Elon Musk Is Right about H-1Bs

‘I’ve been very clear that the program is broken and needs major reform’

By George Fishman on January 9, 2025

Summary

Elon Musk recently posted on X that “[t]he reason I’m in America along with so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong is because of [the] H1B” temporary visa program for workers in specialty occupations. After his post generated significant controversy, Musk followed-up by stating that the H-1B program’s negative impact on American workers can be “[e]asily fixed by raising the minimum salary significantly and adding a yearly cost for maintaining the H1B, making it materially more expensive to hire from overseas than domestically”.
Aliens generally need college degrees to qualify for H-1B visas. In most years, a majority of H-1B visas go to workers in computer-related occupations. However, contrary to popular belief, there is (in most cases) no requirement that an employer recruit for American workers before seeking H-1B workers, and there is (in most cases) no prohibition against an employer laying off U.S. workers and replacing them with H-1B workers.
While employers using the H-1B program have long argued that it allows them to hire the “best and brightest” workers from around the world, advocates for American workers argue that “most H-1B workers have no more than ordinary skills, skills that are abundantly available in the US labor market”. In 2017, President Trump issued an executive order asking administration officials to “suggest reforms to help ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries”.
Advocates for American workers have long argued that the program has had a devastating impact on American workers. DHS under the Trump administration agreed that “a prevalence of relatively lower-paid and lower-skilled H–1B workers is detrimental to U.S. workers” and has resulted in “downward pressure on wages in industries and occupations with concentrations of relatively lower-paid H–1B workers”, and that “in some circumstances, U.S. employers are replacing qualified and skilled U.S. workers with relatively lower-skilled H–1B workers”.
The H-1B program’s supposed protection for American workers is its prevailing wage requirement. However, advocates for American workers contend that employers can and do still “pay[] H-1Bs less than comparable Americans” and “hir[e] younger, thus cheaper, H-1Bs in lieu of older, thus more expensive (age 35+) Americans”. The level of wages paid to H-1Bs also helps answer the “best and the brightest” question, since, as President Trump’s DHS concluded, “salary generally is a reasonable proxy for skill level” and “earning the highest wages in an occupational classification and area of intended employment … correlates with higher skill levels”.
What is the truth? I compared the salaries employers have paid H-1B workers in computer-related occupations over the past two decades with the salaries that software developers have been paid in the overall American economy over this period. This is what I found:
- For H-1B petitions approved in 2023, the average salary that petitioning employers promised to pay new H-1B workers in computer-related occupations was $99,000. Pretty good, huh? Not so fast. In that same year, the average software developer’s salary was $132,270. The average new H-1B worker was paid 25.2 percent less.
- The average starting salary for 2023 graduates of U.S. universities with master’s degrees in fields in Computer/Information Sciences was $114,144. The average new H-1B worker was paid 13 percent less.
- What about high-paid H-1B workers? In 2023, the 75th percentile (the top quartile) for promised salaries for new H-1B workers in computer-related occupations was $126,000 — 5 percent less than the average software developer’s salary.
- How do the salaries of H-1B workers in computer-related occupations compare with relatively high-paid U.S. software developers? In 2023, the 75th percentile of salaries for American software developers was $167,540 and the 90th percentile was $208,620. In that year, the average new H-1B worker was paid 41 percent and 53 percent less, respectively.
- How do the salaries of high-paid H-1B workers in computer-related occupations (compared to other H-1B workers in such occupations) compare with those of high-paid software developers (compared to all software developers)? In 2023, the 75th percentile of salaries for new H-1B workers was 25 percent less than the 75th percentile of salaries for software developers overall, and 40 percent less than the 90th percentile.
- A review of data for the years 2004 to 2022 shows broadly similar results, with one very interesting anomaly — over the two decades, H-1B workers in computer-related occupations came closest to receiving the average salary of software developers during the Trump administration. This could be the result of efforts by President Trump’s DHS to more seriously scrutinize employers’ H-1B petitions.
- The results speak for themselves. When judged by salary level, H-1B workers in computer-related occupations cannot by and large hardly be called the best and the brightest. More accurate would be the cheap and the cheapest.
What can be done to fix the H-1B program? First, I would recommend that Congress consider instituting a prevailing wage floor set at the average wage for each occupation in each area of employment. I could understand a justification for including a lower floor for recent foreign graduates of U.S. universities, say the average starting wage for new graduates in each occupation for an H-1B worker’s first two years. Second, since there is almost always more employer demand for H-1B workers than there are visas available, I would recommend that Congress consider abandoning the current lottery and instead allocate visas first to the best and brightest (those promised the highest salaries).

Introduction

On December 27, Elon Musk ignited quite a firestorm when he proclaimed on X that:

The reason I’m in America along with so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong is because of H1B [visas for workers in “specialty” occupations]. Take a big step back and F*CK YOURSELF in the face. I will go to war on this issue [of possible major legislative or administrative restrictions on the program] the likes of which you cannot possibly comprehend.

I admit that I was taken aback by the (let’s say) colorfulness of Musk’s request of the person with whom he was exchanging Xpressions. But my colleague Mark Krikorian told me that Musk was just quoting Tom Cruise’s character in the movie Tropic Thunder. It’s true — here’s a clip.

In any event, in a follow-on post the next day, Musk tried to lower tensions by stating: “Easily fixed by raising the minimum salary significantly and adding a yearly cost for maintaining the H1B, making it materially more expensive to hire from overseas than domestically. I’ve been very clear that the program is broken and needs major reform.”

