Despite near universal frustration with the U.S. legal immigration system, Congress has not meaningfully reformed its laws in more than 35 years. Still, policymakers could make the existing approach work better for Americans, employers, and immigrants alike, while still avoiding the traditional pitfalls related to overall immigration levels.
The following reforms offer Congress and key federal agencies the opportunity to demonstrate good faith efforts to work across the aisle and improve the legal immigration system at the margins without increasing, or decreasing, legal immigration levels. Many of the recommendations are long-standing Niskanen priorities, but all deserve to be taken up in earnest.
Modernize labor market testing to better protect American workers and prioritize strategic occupations in visa allocations
- Replace the newspaper advertisement requirement in permanent labor certifications
When sponsoring an employee’s green card, one of an employer’s first steps is filing a permanent labor certification (PERM) application with the Department of Labor (DOL) to demonstrate that there are no able, qualified, and available U.S. workers willing to do the job, and that the employment of the foreign national will not adversely affect the wages and working conditions of similarly employed U.S. workers.
While well-intentioned, the process requires employers to post job openings in local Sunday print newspapers, demonstrating just how out of date the process is and how ineffective it is at protecting American jobseekers.
This antiquated requirement could be removed by regulation alone, allowing DOL to replace it with a mandate to recruit prospects in the places where Americans are actually looking for jobs in the Internet age.
- Mandate regular Schedule A updates that reflect national priorities
Not only is the PERM recruitment process out of date, so is Schedule A, the list of occupations for which DOL has determined there aren’t enough U.S. workers able, willing, qualified, and available. The department hasn’t substantively updated the list since 1991, the year the first web page was publicly available.
It would be an understatement to say that the U.S. labor market has changed significantly in the past three and a half decades. Still, the occupations that were most in need 35 years ago remain on the list and continue to benefit from their designation as employers hiring for Schedule A occupations bypass the PERM certification process and go directly to USCIS to initiate green card sponsorship.
DOL has the authority to update the list of designated occupations unilaterally, but Congress could help by prescribing the methodology and frequency. Doing so would protect American workers by ensuring that the list does not give undue advantage to occupations in which Americans are available. It could also support U.S. interests by providing an expedited immigration path to occupations that are proven to be currently in demand and to those that are critical to ongoing U.S. economic and technological success.
- Extend domestic recruitment requirements to most, if not all, H-1B employers
Even temporary immigration programs could benefit from improved labor market testing. The H-1B visa is a specialty occupation visa, typically issued to such professionals as architects, software engineers, and data scientists. Demand for the H-1B regularly outpaces availability. In Fiscal Year 2026, employers entered over 300,000 workers into the lottery for the 85,000 available slots. While recent rule changes have built some wage level prioritization into the once-random lottery, better labor market testing could more strategically elevate skills that are unavailable in the domestic workforce.
Currently, most employers are not required to show that they have attempted to find a suitable U.S. worker before sponsoring an H-1B. Only “H-1B dependent” employers, who have a large share of their workforce on H-1Bs, and “previous willful violator” employers, who have previously run afoul of key terms of the visa program, are required to take good faith steps to recruit U.S. workers for a job before sponsoring an H-1B for it. Even they are not required to submit proof of these good faith steps; they simply have to check a box on a form agreeing to the premise.
Extending good faith requirements to most, if not all, H-1B employers and implementing an evidentiary standard that is consistent with contemporary recruitment practices could yield significant benefits for the U.S. economy and workforce. It would protect American workers by ensuring that they have a chance to be considered for these jobs before they go to foreigners, and it would implement a de facto prioritization of the limited H-1B slots by focusing on positions that cannot reasonably be filled by a U.S. worker.
Adjust fees and fee authorities to reflect current priorities
- Authorize the Department of Labor to collect fees for permanent labor certifications
Department of Labor analysts reviewed over 140,000 PERM applications in FY 2025. Unlike most immigration applications and petitions filed with USCIS, labor certification applications submitted to DOL do not have an associated fee, so the costs of adjudication are borne entirely by American taxpayers. Although nearly every presidential budget request since FY 2005 has sought congressional approval for DOL to collect fees for these applications, the request has never been honored.
