The New H-1B Math: Weighted Lottery, $100k Fee, and Rising Wage Thresholds
Three simultaneous policy changes are reshaping who can viably participate in the H-1B program. An analysis of over 1 million LCA filings.
By Kevin Cole •
Updated March 27, 2026: This post has been revised to reflect the DOL’s published proposed rulemaking, which sets wage level thresholds at the 34th/52nd/70th/88th percentiles. The original version used the 2021 Final Rule thresholds (35th/53rd/72nd/90th) as a reference point.
The H-1B program is being reshaped by three policy changes, which will interact with one another in complex ways that fundamentally alter its structure.
On December 23, 2025, the Department of Homeland Security (DHS) finalized a weighted lottery rulemaking that gives higher-wage positions up to four times better selection odds and will be in effect for the FY2027 cap season beginning March 2026. The same day, a federal judge upheld the $100,000 fee on H-1B petitions requiring consular notification, rejecting a challenge by the U.S. Chamber of Commerce. And the Department of Labor (DOL) has published a proposed rule that would raise prevailing wage thresholds, shifting Level 1 from the 17th percentile to the 34th.
Together, these policies represent the most significant restructuring of H-1B economics in the program’s history. Using DOL’s FY2025 LCA disclosure data (over 1 million certified filings), I modeled what this new landscape means for employers across the country who hire through the H-1B program.
The bottom line: Under the proposed thresholds, 92% of FY2025 LCA filings would require wage increases totaling an estimated $16.5 billion annually just to maintain their current wage level classifications. This comes in addition to entry-level positions facing dramatically reduced lottery odds under the weighted lottery, and alongside the six-figure fee faced by employers sponsoring overseas candidates.
The Weighted Lottery (Finalized)
On December 23, 2025, DHS published a final rule replacing the random H-1B cap lottery with a wage-weighted selection system. The rule takes effect February 27, 2026, and will govern the FY2027 cap season.
How It Works
Under the new system, each H-1B registration is entered into the selection pool multiple times based on its wage level:
| Wage Level | Pool Entries per Applicant | Description |
|---|---|---|
| Level 4 | 4× | Highest wages; expert/leadership roles |
| Level 3 | 3× | Senior roles with significant autonomy |
| Level 2 | 2× | Mid-level professionals |
| Level 1 | 1× | Entry-level positions |
A Level 4 position gets four entries in the lottery pool, while a Level 1 position gets one entry. So although the lottery hasn’t been eliminated, the odds are now weighted heavily toward senior, higher-paying positions.
Where Employer Demand Sits Today
To understand who this affects, I looked at the wage level distribution across over 1 million FY2025 LCA filings:
| Wage Level | Share of Filings | Lottery Weight |
|---|---|---|
| Level 1 | 24.0% | 1× |
| Level 2 | 32.6% | 2× |
| Level 3 | 21.3% | 3× |
| Level 4 | 22.1% | 4× |
Over half of employer demand (56.6%) is concentrated in Level 1 and Level 2 positions. These are exactly the tiers that receive the lowest selection weights under the new system. Level 1 positions, which represent nearly a quarter of all filings, will compete with one-quarter the effective lottery presence of Level 4 positions in the upcoming cap season.
New Registration Requirements
The final rule also introduces new “integrity measures” with broad implications beyond the lottery mechanics:
- SOC code required at registration: Employers must specify the Standard Occupational Classification code for the position when submitting a lottery registration, rather than first determining it at the LCA filing stage.
- Wage level required at registration: The offered wage level must be declared upfront during lottery registration, with employers attesting that the offered wage meets or exceeds the threshold for the position’s wage level.
- Consistency enforcement: USCIS may deny or revoke petitions where the SOC code, wage level, or worksite indicated in an LCA filing differs materially from what was declared at registration.
This front-loads compliance work that previously occurred after successful selection in the lottery. Going forward, employers will need accurate prevailing wage determinations and SOC code assignments before the registration window opens, not after selection.
