Since the second Trump administration swept into office in January 2025, it has undertaken a range of damaging and destabilizing actions that have weakened the economy, undermined workers, hurt businesses and consumers, and threatened core elements of our democracy. While Trump has targeted numerous Democratic-led states and cities, the Washington, D.C., region has faced acute and prolonged harms since day one. From the first set of executive actions signed on Inauguration Day, the Trump administration has attacked people and businesses in the capital region repeatedly and intensely. These initial actions announced the president’s dubious claims of authority to fire large segments of the federal workforce, eliminate long-standing federal agencies and programs, and begin a campaign of illegal and inhumane mass deportations.  

The Trump administration’s damaging actions have been enabled and abetted by Republican members of Congress. Their passage of H.R. 1, the bill that the White House has referred to as the “One Big Beautiful Bill Act” (OBBBA), amplifies the administration’s mass deportation agenda and shreds critical health care and food supports for lower-income families to finance tax cuts for the wealthy. This funding bill will only cause more pain in the years ahead for Washington, D.C.-area households and throughout the country.

Congress also passed a federal spending bill that constrained the District of Columbia’s ability to spend its own tax revenue (Koma 2025) and a resolution that may force the district to adopt local tax code changes that match the OBBBA, whether the city wants to or not—changes that will jeopardize hundreds of millions of dollars for city programs (D.C. Fiscal Policy Institute 2026).

In this report, we assess the early indicators of the damage of Trump’s actions and their effects on the Washington, D.C., regional economy, with particular attention to effects on workers and the labor market. We focus on this region due to its prominence as an early target of the Trump administration, in part due to its large federal workforce. Additionally, the district’s unique status as a non-state means that its leaders have far less legal authority to resist Trump’s interference than other target areas do.

Throughout this report, unless otherwise indicated, the data describe economic conditions for the Washington, D.C., metropolitan statistical area (MSA), which includes the District of Columbia, four nearby counties in Maryland, six cities and 11 counties in northern Virginia, and one county in West Virginia. We also refer to this region as the DMV (Washington, D.C.; Maryland; and Virginia). While we do not yet have the requisite data to fully and precisely document all the effects of the administration’s actions, we can see clear signals that the regional economy is already struggling, with more severe impacts likely to register in the data soon.

We then explore some of the factors that make other regions particularly vulnerable to significant economic harm from the Trump administration’s agenda. These include counties with large concentrations of federal workers, areas where federal transfer income (such as Medicaid and Social Security) makes up a significant portion of the region’s economic base, and places with significant immigrant populations. Though Trump has largely targeted prominent, Democratic-led areas, many of the regions most susceptible to the harmful economic consequences of the administration’s actions are rural counties, frequently represented in Congress by Republicans.

Trump’s actions in Washington, D.C., have led to reduced employment and rising unemployment

The clearest sign of the harm that the Trump administration’s actions have done to the Washington, D.C., regional economy is the substantial drop in the region’s employment rate. Based on EPI analysis of Current Population Survey data from the Bureau of Labor Statistics, from December 2024 to December 2025, the share of the regional working-age population with a job fell by 3.2 percentage points.1 As shown in Table 1, this compares with a decline of just 0.4 percentage points for the country over the same period. Among prime-age workers (those ages 25–54), the share employed in the DMV fell by 2.7 percentage points, compared with a decline of just 0.1 percentage points for the country overall.

This dramatic drop in regional employment is a direct result of the Trump administration’s relentless attacks on federal government workers, cuts to federal programs and agencies, and their cascading effects on connected regional industries. Prior to Trump’s taking office, federal employees made up 11.2% of the metro area’s total workforce (BLS-CES-SAE 2025).2 Between the end of 2024 and 2025, federal employment in the DMV region fell by more than 53,800 jobs (-14.2%) (BLS-CES-SAE 2026).3 These losses reverberated through the regional economy as affected households pulled back on spending, and many may have even opted to move, as data show the DMV region had the largest increase in home sale listings of any major metro last year (Brookings Institution 2026).

These significant cuts to federal employment, though highly damaging on their own, are only the first layer of the administration’s harm on the regional labor market. The DMV has a non-federal workforce of over three million people (BLS-CES-SAE 2026), many of whom work at firms that consult with, contract with, are funded by, or are otherwise connected to the government.4 The Trump administration has terminated thousands of grants to scientific research institutions (Kozlov, Tollefson, and Garisto 2026) and frozen or delayed funding for tens of thousands of nonprofit organizations, causing those targeted to limit operations or lay off staff (Tomasko et al. 2025). These cuts have also shrunk the funding pool for nonprofit groups, causing budget challenges even for those not previously receiving federal funding, as they must compete with groups previously funded through federal programs that are now scrambling to fill gaps with private support (Barrett 2025). The administration has also moved to cancel contracts with any company that maintains a commitment to DEI standards (Singh 2026). Although these cuts affect organizations everywhere, the DMV is disproportionately vulnerable to the economic harms of attacks on this sector as it has one of the highest concentrations of nonprofits in the country (Friesenhahn 2025). This is evident in the region’s slight dip (-0.3%) in private-sector employment from December 2024 to December 2025, a change from the consistent, albeit slowing, growth that had marked the years following the COVID-19 pandemic. At the national level, private-sector employment experienced slow but still positive change (0.5%) over the same period (BLS-CES-SAE 2026).5

The widespread impact of the administration’s actions can be seen in the breadth of employment declines across racial, ethnic, gender, and age groups in the region. As shown in Table 1, the employment rate fell by at least 2 percentage points for every demographic category of workers in the DMV. Notably, young workers under age 25 (-4.3 percentage points), workers age 55 and older (-3.3 percentage points), men (-3.5 percentage points), and Black workers (-5.9 percentage points) all experienced drops in their employment rates larger than the regional average. For older workers, the above-average decline likely reflects, at least in part, the firings and retirements of many federal employees, including many who had been near retirement age and opted into the so-called “Fork in the Road” deferred resignation program. For young workers, the administration’s funding and programmatic cuts directly reduced many traditional Beltway early-career opportunities (internships, fellowships), while weakness in the broader regional economy simultaneously forced area employers to pull back on entry-level positions.

Still, not all groups have been equally affected by Trump’s actions. As Table 1 shows, Black workers in the DMV region have suffered the largest employment declines, with the share employed falling by 5.9 percentage points in 2025. This is nearly triple the employment drop experienced by white workers (2.0 percentage points) in the region and, notably, more than seven times the employment drop of Black workers throughout the country overall (0.8 percentage points). Again, this is a direct consequence of the administration’s attacks on the federal workforce. Black workers have long tended to make up a larger share of the public sector than they do in the private sector—both in the DMV and across the country. This is because the public sector has historically been a pathway to the middle class for workers of color who face labor market discrimination in the private sector (Maye and Marvin 2025).

Trump’s massive cuts to federal employment have also rapidly undone what had been considerable progress in shrinking the regional Black-white employment gap. Figure A shows the employment rate of DMV workers, overall and by race/ethnicity, since the end of 2018. The rapid drop in the Black employment rate since the start of President Trump’s second term is striking, bringing the regional Black employment rate back down to its pandemic-era low. It is also notable that before that drop began, Black workers in the region were employed at essentially the same rate as their white counterparts—the only time in the last two decades when that occurred. These losses in employment will exacerbate existing racial and gender inequity across wages, poverty, and unemployment (Markoff and Zielinski 2026; Zielinski 2025; Busette and Elizondo 2022).

Recent increases in the DMV’s overall unemployment rate underscore the damage Trump is doing to the region. The non-seasonally adjusted unemployment rate jumped more than a full percentage point, from 3.1% in January 2025 to 4.4% in January 2026—more than four times the increase in the national figure. (Importantly, this increase understates the weakening of the area labor market, as the BLS estimates the DMV labor force shrank by 3% over the same period—meaning that many workers who would have been counted as unemployed simply left the area labor force.) For comparison, the national non-seasonally adjusted unemployment rate increased by less than half a percentage point, moving from 4.4% in January 2025 to 4.7% in January 2026 (BLS-LAUS 2026).

These numbers do not capture the full extent of the economic downturn in the DMV area, nor can they give us precise insight into where the pain has been most acutely felt. The administration’s violent deportation agenda, for example, will lead to a drop in immigrant and U.S.-born Hispanic workers’ employment, but resulting changes in Hispanic employment rates may be muted by the corresponding shrinking of the overall Hispanic population (Zipperer 2025). In other words, while the overall Hispanic population in the U.S. may fall dramatically in coming years, the ratio of remaining employed workers to remaining total population may stay somewhat consistent. This will mask the true scale of the economic and social harm being done to immigrant communities in the DMV and across the country.

It is also difficult to fully quantify how the deployment and continued presence of National Guard troops, violent immigration actions, and other authoritarian, fear-inducing tactics have impacted D.C.-area businesses, workers, and families, particularly in neighborhoods with predominately Black and Latino populations. Early data show regional declines in tourism, consumer spending, and foot traffic; harder to capture are the emotional and long-term economic consequences (Montgomery 2025; Hadden Loh and Haskins 2025; Sachs and Cocco 2025). Other recent analyses estimate similar economic harms in cities where targeted federal immigration enforcement actions have been aggressively deployed (Rosenthal and Sojourner 2026). A full accounting of the Trump administration’s harms on the Washington, D.C., region will take years to document.

Other localities should brace for similar consequences

Some of the Trump administration’s actions and their acute consequences are unique to the DMV, a function of the region’s high concentration of federal employees and government contractors, as well as the District of Columbia’s lack of statehood and full constitutional rights. However, the anti-government attacks the administration has unleashed on DMV-area households, workers, and businesses will have cascading consequences for communities throughout the country. The effects of the administration’s authoritarian attacks on the civil service, democratic institutions, and immigrants (Human Rights Watch 2026) that first registered across the DMV should be viewed as a preview of the consequences that will be felt in other regions. While no locality will be spared, regions particularly at risk include those with large shares of government workers (especially federal workers, but state and local government workers too), localities in which federal funding and social safety net programs make up a large portion of total area income, and those with large immigrant populations.

Trump’s attacks on the federal workforce will harm communities that rely on their employment

The day Trump returned to power in January 2025, he began attacking the federal workforce, first by moving to reclassify tens of thousands of federal employees to make it easier to fire and replace them with political loyalists (EPI 2026c), and then by stripping more than one million federal workers of their collective bargaining rights (EPI 2025a). The Trump White House subsequently worked feverishly to slash federal employment, attempting large and chaotic reductions in force, shuttering entire agencies, and coercing tens of thousands of staff to resign, among many other attacks (Poydock 2025). As of March 2026, the administration’s actions have reduced nationwide federal government employment by over 350,000 (11.7%) since January 2025 (Gould 2026).

Though federal workers make up a sizeable share of the DMV’s workforce, over 80% of federal workers live outside the region (Partnership for Public Service 2024). For instance, in Alaska, Hawaii, and New Mexico—states that are home to large swaths of federal and Native land, military bases, and federal research institutions—federal workers make up at least 4.5% of total employment (EPI 2025c). Within states, federal workers tend to be concentrated in specific localities. For instance, in Apache County, Arizona, which is largely made up of the Navajo Nation and the White Mountain Apache Reservations, lands that extend beyond county lines, the federal government employs 12% of the county’s workers, more than double the next most significant county for federal worker employment in the state (EPI 2025c). There are 22 U.S. counties, spread across the South, Midwest, and West Census regions, where federal workers comprise at least 10% of the county’s workforce (see Table 2).

In these counties and elsewhere, federal workers are the backbone of the regional economy, both through the essential services they provide and through their contributions to the local economy. Trump’s attacks simultaneously threaten federal workers’ livelihoods and the economic health of communities in which these workers’ spending on goods and services makes up a large share of economic activity in the region. In Apache County, Arizona, civilian government workers’ earnings comprise 11.7% of total economic activity in the county (see Table 3)—roughly the same as their share of overall county employment. However, in some counties, federal employees’ earnings are a disproportionate share of the regional economic base. For instance, in Leavenworth County, Kansas, where federal employees make up 10.0% of employment (Leavenworth has a large federal prison), federal civilian earnings comprise 22.1% of total income in the county.

The effects from lost federal jobs and income in these regions could be devastating. Some of these communities are places that have already faced historic disinvestment and in which there are few local employment opportunities that can match the quality of federal government jobs. These jobs are historically stable, good quality, union jobs that offer a pathway to the middle class, particularly for workers without a college education.6

Regions highly dependent on federal revenue will also suffer from a reduction in services and a loss of income

Beyond the harm to localities from reductions in the federal workforce, localities that are particularly reliant on federal government revenue and services will bear the consequences of Trump’s actions most acutely, though no locality will be spared from harm. For example, the Trump administration has announced or considered $23 billion in cuts to federal clean energy projects in nearly every state (CATF 2025) and $8 billion in cuts to colleges and universities that will impact every state’s economy (Bedekovics and Ragland 2025). Trump’s 2025 budget bill also made massive cuts to federal safety net programs that millions of low-income households rely on in order to finance tax cuts for the wealthiest households and corporations.

Funds from federal programs such as SNAP, Medicaid, and other social programs not only help struggling families make ends meet, they also comprise a significant share of a locality’s “economic base,” the amount of money circulating in that region, as shown by sociologist Robert Manduca in a recent working paper (2025). Indeed, an often-overlooked benefit of Medicaid coverage is its role as a source of income for low-income households (money they would have had to spend on medical care in the absence of Medicaid). For the bottom 20% of households in the U.S., Medicaid comprised 70% of their total money income, based on recent data from the Congressional Budget Office (Bivens, Wething, and Morrissey 2025). In fact, government transfers such as Social Security, Medicare, and Medicaid collectively made up 40% of the economic base of U.S. regions in 2022 (Manduca 2025). Substantial cuts to government social programs that support low-income households could reduce the economic base of these localities, at a scale equivalent, in many cases, to the loss of entire private industries in those areas.

Without deliberate intervention by state lawmakers to offset lost federal revenues, localities in every state face dire economic losses, but states particularly reliant on government transfers will suffer most. For instance, take Clay County, West Virginia, which is represented in Congress by Rep. Carol Miller (R-WV01), who voted in support of Trump’s budget bill (Miller 2025). Clay County’s poverty rate is more than double the national rate, and its per capita income is half the national amount (U.S. Census 2024a). Of the 10 U.S. counties that rely most on each of the largest federal social insurance programs (Medicare, Medicaid, SNAP, and Social Security) as a share of their economic base, Clay is the only county in the country to show up three times (see Table 4). Federal government transfers in the form of Medicare, SNAP, and Social Security payments comprise 57% of Clay County’s economic base, 20 times the share comprised by the earnings of every private industry in the county combined. Alaska, Arizona, Florida, Georgia, Kentucky, Tennessee, and West Virginia all have at least three counties that are ranked in the top 10 in the country for their reliance on a given social safety net program as a share of the county’s economic base (see Table 4).

Localities that have significant shares of federal workers and rely heavily on federal government transfers may face particularly significant consequences as a result of Trump’s attacks on the federal workforce and the Republican budget bill’s cuts to essential social safety net programs. For example, in Rio Arriba County, New Mexico, and Apache County, Arizona, federal government workers make up 16.1% and 12.0% of all workers in the county, respectively (EPI 2025b). At the same time, both counties are ranked in the top-10 counties most reliant on federal government transfers—Apache is #2 for Medicaid, and Rio Arriba is #10 for SNAP. In Apache County, federal government transfers account for three-quarters (76.9%) of the county’s economic base, and the earnings of federal government civilian workers account for 11.7%—the Navajo Nation Tribal Government is the county’s largest employer (NACOG 2023). Meanwhile, private earnings account for a mere 2.8% of the county’s economy. In Apache, Trump’s cuts to both the federal workforce and federal government programs mean that the federal government may be unable to fulfill its legal obligations to tribal communities (Brown 2025) that have faced decades of disinvestment and depressed economic outcomes resulting from historic land theft and forced assimilation. Apache County’s poverty rate of 31.2% (AZ Economics 2026) is nearly triple the national rate of 11.1% in 2023 (Shrider 2024).

Trump’s anti-immigrant crackdown and deportation agenda hurt localities with large immigrant populations

Trump has launched a campaign of terror against immigrant communities, communities of color, and those who stand with them. Last summer, Trump federalized local police and deployed thousands of federal troops to diverse cities with large immigrant populations (Kim 2025). Though Washington, D.C., may have experienced the most visible federal troop presence, a function of the district’s lack of statehood and the president’s unchecked authority to mobilize the National Guard there (Dallas 2025), Los Angeles was the first city Trump targeted after public opposition to aggressive immigration raids (Kim 2025). It was soon followed by Washington, D.C.; Memphis, Tennessee; Portland, Oregon; New Orleans, Louisiana; Minneapolis, Minnesota; and Portland, Maine.

These attacks are characteristic of an authoritarian playbook that includes forcing the leaders of diverse, opposition-led communities to bend to the strongman government’s will (McManus, Benson, and Herman 2024). Minneapolis, home to a large immigrant population, was subjected to an unprecedented immigration crackdown that drew widespread protests (Boone 2026). During “Operation Metro Surge,” as it was called, federal immigration enforcement officials made 4,000 arrests and killed two U.S. citizens. Though the true toll of this violent operation may never be fully quantified, initial economic data show clear cause for concern. A recent analysis estimated that Trump’s immigration crackdown has led to a 2.9% decline in consumer spending in Minnesota over a single month—the equivalent of the state’s economy losing $626 million (Rosenthal and Sojourner 2026). Relative to overall consumer spending, the food and accommodation sector (which employs a large share of immigrant workers) saw the most significant decline in January 2026—3.8% or a $46 million reduction in economic activity. Researchers also estimated that nearly 3% of workers in the Minneapolis-Saint Paul region were unable to work during the occupation, resulting in a loss of over $100 million in wages (Sojourner and Rosenthal 2026).

Trump’s deportation agenda will continue to destabilize local communities and result in job losses for immigrant and U.S.-born residents alike (Zipperer 2025). Though immigrants live in counties across the U.S., coastal urban areas tend to have the largest shares of foreign-born residents. Counties with the largest foreign-born populations include Miami-Dade, Florida; Queens, New York; Aleutians, Alaska; and Hudson, New Jersey (see Table 5). Counties with relatively large shares of immigrants may see particularly acute harms from aggressive immigration enforcement.

Communities face overlapping economic threats from attacks on federal workers, the social safety net, and immigrants, but state and local lawmakers can resist them.

The Trump administration’s attacks on the federal workforce, the social safety net, and immigrant communities are designed to exacerbate economic precarity in many communities that are already struggling (Bivens 2026). The implementation of Trump’s authoritarian agenda in the DMV region may be the first, clearest, and in some cases most direct manifestation of its harms, but other localities across the country—particularly those with large federal workforces, those that are heavily dependent on federal revenue and those with sizeable immigrant populations—are far from immune, and many will suffer as much, if not more, from this agenda.

While state and local leaders cannot stop federal attacks, they do have the power to resist Trump’s agenda by improving state labor standards (EPI 2026b), advancing protections for immigrant workers (Díaz and Whitaker 2026), investing in the public-sector workforce (Bivens and Shierholz 2026), and using progressive tax policies (Austin and Davis 2025) to stabilize funding for critical social programs and other investments that workers, families, and communities need.

Notes

1. Throughout this report, unless explicitly noted, the source for all employment rate data is the authors’ analysis of Current Population Survey data (EPI 2026a). We compare an average of calendar year 2025 with calendar year 2024 in order to have adequate sample sizes for the noted demographic groups.

2. Employment level by industry and sector data come from the authors’ analysis of the Bureau of Labor Statistics’ Current Employment Statistics (CES) State and Metro Area (SAE) data.

3. These numbers are calculated using monthly totals rather than annual averages. A quarterly comparison of 2025Q4 to 2024Q4 finds roughly the same results—employment fell by 52,600 jobs (13.9%). The quarterly analysis omits October in both years to maintain an apples-to-apples comparison, accounting for missing data due to the government shutdown that began in October 2025 and the subsequent lapse in Bureau of Labor Statistics funding.

