In 2011, Rep. Zoe Lofgren, a Democrat who has represented Silicon Valley for many years, observed that the average wage for a computer-systems analyst in her district was $92,000, but that the US government allowed foreign workers using H-1B visas to take these jobs at a so-called prevailing wage of $52,000. “Small wonder there's a problem here,” Lofgren said. “We can’t have people coming in and undercutting the American educated workforce.”
As Lofgren noted, H-1B visas undercut the wages of American workers by design. But the harms caused by these high-skill visas go beyond even what many critics of the system have recognized. Critics have focused on how H-1B visas are used by disreputable “body shops” that contract out cheap foreign labor, but these visas are also relied on by some of America’s leading tech firms and educational institutions. Specifically, they are used to help foreign workers gain green cards, based on employer sponsorship. A typical pattern starts with an international student earning a STEM degree, usually a master’s or doctorate at a US university, then being hired by a US employer. The employer then starts sponsorship for permanent residence, with the student holding an H-1B work visa until the green card is approved.
“The Indian backlog could reach 2 million by 2030.”
For many Indians, that pattern has become a nightmare fit for a Kafka novel. Indians have come to dominate tech hiring in the United States, and they have run afoul of the 20,000 yearly country caps for green cards. Depending on the specific employment category, Indians face wait time measured in decades. Credible estimates of 50 years have been made, and a 2020 congressional report estimated that the Indian backlog could reach 2 million by 2030, taking 195 years to exhaust.
Understandably, the issue has galvanized many in the Indian community, who are now aggressively lobbying the incoming Trump administration. As this debate has expanded, international students using work visas have been portrayed as the “good” H-1Bs—and the Intels and Googles who hire them as the “good” employers—as opposed to the employers of “bad” H-1Bs—consultancy firms such as Infosys and Tata Consultancy Services, which hire H-1Bs and then rent them out to US employers, often in the role of serving as conduits for outsourcing IT work to India.
Even immigration restrictionist organizations have tended to take this view of “good” vs. “bad” H-1B employers. One of the most prominent academic skeptics regarding H-1B, Prof. Ron Hira, also focuses on outsourcing. A 2024 report by the Congressional Research Service warns against treating H-1B holders as “a homogenous group.” In practice, it says, people gain high-skilled visas “through two distinct selection systems that have differing objectives.”
An amusing but telling example of this assumption involved Rep. Ro Khanna, whose district includes a large swath of Silicon Valley. On X, a crazed user engaged in an anti-Indian rant accused Khanna’s family of gaining US residency through H-1B abuse. Khanna replied, with admirable restraint but very revealingly, “Actually, they are not. My dad came to study engineering at Michigan in the 1960s.” The father’s status as an international student who went on to work in US industry, rather than a worker in a consultancy, automatically absolved him of H-1B abuse in Khanna’s eyes.
But even these supposedly good H-1Bs are counter to the interests of Americans. International students with H-1Bs undercut American workers by offering employers wage savings, tax benefits, and de facto indentured servitude. And they compete for more desirable jobs, with higher pay and more responsibility. In this sense, the hiring of “good” visa holders of the sort Khanna’s father received is actually more injurious to US citizen and permanent resident workers than the ones handed out to body shops. Addressing this use of H-1B visas is crucial to any reform effort.
H-1B visas were created as part of the 1990 Immigration Reform Act, replacing the old H-1. The visa is good for a nominal maximum of six years, though with important provisions for extensions beyond that period. A key aspect was the dropping of the H-1 labor-certification process, in favor of use of a more streamlined prevailing wage structure. The Act also allocated 140,000 employer-sponsored green cards per year, in categories EB-1 through EB-5, differentiated in terms of education, level of experience, and outstanding talent.
Another important factor in the promotion of high-skilled immigration is the Optional Practical Training program, instituted in 1992 by the Department of Labor through administrative fiat rather than legislation. Implemented as an extension of the F-1 foreign student visa, it initially allowed one year of work (or search for work) after graduation from a US school. It was eventually extended to 42 months and is often used by employers as a workaround to the H-1B cap. It was made all the sweeter by the fact that, as the foreign workers are technically still students, employers are exempted from paying FICA and FUTA payroll taxes.
