vote on whether to raise the state’s minimum wage. Although organizers collected enough signatures well before the deadline to be placed on the November 2024 ballot, a lengthy certification process delayed State Question (SQ) 832’s approval. In September 2024, Oklahoma Governor Kevin Stitt delayed the vote by nearly two years and scheduled it for June 2026.

If voters pass the measure this summer, SQ 832 will increase the minimum wage to $15 per hour by 2029, starting with an increase to $12 per hour in 2027. The legislation also mandates annual inflation adjustments starting in 2030 and extends the wage floor to historically excluded categories of workers such as tipped workers, farmworkers, part-time employees, domestic workers, and feed store employees.

According to EPI’s 2024 estimates, this higher minimum wage would benefit 320,000 Oklahoman workers (directly benefiting the more than 200,000 Oklahomans who are paid less than $15 per hour and indirectly boosting wages for another 119,000 workers.) Low-wage workers are not just teenagers working fast-food jobs on the weekends; nearly 82.0% of affected workers are age 20 or older and more than half (51.3%) are working full time. Women in particular are more likely to work at or near the minimum wage, making up almost two-thirds (62.9%) of affected workers.

Workers of color are also disproportionately more likely than white workers to work low-wage jobs: while they make up about one-third (34.8%) of the Oklahoma workforce, they are nearly half of the affected workforce (48.7%). This disparity is the outcome of decades of violence and discrimination. For example, the destruction of Tulsa’s Black Wall Street brought an end to a vital center for Black economic advancement. Higher wages, alongside strong nondiscrimination laws, are necessary to rectify this inequality.

Oklahoma is one of the country’s poorest states, with one in seven residents (14.9%) living in poverty and nearly one in five (18.9%) children living at or below the federal poverty line. Passing SQ 832 and raising the minimum wage would alleviate poverty, help workers and their families, and boost Oklahoma’s economy. Without it, many Oklahomans will continue to struggle to afford basic necessities as costs of living grow.

But it’s not just Oklahoma—the Family Budget Calculator shows that nowhere in the country can a minimum-wage worker meet the requirements of their local family budget on their wages alone. Raising wages is a critical, but often overlooked, component of solving the affordability crisis. EPI’s Family Budget Calculator is a vital tool for understanding the wages and resources that are needed for families to afford the true cost of living across the United States.

President Donald Trump has said some strikingly out-of-touch things about affordability: that it’s a “hoax,” he’s “solved it” and he’s “won affordability.” In his State of the Union address, he even said “prices are plummeting downward.” U.S. families know this is nonsense. But to see how much Trump’s policies will erode affordability in the coming years, you must understand that affordability isn’t just about prices. 

Affordability is the outcome of a race between incomes and prices. And for typical families, the Trump agenda is near-guaranteed to harm their incomes far more than it can possibly reduce their prices. 

Even judged by the movement of prices alone, Trump’s record on affordability is poor. Inflation fell from 8.0% to 3.0% in the final two years of the Biden administration. This rapid downward movement slowed to a crawl in the first year of Trump’s second term, with inflation falling from 3.0% to just over 2.6%.

There are clear policy reasons why progress in reducing inflation has slowed. Electricity prices have surged as the Trump administration has ended subsidies for renewable generation passed during the Biden administration. The Trump tax cuts passed in the president’s first term were part of a law that gouged loopholes in the tax code, including inviting pharmaceutical companies to offshore their production and import back into the United States. Last year the Trump administration put tariffs on these offshored pharmaceuticals, pushing up their costs. When the administration failed to extend Obamacare subsidies for people buying health insurance through the exchanges, healthier enrollees who could afford to began opting out, driving up prices for everybody left in the Affordable Care Act marketplace.  

And these are not the only ways that Trump administration policies have intensified affordability issues for ordinary Americans.

Read the full piece here. 

Key takeaways:

• Real wages declined 0.3% for low-wage workers in 2025, a stark departure from the unusually strong wage gains they had experienced over the previous five years.
• This reversal was not inevitable—it was caused by policy decisions that weakened the labor market.
• Meanwhile, middle- and high-wage workers saw modest wage growth in 2025.
• Low- and middle-wage workers have suffered from decades of slow and suppressed wage growth. To improve affordability, policymakers can and must raise wages. 

Low-wage workers saw their real (inflation-adjusted) wages decline in 2025, a sharp reversal from the historically fast real wage growth they had experienced over the previous five years. Middle- and high-wage workers continued to experience modest gains in 2025, according to our new analysis (see Figure A).

We examine wage growth across deciles, using the Current Population Survey (CPS) Outgoing Rotation Group microdata. Note: Due to the federal government shutdown and a lack of funding at the Bureau of Labor Statistics (BLS), there are no CPS wage data for October 2025. That means that 2025 wages are calculated based on reported wages from the other 11 months of the year.

Figure A

A weakening labor market halted low-end wage growth in 2025

In 2025, the 10th-percentile wage—the hourly wage at which 10% of workers are paid less and 90% of workers are paid more—fell 0.3% to $14.56. The median wage—the wage at the middle of the wage distribution—grew 0.8% to $25.67 in 2025 while the 90th-percentile wage increased 0.4% to $64.52 (see Figure B).