Well, here Musk is exactly right, and his requests of Congress and the incoming Trump administration are actually quite doable — unlike the request he made of his sparring partner on X.

H-1B Visas

What are H-1B visas? Section 101 of the Immigration and Nationality Act (INA) provides that H-1B visas are for aliens “coming temporarily to the [U.S.] to perform services … in a specialty occupation … who meet[] the requirements for the occupation”. Section 214 of the INA defines a specialty occupation as one 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 (or its equivalent) as a minimum for entry into the occupation in the [U.S.]”. Section 214 also sets forth the requirements for an H-1B worker, who must 1) have “full state licensure to practice in the occupation, if such licensure is required to practice in the occupation”, 2) “completion of the degree” in the specific specialty, or 3) “experience in the specialty equivalent to the completion of such degree” along with “recognition of expertise in the specialty through progressively responsible positions relating to the specialty”.

In most years, a majority of approved H-1B petitions (for initial employment as opposed to extensions of H-1B status) are for aliens working in computer-related occupations — 54.3 percentin FY 2023 and ranging from 34.6 percent to 65.1 percent over the past two decades).¹

Section 214 caps the number of available H–1B visas at 65,000 a year. However, it also provides that the cap does not apply to aliens who will work for institutions of higher education (or related or affiliated nonprofit entities), nonprofit research organizations, or governmental research organizations, and does not apply to aliens who have earned advanced degrees from U.S. institutions of higher education, “until the number of [advanced degree] aliens who are exempted from such numerical limitation during such year exceeds 20,000”.

Most every year, demand for H-1B visas far exceeds the available supply. For example, on March 27, 2023, U.S. Citizenship and Immigration Services (USCIS) announced that:

[USCIS] has received enough electronic registrations during the initial registration period to reach the fiscal year (FY) 2024 H-1B numerical allocations (H-1B cap), including the advanced degree exemption (master’s cap). We have randomly selected from the registrations properly submitted to reach the cap, and have notified all prospective petitioners with selected registrations that they are eligible to file an H-1B cap-subject petition for the beneficiary named in the applicable selected registration.

Then, on December 13, 2023, USCIS announced that it had “received a sufficient number of petitions needed to reach the congressionally mandated 65,000 H-1B visa regular cap and the 20,000 H-1B visa U.S. advanced degree exemption, known as the master’s cap, for fiscal year (FY) 2024”.

Most recently, USCIS announced on December 2, 2024, that it had “received enough petitions to reach the congressionally mandated 65,000 H-1B visa regular cap and the 20,000 H-1B visa U.S. advanced degree exemption, known as the master’s cap, for fiscal year (FY) 2025”.

Section 214 also provides that the period of authorized stay in H-1B status is up to six years, though aliens can stay in H-1B status indefinitely for as long as they are the beneficiaries of pending employment-based immigrant visa petitions that have been pending for at least 365 days.

Contrary to popular belief, there is (in most cases) no requirement that an employer recruit for American workers before seeking H-1B workers, and there is (in most cases) no prohibition against an employer laying off U.S. workers and replacing them with H-1B workers. The H-1B program’s proffered protection for American workers is its prevailing wage requirement. Section 212 of the INA provides that:

The employer … [must] offer during the period of authorized employment to … H-1B nonimmigrant[s] wages that are at least—

(I) the actual wage level paid by the employer to all other individuals with similar experience and qualifications for the specific employment in question, or

(II) the prevailing wage level for the occupational classification in the area of employment,

whichever is greater, based on the best information available as of the time of filing the application. [Emphasis added.]

Advocates for American workers have argued ever since I began working on the H-1B issue for the House Judiciary Committee in 1995 (and before then) that the program has had a devastating impact on American workers. In 1995, then Secretary of Labor Robert Reich stated that:

Our experience with the practical operation of the H-1B program has raised serious concerns … that what was conceived as a means to meet temporary business needs for unique, highly skilled professionals from abroad is, in fact, being used by some employers to bring in relatively large numbers of foreign workers who may well be displacing U.S. workers and eroding employers’ commitment to the domestic workforce. Some employers … seek the admission of … [H-1B aliens], especially for work in relatively low-level computer-related and health care occupations. These employers include ‘‘job contractors,’’ some of which have a workforce composed predominantly or even entirely of H-1B workers, which then lease these employees to other U.S. companies or use them to provide services previously provided by laid off U.S. workers.²

Twenty six years later, President Trump’s Department of Homeland Security (DHS) reached a similar conclusion:

Abuse of the H–1B program to fill relatively lower-paid, lower-skilled positions … is a significant problem under the present [H-1B] selection system.
The existing widespread use of the H–1B program to fill relatively lower-paid or lower-skilled positions, for which there may be available and qualified U.S. workers … might [result in the] depress[ion of the U.S. workers’ wages] by an influx of relatively lower-paid, lower-skilled H–1B workers.
A prevalence of relatively lower-paid and lower-skilled H–1B workers is detrimental to U.S. workers.