The $100,000 Consular Fee (In Effect)
On September 19, 2025, President Trump signed a proclamation imposing a $100,000 fee on certain new H-1B petitions. The fee applies to petitions filed after September 20, 2025, where the beneficiary requires consular processing to enter the United States.
Initial Court Challenge Rejected
The U.S. Chamber of Commerce, joined by the Association of American Universities, sued to block the fee, arguing it exceeded executive authority and violated the Immigration and Nationality Act’s fee-setting provisions.
On December 23, 2025, U.S. District Judge Beryl Howell rejected the challenge, ruling that the proclamation was issued under “an express statutory grant of authority to the President” and that Congress has given the executive broad powers to address matters of “economic and national security.”
Two other lawsuits remain pending, one filed by 20 state attorneys general and another by healthcare employers, so another judge could still block the fee. But for now, the fee is in effect and will likely remain so through at least the FY2027 filing season.
Who Is Affected
The US authorities have clarified that the fee applies to H-1B petitions where the beneficiary will require consular notification, meaning they are outside the United States or will process their visa at a U.S. consulate abroad. It does not apply to:
- H-1B workers already in the U.S. changing status (e.g., from F-1 OPT), if USCIS approves the change of status;
- Extensions or amendments for existing H-1B workers who remain in the U.S.;
- Petitions filed before September 21, 2025;
- Beneficiaries who are abroad but already have a valid H-1B visa stamp to reenter the U.S.
Important: Cap-exempt employers (universities, nonprofit research institutions) do not appear to be exempt from the fee under current USCIS guidance.
This creates a sharp cost distinction between domestic and overseas H-1B candidates. An employer sponsoring an international student currently on OPT faces standard filing costs (assuming USCIS approves the change of status). The same employer sponsoring a comparably qualified candidate residing abroad faces an additional $100,000 filing fee.
Proposed Prevailing Wage Increases (NPRM Published March 2026)
On March 27, 2026, the Department of Labor published a Notice of Proposed Rulemaking (NPRM) titled “Improving Wage Protections for the Temporary and Permanent Employment of Certain Foreign Nationals in the United States.” The proposed rule would revise prevailing wage calculations for the H-1B and PERM programs, raising the wage level percentile floors substantially. It closely mirrors a 2021 rulemaking that was finalized but ultimately withdrawn during the transition to the Biden administration.
The proposed percentile shifts:
| Level | Current Percentile | 2026 Proposed Percentile |
|---|---|---|
| Level 1 | 17th | 34th |
| Level 2 | 34th | 52nd |
| Level 3 | 50th | 70th |
| Level 4 | 67th | 88th |
The rule would apply to all new Prevailing Wage Determinations (PWDs) and Labor Condition Applications (LCAs) filed on or after the effective date; existing approved certifications would remain valid until expiration. The effective date has not been set, but given the comment period and typical rulemaking timeline, finalization is likely in late 2026 or early 2027.
Which Filings Fall Below Proposed Thresholds?
Using the proposed thresholds, I calculated what share of FY2025 LCA filings would fall below the proposed wage floor for their filed wage level:
This is a “full compliance” analysis: what employers would need to pay to maintain all of their current wage level classifications (e.g., upon expiration of their current LCA filings). Every Level 1, 2, and 3 filing in the dataset falls below the proposed threshold for its level. At Level 4, roughly 65% would need increases.
This finding is not necessarily surprising: wage levels represent the lowest legal wage an H-1B employer may pay for a given job classification and worksite, so employers tend to file Labor Certification Applications (LCAs) at the minimum compliant level to ensure they meet the requirements.
How Large Are the Gaps?
For the approximately 952,000 filings that would need wage increases:
Over two-thirds of affected positions (68%) are within 20% of the proposed thresholds. These are substantial but potentially manageable adjustments for employers committed to maintaining their workforce. The remaining third face gaps exceeding 20%: a more difficult proposition.
Aggregate Compliance Cost
What is more interesting is summing the individual wage gaps across all affected filings, to better understand the scale of the compliance burden and its impact on the economics of the H-1B program.
