How a Sensible H1-B Overhaul Would Look

Elon Musk once held an H-1B visa, which is a good anecdotal argument that the visa is important to America. But in its current form it is not perfect. Five questions (and five answers) to explain why the H1-B visa needs to be reformed.

1) What is an H1-B visa?

Visas for foreigners to travel temporarily to the U.S. are designated by letters and numbers. B-1 is a business visa, B-2 is for tourists. H1-A allows foreign nurses to work in the U.S. while H1-B is for highly skilled workers—think AI scientists, programmers, and engineers—to work in the U.S. Unlike most non-immigrant visas, H1-B is considered a visa with dual intent, meaning it is understood most holders will go on to apply for green cards, permanent residence in the U.S., and never return home to their foreign residence.

Created in 1990, the H-1B is an employer-sponsored visa that authorizes foreigners to work in the U.S. for up to six years. Tech companies and IT consultancies are the top recipients. Every year, a government lottery awards 65,000 slots to applicants with an undergraduate degree and another 20,000 to those with advanced degrees (universities and nonprofits are exempt from these caps.) The private-sector allocation is typically filled within days, hence a lottery to choose finalists for the visa. More on this in a moment.

2) Who are the H1-Bs in the U.S.?

The majority of H1-Bs work in science, technology, engineering, and mathematics, with computer-related occupations accounting for 65 percent. This was followed by about 10 percent distributed among architecture, engineering, and surveying. Amazon was the top employer of H-1Bs in 2024, hiring more than 13,000. Other top employers were Google (4th), Meta (6th), Microsoft (7th), Apple (8th), and IBM (10th.) Tesla ranked 22nd. The rest of the top employers are Indian staffing companies (see below.) Successful H1-Bs came through the lottery system.

3) Does the lottery assure the U.S. of getting the best and brightest from abroad?

Since 2004, the number of new H-1B visas issued has been capped at 85,000 per year, 20,000 of which are reserved for foreign students with master’s degrees or higher from American universities. (The cap does not apply to universities, think tanks, and other non-profit groups, so more are issued.) These limited slots are chased by some 386,000 approved H-1B applications in fiscal year 2023, all thrown into that lottery.

So that winnows out the best candidates? Nope, sometimes just the opposite. Or maybe better to say any of the best and brightest are chosen by dumb luck and have just as much chance as the dull and dim. Because so many more people want an H1-B visa than there are visas available, a lottery is held. The lottery does not look at the quality or credentials of the applicant; he’s just thrown into the hopper to try his luck. All that is needed is the minimum qualification to enter, so many excellent candidates to fill jobs badly needed in the U.S. are never even considered.

Worse yet, the lottery is dominated by IT staffing firms which routinely flood it with entries, often for more visas than they need, crowding out companies that play by the rules and submit for specific, individual workers. Many of the world’s smartest engineers are shut out from the most lucrative, in-demand jobs, and shortages at the top end persist. It works like this: American Company A needs a programmer. Rather than try to recruit abroad and then navigate the cumbersome U.S. immigration system alone, they contract with an IT staffing firm, usually located in India (there are more than a million Indians in the U.S. on H-1 B visas, 72 percent of the whole; five of the top 10 H1-B firms are Indian), for such a person, any person who fits the general bill. The IT staffing firm then recruits say 100 such programmers and dumps them all in the lottery hoping one will win. That’s your man!

The paperwork is sometimes tidied up to change the employer from the staffing firm to American Company A. In some cases even the lottery winner can be substituted for a preferred candidate. It makes it very difficult for a specific individual to make it through the process. The lottery—by design—doesn’t reward top talent. It rewards luck and gaming the system. So it is not surprising 85 percent of H-1B petitions are awarded to employers paying well below the median wage, as determined by occupation and location. The floor for the H-1B visa salary is only $60,000, a number that has not be raised since, well, since when 60k was a decent salary in the IT industry. Even then the median compensation was only $118,000 fiscal year 2023.

4) Do H1-B workers compete with Americans for jobs?

The law says H1-B workers are supposed to be paid the prevailing wage for their job, based on the Department of Labor statistics. In reality, the Economic Policy Institute found that 60 percent of H-1B positions were assigned wage levels well below the local median wage for the occupation. A Government Accounting Office report found between June 1, 2009, and July 30, 2010, 83 percent of H-1B jobs were certified at Level 1 (Entry-level.) This does not mean the workers themselves were entry-level, only that to save money some highly-skilled workers were down-labeled to make them cheaper to hire.

Companies get low-cost employees, and the worker himself considers the eventual green card enough a part of his compensation that he tolerates the lower wage. The H1-B workers can’t complain too much; Their visa is for a specific company and they are like indentured servants, unable to change jobs freely. They have to take what they are given. Too bad about the displaced American workers priced out of the market.

5) What can be done to fix this?

Elon Musk and other tech barons argue the H-1B visa program is critical to ensuring American companies can find highly skilled labor that may not be easily available in the U.S. labor force. Trump himself has spoken highly of the program, ensuring its continued viability.

“Ultimately, if you’re going to have a skilled worker program for ‘skilled’ workers, you don’t award these visas via a lottery,” said Eric Ruark, the director of research at NumbersUSA, which advocates for tighter immigration controls. “Obviously, that’s not how you find the best and the brightest.”

To make the program better, dump the H1-B visa lottery in favor of a merit-based program for skilled workers that assigns points for various criteria, including education and work experience, similar to how Canada and other Western nations allocate their "Green Cards." Another possible approach, considered during Trump 1.0, would be to prioritize allocation of visas by wages. One way or another replace luck with skill to the benefit of the United States.

Here are five things that need to be done to fix the H1-B program.

• The salary floor should be raised for H1-B workers to make Americans more competitive for their jobs.
• The Department of Labor needs to update salary schedules more frequently, with an eye toward what real wages in the IT world are.
• Enforcement of H1-B regulations must eliminate more highly-skilled workers being used to fill entry-level jobs to get around wage caps. There should be no competition between American workers and H1-Bs.
• The overall number of H1-B visas available should be raised. Exempt “critical” industries such as defense-oriented companies from the numerical cap. To get more of the world’s best, the U.S. needs to open more doors to them.
• The H1-B application process should be further streamlined. The January 17, 2025 H-1B visa reforms are a good start but still not enough.

What should not be done is to eliminate the H1-B visa. The program as it stands today is necessary but not sufficient, and ripe for overhaul as part of the greater scrutiny Trump seeks to apply to all immigration to the United States.