President Trump’s DHS also believed that:

[The H-1B program has had an] adverse effect on similarly employed U.S. workers.
[The H-1B program has resulted in] downward pressure on wages in industries and occupations with concentrations of relatively lower-paid H-1B workers.
[The H-1B program has impacted] employment opportunities for unemployed or underemployed U.S. workers seeking employment in positions otherwise offered to H-1B [workers] at wage levels corresponding to lower wage positions.
[There has been a] stagnation of wages for U.S. information technology … workers generally.
[I]n some circumstances, U.S. employers are replacing qualified and skilled U.S. workers with relatively lower-skilled H-1B workers. U.S. companies such as The Walt Disney Company, Hewlett-Packard, University of California San Francisco, Southern California Edison, Qualcomm, and Toys ‘‘R’’ Us have reportedly laid off their qualified U.S. workers and replaced them with H-1B workers.

On June 22, 2020, President Trump himself issued a presidential proclamation stating that “The Secretary of Homeland Security shall … consider promulgating regulations or take other appropriate action … ensuring that the presence in the [U.S.] of H–1B nonimmigrants does not disadvantage [U.S.] workers.”

The Best and the Brightest . . . ?

Earlier, on April 18, 2017, President Trump issued a “Buy American and Hire American” executive order stating that “in order to promote the proper functioning of the H–1B visa program, the Secretary of State, the Attorney General, the Secretary of Labor, and the Secretary of Homeland Security shall, as soon as practicable, suggest reforms to help ensure that H–1B visas are awarded to the most-skilled or highest-paid petition beneficiaries”.

Wait one New York minute — “ensure that H-1B visas are awarded to the most-skilled or highest-paid petition beneficiaries”! Doesn’t that already happen?

In the first of Elon Musk’s posts that I mentioned, he referred to H-1B foreign workers as “critical”. H-1B program advocates have long contended that the program brings in the “best and the brightest” from around the world. As the House Judiciary Committee stated in 2013:

[T]he immigration advocacy organization FWD.us states, Congress should increase the numbers of H-1Bs to “attract the world’s best and the brightest workers.” The Society for Human Resource Management argues that the H-1B cap should be raised so that employers will have the “reliability that the best and brightest talent will be able to join the employer.”

However, as the committee also noted, “questions can be raised as to whether the use of [the] H-1B program is always focused on … ‘the best and the brightest’”. Putting the matter more bluntly, in 2013, Norman Matloff, professor of computer science at the University of California, Davis, and longtime advocate for U.S. citizen and legal permanent resident workers and students, concluded that “the data show that most of the foreign tech workers are ordinary folks doing ordinary work”. Similarly, in 2019, Ronil Hira, associate professor of political science at Howard University, and Bharath Gopalaswamy, director of the South Asia Center at the Atlantic Council, concluded that “By every objective measure, most H-1B workers have no more than ordinary skills, skills that are abundantly available in the US labor market.” Not that there’s anything wrong with that! Unless, of course, they are aliens who, in the Trump administration’s words, are having an “adverse effect on similarly employed U.S. workers”.

Matloff believes that “We should of course support facilitating the immigration of ‘the best and the brightest.’” But in 2008, he explained in a piece for the Center for Immigration Studies that “foreign students in the U.S. tend to be concentrated in the less-selective universities, and … they receive a lower percentage of research awards relative to their numbers in the student population”. In 2013, he concluded that “former [foreign computer science] students [at American universities] apply for somewhat fewer patents than do their American peers” and “are significantly less likely to be working in R&D than the Americans”. And that same year, he concluded that “In the computer science case, the former foreign students are in fact generally of significantly lower talent in many aspects than Americans of the same age, education, and so on.” (Emphasis in original.)

As to the relevance of foreign graduates of U.S. universities to the H-1B program, while USCIS explains that it “does not maintain data on … whether [an H-1B worker’s] degree was earned in the [U.S.] or abroad”, it does report the percentage of approved H-1B workers who were processed by U.S. State Department consular officers abroad and the percentage processed domestically by USCIS. For 2023, USCIS reportsthat of H-1B petitions approved for initial employment, half (49.5 percent) were processed abroad and half (50.5 percent) processed inside the U.S. Most often, those petitions processed within the U.S. are for aliens seeking to change their status from another nonimmigrant class, and in 2023, 71.7 percent had been here on student visas. Thus, a significant proportion of H-1B workers are graduates of U.S. universities.

. . . Or the Cheap and the Cheapest?

Matloff contends that “Employers accrue … wage savings by paying H-1Bs less than comparable Americans … [and] wage savings by hiring younger, thus cheaper, H-1Bs in lieu of older, thus more expensive (age 35+) Americans.”

He has written that “Employers claim that they hire H-1Bs for rare skill sets or outstanding talent ― traits that they would need to pay a premium for on the open market.” But he noted that “current law requires only that they pay the average wage. Worse … the average wage” is divided “within one of … four experience levels.”

As to those four levels, § 212 of the INA provides that “Where the Secretary of Labor uses, or makes available to employers, a governmental survey to determine the prevailing wage, such survey shall provide at least 4 levels of wages commensurate with experience, education, and the level of supervision.” (Emphasis added.) The Department of Labor’s (DOL) Employment and Training Administration sets forth in “Prevailing Wage Determination Policy Guidance Nonagricultural Immigration Programs” that:

Level I (entry) wage rates are assigned to job offers for beginning level employees who have only a basic understanding of the occupation. These employees perform routine tasks that require limited, if any, exercise of judgment. The tasks provide experience and familiarization with the employer’s methods, practices, and programs. … These employees work under close supervision and receive specific instructions on required tasks and results expected. Their work is closely monitored and reviewed for accuracy.

Level II (qualified) wage rates are assigned to job offers for qualified employees who have attained, either through education or experience, a good understanding of the occupation. They perform moderately complex tasks that require limited judgment.

