H-1B visa: Why the US economy can’t do without foreigners with H-1B visas

Foreign workers play a critical role in addressing the U.S. labor shortage, particularly in the science, technology, engineering and mathematics (STEM) fields. Each year, U.S. employers compete for a limited number of H-1B visas awarded by the U.S. Citizenship and Immigration Services (USCIS) to hire highly skilled foreign professionals. Due to a low legal cap, demand for these visas has consistently exceeded supply in recent years, often reaching the limit before the end of the fiscal year.The American Immigration Council’s latest study shows that H-1B workers not only fill critical gaps in STEM jobs, but also complement the U.S. workforce and create broader employment opportunities.

ALSO READ: H-1B visas benefit both US and India, says MEA after Trump and Musk’s support

What impact does the H-1B visa have on the US economy?

The U.S. Citizenship and Immigration Services report, citing economists, said the presence of immigrants in the United States creates new job opportunities for native-born workers. This happens in five ways.

(Join our ETNRI WhatsApp channel for latest updates.)

• Immigrant workers and native-born workers often have different skills, meaning they fill different types of jobs. This means they complement each other in the job market rather than competing for the exact same jobs.
• Immigrant workers give and invest their wages in the U.S. economy, which increases consumer demand and creates new jobs.
• Companies are responding to the presence of migrant workers and consumers by expanding their operations in the United States rather than seeking new opportunities abroad.
• Immigrants often start new businesses themselves, expanding the U.S. labor market.
• The new ideas and innovations developed by immigrants promote economic growth.

In particular, the economic contributions of H-1B workers can increase employment opportunities for native-born workers in the United States. For this reason, unemployment rates are relatively low in occupations that employ large numbers of H-1B workers. Many occupations for which H-1Bs are regularly filed are found in the broader category of professional and related occupations.

ALSO READ: TCS, Infosys and other Indian-based tech firms account for a fifth of H-1B visas issued by the US

Citing a study, the American Immigration Report says that between 2005 and 2018, an increase in the share of workers in a given occupation who were H-1B visa holders was associated with a decrease in the unemployment rate in that occupation.

“Another recent study found that restrictions on H-1B visas (such as rising denial rates) motivate U.S.-based multinational corporations to reduce the number of jobs offered in that country.”

Instead, companies are increasing employment in their existing foreign branches or opening new foreign branches – particularly in India, China and Canada.

ALSO READ: Indian IT majors like TCS and HCLTech may have nothing to worry about when it comes to H-1B visa changes

The report, citing another study, said that in 2019, higher rates of successful H-1B petitions were positively correlated with increased numbers of patents filed and patent citations. Additionally, such startups were more likely to secure venture capital funding and conduct successful IPOs or acquisitions.

What impact does this have on the median wage?

The report shows that H-1B workers neither earn low wages nor reduce the wages of other workers.

“In 2021, the average wage of an H-1B worker was $108,000, compared to $45,760 for U.S. workers in general. Additionally, the average wage of H-1B workers increased by 52 percent between 2003 and 2021. During the same period, the average wage of all U.S. workers rose 39 percent. In fiscal year 2019, 78 percent of all employers that hired H-1B workers offered H-1B visa holders wages that were higher than what the Department of Labor determined to be the “prevailing wage” for a particular type of work.”

What is the H-1B visa category?

The H-1B is a temporary (nonimmigrant) visa category that allows employers to apply to hire highly skilled foreign professionals to work in “specialty occupations” that require at least a bachelor’s degree or equivalent.ii Jobs in fields such as math, engineering, technology and medical sciences often qualify. Typically, the initial validity period of an H-1B visa is three years and can be extended for a maximum of six years.

Before an employer can file a petition with USCIS, the employer must take steps to ensure that hiring the foreign worker will not cause harm to U.S. workers.

• Employers must first certify in a Department of Labor (DOL)-certified Employment Conditions Application (LCA) that the H-1B worker’s employment will not adversely affect the wages and working conditions of similarly employed U.S. workers.
• Employers must also notify existing employees of their intent to hire an H-1B worker.

Since the category was created in 1990, Congress has limited the number of H-1Bs made available each year. The current legal cap is 65,000 visas per year, with 20,000 additional visas for foreign professionals earning a master’s degree or doctorate from a U.S. university. For fiscal year (FY) 2025, the cap was reached on December 2, 2024.