Two Simple Reforms Can Make H-1B Visas Great Again

By Hal Salzman edited by Dan Vergano

Just in time for the holidays, an internecine fight about what “America First” means broke upon the incoming Trump administration. The brawl pitted demands for more high-skill foreign guest workers against others saying those workers sent Americans to the back of the hiring line.

This latest fracas began on Christmas, when Trump’s billionaire backer Elon Musk wrote: “The number of people who are super talented engineers AND super motivated in the USA is far too low,” on his X social network. He called for more H-1B workers to compensate for these overly complacent and less competent Americans. Trump’s former-opponent-turned-backer, former ambassador to the United Nations Nikki Haley responded: “We must invest in Americans first before looking elsewhere.”

The fracas is new, but the argument isn’t. For decades, researchers have disputed the effects of an expansive and ever-growing H-1B visa program for technology guest workers. Tech executives such as Musk say they need tens of thousands more workers. But others point out that hundreds of thousands of experienced U.S. tech workers were fired in the last two years—some among the 15,000 fired by Musk—and then replaced by guest workers.

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But there is a way for top talent to work in the U.S. without undermining the wages and opportunities for its workers—if we tighten restrictions on visas and end exploitative educational programs.

The U.S. Department of Labor’s H-1B visa program yearly provides businesses with up to 65,000 nonimmigrant work visas for guest workers with specialized skills, usually defined as requiring a bachelor’s degree related to the field of proposed employment. Another 20,000 go to those with a master’s degree or higher, and an unlimited number go to universities and nonprofits to hire foreign lab techs, scientists, tech workers, professors and postdocs. In 2023, the agency granted about 120,000 visas in total. Additionally, there is an even larger STEM OPT (optional practical training) program that provides any foreign student graduate a three-year work permit in a STEM field—which can be whatever a university defines as “STEM” (such as New York University’s drama therapy or games for learning master’s degree). These two programs swim in an alphabet soup of visas that yearly provide U.S. employers over 700,000 high-skill guest workers.

Technology industries scoop up about two thirds of these visas, and have done so for decades; they rely on guest workers to fill the vast majority of new, young hires, perhaps as much as 70 to 80 percent of entry-level employees. Unlike other visas, the H-1B visa is tied to the employer so workers are, as often described, “indentured servants,” with limited mobility. That undercuts their market power in negotiating wages, leaving abusive working conditions or protesting wage theft. There is no requirement that their employers demonstrate a labor shortage or first search for U.S. workers; in fact, it is perfectly legal for employers to exclude citizens and permanent, “green card” residents alike from consideration; U.S. workers are not a protected class under antidiscrimination laws. It was only this past year that one of the larger IT guest worker employers, Cognizant, lost a novel lawsuit charging discrimination in favor of one ethnic group, Indian workers, who were the most hired on H-1B visas.

When we look at the education and jobs held by the vast majority of guest workers, it’s hard to call them hard-to-find talent. Most work for software outsourcing and consulting firms, doing important but not innovative work. And most computer science guest workers graduating from U.S. colleges with advanced degrees come from low or no-ranked programs with enrollments of some 80 to 100 percent foreign students. That is, colleges have gotten into the game of profiting from guest workers, through master’s degree programs that are low-cost to run but high-cost for students. These serve as a labor market portal for foreign students, and high-margin profit centers for colleges.

Two simple reforms would provide the tech industry access to global talent while minimizing job losses of domestic workers. They’d also encourage investment in American education and training.

First, guest worker visas, including H1-Bs, should be issued only for workers paid in the top 15 percent of each industry and occupation groups’ wages. Second, work visas should go only to graduates in the top 15 percent of each class for workers entering through OPT. Both policies are reasonable and relatively straightforward to implement and monitor. Employers and colleges already report most of the necessary data to federal agencies. And they address the important concerns of both of our rhetorical combatants.

“Super talented” and “super motivated” workers are certainly a far smaller share than the top 15 percent of the workforce. That means these restrictions will more than satisfy Musk’s demands to fill innovative technology development jobs.

Limiting guest worker permits and visas to the foreign students graduating in the top 15 percent of their class in a U.S. college would address two concerns: First, students would be ranked alongside their domestic peers, providing some measure of their academic abilities. Second, it would keep colleges from operating diploma mills that target and exploit foreign students. For those students, there would be risk of not getting a work permit by going to colleges with more than 10 to 15 percent foreign student enrollment. That would encourage them to attend a broader range of colleges, bringing higher performing students to lower-tier schools. To keep this profitable population, colleges will, in turn, need to recruit a substantial pool of domestic students and, importantly, support them through graduation. That’s because a high dropout rate will shrink the domestic pool and thus the share of foreign students who can be in the top 15 percent (motivating foreign students to help their domestic peers graduate, lest the domestic pool shrink and decrease the number of students in the top percentiles).

Employers also will need to recruit more widely and invest in domestic education to maintain the pool of foreign graduates eligible for work permits. The smaller pool of foreign graduates will motivate employers to compete for workers rather than relying on government largesse for abundant supplies of guest workers willing to accept below-market wages. This will draw talented workers into the technology industries rather than losing them to Wall Street, which doesn’t advance science and engineering. Adjustments for regional wages could spur industries hiring these higher-paid, higher-skilled workers to locate high-wage operations in lower-cost U.S. cities and towns.

These straightforward reforms would reduce by 90 percent, I estimate, the current pool of eligible H-1B applicants that irks Haley. Tens of thousands of guest worker visas would then be available under the current cap so tech industries could recruit top global talent, while also encouraging these companies to draw on the large supply of U.S. talent.

Let’s be honest about reforming guest worker visas to bring in global talent, using the market as a guide rather than falling under the influence of industries that spend the most on lobbyists or who flood the zone with applications gaming the system. With these straightforward reforms we can support legitimate goals for bringing in hard-to-find global talent and investing in the ample supplies of the domestic “super talented” students and workers. These strategic reforms will provide U.S. workers, especially underrepresented minorities, real opportunities in our technology workforce, and cut the Gordian knot tied by antiworker expansionists and anti-immigrant restrictionists alike. This is what industry should be “super motivated” to do.

This is an opinion and analysis article, and the views expressed by the author or authors are not necessarily those of Scientific American.