There was originally a cap of 65,000 H-1B visas per year, increased in 2004 by adding a 20,000-visa allocation for workers with advanced degrees from US universities. H-1B advocates like to point out that this 85,000 figure is only a small fraction of overall STEM employment. But that is misleading. Assuming a six-year stay, the nominal time limit, at any given time there would be 510,000 visa holders in the country. More importantly, the impact is cumulative. The H-1B workers who transition to green cards become permanent fixtures in the labor market, especially in tech-heavy regions. In 1990, about 30 percent of Silicon Valley engineers were foreign-born; by 2014, the figure had jumped to 74 percent. Some of the increase was due to non-H-1B immigration, but the impact of H-1B has been much more profound than its advocates admit. I welcome these new Americans, but there is a cost.
“By 2019, 72 percent of computer science graduate students were foreign.”
Academic research has largely ignored the cumulative effect of H-1B visas, focusing on the number of current visa holders, without including the former H-1Bs now holding green cards. As a result, the negative effects on the work availability and wages of US domestic tech workers, often found to be modest (though nonzero), have been greatly underestimated. A more accurate measure is the percentage of international students in US tech graduate programs, which has skyrocketed over the years. As Berkeley researchers pointed out, “high-tech engineers and managers have experienced lower wage growth than their counterparts nationally.” One reason for this, she asserted, is the fact that “approximately one-half of engineering PhDs and one-third of engineering MSs were granted to foreign-born students in the mid-1990s.” Those numbers, viewed as high by the authors at the time, have only grown since then. By 2019, 72 percent of computer science graduate students were foreign.
Because of the H-1B program, graduate study at the doctoral level has become a major money-losing proposition for domestic STEM students. The extra salary earned by a doctorate does not compensate for the five or six years of foregone industry-level income. As a researcher interviewed in 2008 by the journal Science noted, “a Ph.D. in computer science is probably a financial loser in both the short and long terms.” The tech industry loves to cite data showing that many computer science doctoral programs are populated largely by foreign students, claiming that domestic students are too weak for the rigors of the field. But in addition to the monetary disincentives for domestic students, the fact is that most employers don’t want to hire candidates with doctorates. For that matter, a master’s adds very little to a good bachelor’s education. Yet a foreign worker needs a master’s to justify green card sponsorship, hence the industry’s focus on that degree.
Concerns about the H-1B visa program emerged soon after it was enacted. Bill Clinton’s Secretary of Labor Robert Reich was an early critic, and his Department of Labor found widespread abuse. Some years later, he wrote that the officially recognized median wage for H-1B visas in computer-related occupations was “way below” the actual median wage—exactly the problem Lofgren noted. This was no accident. The H-1B program was deliberately set up to hire younger, cheaper foreign workers in lieu of older, more expensive Americans.
“The H-1B program was deliberately set up to hire younger, cheaper foreign workers.”
Exploitation is further enabled by the fact that median wage is assessed based on occupation and region. But in computer-related fields, “hot skills” can play a big role. A software engineer may ordinarily command a premium on the open market if the engineer knows Polars, a software library that does speedy processing of data. But if he is an H-1B, his salary requirement will not take Polars into account.
During the green-card application process, the foreign workers are largely immobile. While they could move to other employers, they would have to start the entire process anew, entailing delay and risk. They also cannot receive a promotion, as that would be a “new” job. The workers are stuck, in no position to ask for raises. It is thus clear that foreign workers are on average underpaid; a worker who cannot move freely in the labor market cannot swing the best salary deal. One academic analysis aimed to quantify this effect, by comparing salaries of green card applicants before and after obtaining a green card (compared to matched US workers). They found the penalty for being tied to an employer to be about 25 percent.
Yet for many employers, the immobility itself is even more appealing than wage savings, as loss of a key player to another firm can cause major disruption in a project. As immigration attorney David Swaim has said, “in most cases the employee is required to wait under an extensive quota system which can be anywhere from five to ten years…which allows the employer to maximize the retention advantages of hiring international students.”
