The Impact of H-1B Visas on American Workers

The H-1B visa program is central to debates about skilled immigration and American jobs. With hundreds of thousands of H-1B applications approved annually, highly skilled foreign workers fill specialty roles across technology, healthcare, and research. 

U.S. companies champion the program to address talent gaps in ways that other visa categories, such as the O-1A, do not, while critics question whether H-1B workers displace U.S. workers. 

What does the evidence show? Below, we examine research on jobs, wages, and economic impact.

What is the H-1B visa program?

Before examining the program's effects on American workers, it helps to understand how the H-1B visa works and who qualifies. The H-1B is a nonimmigrant visa that allows U.S. employers to temporarily hire foreign workers in specialty occupations requiring at least a bachelor's degree. Common fields include software development, engineering, medicine, and research. U.S. Citizenship and Immigration Services (USCIS) administers the program.

Congress caps new H-1B visas at 65,000 annually, with an additional 20,000 reserved for workers holding advanced degrees from U.S. institutions, for a total of 85,000 per fiscal year. Cap-exempt organizations, such as universities and nonprofit research institutions, may hire H-1B workers without counting against these limits. When applications exceed the cap, USCIS uses a lottery to select which petitions to process. The FY2026 lottery saw 343,981 eligible registrations competing for available slots. 

For complete details on requirements, application steps, and timelines, read our comprehensive H-1B visa guide.

Recent policy changes and new rules

The Trump administration has implemented major changes affecting H-1B employers and workers. These rule changes help employers and foreign workers plan accordingly.

In September 2025, a Presidential Proclamation was issued, requiring employers to pay a $100,000 fee for new H-1B petitions filed on behalf of workers outside the United States, representing the most substantial cost increase in the program's history.

Current H-1B holders requesting extensions or transfers are exempt from the H-1B cap fee. F-1 students changing status within the U.S. also fall outside the requirement.

Richmond Fed economists estimate that the fee could sharply reduce inflows of college-educated immigrants, with IT services and nonprofits most affected. Research shows firms facing H-1B restrictions increasingly shift operations to Canada and India rather than hiring American workers.

The Department of Homeland Security (DHS) also issued a final rule implementing a weighted selection process for the FY2027 lottery. Effective February 2026, the rule prioritizes higher-skilled and higher-paid nonimmigrant worker applicants, giving preference to those at higher wage levels. Multiple lawsuits in Washington challenge the $100,000 fee's legality under the Administrative Procedure Act.

Who are H-1B workers?

According to Pew Research data from FY2023, India accounted for 73% of H-1B approvals, the largest share of country of origin. China follows at 12%, with no other country exceeding 2% of total approvals.

Education levels among H-1B holders have risen sharply. In 2000, just 31% held master's degrees. By 2023, that figure climbed to 57%; 34% hold bachelor's degrees. This shift reflects both changing employer demands and updates to the selection process that now favor higher-skilled applicants.

Computer-related occupations dominate, accounting for 65% of H-1B positions. Architecture, engineering, and surveying jobs represent another 9%. Top employers include Amazon (which has led since 2020) and IT outsourcing firms such as Cognizant, Infosys, and Tata Consultancy Services.

Here’s a quick look at the demographics of H1-B visa holders. 

Countries of Origin (FY2023)

Education Levels (FY2023)

Top Industries & Employers

H-1B salaries and wage requirements

According to Richmond Federal Reserve research, H-1B workers in the private sector earn a median salary of $92,600. For computer-related occupations, the median rises to $123,600.

Federal law requires employers to pay H-1B workers at least the prevailing wage for the occupation and location. The DOL determines these wage levels based on labor market surveys. Before filing an H-1B petition, employers must submit a Labor Condition Application (LCA) attesting the offered wage meets or exceeds the prevailing wage. Some critics contend that wage levels still allow outsourcing firms to pay lower wages than they would to American workers.

These wage protections aim to prevent employers from using the H-1B program to undercut American workers, though enforcement and compliance remain areas of continuing debate.

H-1B workers and job displacement

Economists who study the H-1B program consistently find that H-1B workers complement rather than displace U.S. citizens and other American workers. Research from the National Foundation for American Policy found that for every H-1B position requested by an employer, an average of 7.5 additional U.S. jobs are created. This multiplier reflects how skilled immigrants expand business capacity and drive demand for supporting roles.

The Richmond Fed's quasi-experimental research, comparing companies that won versus lost the H-1B lottery, found that winning firms expanded employment and revenues without displacing native college-educated workers. Small, high-productivity firms benefited most from access to H-1B talent. Companies that won the lottery were 2.5 percentage points more likely to survive as employers than those that lost.

The healthcare sector illustrates how H-1B workers address critical workforce needs. H-1B approvals for healthcare rose 8% between FY2022 and FY2025, helping staff hospitals, research institutions, and clinics in underserved areas. Counties with the highest poverty levels employ a higher percentage of H-1B physicians and healthcare workers compared to wealthier areas.

Critics raise valid concerns about IT outsourcing firms that submit thousands of H-1B applications annually. Some roles might be performed by domestic workers with additional training. The concentration of H-1B workers in outsourcing companies, rather than distributed across Silicon Valley startups and other employers, shapes how the program affects different labor market segments.

Economic contributions and tax obligations

Beyond labor-market effects, H-1B workers contribute to the broader U.S. economy through taxation, consumer spending, and entrepreneurship.

H-1B holders pay federal and state income taxes, Social Security, and Medicare (FICA) taxes like any U.S. employee. The IRS confirms that H-1B workers are treated as resident aliens for tax purposes, meaning they face the same tax obligations as U.S. citizens. These contributions fund infrastructure, healthcare, and social programs benefiting the entire population.

