A new economic analysis has found that U.S. companies are saving the equivalent of hundreds of thousands of dollars in payroll costs for every H‑1B worker they hire, raising further questions about the visa’s purpose of bringing in high-skilled talent.
The study, released by the National Bureau of Economic Research (NBER), examined more than 340,000 H‑1B hires made by for‑profit companies between 2021 and 2024. It concluded that employers pay H‑1B workers about 16 percent less than U.S. workers with the same education, occupation, age, gender and location.
Because salaries in these roles typically exceed $100,000, the paper estimates firms save nearly $100,000 over the six‑year employment period allowed under the visa.
“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,” report author George J. Borjas told Newsweek. “Other than the large American tech companies, it seems that a lot of the other firms underpay their H-1Bs.
“I was stunned by how many firms use the program, and by how most of these firms hire only one, two, or three H-1Bs during the four-year sample period. And these firms also have large wage gaps.”
H-1B Visa Offers Large Savings with Strong Demand
That gap is far larger than previously documented in federal government datasets, industry reports or research analyses, NBER found.
While raw, unadjusted numbers show H‑1B workers sometimes earning slightly more than U.S. peers—largely because they cluster in expensive tech hubs—adjusting that data to take job type and geography into account reverses the pattern dramatically.
The report said the “true” wage gap turns from a +13 percent advantage for H‑1Bs in unadjusted data to a -16 percent disadvantage, a 29‑point swing once the comparison is made.
The paper argued that these savings help explain the intense demand for H‑1B visas, something which has caused concern among critics who feel U.S.-born graduates are being shut out of new jobs because of the visa.
“That undercuts the common claim from H-1B advocates that employers use the program only as a last resort because of its costs, when they supposedly can’t find qualified U.S. workers. That’s entirely a myth,” Kevin Lynn, founder of U.S. Tech Workers, which advocates for H-1B reform, told Newsweek. “In practice, any one-time fee is trivial compared to the compounding long-term labor cost savings the visa provides.”
Between 2021 and 2026, more than 450,000 unique beneficiaries registered annually for just 85,000 available slots. Tech employers, outsourcing firms and multinational contractors have all said they struggle to meet their talent needs within the program’s cap.
But the new analysis suggests many firms may be motivated less by worker scarcity and more by cost advantages. “The average payroll savings accruing to a firm that wins an H‑1B visa in the lottery are large,” the study notes, estimating savings close to six figures across the visa term.
Visa Fees Could Reach $200,000 Without Reducing Hiring
Beginning in Fiscal Year 2027, companies that win an H‑1B slot will be required to pay a $100,000 fee, a policy change initially intended to curb abuse and fund immigration services when President Donald Trump announced the measure.
This new study, however, argued that the fee could be raised far higher without meaningfully reducing employer demand. Instead, it was estimated that the fee could be set between $118,000 and $264,000—depending on assumptions about worker productivity and job turnover.
NBER felt that all 85,000 H-1Bs would likely still be filled each year, while generating between $6.2 billion and $22.4 billion for the federal government.
“That isn’t surprising given how the program is structured,” Lynn said. “The visa is held by the employer, not the worker, which ties the employee to the firm and alters labor-market dynamics in ways U.S. workers don’t face. A U.S. worker can freely look for better opportunities. An H-1B worker largely cannot, and that constraint has predictable effects on wages.”
Implications for the Tech Workforce
The research arrives amid ongoing debate over the role of H‑1B workers in the tech labor market.
Critics—particularly from labor groups—argue that the program has evolved into a tool for lowering wages and offshoring work, especially through large contracting firms. Supporters contend the U.S. does not produce enough STEM workers to meet industry demand.
While the paper does not propose policy changes explicitly, it hints that a fee‑based redesign could help ensure the economic benefits of the program “are more widely shared,” and could address distortions created by the underpayment of foreign professionals.
“In general, immigration programs that cater to specific sectors tend to benefit those sectors. That’s probably why they exist in the first place,” Borjas said. “Maybe it’s time to think about how to redistribute the gains from immigration more broadly.”