The National Science Foundation is a major government funder of university research—and one force behind the rise of H-1Bs. Lower salaries give the agency more bang for its buck, and a 1989 internal memo—written the year before enactment of the H-1B program—was quite blatant in promoting the use of cheap foreign labor to that end. It called for stepping up recruitment of foreign doctoral students, using eventual attainment of a US green card as a lure. It also forecast—correctly—that lower wages would discourage domestic students from pursuing a doctorate. “A growing influx of foreign PhDs into US labor markets will hold down the level of PhD salaries,” the report said. For domestic students, it noted, “the effective premium for acquiring a PhD may actually be negative.”
Except for so-called “H-1B-dependent employers,” defined to be those whose H-1B workers make up at least 15 percent of the firm’s overall workforce (not just the firm’s tech workers), the H-1B visa does not require employers to give hiring priority to US workers. By contrast, this is a firm requirement for green cards. The employer’s application for a green card for a foreign worker will not be granted unless the employer shows that no qualified US applicants are available.
As one might guess, the word “qualified” gives employers a lot of wiggle room. If the foreign worker possesses skill X and employer states X as a job requirement, it may be real or may be just a barrier put up to screen out the US applicants. Tailoring job requirements to the skill set of the proposed foreign beneficiary is specifically banned by regulations. But except for blatant, inartful pitches made by an employer, government officials who review the application are powerless to do much, and must approve the application.
People involved in H-1B recruitment are quite open about skirting the law. In the year 2000, immigration attorney Joel Stewart wrote a piece for Immigration Daily with the remarkable title, “Legal Rejection of US Workers.” After listing various laws and regulations, his bottom line was “even in a depressed economy, employers who favor aliens have an arsenal of legal means to reject all US workers who apply.” A 2007 video from the immigration law firm Cohen and Grigsby—meant only for private viewing by clients—is equally blatant:
And our goal is clearly, not to find a qualified and interested US worker … We are complying with the law fully, but ah, our objective is to get this person a green card … So certainly we are not going to try to find a place [at which to advertise the job] where the applicants are the most numerous. We're going to try to find a place where we can comply with the law, and hoping, and likely, not to find qualified and interested worker applicants … Very qualified US applicants are brought in for an interview for the sole purpose of finding a legal basis to disqualify them. In most cases, this doesn’t seem to be a problem.
That a major law firm with household-name clients felt comfortable openly discussing such deceptive practices with its clients is another illustration of the fallacy of dividing H-1B employers into “good” and “bad.”
It’s well known that the tech industry favors workers under age 35, and a number of lawsuits have been brought against major firms. What is lesser known is the key role played by H-1B in age discrimination. As Lofgren observed, the lower officially required wage floors reflect salaries of entry-level workers, well below what most US workers make. The Americans are thus literally priced out of contention for the jobs. And as noted, foreign H-1B workers who are sponsored for green cards eventually become permanent fixtures in the labor market, and they are older by then. They thus swell the population of older workers who are competing for the few jobs that aren’t restricted to the young.
Over the years, immigration has become sacrosanct on the left, due to being viewed through a racial lens: Refusing immigrants is seen as a form of racial discrimination. But at least in the case of H-1B, this concern is misguided. As anyone who has poked her head into an undergraduate computer-science classroom knows, this college major attracts mainly Asian-American students. To refuse to restrict H-1B on the grounds that the visa holders are Asian, when the majority of victims of the program are also of Asian descent, is a muddle of the first degree. Moreover, contrary to the claim that criticism of H-1B is a mask for “anti-Hindu” sentiment among white Americans, the early H-1Bs tended to be Eastern Europeans, yet the criticism of the program was just as sharp then.
Policy should indeed favor the “best and brightest” foreign workers, but most H-1B holders are ordinary people doing ordinary work. A 2009 NBER paper found:
In physics, biochemistry, and chemistry much of the expansion [from the mid-1980s to mid-90s] in doctorate receipt to foreign students occurs at unranked programs or those ranked outside the top 50; the growth in foreign students in engineering is distributed more evenly among programs. Among students from China, Taiwan, and South Korea growth has been particularly concentrated outside the most highly ranked institutions.