4. The non-federal workforce includes private sector workers as well as state and local government employees.

5. These numbers are calculated using monthly totals rather than annual averages. Quarterly comparisons of 2025 Q4 to 2024 Q4 produce similar results—private sector employment fell by 0.1% in the DMV and grew by 0.7% nationally. The quarterly analysis follows the methodology outlined in note 2.

6. On average, federal workers with advanced degrees typically earn less in wages and total compensation than their private-sector counterparts. Federal workers without an advanced degree typically earn more than their private-sector counterparts and have access to retirement benefits that have become less common in the private sector (CBO 2024).

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Division of Humanitarian Affairs
Office of Policy and Strategy
U.S. Citizenship and Immigration Services
Department of Homeland Security
5900 Capital Gateway Drive
Camp Springs, MD 20746

Re: DHS Docket No. USCIS-2025-0370, Employment Authorization Reform for Asylum Applicants, Notice of Proposed Rulemaking (Feb. 23, 2026) ¹

To whom it may concern:

The Economic Policy Institute (EPI) submits this comment strongly opposing the Department of Homeland Security’s (DHS) Notice of Proposed Rulemaking (NPRM) titled Employment Authorization Reform for Asylum Applicants, published February 23, 2026. and assigned DHS Docket No. USCIS-2025-0370 (i.e. the proposed rule).

About EPI and organizational interest

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 policies that protect and improve economic conditions and raise labor standards for low- and middle-income workers—regardless of immigration status—and assesses policies with respect to how well they further those goals.

EPI has researched, written, and commented extensively on the U.S. system for labor migration, including on temporary immigration protections and Employment Authorization Documents (EADs), and on labor standards enforcement for both the low-wage and professional workforce. EPI has also provided expert testimony about the U.S. immigration system to both the U.S. Senate and House of Representatives, as well as state legislatures.

Summary of the comment

The proposed rule is designed to force asylum applicants seeking haven in the United States to live in the country without being able to work or support themselves and their families. Among other changes, the proposed rule introduces extreme and potentially indefinite delays to obtain a work permit, as it proposes to extend the waiting period to apply for work authorization from 150 days to 365 days, increase the mandatory processing timelines once an initial work permit application is received from 30 days to 180 days, and pause initial work permit processing completely when average affirmative asylum processing times exceed an average 180 days.1 The proposed rule also imposes many new eligibility barriers for both initial and renewal work permits, and would make approval of both applications completely discretionary, meaning asylum-seekers may be denied employment authorization for no reason at all.2

This proposed rule would be acutely harmful to asylum-seekers, but also to employers, coworkers, and spouses and children who rely on asylum-seekers’ employment and income. From the perspective of worker rights, labor standards, and growth in the overall economy, this NPRM raises at least four significant concerns that should be avoided by withdrawing the proposed rule in full.

First, DHS ignores the true value and impact of work authorization on the workforce, and fails to estimate the negative economic impacts that will result from the NPRM. In addition, the proposed rule would impact many workers already participating in the U.S. workforce, including individuals the NPRM classifies as “initial” asylum applicants who previously held lawful employment authorization through programs such as Temporary Protected Status (TPS), humanitarian parole, or deferred action. By focusing on deterrence of future migration while overlooking these workforce impacts, the NPRM substantially understates both the disruption the rule would cause and the reliance interests at stake.

Second, the NPRM rests on the flawed assumption that employers can easily replace asylum-seeking workers who lose employment authorization, and that such replacement can happen quickly and without disruption to the economy. In reality, sudden workforce losses that result from the NPRM terminating or putting in jeopardy the work authorization of roughly 2 million current workers would disrupt operations across multiple industries, forcing employers to increase mandatory overtime, heightening workplace safety risks, and creating significant operational instability that would impact not only asylum-seekers but also their coworkers. Employers would also lose the experience and job-specific skills that many asylum applicants already possess.

Third, by making it far more difficult for asylum-seekers to obtain or renew work authorization, the proposed rule would eviscerate the workplace rights of millions of current and future workers, pushing many into the informal economy, increasing the risk of wage theft, retaliation, and other forms of worker exploitation. This shift would also undermine labor and employment law enforcement by making workers less likely to report violations or cooperate with investigators, weakening workplace protections and lowering labor standards for all workers. The NPRM fails to acknowledge the scope of these enforcement and labor-standards consequences for U.S.-born citizens and foreign-born workers, half of whom are U.S. citizens.

Fourth, the NPRM fails to consider the substantial reliance interests that workers have developed around a predictable system of asylum-based employment authorization, which the NPRM would upend.

Far from streamlining the regulation of asylum-related employment authorization, the proposed rule would harm workers across the board. For these reasons, DHS should withdraw the proposed rule.

The worker rights of millions are protected by EADs

The role that Employment Authorization Documents (EADs) play when it comes to protecting worker rights and uplifting workplace standards should not be ignored and cannot be overstated. For workers who lack a permanent or more durable immigration status, obtaining a temporary EAD can mean having enforceable workplace rights that an individual would otherwise not have. While all workers have some labor and workplace rights under U.S. law—regardless of immigration status—enforcing them in practice becomes virtually impossible because of the threat of deportation, which prevents workers who lack an immigration status or an EAD from calling out lawbreaking employers and demanding that they comply with the law, or from reporting workplace violations to labor enforcement agencies. But having an asylum-based EAD, or protection from deportation through temporary administrative immigration protections like parole, Temporary Protected Status, deferred action—accompanied by an EAD—means that, in practice, workers can report workplace violations to government officials without fear of retaliation that can lead to deportation. It also means that a worker with an EAD can be employed by just about any U.S. employer and change jobs or employers, unlike, for example, migrant workers employed with temporary visas who can only be employed by the sponsor of their visa.

Altogether, nearly 5.6 million people in the U.S. held a temporary but precarious immigration status in 2024, including over 2 million people who are asylum-seekers. (see Table 1 below).

Table 1

While these statuses and protections are only a band-aid for a flawed immigration system that is deeply in need of reform,3 they have been shown to protect millions of workers from some of the worst forms of employer lawbreaking. Employers also greatly benefit from workers having a protective status and a work permit because it allows them to lawfully employ millions of people who would otherwise not be eligible to work, leading to billions in economic contributions to the U.S. economy and generating demand that stimulates growth.

DHS ignores the positive value and impact of work authorization on the workforce and economy, and the negative impacts of terminating and delaying work authorization

In the NPRM, DHS does not estimate and consider the true value and impact that EADs have on the workforce and economy, not even specifically for asylum-seekers. There are examples of existing research showing the important economic contributions that workers with temporary immigration protections and EADs are able to make thanks to being work-authorized. These estimates are relevant because parole, TPS, and DACA recipients are likely to see similar wage gains associated with having an EAD, due to gaining the ability to work lawfully, which brings with it the practical ability to enforce workplace rights and standards. In addition, may persons with protections like TPS and DACA may also be asylum applicants.

One estimate from the American Immigration Council estimated that when the TPS population was approximately 354,000 in 2021, “TPS holders contributed more than $2.2 billion in taxes, including almost $1 billion to state and local governments,” as well as “held $8 billion in spending power.”4 Another estimate by Moriarty found that TPS-eligible individuals “annually contribute some $31 billion in wages to the national GDP.”5

Research has also quantified some of the contributions made by persons who have an EAD because they qualified for Deferred Action for Childhood Arrivals (DACA). DACA was created by DHS in 2012, and recipients are eligible for protections from deportation and EADs that are valid for two years and renewable. More than 835,000 persons have benefitted from DACA, and more than 500,000 were enrolled as of 2024.6 Svajlenka and Truong found that DACA recipient households “pay $6.2 billion in federal taxes and $3.3 billion in state and local taxes each year,” and “after taxes, these households hold $25.3 billion in spending power,” and that DACA recipient families “own 68,000 homes, making $760 million in mortgage payments and $2.5 billion in rental payments annually.”7

When it comes to measuring the workplace impact and economic benefits of workers being issued an EAD, there are a few examples that are worth citing here. One is an annual survey of DACA recipients that was conducted in 2024 for the ninth time. The most recent survey, conducted by Wong et al. and published by the Center for American Progress, showed that DACA has been an essential tool to improve the economic and educational outcomes of recipients.8 In terms of the impact that deferred action and an EAD have had on the employment of DACA recipients: 59.1% of respondents moved to a job with better pay; 47.3% moved to a job with better working conditions; 47.5% moved to a job that “better fits [their] education and training”; 49.6% moved to a job that “better fits [their] long-term career goals”; 57.3% moved to a job with health insurance or other benefits; and 19.6% of respondents obtained professional licenses.

Wong et al. also measured the impact of EADs on DACA recipients’ wages, finding that “[d]ata from the past nine years show that DACA has had a significant and positive effect on wages: Recipients’ average hourly wage more than doubled from $11.92 to $31.52 per hour—an increase of 164.4 percent—after receiving DACA.” These significant wage increases are no doubt a result of the labor and workplace rights and stability that DACA recipients gain from having an EAD.

Orrenius and Zavodny examined the wage and employment impact of TPS9—which allows those who are eligible to also be granted an EAD. They looked specifically at migrants from El Salvador, finding that having TPS increased employment rates, and that less-educated Salvadoran men who were employed earned 13% more if they had TPS. They note that “As a whole, the results suggest that less-educated Salvadoran men who receive TPS are able to move into better jobs and become more selective about the jobs they hold, increasing their earnings but also their job search and unemployment incidence.”

One other analysis comes from Kallick,10 looking specifically at asylum-seekers in New York and nationwide, assesses the wage impact of being issued an EAD. Relying on previous methodologies for measuring the impact of a lawful immigration status being granted to unauthorized immigrants, Kallick estimates that asylum-seekers who are granted EADs increase their wages by 10%.

While the relative benefits of precarious and temporary immigration protections and EADs to migrant workers and the broader economy are clear, it is important to note here that because of the NPRM’s new provisions and pauses in processing, a significant share of the 2 million EADs held by asylum-seekers are unlikely to be renewed, or at a minimum, will be substantially delayed—and initial applications will not be granted—despite meeting the statutory requirements for issuance. This violates the statute and will leave hundreds of thousands of workers at least, and possibly millions, unemployed and without the ability to feed and house themselves, causing them to rely on homeless shelters and food banks, which are already overstretched given the current state of the economy and the affordability crisis. Thus, DHS through this NPRM will intentionally hurt the economy and eliminate the economic benefits for workers and employers that EADs held by asylum-seekers create—and exacerbate a crisis among social safety net providers—a fact that the NPRM does not grapple with or address.

In the meantime, EADs obtained through the asylum process, like those obtained through TPS, parole, and DACA, can mean the difference between having rights on the job or being extraordinarily vulnerable to the worst abuses by employers. While the current administration has claimed they want to help U.S. workers, actions like the mass detention and deportation of millions of workers and canceling EADs reveal they are willing to degrade conditions and standards for all workers, as well as kill jobs and shrink the economy, in order to carry out their extreme immigration enforcement agenda.11

If the NPRM is not withdrawn, millions of workers will be more easily exploited by their bosses and driven into the informal economy. That, in turn, will reduce their tax contributions that support the social safety net and lower their wages significantly12—ultimately hurting U.S workers in low-wage industries and the U.S. economy writ large by driving down demand for goods and services. It will also leave employers without millions of reliable employees in industries like construction, hospitality, childcare, agriculture, food processing and production, and more.

The NPRM underestimates the economic harm to initial asylum applicants who are already employed in the U.S. workforce

The NPRM rests heavily on the premise that restricting access to asylum-based work authorization will deter future asylum applicants by reducing the perceived “pull factor” of employment opportunities in the United States given the lengthy asylum backlog.13 While briefly referenced above, it is worth highlighting that this premise overlooks that many “initial” asylum employment authorization applicants are workers who are already here, including many who are gainfully employed.

Since January 2025, the federal government has terminated or moved to dismantle legal immigration programs that provided work authorization to hundreds of thousands of individuals, including several countries’ TPS designations, the CBP One parole program, the parole program for Cubans, Haitians, Nicaraguans, and Venezuelans (CHNV), multiple family reunification parole programs, and DACA.14 Many workers whose work permits have been terminated or threatened by these changes—and who are also eligible for asylum—are filing asylum applications and seeking initial employment authorization based on their pending applications.

The NPRM acknowledges this trend in passing,15 but largely sidesteps its implications—namely, that the NPRM’s sweeping restrictions on employment authorization for “initial asylum applicants” will largely fall on individuals who are already integrated into the lawful workforce. These workers are not hypothetical future entrants; they are experienced employees currently working in hospitals, manufacturing facilities, construction sites, hotels, schools, and public services. The NPRM therefore risks removing from the workforce hundreds of thousands of workers who have already been performing essential roles in the U.S. economy.

By focusing on speculative deterrence effects for future migrants while overlooking the proposed rule’s immediate impact on workers already embedded in the U.S. economy, the NPRM fails to accurately assess the scope of the disruption the proposed rule would cause. This flawed premise permeates the NPRM’s analysis and projected impacts and, on its own, warrants withdrawal of the proposed rule.

The NPRM incorrectly assumes that asylum-seekers who lose employment authorization can easily be replaced and ignores the resulting disruption to the economy

The NPRM suggests that asylum-seeking workers who lose employment authorization may be replaced and that the resulting shifts may lead to increased hours or compensation for currently employed workers.16 Although the NPRM acknowledges that restrictions on asylum-based employment authorization may lead employers to rely more heavily on currently employed workers through increased hours or overtime, it largely treats these effects as a potential transfer of compensation rather than as a source of workforce disruption.17 These assumptions simply do not reflect the realities in which many asylum applicants work.

A) The NPRM would shrink the legal workforce, exacerbating staffing issues in key industries

Asylum applicants are employed in a number of key industries, such as construction, transportation, manufacturing, food preparation and service, and building and grounds maintenance.18 Employers in sectors such as health care, long-term care, hospitality, education, and logistics frequently report difficulty recruiting and retaining sufficient numbers of workers.19 In these and other industries, the loss of experienced workers cannot easily be offset by replacement hiring. This is the case, in part, because of the Trump administration’s immigration enforcement policies, which are resulting in stagnant population and workforce growth, leaving fewer available workers to fill positions previously held by asylum-seekers.20

The NPRM as a result will exacerbate staffing issues in key industries, by pausing, terminating, or simply not adjudicating EAD applications. Further, the NPRM provides no empirical analysis demonstrating that employers will be able to replace workers who lose asylum-based employment authorization. Instead, the proposed rule rests on speculative assumptions that are inconsistent with the experience of the industries most affected.

B) The NPRM would increase mandatory overtime and workload pressures on remaining workers

Across unionized industries, abrupt workforce losses rarely produce the seamless labor substitution envisioned in the NPRM. Instead, employers often struggle to recruit qualified replacements, leaving operations understaffed for extended periods. In some cases, employers may scale back operations or lay off additional workers when they can no longer meet production or service demands due to the loss of experienced personnel.21 These dynamics are particularly severe in rural areas and specialized industries where the available labor pool is already limited and recruiting new workers can take months or even years.

When employers cannot quickly replace lost staff, the burden falls on the remaining workforce. Workers may be required to work extended shifts, mandatory overtime, or intensified production schedules to maintain operations. These conditions increase worker fatigue and place significant strain on the remaining workforce.22

C) The NPRM would increase workplace safety risks by disrupting experienced workforces

Staffing shortages and excessive overtime can also create significant safety risks. In many safety-sensitive workplaces, such as construction sites, manufacturing facilities, warehouses, and healthcare settings, the sudden loss of experienced workers can create immediate hazards for the remaining workforce. Short-staffing often forces employees to perform additional tasks or work at faster production speeds, increasing the likelihood of fatigue-related injuries and other workplace incidents. Efforts to rapidly replace experienced workers with new or inexperienced hires can further heighten safety risks for the entire workforce. Unionized workplaces have reported increased injury rates, higher stress levels, and exacerbated turnover and burnout following sudden staffing reductions tied to immigration policy changes.23

D) The NPRM would weaken bargaining power in unions and organizing capacity

Many asylum-seekers and other immigrant workers are union members, and their ability to work lawfully is critical to the stability of union bargaining units. By severely restricting asylum-seekers’ access to employment authorization, the NPRM would harm not only individual workers but also the unions that represent them by disrupting membership, weakening collective representation, and undermining unions’ capacity to maintain stable bargaining relationships with employers.

Labor history and modern labor-market research confirm the central role immigrant workers play in sectors where unions organize and represent workers.24 Immigrant workers are disproportionately employed in high-turnover, demanding industries where unions depend on workforce stability to sustain membership and bargaining strength.25 As immigrant employment has grown, so too has immigrants’ share of union membership, making them an increasingly important source of union participation and organizing.

By sharply curtailing asylum-seekers’ access to employment authorization, the NPRM would destabilize the workforce in industries where unions are building and maintaining collective representation. Denying or delaying work authorization would force many workers out of lawful employment or prevent workers from entering lawful employment relationships and joining unions, weakening existing bargaining units and reducing unions’ membership base. It would also disrupt organizing efforts by removing workers from the workforce before they can participate in union campaigns or collective bargaining.

The NPRM’s restrictions on asylum-seekers’ work authorization would significantly impair unions’ ability to represent and grow their membership.

The NPRM would push workers into the underground economy, increase labor and employment violations, weaken labor standards enforcement, and lower wages in numerous industries

The proposed rule would significantly restrict asylum-seekers’ ability to work legally while their asylum claims—often pending for years—are adjudicated, effectively forcing many asylum-seekers to support themselves and their families for extended periods of time without lawful employment.

The NPRM does not meaningfully analyze how individuals in this situation are expected to sustain themselves during those years, nor how effectively eliminating asylum-seekers’ access to employment authorization will impact the enforcement of labor standards, including wage and hour laws, labor laws, and workplace safety laws. In practice, without work authorization, many people will turn to informal or off-the-books employment arrangements in order to support themselves and their families. And we know from existing research that employees who lack work authorization are more than twice as likely to be victims of wage theft for minimum wage violations than U.S.-born citizens.26 Workers in these circumstances are significantly more vulnerable to exploitation. Employers may take advantage of workers’ immigration status to suppress wages, deny overtime pay, ignore workplace safety standards, or retaliate against workers who attempt to assert their rights.

When workers are pushed into informal employment, the resulting labor violations extend beyond those workers themselves—to all workers—regardless of immigration status or the country where they were born. Employers who exploit vulnerable workers not only depress wages and benefits for authorized workers in the same workplace, but they also gain a competitive advantage over law-abiding employers that comply with labor laws and collective bargaining agreements.27 In this way, the NPRM’s restriction of lawful employment authorization would distort workplace competition by rewarding employers that exploit vulnerable workers while disadvantaging those that comply with labor laws and collective bargaining agreements, thus lowering wages for all workers in the many industries where asylum-seekers are employed.

These consequences would reverberate across workplaces and industries. When employment moves into the informal economy, labor violations become harder to detect and enforce, enabling exploitative employers to undercut law-abiding competitors and driving down wages and working conditions for other workers. The NPRM does not meaningfully analyze these foreseeable effects. By failing to account for the predictable expansion of informal employment created by the proposed rule, the NPRM substantially understates its impact on labor standards and the broader labor market.

The NPRM disregards the significant reliance interests created by the existing system of asylum-based employment authorization

Under the Administrative Procedure Act (APA), agencies must consider the reliance interests that regulated parties have developed under existing policies before adopting regulatory changes that would disrupt those settled expectations.28 The NPRM fails to meaningfully account for the reliance interests that workers and unions have developed around the current system of asylum-based employment authorization.

