Study Finds $100,000 H-1B Visa Fee May Not Significantly Reduce Hiring of Skilled Foreign Workers
A recent study from the National Bureau of Economic Research (NBER) suggests that the newly imposed $100,000 fee on H-1B workers may not substantially hinder employers from hiring these high-skilled foreign professionals. The research paper, titled 'THE H-1B WAGE GAP, VISA FEES, AND EMPLOYER DEMAND', was authored by economist George Borjas, who is often recognized for his influence on immigration fee policies during the Trump administration.
Significant Wage Disparity Between American and H-1B Workers
The paper highlights a considerable pay gap between American workers and H-1B visa holders. Borjas found that the average H-1B worker earns approximately 16 percent less than a US-born worker with equivalent education, age, gender, occupation, and location. This wage disparity plays a crucial role in employers' hiring decisions, even with the additional financial burden of visa fees.
Employer Savings Offset Visa Fee Costs
Despite the $100,000 fee, the study indicates that employers continue to find it advantageous to hire H-1B workers. Since these high-skill professionals typically earn more than $100,000 annually, the average payroll savings from a single H-1B hire nears $100,000 over the six-year visa term. This substantial cost saving effectively offsets the visa fee, making the hiring process economically viable for companies.
Potential for Higher Fees and Economic Impact
Borjas further argues that imposing a visa fee between $150,000 and $200,000 might not dramatically change the number of H-1B workers hired. The existing wage gap makes employers willing to pay a significant fee for the privilege of hiring such workers. According to his calculations, such a fee could:
- Generate annual revenues totaling between $10 billion and $20 billion
- Alter the skill composition of the H-1B workforce, making it more skilled
- Enhance economic benefits, as immigration yields greater advantages when the flow consists of high-skill workers
Market Dynamics and Visa Scarcity
The study also examines how market power and legislative caps influence H-1B employment. Firms must request permission for the temporary employment of specific workers, which grants employers some market power, likely reducing H-1B wages. Additionally, the number of H-1B visas available to for-profit firms is legislatively capped at 85,000 new visas per year, making the H-1B visa a precious and scarce commodity.
This combination of factors—wage savings, employer willingness to pay fees, and visa scarcity—suggests that the $100,000 fee may not be a significant deterrent to hiring H-1B workers, according to the NBER study.
