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

In 1910, 1.28 million immigrants entered the United States. Roughly 80% were classified as laborers, farm laborers, or servants.^[14] They worked in coal mines, slaughterhouses, textile mills, and steel plants. The Dillingham Commission documented that 48% of anthracite coal miners in Pennsylvania were foreign-born. Over 60% of workers in Chicago's stockyards were immigrants.

The professional class was American. Among physicians, lawyers, and bankers in the 1910 Census, foreign-born representation was under 10%. Immigrants mined the coal. Americans ran the banks.

The H-1B visa inverted this. For the first time in American history, immigration policy created a pipeline for importing workers directly into the professional class - not the factory floor, but the best-paying jobs the economy produces.

What Changed in 1990

Before the Immigration Act of 1990, the predecessor H-1 visa required "distinguished merit and ability." That phrase meant something. The worker needed to be notably accomplished - a renowned physicist, a specialist surgeon, a leading engineer. Annual issuances ran roughly 20,000-30,000 in the 1970s, rising to about 48,000 by 1989, across all industries.^[10]

The 1990 Act replaced "distinguished merit and ability" with "specialty occupation." The statutory language, codified at 8 U.S.C. 1184(i)(1), defines it as "an occupation that requires theoretical and practical application of a body of highly specialized knowledge, and attainment of a bachelor's or higher degree in the specific specialty as a minimum for entry into the occupation."^[9]

A bachelor's degree. That is the bar. A 22-year-old with a generic computer science degree from any accredited university qualifies. Millions of Americans hold the same degree. The shift from "distinguished merit and ability" to "bachelor's degree" is the single most consequential change in American labor policy since 1990.

The Jewish Parallel

The first wave of mass immigration offers a useful comparison. Jewish immigrants from Eastern Europe arrived between 1880 and 1924 overwhelmingly as garment workers, peddlers, and manual laborers. In 1900, roughly 60% of employed Jewish immigrants in New York worked in the garment industry. The Triangle Shirtwaist Factory fire in 1911 killed 123 Jewish women - garment workers, not bankers.

Jewish Americans entered finance, law, and medicine in large numbers only after immigration stopped. The 1924 Act cut the pipeline. The children of immigrants - the second generation - used free public education at City College of New York, then the GI Bill after 1944, to move into professional careers. By the 1950s, Jewish household income exceeded the national median. By the 1960s, the barriers at white-shoe law firms and WASP banks began to fall.

That mobility took 30 to 50 years. It required two conditions: the immigration cutoff in 1924, which stopped the constant inflow of poor arrivals that would have kept the community in lower economic strata, and time for the second generation to assimilate, acquire English fluency, and complete higher education.

The H-1B program skips this entirely. It imports workers directly into $118,000-a-year professional jobs on day one. There is no period of manual labor, no multi-generational climb, no assimilation arc. The immigrant arrives as a software engineer at Google. The American who would have had that job does not.

The Reality: Below-Median Wages and Entry-Level Jobs

Three decades later, the data reveals a stark departure from the program's original intent.

60% of H-1B Jobs Pay Below Median Wages

According to the Economic Policy Institute's analysis of Department of Labor data, 60% of all H-1B positions are certified at wage levels below the local median for their occupation:^[5]

If H-1B workers truly possessed "exceptional" skills that no American had, they would command premium wages - not wages at the 17th or 34th percentile. The data proves the opposite: most H-1B workers are paid less than the typical American in their field.

Major Tech Firms: Part of the Problem

This isn't just about outsourcing firms. Major U.S.-based technology companies that hire H-1B workers directly have significant shares of their positions assigned as Level 1 or Level 2-below-median wages.

For the top 30 H-1B employers in FY 2019: - 12% of certified positions were at Level 1 (entry-level) - 48% were at Level 2 (below median) - 60% total were below median local wages

When Amazon, Google, and Microsoft are hiring H-1B workers at below-median wages, it's hard to argue these workers possess skills that command premium compensation.

One Country, One Program

Perhaps the most striking feature of the modern H-1B program is its demographic concentration.

72% From a Single Country

Nearly three-quarters of all H-1B approvals go to workers from India.^[3] This isn't because India produces the world's only talented workers - it's because a specific pipeline has been created connecting Indian IT firms, U.S. tech companies, and immigration law firms.

This concentration raises a fundamental question: If H-1B visas went to workers with truly unique, irreplaceable skills, wouldn't we see a more diverse distribution across countries? The single-country dominance suggests something else: a systematic pipeline that has little to do with exceptional talent.