Level III (experienced) wage rates are assigned to job offers for experienced employees who have a sound understanding of the occupation and have attained, either through education or experience, special skills or knowledge. They perform tasks that require exercising judgment and may coordinate the activities of other staff. They may have supervisory authority over those staff.

Level IV (fully competent) wage rates are assigned to job offers for competent employees who have sufficient experience in the occupation to plan and conduct work requiring judgment and the independent evaluation, selection, modification, and application of standard procedures and techniques. Such employees use advanced skills and diversified knowledge to solve unusual and complex problems. These employees receive only technical guidance and their work is reviewed only for application of sound judgment and effectiveness in meeting the establishment’s procedures and expectations. They generally have management and/or supervisory responsibilities. [Emphasis in original, except that emphasis was added to underlined words.]

Section 212 requires that employers seeking H-1B workers first submit “labor condition applications” (LCAs) to DOL containing certain information such as the wage rate to be paid and making certain promises (“attestations”) such as to pay the greater of the actual or prevailing wage. In 2011, the U.S. Government Accountability Office (GAO) found that 83 percent of the prospective H-1B workers whose LCAs were approved between June 2009 through July 2010 were categorized by their employers as levels one (54 percent) or two (29 percent), while only 17 percent were categorized at levels three (11 percent) or four (6 percent). These proportions have changed little over the ensuing years. In 2020, DHS found that in FYs 2018-19, approximately 85 percent of “H-1B petitions for which wage levels were reported were for level I and II wages.”

DHS has noted that “[P]ositions certified at the level I or level II prevailing wages … are set below the local median [the middle value in a list of given numbers numerically ordered from smallest to biggest] wage.” Ronil Hira and Bharath Gopalaswamy explained that DOL sets level 1 at the 17th percentile of wages for the relevant occupation in the area of employment, level 2 at the 33rd percentile, level 3 at the median, and level 4 at the 66th percentile. In 2021, Hira testified before the Immigration and Citizenship Subcommittee of the House Judiciary Committee that:

[Level 1 and 2] salaries … are significantly lower than local median salaries — typically 20 to 40 percent lower than the median. H-1B employers can reap significant savings by selecting one of the two lowest wage levels. … Major U.S.-based technology firms that hire H-1B workers directly … had significant shares of their certified H-1B positions assigned as Level 1 or Level 2 … in fiscal 2019…

Amazon and Microsoft each had three-fourths or more of their H-1B positions assigned as Level 1 or Level 2.

Walmart and Uber had roughly half of their H-1B positions assigned as Level 1 or Level 2.

IBM had three-fifths of its H-1B positions assigned as Level 1 or Level 2.

Qualcomm and Salesforce had two-fifths of their H-1B positions assigned as Level 1 or Level 2.

Google had over one-half assigned as Level 2.

Apple had one-third of its H-1B positions assigned as Level 2.

Firms appear to systematically misclassify prevailing wage skill levels by selecting levels far below the actual skills (education and experience) of the worker and/or duties of the position. … For example, the San Jose Mercury News published analysis showing that Uber Technologies assigned Level 2 wages to positions it described as “senior software engineer” even though DOL guidance recommends a minimum of Level 3.

In 2013, the House Judiciary Committee concluded that “given that GAO found that the majority of H-1B aliens with approved LCAs are classified at the lowest level, questions can be raised as to whether the use of [the] H-1B program is always focused on … ‘the best and the brightest’”.

The Evidence

As John Lennon once pleaded, just gimme some truth. I thus performed a comparison of the salaries employers pay H-1B workers in “computer-related occupations” (CRO, as described and tallied by USCIS) with the salaries that “software developers” (as described and tallied by the Bureau of Labor Statistics (BLS)) are paid nationwide in our economy. Software developers hold a plurality of jobs within the universe of BLS’s “computer occupations” — 1,656,880 out of 4,804,840 jobs in 2023 (34.5 percent), and a greater plurality of jobs — 1,656,880 out of 3,956,420 jobs (41.9 percent) — excluding computer network support specialists and computer user support specialists (occupations that do not normally require a college degree and thus do not qualify as H-1B specialty occupations).³

For petitions approved in 2023, USCIS reports that the average annual salary that petitioning employers promised to pay their petitioned-for H-1B CRO workers (for initial employment) was $99,000 (rounded by USCIS to the nearest thousand dollars). Pretty good, huh?

Not so fast. I compared the wages of new H-1B CRO workers with the wages of software developers nationwide in 2023 and found:

