How Will the H-1B Visa Affect the US Economy?


In 1990, President George Herbert Walker Bush signed the Immigration Act of 1990 into law, launching the H-1B visa program. The idea was simple: to help American companies fill vacant positions in specialized fields like research, engineering, and computer programming by hiring skilled foreign workers on a temporary basis.

But over time, the program has become a source of controversy. Think about it. If foreign workers started finding work in your country, wouldn’t you feel like your chances of finding a job are diminishing? That’s exactly what many Americans have come to feel.

This unrest has fueled endless debate over whether H-1B visas are helpful or harmful, and has even caused divisions within presidential candidate Donald Trump’s team.

Trump was not a fan of the program during his first term as president. He believed it was unfair to American workers and argued that it would allow employers to replace locals with cheaper foreign labor by imposing restrictions in 2020.

But things seem to be changing today.

Trump’s new allies, such as Elon Musk and Vivek Ramaswamy, who was tasked with leading the US Department of Government Efficiency (DOGE), are pushing for reforms that would strengthen the H-1B system. With Indian-American Sriram Krishnan joining Trump’s team as a senior AI policy advisor, there is even talk of removing country-specific limits on these visas, which could be a game-changer.

To put things in perspective, the US Citizenship and Immigration Services (USCIS) issues 65,000 H-1B visas each year, with another 20,000 set aside for those with master’s or doctoral degrees from US institutions. But there’s a catch. There are many more applicants than there are slots available. So the system is a lottery. Many qualified applicants miss out due to sheer bad luck.

Here’s where things get tricky.

While Indians account for over 70% of H-1B visa recipients, China gets around 12-13%. The rest go to countries like Mexico, Canada, the Philippines, Taiwan and Korea. But there is still a limit to how many visas any country can get. Even with a huge talent pool waiting, not more than 7% of the total H-1B visas can be given to workers from any one country.

But you can imagine that not everyone in America shares this optimism. Some Trump supporters like Steve Bannon (former White House Chief Strategist), Nikki Haley (former South Carolina Governor) and Laura Loomer (political activist) argue that foreign workers are taking away jobs from Americans. And they are not alone. Recent polls show that 60% of Americans believe that the country has enough skilled workers to fill these roles and does not need more.

But do their concerns really make sense, you may ask?

Well, if you look at it through the lens of tech companies, their arguments may be valid. After all, some of the largest employers of foreign workers in the US come from the tech world, including global giants and the big four Indian tech companies like Infosys, TCS, HCL, and Wipro. Together, these companies account for about 35% of the top 10 H-1B visa recipients.

If you’re wondering why, it’s because it’s often cheaper for these companies to hire Indian workers. Many Indian workers are willing to accept lower salaries than their American counterparts, allowing companies to save money on their salaries while offering what seems like an impressive pay raise by Indian standards.

For context, nearly 70% of H-1B petitions approved for Indian professionals in 2023 were for salaries under $100,000 per year, even though the average IT salary in the US is around $104,000. This means that Americans may have had to lower their salary expectations to compete for these jobs. This has led some to argue that foreign workers are undercutting the salaries of local workers.

But there’s a catch. Immigrants with H-1B visas may be benefiting more Americans than people think. Yes. Because think about it this way. Immigrants and native-born Americans don’t always have the same skill sets, which means they don’t always compete for the same roles. Instead, they collaborate and fill gaps where they’re needed.

When immigrants spend their earnings in the U.S., it creates a ripple effect. The increased demand for goods and services means companies are expanding rather than moving their operations overseas. Immigrants also often start their own businesses, adding more jobs to the U.S. economy. And not only that, they bring new ideas and innovations that fuel economic growth and create more opportunities.

I’m not the only one saying this. The numbers back it up. A study by the American Immigration Council found that from 2004 to 2023, and even during the pandemic, there were consistently low unemployment rates in fields like science, technology, engineering, and mathematics (STEM). That is, the demand for skilled workers actually outpaced the supply.

What’s more, it shows that H-1B workers aren’t actually earning lower wages or undercutting their local counterparts. In fact, the median wage for H-1B workers was $108,000 in 2021, compared to $45,800 for U.S. workers overall. Between 2003 and 2021, the median wage for H-1B workers increased by 50%, while the median wage for U.S. workers increased by 40%. That means employers hiring H-1B workers are offering wages above the Department of Labor’s “going wage” for similar jobs.

Let’s not forget that between 2010 and 2019, US companies like Moderna, Johnson & Johnson, and Pfizer, who later helped develop COVID-19 vaccines, hired more than 3,300 scientists, including biochemists and chemists, through the H-1B program. Many of the doctors on the front lines during the pandemic were also H-1B visa holders. So maybe that’s the bigger picture that Americans haven’t quite thought about yet.

So no matter where the H-1B visa debate goes, it’s not going to fundamentally change things for most immigrants. We’ll have to wait and see how the Trump administration handles it.

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