US companies save nearly $100,000 per H-1B hire as workers earn 16% less: Here’s why demand stays high
US companies are saving close to $100,000 in payroll costs for every H-1B worker they employ over the life of the visa, according to a new economic analysis examining wage data across hundreds of thousands of hires.The study, released by the National Bureau of Economic Research, analysed more than 340,000 H-1B hires made by for-profit firms between 2021 and 2024. After adjusting for education, occupation, age, gender and location, it found that H-1B workers were paid about 16% less than comparable US employees.Adjusted data reveals sizeable wage gapThe paper states that unadjusted figures show H-1B workers earning roughly 13% more than US peers, largely because many are employed in high-paying technology hubs. However, once job role and geography are factored in, the pattern reverses, producing what researchers describe as a 16% wage disadvantage. That represents a 29 percentage-point swing.“There is a very large wage gap between H-1Bs and comparable natives. Everybody sort of ‘knew’ that, but it’s nice to document it with credible wage data,” George J. Borjas said, as quoted by Newsweek. He added, in remarks reported by the publication, that apart from large American technology companies, “a lot of the other firms underpay their H-1Bs”.Borjas further told Newsweek he was struck by how many companies use the programme and by the fact that most hired only one, two or three H-1B workers during the four-year sample period. Those firms, he said in comments carried by Newsweek, “also have large wage gaps”.Given that salaries in the occupations examined typically exceed $100,000 a year, the paper estimates that employers save nearly $100,000 over the six-year period an H-1B visa holder may remain in the US.Strong demand despite limited slotsBetween 2021 and 2026, more than 450,000 unique beneficiaries registered annually for 85,000 available H-1B places. Technology employers, outsourcing firms and multinational contractors have said they struggle to meet hiring needs within the cap.The study argues that the level of payroll savings helps explain persistent demand. It notes that “the average payroll savings accruing to a firm that wins an H-1B visa in the lottery are large”, as reported by Newsweek, placing the figure close to six digits over the visa term.Kevin Lynn, founder of US Tech Workers, told Newsweek that the findings challenge the claim that employers rely on the visa only when no qualified US workers can be found. “In practice, any one-time fee is trivial compared to the compounding long-term labour cost savings the visa provides,” he said, according to Newsweek.Lynn also stated, in comments published by Newsweek, that the visa is held by the employer rather than the worker, tying the employee to the firm and altering labour market dynamics. An H-1B worker “largely cannot” move freely for better opportunities, he said, as quoted by Newsweek.Higher fees unlikely to deter hiringFrom Fiscal Year 2027, companies awarded an H-1B slot will be required to pay a $100,000 fee, a policy announced by US President Donald Trump. The measure was intended to curb abuse and fund immigration services.However, the NBER analysis suggests the fee could be set much higher without reducing demand. As reported by Newsweek, researchers estimated the charge could range from $118,000 to $264,000, depending on assumptions about productivity and turnover, while all 85,000 visas would likely still be filled.Under those projections, annual federal revenue could range between $6.2bn and $22.4bn, the study found, according to Newsweek.