For years, asylum-seekers and labor organizations have relied on a predictable regulatory framework under which individuals who meet the criteria for employment authorization can obtain a work permit within a defined timeframe. Workers make critical life decisions—including housing, transportation, and family support—based on the expectation that, if they satisfy the applicable requirements, they will be able to work lawfully while their asylum claims are pending. By introducing sweeping delays, additional eligibility barriers, and broad discretionary authority to deny applications, the proposed rule would upend these settled expectations and inject profound uncertainty into a system on which workers have long depended.

These reliance interests are particularly significant because many individuals the NPRM characterizes as “initial” asylum employment authorization applicants are not new entrants to the labor market. As described above, many have already been participating in the lawful workforce through programs such as TPS, humanitarian parole, deferred action, or other programs that allow for employment authorization. When those programs are terminated or curtailed, many workers eligible for asylum turn to the asylum system in order to maintain lawful employment authorization—relying on claims for asylum that are almost certainly valid given the circumstances that allowed them to qualify for temporary protections like TPS and parole—but which they did not assert sooner because of their eligibility for other programs which could be approved more quickly. Closing off this pathway for these current lawful employees in the U.S. labor market who also have valid asylum claims will eliminate the only remaining pathway for them to continue working lawfully in jobs they already hold. Their coworkers, employers, and entire workplaces depend on their continued participation in the labor force.

By imposing new eligibility barriers and expanding the circumstances under which renewal applications may be denied, along with creating unjustified lengthy bureaucratic pauses in adjudication, the proposed rule would significantly slow the renewal process and increase the likelihood that workers will lose lawful employment authorization while their applications remain pending. Given the scale of the existing asylum backlog, these changes threaten to create widespread gaps in work authorization for workers who have already been lawfully employed for years.

The NPRM would bring the asylum-based employment authorization system to a functional standstill. Workers who have relied on timely adjudication of work authorization applications would face prolonged periods without lawful employment authorization, while co-workers who depend on those workers would face sudden and unpredictable staffing disruptions. The NPRM does not meaningfully engage with these reliance interests or the systemic consequences of destabilizing an employment authorization framework on which hundreds of thousands of workers and employers have come to depend.

Because the proposed rule disregards these substantial reliance interests and fails to evaluate the disruptive consequences of overturning longstanding expectations about the availability and timing of employment authorization, the NPRM fails to consider an important aspect of the problem before the agency.

Conclusion and recommended action

The NPRM rests on a chain of flawed assumptions that do not reflect the realities of the modern U.S. labor market. It ignores the positive economic benefits and value of Employment Authorization Documents for asylum-seekers, and fails to estimate the many negative impacts that will result, harming not only asylum-seekers, but also U.S. employers and U.S.-born citizen workers. It mischaracterizes who will be impacted by the proposed rule, failing to recognize that many “initial” asylum applicants who would face the harshest aspects of the proposed rule are already embedded in the workforce. It disregards the substantial reliance interests that workers and employers have developed around a predictable system of asylum-based employment authorization. It ignores the predictable expansion of informal employment that will result from leaving asylum-seekers without lawful means of supporting themselves for years. And it assumes—without evidence—that employers will be able to easily replace workers who lose employment authorization.

In practice, the proposed rule would not streamline the administration of asylum-based employment authorization. Instead, it would destabilize workplaces, disrupt established workforces, weaken labor standards enforcement—leading to lower wages for workers in many industries—and impose significant costs on workers, employers, and the broader labor market.

For these reasons, the Economic Policy Institute urges DHS to withdraw the proposed rule.

Comment submitted by:

Daniel Costa
Director of Immigration Law and Policy Research
Economic Policy Institute

Endnotes

1. See Employment Authorization Reform for Asylum Applicants, 91 Fed. Reg. 8616, 8618–20 (Feb. 23, 2026).

2. See id. at 8618–19.

3. 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, Economic Policy Institute, October 4, 2024.

4. American Immigration Council, The Contributions of Temporary Protected Status Holders to the U.S. Economy (fact sheet), September 19, 2023.

5. Andrew Moriarty, “Temporary Protected Status (TPS): 5 Things to Know,” Policy Brief, FWD.US, February 29, 2024.

6. President’s Alliance on Higher Education and Immigration (President’s Alliance), Breakdown of Dreamer Populations—Both with and Without DACA, Updated May 23, 2024.

7. , Nicole Svajlenka and Trinh Q. Truong, “The Demographic and Economic Impacts of DACA Recipients: Fall 2021 Edition,” Center for American Progress, November 24, 2021.

8. Tom Wong, Ignacia Rodriguez Kmec, Diana Pliego, Karen Fierro Ruiz, Silva Mathema, Trinh Q. Truong, and Rosa Barrientos-Ferrer, 2023 Survey of DACA Recipients Highlights Economic Advancement, Continued Uncertainty amid Legal Limbo, Center for American Progress, March 25, 2024.

9. Pia Orrenius and Madeline Zavodny, “The Impact of Temporary Protected Status on Immigrants’ Labor Market Outcomes,” Federal Reserve Bank of Dallas Working Paper no. 1415, December 2014.

10. David Dyssegaard Kallick, “’Let Us Work’: The Wage Gain When Asylum Seekers Gain Work Authorization,” Immigration Research Initiative, September 7, 2023.

11. See for example, Ben Zipperer, Trump’s deportation agenda will destroy millions of jobs: Both immigrants and U.S.-born workers would suffer job losses, particularly in construction and child care, Economic Policy Institute, July 10, 2025.

12. See for example, Carl Davis, Marco Guzman, and Emma Sifre. 2024. Tax Payments by Undocumented Immigrants, Institute on Taxation and Economic Policy, July 30, 2024.

13. This rationale—the validity of which is beyond the scope of this comment—is repeated throughout the NPRM. See, e.g., Employment Authorization Reform for Asylum Applicants, Notice of Proposed Rulemaking, 91 Fed. Reg. 8616, 8620 (Feb. 23, 2026) (“[T]he affirmative asylum application backlog serves as a magnet pulling aliens into the U.S. illegally.”); id. at 8664 (same); id. at 8629 (“filing fraudulent, frivolous, or otherwise meritless asylum cases primarily to access employment authorization” is a “pull factor for illegal immigration,” such that the NPRM “should decrease the number of illegal border crossers”); id. at 8659 (proposing new eligibility bar on asylum-based work permits to “curb the pull-factor of employment authorization for those who have been present in the United States for more than 1 year”); id. at 8660 (“This rule will prioritize the safety and security of the American people by disincentivizing illegal migration and criminal conduct for [sic] aliens who would like to obtain employment authorization.”); id. at 8669 (“tethering (c)(8) EAD application acceptance to asylum processing times . . . will permanently eliminate the possibility that asylum backlogs may serve as a magnet attracting illegal immigration”).

14. See Temporary Protected Status (TPS): Fact Sheet, Forum (Feb. 4, 2026), https://forumtogether.org/article/temporary-protected-status-fact-sheet/ (listing recent TPS termination announcements, including TPS protections for Venezuela, Haiti, Nepal, Honduras, Nicaragua, Syria, Afghanistan, Cameroon, South Sudan, Burma, Ethiopia, Somalia, and Yemen); Dep’t of Homeland Sec., DHS Issues Notices of Termination for the CHNV Parole Program, Encourages Parolees to Self-Deport Immediately (June 12, 2025), https://www.dhs.gov/news/2025/06/12/dhs-issues-notices-termination-chnv-parole-program-encourages-parolees-self-deport; U.S. Citizenship & Immigr. Servs., Termination of Family Reunification Parole Processes for Colombians, Cubans, Ecuadorians, Guatemalans, Haitians, Hondurans, and Salvadorans, 90 Fed. Reg. 58032 (Dec. 15, 2025); Gregory Royal Pratt & Laura Rodríguez Presa, DACA delays lead to lost jobs, less stability and anxiety over potential deportation under Donald Trump, Chicago Tribune (Mar. 15, 2026), https://www.chicagotribune.com/2026/03/15/daca-delays-trump-immigration/.

15. See 91 Fed. Reg. at 8652-53, 8658 (acknowledging former TPS, parole, and DACA holders often apply for asylum).

16. 91 Fed. Reg. at 8620–21, 8664-65.

17. See id. (noting that lost compensation may be transferred to currently employed workers through additional hours or overtime).

18. See, e.g., fwd.us, People seeking asylum are contributing to the workforce (Jan. 31, 2026), https://www.fwd.us/news/people-seeking-asylum-are-contributing-to-the-workforce/.

19. See, e.g., Brief of Amici Curiae AFL-CIO and Ten Affiliated Labor Unions, Lesly Miot v. Trump, No. 26-5050 (D.C. Cir. Feb. 17, 2026) (“AFL-CIO and Affiliated Labor Unions Haiti TPS Brief”), at 16–17.

20. See, e.g., Julia Gelatt, “Trump Restrictions on Legal Immigration Could Sharply Reduce U.S. Population Growth,” Migration Policy Institute (April 2026), https://www.migrationpolicy.org/news/trump-legal-immigration-cuts-us-population-growth; and Chair Jerome Powell, “Transcript of Chair Powell’s Press Conference, March 18, 2026,” Federal Reserve, https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20260318.pdf (March 18, 2026).

21. See, e.g., Brief of Amici Curiae AFL-CIO and Affiliated Labor Unions, Svitlana Doe et al. v. Noem et al., No. 25-1384 (1st Cir. July 7, 2025) (“AFL-CIO and Affiliated Labor Unions Parole Brief”), at 13.

22. See, e.g., id. at 8–17 (discussing the chaos and harmful fallout that union members and employers experienced when DHS abruptly ended work authorization through the CHNV parole program); Andrea Hsu, Factories from GE to Kraft Heinz lose immigrant workers, stressing those who remain, NPR (Aug. 11, 2025), https://www.npr.org/2025/08/11/nx-s1-5496335/trump-immigration-workers-parole-tps.

23. See, e.g., AFL-CIO and Affiliated Labor Unions Haiti TPS Brief at 36 (noting that “[a]s a direct result of DHS’s actions [in terminating TPS for Haiti], nurses and other healthcare workers will feel pressure to work longer hours to attend to more patients, exacerbating the turnover and burnout that is endemic to the industry”).

24. See, e.g., Mae M. Ngai, Impossible Subjects: Illegal Aliens and the Making of Modern America (2004) (discussing historical links between immigrant labor and industrial unionization); Joint Econ. Comm. of the U.S. Cong., Unions Protect Employment and Raise Earnings, Including for Workers Who Are Immigrants (June 14, 2023) (finding unionization increases wages, benefits access, and workplace protections for immigrant workers); Andrea Hsu, Factories from GE to Kraft Heinz lose immigrant workers, stressing those who remain, NPR (Aug. 11, 2025), https://www.npr.org/2025/08/11/nx-s1-5496335/trump-immigration-workers-parole-tps.

25. See, e.g., Kevin Appleby, The Importance of Immigrant Labor to the US Economy, Center for Migration Studies (Sept. 2, 2024), https://cmsny.org/importance-of-immigrant-labor-to-us-economy/ (noting foreign-born workers were mainly employed in service occupations, construction, transportation, and material moving occupations); Dorothy Neufeld, Ranked: Union Membership by Industry in America, Visual Capitalist (Nov. 7, 2024), https://www.visualcapitalist.com/union-membership-by-industry-in-america/ (listing top industries with union membership based on Department of Labor statistics, including construction and transportation); Migration Policy Institute, Immigrants and Union Membership in the United States (2004) (demonstrating rising absolute numbers of immigrant workers in unions despite lower overall union density among foreign-born workers).

26. Annette Bernhardt et al., Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities, Center for Urban Economic Development, National Employment Law Project, and UCLA Institute for Research on Labor and Employment, 2009.

27. See, e.g., AFL-CIO and Affiliated Labor Unions Parole Brief at 15–16 (when the hotel industry is faced with labor shortages, employers often use temporary labor agencies to supply workers, which not only “undermin[e] the wages and working conditions” for U.S. citizen workers employed by the hotel “by paying substandard wages and benefits,” but also “often violate immigration law by hiring undocumented workers”).

28. See FCC v. Fox Television Studios, Inc., 556 U.S. 502, 515–16 (2009) (noting that an agency must sufficiently explain its decision when it departs from a previous position, which requires a “reasoned explanation” as to why it is “disregarding” any “factual findings . . . which underlay its prior policy” and “contradict” the factual findings underlying its new policy).

1. The proposed rule includes multiple reference numbers, which are listed here out of an abundance of caution: No. 2799-25; DHS Docket No. USCIS-2025-0370; DHS Docket No. 2025-0370; and RIN 1615-AC97.

Key findings:

• This analysis estimates the cost to workers of being misclassified as an independent contractor for 11 commonly misclassified jobs. We find, for example, that a typical construction worker misclassified as an independent contractor would lose as much as $20,399 in annual income and job benefits compared with what they would have earned as an employee. A typical truck driver, if misclassified as an independent contractor, would lose as much as $23,266 annually.
• Lost compensation due to misclassification varies by state. Estimated annual per-worker costs in lost compensation are as high as $31,326 for truck drivers in New Jersey. On average, misclassified workers stand to lose more in higher-wage states and occupations because W-2 earnings are greater, but losses are substantial in all states.
• Misclassification can happen in any occupation. However, because of occupational segregation and other labor market disparities, people of color, women, and immigrants—and people at the intersections of these categories—are more likely to be in occupations where misclassification is common, like most of the 11 occupations analyzed in this report.
• Misclassification shifts the full burden of social insurance—like Social Security and Medicare—to workers, while also reducing the total revenues received by the social insurance system. We estimate that social insurance systems can lose up to roughly 30% of per-worker revenue when workers are misclassified as independent contractors.
• In 2025 and 2026, lawmakers in at least 12 states proposed or passed legislation to address worker misclassification. Most recent state efforts have focused on increasing accountability of employers that misclassify workers, bolstering remedies for workers subject to illegal misclassification, and strengthening enforcement capacity.

What is misclassification?

The type of misclassification addressed in this report occurs when an employer wrongly classifies an employee as an independent contractor. The problem of workers being misclassified as independent contractors is pervasive and widespread. An analysis from the National Employment Law Project focusing on state-level reports on misclassification estimated that as many as 10–30% of employers misclassify their workers.1

The way a worker is classified has serious implications for their labor rights and economic security. Federal, state, and local labor laws provide extensive protections for employees that are not available to independent contractors. For example:

• When a worker is misclassified as an independent contractor, they are stripped of minimum wage and overtime protections.
• These misclassified workers are no longer eligible for unemployment insurance or workers’ compensation.
• They do not qualify for paid sick or family leave, even in places where those benefits are statutorily prescribed for employees, and they are extremely unlikely to receive employer-provided health insurance or retirement benefits.
• They are no longer protected by the National Labor Relations Act, which ensures workers’ rights to form unions and bargain collectively to improve their working conditions.
• In most states, misclassified workers are not covered by anti-discrimination and sexual harassment protections.2
• Workers misclassified as independent contractors also must assume the full financial cost of Social Security and Medicare contributions, rather than split it evenly with their employer.

Losing these benefits and protections leaves independent contractors in a far more vulnerable position than employees when it comes to their basic rights on the job. Employers have argued that many workers prefer being classified as independent contractors because they value “flexibility” over fundamental labor rights. But this so-called flexibility is often illusory, given the degree of control many employers retain over workers and their schedules.3

Misclassification remains pervasive in part because its costs to individual workers can be hard to quantify and thus easy to obscure. Prior research has estimated the costs of misclassification by quantifying the number of workers misclassified; the amount of wage theft experienced by misclassified workers; and the loss in federal and state tax revenues resulting from employers not paying payroll taxes and workers’ compensation insurance.4 This report presents estimates of two types of costs caused by misclassification for 11 commonly misclassified occupations:

1. What workers lose when they are misclassified—that is, the difference in the value of a job to a worker if the worker is classified as an independent contractor rather than as an employee; and
2. What social insurance funds lose when workers are misclassified—that is, the difference in payments to social insurance funds if a worker is classified as an independent contractor rather than as an employee.

Misclassification can happen to any worker. However, because of occupational segregation and other labor market disparities, people of color, women, and immigrants—and people at the intersections of these categories—are more likely to be in occupations where misclassification is common, such as most of the 11 occupations investigated in this analysis (see Appendix Table 1). Any policy conversations about worker classification status should center these types of occupations, as workers classified as independent contractors in these occupations are often not genuine independent contractors with full control over their work conditions and are more likely to be exposed to the harms of reduced earnings and loss of labor protections.

The cost to workers

Table 1 presents estimates of the cost to workers of being misclassified as an independent contractor for 11 occupations that are highly prone to misclassification.5

For example, when classified as an employee, the typical construction worker had annual earnings of $58,360 in 2025 (column 1, top row of Table 1). This includes the average value of supplemental pay—overtime, shift differentials, and paid time off. When we also include the value of health insurance and retirement plans and subtract the worker contribution to Social Security and Medicare, the full value of the job to the worker when classified as an employee rises to $62,567 (column 2, top row). But when the typical construction worker is misclassified as an independent contractor—and therefore loses access to legal protections, supplemental pay, and employer contributions to Social Security and Medicare—we estimate that the value of that job falls to between $42,169 and $49,382 (columns 3 and 4, top row). That estimated range depends on the assumptions we make about the degree to which the employer increases the base pay of independent contractors, if at all, to offset the fact that the worker does not have access to many rights and benefits.

The estimates in columns 3 and 4 are based on two scenarios, described below, that together define the endpoints of this range and establish plausible estimates of the cost of misclassification to workers. It should be noted, however, that this range is conservative because it does not account for the loss independent contractors face of many rights associated with being an employee—for example, it excludes the impact of the loss of rights guaranteed by the National Labor Relations Act, such as the right to union representation.

In both scenarios, we assume that the worker—if classified as an independent contractor—receives the full regular pay of a W-2 employee but does not receive supplemental pay (like overtime or paid time off), must pay the full combined employer and employee contribution to Social Security and Medicare (15.3% of earnings), and must cover paperwork costs like invoicing, bookkeeping, and small business tax filings.

Scenario 1: No compensation for health and retirement benefits

In the first scenario, we assume employers do not compensate independent contractors for the value of health insurance and retirement benefits. This generates our low estimate of the value to workers of independent contractor jobs—along with the high estimate of the cost to workers of independent contractor jobs—in Table 1.

Under this assumption, we conservatively estimate the net value of a construction job done as an independent contractor falls to $42,169 per year. This is $20,399—or 32.6%—less than if that worker were a W-2 employee ($62,567 in column 2). Notably, misclassified truck drivers also see a massive decline in net value of the job. As a W-2 employee, a truck driving job is worth $64,474, while an independent contractor receiving the same wage, but no supplemental pay or benefits, earns $41,208, which is $23,266 less.

Table 1

Scenario 2: Full compensation for health and retirement benefits

In the second scenario, we assume employers fully compensate independent contractors for the value of health insurance and retirement benefits. This generates our high estimate of the value to workers of independent contractor jobs, along with the low estimate of the cost to workers of independent contractor jobs, in Table 1.

Access to these benefits increases the annual earnings of an independent contractor, but not to the level of a W-2 employee. For a construction worker, the net value of the job as an independent contractor is only $49,382, or more than $13,000 below the net value of the same job done as an employee. For a truck driver, the switch to independent contractor status would cost $13,760.

Table 1 also shows estimates for nine other occupations with lower annual earnings than construction workers and truck drivers. As W-2 employees, these workers had median annual earnings between $33,690 and $44,140. Under the estimates in scenario 1 (no compensation for health and retirement benefits), being misclassified as an independent contractor would cost between $8,858 (retail sales workers) and $17,939 (light truck delivery drivers). Under scenario 2 (full compensation for health and retirement benefits), the costs would be $6,294 and $10,634, respectively.

Mapping cost to workers by state

See fact sheets by state.

Because worker pay varies meaningfully across states, we also estimate the cost of misclassification to workers by state. We follow the same methodology we used for our national-level estimates but incorporate state-level data where available.