PERM user fees could help offset operational costs, strengthen oversight, or pay for key IT improvements, leading to a better experience for PERM employers and better outcomes for Americans who should be protected by the process. Since PERM processing times were over 500 days as recently as May 2026, a premium, or expedited, processing fee could benefit employers with time-sensitive business needs.
Even a modest filing fee of $250 would have generated over $35 million if applied in FY2025. If just 20 percent of applicants had also requested premium processing with a hypothetical additional fee of $1,000, total fee revenue would have exceeded $63 million.
- Eliminate the Asylum Program Fee levied on employment-based petitions and applications
In 2024, the Biden administration created the Asylum Program Fee, requiring employers sponsoring work visas to help cover the costs of a ballooning asylum program. However, asylum applications have dropped significantly since that time, and both the asylum application and its accompanying work authorization application require a fee now. Therefore, employers should not have to continue subsidizing the program when its costs are, at least to an extent, being paid by applicants directly.
Visa-sponsoring employers already pay a number of fees to contribute to American workforce development and fund USCIS fraud detection efforts, in addition to fees for petition adjudication. What’s more, if the “Fee for Certain H-1B Petitions” rule goes into effect as proposed, some of these employers would also be required to pay a $103,265 fee to further support the costs of all immigration processing. Therefore, when possible, duplicative fees such as the Asylum Program Fee should be eliminated.
- Expand American Competitiveness and Workforce Improvement Act fees to strengthen domestic talent pipelines
The American Competitiveness and Workforce Improvement Act (ACWIA) requires most H-1B employers to pay a fee to fund domestic workforce development programs in high-demand industries such as nursing and infrastructure. Participation in costly visa programs can signal that the necessary talent is not available domestically, as could modernized labor market tests. In either case, expanded domestic workforce development would offer a dual benefit: It would protect American workers by maximizing their labor market potential, and it would reduce the strain on oversubscribed visa programs by providing a domestic alternative.
Since H-1B is not the only visa filling in domestic talent gaps, the fees could be replicated for L-1B, O-1, and I-140 petitions. Expanding the ACWIA fee to these other categories would generate significant revenue that could build a talent base that, in turn, is likely to reduce long-term employer dependence on these visas.
Leverage existing tools to strengthen the integrity and credibility of international student programs
- Require universities or employers to file the I-983 for greater transparency and accountability in STEM OPT employment
When STEM graduates of U.S. universities elect to use their two-year Optional Practical Training (OPT) extension, or their two additional years of work authorization, they are required to complete form I-983 with their employer and submit it to their university. In theory, this document captures crucial information related to the graduate’s employer and salary, including a confirmation from the employer that the graduate’s compensation is commensurate with similar U.S. employees.
However, the form is almost never reviewed outside of the university, and, unless the school or student is audited or investigated, its information is generally inaccessible to Immigration and Customs Enforcement (ICE), which administers the international student program. As a result, stakeholders, including advocates or others evaluating the value of the program, are not able to obtain information regarding the average salary or typical industry of these graduates, obfuscating the functional realities of the program.
To increase oversight and public confidence in the program, ICE should create the infrastructure to collect and review these forms. This could include requiring a fee to cover the costs of reviewing the form and a mechanism for regular publication of annual average salaries and other relevant statistics.
- End the FICA tax loophole for work-authorized international students
International students working off-campus using Curricular Practical Training (CPT) or OPT work authorization programs are exempt from paying Social Security and Medicare taxes — FICA taxes — unless they have been in the U.S. for more than five years. While U.S. students are also exempt from FICA taxes for on-campus work performed during their enrollment, the extension of this exemption to off-campus employment is limited to international students.
To better protect American students and early-career employees, any off-campus employment should incur standard FICA tax liabilities, regardless of how long an international student has been in the U.S.
These reforms would not transform the U.S. immigration system. Nor would they be sufficient to ensure that immigration continues to fuel economic activity and population growth in the United States. However, they would improve the current system, making it work better for the Americans, businesses, and immigrants who rely on and are affected by it every day while we continue to lay the groundwork necessary for more durable, wholesale changes.