The Training Gap Myth

Advocates for H-1B expansion often claim there aren't enough American STEM graduates to fill tech positions. The data says otherwise.

More American STEM Graduates Than STEM Jobs

According to research by Rutgers University Professor Hal Salzman:

• Only 30-50% of American STEM graduates work in STEM fields^[14]
• The IT industry laid off 97,000 workers per year on average from 2006-2016
• In that same period, 74,000 H-1B workers were brought in annually for IT positions^[14]

A 2012 IEEE study found that after 10 years, only 8% of Americans with undergraduate STEM degrees still work in STEM-related fields.

Meanwhile, American Tech Graduates Face Record Unemployment

The Federal Reserve Bank of New York reports that among recent college graduates ages 22-27: - Computer science majors: 6.1% unemployment^[7] - Computer engineering majors: 7.5% unemployment^[7]

These rates are more than double the unemployment of biology and art history graduates. How can we claim a STEM shortage when computer science graduates can't find jobs?

The Real Issue: Universities Promoting the Wrong Degrees

The problem isn't that Americans don't want STEM careers. It's that our university system has failed to prepare them while simultaneously promoting degrees with limited market value.

At less selective institutions, the gender ratio in computer science has actually worsened - from 3.5 men per woman in 2002 to 7 men per woman in 2022. Instead of encouraging more Americans into high-paying STEM fields, universities have expanded programs in fields with limited job prospects.

The Transformation of Silicon Valley

In 1990, about 30% of Silicon Valley engineers were foreign-born. By 2023, that figure had jumped to 66% - two-thirds of the tech workforce.^[11]

The 2025 Silicon Valley Index reported that two-thirds of tech sector employees are foreign-born, with 70% of those holding bachelor's degrees or higher being immigrants. Of tech workers with a bachelor's degree or higher, 23% came from India and 18% from China - while only 17% were born in California.^[12]

This wasn't a natural evolution. It was a policy choice - enabled by the H-1B program - that transformed American tech from a domestic industry to one dependent on foreign labor.

Between 2020-2024, Amazon alone received over 56,000 H-1B approvals. Meta accounts for 40% of all H-1B approvals in the Information sector since 2020.^[13]

How the Program Actually Works

Understanding how H-1B has been corrupted requires looking at the mechanics:

1. The Lottery System Favors Volume Over Quality

With 780,884 registrations for just 85,000 cap-subject slots in FY 2024^[1], companies that submit more applications have better odds. This rewards large employers who sponsor hundreds or thousands of workers, not individual exceptional candidates.

2. Wage Rules Are Easily Gamed

The "prevailing wage" system has four levels, and employers choose which level to assign. By designating positions at Level 1 or Level 2, companies can legally pay H-1B workers 17-34% below the median wage for their occupation.

3. Renewals Dwarf New Hires

In 2024, 65% of approved H-1B applications were renewals - not new talent entering the country.^[3] The program has become a mechanism for maintaining an existing foreign workforce rather than filling new skill gaps.

4. Universities Are Exempt from Caps

Universities and nonprofits aren't subject to the 65,000 annual cap, creating a separate pipeline that trains foreign students who then seek H-1B sponsorship in the private sector.

The Impact on American Workers

The consequences of H-1B expansion are felt directly by American workers:

Displaced by Visa Workers

Reports indicate that many American tech companies have laid off their qualified and highly skilled American workers and simultaneously hired thousands of H-1B workers. One software company was approved for over 5,000 H-1B workers in FY 2025 while announcing more than 15,000 layoffs around the same time.

Wage Suppression

When 60% of H-1B workers are paid below-median wages, it creates downward pressure on compensation for all workers in those fields. American workers must compete against a labor pool willing to accept lower wages.

Reduced Training Investment

Why invest in training American workers when you can hire cheaper foreign workers already trained? The H-1B program reduces employers' incentives to develop domestic talent.

The Competition Fallacy

Defenders of H-1B expansion often invoke competition: "American workers need to compete in a global economy." But this argument fundamentally misunderstands what labor policy is supposed to do.

Competition Should Be Domestic

Competition is healthy - when it's fair. American workers competing against each other for jobs, pushing each other to develop skills and work harder, benefits everyone. This is how a healthy labor market functions.

But the H-1B program doesn't create fair competition. It pits 330 million Americans against the labor pools of countries with populations 3-4 times larger:

When you open American jobs to competition from countries with nearly a billion working-age adults each, you're not creating a level playing field-you're flooding the market.