Figure A maps the financial penalty that workers face when wrongfully misclassified as independent contractors. This figure uses estimates from scenario 1, where we assume employers do not compensate independent contractors for health and retirement benefits. (See Appendix Table 2 and Appendix Table 3 for a detailed breakdown of costs to workers by occupation and state for independent contractors with and without compensation for health and retirement benefits.)

The cost of misclassification ranges from $5,774 annually for housekeeping cleaners in Mississippi to $31,326 for truck drivers in New Jersey. This range of estimates reflects the fact that misclassified workers stand to lose more in higher-wage states and occupations where the W-2 earnings of employees are greater. Even so, losses are substantial across all states.    

Figure A

The cost to social insurance

Social insurance consists of government programs funded by dedicated payroll taxes paid by workers and/or employers, which entitle workers to benefits when they experience qualifying events—such as reaching retirement age (Social Security and Medicare), being laid off (unemployment insurance), or being injured on the job (workers’ compensation). When a worker is misclassified as an independent contractor, the entire cost of Social Security and Medicare contributions is shifted to the worker.6 Misclassification also renders workers ineligible for participation in state and federal unemployment insurance and workers’ compensation programs.

Misclassification does not just shift the full burden of social insurance to workers—it also reduces the total revenues received by the social insurance system. This occurs for several reasons. First, unemployment insurance and workers’ compensation systems receive no contributions from independent contractors—though it is worth noting that this in no way ensures that these workers will not need to rely on public safety net programs if they are laid off or injured on the job. Second, independent contractors in the occupations we analyze may earn less than they would as employees, because, for example, they are no longer legally entitled to the minimum wage, overtime protections, and are highly unlikely to receive any paid time off. Because Social Security contributions are a percentage of earnings (and the taxable maximum is not binding in these occupations), lower pay translates directly into lower contributions.

Table 2 illustrates the impact of worker misclassification on payments to social insurance funds in the 11 occupations analyzed above. For example, the typical construction worker classified as an employee and their employer jointly contributed a total of $10,663 toward these social insurance programs in 2025. When misclassified as an independent contractor, total payments toward social insurance programs fall to between $7,617 and $8,920 per construction worker (using the same two scenarios described above). This represents a decline in social insurance revenues between $1,743 and $3,046 per construction worker per year.

Under our scenario 1 assumptions (where employers do not increase pay to compensate independent contractors for their lack of employer-provided health and retirement benefits), total contributions to social insurance fall from between 21% ($1,220) for manicurists/pedicurists and 29% ($3,046) for construction workers. Under our scenario 2 assumptions (where employers increase pay enough to fully compensate independent contractors for health and retirement benefits), payments to social insurance drop by somewhat less—10% ($601) for manicurists/pedicurists and 16% ($1,743) for construction workers—due to the higher base pay.

Table 2

Mapping the cost to social insurance funds by state

Expanding this methodology to states reveals how misclassification deprives social insurance funds of crucial dollars needed to maintain crucial programs, such as unemployment insurance and workers’ compensation. Figure B maps the difference in contributions to social insurance funds between W-2 employees and independent contractors under scenario 1, where we assume employers do not compensate independent contractors for health and retirement benefits. The median cost to social insurance funds ranges from $654 per person annually for housekeeping cleaners in Mississippi to $4,008 for construction workers in Hawaii. See Appendix Table 4 and Appendix Table 5 for a detailed breakdown of costs to social insurance funds by occupation and state for the full range of estimates for independent contractors with and without compensation for health and retirement benefits.

Figure B

Recent state and federal policy changes

Strong statutory language, like the ABC test, provides the legal foundation for identifying misclassification 

Given the high stakes of misclassification for workers’ access to fundamental rights and protections, embedding strong legal definitions in state and federal law is fundamental to ensuring that employees are not improperly classified as independent contractors.  

The ABC test is the strongest, most protective test for determining employee status. The test establishes a presumption that an individual performing services for an employer is an employee—not an independent contractor—unless the employer can establish three factors: 

1. The work is done without the direction and control of the employer; 
2. The work is performed outside the usual course of the employer’s business; and 
3. The work is done by someone who has their own, independent business or trade doing that kind of work. 

The ABC test differs from other “tests” of employee status such as the National Labor Relations Act (NLRA) “common law” test and the Fair Labor Standards Act (FLSA) “economic realities” test because the ABC test shifts the presumption to one of employee status, places the burden on the employer to prove independent contractor status, and provides a clear, narrow definition of independent contractor status. In turn, this reduces the likelihood that workers are misclassified and lose protections they should be guaranteed under the law as employees.  

The strength of frameworks used to determine employee status is highly varied across states. At least 18 states and the District of Columbia currently use the ABC test for determining employee status for certain workplace laws. Some states have taken action recently. In addition to pursuing strong, innovative enforcement strategies to combat misclassification, New Jersey’s labor department proposed a new administrative rule in 2025 to codify into state law the agency’s existing ABC test for preventing independent contractor misclassification (the rule has since been paused). This year, a West Virginia bill proposed establishing a new ABC test into state law. 

However, the number of states with ABC tests has decreased in the past decade, with some states weakening or repealing their statutory definitions as a result of lobbying efforts by digital platform companies (e.g. Uber) and other industries whose business models depend on designating large numbers of workers as “independent contractors.” While most states with ABC tests apply them to determine workers’ eligibility for unemployment insurance benefits, only a few states apply them to wage and hour standards like the minimum wage and overtime compensation, and some states have them in place only for workers in certain occupations.

Strong enforcement mechanisms allow lawmakers to protect workers and hold employers accountable 

While strong legal tests provide a basis for determining whether an employee has been misclassified as an independent contractor, they must be paired with strong enforcement mechanisms to uphold workers’ rights and deter employers from violating the law. Many states are taking steps to strengthen enforcement. In 2025 and 2026, lawmakers in at least 12 states proposed or passed legislation to address worker misclassification. For example, Delaware passed a law in 2025 to hold contractors liable when their subcontractors misclassify workers, Colorado enacted a law to penalize employers that willfully misclassify workers, and Minnesota enacted a law requiring the state labor agency to study the impact of misclassification on workers and state revenue. In 2026, lawmakers in at least eight additional states7 have proposed legislation to address worker misclassification, and two states (Virginia and Washington) have sent approved legislation to the governor. 

At the same time, attacks also continued in 2026. Bills in several states proposed weakening existing ABC tests and excluding certain occupations from being subject to the tests. Other bills proposed establishing corporate-backed sham “portable benefits” schemes that promise some limited (but often inaccessible) benefits for gig workers while locking them out of full coverage under standard state programs and protections by treating them as “independent contractors.”8

Strong enforcement is important, and whether a given situation will be subject to enforcement depends on the strength of a state’s statutory definitions of employment. Both strong legal tests and enforcement are critical to protecting workers from being misclassified.  

Policy recommendations 

Policymakers at the federal, state, and local levels should act to curb misclassification and enforce the rights to which all workers should be entitled. Unfortunately, federal protections from misclassification are limited, and recent progress to address misclassification has been undermined. For example, the ABC test is not currently part of any federal workplace laws. In 2024, the Department of Labor finalized a rule to combat misclassification by adopting a six-factor test to determine worker classification under wage and hour laws. However, the Trump administration stopped enforcing the 2024 rule and recently proposed replacing it with a weaker standard. Given federal retrenchment, state lawmakers have an opportunity and responsibility to strengthen existing state standards.

State and federal policymakers should:

• Establish or expand the use of a strong, uniform protective legal test for determining employee status, such as the ABC test;9
• Strengthen enforcement and increase penalties to deter the misclassification of workers as independent contractors; 
• Pass the Protecting the Right to Organize (PRO) Act,10 which would make it harder for employers to misclassify employees in order to prevent them from forming a union and bargaining collectively;
• Strengthen enforcement of wage theft and misclassification, and fully fund the federal and state agencies responsible for enforcing workers’ wage and hour rights;
• Require employers to provide workers with transparent statements of their employment status and a justification for their classification;
• Extend basic wage and hour protections, workplace health and safety protections, paid sick leave, and other protections to independent contractors to discourage misclassification as a “race to the bottom” for workers’ rights; and
• Improve coordination among state and federal tax and labor enforcement agencies by establishing interagency misclassification task forces with dedicated resources and staff and strong co-enforcement partnerships capable of effectively cracking down on misclassification in targeted industries.11

Methodology

Since there are no comprehensive private or public data sources on workers misclassified as independent contractors, we apply a methodology that makes use of available employee total compensation and earnings data to estimate the costs of misclassification. For each of the 11 occupations included in our analysis, we begin with the average compensation profile drawn from the Bureau of Labor Statistics’ (BLS) Employer Costs for Employee Compensation (ECEC) database. This profile provides a breakdown of average employer costs for employee compensation in the private sector. As an example, Table 3 presents the average hourly compensation profile for construction workers broken into its component parts. We take the ratio of the individual compensation components to regular pay—which includes wages, salaries, supplemental pay, and paid leave—to estimate the ratio of compensation to pay.

Table 3

Next, we apply the ratios of total compensation to pay to median annual earnings obtained from the BLS’ Occupational Employment and Wage Statistics data (OEWS). This gives us estimates of the regular pay, supplemental pay, paid leave, and insurance and retirement benefits for a W-2 employee. We then calculate the net value to the worker as an employee based on the sum of all pay, paid leave, insurance and benefits, minus Social Security and Medicare taxes.

From here, we model two possible ways that the value of a job to a worker can change if the employee is misclassified as an independent contractor. In both scenarios, we assume that the worker, if classified as an independent contractor, receives the full regular pay of a W-2 employee, does not receive supplemental pay (like overtime or paid time off), must pay the full employer and employee contribution to Social Security and Medicare (15.3% of earnings), and must cover paperwork costs like invoicing, bookkeeping, and small business tax filings. We calculate paperwork costs by updating the methodology used in 2020 comments on independent contractor status under the Fair Labor Standards Act.12 The difference in the two scenarios is in our assumptions about the degree to which the employer increases the base pay of independent contractors, if at all, to offset the fact that the worker does not have access to many rights and benefits.

1. In the first scenario, we assume employers do not compensate independent contractors for health and retirement benefits. This generates our low estimate of the value to workers of independent contractor jobs—along with the high estimate of the cost to workers of independent contractor jobs.
2. In the second scenario, we assume that employers fully compensate independent contractors for the cost of health insurance and retirement benefits that employers would have paid to the same worker working as an employee. This generates our high estimate of the value to workers of independent contractor jobs, along with the low estimate of the cost to workers of independent contractor jobs.

State estimates

Estimates of the cost of misclassification by state and occupational group are produced similarly to national estimates, using compensation data from the BLS’ ECEC data and state earnings data from the BLS’ OEWS data.

Compensation profiles can be obtained from the ECEC that detail the total hourly cost of compensating a worker, including the share of total compensation derived from regular pay, insurance and retirement benefits, and legally required benefits. A ratio of compensation to pay can be calculated from these profiles by dividing each compensation component by regular pay, as in Table 3.

The ECEC does not have compensation profiles for occupational groups at the state level. They do, however, have compensation profiles for all workers, for all workers by occupation, and for all workers by census division, which we combine to estimate compensation profiles for occupational groups at the census division level. Table 4 illustrates this procedure using construction workers in New England as an example. First, we create compensation to pay ratios for private-sector workers at the national level, for each occupational group (e.g. construction workers), and for each census division (e.g. New England). Next, we divide the occupation-specific ratio by the national ratio and multiply this quotient by the census division ratio. This yields a unique compensation to pay ratio for New England construction workers, which is then mapped onto all states within this respective census division. This procedure is followed for all occupational groups and census divisions to produce compensation to pay ratios for all 50 states and the District of Columbia.

Table 4

We apply the state- and occupation-specific compensation to pay ratios to state and occupation median annual earnings obtained from BLS’ OEWS data. This gives us estimates of total compensation that comes from regular pay, supplemental pay, paid leave, and insurance and retirement benefits for W-2 employees across all states and occupations.

As in the national estimates, the cost of misclassification to both workers and to social insurance funds is calculated by comparing the net value of a job for a W-2 employee with that of an independent contractor under two scenarios: with and without compensation for health and retirement benefits. Appendix Tables 2–5 provide detailed breakdowns of these costs in both net dollar amounts and percentage differences relative to W-2 employees.

Notes

1. National Employment Law Project, Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, October 2020.

2. Meghan Racklin, Molly Weston Williamson, and Dina Bakst, “State Leadership on Anti-Discrimination Protections for Independent Contractors,” Future of Work Blog (A Better Balance), April 22, 2020.

3. Margaret Poydock, Lynn Rhinehart, and Celine McNicholas, Flexible Work: What Workers, Especially Low-Wage Workers, Really Want And How Best To Provide It, Economic Policy Institute, July 2024.

4. Françoise Carré, (In)dependent Contractor Misclassification, Economic Policy Institute, June 2015; Government Accountability Office, Employee Misclassification: Improved Coordination, Outreach, and Targeting Could Better Ensure Detection and Prevention, GAO-09–717, August 2009.

5. For discussions of occupations where workers are particularly vulnerable to misclassification as independent contractors, see Annette Bernhardt, Sarah Thomason, Chris Campos, Allen Prohofsky, Aparna Ramesh, and Jesse Rothstein, Independent Contracting in California: An Analysis of Trends and Characteristics Using Tax Data, UC Berkeley Labor Center and California Policy Lab, March 2022; Françoise Carré, (In)dependent Contractor Misclassification, Economic Policy Institute, June 2015; National Employment Law Project, Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, October 2020; and Lisa Xu and Mark Erlich, Economic Consequences of Misclassification in the State of Washington, Harvard Labor and Worklife Program, December 2019.

6. When workers are employees, they pay the employee share of Social Security and Medicare (7.65% of W-2 earnings). Their employers also make identical payments to Social Security and Medicare.

7. Arizona HB 2463, Illinois HB 2794, Iowa HB 2385, Kentucky HB 449, Virginia SB 644, Washington SB 6302, West Virginia HB 4571, and Wisconsin AB 1160.

8. See, for example, New Jersey A 1184, California SB 527, and Georgia HB 987.

9. Lynne Rhinehart et al. Misclassification, the ABC Test, and Employee Status, Economic Policy Institute, June 2021.

10. Celine McNicholas, Margaret Poydock, and Lynne Rhinehart, Why Workers Need the Protecting the Right to Organize Act, Economic Policy Institute, February 2021.

11. For more on interagency misclassification task forces, see Rebecca Smith, Public Task Forces Take on Employee Misclassification: Best Practices (policy brief), National Employment Law Project, updated August 2020. For more on co-enforcement partnerships, see Janice Fine, Daniel Galvin, Jenn Round, and Hana Sheperd, “Strategic Enforcement and Co-enforcement of U.S. Labor Standards Are Needed to Protect Workers Through the Coronavirus Recession,” Boosting Wages for U.S. Workers in the New Economy series, Washington Center for Equitable Growth, January 2021.

12. Heidi Shierholz, “EPI comments on independent contractor status under the Fair Labor Standards Act,” comments submitted on behalf of the Economic Policy Institute to Division of Regulations, Legislation, and Interpretation (Wage and Hour Division) Director Amy DeBisschop, October 26, 2020.

The IRS estimates that business taxpayers spend 13 more hours than nonbusiness taxpayers doing their taxes. If we conservatively assume that independent contractors spend 30 minutes per week on other (non-tax) paperwork costs that they wouldn’t have to spend if they were a payroll employee, that, plus the additional 13 hours spent on taxes, is an additional 39 hours of paperwork per year. This is equivalent to 1.8% of pay, or $880 annually for an independent contractor who earns $48,887 in regular pay annually.  

Additionally, we estimate these paperwork costs as the annual purchase of basic bookkeeping software ($114 on the lowest end, using FreshBooks, see https://www.freshbooks.com/pricing, accessed October 16, 2024), self-employed tax filing software for federal taxes ($129, using TurboTax, https://turbotax.intuit.com/personal-taxes/online/live/, accessed October 16, 2024) and state taxes ($64, using TurboTax).

Data appendix

Appendix Table 1

Appendix Table 2

Appendix Table 3

Appendix Table 4

Appendix Table 5

Originally held Thursday, February 19, 2026

Webinar links, notes and discussion

Timestamped themes, discussion, and resources mentioned in the webinar

MORE ABOUT THE HOLDING THE LINE SERIES

Federal worker protections are under attack

Long-standing U.S. worker rights and protections are under acute threat. These include attempts to roll back standards that set a national floor for minimum wages, health and safety, nondiscrimination, unemployment insurance, and other rights and protections long taken for granted in most U.S. workplaces.

The crisis calls for urgent action. At a minimum, states must be equipped to maintain and enforce basic protections should at-risk federal standards disappear. The crisis also presents opportunities for states to do much more to:

• remedy longstanding gaps and exclusions in weak or outdated labor and employment laws;
• advance new policies that address the pressing challenges of eroding worker power, growing income inequality, persistent racial and gender wage gaps, and declining job quality; and
• position states over the long term to assume more expansive, effective roles in enacting and enforcing key protections that form the bedrock of an economy that works for all.

Holding the Line: State solutions for the workers’ rights crisis provides a roadmap to defending and strengthening protections at the state and local level. 

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This FAQ answers key questions about the “no tax on tips” policy and what it means for working people.

In part 1 of this two-part blog post series, I provided background and discussion on a rider amendment that the Homeland Security subcommittee of the House Appropriations Committee proposed and passed over the summer. Originally known as Amendment #1 but later dubbed the Bipartisan Visa En Bloc amendment, it would make major changes to the H-2A and H-2B visa programs through the appropriations process, while completely circumventing the committees that should have subject matter jurisdiction in the House and Senate. Part 1 focuses on the changes and impacts in the H-2A program; this post will briefly explain the components of the rider that would make changes to the H-2B visa program and the impact of those changes, as well as one change that would affect both programs.

The H-2B program has been expanded through appropriations riders every year since fiscal year 2016

Two of my previous reports provide a fuller explanation of the background on the size of the H-2B program and a history of the legislative riders in appropriations bills that have been used to expand the size of the H-2B program. A quick recap here is warranted. In fiscal year 2016, Congress authorized a “returning worker” exemption through appropriations legislation to fund the operation of the U.S. government. The legislation exempted H-2B workers from the annual H-2B cap of 66,000 that is set in law, for fiscal year 2016, if the workers hired were previously in H-2B status in any of the preceding three fiscal years. There was no cap on the number of returning H-2B workers under the exemption.

In each year since FY 2017, Congress has, through appropriations riders, given the executive branch the discretionary legal authority to roughly double the number of H-2B visas available. Rather than specify the level of increase for the H-2B program, appropriators have passed the buck instead to the executive branch—perhaps because they didn’t want the responsibility or criticism that may come from setting a specific number—by directing the U.S. Department of Homeland Security, in consultation with the U.S. Department of Labor (DOL), to determine how many additional H-2B visas are appropriate, if any. DHS has interpreted the rider language as allowing them to issue up to 64,716 “supplemental” visas in the corresponding fiscal year. In total, it has been 10 years (FY 2016–2025) since Congress first permitted increases to the size of the H-2B program through an appropriations rider. The Biden administration in 2023, 2024, and 2025 used the full authority granted to the executive branch in the legislative riders, raising the total H-2B annual limit to 130,716.

The appropriations rider would create a new methodology to expand the H-2B cap by at least 100,000

The rider takes a different approach to allowing a higher number of H-2B visas to be issued in FY 2026. The language of the amendment states that for every employer who has had any H-2B positions certified in the past five fiscal years (2021–2025), the highest number that they had certified in those years will be the number of H-2B workers they may hire who will not count against the annual cap of 66,000. In other words, if an employer had 10 jobs certified in 2021, 15 in 2022, 20 in 2023, 100 in 2024, and 50 in 2025, they would be allowed to hire 100 H-2B workers in 2026 without them counting against the 66,000 cap.

