Project Firewall

The First Real Crack in America’s High-Skill Labor-Arbitrage Machine

For years, the H-1B visa program has functioned like a cultural Rorschach test. To some, it’s the fuel for America’s innovation engine. To others, it’s the slow erosion of the domestic professional class. But to the people who’ve tracked it closely — labor economists, displaced American workers, internal whistleblowers, and the handful of reporters who aren’t hypnotized by Silicon Valley’s PR machine — H-1B is something far simpler: the largest, longest-running labor-arbitrage mechanism in the post-NAFTA U.S. economy.

It does exactly what it was engineered to do. And because both parties were too dependent on the donor class and corporate staffing models built around it, the program inflated for three decades without serious enforcement.

Until now.

With Project Firewall, the Department of Labor has launched the most aggressive H-1B enforcement campaign in the program’s 33-year history — 175 investigations, millions in back-wages identified, and the first structural acknowledgment that the system’s “abuses” aren’t aberrations.

They’re design features.

They always were.

Firewall doesn’t reform the H-1B.

Firewall reveals it.

The Public Story vs. the Real Story

Officially, the H-1B was sold as a pipeline for “highly-skilled foreign workers” supplementing American talent during shortages. Every administration recycled the same talking points: innovation, competitiveness, global leadership — the verbal equivalent of a corporate PowerPoint.

But the internal mechanics told a different story.

The H-1B became a pricing tool, not a talent tool — a way for corporations and contracting shops to:

• Pay skilled labor less
• Depress wage growth without triggering antitrust scrutiny
• Use subcontractor chains to mask downward wage pressures
• Replace older, higher-paid U.S. workers
• Claim the entire scheme was “legal” because the paperwork said so

The system wasn’t broken — it was optimized.

What Project Firewall Actually Does

To understand Firewall, ignore the press releases and look at how the enforcement architecture changed.

1. Secretary-certified investigations

For the first time, the Secretary of Labor can personally certify H-1B investigations — turning routine audits into top-priority enforcement actions.

2. 175 active federal probes

The early wave hits the core issues critics documented for years:

• wage underpayment
• misclassified roles
• fake/ghost worksites
• contractors displacing U.S. workers
• failure to notify USCIS of terminations
• LCAs that don’t match reality

3. Multi-agency escalation

Severe violations now escalate into:

• USCIS (immigration compliance)
• DOJ (fraud/wire-fraud exposure)
• EEOC (age/national-origin discrimination)

One violation can now spiral into a four-front problem.

4. Millions in back wages

Over $15 million in owed wages have already been identified — revealing how much value was extracted through the wage-spread model.

Firewall doesn’t “increase oversight.”

It attacks the incentives that made abuse more profitable than compliance.

The Labor-Arbitrage Model Behind H-1B

Think of the modern American labor economy as a three-act farce written by Douglas Adams.

Act I is H-1B.

The program created three price spreads:

1. Wage Spread

Imported workers (usually routed through multilayered contractors) are cheaper than American equivalents.

2. Compliance Spread

Employers file paperwork for one job but demand work for another.

3. Risk Spread

The knowledge that enforcement was too slow, too polite, and too deferential to stop systemic abuse.

Firewall directly targets all three spreads.

The Compliance Gaps: Where the Damage Actually Happens

The most damning details in Firewall’s investigative summaries aren’t the dollar amounts — it’s the repetition of predictable patterns:

• underpayment vs. prevailing wage
• using lower skill tiers to minimize wage floors
• listing downtown offices as worksites while placing workers elsewhere
• not reporting terminations to USCIS
• replacing full U.S. teams with H-1B contractors

None of these require anti-immigration rhetoric to explain.

They are, in pure economic terms, tools of wage suppression.

Firewall is the first federal initiative to say out loud:

The H-1B is not a merit system. It is a price system.

The Birthright Citizenship Shift: The H-1B Family Dimension

In January 2025, Executive Order 14160 introduced a new rule: children born in the U.S. to parents on temporary visas (including H-1B) would no longer automatically receive birthright citizenship for births on or after Feb. 19, 2025.

