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H-1B Wages Surge to the Top 10% of All Wages in the US

By Bill at April 14, 2022 01:02
Filed Under: Immigration News
by David Bier, Cato Institute

Opponents of the H‑1B visa often claim that H‑1B employers “pay low wages.” This has never been true, but the latest wage data prove how ridiculous this claim is. H‑1B workers are highly paid: their wages are in the 90th percentile of all wages in the United States, meaning that they have wages in the top 10 percent of U.S. wage earners. H‑1B workers are not low wage or “cheap” workers in any honest assessment of the meaning of those words.

The Bureau of Labor Statistics announced last week that the median wage for all U.S. workers in 2021 was $45,760 and that the 90th percentile for all U.S. wages was $102,810. Meanwhile, according to the Department of Homeland Security (DHS), the median wage for H‑1B worker in 2021 was about $108,000—above the 90th percentile and well over double the median wage for all U.S. workers. The majority of H‑1B workers are making more than all but about 8 percent of U.S. workers.

Figure 1 shows how H‑1B wages have surged above the 90th percentile for the first time since DHS has reported H‑1B wages in 2003. It also shows that H‑1B wage growth has exceeded the growth for all U.S. workers. From 2003 to 2021, the nominal median H‑1B wage grew 52 percent, while the nominal median for all U.S. workers grew just 39 percent. If H‑1B employers could just pay whatever they want—as opponents claim—these increases would not be happening.

DHS held its annual lottery last week to allocate the 85,000 cap‐​subject H‑1B temporary work visas for high skilled foreign workers. The exact number of entrants is not clear, but once again, demand for H‑1B workers far exceeded the cap. In 2021, employers submitted more than 300,000 registrations. The wage data show that the U.S. government is turning away billions of dollars in production, decreasing tax revenue and harming U.S. competitiveness. There is no reason to impose an arbitrary limit on H‑1B visas. The numbers should reflect the demand for workers.

Of course, the H‑1B program has its problems. H‑1B workers should be able to receive promotions, change jobs, and start businesses without onerous government restrictions. DHS should automatically send them green cards shortly after their arrival without needing to undergo yet another bureaucratic and expensive effort that is often delayed by ridiculously low and outdated caps, both overall and on immigrants from specific countries.

But in reforming the green card process, Congress should not ignore the massive economic benefits from the H‑1B program—which is the initial on‐​ramp for the vast majority of skilled green card applicants. The latest wage data only further confirm the urgency of raising the H‑1B cap and making hiring foreign workers easier.