BLS estimates that the nationwide median salary for software developers was $132,270 in 2023. So, the average salary for new H-1B CRO workers was only 74.8 percent of what software developers were paid overall — fully 25.2 percent less! Not only might this, as President Trump’s DHS believed, lead to a depression of American workers’ wages and a decrease in employment opportunities for unemployed or underemployed Americans, but it also casts doubt on whether H-1B CRO workers are by and large the best and the brightest. For, as Trump’s DHS concluded, “salary generally is a reasonable proxy for skill level” and “earning the highest wages in an occupational classification and area of intended employment … correlates with higher skill levels”.
Further, the National Association of Colleges and Employers estimates that for the graduating class of 2023, the mean (the average, i.e. the sum of the figures divided by the total number of figures) starting salary for graduates of U.S. universities with master’s degrees in fields of Computer/Information Sciences was $114,144. Thus, the average salary for new H-1B CRO workers was only 86.7 percent of the average starting salary of graduates with newly minted MAs — 13.3 percent less. As to the relevance of master’s degrees, USCIS reports that of H-1B workers approved for initial employment in 2023, half (49.5 percent) of those whose educational level was known possessed advanced degrees (master’s, professional, or doctorate).
One might ask, but what about high-paid (among H-1Bs) new H-1B CRO workers. Surely they are the best and the brightest? USCIS reports that for petitions approved in 2023, the annual salary for new H-1B CRO workers at the 75th wage percentile (the top quartile) was $126,000. Thus, even many relatively high-paid H-1B CRO workers were paid less (4.7 percent less) than the average U.S. software developer.
One might also ask how the salaries of H-1B CRO workers compare with high-paid software developers overall. BLS estimates that in 2023 the salary for software developers at the 75th percentile nationwide was $167,540 and at the 90th percentile was $208,620. Thus, an average new H-1B CRO worker approved in 2023 was paid only 59.1 percent of the salary of a top-quartile software programmer (i.e. 40.9 percent less), and only 47.5 percent of the salary of a top-decile software programmer (i.e. 52.5 percent less).
And one might ask how the salaries of high-paid (among H-1Bs) new H-1B CRO workers compare with those of high-paid (in the overall economy) software developers. As I noted, for 2023, the salary for new H-1B CRO workers at the 75th percentile was $126,000 while the salary for software developers at the 75th percentile was $167,540 and for those at the 90th percentile was $208,620. Consequently, the salary for new H-1B CRO workers at the 75th percentile was only 75.2 percent of the salary of software developers at the 75th percentile (24.8 percent less), and only 60.4 percent of the salary of software developers at the 90th percentile (39.6 percent less). Thus, “high-paid” H-1B CRO workers are generally paid significantly less than high-paid software developers overall.

Lest one think that 2023 was an atypical year, I conducted these salary comparisons for each year over the past two decades (since 2004), which are available here. I found that:

The average salary for new H-1B CRO workers ranged from 64.9 percent to 85.6 percent of the average salary of software developers in the years from 2004 through 2022 (from 14.4 percent to 35.1 percent less). The average salary for new H-1B CRO workers ranged from 78.5 percent to 96.1 percent of the average starting salary for newly minted master’s degree recipients from U.S. universities (from 3.9 percent to 21.5 percent less) in the years 2015 to 2022 (earlier data not being available).⁴
The salary for new H-1B CRO workers at the 75th percentile ranged from 71.4 percent to 107 percent of that of the average software developer (from 7.0 percent more to 28.6 percent less).
The average salary for new H-1B CRO workers ranged from 52.6 percent to 67.5 percent of the salary of a software programmer at the 75th percentile (from 32.5 percent to 47.4 percent less), and from 43.0 percent to 55.9 percent of the salary of a software programmer at the 90th percentile (from 44.1 percent to 57.0 percent less).
The salary for new H-1B CRO workers at the 75th percentile ranged from 58.2 percent to 84.4 percent of the salary of software developers at the 75th percentile (from 15.6 percent to 41.8 percent less), and ranged from 47.3 percent to 69.9 percent of the salary of software developers at the 90th percentile (from 30.1 percent to 52.7 percent less).

Interestingly, over the two decades of data that I reviewed, H-1B CRO workers came closest to receiving median occupational wages during the Trump administration. For instance, I found that during FYs 2017-20, the average salary for new H-1B CRO workers was 74.7/82.0/85.6/83.5 percent of the average for software developers (respectively), and the salary of new H-1B CRO workers at the 75th percentile was 96.3/105.2/107.0/103.5 percent of the average salary for software developers (respectively).

What could explain the fact that during the first Trump administration, employers paid their new H-1B workers salaries better approximating the salaries of comparable American workers?

It could be the result of efforts by President Trump’s DHS to more seriously scrutinize employers’ H-1B petitions. Many H-1B employer advocates criticized these efforts by President Trump’s DHS, few more shrilly than the National Foundation for American Policy (NFAP), which complained in July 2018 that “H-1B Denials and Requests for Evidence Increase Under the Trump Administration”. NFAP wrote that:

H-1B denials and Requests for Evidence (RFEs) increased significantly in the 4th quarter of FY 2017, likely due to new Trump administration policies. … The proportion of H-1B petitions denied for foreign-born professionals increased by 41% … from the 3rd to the 4th quarter of FY 2017, rising from a denial rate of 15.9% in the 3rd quarter to 22.4% in the 4th quarter. The number of Requests for Evidence in the 4th quarter of FY 2017 almost equaled the total number issued by USCIS adjudicators for the first three quarters of FY 2017 combined (63,184 vs. 63,599). Failure to comply with an adjudicator’s [RFEs] will result in the denial of an application. As a percentage of completed cases, the [RFE] rate was approximately 69% in the 4th quarter compared to 23% in the 3rd quarter of FY 2017.
The data document how the Trump administration is limiting the admission of high-skilled foreign nationals. … The significant increase in denials and [RFEs] … came shortly after Donald Trump issued his restrictive “Buy American and Hire American” executive order on April 18, 2017. The data indicate the new administration needed time to get in place its new political appointees — considered by observers to be a who’s who of opponents of all forms of immigration — and to exert their will on USCIS career adjudicators.

NFAP concluded that “The increase in denials and [RFEs] of even the most highly skilled applicants seeking permission to work in America indicates the Trump administration is interested in less immigration, not ‘merit based’ immigration.” Alternately, the Trump administration might have been interested in immigration that furthers the national interest, that benefits American workers.

