The H-1B Visa: A Deep Dive Into America’s Most Controversial Work Program

How a system designed to attract the world’s best and brightest became a corporate cost-cutting machine — and who’s really paying the price.

Last updated: April 2026

In 1990, Congress created the H-1B visa with a straightforward premise: let American employers hire foreign professionals for highly specialized jobs that couldn’t be filled domestically. Three and a half decades later, that program has metastasized into something its architects would barely recognize — a system that simultaneously depresses wages for American workers, exploits the foreign talent it claims to champion, and enriches a class of corporate middlemen while hollowing out the middle-class tech careers that were supposed to define the American Dream.

This isn’t a partisan argument. Criticism of the H-1B program comes from Senator Bernie Sanders on the left and the Trump White House on the right. It comes from the AFL-CIO and the Heritage Foundation. The question is no longer whether the system is broken — it’s how badly, and who profits from keeping it that way.

The Numbers: What the H-1B Program Actually Looks Like

The statutory cap on new H-1B visas is 65,000 per year, with an additional 20,000 reserved for foreign professionals holding a master’s degree or higher from a U.S. institution. Universities, nonprofit research organizations, and government research entities are exempt from the cap entirely. In total, approximately 600,000 H-1B workers are employed by roughly 50,000 U.S. employers at any given time.

For fiscal year 2025, USCIS approved approximately 406,000 H-1B petitions at a 97.9% approval rate. That number includes renewals, transfers, and extensions — not just new hires. For the FY 2026 lottery cycle, USCIS received registrations for about 336,000 unique beneficiaries and selected approximately 118,660 — a 35.3% selection rate.

Demand has been softening. FY 2026 saw a 26.9% reduction in eligible registrations compared to FY 2025, driven partly by USCIS’s shift to a “beneficiary-centric” lottery system that eliminated a major source of gaming (more on that shortly).

Nearly 400,000 H-1B petitions were approved in fiscal year 2024, with the majority being renewals rather than new employment authorizations — a detail often lost in the headlines.

The Occupation Audit: What Jobs Are These Visas Actually Filling?

The original vision of the H-1B — importing a world-class nuclear physicist or a rare disease researcher — represents a sliver of how the program is actually used.

Software developers alone account for roughly 38% of all H-1B workers. When you expand to the top five occupations, you capture about two-thirds of the entire H-1B workforce. Stretch to the top ten, and you’re looking at approximately three-quarters. The program is, in practice, an IT staffing pipeline.

According to Department of Labor data for FY 2026, the single most common job title on H-1B labor condition applications was “Software Engineer,” with over 30,000 filings at an average salary of $149,407. Other dominant titles include systems analyst, computer programmer, data engineer, and business analyst — solidly mid-level technology positions, not the rare genius-tier talent the program was ostensibly designed for.

Senator Bernie Sanders put it bluntly in a January 2025 op-ed: if this program is really about importing the best and the brightest, why are H-1B guest workers being employed as lawyers, dog trainers, massage therapists, cooks, and English teachers?

The data from Heritage Foundation analysis of 2020–2024 approvals tells a revealing story about who’s actually using the program. Over half of approved H-1B applicants held F-1 student visas immediately prior — meaning the majority of H-1B recipients are international students already studying in the United States, not world-class specialists being recruited from abroad for irreplaceable skills.

The Corporate Playbook: How Outsourcing Firms Hijacked the System

This is where the story turns dark. The H-1B program isn’t just dominated by a handful of employers — it’s been structurally captured by an outsourcing industry whose entire business model depends on labor arbitrage.

According to analysis by the Economic Policy Institute, in 2022, the top 30 H-1B employers hired more than 34,000 new H-1B workers — accounting for 40% of the total annual cap. Thirteen of those top 30 were outsourcing firms. Among the most prominent: Infosys, Tata Consultancy Services (TCS), Cognizant, Wipro, and HCL America.

Heritage Foundation data covering 2020–2024 shows Amazon leading all employers with over 13,000 approved H-1B petitions, followed by Infosys, TCS, Cognizant, Google, and Microsoft.

A Bloomberg investigation published in July 2024 found that nearly half of all H-1B visas in their analysis went to outsourcing or staffing companies. More than 11,600 visas went to multinational outsourcing companies, and another 22,600 went to IT staffing firms. Bloomberg uncovered evidence that many of these firms cheated the lottery on a massive scale by submitting multiple entries for the same worker through affiliated shell companies.

This isn’t a peripheral problem. It’s the system’s defining feature.