Various researchers have investigated patent applications by US and foreign workers. No clear picture has emerged. A number of papers have reported that foreign workers do file a lot of patents, but their basis of comparison is the US population as a whole. Yes, foreign tech workers do engage in more patenting than do Starbucks baristas, but what about compared to US tech workers? And what about other quality measures than patents?
Due to aforementioned disincentives, domestic tech students tend not to pursue advanced degrees. Yet the data show that those who do so perform similarly to the international graduate students. My analysis of ACM Dissertation Awards found that the rates for foreign and US students were comparable to their proportions in doctoral programs. I also found that the Americans tended to be in more prestigious programs than the foreign students.
“Holders of H-1B visas being sponsored for green cards did no better than natives.”
Jennifer Hunt’s work on patenting, research, and entrepreneurship found that holders of H-1B visas being sponsored for green cards did no better than natives, after controlling for education and focus on STEM fields. Hunt did detect “considerable differences by country of origin, with immigrants from Europe performing better than similar immigrants from Asia for all outcomes except firm start-ups.” This finding might justify the green card country caps. Different countries have different cultures, so the caps might help America’s benefit from a variety of “specialties,” say innovation for Europe and entrepreneurship for Asia.
Though foreign worker policy should favor (and be limited to) the best and brightest, we must ensure that we do not discourage our own young best and brightest. The current job market is abysmal, and many college students have seen their parents, aunts and uncles and other elders fall victim to the industry’s age discrimination problem. Given these headwinds, many potential tech students will naturally gravitate to other fields. Holding down the population of current and former visa workers would ameliorate these problems, and thus make the field more attractive to the next Gates or Zuckerberg.
It’s a safe bet that some in Congress will write bills that claim to address the problems of H-1B visas but in reality do very little—or else make things worse. Numerous comments in December 2024 on X by Sriram Krishnan, tapped by Donald Trump as senior adviser on AI, suggest that the reforms to be devised by the new administration will be aimed at facilitating access to foreign labor by the “good” H-1B employers, the group with the higher negative impact on US workers.
But if they are interested in real reform, I propose the following.
- For both H-1B and green cards, replace the current prevailing wage requirement by a policy in which applications are approved in order of offered salary. This addresses the cheap, mediocre-quality labor issue in a clean (if broad-stroked) manner. It also to a large extent attains our goal of targeting “the best and the brightest.” For example, Stanford computer-science graduates enjoyed starting salaries that were 37 percent higher than average in 2009-2010, according to the school. A more refined version of this policy could rank on the ratio of offered salary to the occupational/regional median, so as to attain quality among less expensive occupations and regions.
- Make green card issuance immediate after approval, instead of waiting in a queue for years. This addresses the de facto indentured servitude issue, and also solves the problem of queues based on country caps.
- Establish an open, national online registry for jobs that employers propose to fill with H-1Bs or green card applicants. Use would be advisory for H-1B, mandatory for green cards and H-1B-dependent employers. Placing newspaper ads as a way of giving public notice is downright silly in today’s Internet Age. An online registry is the efficient, effective way to handle the recruitment requirement.
- Liberalize the National Interest Waiver, under which outstanding talents can apply for a green card without employer sponsorship. Do the same for the O-1 work visa, which again involves exceptionally talented workers. The industry lobbyists greatly exaggerate the number of foreign workers who are “the best and the brightest,” but some are indeed top-flight. Our nation benefits enormously from them, so targeted measures are vital.
- Require that an employer justify a job requirement of an advanced degree. Very few tech jobs truly require a master’s or doctoral degree. Just look at all the major notables in the field who lack such a degree, such as Larry Ellison and Jensen Huang, or who have no degree at all, such as Bill Gates and Mark Zuckerberg. Since international students who work in tech largely have a master’s, setting a requirement of that degree is a common method of rejecting US workers.
By taking these steps, lawmakers can address corporations’ legitimate need for top-flight talent while limiting unfair competition against US workers and exploitation of visa holders. The H-1B program isn’t likely to be eliminated any time soon, but many of its harms can be limited by intelligent reform.