H-1B visa: What role do foreign workers play in US economy?

H-1B visa holders fill skill gaps, complement US workers, and boost the economy, per American Immigration Council

Listen to article

Foreign workers on H-1B visas are crucial for addressing labour shortages in the United States, particularly in science, technology, engineering, and mathematics (STEM) fields.

Each year, US employers vie for a limited number of H-1B visas, issued by US Citizenship and Immigration Services (USCIS), to hire highly skilled foreign professionals.

With demand consistently outstripping supply, the statutory cap for H-1B visas is often reached before the end of the fiscal year. For Fiscal Year 2025, the cap was met as early as December 2, 2024.

Economic contributions of H-1B workers

A study by the American Immigration Council highlights the pivotal role of H-1B visa holders in bolstering the US economy. They do not merely fill critical skill gaps; they also complement the native workforce, creating broader job opportunities.

The report outlines five key ways in which immigrant workers drive economic growth:

Complementary Skills: Foreign and native-born workers often possess different skills, enabling them to work in tandem rather than compete.

Economic Demand: Immigrant workers’ spending and investments boost consumer demand, leading to job creation.

Business Expansion: The presence of immigrant workers encourages businesses to grow domestically rather than relocate overseas.

Entrepreneurship: Many immigrants establish businesses, further expanding the labour market.

Innovation: Immigrant contributions to innovation stimulate economic growth.

H-1B Visas and economic Growth

Between 2005 and 2018, increases in H-1B visa holders within specific occupations were linked to declining unemployment rates in those fields. Restrictions on H-1B visas, however, have driven multinational corporations to reduce US-based jobs and expand operations in countries like India, China, and Canada.

H-1B workers also drive innovation. In 2019, higher approval rates for H-1B visas correlated with increased patent filings, venture capital funding, and successful business outcomes such as IPOs and acquisitions.

Impact on wages

Contrary to claims that H-1B workers lower wages, the report indicates they earn significantly more than the average US worker. In 2021, the median wage for H-1B visa holders was $108,000, compared to $45,760 for the broader workforce. Between 2003 and 2021, H-1B wages grew by 52%, outpacing the 39% increase in median wages for US workers.

The H-1B Visa programme

Established in 1990, the H-1B visa programme allows US employers to petition for highly educated foreign professionals in "specialty occupations" requiring a bachelor's degree or higher. STEM fields such as engineering, technology, and medical sciences are common beneficiaries.

Employers must demonstrate that hiring H-1B workers will not harm US workers by adhering to labour condition application (LCA) requirements. Despite these safeguards, the annual visa cap is capped at 65,000, with an additional 20,000 visas available for advanced degree holders from US institutions.

The H-1B visa programme remains a cornerstone of the US economy, driving innovation, job creation, and economic growth while addressing critical labour shortages.