To calculate how many workers could be hired in 2026 under this formula, a colleague and I matched employer records from DOL and identified the employers who had at least one approved H-2B job in each of the years between 2020 to 2024. (Full year data for 2025 were not available at the time of writing, so 2020–2024 are used as a proxy.) Altogether, 186,342 H-2B workers would have been exempted from the annual cap under this formula. This is almost certainly a low-end estimate because the number of H-2B jobs certified in 2020 was lower than normal because of the bureaucratic shutdowns and slowdowns caused by the start of the COVID-19 pandemic.

Table 1 shows an estimate for 2020–2024 that serves as a proxy for our estimate on the number of new H-2B workers who will be exempted from the cap in 2026 and also lists the number of new H-2B workers who will be permitted under the regular annual cap of 66,000. Altogether, the regular cap plus the supplemental cap for H-2B in 2026 would permit at least 252,342 new workers if the language in the rider becomes law. That’s an increase of almost 100%, relative to the total cap in 2023–2025, and a 282% increase, relative to the original H-2B cap of 66,000.

It’s also important to note that the annual caps and total number of workers will grow exponentially in the following years after 2026 if Congress reauthorizes the same language in the rider year after year, as they’ve done with past H-2B riders. This will occur because employers will have an incentive to apply to DOL for labor certification for as many H-2B jobs as possible because that will increase the size of their exemption from the cap for the following year.

Table 1

Total number of H-2B workers would reach 282,000 in 2026 if the rider becomes law

In a recent report, I showed that in 2024, when 64,716 supplemental H-2B visas were added to the statutory cap of 66,000, for a total cap of 130,716, there were a total of 169,177 H-2B workers. This was up from 75,122 total H-2B workers just a decade earlier. The nearly 170,000 total in 2024 included 139,541 H-2B workers with newly issued visas from the State Department, and 4,580 H-2B workers who had their employment extended with the same employer. An additional 25,056 were H-2B workers who changed employers. Workers who extend their H-2B status or change jobs are not counted against the annual cap. (In 2025 the cap was identical to the previous year; thus, final numbers for 2025 are likely to be very similar to 2024.)

To get a better sense of the total number of H-2B workers who would be employed in 2026 if the rider became law, I estimated that the same number of workers who extended their status or changed jobs in 2024 would also do so in 2026, and added that total to the 2026 total cap that would result from the rider. This is illustrated in Figure A, which shows the total number of H-2B workers from 2017 to 2024, and projections for 2025 and 2026. The annual cap plus the supplemental cap, together with H-2B extensions and job changes, will result in nearly 282,000 H-2B workers being employed in 2026—almost 113,000 more workers than were employed in 2024 and 2025.

Figure A

The rider would move 12,000 H-2B jobs to the P visa, which is not administered by the Department of Labor

The other notable change in the rider when it comes to the H-2B program is that H-2B workers employed at carnivals, traveling fairs, and circuses would be moved to the P visa program. According to DOL, in FY 2024 there were 12,398 H-2B jobs certified in the “Amusement and Recreation Attendants” occupation, which is the relevant occupation that would be moved to the P visa. There would be no annual cap on the number of amusement and carnival workers who could be employed in the P visa program.

At present, the P visa is a little-known program intended for use by professional athletes and coaches, members of an internationally recognized entertainment group, or persons performing under a reciprocal exchange program or as part of a culturally unique program. At present, the P visa program has no wage rules or worker protections and is administered exclusively by DHS, which has no staff or expertise on worker rights. This is extremely troubling, given that H-2B workers employed at carnivals and traveling fairs work grueling hours and in terrible conditions, making them some of the most exploited H-2B workers—as advocacy groups have pointed out. These workers are often paid below the minimum wage and are not paid for overtime hours. Yet DOL would no longer have any formal oversight role to ensure they are protected.

The rider language says that employers hiring H-2B carnival workers through the P visa “shall be subject to the same program requirements” of the H-2B program, which are administered by DOL. It also directs DHS and DOL to each separately publish regulations to implement H-2B carnival workers being moved to the P visa program within 180 days and finalize them within one year.

The legislators who support this amendment have provided no explanation or rationale for why it makes sense to create an entirely new process and set of regulations to move one of the biggest H-2B occupations from DOL into DHS—an agency that will be given primary responsibility over the P visa and protecting carnival workers, but which has no mandate or expertise on labor standards and employment laws. The most obvious explanation is that this legislative maneuver is simply a new way to expand the H-2B cap even beyond 252,000, in a way that gives carnival employers an unlimited supply of workers who can be exploited and underpaid. It also seems absurd to put a low-paid traveling carnival worker into the same visa category—where there’s no labor oversight—as a professional baseball player coming from abroad to sign a multimillion-dollar contract with a major league team, or a world-famous singer, dancer, or painter.

House Homeland Security appropriations rider would defund the H-2 modernization rule, restricting the ability of H-2 workers to change jobs and leave abusive employment situations

One other notable section in the rider that impacts both the H-2A and H-2B programs would prohibit DHS from spending funds to implement a regulation that took effect in January 2024—often referred to as the H-2 modernization rule. The rule, among other things, requires additional scrutiny of applications from employers that have violated the law, makes it easier for H-2 workers to be eligible for green cards through existing pathways, and expands the ability of H-2A and H-2B workers to change employers (this is referred to as visa “portability”), making it easier to leave an abusive employment situation. The regulation is far from perfect. As EPI and other advocates have pointed out, the portability provisions require additional measures to make visa portability a more practical reality, rather than just a right that exists on paper and one that can be hijacked by employers seeking to circumvent the annual cap.

Nevertheless, these three provisions in the H-2 modernization rule can undoubtedly help some workers, reducing the indentured nature of the visa programs by tilting the balance of power ever so slightly in the direction of workers. And that’s likely the exact reason that the employers and legislators pushing for the rider included this provision to defund the rule.

The H-2B program needs reforms to improve labor protections and provide H-2B workers with a pathway to citizenship

The appropriations committees in the House and Senate should not continue using parliamentary tactics to make changes to the H-2B program that would likely not pass in Congress through regular order. Instead, Congress should work with the executive branch to reform the H-2B program in the following ways: 

• ensure U.S. workers are considered for open temporary and seasonal jobs 
• craft updated wage rules that protect U.S. wage standards for all workers in H-2B industries
• provide migrant workers with new protections and allow them to more easily change jobs
• provide migrant workers with a quick path to a green card and citizenship
• prohibit lawbreaking employers from hiring through the H-2B program

As EPI and other advocates have long said, these genuine reforms are the only way to ensure that the workers playing vital roles in the U.S. economy are not being exploited and underpaid and that their employers are not able to use visa programs as an employment law loophole that ultimately erodes job quality for all.

Business and Foreign Workers Division
Office of Policy and Strategy, USCIS
U.S. Department of Homeland Security
5900 Capital Gateway Drive
Camp Springs, MD 20746

RE: 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

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 to the U.S. Department of Homeland Security (DHS) and its subagency, U.S. Citizenship and Immigration Services (USCIS), in response to their Notice of Proposed Rulemaking (NPRM) regarding the visa allocation process for H-1B visas. The proposed rule takes the current equal weighting random allocation process —often referred to as the H-1B “lottery”— for visas when more petitions than the number of visas available are filed when the application window opens, and modifies it to allocate H-1B visas to employers based on a weighted selection process that would generally favor the allocation of H-1B visas to higher skilled and higher paid applicants.

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. EPI published a lengthy piece of research detailing the need to improve the way the U.S. Department of Labor (DOL) sets the H-1B wage levels,1 which we coauthored and have annexed to this comment as a separate PDF file. The report, however, did not address the flawed manner in which H-1B visas are allocated; a problem that goes hand-in-hand with H-1B prevailing wage levels that have been set artificially low for many years.

In 2016, President Donald Trump campaigned on reforming the H-1B program and immediately promised to do so after becoming president-elect. Yet virtually no substantive action was taken until just weeks before the 2020 election. At that time, the U.S. Department of Labor (DOL) and USCIS/DHS issued three rules, a DOL Interim Final Rule (IFR) updating the H-1B prevailing wage levels,2 a USCIS IFR modifying the definition of H-1B “specialty occupation,”3 and an NPRM, on the H-1B allocation process by lottery.4 While DHS and DOL have the requisite legal authority to make these regulatory changes, the timing and process of their issuance made them susceptible to procedural legal challenges. On December 1, 2020, a federal court in California struck down both the DOL prevailing wage IFR and USCIS IFR.5 During his 2020 campaign, President Biden’s immigration plan stated he would “reform temporary visas to establish a wage-based allocation process and establish enforcement mechanisms to ensure they are aligned with the labor market and not used to undermine wages,”6 but the Biden administration never took any steps to propose an updated allocation scheme for H-1B visas to implement that campaign promise.

EPI generally supports the main substance of this NPRM and believes it improves the current allocation process for H-1B visas, which is random and susceptible to companies that have learned how to “game the system” to unfairly obtain large numbers of H-1B visas at the expense of other companies seeking to hire H-1B workers. We do not believe that it is the best method for allocating visas because high shares of petitions will still be awarded to firms paying their H-1B workers at below-median wage rates, but it is reasonable and preferable to the status quo. If the NPRM or final rule issued pursuant to this NPRM is challenged in court based on DHS’s interpretation of the statute that establishes how H-1B visas are allocated, then DHS should consider alternate methods to achieve the same goal of allocating visas by wage levels. These comments will suggest one alternative way to do it.

This proposed rule will incentivize H-1B employers to pay their migrant worker employees at fairer wage rates that are commensurate with local U.S. wage standards and result in rewarding employers that recruit and hire higher-skilled workers and pay higher salaries with additional visas and workers. That in turn will improve the program by reducing the number of H-1B workers who are underpaid according to U.S. wage standards—but without reducing the overall number H-1B visas that are issued—and will also better protect the wages of similarly situated U.S. workers. The proposed rule will also increase the overall skill mix and quality of the pool of H-1B workers, thereby boosting the impact of the H-1B program on the U.S. economy. As a result, the proposed rule helps address a major critique EPI has long held about the program—that it is exploited by firms that use it to legally undercut U.S. wage standards—and which Members of Congress from both major parties have attempted to address through proposed bipartisan legislation to reform H-1B, which includes a preference allocation system for H-1B visas, one that is more detailed and includes additional factors based on other policy priorities, unlike the one in the proposed rule based on a weighting of wage levels).7

It must also be noted at the outset of these comments that actions taken both recently and in 2020 by federal agencies with respect to wages for migrant workers in temporary work visa programs have been inconsistent and confusing. While DOL took action with its 2020 proposal and IFR that—if it had not been struck down—would have raised wage rates for underpaid migrant workers in the H-1B, H-1B1, and E-3 visa programs, DOL almost simultaneously issued a new wage rule for the H-2A program that would have cut wages for the migrant farmworkers in that program.8 DOL has now in 2025 again issued another rule for H-2A visas that will drastically cut the wages of farmworkers and lead to billions of dollars in wages being transferred from poor farmworkers to farm owners and operators, and lead to reduced opportunities for U.S. farmworkers, including the 30% of farmworkers who are U.S.-born citizens.9 This is troubling and misguided, especially considering that DHS at the end of the first Trump administration had determined that farmworkers were part of the U.S.’s critical infrastructure workforce, and the Department of State has designated H-2A workers as “a national security priority”—because of their contribution to stabilizing the food supply chain during the Coronavirus pandemic.

Both DHS and DOL should issue regulations that lead to improved labor standards and higher 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 labor and no work visa programs should operate essentially as employment law loopholes that permit employers to legally underpay migrant workers.

The first major section of these comments addresses the flaws in the current H-1B program, and the second section specifically addresses elements of the NPRM.

The H-1B program is an important avenue for attracting skilled, talented workers from abroad—but is deeply flawed and in desperate need of reform

The H-1B program provides temporary, nonimmigrant U.S. work visas for college-educated workers and fashion models from abroad. While no one can deny the importance of attracting skilled, talented workers to the United States, the reality is that some of the biggest beneficiaries of the H-1B program are outsourcing companies that have hijacked the system—using it to pay low wages, replace thousands of U.S. workers with much-lower-paid H-1B workers, and to send decent-paying technology jobs abroad.10 Outsourcing companies, however, are not the only abusers of the system: The vast majority of employers who use H-1B visas are legally allowed to pay their H-1B workers at wage levels below the local median wage for the occupation.

The major structural, programmatic flaws in H-1B are the following:

U.S. employers do not have to recruit U.S. workers before hiring H-1B workers

Employers and corporate lobby groups claim that they use the H-1B primarily to bring in the “best and brightest” workers from abroad to fill labor shortages when they can’t find willing and available U.S. workers, especially in science, technology, engineering, and math fields (STEM), but the reality is that:

• Under current law, employers are not required to recruit and hire U.S. workers or prove they are experiencing a labor shortage before hiring H-1B workers.
• “H-1B-dependent” employers—those filling 15% or more of their U.S. jobs with H-1B workers—are required to recruit U.S. workers first, but they all get around the requirement by exploiting a cheap and easy loophole: they can hire an H-1B worker without recruiting U.S. workers if the H-1B worker holds a master’s degree or receives an annual salary of over $60,000.
  • For comparison, $60,000 per year is $56,810 less than the national average wage for all workers employed in computer occupations.11 Analysis of the FY 2024 DOL Labor Condition Application disclosure data shows that employers exempt themselves from recruiting U.S. workers for effectively all of H-1B positions (over 99%).12

U.S. employers can legally underpay H-1B workers

For years, corporate lobbyists and other H-1B proponents have claimed that H-1B workers cannot be paid less than U.S. workers because employers must pay H-1B workers no less than the “prevailing wage.” That is true only as a tautology. The reality is:

• Employers have the option of paying the prevailing Level 1 “entry-level” wage or Level 2 wage, which are between 20-40% less than the local median wage (Level 3) that employers pay workers in the occupation in the local region.
• As DHS notes in Table 12 of this draft rule, the five-year average of cap-subject beneficiaries who were paid at the two lowest wage levels—both of which are set below the local median wage—was 83% for fiscal years 2020-2024.
• While the wage level is supposed to correspond to the H-1B worker’s education and experience, in practice the employer gets to choose the wage level and the government doesn’t verify whether the two reasonably correspond to each other.

H-1B workers are often exploited and some arrive to the United States in debt after paying hefty recruitment fees

H-1B workers sometimes pay hefty fees to labor recruiters, which means that many arrive virtually indentured to their employer, fearing retaliation and termination if they speak out about workplace abuses or unpaid wages. And widespread abuses have been documented—even human trafficking and severe financial bondage.13

H-1B workers do not have sufficient job mobility between employers

The H-1B visa itself is owned and controlled by the employer; an H-1B worker who is fired or laid off for any reason becomes deportable unless they can find new employment within 60 days. This arrangement results in a form of indentured servitude.14 During waves of mass layoffs in the tech industry, numerous stories have been publicly reported about the precarious situations and impossible choices that thousands of H-1B workers are left to face.15 Thus, H-1B workers have good reason to fear retaliation and deportation if they speak up about wage theft, workplace abuses, or other working conditions like substandard health and safety procedures on the job. While H-1B workers have the ability to switch jobs if they can find another employer willing to petition for a new visa for them (sometimes referred to as “portability”), and have 60 days to find a new employer if they are fired, these avenues are not straightforward enough and inadequate to mitigate the power that employers have over the right of their H-1B workers to remain employed in the United States.16 These protections should be improved.

H-1B workers are not allowed to self-petition for lawful permanent residence

The ability of H-1B workers to become lawful permanent residents and remain in the United States is entirely at the whim 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. To remedy this wrong, H-1B workers should be allowed to petition on their own for permanent residence after a short provisional period—no longer than 18 months—and independent from their employer.

Outsourcing companies are using the H-1B program to underpay H-1B workers, replace U.S. workers, and send tech jobs abroad

As we have documented in the annexed report and numerous other commentaries and testimonies, roughly half of the top 30 employers of H-1B workers in most years are not innovative high-tech firms like Apple and Google.17 Some of the biggest users of the H-1B visa are staffing firms that specialize in information technology (IT) and accounting and that pay H-1B workers the lowest wages legally allowed, and outsource their H-1B employees to third-party firms. Some of those firms also have a business model dependent on sending jobs offshore where labor costs are lower.

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.18 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 regulated utilities like Southern California Edison and Northeast Utilities—have laid off thousands of U.S. workers who were forced to train their own replacements. Eventually, many of the outsourced jobs that are filled by H-1B workers get moved offshore.19

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 Bloomberg and the New York Times, 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.20

Allowing outsourcing companies to hire H-1B workers lets employers utilize the immigration system to degrade labor standards for skilled workers—as a result, they should be barred from obtaining H-1B visas

The outsourcing/staffing model of employment generally may increase the incidence of 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 (if extreme) 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 subcontractor21 (in this case the H-1B outsourcing firm). Research shows that fissuring leads to a wage penalty for workers who are subcontracted, employed as temps, and work for staffing firms,22 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.

Analysis of the NPRM, “Weighted Selection Process for Registrants and Petitioners Seeking to File Cap-Subject H-1B Petitions”: Updating the H-1B lottery

We now turn to the NPRM, which proposes to update the random lottery allocation system for cap-subject H-1B petitions. The H-1B statute at 8 USC §1184(g)(3) requires that H-1B visas or statuses “be issued … in the order in which petitions are filed for such visas or status.” However, the practical realities of the H-1B annual numerical limit or “cap” and the way that USCIS receives petitions for H-1B visas, renders this impossible to implement in practice—leaving USCIS little choice other than to propose a rational alternative that is consistent with the broader goals and intent of the H-1B statute.

There is no feasible way for USCIS to meet the statutory requirement of allocating H-1B visas “in the order in which petitions are filed.”

At present, when demand for H-1B visas immediately exceeds the annual limit of 65,000 for cap-subject petitions and annual limit of 20,000 visas reserved for foreign graduates of U.S. universities who have obtained at least a master’s degree—USCIS allocates the visas by a random lottery where each petition has an equal chance of being approved, regardless of occupation, region, or that salary that will be paid to the H-1B worker. This process is utilized because, since fiscal year 2014, USCIS has received far more H-1B petitions that are subject to the annual cap in the first five days of the eighteen-month application window, than the 85,000 available slots for that fiscal year. Since so many petitions are submitted to USCIS nearly simultaneously, it is impossible for USCIS to determine the order in which the petitions were filed, a necessary prerequisite to adequately comply with the H-1B statute’s requirement that H-1B visas or statuses be allocated to employers “in the order in which [those] petitions [were] filed for such visas or status.” Therefore, USCIS allocates them at random via an electronic lottery, which appears to be a choice of convenience and not a well-reasoned response to a phenomenon unanticipated by the statute. The process has been in place since FY 2008.

However, considering the ambiguity of 8 USC §1184(g)(3) and the fact that the letter of the statute cannot be adhered to in practical terms, other interpretations about how to allocate H-1B visas can be equally reasonable so long as they are consistent with the intent of the H-1B statute.

The prevailing wage and its enforcement is the most important protection for labor standards in the H-1B program

DHS should measure the merits of any allocation scheme based on how well it advances the administrative efforts to meet the H-1B program’s intent, “to help employers who cannot otherwise obtain needed business skills and abilities from the U.S. workforce.”23 As we’ve described above, and elsewhere, one of the most effective ways for the H-1B program to meet this intent is to employ a labor market test that includes good faith recruitment from the U.S. domestic supply and a requirement that employers hire qualified applicants before an H-1B application is approved. Absent a labor market test, under current law, DHS and other agencies involved in H-1B governance, DOL, the State Department, and the Department of Justice (DOJ), should craft rules to move the program closer to fulfilling its intent. 

The current allocation scheme, based on a random lottery, undermines the government’s efforts to fulfill the program’s intent. Replacing it with a better scheme, as proposed by the NPRM, would improve program outcomes: better addressing labor shortages and increasing the overall skills of the H-1B worker population.