Here’s how the outsourcing model works: A major American corporation — Disney, Southern California Edison, Citigroup, Verizon — decides it wants to cut IT costs. Instead of directly hiring H-1B workers (which would subject them to certain attestation requirements), they contract with an outsourcing firm like Infosys or Cognizant. That outsourcing firm brings in H-1B workers, places them at the American company’s offices, and pays them significantly less than the American workers they’re replacing. The American company gets plausible deniability. The outsourcing firm profits from the wage spread. The American workers get fired. The H-1B workers get paid below market.

Between 2020 and 2024, Bloomberg reported that Citigroup alone added roughly 3,000 H-1B visa holders — more than Nvidia, Oracle, or Qualcomm. But two-thirds of them weren’t direct hires. They were placed by Indian outsourcing companies under contract and paid substantially less than Citigroup’s own employees.

Capital One, Verizon, AT&T, and Walmart have all been found using similar arrangements.

The Wage Suppression Machine

This is the mechanism that makes the whole system work for corporations — and the mechanism that hurts both American and foreign workers the most.

The Department of Labor sets four “prevailing wage levels” for H-1B positions. The two lowest levels — Level I and Level II — correspond roughly to the 17th and 34th percentile of local wages for an occupation. In plain English: employers can legally pay H-1B workers 17% to 34% below the local median salary for their job.

According to the Economic Policy Institute, 60% of all H-1B positions certified by DOL were assigned wage levels well below the local median — 14% at Level I and 46% at Level II. Among the top 30 H-1B employers specifically, the pattern was nearly identical: 60% of their certified positions were at the two lowest wage tiers.

Heritage Foundation analysis of 2020–2024 data confirmed this pattern: only 15.8% of labor condition applications were filed at the highest wage tier (Level IV), while nearly half were filed at Level II and another 15.4% at the floor-level Level I.

What does this look like in practice? A City Journal analysis from March 2026 offered two illustrative examples: NVIDIA sponsored a 31-year-old computer science Ph.D. for a role in California at $225,000 — more than $22,000 above typical American earnings for that profile. Meanwhile, Cognizant sponsored a 44-year-old computer systems engineer for a position in College Station, Texas, at $78,000 — roughly $18,000 below what a comparable American worker would earn.

Under the current system, both of those filings are legal. The system doesn’t distinguish between them.

A separate analysis found that H-1B workers change jobs at dramatically lower rates than comparable American workers. Only about 63,865 H-1B workers out of approximately 680,000 switched employers in FY 2024 — a separation rate of roughly 9%, compared to 20–25% for high-skilled American workers. Because the visa is tied to the sponsoring employer, H-1B holders are effectively captive labor: less likely to negotiate, less likely to leave, and therefore cheaper to retain even beyond the initial wage discount.

The Corporate Hall of Shame: Named Companies, Real Victims

Let’s stop talking about this in the abstract. These are specific corporations, specific abuses, and in many cases, specific court verdicts.

Disney: The Case That Broke the Story Open

In 2015, Walt Disney World in Orlando laid off approximately 250 IT workers. But before they could leave, Disney imposed a condition: they had to spend 90 days training their foreign replacements — H-1B visa holders brought in by outsourcing firms HCL and Cognizant — as a condition of receiving severance pay and bonuses.

The training process was methodical and humiliating: 30 days of job shadowing, 30 days of parallel working, and 30 days of monitoring. Leo Perrero, one of the displaced workers, told 60 Minutes: “Never in my life did I imagine that I could be sitting at my desk and somebody would be flown in from another country, sit at my same desk and chair, and take over what I was doing. It was the most humiliating and demoralizing thing I’ve ever gone through in my life.”

Perrero and fellow worker Dena Moore filed federal class-action lawsuits in Tampa against Disney, HCL, and Cognizant — the first time Americans had sued both the outsourcing companies and the American corporation that contracted with them. Moore, who had worked at Disney for 10 years, applied for more than 150 other jobs at Disney without success after being let go. At least 30 former Disney workers also filed complaints with the federal Equal Employment Opportunity Commission alleging discrimination as American citizens.

The Labor Department opened investigations. The investigations found — nothing. Because of the outsourcing loophole, the H-1B workers were technically employed by HCL and Cognizant, not Disney. Disney could say it never hired H-1B workers. The outsourcing firms could say they never fired Americans. Nobody was penalized. Nobody changed their behavior.

Southern California Edison: 500 IBEW Workers Replaced

Around the same time, Southern California Edison laid off approximately 500 workers — including members of IBEW Local 47 — and replaced them with H-1B workers supplied by Infosys and Tata Consultancy Services. The same playbook: Americans were forced to train their foreign replacements, who were paid less to do the same jobs. Congressional hearings followed. State legislators in California introduced bills to regulate the practice. The Department of Labor investigated. Zero penalties were ever imposed.

Cognizant: Found Guilty of Systematic Discrimination — Twice

In October 2024, a California federal jury delivered what may be the most important legal verdict in H-1B history: Cognizant Technology Solutions was found to have engaged in a pattern or practice of intentional discrimination against non-South Asian and non-Indian employees.

