Key Takeaways

• The Trump administration proposed replacing the H-1B lottery with a wage-based selection system, aiming for higher-paid, higher-skilled workers.
• This shift, unlikely for FY2027, will require employers to reassess wage strategies for H-1B applicants.

Overview

On July 17, 2025, the Trump administration formally submitted a proposal to overhaul the H-1B cap selection process, marking a significant shift in U.S. immigration policy. Currently, the USCIS conducts a random lottery to select 85,000 H-1B registrations annually (65,000 regular cap and 20,000 U.S. master’s cap). Under the proposed changes, the random lottery would be replaced with a weighted selection system that prioritizes applications offering higher wages, among other potential factors.

Preliminary analysis suggests this shift could lead to a 60%+ increase in offered salaries for first-time H-1B applicants seeking to improve their selection odds. The intended outcome is to favor higher-paid, higher-skilled roles, which may disadvantage employers seeking to hire entry-level talent, including campus hires.

Cozen O’Connor Analysis

The proposed changes align with President Trump’s campaign focus on transitioning the H-1B process from a lottery-based model to a more merit- and wage-driven system. Outsourcing and staffing firms that rely heavily on entry-level, lower-wage roles are expected to be among the most impacted. Employers may need to reevaluate their H-1B wage strategies, particularly for junior positions, in order to remain competitive under the new selection model.

While some had anticipated a broader merit-based approach involving degree type or university tier, the current proposal focuses primarily on wage prioritization. The proposed rule does not include any increases to the overall lottery system that many hoped for.

The proposal has been submitted to the Office of Management and Budget (OMB) for a standard 90-day review. Following that, the Department of Homeland Security will publish a Notice of Proposed Rulemaking (NPRM) in the Federal Register, triggering a public comment period. Based on timing, these changes are unlikely to take effect for the FY2027 H-1B cap season, but further developments are expected.

Cozen O’Connor will continue to monitor and report on all updates.