The Purpose of Immigration Policy

Immigration policy exists to serve the national interest - not to provide global corporations with access to the cheapest possible labor. The question isn't "Can we find someone somewhere in the world willing to do this job for less?" The question should be: "What policies benefit American workers and American families?"

No other country operates this way. India doesn't open its labor market to American workers. China doesn't let foreign workers displace its citizens. Only America has convinced itself that protecting its own workers is somehow wrong.

The Math Doesn't Work

Even if only 1% of India's working-age population wanted American tech jobs, that's 9 million people - more than the entire U.S. tech workforce. No amount of "competition" from American workers can offset that kind of numerical disparity.

The H-1B program wasn't designed to make American workers compete against the world. It was designed to fill genuine skill gaps with exceptional talent. The moment it became a tool for mass labor arbitrage, it stopped serving American interests.

What Real Reform Would Look Like

The solution isn't to eliminate skilled immigration - it's to return the H-1B program to its original purpose:

1. Require Above-Median Wages

If a worker truly possesses skills no American has, the market would pay above-median wages. Eliminate Level 1 and Level 2 wage designations for H-1B workers. Require employers to pay at least the 67th percentile (Level 4) for all H-1B positions.

2. Prioritize by Wage Level

Instead of a lottery, allocate visas to the highest-paying positions first. This ensures visas go to genuinely exceptional talent, not cheaper labor.

3. End the Renewal Pipeline

Cap the total years a worker can remain on H-1B status. The visa was designed as "temporary" - enforce that.

4. Require American Recruitment First

Before sponsoring an H-1B worker, require employers to demonstrate good-faith efforts to hire American workers at comparable wages.

5. Eliminate Volume Advantages

Limit the number of H-1B applications per employer to prevent large companies from gaming the lottery system.

The Path Forward

The H-1B program has strayed far from its original mission. What was designed to bring exceptional talent to America has become a tool for wage suppression and the displacement of American workers.

The evidence is clear:

• 60% of H-1B jobs pay below median wages
• 72% of visas go to workers from a single country
• American STEM graduates face higher unemployment than art history majors
• Silicon Valley went from 30% to 66% foreign-born in 33 years

These aren't signs of a program attracting the world's best and brightest. They're signs of a program that has been captured by employer interests and transformed into a cheap labor pipeline.

America should welcome truly exceptional talent. But we should also protect American workers from a system designed to undercut their wages and replace them with cheaper alternatives.

The choice is clear: reform the H-1B program to fulfill its original promise, or continue watching American workers be displaced by a system that serves employer profits over national interest.

Sources

1. USCIS: Characteristics of H-1B Specialty Occupation Workers, FY2023 - Official annual report on H-1B worker demographics, wages, and employers
2. USCIS: H-1B Employer Data Hub - Searchable database of H-1B petitions by employer
3. Pew Research Center: What we know about the US H-1B visa program - Comprehensive overview of H-1B trends and data (March 2025)
4. DHS Yearbook of Immigration Statistics - Official annual immigration data from the Department of Homeland Security
5. Economic Policy Institute: H-1B visas and prevailing wage levels - Analysis showing 60% of H-1B jobs pay below median wages (May 2020)
6. Heritage Foundation: Rethinking the H-1B Visa Program - Data-driven analysis of structural failures in the program
7. Federal Reserve Bank of New York: Labor Market for Recent College Graduates - Unemployment rates by major, including STEM fields
8. Bureau of Labor Statistics: Native and Foreign-Origin Workers in Computer Industries - Official BLS analysis of workforce composition trends
9. Library of Congress: Immigration Act of 1990 - Full text of the law that created the H-1B program
10. The Conversation: What's an H-1B visa? A brief history - Historical overview of the program's evolution
11. Mercury News: Foreign citizens make up nearly three-quarters of Silicon Valley tech workforce - Regional analysis of tech workforce composition (2018)
12. Joint Venture Silicon Valley: Silicon Valley Index 2025 - Annual report on Silicon Valley demographics and economy
13. SF Chronicle: Bay Area H-1B Visa Tracker - Interactive database of H-1B workers by company in the Bay Area
14. Salzman, Hal. Congressional Testimony on H-1B Impact - Senate Judiciary Committee testimony on STEM labor market dynamics
15. IEEE: STEM Workforce Study - Research on STEM career retention and employment patterns (2012)