Age Discrimination

In its 2011 report, GAO reported that while 40 percent of American systems analysts, programmers, and other computer-related workers were 40–50 years old, a paltry 3 percent of H-1B workers in these occupations were of comparable ages, and that while 38 percent of American workers in these occupations were 20-35 years old, an astounding 83 percent of H-1B workers were of comparable ages. More recent data shows similar results. USCIS reports regarding new H-1B workers approved in fiscal year 2023 that 66.5 percent were under 35 years of age, 85.4 percent were under 40, and 94.7 percent under 45.

GAO stated in 2011 that:

Because H-1B workers tend to be younger (with less potential work experience) than their U.S. counterparts who tend to be older (with more potential work experience), some labor advocates we spoke with argued that the H-1B program detrimentally impacts older IT [information technology] professionals. Several researchers and labor advocates have stated that technology companies seek to replace older, American IT workers with cheaper, younger workers that are freshly supplied through the H-1B program in order to lower costs, and that IT companies have no incentive to retain and retrain older workers with the latest skills, since the H-1B program provides ready access to young workers with cutting-edge training. While companies could use any young, skilled workers to lower their labor costs in this manner, advocates argue that the H-1B program facilitates the practice of displacing older IT workers because it provides an inflow of new workers in IT fields that is much larger than would otherwise be available to U.S. employers.

GAO declined to reach a conclusion as to the matter, because the labor advocates neither provided evidence as to “what the wages of older U.S. IT professionals would have been in the absence of the H-1B program”, nor “account[ed] for the myriad factors affecting wage, for which we lack data.” However, Matloff has concluded that:

[T]he H-1B program is an enabler of rampant age discrimination in the tech industry. Age is actually one of the core issues in H-1B. Mind you, we are talking about age 35 as being “old” here, not 55. Almost all the H-1Bs are young, and younger is cheaper. And young H-1Bs are even cheaper than young Americans.
Age gives employers an excuse to shun American applicants, on the grounds that a given job opening requires only three to five years of experience, rendering the Americans “overqualified.” Or the employer will load the job description with unnecessary requirements, making the Americans simultaneously under- and overqualified.

I should note that in September 2023, San Jose, California’s, Mercury News reported that:

After a seven-year legal battle, technology industry icon HP and its spinoff Hewlett Packard Enterprises have agreed to pay $18 million to settle a class-action lawsuit accusing them of purging older workers, according to a court filing.The lawsuit went on so long that lead plaintiff Donna Forsyth, a manager laid off at age 62 after 17 years with the companies, did not survive to see its resolution.
Three years before the split, the company “began implementing a company-wide initiative to replace thousands of existing, older workers with new, younger employees,” the lawsuit claimed. Then-CEO Meg Whitman, the lawsuit alleged, “repeatedly admitted that her goal was to make the entire organization younger.”

Mend It, Don’t End It?

To H-1B or not to H-1B, that is the question. Assuming the program is to be retained, how can the systemic flaws discussed in this report be fixed?

Higher H-1B Salary Floor

One promising legislative fix for the H-1B program would be to modify the prevailing wage requirement to, in the Trump administration’s words, curtail “the influx of relatively lower-paid, lower-skilled H–1B workers”.

In 2013, the House Judiciary Committee reported a bill, H.R. 2131, that would have done just that. The legislation, introduced by U.S. Rep. Darrell Issa (R-Calif.), provided in part that:

[T]he Secretary of Labor shall make available to employers a governmental survey to determine the prevailing wage for each occupational classification by metropolitan statistical area. … Such survey, or other survey approved by the Secretary of Labor, shall provide 3 levels of wages commensurate with experience, education, and level of supervision. Such wage levels shall be determined as follows:

(A) The first level shall be the mean of the lowest two-thirds of wages surveyed, but in no case less than 80 percent of the mean of the wages surveyed. [Emphasis added.]

(B) The second level shall be the mean of wages surveyed.

(C) The third level shall be the mean of the highest two-thirds of wages surveyed.

The committee’s report stated that:

In order to ensure that the prevailing wage system protects U.S. workers from potential wage depression and that employers focus on bringing in the best and brightest foreign workers, H.R. 2131 provides that employers shall use prevailing wage surveys — either governmental or private — that provide three levels of wages with a lowest prevailing wage level not lower than 80% of the average wage level for the occupation. This ensures that if employers pay the majority of their H-1Bs at the lowest wage level, a wage floor will prevent the program from potentially harming the wages of competing American workers and will encourage employers to use the H-1B program for higher-value and higher-skilled workers.

The bill as introduced additionally provided that:

In computing the prevailing wage level for an occupational classification in an area of employment … in the case of an alien who does not begin work with their employer … within one year of graduation from an institution [of higher education in the U.S.] … the wage level shall be [either] the [second or third] wage level … depending on the alien’s experience, education, and level of supervision.

That provision would have required H-1B workers to be paid no less than the average wage for the occupation in the area of employment, except for recent foreign graduates of U.S. universities, who could be paid as little as 80 percent of that average wage.

In any event, BLS estimated that the mean salary level for software developers in 2023 was $138,110. Eighty percent of that amount would be $110,488, 11.6 percent higher than the median promised salary that year for new H-1B CRO workers of $99,000.