The evidence was stark. While only about 12% of the U.S. IT industry is South Asian, at least 75% of Cognizant’s U.S. workforce is South Asian, primarily from India. The lawsuit, originally filed in 2017, alleged that Cognizant created a discriminatory scheme: it would apply for vast numbers of H-1B visas for positions that didn’t yet exist, building a “robust inventory” of Indian nationals. When actual projects materialized, these visa holders got first — if not exclusive — preference. Non-Indian employees were disproportionately left on the “bench” with no assignments, then fired after five weeks of inactivity.

A whistleblower within Cognizant — an executive named Franchitti — alleged he was fired in 2016 after complaining repeatedly that he was being forced to sign hundreds of fraudulent invitation letters supporting H-1B visa applications for jobs that didn’t exist.

The jury recommended punitive damages. The class encompasses approximately 2,200 employees terminated between 2013 and 2022. Bloomberg reported that Cognizant held the highest number of H-1B visas of any U.S. employer from 2013 to 2019.

Then, in December 2025, a federal judge delivered a second blow: Chief U.S. District Judge Dolly Gee ruled that Cognizant’s “Visa Readiness,” “Visa Utilization,” and related staffing policies had a discriminatory disparate impact on non-South Asian and non-Indian employees. Estimated total damages: $25 million or more. Cognizant held more than 3,000 active H-1B visas in Texas alone as of March 2025.

Bloomberg’s December 2024 investigation added human detail: Kimberly Folkes, a Black American project manager, said she was repeatedly denied advancement while Indian H-1B holders were promoted around her. She filed an internal discrimination complaint in 2017 — three days before she was fired.

Meta/Facebook: $14.25 Million Settlement — and It’s Not Over

The Department of Justice filed a lawsuit against Facebook (now Meta) alleging that from 2018 to 2019, the company deliberately discriminated against U.S. workers for more than 2,600 positions — jobs with an average salary of approximately $156,000 — that Facebook reserved for temporary visa holders being sponsored for green cards through the PERM process.

The DOJ’s investigation found that Facebook intentionally made it harder for Americans to apply for these positions: it didn’t advertise them on its careers website, required applicants to apply by physical mail only, and refused to consider any U.S. workers who applied. In October 2021, Facebook settled, paying a $4.75 million civil fine and up to $9.5 million to affected U.S. workers — the largest monetary award in the 35-year history of the INA’s anti-discrimination provision.

But that wasn’t the end. In February 2025, a federal judge denied Meta’s motion to dismiss a separate class-action lawsuit making similar claims. The judge cited that 15% of Meta’s U.S. workforce holds H-1B visas — compared with 0.5% of the overall U.S. workforce — as evidence supporting the discrimination claims. That case is ongoing.

The Layoff-and-Hire Machine: By the Numbers

The White House’s own September 2025 presidential proclamation cited specific examples — without naming the companies — that paint a damning picture:

One software company was approved for over 5,000 H-1B workers in FY 2025 while simultaneously announcing layoffs totaling more than 15,000 employees.
An IT firm received approval for nearly 1,700 H-1B workers while laying off 2,400 American workers in Oregon.
A third company reduced its American workforce by approximately 27,000 since 2022 while being approved for over 25,000 H-1B workers in the same period.
A fourth company eliminated 1,000 jobs in February 2025 while receiving approval for over 1,100 H-1B workers.

The EPI documented that the top 30 H-1B employers collectively laid off at least 85,000 workers in 2022 and early 2023 — while simultaneously hiring 34,000 new H-1B workers.

Senator Bernie Sanders noted specific examples from Tesla: the company laid off over 7,500 American workers in 2024 — including software developers and engineers at its Austin factory — while applying to hire thousands of H-1B guest workers. Tesla had employed H-1B workers as associate accountants for as little as $58,000 and associate mechanical engineers for as little as $70,000 a year.

The pattern extends beyond tech. News reports have documented workers being forced to train their own foreign replacements at the University of California, New York Life, MassMutual, and others. As the EPI documented: despite dozens of these cases being reported in the press, affecting thousands of workers, not a single penalty has ever been levied, nor has any change in business behavior resulted.

The Youth Employment Crisis

The White House proclamation highlighted a devastating downstream effect: among college graduates ages 22 to 27, computer science and computer engineering majors now face unemployment rates of 6.1% and 7.5% respectively — more than double the rates for biology and art history graduates. The very STEM careers that young Americans were told would guarantee their futures are now among the hardest to break into — in part because a significant portion of entry-level and mid-level positions are being filled through the H-1B pipeline at below-market wages.

