Even $200,000 H-1B visa fee won’t deter hiring: New study explains why | Immigration News

A proposed $100,000 fee on hiring H-1B workers may not materially slow employer demand for the visa, according to a new study by the US-based National Bureau of Economic Research.
 

The paper, titled The H-1B wage gap, visa fees, and employer demand, authored by economist George Borjas, who has previously advised on restrictive US immigration policies, added that even if the fee were raised to between $150,000 and $200,000, it would still not deter employers from hiring skilled workers.
 

Borjas found that H-1B workers earn less than comparable US-born workers across most settings. “The average H-1B worker earns about 16 per cent less than a US-born worker in the same locality and with the same education, age, gender, and occupation,” he wrote.

 
 

Wage gap across firms
 

Pay levels for H-1B workers vary widely depending on the employer. At large US technology firms such as Meta and Apple, average salaries for H-1B workers are close to $150,000. At Indian-origin IT services firms such as Infosys and Wipro, average pay is closer to $80,000.
 

Borjas found that large American technology companies, including Amazon, Google, Microsoft, Meta, Apple and Tesla, show relatively small wage gaps between H-1B and US-born workers. At Meta and Tesla, the wage gap ranges from about minus 1 per cent to minus 3 per cent and is statistically indistinguishable from zero.
 

In contrast, firms frequently cited as outsourcing pipelines for Indian H-1B workers, including Infosys, Tata Consultancy Services, Wipro and HCL, show much larger negative wage gaps, with H-1B workers paid far below market rates for comparable US workers.
 

However, the study noted that H-1B workers are not heavily concentrated in a small group of employers.
 

Nearly 75 per cent of H-1B hires are outside the top 25 firms. Data from I-129 filings show that 46,184 distinct firms hired at least one H-1B worker over a four-year period. The median firm hired exactly one H-1B worker during that time, while firms at the 75th percentile hired three.
 

Even among firms hiring very small numbers of H-1B workers, pay gaps persist. For firms that hired only one H-1B worker, the estimated wage gap was minus 18.5 per cent. Similar gaps appeared among firms hiring up to three workers.
 

Borjas concluded that low pay is not limited to large outsourcing companies. “Practically all H-1B workers, except the few that end up in large American-owned high-tech companies, end up working for firms that pay them far less than the market wage for statistically comparable American workers,” he wrote.
 

Wage gaps within occupations
 

According to the study, the H-1B workforce is concentrated in a narrow set of occupations. Software developers alone account for 38.3 per cent of all H-1B workers. The five largest occupations together employ nearly two-thirds of the workforce, while the top ten account for around three-quarters.
 

Because US-born workers are less prevalent in many of these high-paying roles, the study found that adding occupation-level controls reduces measured wage gaps but does not eliminate them.
 

The paper also examined how employers classify H-1B roles under the Labour Condition Application system, which assigns jobs to one of four prevailing wage levels:
 

Level I: About the 17th percentile of the local wage distribution

Level II: About the 34th percentile

Level III: About the 50th percentile

Level IV: About the 67th percentile
 

Borjas cautioned against treating these levels as direct indicators of skill. He gave the example of a young software programmer in San Francisco earning a relatively low wage compared with other local programmers, which could place the role in a lower wage category despite high underlying skills.
 

Visa fees and employer incentives
 

The study assessed whether a $100,000 visa fee would deter firms from hiring H-1B workers. Borjas argued that it would not, particularly for high-skilled workers who earn more than $100,000 a year.
 

“The average payroll savings resulting from a single H-1B hire nears $100,000 over the term of the six-year visa,” he wrote, suggesting employers would still find it profitable to hire such workers even after paying the fee.
 

Borjas added that even higher fees may not drastically reduce demand. “Imposing a visa fee between $150,000 and $200,000 may not change the number of H-1B workers hired all that much,” he wrote, adding that firms would be willing to pay for the “privilege” of hiring these workers because of the wage gap.
 

Based on his estimates, such fees could generate between $10 billion and $20 billion in annual revenue and shift the H-1B programme towards a more highly skilled workforce.
 

Borjas also pointed to structural features of the programme that give employers leverage over workers. Because firms must request permission to hire a specific individual and the number of new H-1B visas for for-profit firms is capped at 85,000 a year, visas become scarce.
 

That scarcity, he argued, gives employers market power, which in turn helps keep H-1B wages below those of comparable US workers.