Ronil Hira and Bharath Gopalaswamy recommended an even higher salary floor:

If the [U.S.] is going to invite in the “best and brightest” workers, they ought to be paid in the top quartile. The statute requires there to be four wage levels, but it doesn’t specify how the DOL calculates those wage levels. [DOL] should raise the Level 1 wage to the 75th percentile, to ensure that the workers being recruited are indeed highly skilled and are not undercutting US workers. This can be done through an administrative procedure, either via policy guidance or a regulation.

Matloff similarly recommended that “we should [have] a single wage floor set at the 75 percentile of the overall wage distribution for the given occupation and region.” He noted that “This approach would give the visas to those who can truly make exceptional contributions to our economy and society.”

As BLS estimated the 75th percentile of salaries for software developers in 2003 to be $167,540, the Hira/Gopalaswamy/Matloff proposal would have resulted in an H-1B salary floor (not accounting for variations by area of employment) of the same amount, 69.2 percent higher than the median promised salary for new H-1B workers that year, and 33.0 percent higher than the 75th percentile promised salary for new H-1B workers.

In any event, I do not believe that such a change could be accomplished administratively, as § 212 of the INA provides that “a governmental survey to determine the prevailing wage … shall provide at least 4 levels of wages commensurate with experience, education, and the level of supervision”. It would be hard to argue that the “prevailing wage” at the lowest of four levels of experience, education, and supervision could equate to the median wage for an occupation, let alone a wage at the 75th percentile. Of course, Congress could choose to make such a change.

I would recommend that Congress consider instituting a prevailing wage floor of the average wage for an occupation in the area of employment. I could understand a justification for a lower floor for recent graduates of U.S. universities such as the average wage for new graduates — but the lower floor would need to expire at some point after the former students’ graduation — say after two years. Presumably, after two years of work experience, H-1B workers will have developed the skills to no longer warrant a cut-rate wage. In effect, this would not be too far off from what H.R. 2131 as originally introduced would have accomplished.

First Preference for Higher-Paid H-1B Workers

Another promising legislative fix would be to require DHS to abandon its lottery and give first preference to prospective H-1B workers who are promised the highest salaries.

Because of the facts that demand for H-1B slots usually greatly outpaces supply and DHS’s method of resolution is a random lottery, Hira and Gopalaswamy have noted with concern that “Workers who are barely eligible for an H-1B, with the lowest possible skill levels and wages, can squeeze out someone with unique skills and a very high salary.” President Trump’s DHS agreed, pointing out the “risk … of U.S. employers … rely[ing] on the [H-1B] program to access relatively lower-cost labor, precluding other employers from benefitting from the H-1B program’s intended purpose of providing high-skilled nonimmigrant labor to supplement domestic labor.”

Hira and Gopalaswamy recommended that:

[V]isas should be allocated to the best and brightest first. This can easily be done by allocating the visas to the highest-salaried workers. The highest salary could be calculated in one of two ways. First, simply by a rank order of the salary offered. Or, second, ranking the visas from highest to lowest skill levels, with workers being offered Level 4 wages getting to the front of the line. The former system would maximize salaries, while the latter would ensure geographic and occupational diversity. Additional preferences could be included in the selection criteria, such as educational attainment (e.g., advanced degrees) and whether the applicant studied at a US university.

President Trump’s DHS actually attempted to transform the H-1B program’s random lottery in this manner into a “best and brightest first” selection process. DHS promulgated a final ruleon January 8, 2021, providing that:

USCIS will rank and select registrations. … For purposes of the ranking and selection process, USCIS will use the highest [of the four] corresponding Occupational Employment Statistics (OES) wage level[s] that the proffered wage will equal or exceed for the relevant Standard Occupational Classification (SOC) code and area(s) of intended employment.
If USCIS has received more registrations on the final registration date than necessary to meet the H–1B regular cap … USCIS will rank and select from among all registrations properly submitted on the final registration date on the basis of the highest OES wage level that the proffered wage equals or exceeds for the relevant SOC code and area of intended employment, beginning with OES wage level IV and proceeding in descending order with OES wage levels III, II, and I. … If USCIS receives and ranks more registrations at a particular wage level than the projected number needed to meet the numerical limitation, USCIS will randomly select from all registrations within that particular wage level a sufficient number of registrations needed to reach the numerical limitation.

The rule provided a similar process for allocation of the 20,000 slots available under the “master’s degree cap”.

DHS explained in the final rule that the purpose of the rule was to “better ensure that H-1B classification is more likely to be awarded to petitioners seeking to employ relatively higher-skilled and higher-paid beneficiaries”. It expected that the rule would “incentivize[] employers to offer higher wages, or to petition for positions requiring higher skills and higher-skilled aliens that are commensurate with higher wage levels, to increase the likelihood of selection for a[] … petition”, and that the rule was “necessary to better protect U.S. workers, particularly those U.S. workers competing against H–1B workers for entry-level jobs”.

As to why DHS did not simply select those prospective H-1B workers being offered the highest salaries, DHS argued in the final rule that:

[S]electi[on] … solely based on the highest salary would unfairly favor certain professions, industries, or geographic locations. … [P]rioritizing generally based on the highest OES wage level that the proffered wage equals or exceeds for the relevant SOC [occupational] code and in the area of intended employment is the better alternative.
If DHS were to select the highest prevailing wage within a wage level, that could unfairly advantage registrations or petitions for positions in higher-paying metropolitan areas or occupations.

