A Department of Labor proposal to raise the pay scale of foreign workers has triggered warnings of new and potentially unsustainable strain on healthcare employers.
The policy was proposed in late March and was open to public comment through last week. It proposes a methodology change for wage minimums that are applied to those with green cards and certain work visas.
Doing so, the department said, would address below-market rates that incentivize employers to pay “substandard wages” to foreign workers rather than Americans, which it said has become particularly common in the H-1B program that involves workers in specialty fields.
“This proposed rule will help ensure that employers pay foreign workers wages that reflect the real market value of their labor, in addition to protecting the wages and job opportunities of American workers,” Labor Secretary Lori Chavez-DeRemer said in March of the proposed rule, which is separate from a $100,000 H-1B visa petition fee that has faced its own pushback.
The Administration’s pay plan raises the percentile thresholds used for foreign workers’ prevailing wage floors. The entry-level prevailing wage percentile would rise from the 17th percentile to the 34th percentile, while the top end rises from the 67th percentile to the 88th percentile. Per the department, the changes will translate to an average of about $14,000 per sponsored worker per year, or $6.5 billion of additional wages economywide.
While many industries can choose to offshore roles, Samantha Wolfe, a partner at Holland & Hart who specializes in foreign worker employment, said that healthcare doesn’t have the flexibility of other industries facing the changes.
“The work of nurses, doctors and other licensed hospital professionals requires them to be on site,” she told Fierce Healthcare. “This means the new costs will get absorbed, passed to patients or the positions will go unfilled. My hospital clients may be pushed toward travel nursing and agency staffing, which cost significantly more and offer less stability than building a permanent workforce through visa sponsorship.”
Physicians are also sounding the alarm. In a submitted comment letter, the American Medical Association said the changes affecting H-1B physicians “will irreparably harm the entire medical community and the patients they serve” without some kind of healthcare exemption.
The group raised concerns that the pay levels determined by the department’s methodology won’t be accurate for all markets or physician specialties, with medical practices and facilities serving low-income, rural or other medically underserved areas most likely to miss the mark. These settings are already highly served by international medical graduate physicians compared to others, raising the risk of a workforce shortage for those communities, the AMA wrote.
Further, AMA noted that the process by which the department surveys wage data to determine its prevailing H-1B wages may also place an unfair reporting requirement on resident physicians and their employers.
“The proposed rule has the potential to reduce the country’s physician workforce by approximately 25%, and unfairly price H-1B physician residents out of the market or require employers to shoulder the burden of paying an H-1B resident significantly more than their U.S. counterpart to meet the proposed DOL wage requirement," AMA wrote.
On the employer side, Wolfe agreed that rural hospitals and critical access facilities would be "hit the hardest” by the department’s proposal.
“They depend on foreign-born clinicians to keep the doors open, and their margins cannot absorb a significant wage increase for sponsored staff,” she said. “A rural nursing home in Appalachia is not a Silicon Valley tech firm, but this rule treats them identically. Sadly, there's no carve-out for providers serving underserved populations.”
The Greater New York Hospital Association (GNYHA), which represents 160 nonprofit and public hospitals, similarly had “great concerns” on how the rule would hit hospitals as well as their affiliated medical schools and research organizations. It also called for exemptions to positions at these facilities, plus an exemption for healthcare employers’ specific roles “beyond healthcare-specific titles,” such as technical occupations.
The group’s initial analysis of the proposal’s impact in its market outlined per-employee financial impacts in line with the DOL’s estimates for lower-tier roles, but noted that the impact for a “Level III speech language pathologist in the New York metropolitan area would be $26,124.” It also highlighted the rulemaking’s impact on the medical training and academic pipeline, highlighting among its member organizations 1,135 medical residents currently training and working under an H-1B visa and 587 researchers with H-1B visas.
“GNYHA has already expressed significant concerns about the imposition of a $100,000 fee on employers submitting petitions for new H-1B visas,” the association wrote. “GNYHA has similar concerns about DOL’s proposed rule and its effect on the health care workforce. For both policies, GNYHA believes that the Administration’s visa policies should exclude healthcare occupations. Healthcare workers serve a critical societal need and more, not less, should be done to provide options for these mission-critical organizations to secure the best workforce they can.”
The American Hospital Association, which represents the industry at a national level, did not submit a comment on the proposed rule and declined a request to comment on the rule's expected impact.