Why the H-1B Visa is Pointless: An Argument

Technology firms, big banks, and other corporations have all been big users of H-1B visas, which enabled them to hire talent from overseas. When President Trump temporarily banned H-1B visas in mid-2020, it sparked protests from companies that it would lead to pay inflation for U.S. workers.

However, the ban has plenty of supporters. Key among them is Hal Salzman, a professor of planning and public policy at Rutgers University.

There’s little reason why companies should complain about the lack of H-1B visa talent, Salzman recently told Dice’s sister site eFinancialCareers: “Annual hiring demand for top talent positions is probably, say, 5,000 new hires a year. Make it 10,000 if you like.” He points out that the United States produces 1.9 million BA and BS graduates a year, plus hundreds of thousands of Master’s degree graduates, plus PhDs: “It seems implausible they can’t find that number among the 1.9 million.” 

In a paper published last year*, Salzman pointed out that only a third of all U.S. STEM degree holders are actually employed in STEM jobs, suggesting the majority are under-employed and that the supply of U.S. STEM graduates more than meets the country’s demand. The same paper pointed out that the supply of U.S. STEM students is highly elastic and increasing: “The U.S. education system has produced ample supplies of students to respond to STEM labor demand.”

Why, then, do companies such as banks and tech firms like to hire developers, quants and data specialists from overseas? Salzman thinks it’s all about labor arbitrage and that the U.S. government shouldn’t be supporting such efforts: “H-1B is the government reaching its hand into the pockets of tech workers (those lucky enough to get a job) and handing out the money it grabs to the tech companies’ executives and shareholders.” That echos what longtime critics of the system have said.

If banks and technology firms really need specialist talent from overseas following the H-1B ban, Salzman added, they can still hire it using visas such as the O-1 for outstanding talent, which has fewer constraints than the H-1B. They could also recruit some of PhD students who leave U.S. universities each year, only half of whom Salzman says are in “career jobs.” 

“Are we to believe the talent these companies are looking for is so extraordinarily rare and greater than doctoral scientists? Or engineers?” Salzman said. “I’d like a cheaper iPhone but, so far, the government hasn’t created a program to lower the cost, say by using some of Apple’s astronomical profit (on which they pay close to zero taxes via the double Dutch).” 

He added: “Guest worker programs are a travesty for all concerned: guest workers are in a modern indentured servitude and many are exploited and, as the ban demonstrates, in a very vulnerable position. The guest worker programs have detrimental impact on the labor market, lowering or at least flattening wages, lowering career tenure, and distorting the labor market for all workers.”

*STEM Performance and Supply: Assessing the Evidence for Education Policy

A modified version of this article originally appeared in eFinancialCareers.

20 Responses to “Why the H-1B Visa is Pointless: An Argument”

  1. Professor Salzman is absolutely right! The H-1B Visa has gamed the tech hiring system. STEM profesionals went into STEM expecting, among other things, to make a livable wage. But what they get are impossible student-loan payment demands, and the inability to even be considered for a ‘convienance-store’ job at minimum wage because their educational ‘background’ over-qualifies them! If this is capitalism you can keep it!

  2. Karl Follman

    Many of the H-1Bs in my industry are very bright – and have MS Degrees in Engineering. However, most are doing software development or other IT and I just cannot find a link between being a “Fluid Engineer” and someone who can write code or manage databases and servers.

    • Many of the H-1Bs in my industry are very bright —
      And just as many are not.

      and have MS Degrees in Engineering. —
      Many of those degrees are in no way comparable to degrees from Western schools.

  3. Purpose of H/L is temporary, in interview at embassy you got tell you have no permanent plans stay in US and will back to home country to get visa approved.
    So why Leaders owes to lift bans or remove green card limits to flood US to take away jobs. If H/L denied or not gotten green card they have their home country to live. What about the Citizens who studied in schools and colleges here and not getting jobs because of H/L or green card flooding?

  4. Walt Karas

    Anyone of good character who has worked in the US for a couple years on an H1-B should be given permanent residency. That would reduce the ability of companies to pay immigrant tech workers substandard wages. We have to look at the big picture when setting policies to protect workers from foreign/immigrant competition. It makes no sense to protect high income workers more than low income workers.

    • H-1B was never necessary. It was always a white-color Bracero program. There is no need for them in IT and there never was. And the idea that permanent residency would be a dis-insensitive for H-1B abuse makes no sense.In fact, it would increase the problem. H-1B candidates would accept even lower wages to get a shot at residency.

  5. The issue with getting jobs as a US citizen is that H1B’s are getting jobs via a Body Shop which hold the majority of jobs with big clients in Banking, and IT. When the Body Shop has the job opening they will only fill it with an H1B. The US Citizen simply cannot compete for jobs with Body Shops holding all the job opening with big clients (many of which everyone knows). Also the Body Shop will not hire the US Citizen they will make up some excuse saying the hiring manager found you not to be a good fit.

  6. Peggy McMurtray

    This article is missing a HUGE HUGE point. H1B visa and Indian Nationals now control the hiring of most IT jobs in major corporations. I have a bachelors degree from Texas A&M in Computer Science, have decades of IT experience, and here I am unemployed. CVS just contracted out mega IT jobs to Cognizant, an Indian firm. I was a casualty among many others with decades of experience on their Pharmacy Benefit Management system. I have applied to SO MANY positions (both internally at CVS and at many many other companies) that I am fully capable of and who do those jobs go to? People with names like Priyanka and not Peggy. I can’t go to India and get a job. But the reverse is true. As an IT manager in the past, I was bribed by MANY companies based in India. “Oh Peggy, we can send you and your family on very nice vacation. It is just the cost of doing busienss.” This is a very complex but unfair – very unfair – situation in the U.S. The H1B visa approval process seems to be a joke. If an Indian company contributes the right amount of money to a policital PAC, they can get whatever the hell they want approved.

    • harpsponge

      Number of years of experience doesnt matter these days if you havent upgraded your skills. Also, its wrong to say that H1b’s are eating citizens jobs. We have been looking for salesforce developers to work for one of the big 4 companies. Cant find anyone because new grads want lots and lots of perks to start off with and don’t want to put in extra work. In such competitive global market, US will not be able to compete with the world without H1b’s. My two cents

  7. You can be Peggy or an Indian born Us Citizen and neither will get the job because as to post 10 the H1B is going to get it. One thing to remember when Cognizant gets the contract they are going to fill limited opening with Cognizant direct employees the rest will be outsourced to other Indian companies working with Body Shops who will fill the remaining jobs with other H1Bs. So a Us Citizen will not get hired at all unless Cognizant is nice enough to put some US Citizens at CVS or retain some that where working at CVS prior.

    Sadly

    A US Citizen Unemployed

  8. I had the same experience. Hiring managers of Indian origin have never hired me, people of Indian origin failed me at phone interviews every single time, people of Indian origin vetoed my hiring when the hiring manager was American. Anyway, after a lot of work I was able to get jobs. We can never give up, and it is time to get back our country.

  9. We should just cut the crap, H1B was about getting cheap tech labor and obfuscating hiring in the country the companies reside in, namely the US. We do not need any H1Bs in this country at all, simple fact