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THE H-1B WAGE GAP
How the H-1B Program Undercuts American Workers
Source: George J. Borjas, NBER Working Paper No. 34793 (Revised March 2026)
KEY FINDING
H-1B workers earn 15% less than comparable American workers – generating payroll savings exceeding $100,000 per hire over a six-year visa term. This is after controlling for education, age, gender, occupation, industry, and metropolitan area. Comparable high-skill Americans in the private sector earn more than $125,000 annually. This revised finding has withstood two published critiques and is confirmed across multiple independent data sources.
THE OUTSOURCING PIPELINE: WHO PROFITS MOST
Nearly 75% of H-1B hires are outside the Top 25 firms, and the wage gap for those firms is -18.3%. Firms that hired just one H-1B worker show a gap of -19.7%. Underpayment is systemic – not limited to a few bad actors.
| Firm | Avg. H-1B Salary | Wage Gap vs. Americans |
|---|---|---|
| Wipro | $92,900 | -39.6% |
| Tech Mahindra | $101,300 | -37.0% |
| HCL | $101,800 | -35.1% |
| Larsen & Toubro Infotech | $118,800 | -24.7% |
| Tata Consultancy | $98,400 | -20.8% |
| Capgemini | $113,500 | -17.4% |
| Infosys | $96,900 | -17.2% |
| All Other Firms (75% of hires) | $114,100 | -18.3% |
CONCENTRATED IN HIGH-TECH, BUT UNDERPAYMENT IS UNIVERSAL
Software Developers alone account for 38.3% of all H-1B employment. Nearly half the H-1B workforce is in a single industry: Computer Systems Design. Over 43% of H-1B workers concentrate in just five metro areas (vs. 15% of Americans). Before adjusting for these differences, H-1B workers appear to earn more than Americans – a 20-percentage-point reversal once location, occupation, and industry are accounted for.
A CAPTIVE WORKFORCE: RESTRICTED MOBILITY DEPRESSES WAGES
H-1B workers change jobs at just 9.4% annually, compared to 20–25% for comparable American workers. This restricted mobility gives employers market power to suppress wages. Research on similar contractual restrictions (noncompete agreements) shows they reduce wages by 4–14%.
BATTLE-TESTED: CONFIRMED ACROSS METHODS AND DATA SOURCES
The revised study addressed two published critiques and strengthened its methodology with proper inflation adjustment, better geographic controls, industry fixed effects, and a private-sector baseline. The CPS independently confirms the same -15.5% gap. An alternative “likely H-1B” identification method in survey data confirms a gap exceeding -12%. The job seniority bias – comparing new H-1B hires to experienced Americans – accounts for only 2.9 percentage points, leaving a “true” gap of approximately 12.6%.
THE FEE TEST: IT’S ABOUT CHEAP LABOR, NOT TALENT
If employers truly couldn’t find qualified Americans, a fee would eliminate demand. Instead:
- Even fees exceeding $100,000 may not significantly reduce demand
- Revenue-maximizing fee: $97,000–$190,000 per visa
- Annual revenue generated: $5–$13 billion
- At a $100,000 fee: 45–64% of H-1B workers would still be hired
THE BOTTOM LINE
The H-1B program is not filling a talent gap – it is providing a captive, underpaid workforce that depresses wages for American workers in high-skill occupations. The program transfers wealth from American workers to employers: firms pocket the savings while comparable Americans earn less or are displaced entirely. This finding has been revised, stress-tested, and confirmed: employers would pay well over $100,000 per visa and still hire – proving the program is driven by cost savings, not genuine need.
You can read the study here.
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