How H-1B Visas Became a Tool for Cheap Labor

The H-1B visa was sold as a way to import workers no American could replace. The government's own filings describe something else. When Homeland Security rewrote the H-1B lottery in December 2025, it reported that 83% of new H-1B jobs over the previous five years had been filed at the two wage tiers that pay below the local median for the occupation.^[1] Most of these workers do jobs Americans already do, at below-market pay.

A company that wanted exceptional talent would pay a premium for it. Instead, employers reach for the visa to fill ordinary jobs at below-ordinary pay, and they have built the hiring pipeline to match.

A bar that dropped

Before 1990 the visa was called the H-1. The law required "distinguished merit and ability." In practice that meant a renowned physicist, a specialist surgeon, a leading engineer. Across every industry, the country issued roughly 48,000 of these visas in 1989.^[2]

The Immigration Act of 1990 rewrote the standard. It replaced "distinguished merit and ability" with "specialty occupation," defined as a job that requires a bachelor's degree. A 22-year-old with a generic computer science degree now qualified. Millions of Americans hold the same degree.

The cap was set at 65,000, later stretched with exemptions and renewals into a far larger flow.

Cheaper, not better

Employers, not the government, choose how much an H-1B worker gets paid. The prevailing-wage system has four levels. Pick Level 1 and the law lets a company pay at the 17th percentile of the local wage for that occupation. Pick Level 2 and it pays at the 34th. Level 3 is the local median. Homeland Security counted the cap-subject petitions filed between 2020 and 2024 and found 28% at Level 1 and 55% at Level 2. Level 3 took 12% and Level 4 took 5%.^[1]

The median salary an employer offered an approved H-1B worker in 2025 was $133,000.^[3] That is real money, well above what a typical American household earns. It is also below what the same work commands on the open market, and the agency writing the rule said so: because Level 3 is the median for the occupation and the location, a program that files 83% of its jobs at Levels 1 and 2 is offering below-median pay.^[1] A worker who must be sponsored, tied to one employer, and given 60 days to find a new sponsor if laid off does not negotiate from strength.

The selection process rewards quantity. In 2024 employers filed 780,900 registrations for 85,000 slots.^[4] The more applications a company submits, the more it wins. USCIS approved 406,348 H-1B petitions in 2025, and only 28% of them were for new employment.^[3] The rest extended, amended, or transferred workers already here. The program keeps an existing workforce in place rather than reaching for scarce new talent.

Why companies stopped training Americans

A firm that can sponsor a foreign engineer at the 34th percentile has little reason to train an American for the same desk. The cheaper worker arrives credentialed, compliant, and unable to leave. The investment in domestic talent stops paying.

The displacement is documented. Major technology companies have laid off American staff and filed for thousands of H-1B workers in the same year. One software company was approved for more than 5,000 H-1B positions in 2025 while announcing over 15,000 layoffs.

The claim that drives the program is that America cannot produce enough skilled graduates. The numbers do not support it. Among recent college graduates ages 22 to 27, computer science majors face 6.1% unemployment and computer engineering majors 7.5%.^[6] Those rates run higher than the unemployment of art history and biology graduates. American computer science graduates are already competing for too few openings, and the pipeline keeps adding foreign workers to the same job market.

Into the most expensive cities

The visa does not spread its arrivals evenly. 70% of H-1B approvals go to workers born in India, channeled through a small set of Indian outsourcing firms and a handful of large tech employers.^[3][5] China is second at 12%. The remaining eight countries in the top ten account for 7% combined. Those jobs sit in a few metros.

Silicon Valley shows the result. About 30% of its engineers were foreign-born in 1990. By 2023 the figure reached 66%.^[7] The same pattern repeats in Seattle, New York, and Northern Virginia.

These are not temporary guests. H-1B workers bring spouses and children, then convert to green cards and stay. The visa is a front door to permanent settlement, and it deposits that settlement into the exact cities with the worst housing costs. Roughly 64% of all foreign-born residents already live in just 20 metropolitan areas.^[8] Adding more demand to those markets raises rents and home prices for the Americans who were there first.

The program is described as a benefit to the economy. For the metros absorbing it, the bill arrives as higher housing costs and a professional class American graduates can no longer enter.

Recommendations

Restore the pre-1990 "distinguished merit and ability" standard and shrink the program to a fraction of its current size.

• Replace H-1B with a sub-10,000 exceptional-talent visa. Reserve it for the best-in-world specialist no American can supply, the bar the law held to before 1990, when about 48,000 visas a year went to renowned physicists, specialist surgeons, and leading engineers rather than entry-level coders.
• Require every sponsored job to pay above the local median. End the four-level prevailing-wage system that lets 83% of new positions be filed at the 17th or 34th percentile of the local wage.
• End the lottery-by-volume and eliminate OPT. Award remaining slots to the highest-paid positions first, so 780,900 registrations can no longer game the draw, and close the Optional Practical Training pipeline.
• Require employers to recruit Americans first. Disqualify any firm laying off thousands of American staff while filing for thousands of H-1B workers in the same year. Computer science graduates face 6.1% unemployment.

Sources

1. Department of Homeland Security, Weighted Selection Process for Cap-Subject H-1B Petitions, final rule, 90 Fed. Reg. 60864 (Dec. 29, 2025)
2. The Conversation: What's an H-1B visa? A brief history
3. USCIS: Characteristics of H-1B Specialty Occupation Workers, 2025 report to Congress
4. USCIS: H-1B Electronic Registration Process
5. Pew Research Center: What we know about the US H-1B visa program
6. Federal Reserve Bank of New York: Labor Market for Recent College Graduates
7. Joint Venture Silicon Valley: Silicon Valley Index
8. Migration Policy Institute: U.S. Immigrant Population by Metropolitan Area