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The H-1B visa program was intended to bring in specialized talent from abroad, but instead it has become a tool for employers to hire cheaper labor for mainstream jobs.
The result is a distorted labor market, where highly qualified workers are pushed out of the H-1B visa program by spam applications for rank-and-file workers, who then fill entry-level positions that are already in short supply. This misuse of H-1B visas has a negative synergy with growth impact of AI on the labor market and is part of a larger problem that needs urgent attention.
The impact of this visa farming problem is especially acute among young people and recent graduates, who face a bleak job market despite moderate overall unemployment rates. According to government data, the unemployment rate among students under 25 and students over 25 has reached a record high of more than four to one. This means that entry-level jobs are already four times scarcer than jobs that require experience or advanced expertise.
Program applicants must explicitly be people with specialized skills, and those specialized skills cannot be readily available existing live-in employees.
I have seen firsthand the symptoms of declining demand for Entry-level technical jobs. These symptoms include fewer job openings from recruiters targeting new CS students, job fairs with fewer companies, and concerned consultants receiving fewer offers with lower pay or in some cases no offers at all. Awarding the H-1B visas to low-wage, non-specialist workers only exacerbates this shortage, while doing little to meet the actual demand for workers with specialist skills.
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The problem here is not about the number of visas issued, but rather the way they are used. Program applicants must explicitly be people with specialized skills, and those specialized skills cannot be readily available existing live-in employees. However, the bureaucratic assessment process allows employers to exaggerate claims and hire workers with ordinary skills at low wages. There is a whole sub-profession of HR professionals and lawyers who specialize in dressing up pigeons to look like peacocks.
This abuse of the hiring process has created a lottery system where workers with the special skills needed often lose out to those who do not have any specialized skills. As a result, new graduates find it more difficult to obtain entry-level work, while companies that really need specific specialized skills cannot obtain visas for these workers. Imagine a person suffering from both malnutrition and diabetes because instead of vitamins he has been gobbling up sugar pills.
I would like to emphasize that I am not in favor of insular restrictions on the number of H-1B visas. It’s about making sure that people with real specialized skills that are actually needed are welcomed through the H-1B program. When used properly, an H-1B visa produces someone who complements the workforce with skills that are both needed and specialized, potentially benefiting the entire country. Whether it’s retaining a graduating international student or bringing in someone from outside the country, the U.S. has historically benefited greatly from immigrants with the necessary skills.
Many people invested in the visa business argue unconvincingly that H-1B visas are already going to specialized workers as intended, but the statistics on H-1B visa recipients disagree.
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According to the annual report of the U.S. government’s Office of Citizenship and Immigration Services, nearly 63,000 of the 2023 H-1B visa recipients were in “computer-related occupations” and the average salary for this group was $99,000 per year, with 25% less than $ Earn 85,000. A salary of $99,000 or $85,000 per year is certainly a good amount to earn, but it is quite low for what I would expect from someone with rare specialized skills in this field.
You would think that people with specialized, hard-to-find skills would earn exceptionally good salaries, but instead this data shows the opposite. The more I dig into the data in the agency’s annual report, the less it appears that approved applications are for exceptional people for specialized jobs. It’s more like some specially trained workers mixed with many regular employees who are paid on the low side of what I would expect.
These observations are consistent with my own experiences hiring technical staff and advising CS students, with what others have told me firsthand, and with numerous recently published analyses. The only clear explanation I see for these inconsistencies is that employers submit entry-level positions, not positions requiring special, rare skills, that even for entry-level salaries are low, and that these non-compliant applications are not rejected.
Looking at the bigger picture, H-1B visa abuse isn’t the only obstacle American job seekers face, as AI automation is also eliminating jobs, increasing scarcity. Currently, AI’s impact is disproportionately on entry-level jobs, exacerbating the problems caused by abuse of the H-1B program. However, AI will continue to improve, both in terms of capabilities and ease of use, and its impact on the labor market will increase as the range of tasks that can be performed by AI expands.
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Although AI and H-1B visa abuse may appear to be separate problems in their own right, they interact in ways that most people do not appreciate. Even if it cannot completely replace a human worker, AI facilitates moving work away from permanent employees to contractors or external workers.
The explanation is that AI often eliminates the need for advanced specialized skills or knowledge, replacing it with a lesser requirement of merely having the ability to review work for correctness. The result is that tasks that were previously too complex to move to contractors or remote workers are now made easier by AI and more suitable for externalizing.
As AI technology continues to improve, employers will find that more and more jobs can be done by less skilled workers, and there will be greater motivation to use H-1B visas to hire those less skilled workers cheaply.
The review process for the H-1B visa program should be reformed to prioritize applicants with true specialized talents and to ensure that recipients do not unfairly compete with workers already in the US. We must also address the growing threat of AI automation and its growing impact on the labor market.
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About 90% of everything US tax revenue comes from taxing the income of working individuals, so if unemployment continues to rise, tax revenues will shrink dramatically. At the same time, the number of unemployed people in need of public support will soar. That combination doesn’t work mathematically and is a clear recipe for disaster.
This situation requires radical change to avoid a dystopian future. Overall unemployment rates may seem robust, but high unemployment among first-time buyers and overall underemployment indicate that a much larger problem is developing.
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Disclaimer: All opinions expressed in this article are solely those of the author as an individual. Nothing in this article should be construed as a statement regarding the author’s professional position at any institution.