- Total annual compliance cost: $16.5 billion
- Median gap per affected position: $17,419
- Mean gap per affected position: $17,335
To be clear: this is not a prediction of what employers will actually spend. Some employers will absorb marginal salary increases; others will reduce H-1B sponsorship, offshore positions, or exit the program entirely. But it quantifies the multi-billion dollar scale of the decision employers face while looking at only a single axis of what is, in effect, a three-pronged policy overhaul.
Who Bears the Cost?
Compliance Cost by Employer
| Employer | Total Cost | Median Gap | Positions |
|---|---|---|---|
| Cognizant | $593.9M | $22,606 | 28,074 |
| Infosys | $384.9M | $21,032 | 18,633 |
| Tata Consultancy Services | $371.9M | $22,950 | 17,111 |
| Amazon | $345.9M | $17,222 | 21,037 |
| $313.4M | $15,327 | 19,833 | |
| Microsoft | $291.7M | $12,362 | 23,252 |
| Grandison | $250.0M | $20,040 | 18,895 |
| HCLTech | $221.3M | $22,994 | 10,041 |
| Oracle | $213.3M | $19,755 | 11,273 |
| Ernst & Young | $209.4M | $15,607 | 12,708 |
| Meta Platforms | $186.6M | $19,835 | 9,343 |
Big Tech: The aggregate costs are large ($300-600M) but the median gaps are moderate ($12-19k per position). For example, Microsoft’s median gap of $12,362 suggests many of their positions are already paying relatively close to proposed thresholds.
IT Services Firms: Cognizant, Infosys, TCS, and their peers face median gaps of $20-23k per position, and their business model runs on thinner margins than direct-hire tech employers. Combined compliance costs for the major IT services firms exceed $1 billion. A number of these firms have already signaled their intentions to significantly reduce their engagement with the H-1B program or to exit it entirely.
Staffing Firms: Grandison, a healthcare staffing agency, would face a $250M compliance cost across all of its 18,900 positions, representing an existential challenge to the staffing model’s economics.
Compliance Cost by Industry
| Industry | Affected Positions | Median Gap | Gap % |
|---|---|---|---|
| Custom Computer Programming Services | 212,162 | $21,744 | 21.2% |
| Computer Systems Design Services | 66,572 | $20,395 | 14.7% |
| Software Publishers | 55,398 | $16,656 | 10.1% |
| Electronic Computer Manufacturing | 54,907 | $17,970 | 11.7% |
| Investment Banking | 25,511 | $25,542 | 26.3% |
| Computing Infrastructure/Data Processing | 24,897 | $17,046 | 11.6% |
| Temporary Help Services | 22,209 | $12,974 | 17.2% |
| Engineering Services | 18,349 | $15,298 | 16.0% |
| General Medical and Surgical Hospitals | 17,599 | $11,316 | 13.6% |
Custom Computer Programming Services (the IT consulting category) dominates with over 212,000 affected positions at a median gap of $21,744—representing roughly $4.6 billion in compliance costs for one industry segment.
Investment Banking faces the highest median gap at $25,542 (26.3% increase), underscoring the fact that even high-compensation industries aren’t immune when thresholds shift.
Combined Impact
These three policies don’t operate in isolation. They reinforce each other, and their combined effect is greater than the sum of their parts.
The New Calculus by Wage Level
Consider what employers now face for a Level 1 position:
| Policy | Impact |
|---|---|
| Weighted lottery | 1× selection weight (vs. 4× for Level 4) |
| $100k fee | Applies if candidate requires consular processing |
| Proposed wage thresholds | 100% of L1 filings would need ~$10k/year wage increases |
Now consider a Level 4 position:
| Policy | Impact |
|---|---|
| Weighted lottery | 4× selection weight |
| $100k fee | Still applies if consular, but more justifiable at senior compensation |
| Proposed wage thresholds | 65% need increases, but many are already close to threshold |
The policies are mutually reinforcing: all three favor higher-wage positions and disadvantage entry-level sponsorship.
Who Remains Viable?
