High Visa Fees May Not Curb H-1B Hiring, New Economic Study Suggests

• A $100,000 H-1B visa fee is unlikely to significantly reduce employer demand, the NBER study finds.

• H-1B workers earn about 16% less than comparable U.S.-born employees on average.

• Wage gaps vary widely by employer, with smaller gaps at major U.S. tech firms.

• Most H-1B hires occur outside top firms, and pay gaps persist among small employers.

• Even higher fees may not deter hiring due to sustained payroll savings.

  
  

A proposed $100,000 charge on companies that hire H-1B visa holders is unlikely to significantly dampen employer interest in the program, according to new academic research from the National Bureau of Economic Research (NBER).

In a paper titled The H-1B Wage Gap, Visa Fees, and Employer Demand, economist George Borjas examines how wage differences between foreign-born H-1B professionals and comparable U.S.-born workers shape corporate incentives. Borjas, who has previously advised on more restrictive immigration policies, concludes that even a steep visa fee would not meaningfully reduce demand for high-skilled foreign labor. In fact, he suggests that raising the fee to as much as $150,000 or even $200,000 per worker may still leave hiring patterns largely intact.

Persistent Wage Differences

Central to the study is the finding that H-1B employees, on average, are paid less than similarly qualified American workers. After adjusting for factors such as education, occupation, age, gender, and location, Borjas estimates that H-1B workers earn roughly 16 percent less than their U.S.-born counterparts.

However, the pay gap varies sharply by employer.

At major American technology firms—including Meta and Apple—average H-1B salaries approach $150,000 annually. By contrast, Indian-headquartered IT services companies such as Infosys and Wipro report average pay closer to $80,000 for H-1B employees.

Borjas finds that wage disparities are relatively small at large U.S. tech giants like Amazon, Google, Microsoft, Meta, Apple, and Tesla. At companies such as Meta and Tesla, the wage gap ranges from about 1 to 3 percent below comparable American wages—a difference that the study describes as statistically insignificant.

The situation differs at firms often associated with outsourcing pipelines, including Infosys, Tata Consultancy Services, Wipro, and HCL. At these employers, H-1B workers tend to earn considerably less than market rates for similarly situated U.S. employees.

Not Just a Big-Company Phenomenon

Despite public perception, the H-1B workforce is not clustered within a small circle of corporate giants. Nearly three-quarters of H-1B hires occur outside the 25 largest sponsoring firms.

Data drawn from I-129 petition filings show that over a four-year span, 46,184 different companies hired at least one H-1B worker. The typical employer hired just a single H-1B employee during that period. Even firms at the 75th percentile of hiring brought on only three.

Yet wage differences persist even among these smaller employers. Companies that hired only one H-1B worker showed an estimated wage gap of approximately 18.5 percent below comparable U.S.-born workers. Similar patterns appeared among firms hiring two or three workers.

Borjas concludes that lower pay is not confined to large outsourcing firms. In his assessment, only a small share of H-1B employees—primarily those at large American-owned technology companies—receive compensation comparable to domestic workers with similar qualifications. Most others, he argues, are paid substantially less than prevailing market wages.

Occupational Concentration

The research also highlights how heavily the H-1B program is concentrated in a limited number of professions. Software developers alone account for more than 38 percent of all H-1B workers. The five most common occupations collectively represent nearly two-thirds of the total workforce, while the top ten make up roughly three-quarters.

Because U.S.-born workers are underrepresented in some of these specialized and often high-paying roles, adjusting for occupation reduces—but does not eliminate—the observed wage gap.

The study further reviews how employers categorize H-1B roles within the Labor Condition Application (LCA) system. Positions are slotted into four prevailing wage levels tied to percentiles of local wage distributions, ranging from Level I at roughly the 17th percentile to Level IV at about the 67th percentile.

Borjas cautions that these classifications should not be interpreted as straightforward indicators of skill. For example, a junior software engineer in San Francisco may fall into a lower wage tier relative to local peers despite possessing advanced technical capabilities.

Would Higher Fees Change Hiring Behavior?

The paper’s most policy-relevant question centers on whether imposing a substantial visa fee would discourage companies from participating in the program.

Borjas argues that a $100,000 fee would likely have minimal impact, especially for high-earning professionals. Over a standard six-year H-1B term, employers’ payroll savings from paying below-market wages can approach $100,000 per worker, he estimates—effectively offsetting the proposed fee.

Even higher fees, in the range of $150,000 to $200,000, might not dramatically reduce hiring levels. Employers, he suggests, would still view the payment as worthwhile given the underlying wage differential.

Such fees, however, could generate significant government revenue—potentially between $10 billion and $20 billion annually—and might tilt the program toward the most highly skilled workers, who command higher salaries.

Structural Pressures in the System

Beyond wages and fees, the study points to structural aspects of the H-1B framework that may give employers added leverage. Companies must petition for a specific individual, and the annual cap for new H-1B visas in the for-profit sector stands at 85,000.

That limit creates scarcity. According to Borjas, this scarcity strengthens employers’ bargaining position, contributing to wage suppression relative to comparable American workers.

Overall, the research paints a picture of a program shaped not only by skill shortages and global talent flows, but also by economic incentives embedded in its design. Even substantial new fees, the study suggests, may not fundamentally alter the financial calculus that drives employer demand for H-1B labor.