Figure B

These outcomes are a stark departure from the post-2019 pattern in which low-wage workers consistently experienced faster real wage growth than those in the middle and upper parts of the wage distribution. During that period, policymakers engineered a fast and full recovery from the pandemic recession, which provided unusual leverage to low-wage workers as employers scrambled to hire or rehire the workers they lost in the pandemic. Low-wage workers were able to secure historically fast real wage growth, despite the pandemic- and war-driven inflationary spike in 2021–2022.

But in 2025, a softening labor market halted low-wage workers’ progress. The Trump administration chaotically imposed historically high tariffs, conducted cruel mass deportations, and implemented massive layoffs among federal agencies that provide key inputs to private-sector economic growth and security. All of this led to increased economic uncertainty, and promised growth failed to materialize—particularly in areas such as manufacturing employment.

Payroll employment growth slowed notably as average monthly job gains fell from 168,000 in 2024 to only 49,000 in 2025. The average unemployment rate ticked up from 4.0% to 4.3%. By December 2025, the unemployment rate stood at 4.4%, fully a percentage point higher than the 3.4% low point reached in April 2023. Groups that are often affected first by an economic downturn—such as young workers and Black workers—experienced a much faster uptick in unemployment. Most concerning is the depressed hires rate, which is currently at levels similar to 2013 when the economy was still recovering from the Great Recession. Should layoffs pick up even a bit, this low hires rate would see the unemployment rate rise quickly.

The 2026 outlook for wages remains uncertain. While higher unemployment and depressed hires point to a cooling labor market, it is unclear that conditions will continue to deteriorate: Unemployment insurance claims remain stable and consumer spending has held up. At the same time, economic risks loom large, including geopolitical instability, Trump’s immigration policy and cuts to social programs, and the possibility of a stock market and investment collapse if the AI-driven stock market bubble deflates rapidly.

Wage inequality has declined since 2019, but low-end wage levels are still insufficient to make ends meet

Even with last year’s decline, the 10th-percentile wage of $14.56 represents a significant improvement from 2019 in inflation-adjusted terms. And there was still substantial wage compression between 2019 and 2025, as wages at the 10th percentile grew twice as fast (15.0%) as wages at the 90th percentile (7.4%). These findings are consistent with economist Arindrajit Dube’s recent Substack article, which documents strong wage compression over this period. Importantly, Dube shows that these patterns persist even after controlling for compositional changes in the population, meaning that faster wage growth at the bottom is not explained by shifts in worker demographics such as age, education, or gender.

But this low wage is still far from sufficient to make ends meet. Even if that 10th-percentile worker worked full time throughout the year, their annual pay would only be $30,279—which is not enough to attain a modest yet adequate standard of living in any U.S. county or metro area, according to EPI’s Family Budget Calculator.

Low-wage workers have seen little wage growth for much of the last 50 years

While the gains over recent years are welcome, longer-term trends show lower-wage workers losing ground. Figure C shows wage growth at the 10th, 50th, and 90th percentiles from 1979 to 2025. Over this period, 90th-percentile wages grew by an average of 1.1% per year, compared with just 0.5% at the 10th percentile. In fact, it wasn’t until 2015 that lower-wage workers finally reliably surpassed their 1979 real wage. If wages at the 10th and 50th percentiles had grown at the same rate as the 90th percentile since 1979, they would have been $18.58 and $32.40, respectively, or about 27% higher. For all wage deciles over time, including data by demographic characteristics, visit the EPI data library.

Figure C

While workers at the 90th percentile have benefited more than lower-wage workers, their gains pale in comparison to those at the very top of the distribution. The gulf between the lowest- and highest-wage workers cannot be fully captured in the CPS data because it isn’t possible to accurately measure what’s happening with very high-end wages. Using Social Security Administration (SSA) data, we previously found that wages for the top 1% skyrocketed 182% from 1979 to 2023, roughly triple the growth rate of the 90th percentile and about seven times the growth of the 10th percentile.1 As a result, inequality between the top 1% and the rest of workers substantially worsened over this period.

It is also true that productivity growth—the change in the amount of goods produced or services provided in an hour of work—has outpaced the wages of the vast majority of workers since 1979.2 While higher earners have fared better, every worker should benefit when the economy expands and productivity increases. Had low-end wages grown in line with productivity since 1979 (as they almost surely did in previous decades), the 10th-percentile hourly wage would be $21.04—or 45% higher than it is now. Similarly, the median wage would be 43% higher—or $36.69. Our forthcoming wage calculator will allow users to input any wage level and find how much higher their wages would be if they had in fact grown as fast as productivity.

Policymakers can and must raise wages to address affordability concerns

Making life more affordable for working families is not just about slowing the rate of increase of prices, it’s about ensuring continued wage gains at the bottom and middle of the wage distribution after decades of slow and suppressed wage growth before the COVID pandemic. In 2025, wages for the lowest-wage workers lost the race against prices, making it more difficult for them to afford necessary goods and services.

Policymakers must identify raising wages as the key lever to making life more affordable for working families, and they can do that by raising the minimum wage, reforming labor law to ensure workers can freely exercise their right to unionize, and maintaining full employment. Ignoring these policy levers to raise wages makes the affordability proposition even more difficult to attain.

1. To be clear, this isn’t an apples-to-apples comparison because we are comparing two different data sets and one uses annual earnings (SSA) and the other uses hourly wages (CPS).

2. Productivity growth is the percent change between 1979 and the most recent four quarters. At the time of writing, 2025 Q4 was not available.