If all three policies proceed as currently structured, viable H-1B sponsorship will seemingly concentrate around:
- Senior foreign national workers and specialized talent at direct-hire employers paying premium wages: these are positions that clear the weighted lottery, justify the consular fee (if needed), and meet elevated wage thresholds;
- Candidates already in the U.S. on OPT or other status, avoiding the $100k consular fee entirely;
- Cap-exempt positions at universities and nonprofit research institutions, which sidestep the lottery and some fee requirements.
Conspicuously squeezed: the IT consulting model that currently accounts for a significant share of H-1B volume, the pipeline of new international graduates seeking entry-level sponsorship, and overseas candidates who face the $100k fee on top of reduced lottery odds.
The End of Entry-Level H-1B?
Under current rules, a recent international graduate from a U.S. university can realistically secure H-1B sponsorship at an entry-level wage while on OPT. The weighted lottery will reduce their selection probability relative to senior hires, but the path exists.
Under the emerging framework of policy changes, that path narrows considerably. If the proposed wage thresholds take effect:
- The 34th percentile Level 1 threshold is not an entry-level wage in most markets and occupations
- 100% of current Level 1 filings would need wage increases averaging $10k/year
- Employers must either pay new graduates significantly above market or decline to sponsor them
For international students completing OPT and hoping to transition to H-1B, this represents a structural shift that strongly disadvantages them.
What This Analysis Does Not Cover
This analysis focuses on three major policy changes currently in effect or under active rulemaking. Several related factors could compound or alter these effects:
- Employer behavioral adaptation: The compliance cost estimates assume current filing patterns; however, actual employer responses will certainly reshape the market. Some portion of the $16.5 billion “cost” will translate to offshore substitution, reduced hiring, or exit from the program, rather than wage increases.
- Dynamic effects on the lottery pool: If higher wage thresholds and reduced lottery odds cause employers to pull back on Level 1 and Level 2 filings, the composition of the lottery pool itself changes: potentially improving odds for remaining participants. It’s even possible to imagine a scenario where the cost of entry for Level 1 and Level 2 filings becomes so prohibitive that registrations decline enough to side-step the need for a lottery altogether, turning H-1B into a near guarantee for qualified registrants.
- The $100k fee’s interaction with wage levels: We don’t have visibility into exactly which FY25 LCA filings would require consular notification vs. change of status; however, analysis of FOIA information gathered by Bloomberg demonstrates that IT consulting firms would likely shoulder the lion’s share of consular notification costs.
Conclusion
The H-1B program is being restructured around wage level as the central organizing principle. Higher-wage positions get better lottery odds, can more easily justify the $100k consular fee, and are more likely to survive elevated wage thresholds. Lower-wage positions face compounding disadvantages across all three policies.
For employers, the math has changed:
- Big Tech can likely absorb these costs: median compliance gaps of $12-19k per position are material but manageable at their scale and margins, and even the $100k fee is likely to be absorbed for needed talent.
- IT services firms face a structural challenge With over $1 billion in combined compliance costs. Many firms will turn to other avenues such as offshoring or expanding L-1 programs, pivots which themselves will further shake-up the H-1B lottery pool.
- Staffing agencies face potential program exit: the economics no longer work, and this may lead to significant staffing shortages in areas like healthcare, including in rural areas across the US.
It remains to be seen whether these policy adjustments will achieve their stated goals: raising H-1B wages, curtailing the staffing and outsourcing model, and prioritizing “higher-skilled, higher-paid” workers (as well as the hiring of US citizens).1 And, whether the second-order effects–offshore substitution, reduced access to early-career international talent, and consolidation of H-1B usage among the largest employers—serve U.S. economic interests is a question the data alone cannot answer.
What the data shows clearly is the magnitude of the decision employers face. It’s a fundamental restructuring of who can viably participate in the H-1B program, with billions of dollars in labor costs and hundreds of thousands of positions hanging on employer responses.
Footnotes
Footnotes
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Organizations like the National Foundation for American Policy (NFAP), Institute for Progress (IFP) and Economic Innovation Group (EIG) have expressed their concerns about the impact of the weighted lottery rulemaking on the H-1B program, including the critique that wage levels (which only capture paid salaries, not total compensation) do not accurately reflect the skill level of H-1B workers. ↩
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