As DHS drafts its final rule, the agency should consider and rank alternate allocation schemes based on how well their outcomes meet the program’s purpose. Allocation schemes that do a better job at filling pressing labor shortages should be ranked higher. Since there is no direct way to measure the severity of labor shortages, proxy measures must be used. The best proxy for this purpose is the migrant worker’s wage premium compared to comparable U.S. workers. The larger the wage premium, the more likely it is that the migrant worker brings specialized skills that cannot otherwise be obtained from the U.S. workforce. Migrant workers earning larger premiums are more likely to complement, rather than compete with, U.S. workers.

The prevailing wage is the most important worker protection in the H-1B program and its effective administration is essential. The H-1B program laws and rules specify that the prevailing wage for each position is calculated using three attributes: (1) occupational classification; (2) worksite geography; and (3) level. The employer selects these three variables based on the position description they are trying to fill, not the actual worker’s skills. In virtually all Labor Condition Application (LCA) filings, employers use the Office of Foreign Labor Certification (OFLC) Occupational Employment and Wage Statistics (OEWS) data or a private wage survey to determine the position’s prevailing wage, rather than requesting that one be provided by the National Prevailing Wage Center, as employers are permitted to do.

Allowing employers to interpret the key factors that determine the prevailing wage introduces errors. First, employers interpret the occupation and level differently, even in cases when they position is the same. Further, granting employers substantial front-end discretion over choices when they have significant conflicts of interest invites widespread non-compliance, which can only be remedied through strong back-end enforcement. But the government’s back-end enforcement has been nonexistent. DHS’ worksite visits and Requests for Evidence may have improved compliance with (2) worksite geography. However, no government agency ever ensures that the employer’s choice of (1) occupational classification and (3) level, accurately reflects the position being filled, or the H-1B worker’s actual activities in the position. Any employer that misclassifies the occupation or level, or both, significantly undermines program integrity, regardless of whether the misclassification is intentional or inadvertent. Public disclosure data indicate that some employers are likely exploiting these vulnerabilities on a mass scale, stealing wages from H-1B and U.S. workers alike.

Examples from existing H-1B data demonstrate the failure of the government’s prevailing wage regulations in achieving their raison d’être, which is protecting workers, labor standards, and the integrity of the labor market.

Take this first example which comes from one of Microsoft’s H-1B employees, which can be found at DOL LCA Case Number I-200-23087-882196, and which was selected and approved by USCIS for an H-1B visa in the FY 2024 lottery.24

Table 1

Microsoft, one of the top ten H-1B employers, placed a 35-year-old worker with a doctorate degree into a position it classified at Wage Level 1. Based on their age, the H-1B visa recipient likely has at least 7 years of experience in addition to holding a doctoral degree. Yet, they are filling an entry-level position, one that, according to DOL’s prevailing wage guidance, would be appropriate for an “internship” or a “worker in training.”25 This appears to be an example of wage-level misclassification that can only be remedied through tighter rules and stronger enforcement.

The second example is for one of Deloitte’s H-1B positions, which can be found at DOL LCA Case Number I-200-23258-349652, which was certified by DOL in FY 2023.26

Table 2

Deloitte Consulting, another one of the top ten H-1B employers, classified its Senior Consultant job in Philadelphia as an entry-level position, one that, according to DOL’s prevailing wage guidance, would be appropriate for an “internship” or a “worker in training.” Classifying a Senior Consultant at Wage Level I directly conflicts with DOL guidance that states that job titles with “‘senior’ (e.g., senior programmer)” should be classified at Wage Level III. Yet, the DOL certified the LCA despite the employer’s apparent wage-level misclassification.

The Deloitte case also highlights problems with the wage surveys used to source prevailing wages. In this case, the corresponding prevailing wage for Standard Occupational Code (SOC) 15-1299.08 (Computer Systems Engineers/Architects) is extremely low by any benchmark. The National Association of Colleges and Employers (NACE), a professional association of university-based career services officers and business campus recruiters, conducts regular wage surveys of recent bachelor’s degree graduates across the country. For the class of 2024, the average starting salary for computer and information sciences majors was $88,907.27 The DOL H-1B prevailing wage of $61,838 is $27,000 less, offering Deloitte a 30% discount over the market rate for recent graduates.

This demonstrates how lax DOL oversight and guidance on employers’ occupational code choices can lead to market distortions. Had Deloitte selected SOC 15-1252, Software Developers, which has a similar occupational profile, the prevailing wage rate it would have been required to pay was 30% higher.

Given these operational realities, DOL and DHS should make it a priority to implement a comprehensive back-end compliance system that includes random audits, to validate that the occupation and prevailing wage level accurately match the H-1B worker’s actual activities in the position. Given DOL’s expertise in labor standards enforcement and occupational duties, and the Wage and Hour Division’s (WHD) primary role in enforcing the promises made by employers on LCAs, DOL should take the lead on such compliance efforts, with DHS possibly partnering in support of DOL. Any enforcement of prevailing wage levels, including random audits, will require additional funding and staffing for DOL. As a result, the administration should make a request to Congress for new funds to hire additional WHD investigators. (A recent report shows that the number of WHD investigators is at 611, an all-time low,28 likely due in part to the administration’s funding and staffing cuts at DOL.)

Accurately identifying prevailing wages is also critical to ensuring the effectiveness of the allocation scheme. The government has recently announced significant efforts, such as the forthcoming DOL proposed rule to update prevailing wage levels, as well as Project Firewall, an enforcement initiative, to improve program integrity. While we believe such initiatives may be a positive step, they remain only aspirational—and may be difficult to implement given significant DOL funding and staffing cuts, and we worry about DOL following through, given DOL’s actions on other fronts that we are critical of—thus our analysis is based on the current state of program implementation.

A successful H-1B allocation scheme depends on accurately identifying and labeling prevailing wage levels and occupations

The key factor for the allocation scheme is determining the foreign worker’s wage premium, which is calculated as the difference between the H-1B worker’s wage and that of a similarly situated U.S. worker. Identifying the H-1B wage is straightforward since the proposed rule requires employers to submit the proffered wage in their electronic registration, rather than just the wage level selected at the LCA level. The imprecision of the employer’s choice of both occupation and level makes benchmarking against similar U.S. workers problematic since the agency cannot ensure they are, in fact, similar.

The proposed rule requires employers to map their proffered wage to a wage level based on the SOC and geography. This step eliminates the most problematic element in the prevailing wage process, i.e. the employer’s interpretation of the position’s level. However, the employer’s interpretation of the occupation and the possibility of its misclassification remain problematic. The interpretation of occupations is non-standard, and different firms would likely map the same exact position to various occupations. For example, firms may interchange a relatively low wage six-digit level occupation, such as 15-1211 Computer Systems Analysts, which at the national level has a Level III wage of $103,790, with the higher wage of 15-1252 Software Developers, which has a Level III wage of $133,080 at the national level.29 An employer paying an H-1B worker $104,000 would be Wage Level III if they select the position of Computer Systems Analyst, but Level I if they identified the position as Software Developer.

The agency can mitigate the adverse effects of occupational misclassification on the proposed allocation scheme by having employers use a four-digit, instead of a six-digit, SOC to identify the wage level for registration purposes. Employers would select the six-digit occupation with the highest median wage within its four-digit SOC family, and then map their proffered wage to the corresponding wage level. For example, applications with any computer occupation (15-12XX) would map their wage levels to 15-1221, Computer and Information Research Scientists. Correcting occupational misclassification this way is analogous to the proposed rule’s handling of multiple worksite locations to, “prevent gaming of the weighted selection process…”30

Using a wage level prioritization allocation for H-1B visas is reasonable and consistent with the H-1B statute, and it should be the preferred method for allocation

The program statute states that the visa is open to any “specialty occupation” and that prevailing wages should be adjusted based on “the occupational classification in the area of employment.”31 Congress wrote this language in recognition that the wage structures of occupations vary, e.g., accountants are typically paid lower wages than software developers, and that the cost of living varies across geographies, e.g., the California Bay Area has a much higher cost of living than Cleveland, Ohio. The allocation scheme should favor registrations that offer the highest wage premium—as compared to the highest wage amount—measured after controlling for occupation and geography.

USCIS’s proposed rule in 2020 and final rule in 2021 would have achieved this by allocating H-1B petitions first to employers who file petitions that pay Level 4 wages—the highest H-1B wage level—and then to petitions with the lower wage levels in descending order (Level 3, Level 2, and then Level 1).32 Since higher wages are a valid proxy for higher skills in this context,33 the proposed allocation system by wage levels would have resulted in the highest-skilled and best paid applicants with in an occupation being selected for H-1B petitions from the available annual pool of petitions. In fact, this formulation continues to be our preferred allocation scheme for H-1B petitions, although we would modify it to include the requirements from the current NPRM that employers list the proffered wage level on their registration filing that would then be mapped to the appropriate wage level, and when a position is located in multiple geographic locations, using the lowest wage level among the locations as the proffered wage. Had it gone into effect, the rule would have resulted in the selected H-1B workers being paid at higher wage levels, and those higher wages would have helped safeguard U.S. wage standards in major H-1B occupations like information technology and other computer occupations. This is essential given that workers in those occupations have seen virtually no real wage growth since the late 1990s.34 Wage levels are an appropriate proxy for skill since they account for wage variations by geographic location (higher versus lower cost areas) and occupation.

The statutory language at 8 USC §1184(g)(3) is ambiguous and silent as to how visas should be allocated if they cannot be issued in the order that they were filed, and it offers no additional insight into what Congress meant by “filed.” The filing of an H-1B petition is the most reasonable explanation of what “filed” means, but since allocating H-1B visas in the exact order in which they were filed is rendered impracticable by virtue hundreds of thousands of petitions being submitted in one day or over the course of a few days, creating an allocation scheme based on wage levels is more reasonable than creating a random lottery. In addition, a wage level-based allocation scheme is reasonable because it is consistent with the intent of the H-1B visa statute, which is to provide “American businesses” with “highly skilled, specially trained personnel to fill increasingly sophisticated jobs for which domestic personnel cannot be found”35 (emphasis added). Since employers are not required to test the labor market for available U.S. workers before hiring H-1B workers (as discussed in section I), prioritizing higher-skilled, higher-paid H-1B workers also ensures that the employers facing a true shortage of talent—as indicated by the higher wage levels they are willing to pay—have a better chance at obtaining an H-1B visa, which also furthers the goals set out in the statute.

The proposed weighted lottery is reasonable and an improvement from the status quo but will not achieve an ideal outcome

With all of that being said, including our preferred proposal for an allocation scheme discussed in the preceding section, we nevertheless generally support DHS’s proposed weighted allocation scheme because it is reasonable and a measurable improvement over the current scheme in meeting the H-1B program’s intent. It will shift the total number of H-1B petitions that are selected where employers will be required to pay wage rates that are higher than the local median wage for the occupation (i.e., Level 3 and Level 4 wages).

Under the current random allocation scheme, DHS shows in Table 13 of the NPRM that petitions at every wage level have a 29.59% probability of being selected. However, given that so many more petitions have wages promising to pay Level 1 and Level 2 wages, the random lottery results in an outcome where 83% of H-1B beneficiaries selected are at Level 1 and Level 2, as shown in Table 12, with only 17% selected at Level 3 or 4. DHS notes that moving to a weighted lottery would result in the probability of the wage levels being selected shifting towards an increasing the likelihood that petitions at Level 3 and Level 4 are selected: “15.29 percent [probability] for level [1], 30.58 percent for level [2], 45.87 percent for level [3], and 61.16 percent for level [4].”36

Assigning greater weight to petitions at Level 3 and Level 4 will bring implementation of the H-1B program closer to the intent of the original statute, while still retaining a high degree of randomness and permitting significant numbers of petitions at Level 1 and Level 2 to be selected. An allocation process that uses wage levels, rather than a prioritization scheme that uses individual salary levels, will also likely result in H-1B petitions being allocated among a broad mix of occupations and regions, which we believe is a preferred outcome—while also prioritizing petitions for the most highly-skilled workers in each of the occupations.

However, we believe DHS should consider and model other alternatives to H-1B petition allocation that they believe are reasonable, lawful, and help align the H-1B program with the intent and goals of the statute. Other allocation methodologies have also been proposed publicly by advocates; we would welcome discussion, modeling, and analysis of those proposals by DHS.

But given the information that we have available to us now, as noted in the preceding section, we believe that the wage level prioritization in DHS’s proposed rule in 2020 and final rule in 2021 would be preferable. By first allocating H-1B petitions to employers who file petitions that pay Level 4 wages and then to petitions with the lower wage levels in descending order, the result would be that the highest-skilled and best paid applicants within an occupation would be selected for H-1B petitions.

Proposals for a prioritization scheme based solely on compensation levels will favor a small number of occupations and regions, and should be rejected

Some advocates have called for an H-1B allocation proposal that ranks petitions by actual salary level—rather than a wage level that accounts for skill, occupation, and geography—with the latest being published in September 2025 by the Institute for Policy.37 The author of the proposal, Jeremy Neufeld, argues that DHS’s weighted lottery will result in IT outsourcing firms gaining 8% more H-1B visas, that F-1 visa graduates would receive 7% fewer visas, and that the H-1B median salary would increase by just 3%.

Given our understanding of Neufeld’s proposal and modeling, his analysis does not exactly match DHS’s current proposal, calling into question his results. Neufeld appears to have utilized the wage levels selected by employers at the LCA level—rather than what DHS proposes—which is to take the “proffered” wage; i.e. the actual salary that the employer intends to pay the beneficiary—and use that to determine the appropriate wage level listed on the registration that will be weighted, according to the OEWS wage levels for the occupation and region. We know from our own reviews of H-1B LCA and petition data that in many cases the actual salary proffered by employers would correspond to a higher wage level according to OEWS wage levels by occupation and region. (In other words, an employer may select Level 2 but pay a wage that actually corresponds to Level 3 or 4.) Why this occurs reveals how the administrative process is flawed, but the fact remains that any modeling of DHS’s weighted lottery would require mapping proffered wages to wage levels to achieve a reliable result.

We believe that Neufeld’s proposal based on actual salary levels would have certain consequences, not all of which are accounted for in his September 2025 publication or an earlier publication that discusses multiple proposals for an H-1B allocation scheme, including one based solely on “compensation ranking.”38 In that report, Neufeld concedes that a compensation-based ranking of petitions would result in more H-1B petitions being awarded to employers in higher-cost regions of the United States. Those regions would mostly include the urban areas on both coasts of the United States, where the cost of living is higher.

The goal of the H-1B program is to fill labor shortages. Occupational shortages/surpluses are not measured by absolute wages, and a high absolute wage for a specific occupation is not a reliable indicator of a labor shortage. Instead, as a 2001 National Academies of Sciences, Engineering, and Medicine study explains, shortages are observable: “When demand exceeds supply in a particular occupation, compensation tends to rise relative to compensation in other occupations that require similar education, effort, and working conditions” (emphasis added).39

In his analysis, Neufeld does not state explicitly that a larger share of H-1B petitions would go to certain occupations. We believe those are most likely to be computer and engineering occupations, which will crowd out petitions for H-1B workers who would be employed in occupations like teachers, attorneys, accountants, and doctors (especially doctors employed in rural areas). In other words, a compensation-based ranking would mostly benefit technology companies like Google, Microsoft, Amazon, and Meta, that employ H-1B workers in computer occupations who reside on the coasts of the United States.

Ample evidence shows that computer occupations are not experiencing a labor shortage, so prioritizing their allocation would undermine rather than advance the H-1B program’s goals. Wage growth for computer occupations has been stagnant, technology firms have been laying off skilled software employees by the tens of thousands, and recent U.S. computer science graduates are facing the worst job market in a generation, with record levels of unemployment and underemployment, just as U.S. computer science students earn degrees in their highest numbers.40 The latter fact is especially salient since the vast majority of H-1B approvals, 83% according to Table 12 in the NPRM, are for Level 1 and 2 positions, the very jobs that the large surplus of computer scientists in the U.S. should fill. Neufeld’s proposed scheme would prioritize computer occupations—the very job market experiencing a labor surplus rather than a shortage.

Neufeld proposes accounting for the geographical outcome by “adjusting for regional price parity can address geographic heterogeneity without significantly reducing the economic benefits of compensation-based ranking,” and further suggests that DHS make age adjustments, because compensation-based ranking “may not account for the full future potential and lifetime contributions of younger workers who start at lower salaries but have high growth potential.” The age adjustment proposal is not expounded on further, so we are not sure how it would operate in practice.

We have two reactions to this. First, we believe that an allocation scheme solely based on compensation would be clearly inconsistent with the H-1B statute on its face, and thus require Congressional action (as opposed to a weighted or wage level lottery that can be implemented by DHS regulation). The H-1B statute at 8 U.S.C. § 1182(n)(1)(A)(II) clearly states that the H-1B prevailing wage should take into consideration “the occupational classification in the area of employment,” unless it is based on a wage that is already being paid to an employer’s similarly situated U.S. (non-H-1B) employee. Using wage levels that reflect occupation and region are clearly consistent with the statute, and thus more likely to be upheld if challenged in court. A compensation-based ranking scheme reflects neither, and while Neufeld attempts to account for the “area of employment” language in the statute with a suggestion of “adjusting for regional price parity,” he does not explain how that would work in practice—and in any case, it would likely insert an additional and unnecessary layer of complexity to the H-1B registration and allocation process.

Second, we believe that an H-1B program that permits a broader range of occupations is preferable, rather than one that mostly awards H-1B petitions to tech companies. Employers in various industries need a viable pathway to hire skilled talent from abroad and should thus not be closed off from the U.S.’s main visa program that could allow them to do so. We believe that all occupations and contributions of workers have value—and that the H-1B program was designed to permit employers to hire the most skilled and talented workers within a broad range of occupations and industries—not simply as a “computer visa” that almost exclusively benefits tech and information technology companies.

Early career foreign graduates of U.S. universities should have a pathway to employment in the United States that leads directly to a green card

Numerous other commenters, including Neufeld, raise the concern about wage-level-based allocation schemes crowding out younger and early career migrant workers who are just starting their careers. We agree that skilled and talented younger and early career workers, including many of those who graduate from top U.S. universities, deserve a pathway to employment in the United States. However, the H-1B program was created to help employers fill labor shortages with skilled workers, not as an early career development program for foreign students that leaves them in an indentured status for years, if not decades.

There are better proposals that would allow employers to recruit and hire foreign graduates of U.S. universities, including the Keep STEM Talent Act, which would put foreign students on a direct path to a green card if they have a job offer from a U.S. employer that pays the local median wage.41 Nevertheless, early-career workers are not excluded from the H-1B program and would have a legitimate opportunity for an H-1B visa under the weighted allocation, even if they were paid a Level 1 or Level 2 wage. Many early career graduates who are presently paid at Level 1 and Level 2 wages, especially those with advanced degrees, should be offered Level 3 and Level 4 wages, which would make them even more likely to be selected through a weighted allocation scheme. And employers who are currently underpaying their H-1B employees may also change their behavior and offer higher wages to increase their chances in the weighted lottery.

It should also be noted that advocates for more H-1B petitions being approved at below-median wage levels ignore current employment realities, wherein recent college graduates in computer occupations are experiencing unemployment rates that are “more than double the unemployment rate among recent biology and art history graduates, which is just 3 percent,” as the NY Times recently reported. The Times cited statistics from the Federal Reserve Bank of New York—noting that “[a]mong college graduates ages 22 to 27, computer science and computer engineering majors are facing some of the highest unemployment rates, 6.1 percent and 7.5 percent respectively”42—and pointed to examples of skilled graduates applying to hundreds of jobs with little luck. Entry-level H-1B jobs at wage levels 1 and 2 are exactly the types of opportunities that should be available first to U.S. workers, including both U.S.-born citizens and permanent immigrants with green cards. Yet, the H-1B program undermines their opportunities by allowing employers to underpay temporary migrant workers with a precarious immigration status that employers can exert an extraordinary level of control over.

