{"schema_version":1,"citation_url":"https://567politics.com/news/how-h1b-hiring-can-hold-down-wages-employer-power-evidence-november-2026","title":"How companies use H-1B hiring to keep wages down","description":"Lower wage floors, outsourcing and employer-linked visas can give companies leverage over pay—and polling shows many voters distrust how firms use the program.","author":"567 Politics","publisher":"567politics","date_published":"2026-11-12T18:06:45.769884Z","date_modified":"2026-11-12T18:09:40.447529Z","body_markdown":"H-1B hiring can hold down wages when it gives employers a cheaper way to fill a job, weakens a worker’s ability to negotiate or increases competition for the same work. Those effects can harm both U.S. workers and the people hired on visas. They do not require every visa holder to be low paid, and they do not establish that the program reduces wages for every American.\n\nThe strongest case concerns the rules and incentives employers face. A legal wage floor can be below what a firm would otherwise have to offer. A worker whose status depends on sponsorship may face extra costs in moving jobs. A company can also shift work to a contractor with a different pay structure.\n\nEach mechanism needs its own evidence. A pay gap between groups, a proven wage violation and an estimate of what wages would have been without immigration answer different questions. Collapsing them into one statistic overstates what researchers know.\n\n\n```diagram\ntype: flow\ntitle: How employer leverage can translate into lower pay\nsource: [DPE reform proposals](https://www.dpeaflcio.org/factsheets/guest-worker-visas-the-h-1b-and-l-1), [EPI wage-level analysis](https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/)\n---\nHiring options: A company can recruit through sponsorship or an outside staffing firm\nBargaining conditions: Pay floors and the costs of changing sponsors shape workers’ options\nEmployer leverage: The firm may face less pressure to raise offers or retain staff with higher pay\nPossible outcome: Pay can be lower than it would otherwise be; this is a mechanism, not a measured effect for every job\n```\n\n## A wage floor is not the wage an employer would otherwise offer\n\nH-1B is not a legal exemption from wage protections. The Labor Department defines the required rate as the higher of the local prevailing wage or the employer’s actual wage for similarly qualified workers doing the specific job. The actual-wage comparison is not simply an average of everyone in an occupation. [Department of Labor H-1B glossary](https://webapps.dol.gov/elaws/h1b/glossary.aspx?word=all).\n\nThat leaves a policy question: is the floor high enough to remove the incentive to hire for lower labor costs? Compliance with a minimum does not prove a firm paid the amount needed to attract a worker in an unrestricted hiring market.\n\nFor example, suppose a firm would need to offer more money to persuade another qualified worker to join. If sponsorship allows it to fill the role at a lower lawful rate, the firm saves money. This is an illustration of the mechanism, not a claim about a measured national pay gap.\n\nThe Economic Policy Institute’s May 2020 analysis found that 60% of H-1B positions certified in fiscal 2019 were assigned to the two lowest prevailing-wage levels. Those levels were below the local occupational median. EPI argued that the system let employers legally reduce labor costs and called for higher floors. [EPI’s analysis of wage levels](https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/).\n\n```chart\ntype: bar\ntitle: Most certified H-1B positions used lower wage levels in 2019\nsource: [Economic Policy Institute, May 2020](https://www.epi.org/publication/h-1b-visas-and-prevailing-wage-levels/)\nnote: Share of U.S. H-1B positions certified in fiscal 2019. These are assigned wage levels, not proof of wages paid or illegal underpayment. Other levels are the remainder.\nsuffix: %\nhighlight: Level 2\n---\nAssigned level | Share\nLevel 2 | 46\nOther levels | 40\nLevel 1 | 14\n```\n\nThe chart is historical. It does not describe the mix of jobs approved in 2026. Labor-condition certifications also do not all become approved visa petitions or completed hires. Their assigned levels cannot be read as a count of workers whose wages were stolen.\n\nThere is a serious objection to using the median as the test. The National Foundation for American Policy argues that a local occupational median includes people with far more experience than a new graduate. Its March 2025 brief warns that a blanket median requirement could price younger international graduates out of U.S. jobs. [NFAP’s wage-requirements analysis](https://nfap.com/wp-content/uploads/2025/03/Employers-And-Wage-Requirements-For-H-1B-Visa-Holders.NFAP-Policy-Brief.2025.pdf).\n\nThat objection means comparisons should match experience, duties, location and compensation. It does not settle whether existing rules prevent cost-driven hiring. The dispute is over what makes a fair benchmark, rather than whether employers should be allowed to break wage law.\n\n## Sponsorship and outsourcing can shift bargaining power\n\nA worker’s best protection against a poor offer is often the ability to take a better one. Employer sponsorship can complicate that choice. The AFL-CIO’s Department for Professional Employees describes H-1B as employer-controlled and calls for greater freedom to change jobs while workers await permanent status. It also seeks stronger protection against retaliation for reporting violations. [DPE’s February 2026 reform fact sheet](https://www.dpeaflcio.org/factsheets/guest-worker-visas-the-h-1b-and-l-1).