The wage-weighted H-1B lottery is reshaping global hiring

The Department of Labor’s wage system divides every job type and geographic area into four tiers. Nicole Gunara, principal immigration attorney at Manifest Law, explains how it works: the government calculates each worker’s location and wage against databases to assign them a level, which then corresponds to the number of lottery entries they will have.

USCIS projects this will reduce Level I selection probability by 48% while increasing Level IV chances by 107%. For companies that built hiring strategies around mid-level sponsorship, the math just changed. Companies are responding by restructuring compensation, reconsidering office locations, and exploring alternatives to the lottery entirely. Startups relying on equity-heavy packages face the most acute pressure.

Base salary vs. equity

Tech companies that built compensation structures around stock options and other benefits in kind face an immediate problem: these “extras” don’t count towards wage levels. Only base salary does.

"Many of us interact with tech organizations that have heavily invested in giving equity or shares in the business," Gunara says. For companies prioritizing business continuity and lottery selection, that means restructuring packages to emphasize base salary over equity and other benefits. But Gunara warns against artificial wage inflation. If companies push entry-level workers into higher wage tiers just to game the system, they risk USCIS questioning whether the wage level matches the role.

When employees push for wage increases to improve lottery chances, companies are exploring alternative visa strategies instead. Examples include L-1 intracompany transfers, O-1 extraordinary ability visas, or pathways that don't rely on lottery odds at all.

Geographic arbitrage

Workers are reconsidering where they're willing to live based on how their salary translates to wage levels in different markets. A salary that qualifies as Level II in a high-cost market like San Francisco might reach Level III in Austin or similar cities. For workers with geographic flexibility, the calculation matters. "The number of employees who have come to me saying, 'I was offered the ability to work from five different offices. I will move to Austin, Texas. I will move to Washington, D.C. Will that improve my odds?'" Gunara says. "That is a relevant conversation right now."

Large enterprises with multiple offices are seeing workers reconsider locations they previously dismissed. "Suddenly, the other offices that are not the headquarters, which are legitimate workplaces – it's just that they were never considering it as an option – become much more strategic," Gunara says.

This has triggered a reversal in remote work policies. After pandemic-era remote work gave way to return-to-office mandates at Goldman Sachs, JPMorgan, and other major institutions, companies are now reopening remote work options within the U.S. The reasoning is that if a worker already lives somewhere with a beneficial wage level, companies would rather establish the six-year H-1B timeline (three-year initial period plus extension) before worrying about office presence.

However, there's a critical catch Gunaro points out. USCIS takes the lowest wage level among multiple work sites. A worker listed as remote in Plano, Texas, who also works part-time at the New York headquarters gets weighted based on the New York wage level, not Texas. "You're going to be punished in the sense that you will be weighed based on the New York City wage leveling and not the Plano, Texas one," Gunara warns. Companies need clean, single-location registrations to benefit from geographic wage variations.

The startup squeeze

Startups face the most acute pressure under the new system. Their typical model, often consisting of a low base salary compensated by equity that vests over time, collapses under wage-weighted selection.

"Smaller companies are the ones that are potentially hit the hardest," Gunara says. "Startups thrive in saying, 'I cannot pay you a very high base salary. However, your contributions will be rewarded during an exit, during a future IPO, based on shares.' But that makes it extremely difficult when it comes to this wage-weighted lottery."

Nearshoring has emerged as one response, as workers moving to Canada, Mexico, or parts of the Caribbean can stay close to U.S. time zones without requiring H-1B sponsorship. But for many startup roles, particularly founding team members, physical presence in the U.S. matters for investor relationships, team building, and strategic decision-making.

Another approach could be a deeper analysis of occupational classifications. Gunara points out that startups often use broad job categories that hurt wage-level calculations. Someone doing strategy and operations might be listed as "operations research analyst" when a more specific occupational code would show their salary as more competitive. "Sometimes we have to delve very deeply into what exactly the role is to identify the right category," Gunara says. "You'd be surprised at how the salaries could actually look better for particular occupational codes when startups analyze exactly what that person does versus very broad categories."

Why companies have limited alternatives

The fundamental driver behind these adjustments is that the U.S. STEM education can't meet domestic demand. 2025 NAEP data shows only 22% of 12th-grade students scored at or above the proficient level in mathematics, with 45% scored below the basic level. The Department of Labor has already signaled massive labor shortfalls in semiconductor manufacturing and other STEM-dependent industries.

"We don't actually have a choice but to go international, whether it's remote or physically bringing them to the United States," Gunara says. Despite drops in international student enrollment, she doesn't see a reality where significantly fewer people come to the U.S. "The United States is an innovation economy. A lot of the VCs are here; everything from artificial intelligence to quantum computing is really housed here."

The question isn't whether companies will continue pursuing global talent, but how they'll navigate the new system to do it. Companies that previously sponsored mid-level workers are now routinely calculating whether to focus only on highly specialized roles, whether to invest in nearshoring infrastructure, or whether to build out alternative visa pipelines that don't rely on lottery odds.

For workers, the calculus has changed too. Geographic flexibility, salary negotiation focused on base rather than equity, and alternative visa pathways have all become more strategic. The H-1B lottery was always uncertain. Now it's uncertain and weighted, which means preparation matters more than ever.