The H-1B random lottery benefits outsourcing companies that pay low wages and game the system, making it more difficult for start-up and direct-hire firms to hire H-1B workers

The current random lottery allocation may give each petition equal odds, but it does not give each firm equal odds. The main beneficiaries of the current random lottery allocation process have been H-1B employers that are staffing firms, which are more likely to pay H-1B workers at the lowest wage rates.43 The H-1B staffing firms use an outsourcing model to send their H-1B employers to third-party worksites, and earn their profits by undercutting local wage rates for college-educated workers. These companies, as Bloomberg and the New York Times reported, “have obtained many thousands of the visas — which are limited to 85,000 a year — by learning to game the H-1B system without breaking the rules.”44 The “system” the Times is referring to here is the H-1B random lottery.

Real-world scenarios illustrate how the random lottery has favored outsourcing firms over those seeking truly skilled workers. The outsourcing firms have most of their workforce in low-cost countries such as India, and employ hundreds of thousands of workers. If an outsourcing firm seeks 1,000 approved H-1B petitions in any fiscal year, it will submit 3,000 petitions on behalf of its workers located in India. Since the odds have been roughly one-in-three, the random lottery rewards the outsourcing firm with the 1,000 approved petitions it sought. Since many of the workers the outsourcing firms seek to hire have relatively lower skills—as evidenced by being assigned wage rates that are almost exclusively at Level 1 and Level 2—they are largely interchangeable workers, and it matters little to the outsourcing firms which specific one thousand workers are selected. Compare this to a start-up firm seeking to hire a specific engineer with a truly special skill set that it is willing to pay a Level 4 wage to obtain; the start-up firm has only a 33% percent chance of winning the lottery. The outsourcing companies, on the other hand, flood the lottery with multiple applications to obtain thousands of visas per year, which crowds out start-up firms and employers with legitimate needs that employ workers directly and pay H-1B workers at higher wage levels.

It’s important to emphasize that the DHS rule that moved to a beneficiary-centric registration process to reduce lottery abuse perpetrated primarily by small IT staffing companies did nothing to eliminate the abuse described above by outsourcing firms. DHS must enforce the requirement that employers have a bona fide job for the prospective H-1B worker and begin rejecting and revoking petitions in cases where employers maintain large numbers of “travel-ready” and “visa-ready” workers for speculative positions.45

USCIS should consider alternate approaches in case of a legal challenge.

Some commenters and critics of the proposed H-1B allocation process may contend that the statutory language at 8 USC §1184(g)(3) does not authorize DHS to update the H-1B allocation process by wage level as detailed in the proposed rule, because DHS would no longer be issuing H-1B visas in the order in which the petitions were filed. While we disagree with this assessment as discussed herein, DHS should nevertheless explore alternative methodologies for wage-based allocation that it can propose in a new rulemaking if the proposed rule is the subject of a successful statutory challenge in federal court.

One simple new methodology, for example, could consist of having staggered filing deadlines for petitions by wage levels. 8 USC §1184(g)(3) is silent as to whether there can only be one filing period or whether there can be multiple. Therefore, USCIS could have a first filing period, where only petitions with jobs paying Level 4 are considered. Once all the Level 4 petitions are submitted and approved, then a second filing period at a later date could be set to receive only petitions with jobs paying Level 3 wages. After those are collected and approved, if there are any visas remaining under the H-1B cap, then a filing period for Level 2 wages would be next, and finally a filing period for Level 1. With a process like this, the cap-subject H-1B petitions in a given fiscal year would not all be submitted at once, thereby allowing USCIS to adjudicate and allocate petitions “in the order in which” they were filed, as the statute requires. If there end up being more petitions than available H-1B slots during a filing period for a particular wage level, USCIS could conduct a “mini-lottery” in order to randomly allocate the petitions within that wage level.

Fixing the H-1B program requires improving the H-1B prevailing wage methodology

As we have discussed in this comment, a reasonable and fair H-1B prevailing wage methodology that truly reflects market rates for H-1B occupations is essential to reforming the H-1B program and must exist in tandem with any allocation process that can adequately safeguard wages and working conditions. At present, the H-1B prevailing wage methodology is neither reasonable nor fair.

Section 4 of President Trump’s recent proclamation directs the Secretary of Labor to initiate a rulemaking process to revise the H-1B prevailing wage levels.46 We hope to see DOL’s proposal soon. The current methodology sets H-1B wages based on DOL survey data by occupation and local area, setting them at specified percentile levels in the distribution of surveyed wages in the OEWS, which have ben chosen by DOL. The current wage levels are set at arbitrarily low levels (i.e. percentiles), leading to the vast majority of H-1B workers being paid at wage rates that are below the local median wage for the occupations they fill (as discussed at length in this comment). DOL in 2020 finalized a rule to amend the H-1B prevailing wage levels, but it was blocked in federal court on procedural grounds, and the Biden administration DOL considered proposing its own updated H-1B methodology soon thereafter, even soliciting comments from the public on it, but the Biden DOL ultimately never introduced its own proposed rule. 

DOL has the requisite legal authority to attempt again to modify the H-1B prevailing wage levels to appropriate rates that protect U.S. wage standards and prevent adverse effects caused by the H-1B program. For far too long, the H-1B wage levels have been set at an artificially low level that undercuts U.S. wage standards—and we have called on both Republican and Democratic administrations to fix the problem using their executive authority. It is reasonable for DOL to do so now, and we call on DOL to update the prevailing wage levels so that Level 1 is no lower than the local median wage for the occupation, i.e. the current Level 3 wage.

Fixing the H-1B program requires increased and improved labor standards enforcement and adequate funding and staffing at worker protection agencies like DOL

As we have already noted, adequate reform of the H-1B program that improves wages and working conditions for all workers requires robust labor standards enforcement, in particular adequate oversight from the Wage and Hour Division (WHD) at DOL. Unfortunately, the current outlook for labor standards enforcement is bleak.

Federal budgets for the past decade at least have heavily prioritized immigration enforcement over labor standards enforcement, with nearly 14 times as much being appropriated for immigration enforcement ($30.2 billion) as compared to the amount appropriated for labor standards and worker protection agencies ($2.2 billion) in 2023.47 The 2025 budget bill passed by Republican legislators through reconciliation has dwarfed this disparity, giving $170 billion to the administration to carry out its immigration enforcement activities, while failing to appropriate even one additional cent to worker protection agencies. This, at a time when worker protection agencies are already underfunded and understaffed.

Figure A shows that, in inflation-adjusted 2023 dollars, WHD—the primary agency responsible for enforcing the wage promises made by employers in H-1B LCA filings—had a budget in 2006 of $250 million, and in 2023, $260 million—an increase of just $10 million over nearly two decades. As Figure A also shows, this trend has been consistent with appropriations for two other key worker protection agencies, the Occupational Safety and Health Administration (OSHA) and the National Labor Relations Board (NLRB). At both OSHA and the NLRB, inflation-adjusted appropriations were significantly lower in 2023 compared with 2006.

Figure A

In addition to funding levels that have barely kept up with inflation at WHD—the primary agency tasked with protecting labor standards in the H-1B program—the number of WHD investigators that the agency employs is at an all-time low. Those investigators are also primarily responsible for ensuring that federal wage and hour laws are obeyed by employers across all 50 states and U.S. territories, and protecting the roughly 170 million workers in the U.S. labor market. Figure B shows that there were only 733 WHD investigators at the end of 2023 to enforce all federal wage and hour laws, 79 fewer than in 1973, the first year for which data are available, and 499 fewer than the peak year of 1978 when there were 1,232 WHD investigators. By May 2025, just four months into the Trump administration, the number of WHD investigators had dropped to 611, a new historic low. While the number of WHD investigators is now half of what it was at its peak in 1978, the number of workers those investigators have a mandate to protect has tripled, and the number of establishments subject to WHD enforcement has quadrupled.48

Figure B

Having already cut at least half a billion dollars from DOL funding, requiring the agency to close regional offices that enforce wage and hour laws,49 the administration is seeking even further decreases in labor standards enforcement funding and staffing, with a reported goal of cutting 30% of funding from DOL.50 The administration has fired or forced out leaders and career staff at worker protection agencies and cut budgets almost indiscriminately, severely hampering the ability of federal agencies to protect wages and working conditions. And there is now a likely pause in labor and employment law enforcement because of the government shutdown.

If the administration is serious about creating new and improved rules for the H-1B program and enforcing them through new initiatives like Project Firewall, then they must allow DOL to play a lead role and have deconfliction measures in place with DHS to prioritize protecting worker interests over immigration enforcement goals. The administration must also call on Congress to drastically increase budgets for key worker protection agencies, reinstate staff at DOL that has been fired or laid off, and ramp up hiring of new staff. In addition, DHS should offer temporary immigration status protections coupled with work authorization to protect migrant workers who report their employers’ violations of labor and employment laws from retaliation, which will also encourage them to come forward and assist labor agencies in holding H-1B employers accountable when they break the law.

Conclusion

For years, migrant worker advocates, unions, academics, and both Democratic and Republican lawmakers have pointed out the need to change employer incentives by shifting away from the H-1B random lottery towards a true prioritization process in which visas are issued to employers seeking to hire and retain skilled workers by paying them fair wages that reflect market rates. We have urged the Administration and the Congress to explore alternatives to the lottery system that would directly prioritize wages and skills, and thus we support this regulatory effort to implement this change via a weighted lottery.

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 it is a pathway that has serious deficiencies when it comes to the labor and employment rights of migrant workers and preserving U.S. labor standards. By issuing this proposed rule, DHS has taken an important first step towards fixing a system that has rewarded low-road employers with a business model that hinges on underpaying migrant workers. But as these comments suggest, even more should be done to improve the regulations that should act as safeguards to protect H-1B workers and similarly situated U.S. workers. H-1B workers should be paid fairly, have equal rights, and have an opportunity to become lawful permanent residents within a reasonable period of time. The administration should also take further action on other visas and in other areas to lift wage standards and improve working conditions for all workers, regardless of immigration status.

Regards,

Daniel Costa, Esq.
Director of Immigration Law and Policy Research
Economic Policy Institute

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

1. 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.

2. See, Department of Labor, Employment and Training Administration, Strengthening Wage Protections for the Temporary and Permanent Employment of Certain Aliens in the United States, Interim Final Rule DOL Docket No. ETA-2020-0006, RIN: 1205-AC00, October 8, 2020; see also Daniel Costa, “EPI comments on DOL wage level methodology for H-1B visas and permanent labor certifications for green cards,” Economic Policy Institute (public comments), November 9, 2020.

3. U.S. Citizenship and Immigration Services, Department of Homeland Security, Strengthening the H-1B Nonimmigrant Visa Classification Program, CIS Docket No. 2658-20, DHS Docket No. USCIS-2020-0018, RIN: 1615-AC13, October 8, 2020.

4. U.S. Citizenship and Immigration Services, Department of Homeland Security, Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions, CIS No. 2674-20; DHS Docket No. USCIS-2020-0019, RIN 1615-AC61, 85 Fed.Reg. 69236 (November 2, 2025)/

5. Michelle Hackman, “Federal Judge Strikes Down Trump’s H-1B Visa Rules on Highly Skilled Foreign Workers,” Wall Street Journal, December 1, 2020.

6. Presidential Candidate Joe Biden, immigration plan; previously available at https://joebiden.com/immigration/ (archived and on file with authors).

7. See, Sec. 104. H-1B Visa Allocation in S. 2928, H-1B and L-1 Visa Reform Act, 119th Congress (2025-2026) and H.R. 6993, H-1B and L-1 Visa Reform Act, 116th Congress (2019-2020).

8. Dave Jamieson, “Trump is hoping to deliver a parting gift to the agriculture lobby: an effective wage cut for farmworkers,” Huffington Post, November 9, 2020.

9. 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, U.S. Department of Labor, 90 Fed. Reg. 19365 (October 2, 2025). See discussion in Lauren Kaori Gurley, “Trump administration says immigration enforcement threatens higher food prices,” Washington Post, October 11, 2025; David Dayen, “Trump Labor Department Says His Immigration Raids Are Causing a Food Crisis,” The American Prospect, October 8, 2025.

10. Eric Fan, Zachary Mider, Denise Lu, and Marie Patino, “How Thousands of Middlemen are Gaming the H-1B Program,” The Big Take, Bloomberg, July 31, 2024.

11. U.S. Bureau of Labor Statistics, “15-0000 Computer and Mathematical Occupations (Major Group),”Occupational Employment and Wage Statistics, May 2024, U.S. Department of Labor.

12. Authors’ analysis of the LCA Programs disclosure data files for fiscal year 2024, Office of Foreign Labor Certification, Performance Data, Employment and Training Administration, U.S. Department of Labor.

13. See, for example, “Techsploitation,” Reveal News, The Center for Investigative Reporting, and Farah Stockman, “Teacher Trafficking: The Strange Saga of Filipino Workers, American Schools, and H-1B Visas,” Boston Globe, June 12, 2013.

14. Christopher Lapinig, “How U.S. Immigration Law Enables Modern Slavery,” The Atlantic, June 7, 2017.

15. See for example, Erika Werner, “High-skilled visa holders at risk of deportation amid tech layoffs,” Washington Post, February 24, 2023.

16. For a discussion about H-1B portability in practice, see Daniel Costa, “Is portability a panacea?

Changing employers in US temporary migration programmes,” chapter 8 in Christiane Kuptsch and Fabiola Mieres (eds.), Temporary labour migration: Towards social justice? edited volume, International Labour Organization, February 2025.

17. 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; Daniel Costa and Ron Hira, “Tech and outsourcing companies continue to exploit the H-1B visa program at a time of mass layoffs: The top 30 H-1B employers hired 34,000 new H-1B workers in 2022 and laid off at least 85,000 workers in 2022 and early 2023,” Working Economics blog (Economic Policy Institute), April 11, 2023.

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

19. 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.

20. See for example, Eric Fan, Zachary Mider, Denise Lu, and Marie Patino, “How Thousands of Middlemen are Gaming the H-1B Program,” The Big Take, Bloomberg, July 31, 2024; Julia Preston, “Large Companies Game H-1B Visa Program, Costing the U.S. Jobs,” New York Times, November 10, 2015.

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

22. 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.

23. Wage and Hour Division, “H-1B Program,” U.S. Department of Labor, n.d. (last visited October 23, 2025).

24. The source for this table is USCIS Form I-129 petition data obtained by Eric Fan, a reporter with Bloomberg; see BloombergGraphics / 2024-h1b-immigration-data at GitHub, and the source for LCA data is LCA Programs disclosure data files for fiscal year 2024, Office of Foreign Labor Certification, Performance Data, Employment and Training Administration, U.S. Department of Labor.

25. See DOL prevailing wage guidance at Employment and Training Administration, “Prevailing Wage Determination Policy Guidance: Nonagricultural Immigration Programs,” Revised November 2009, U.S. Department of Labor.

26. Source for LCA data is LCA Programs disclosure data files for fiscal year 2023, Office of Foreign Labor Certification, Performance Data, Employment and Training Administration, U.S. Department of Labor.

27. Kevin Gray, “Average Starting Salary for Class of 2024 Shows Mild Gain,” National Association of Colleges and Employers, August 26, 2025.

28. Jake Barnes, Janice Fine, Daniel J. Galvin, Jenn Round, Hana Shepherd, To Help U.S. Workers, We Need Labor Standards Enforcement, Not Mass Deportations, Data Brief, Workplace Justice Lab, Rutgers University, May 2025.

29. Occupational Employment and Wage Statistics, 15-1211 Computer Systems Analysts and 15-1252 Software Developers, Industry: Cross-industry, Private, Federal, State, and Local Government, May 2024, U.S. Bureau of Labor Statistics, U.S. Department of Labor.

30. U.S. Department of Homeland Security, Weighted Selection Process for Registrants and Petitioners Seeking To File Cap-Subject H-1B Petitions, Notice of Proposed Rulemaking, 90 Fed. Reg. 45992-3 (September 24, 2025); see in particular this passage: “If the H-1B beneficiary would work in multiple locations, or in multiple positions if the registrant is an agent, the registrant would select the box for the lowest equivalent wage level among the corresponding wage levels for each of those locations or each of those positions and would list the location corresponding to that lowest equivalent wage level as the area of intended employment.”

31. S.358 – Immigration Act of 1990, U.S. Public Law 101-649.

32. U.S. Department of Homeland Security, Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions, Notice of Proposed Rulemaking, 85 Fed. Reg. 69236 (November 2, 2020); Modification of Registration Requirement for Petitioners Seeking To File Cap-Subject H-1B Petitions, Final Rule, 86 Fed. Reg. 1676 (January 8, 2021).

33. 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.

34. See Analysis of Bureau of Labor Statistics data by Hal Salzman and Khudodod Khudododov, “It Ain’t Pretty: Wage growth has been low or stagnant for many occupations. Coding skills offer little reprieve,” Figure published in Rachel Rosenthal, “Tech Companies Want You to Believe America Has a Skills Gap,” Bloomberg Opinion, August 4, 2020; Hal Salzman, Daniel Kuehn, and B. Lindsay Lowell, Guestworkers in the high-skill U.S. labor market: An analysis of supply, employment, and wage trends, Economic Policy Institute, April 24, 2013; Ron Hira, “Is There Really a STEM Workforce Shortage,” Issues in Science and Technology, Col XXXVIII, No. 4, Summer 2022.

35. 85 Fed. Reg. 69238, citing H.R. Rep. 101–723(I) (1990), as reprinted in 1990 U.S.C.C.A.N. 6710, 6721 (stating ‘‘The U.S. labor market is now faced with two problems that immigration policy can help to correct. The first is the need of American business for highly skilled, specially trained personnel to fill increasingly sophisticated jobs for which domestic personnel cannot be found and the need for other workers to meet specific labor shortages’’).

36. U.S. Department of Homeland Security, Weighted Selection Process for Registrants and Petitioners Seeking To File Cap-Subject H-1B Petitions, Notice of Proposed Rulemaking, 90 Fed. Reg. 46006 (September 24, 2025).

37. Jeremy Neufeld, The “Wage Level” Mirage: How DHS’s H-1B proposal could help outsourcers and hurt US-trained talent, Institute for Policy, September 24, 2025.

38. Jeremy Neufeld, Talent Recruitment Roulette: Replacing the H-1B Lottery: We could almost double the economic value of the H-1B program without changing the number of visas, Institute for Policy, January 17, 2025.

39. National Research Council, Building a Workforce for the Information Economy, The National Academies Press (Washington, DC).

40. For an examination of occupational shortages, see Ron Hira, “Is There Really a STEM Workforce Shortage,” Issues in Science and Technology, Col XXXVIII, No. 4, Summer 2022. For technology layoffs, see Layoffs.fyi, a website that tracks layoffs. For the state of the computer job market for recent graduates see, Natasha Singer, “Goodbye, $165,000 Tech Jobs. Student Coders Seek Work at Chipotle.” NY Times, August 10, 2025. For trends in computer science bachelor’s degrees, see National Center for Education Statistics, Table 322.10, Bachelor’s degrees conferred by postsecondary institutions, by field of study: Selected academic years, 1970-71 through 2021-2, 2023 Digest of Education Statistics, U.S. Department of Education. The vast majority, of computer science bachelor’s degrees, more than 90%, are earned by U.S. citizens and lawful permanent residents.

41. S.1233 – Keep STEM Talent Act of 2025, 119th Congress (2025-2026).

42. Natasha Singer, “Goodbye, $165,000 Tech Jobs. Student Coders Seek Work at Chipotle.” NY Times, August 10, 2025.

43. See for example; Eric Fan, Zachary Mider, Denise Lu, and Marie Patino, “How Thousands of Middlemen are Gaming the H-1B Program,” The Big Take, Bloomberg, July 31, 2024; 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, Congressional Testimony before the U.S. Senate Subcommittee on Immigration and the National Interest, hearing on “The Impact of High-Skilled Immigration on U.S. Workers,” Economic Policy Institute, February 25, 2016.