\n\nThis does not mean H-1B workers can never change employers. The economic concern is the extra friction around a move. If finding another sponsor is harder than finding another job, an employee may be less willing to challenge pay or working conditions. How large that effect is depends on the worker, the employer and the available alternatives.\n\nThe first person harmed can therefore be the visa holder. A system that makes some workers less able to negotiate may also weaken the bargaining position of other people competing for the same roles. This is an explanation of a possible channel, not a claim that every sponsored worker accepts worse terms.\n\nOutsourcing introduces another layer. The company where work is performed may buy a service from a staffing firm instead of employing the people directly. That can change which workers are used for pay comparisons and who is responsible for meeting visa obligations.\n\nIn its December 2021 report on wage theft, EPI argued that contractor arrangements weakened safeguards by separating sponsored employees from the client company’s workforce. It cited a Labor Department investigation at Southern California Edison that found no wrongdoing under the rules applied. EPI viewed that outcome as a failure of the rules, not proof that the agency had found an illegal replacement scheme. [EPI’s outsourcing analysis](https://www.epi.org/publication/new-evidence-widespread-wage-theft-in-the-h-1b-program/).\n\nThe distinction matters. Cutting labor costs through a lawful contract can be controversial without being fraud. A fake job, forged document or failure to pay a required wage raises a different issue. [567politics’ report on documented H-1B fraud and public opinion](https://567politics.com/news/h1b-fraud-public-opinion-employer-abuse-november-2026) examines that boundary.\n\nThere are proven examples of abuse. In a 2021 visa-fraud case, staffing operator Kishore Kumar Kavuru admitted leaving sponsored workers unpaid for months while seeking real placements. He also admitted false job claims and charging workers for petitions in violation of Labor Department rules. These admissions show how sponsorship can be used against workers; they do not establish how common such conduct is. [Justice Department sentencing announcement](https://www.oig.dol.gov/public/Press%20Releases/Sunnyvale_Man_Sentenced_To_15_Months_For_Visa_Fraud_USAO_ND_CA_11232021.pdf).\n\n## Added labor supply can restrain pay even as the economy grows\n\nWage pressure does not require fraud. If firms can recruit more people to do the same work, they may face less pressure to raise offers. But that simple effect is only part of the economy. New workers also help firms produce more, develop products and hire people with complementary skills.\n\nA study by John Bound, Gaurav Khanna and Nicolas Morales illustrates that tradeoff. Their April 2017 paper used a model calibrated to the 1994–2001 U.S. economy. In its simulations, U.S. computer scientists’ wages would have been 2.6% to 5.1% higher in 2001 without the high-skilled immigration examined.\n\nThe same model found overall gains for U.S. natives, lower IT prices and higher IT output and profits. These are model-based comparisons with an alternative economy, not observed pay cuts for named workers. They are not an estimate of the current H-1B program’s effect. [The authors’ paper](https://nicolasmoralesg.github.io/papers/BoundKhannaMorales.pdf).\n\nA wage can rise in dollars and still be held below what it would otherwise have reached. That is why a high salary, by itself, does not disprove wage pressure. Conversely, an observed gap between two groups does not prove that immigration caused it.\n\n| Evidence | What it measures | What it cannot establish alone |\n| --- | --- | --- |\n| Offered wage or assigned level | Terms in a filing | Actual pay or a causal wage effect |\n| Pay comparison | Differences between workers | Whether immigration caused the gap |\n| Enforcement finding | A specific violation | National prevalence |\n| Economic model | An estimated alternative outcome | A current observed pay cut |\n\nThe table explains evidence types; it does not rank all studies using them. A strong comparison needs to account for the question being asked, the sample, the period and the assumptions.\n\nMore recent research supplies an important counterweight. A Richmond Fed working paper, revised in March 2025, examined the 2007 H-1B lottery using Census employer-worker data. Parag Mahajan, Nicolas Morales, Kevin Shih, Mingyu Chen and Agostina Brinatti found that lottery wins helped firms expand and survive. They found no net displacement of native-born college-educated workers at the firm level, while noting differences among narrower groups. [Study and methods](https://www.richmondfed.org/publications/research/working_papers/2024/wp_24-04).\n\nFirm growth does not prove that every incumbent gets a raise. Nor does a model showing pressure on one occupation prove that total employment falls. The studies examine different outcomes and use different methods, so their results should not be forced into a single verdict.\n\nIn an October 2025 Richmond Fed brief, Morales explicitly acknowledged possible wage pressure on native graduates who compete most directly with H-1B workers. He also argued that broader gains can outweigh those costs. He identified complementary work, lower prices and the risk that restrictions push production abroad. Those are the author’s views, not an official Federal Reserve policy position. [Morales’s economic brief](https://www.richmondfed.org/publications/research/economic_brief/2025/eb_25-39).