DHS believed that the rule’s benefits would include:

disincentiviz[ing] abuse of the H-1B program to fill relatively lower-paid, lower-skilled positions[;]
may[be] lead[ing] to the selection of the most-skilled or most-valued H–1B beneficiaries[;]
U.S. employers that might have petitioned for cap-subject H-1B workers to fill relatively lower-paid, lower skilled positions, may be incentivized to hire available and qualified U.S. workers for those positions[;]
[f]acilitating the admission of higher skilled foreign workers, as indicated by their earning of wages that equal or exceed higher prevailing wage levels … benefit[ing] the economy and increase[ing] the [U.S.]’ competitive edge in attracting the “best and the brightest’’ in the global labor market[; and]
benefit[ing] U.S. workers who compete against entry-level H-1B workers and … incentiviz[ing] H-1B petitioners to offer higher wages, further benefiting U.S. workers whose wages might otherwise be depressed by an influx of relatively lower-paid, lower-skilled H-1B workers.

And DHS stated in the proposed rule that “[T]he selection of registrations with proffered wages that correspond to higher wage levels is expected to incentivize higher wages, reduce the adverse effect on similarly employed U.S. workers, and prevent further stagnation of wages for U.S. information technology … workers generally.”

Unfortunately, a month later, on February 8, President Biden’s DHS “delay[ed] the rule’s effective date until December 31, 2021”, explaining that:

USCIS will not have adequate time to complete system development, thoroughly test the modifications, train staff, and conduct public outreach needed to ensure an effective and orderly implementation of the … Final Rule by the time the initial registration period will be open for the upcoming fiscal year (FY) 2022 H-1B cap season. During the delay, while USCIS works through the issues associated with implementation, DHS leadership will also evaluate the … rule and its associated policies, as is typical of agencies at the beginning of a new Administration.

Then, on September 15, 2021, the U.S. District Court for the Northern District of California vacated the final rule “[b]ecause [Chad] Wolf was not lawfully appointed as Acting Secretary [of Homeland Security] at the time the Final Rule was approved”.⁵The Biden administration appealed the decision, but then dropped its appeal, and on December 22, 2021, DHS withdrewthe rule. DHS Secretary Alejandro Mayorkas declined to reissue the rule under this own name.

Many members of Congress have introduced legislation to similar effect. For example, in the 118th Congress, Sen. Richard Durbin (D-Ill.) introduced S. 979, co-sponsored by Sen. Chuck Grassley (R- Iowa) and four other senators, that proposed an approach melding a preference for higher wages with a preference for graduates of U.S. universities:

[DHS] shall consider [H-1B] petitions … in the following order [with the three lowest preference categories omitted]:

(i) Petitions for [foreign students] who, while physically present in the [U.S.], have earned an advanced degree in a [STEM] field … from a[ U.S.] institution of higher education[;]

(ii) Petitions certifying that the employer will be paying the [prospective H-1B worker] the median wage for skill level 4 in the occupational classification found in the most recent [OES] survey[;]

(iii) Petitions [foreign students] who are graduates of any other advanced degree program, undertaken while physically present in the [U.S.], from a[ U.S.] institution of higher education[;]

(iv) Petitions certifying that the employer will be paying the [prospective H-1B worker] the median wage for skill level 3 in the occupational classification found in the most recent [OES] survey[;]

(v) Petitions for [foreign students] who are graduates of a bachelor’s degree program, undertaken while physically present in the [U.S.], in a [STEM] field … from a[ U.S.] institution of higher education[; and]

(vi) Petitions for [foreign students] who are graduates of bachelor’s degree programs, undertaken while physically present in the [U.S.], in any other fields from a[ U.S.] institution of higher education.

Conclusion

In the hope that more employers actually use the H-1B program to hire “critical people who buil[d] … companies that ma[k]e America strong”, we need to either “rais[e] the minimum salary significantly … making it materially more expensive to hire from overseas than domestically”, or prioritize those prospective H-1B workers being offered higher wages. These fixes, whether easy to accomplish or not, are imperative if we are to have an H-1B program that actually serves the national interest and protects the interests of American workers.

End Notes

¹ The USCIS data I relied on can be accessed here. Go to “Program Reports: H-1B”, which provides access to USCIS’s annual “Characteristics of H-1B Specialty Occupation Workers” reports for fiscal years 2004-23.

² Nonimmigrant Visas: Hearings Before the Subcomm. on Immigration of the Senate Judiciary Comm., 104th Cong., 1st Sess. (Sept. 28, 1995).

³ The BLS data I relied on can be accessed here. This page provides access to BLS’s Occupational Employment Statistics estimates issued each May. Because of periodic changes in the way that BLS categorizes and names occupations, for fiscal years 2019-20, I used BLS data for “software developers and software quality assurance analysts and testers”, for fiscal years 2010-18, I used data for “software developers, applications”, and for fiscal years 2004-09, I used data for “computer software engineers, applications”. I should note that in the instances where I used data for software developers or engineers working on applications, BLS also listed a smaller category of those working on systems software. However, BLS consistently reported higher average salaries for those working on systems software than it did for those working on applications.

⁴ The NACE data can be accessed here. Use the dashboard for each year to access data for the classes of 2015-23.

⁵ Chamber of Commerce of the United States v. DHS, No. 4:20–cv–07331 (N.D. Cal. Sep. 15, 2021) LEXIS 175696 (Order Granting Pl.’s Motion for Summary Judgment and Denying Def.’s Cross-Motion for Summary Judgment; Judgment).

Topics: H-1B Nonimmigrant Visa Progam

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