H-1B workers also contribute through consumer spending on housing, transportation, and local businesses, indirectly creating job opportunities for U.S. workers.

The innovation impact extends well beyond individual employment. Many influential technology leaders began their U.S. careers as H-1B visa holders, including Satya Nadella (Microsoft CEO) and Sundar Pichai (Google CEO). These skilled immigrants helped build Silicon Valley into a global technology hub. Startups founded by immigrants or H-1B holders have created millions of American jobs and contributed to U.S. competitiveness globally.

Sector-specific effects

The impact of H-1B workers varies significantly across industries, with some sectors relying more heavily on this visa category than others.

• Technology and IT services: The tech sector accounts for the largest share of H-1B workers, with computer-related occupations representing 65% of all H-1B positions. Research shows that tech companies that win the H-1B lottery experience higher survival rates and greater revenue growth. However, IT outsourcing firms have drawn criticism for concentrating a large number of H-1B applications, with some critics arguing that this crowds out smaller employers and potentially displaces American workers in specific IT roles.
• Healthcare: The healthcare sector demonstrates clear workforce needs addressed by H-1B workers. H-1B approvals for healthcare increased by 8% between FY2022 and FY2025, supporting staffing at hospitals, research institutions, and clinics in underserved areas. Research universities and university-affiliated medical centers rank among the largest employers of H-1B healthcare workers. Counties with higher poverty levels employ a greater percentage of H-1B physicians and healthcare workers than wealthier areas, suggesting that these workers help address geographic healthcare disparities.
• Research and academia: Universities and nonprofit research organizations benefit from cap-exempt status, allowing them to hire H-1B workers without lottery restrictions. These institutions rely on H-1B workers for scientific research, university teaching, and medical innovation. The National Institutes of Health, major research universities, and affiliated medical centers consistently rank among top H-1B employers in the research sector.
• Engineering and manufacturing: Architecture, engineering, and surveying occupations represent 9% of H-1B positions. These sectors employ H-1B workers in specialized technical roles where domestic talent shortages exist, particularly in emerging fields such as renewable energy, advanced manufacturing, and infrastructure development.

The concentration of H-1B workers in specific sectors shapes policy debates. While healthcare and research institutions demonstrate clear workforce needs, the extensive use of H-1B workers by IT outsourcing firms raises questions about whether the program serves its intended purpose of filling genuine skill gaps or enables cost reduction through lower-wage foreign labor.

Disadvantages and limitations of the H-1B

A balanced view requires acknowledging the program's drawbacks for both workers and employers. If you're considering an H-1B visa, you should understand these limitations before committing to the process.

• Employer dependency: Your H-1B status is tied to your sponsoring employer. Changing jobs requires filing a new petition, which can limit negotiating power and career flexibility.
• Cap and lottery uncertainty: Limited visa availability means qualified candidates may not be selected. The selection process creates uncertainty for employers planning workforce needs and for workers building careers.
• Processing fluctuations: Denial rates spiked to 15% in FY2018, then dropped to 2% by 2022, creating unpredictability.
• Six-year limit: Without progress toward a green card, workers must leave the United States after six years. Those from countries with long backlogs may face difficult choices between waiting abroad and losing U.S. job opportunities.
• Family limitations: H-4 dependents are subject to employment restrictions. Spouses may obtain work authorization only if the H-1B holder has an approved Form I-140 immigrant petition. Learn more about H-1B extensions and how they affect dependent status.

Recognizing these limitations helps set realistic expectations for anyone pursuing or sponsoring an H-1B visa.

Choosing the right support partner

The H-1B process requires coordination between employers, USCIS, and DOL. Documentation must meet strict standards, and policy changes create new compliance challenges.

Lighthouse provides eligibility diagnostics, lottery registration support, LCA compliance guidance, legal review to strengthen petitions, and case management technology. For workers pursuing permanent residence, we coordinate green card transition planning through EB-2 and EB-3 pathways.

Start your H-1B evaluation today.

Frequently asked questions

What is the average salary of H-1B visa holders?

The median salary for H-1B workers in the private sector is $92,600, rising to $123,600 for computer-related occupations. Prevailing wage requirements ensure H-1B workers are paid competitively with similarly employed U.S. workers.

Do H-1B visa workers pay Social Security tax?

Yes. H-1B holders pay FICA taxes (Social Security and Medicare) like any U.S. employee. They also pay federal and state income taxes as resident aliens for tax purposes under IRS rules.

Which country gets the most H-1B visas?

India accounts for 73% of H-1B approvals, with China second at 12%. No other country exceeds 2% of total approvals. This concentration results from established employer sponsorship relationships between U.S. companies and international universities.

Can H-1B visa holders get green cards?

Yes. The H-1B allows dual intent, meaning you can pursue permanent residence through EB-2 or EB-3 pathways while maintaining H-1B status. Timeline varies widely by country of birth due to per-country limits, with workers from India and China facing the longest waits.

Does H-1B lead to citizenship?

Not directly. H-1B status may lead to lawful permanent residence (LPR) through employment-based categories. After five years as a permanent resident, you can apply for naturalization. The full path typically spans seven to 10 or more years.

Does it cost $20,000 to become a U.S. citizen?

No. The naturalization application (Form N-400) costs several hundred dollars in filing fees. The $20,000 figure likely confuses citizenship costs with visa sponsorship expenses, which vary by visa type, employer size, and whether premium processing or legal services are used.