44. Eric Fan, Zachary Mider, Denise Lu, and Marie Patino, “How Thousands of Middlemen are Gaming the H-1B Program,” The Big Take, Bloomberg, July 31, 2024; Julia Preston, “Large Companies Game H-1B Visa Program, Costing the U.S. Jobs,” New York Times, November 10, 2015.

45. For more details about visa-ready H-1B abuse by outsourcing firms, see Ronil Hira’s testimony before the U.S. Senate Committee on the Budget, “Unlocking America’s Potential: How Immigration Fuels Economic Growth and Our Competitive Advantage,” September 13, 2023.

46. The White House, Restriction on Entry of Certain Nonimmigrant Workers, Presidential Proclamation, September 19, 2025.

47. 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, Economic Policy Institute, October 4, 2024.

48. Jake Barnes, Janice Fine, Daniel J. Galvin, Jenn Round, Hana Shepherd, To Help U.S. Workers, We Need Labor Standards Enforcement, Not Mass Deportations, Data Brief, Workplace Justice Lab, Rutgers University, May 2025.

49. Rebecca Rainey, “DOGE’s $455 Million in Labor Savings Carry Costs for US Workers,” Bloomberg Law, April 2, 2025.

50. Adam Cancryn and Jennifer Scholtes, “Trump sends a scorched-earth budget plan. GOP lawmakers hate it already.” Politico, May 2, 2025.

The NLRB is the sole agency responsible for interpreting and enforcing the NLRA for more than 100 million private-sector workers. However, Trump has attacked the agency’s independence, illegally firing Board Member Gwynne Wilcox because he did not like her decisions “disfavoring the interests of employers.” Further, Trump issued Executive Order (EO) 14215 giving himself and the attorney general the authority to issue interpretations of the law that place independent agencies like the NLRB under their control. Congress designed the Board to function as an independent quasi-judicial agency, with board members deciding cases based on the law and evidence. The NLRB’s independence is essential and supported by its legislative history and decades of jurisprudence.

Currently, the Board has only one remaining member. Trump nominated Scott Mayer, the chief labor counsel at Boeing, and James Murphy, a longtime NLRB lawyer, to be members of the Board. If confirmed, they would establish a Republican majority at the Board, but their confirmation would do nothing to address the threat to the agency’s independence. At a recent hearing on their nominations, they stated that, as Board members, they would “follow the law” but failed to acknowledge that Trump’s EO 14215 essentially equates Trump’s position to “the law.” Further, after Scott Mayer faced hard-hitting questioning by Senator Josh Hawley during his nomination hearing and was subsequently dropped from a committee vote, the prospects of a quorum at the NLRB continue to be uncertain.

Even once the government shutdown concludes and regional offices resume case handling, the absence of a quorum and concerns around the agency’s lack of independence will create obstacles for workers who are trying to exercise their rights under the NLRA. By firing Wilcox for “disfavoring the interests of employers,” Trump has created the expectation that future Board members are expected to side with employers over workers, effectively destroying the agency’s independence and robbing private-sector workers of the only forum available to them to protect their organizing and collective bargaining rights.

Despite claiming to be pro-worker, President Trump has consistently put forward policies that benefit employers over workers. If the Trump administration really cared about workers, they would sufficiently fund worker protection agencies. Instead, they have proposed decreasing the budgets of these agencies. If the Trump administration really cared about workers, they would propose regulations that strengthen and expand worker protections. Instead, they have put forward a deregulatory agenda that make workers less safe and more vulnerable to wage theft and pursued an anti-immigration and anti-equity agenda that will make all workers more vulnerable to labor exploitation. If the Trump administration really cared about workers, they would pass labor law reform that would ensure all workers would have the right to organize and bargain collectively. Instead, President Trump has stripped federal workers of their collective bargaining rights and Congress has failed to pass meaningful labor law reform. It is now up to Congress to defend the independence of the NLRB and to protect workers’ rights.

In light of the Trump administration’s anti-growth economic policy and a softening labor market, policymakers must act with urgency to fortify UI programs, which suffer from long-standing weaknesses that undermine their effectiveness as a safety net. The Trump administration has also signaled it aims to weaponize UI systems to advance its mass deportation agenda. Although all workers in the U.S. with legal status are eligible for UI benefits, Trump’s Secretary of Labor issued letters warning state governors against granting UI benefits to noncitizen workers, including those legally authorized to work.

The Trump administration has also undermined workplace health and safety standards, including by blocking or delaying long-overdue standards on serious hazards like silica dust and heat exposure. Further, the administration has limited key functions of the Equal Employment Opportunity Commission (EEOC), underscoring the importance of state action to protect and expand nondiscrimination protections.

The policy briefs are part of EPI’s “Holding the Line” series that provide state solutions to the U.S. workers’ rights crisis. The first installment in the series outlined how state policymakers can boost minimum wage standards, protect and expand overtime pay coverage, strengthen child labor standards, and improve wage payment standards to prevent wage theft.

The federal Occupational Safety and Health (OSH) Act—passed in 1970 after decades of fierce advocacy by organized labor and its allies—mandates that workplaces be “free from recognized hazards that could cause death or serious physical harm to employees.” To implement this mandate, the Act created the Occupational Safety and Health Administration (OSHA) to develop and enforce workplace health and safety standards. OSHA standards are designed to limit workers’ exposure to hazards; ensure access to adequate safety equipment; and require that employers monitor workplaces for hazards and report injuries and illnesses. OSHA also provides training and compliance assistance to workers and employers and gives workers the right to request workplace inspections. The OSH Act established the National Institute for Occupational Safety and Health (NIOSH), the sole agency responsible for conducting research to inform OSHA policymaking with evidence-based assessments of injury and fatality risks, and providing actionable guidance for employers to improve safety. Since OSHA was created, fatalities and work-related injuries have dropped by 65%, even while the U.S. workforce has doubled in size.

Separately, following a century of lawmaking related to mine safety, the 1977 Federal Mine Safety and Health Act created the Mine Safety and Health Administration (MSHA), which is charged with enforcing mine safety rules with the goal of reducing deaths, injuries, and illnesses in U.S. mines.

The OSH Act establishes roles for both federal OSHA and states on occupational safety and health protection. The relationship between federal government and state OSH mandates is complicated. The OSH Act grants the federal government jurisdiction over worker health and safety law, but states have the option to establish their own state-level OSHA standards and enforcement systems (known as “state plans”) that are then monitored by federal OSHA. State OSHA plans must be approved by federal OSHA, be “at least as effective” as federal OSHA, and must cover state and local government employees at a minimum. Currently, federal OSHA can only cover private-sector workers. The cost of running a state plan is shared between the state and federal government. At present:

• 29 states are under federal OSHA jurisdiction (“federal OSHA” states). Federal OSHA covers all private businesses engaged in commerce and all federal agencies but does not cover state and local governments (see Figure A). Self-employed workers are excluded and employers with 10 or fewer employees are exempt from OSHA’s record-keeping requirements (though they are still required to comply with OSHA standards and to report serious injuries and fatalities).
• 21 states have OSHA-approved state plans that cover both private-sector and state and local government workers.1
• Six states have “hybrid” plans, where private-sector workers fall under federal OSHA jurisdiction, but public-sector employees are covered by a state plan.2

Figure A

What are the threats to federal workplace health and safety protections?

Threats to federal workplace health and safety protections include:

• Diminishing capacity to enforce or develop workplace safety standards: OSHA has long been understaffed and underfunded. Federal and state OSHAs collectively employ fewer than 2,000 inspectors to cover 161 million workers; it would take the agency 185 years to inspect every U.S. workplace just once. Trump administration actions have already significantly exacerbated OSHA’s existing capacity and enforcement constraints, by:
  • Attempting to close OSHA and MSHA offices, as well as attempting to eliminate NIOSH;
  • Issuing guidance allowing OSHA staff to reduce certain employer OSHA violation penalties by up to 70%; and
  • Announcing self-audit programs that carve out inspection exemptions for employers. These programs reduce the agency’s enforcement powers and create a system that relies on self-policing and individual companies’ voluntary adherence to the law.
• Restricting the General Duty clause: Trump’s Department of Labor has proposed carving out exemptions to this foundational OSHA protection, which ensures that employers have a basic obligation to protect workers from known and preventable dangers not covered by other OSHA regulations. This rule change would exempt certain industries from this obligation and has dangerous implications for the future of OSHA.
• Blocking or delaying long-overdue standards on serious hazards like silica dust or heat exposure: The Trump administration has already paused enforcement of a new mine safety rule on silica exposure that would prevent black lung disease and death from silicosis among coal miners. It is widely anticipated that the administration will block or weaken a proposed new OSHA standard to protect workers from extreme heat exposure.

How can states maintain and strengthen workplace health and safety protections?

State authority to enact and enforce health and safety standards depends on whether a state is a “federal OSHA” or “state plan” state, as follows:

• Federal OSHA states are preempted from enacting standards in areas already addressed by federal OSHA but can still enact policies covering areas of occupational health and safety not addressed by federal law.
• States with state OSHA plans have authority to enact standards that exceed the federal floor—for example, by strengthening existing standards or adopting standards in additional areas, as well as strengthening enforcement programs and imposing civil monetary penalties that exceed federal amounts.

Step I: Update state laws and standards to lock in current federal protections

In state plan states, OSHA standards and enforcement must be at least as strong as the floor set by federal OSHA. However, many state plan states have not achieved this basic standard. Meanwhile, federal OSHA states run the risk of leaving workers unprotected if federal OSHA standards are eliminated or enforcement is further weakened.

Federal OSHA states should:

1. • Ensure OSHA coverage for all public employees: Federal OSHA excludes millions of workers from its protections because it does not cover state and local government employees. Six federal OSHA states have passed protections covering all public employees, but 23 federal OSHA states and the District of Columbia have not yet taken necessary steps to extend protections to state and local government employees. All federal OSHA states should extend coverage to public-sector workers, as is currently under consideration in Pennsylvania. (Because state OSHA plans often struggle with underfunding and capacity constraints that limit their effectiveness, advocates should remain aware that extending coverage to public employees under this model is an important short-term solution, while a best-case long-term scenario would be an expanded federal OSHA that covers all private- and public-sector workers).
   • Pass worker health and safety trigger laws: Federal OSHA states cannot strengthen or adopt standards in areas already regulated by federal OSHA. However, states can safeguard against the possibility of existing federal standards being eliminated by passing legislation to automatically incorporate into state code any eliminated federal standards to ensure workers are not left unprotected. For example, a recently enacted Illinois law directs state agencies to ensure state wage and hour, occupational health and safety, and mine safety standards remain at least as protective as existing federal standards in the event that certain federal protective standards are eliminated.

State plan states should:

• • Ensure full adoption of all current federal standards: Too many state plan states have track records of failing to adopt required new federal standards in their OSHA plans. For example, during the COVID-19 pandemic, the state of Arizona failed to adopt an emergency temporary standard (ETS) for health care workers and failed to align with federal OSHA’s new increase in penalties. After federal OSHA threatened to revoke Arizona’s state plan privilege, the state met its obligations to adopt these standards and penalty increases. Some states, like Kentucky, have failed to update their penalty policy to align with federal minimum standards.

Step II: Close critical gaps in workplace health and safety protections

• All states should adopt standards in key areas federal OSHA fails to cover: Federal OSHA lacks standards in several areas where workers face serious and ongoing workplace hazards, but intense industry opposition has blocked or stalled federal OSHA rulemaking. Fortunately, all states have latitude to adopt their own standards in these areas and can do so by drawing on existing, evidence-based proposals already developed (but not enacted) by federal OSHA, relying on recommendations from NIOSH, or replicating strong standards already implemented in other states.
  • Heat exposure: Heat is a serious and deadly hazard for many workers. There is currently no federal heat standard; it is unlikely that the proposed protection moving through the rulemaking process will be finalized. In the absence of a federal standard, several states have implemented their own state heat standards, which vary in strength and coverage. Lawmakers seeking model policies can look to states like California, Maryland, and Oregon, where strong heat standards apply to both indoor and outdoor workplaces and there are clear temperature thresholds for when protections kick in.
  • Wildfire smoke: Wildfires are becoming more frequent and severe, yet there is no federal OSHA standard requiring protection from wildfire smoke. States can follow the lead of California, Oregon, and Washington, which have all promulgated rules that require employers to follow protocols to protect many workers, not just responders. Outdoor and indoor workers need protection from wildfire smoke when airborne particulate matter reaches a certain concentration threshold.
  • Ergonomics: Ergonomic hazards like repetitive lifting, twisting, and forceful hand and wrist motions have long been a leading source of workplace injuries, especially in industries like warehouse work, meat processing, health care, and construction. A federal ergonomics standard was enacted in 2000 but then promptly repealed by Congress. A few states have passed rules to protect workers in certain industries from musculoskeletal disorders, such as hotel housekeepers in California and meatpacking workers in Minnesota. New York recently passed a warehouse worker protection act that includes specific protections against musculoskeletal disorders, among other workplace health and safety concerns.
  • Workplace violence: Workplace violence has worsened over the past five years and is now the third-leading cause of death on the job, yet federal efforts to implement a workplace violence standard have so far been unsuccessful. California, however, is in the process of developing a general standard for workplace violence protections after the state legislature passed SB 553 and mandated comprehensive protections. Cal/OSHA had already implemented a workplace violence prevention standard for employees in health care industries. Several other states proposed standards this year.
  • Infectious disease: In the absence of a federal OSHA standard on airborne or aerosolized infectious disease, U.S. workers—particularly health care workers, low-wage workers, and workers of color—continue to face high risk of workplace exposure during major infectious disease outbreaks. A 2021 OSHA Emergency Temporary Standard established to address COVID-19 in health care settings was withdrawn six months later and OSHA’s stated intent to develop a broader infectious disease rule for health care remains in limbo. During the pandemic, at least 14 states implemented temporary COVID-19 worker safety protections. Other states, such as New York, have adopted limited infectious disease standards. Unfortunately, no state has adopted a comprehensive, enforceable measure yet.
  • Right to refuse work under dangerous conditions—including during climate emergencies: While federal OSHA law has some retaliation protections for workers refusing to work under dangerous conditions, they are weak and largely unenforced. It is therefore urgent that states take steps to ensure that workers may refuse to work under dangerous conditions without being subject to retaliation—and that they continue to be paid so long as the dangerous workplace condition remains unremedied. The need for this protection is only increasing as the climate crisis causes more severe and more frequent emergencies. Some states—such as California and Oregon—and localities like Miami-Dade County, Florida, have enacted laws that prohibit employers from taking adverse action against non-essential workers who refuse to continue work when emergency conditions are present or imminent.
  • Mandate injury and illness prevention programs (IIPPs): Federal OSHA does not have a specific standard to require an IIPP but has issued formal recommendations that employers adopt comprehensive safety programs. Several states, including California, Minnesota, and Washington, have created regulations that require that employers implement an injury and illness prevention plan.
  • Strengthen anti-retaliation protections for workers that voice concerns about safety and health hazards: Though federal OSHA law contains some language on protecting workers from retaliation when exercising their rights under the law, the provisions are weak and the OSHA offices that enforce the provisions are critically understaffed. Providing workers with a private right of action so that they may go to court if they are retaliated against is critical for ensuring workers are protected. States with existing whistleblower laws should expand them to protect workers who notify fellow workers or the public about workplace hazards (not just workers who file complaints).
• State plan states should strengthen existing standards: State plan states should increase protections for workers by implementing stronger versions of existing weak or outdated federal standards. State plan agencies can look to states like California and Washington, whose OSH agencies regularly pass the nation’s most stringent standards, for guidance.

Step III: Use proven strategies to increase effectiveness of enforcement, encourage compliance, and expand community awareness

• State plan states should implement targeted, more effective enforcement and penalty strategies. They should:
  • Increase agency resources and staff: Where possible, states should dedicate more resources to their state OSH agency. Like federal OSHA, state plans are plagued with staffing shortages that severely limit their ability to carry out regular, sufficient inspections. As of 2024, state plan states had an average ratio of one OSHA inspector per 84,937 employees.
  • Increase penalties to meaningful levels: Penalties are effective for deterring violations only if they’re substantial enough to compel employers to take notice and remove hazards. While state plans are required to maintain statutory maximum penalties that are at least equivalent to those of federal OSHA, Kentucky is one of several states that has failed to raise its penalties after Congress required OSHA to raise its penalties in 2016 and index them to inflation. There are also often significant disparities between the already low average penalties assessed by federal OSHA and the average penalties assessed by state plans, even among those that have adopted new maximums. In fiscal year 2024, the average penalty for a serious violation under federal OSHA was $4,083, compared with an average penalty under state OSHA plans of only $2,580. These penalties are far too low to serve as effective deterrents; state plan states should raise penalty rates substantially across the board. In addition, states should resist adopting the new federal OSHA penalty reduction policy that the Trump administration announced in July.
  • Implement instance-by-instance citations: States can use instance-by-instance citations to cite and fine employers for each individual iteration of a willful and serious violation. This strategy can have a significant impact by compounding OSHA’s otherwise low penalties. Washington’s Department of Labor & Industries, for example, fined a manufacturing company over $2 million after it found 31 willful serious, seven willful general, 94 serious, and more than 40 general violations across three of the corporation’s locations. 
  • Cite all involved employers for violations: It is often the case that companies do not directly employ many of the workers who perform tasks for them—work is often outsourced via other entities such as subcontractors, temporary agencies, and workers misclassified as independent contractors. Multiple employers may also operate at the same site. Federal OSHA has maintained a multiemployer policy since the 1970s, but it is underutilized and not regularly enforced. When workers’ safety rights are violated in situations that involve multiple employers, state plans should cast as wide a net of responsibility as is legally feasible and hold all involved companies that possess control over working conditions financially responsible.
  • Require workplace hazards to be addressed while citations are being contested: Federal OSHA and most state plans do not require employers to abate workplace hazards identified during an OSHA inspection while that violation is being contested. State plan states should require employers to address recognized hazards whether they appeal the violation or not, as is done in Washington.
• Monitor and expose routine violators: Federal OSHA’s Severe Violator Enforcement Program designates agency resources toward inspecting and monitoring employers that have “demonstrated indifference” to their OSH Act obligations. Severe violators are subject to additional inspections and are publicly listed on the Severe Violator Enforcement Program Log. This program has been found to be effective at deterring violations by peer employers. States can implement a state-level “wall of shame” like New Jersey’s Workplace Accountability in Labor List (WALL), a publicly accessible list of employers with outstanding wage/benefit theft or tax liabilities, and can issue press releases publicizing serious and willful violations by employers.
• Provide or require workers’ rights education: States can mandate that both youth and adults receive education on workplace health and safety and their rights under OSHA. For high school students, “workplace readiness” curricula—like the one implemented in California and those proposed in other states—can include education on workplace rights including health and safety protections. States can implement use of NIOSH’s “Youth@Work—Talking Safety” curriculum in schools and develop state-level versions of programs like the federal Susan Harwood Training Grants Program, which provides funding to nonprofit organizations to provide workplace health and safety training—particularly to marginalized workers in high-hazard industries.

Where to go next

This document is designed to be a primer on OSHA, as well as to provide insight into the complex relationship between the federal OSHA and state plan states. It is a first step for those interested in improving worker health and safety conditions in their state. It does not provide enough details to guide drafting of laws or regulations for your state. If you are interested in advocating for specific policies mentioned in this brief, please contact us at earn@epi.org. We will be happy to connect you with relevant health and safety experts and organizations for further technical assistance.

Additional recommended resources:

• AFL-CIO’s Death on the Job report
• AFL-CIO’s resources for workers
• Health & Safety resources from National Employment Law Project
• National Council for Occupational Safety and Health
• Workplace Justice Lab at Rutgers University

Acknowledgments

The authors are grateful to Debbie Berkowitz and Rebecca Reindel for their expertise and guidance.

1. These states are Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wyoming. Puerto Rico also operates a state plan.

2. These states are Connecticut, Illinois, Maine, Massachusetts, New Jersey, and New York. The Virgin Islands also operate a hybrid plan.