\n\n\n## Voters see wage suppression, but still support H-1B\n\nDistrust of employer practices is not the same as opposition to skilled immigration. The Honest Poll found a plurality of likely voters chose wage suppression over genuine shortages as companies’ main use of H-1B. A separate question found majority support for the program.\n\n```chart\ntype: bar\ntitle: More voters see companies holding down wages than filling shortages\nsource: [The Honest Poll, October 4–6, 2026](https://www.thehonestpoll.com/polls/h-1b-program-backed-58-to-29-among-likely-voters-but-a-plurality-says-companies-use-it-to-hold-down-wages)\nnote: U.S. likely voters; perceived main use of H-1B by large companies, not measured wage effects.\nsuffix: %\nhighlight: Hold down wages\n---\nResponse | Share\nHold down wages | 46\nFill genuine shortages | 35\nNot sure | 19\n```\n\n```chart\ntype: bar\ntitle: A majority still supports the H-1B program\nsource: [The Honest Poll, October 4–6, 2026](https://www.thehonestpoll.com/polls/h-1b-program-backed-58-to-29-among-likely-voters-but-a-plurality-says-companies-use-it-to-hold-down-wages)\nnote: U.S. likely voters; separate question about program support.\nsuffix: %\nhighlight: Support\n---\nResponse | Share\nSupport | 58\nOppose | 29\nNot sure | 13\n```\n\nThe pollster surveyed 939 registered voters, including 780 likely voters, October 4–6, 2026, using an online panel and SMS with demographic and political weighting. It reports a full-sample margin of error of 3.4 points; subgroup uncertainty is higher. The public release names no outside sponsor. The toplines download was unavailable during review.\n\nRasmussen also found majority approval in June 2026. Its self-funded telephone and online survey covered 1,107 likely U.S. voters on June 3–4 and 7, with a reported margin of error of three points. Approval was 62%, disapproval 25%, and 13% were unsure. Its description framed H-1B as temporary work in specialty occupations. [Rasmussen release and methodology](https://www.rasmussenreports.com/public_content/politics/trump_administration_second_term/support_for_h_1b_program_remains_high).\n\nThese are different pollsters and questions, not a trend series. Voter beliefs cannot establish that a company broke wage rules or quantify the program’s effect on pay.\n\n\n## Reform depends on which source of wage pressure is being targeted\n\nLabor advocates favor higher pay floors, stronger recruitment and anti-displacement rules, audits and protection for workers who report abuse. DPE also supports greater worker mobility. These proposals target employer incentives and bargaining power, rather than treating foreign workers themselves as the problem.\n\nSupporters of easier skilled hiring warn that blunt restrictions can block useful recruitment and shift activity abroad. NFAP argues for wage comparisons that reflect experience. That position still has to address how to prevent employers from labeling jobs too low or using sponsorship to secure unfair pay advantages.\n\nThe two concerns are not mutually exclusive. A policy can protect a sponsored worker’s pay and improve competition for U.S. workers. It can also be poorly designed, deterring legitimate hires without making enforcement more effective.\n\nA higher application fee and a higher wage requirement do different things. A fee raises the employer’s cost of hiring, but does not itself put money into the employee’s paycheck. A wage rule changes the minimum paid to the worker. [Our earlier coverage of the H-1B fee dispute](https://567politics.com/news/h1b-fee-court-blocks-anti-indian-sentiment-carnegie-survey-uscis-november-2026) provides background on that separate policy fight.\n\nFor readers comparing proposals, the useful questions are concrete. Does the rule change take-home pay? Does it help a worker leave a bad employer? Does it detect false job descriptions? Does it shift hiring overseas? A measure that addresses one of those problems may do little about another.\n\nThis is a debate about legal work, employer conduct and labor standards. [567politics’ legal-immigration guide](https://567politics.com/issues/united-states#immigration) separates admissions from border enforcement. Our [reporting on online hostility and views of India](https://567politics.com/news/social-media-views-of-indians-india-favorability-pew-gallup-november-2026) also explains why criticism of a hiring system should not become a claim about an ethnic group.\n\nThe unresolved question is the present-day size and distribution of the effect. The evidence reviewed here identifies credible channels for wage pressure and documented abuse. It does not yield one reliable percentage by which H-1B hiring lowers all U.S. wages. A better estimate would need matched pay data, worker experience, job duties, employer type and credible comparisons over time.\n\n*Reporting note: Prepared with AI assistance from original research and public records reviewed November 12, 2026; no original interviews. Historical wage-level data and model results are labeled by period. No current nationwide causal wage estimate is claimed. The government-data connector has no H-1B wage series; original sources were reviewed directly.*\n\n*Lead photo: [AgnosticPreachersKid / Wikimedia Commons](https://commons.wikimedia.org/wiki/File:Frances_Perkins_Building.JPG), [CC BY-SA 3.0](https://creativecommons.org/licenses/by-sa/3.0/). May 2010 file photograph of Labor Department headquarters, cropped to 16:9. The cropped photograph retains that license.*","link_base":"https://567politics.com/news/how-h1b-hiring-can-hold-down-wages-employer-power-evidence-november-2026","citation_guidance":"Cite citation_url. Preserve source links, dates and qualifications. date_modified is an edit date, not proof that every claim was rechecked. Third-party images and quoted material retain their own rights."}