A closer look at wages, job displacement, and skill shortages
The question of whether H-1B visa holders take away well-paying US jobs involves conflicting data and strong arguments from both sides of the economic debate. The impact is largely dependent on how the visa is utilized by the sponsoring employer.
The Argument for Job Displacement and Wage Suppression
Critics of the H-1B program argue that it is frequently exploited by certain companies, particularly large IT outsourcing firms, to replace US workers with foreign workers who are paid significantly lower wages, thereby undercutting the US labor market.
- Wage Arbitrage: Companies are required to pay the H-1B holder the prevailing wage for the role, but critics allege that loopholes in how the “prevailing wage” is calculated allow employers to classify jobs at a lower experience level (Wage Level I or II) than the work actually demands. This allows them to pay wages far below the market rate for similar US workers. Reports have shown entry-level H-1B workers at outsourcing firms being paid a significant discount compared to full-time, traditional American counterparts.
- Replacement of Workers: Instances have been documented where large US companies have laid off thousands of American employees while simultaneously filing for or being approved for thousands of H-1B visas, suggesting that the visa is used for replacement rather than to fill genuine skill shortages.
- Impact on Entry-Level: Studies have indicated that the influx of H-1B workers, especially in high volumes at lower wage levels, may negatively affect the employment and wage prospects of recent US college graduates in technical fields.
The Argument for Job Creation and Economic Growth
Conversely, many economists and large US tech companies argue that H-1B workers, when used as intended, are essential for filling legitimate skills gaps, fostering innovation, and actually increasing overall job opportunities for US citizens.
- Complementary Skills: A large body of economic research suggests that high-skilled immigrants generally complement the skills of US workers, rather than compete with them. By allowing US companies to hire top global talent, particularly in cutting-edge fields like AI and specialized engineering, these workers increase the productivity of the entire firm.
- Job Multiplier Effect: Studies have found a positive correlation between hiring H-1B workers and subsequent hiring of native-born workers. For example, some analyses suggest that for every H-1B position requested, US technology companies increase their employment of other workers, indicating that the foreign talent helps the company grow and create more jobs overall.
- Higher Median Wages: Data for H-1B holders employed directly by major US tech companies often shows they are paid well above the US median wage and frequently more than the prevailing wage set by the Department of Labor. In recent years, the median salary for H-1B workers in computer-related fields was well over $100,000, suggesting that many of these are indeed “well-paying” jobs.
- Avoiding Offshoring: Restricting the H-1B program does not eliminate the demand for those specialized skills; instead, firms often respond by moving projects and jobs overseas to foreign affiliates, resulting in a net loss of highly skilled roles from the US.
Conclusion
In short, the claim holds some truth when applied to the misuse of the H-1B visa by staffing and outsourcing companies primarily focused on lowering labor costs. However, the claim is generally not supported by the data when considering the high-skilled workers hired directly by innovative US technology firms, universities, and hospitals, who are widely seen as driving overall economic expansion and innovation, which benefits the entire labor market.
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