The order:

• covers H-1B, L-1, F-1, and most temporary categories
• claims that “subject to the jurisdiction” excludes temporary-visa holders
• faces active federal litigation and partial injunctions
• remains legally contested territory

Why this matters for Project Firewall:

1. Temporary labor now produces temporary families
   The long-standing assumption that an H-1B child becomes a U.S. citizen disappeared overnight.
2. Employers lose a powerful retention anchor
   Many families tolerated low wages and immobility because U.S.-born children had guaranteed citizenship.
   Firewall + EO 14160 removes that stabilizer.
3. The H-1B labor pool becomes more volatile
   Workers with U.S.-born children once had a long-term stake in remaining compliant.
   Now the incentive flips.
4. The “merit-based” narrative takes another hit
   When the U.S. simultaneously:

…the combined effect is unmistakable:
the government is structurally reclassifying temporary workers as temporary.

This returns H-1B closer to its original intent (a short-term specialty visa) and further away from how corporations repurposed it (a long-term discount-labor pipeline).

Where Firewall Fits the “Too Big to Tackle” Framework

Our #TooBigToTackle Series frames systems like H-1B this way:

When a program becomes large enough, politically useful enough, and economically embedded enough, Washington stops trying to fix it and instead tries to manage its symptoms.

Firewall is symptom management.

The government is not dismantling the H-1B.

It’s not rewriting the visa categories.

It’s not addressing the offshore-onshore wage funnel that powers major outsourcing firms.

And it’s certainly not confronting the corporate dependency on controlled-wage tech labor.

What Firewall does is something narrower and more revealing:

It restores the appearance of integrity by targeting the most indefensible abuses.

This is reform by triage.

It’s meaningful, but it’s not structural.

The Real Test Comes Next

Everything hinges on one question:

Will the government actually debar major multinational outsourcers?

Not boutique violators.

Not small contracting shops.

But the massive body shops whose entire U.S. footprint is built on:

• tier-gaming
• misclassified labor
• wage suppression
• and LCA fiction

If Firewall touches them, the entire H-1B economy changes overnight.

If it doesn’t, the system simply evolves around the enforcement surge.

Because wage arbitrage — like bureaucracy — always adapts.

Bottom Line

The H-1B program was never fundamentally about immigration.

It was about the financialization of labor.

Firewall is the first enforcement regime in decades that confronts that truth.

It won’t end the arbitrage machine.

But for the first time since the 1990s, the U.S. government is treating American wages as something worth protecting.

Even if only partially.

Even if only temporarily.

Even if only under pressure.

For a program this large and this entrenched, that alone is historic.

Citations

• U.S. Department of Labor – “US Department of Labor launches Project Firewall to protect H-1B workers and American jobs” (September 19, 2025)  
• American Immigration Lawyers Association – “DOL Announces Launch of H-1B Enforcement Initiative ‘Project Firewall’” (September 19, 2025)  
• KPMG – “United States – Labor Department’s New Program to Enforce H-1B Employer Compliance: Project Firewall” (October 20, 2025)  
• Husch Blackwell – “Department of Labor Launches Project Firewall: What Employers Need to Know About H-1B Enforcement” (October 24, 2025)  
• Holland & Knight – “DOL Launches Project Firewall: New H-1B Enforcement Initiative” (September 23, 2025)  
• The Washington Post – “Trump administration to get tough on companies that misuse the H-1B visa” (September 23, 2025)  
• NDTV – “US Launches 175 Probes Into ‘Potential Abuse’ Of H-1B Visa Program: Report” (November 8, 2025)  
• The Times of India – “Uncovered bounty of concerns: Massive US crackdown on H-1B visa abuse — all you need to know” (November 8, 2025)  
• The Global Mobility Lawyer – “Project Firewall forces firms to rethink hiring foreign talent” (November 13, 2025)  
• Brennan Center for Justice – “Birthright Citizenship Under the U.S. Constitution” (July 29, 2025)  
• NAFSA – “Executive and Regulatory Actions Under the Second Trump Administration” (Executive Order 14160) (November 3, 2025)  
• T&S Law – “Birthright Citizenship Executive Order Once Again Enjoined on Nationwide Basis” (July 14, 2025)  
• Mendoza & Fink Law Firm – “Will Your Child Be Born in the U.S. in 2025? Citizenship Legal Changes Explained” (2025)