WASHINGTON — U.S. employers are bracing for a significant rise in skilled immigration costs as sweeping changes to the H-1B visa selection system move toward implementation in early 2026. The revised rules, which replace the long-standing random lottery with a wage-weighted selection framework, are expected to fundamentally reshape how foreign professionals enter the American workforce — and how much employers must pay to secure them.
According to projections tied to the policy shift, the new system will increase annual employer payroll obligations linked to H-1B workers to $9.4 billion, up from approximately $8.8 billion today. Industries that depend heavily on high-skilled global talent — including technology, engineering, healthcare, and aviation-linked services — are likely to feel the impact most acutely.
“This is not a marginal adjustment; it’s a structural change,” said a U.S. immigration policy analyst familiar with the rulemaking process. “The new framework effectively rewards higher wages with higher selection probability, which inevitably raises employer costs.”
How the New H-1B Selection System Works
Under the revised rules scheduled to take effect in February 2026, the H-1B lottery will be replaced by a wage-weighted process that prioritizes higher-paid roles. The Department of Homeland Security (DHS) has structured the system around four wage levels, aligned with experience, responsibility, and job complexity.
- Level I: Entry-level roles
- Level II: Experienced professionals
- Level III: Fully competent workers
- Level IV: Senior experts and specialists
Instead of each registration receiving a single chance, the number of entries will now scale with wage level. Level IV registrations will receive four chances, Level III will receive three, Level II will receive two, and Level I will receive just one.
“The intent is clear,” a senior DHS official explained. “This system aligns visa allocation with market wages and job complexity, rather than pure chance.”
Payroll Costs Set to Rise Sharply
The financial implications for employers are substantial. DHS estimates the first-year wage increase at approximately $502 million, driven by a higher proportion of Level II, III, and IV workers being selected.
Average salary comparisons illustrate the shift:
- Level I workers earn roughly $85,000 annually
- Level IV professionals earn $160,000 or more
As selection outcomes skew toward higher wage tiers, employers will face sustained increases in payroll costs throughout the typical five-year H-1B employment period.
“Once this system matures, we’re looking at cumulative wage impacts of around $2.5 billion per year,” an economist tracking labor migration trends noted. “That’s a major recalibration of hiring economics.”
These increases will be especially visible in innovation-driven hubs such as Silicon Valley, Seattle, and major aviation and logistics centers, where global competition for senior talent is already intense.
Wage Redistribution and Workforce Shifts
Beyond higher overall payrolls, the new system introduces a redistribution effect that shifts opportunity away from entry-level workers toward senior professionals.
“When a Level IV worker replaces a Level I worker in the selection process, the salary gap represents a direct transfer of opportunity,” said a workforce strategist. “That’s not just a budget issue — it’s a talent pipeline issue.”
For example, replacing an $85,000 entry-level hire with a $160,000 senior hire reallocates visa access away from recent graduates and early-career professionals. Over time, analysts expect fewer H-1B approvals for new graduates, particularly those entering the workforce through U.S. universities.
This may encourage employers to prioritize fewer, more senior hires rather than building long-term entry-level pipelines. Such a shift could reshape talent development strategies across industries that traditionally relied on junior foreign professionals to support growth.
Strategic Implications for Employers
While the higher costs pose challenges, some employers view the changes as a trade-off for greater predictability and access to experienced professionals.
“The upside is that companies investing in senior talent will have better odds of selection,” said an immigration attorney advising multinational firms. “But the downside is clear: higher wages become unavoidable.”
For smaller firms and startups, however, the impact could be more severe. Limited budgets may restrict their ability to compete for top-tier wage levels, potentially narrowing access to global talent.
Bottom Line
The shift to a wage-based H-1B selection system marks one of the most consequential changes in U.S. skilled immigration policy in decades. While it aligns visa access with higher compensation and experience, it also raises employer payrolls to an estimated $9.4 billion annually and restructures who benefits from the program.
As one policy expert put it, “This reform doesn’t just change who gets selected — it changes how companies think about hiring foreign talent altogether.”