The Other Victims: Exploited Foreign Workers

Here’s the part that makes the H-1B debate genuinely bipartisan: the system doesn’t just hurt Americans. It exploits the very foreign workers it’s supposed to be helping.

An EPI investigation uncovered evidence — via a corporate document made public through a federal whistleblower lawsuit against HCL Technologies — of what appears to be systematic wage theft affecting thousands of H-1B workers placed as subcontractors at companies like Disney, FedEx, and Google. The estimated underpayment totaled at least $95 million.

USCIS itself has identified a practice known as “benching” — where H-1B workers are brought to the United States but not paid while waiting for project assignments. This violates immigration law, but enforcement has been minimal. USCIS announced targeted site visits focusing on H-1B-dependent employers and third-party worksites, but the scale of abuse dwarfs the enforcement apparatus.

The structural problem is straightforward: because the H-1B visa is tied to a specific employer, the worker’s entire immigration status — their ability to stay in the country, their family’s stability, their path to permanent residency — depends on keeping that one employer happy. This creates an enormous power imbalance that unscrupulous sponsors exploit. Workers tolerate wage theft, poor conditions, and unpaid bench time because the alternative is deportation.

A UC Hastings Law Journal analysis described the H-1B system as one that “subjects workers to precarity as a result of their transient status, increased employer control over workers’ immigration status, and the potential for wage theft.” The paper argued that the visa’s structure inherently enables exploitation by design, not merely by abuse.

The Offshoring Paradox: Restricting H-1Bs May Cost More American Jobs

One of the most counterintuitive findings in the research literature is that cracking down on H-1B visas can actually accelerate the loss of American jobs — by pushing companies to offshore work entirely rather than bringing workers to the U.S.

A landmark study by Britta Glennon at the Wharton School, published in Management Science in 2023, found that when U.S. firms faced H-1B visa restrictions, they increased foreign affiliate employment by 27% more than comparable firms. For every visa rejection, multinational companies hired 0.4 to 0.9 employees abroad — primarily in India, China, and Canada. The effect was strongest among R&D-intensive firms in industries where services can be easily offshored.

A Federal Reserve Bank of Richmond analysis published in October 2025 estimated that a permanent 10% reduction in college-educated immigrants through the H-1B program would lower annual welfare for U.S. natives by approximately $2.9 billion.

The evidence is already playing out in real time. After the Trump administration imposed its $100,000 H-1B filing fee in September 2025, major U.S. tech companies rapidly accelerated hiring in India. According to reporting by Rest of World, in 2025, major U.S. tech firms added around 33,000 workers in India — an 18% increase from the prior year — with experts projecting an even steeper uptick in 2026.

Amazon and Microsoft committed $35 billion and $17.5 billion respectively for AI investment and jobs in India. Google’s parent company Alphabet was reported to be seeking up to 2.4 million square feet of additional office space in Bengaluru. India now hosts nearly 1,700 global capability centers — more than half the world’s total — employing roughly 2 million people in work that increasingly includes AI, cybersecurity, product development, and advanced analytics.

The Japanese financial services firm Nomura predicted the $100,000 fee would accelerate a strategic shift toward increased offshoring and automation, with H-1B visas being reserved only for “extremely critical roles” where local talent is unavailable.

This is the paradox: a program designed to bring talent into the United States is instead — through its own dysfunction — pushing jobs out.

The Reform Landscape: What’s Actually Changing

The second Trump administration has implemented several major changes since 2025:

The $100,000 Fee. In September 2025, a presidential proclamation established a $100,000 entry fee for new H-1B petitions filed from outside the United States — representing a 1,500% to 5,800% increase over previous filing costs. Universities and nonprofits are exempt. Twenty states have filed legal challenges arguing the fee violates the Administrative Procedure Act.

The Weighted Lottery. Starting with FY 2027, USCIS is replacing the random lottery with a wage-based selection system that gives higher-salary offers a greater probability of being selected. DHS has explicitly stated this rule targets the IT staffing company model. The rule took effect in February 2026, with barely two months for employers to adjust.

Project Firewall. Launched by DOL in September 2025, this enforcement initiative has increased random site visits and scrutiny of third-party worksites. DOL assessed more civil money penalties against H-1B employers in FY 2025 than in the prior four fiscal years combined — though critics note the penalty amounts remain too small to meaningfully deter billion-dollar companies.

Enhanced Vetting. The State Department began “online presence” reviews of all H-1B and H-4 visa applications starting December 2025, causing significant processing delays and cancellations of visa interviews, leaving many H-1B workers stranded abroad.

The Beneficiary-Centric Lottery. Implemented in FY 2025, this reform ensures each individual worker gets only one lottery entry regardless of how many employers submit registrations on their behalf — eliminating the gaming that previously allowed outsourcing firms to flood the lottery with duplicate entries. The result was dramatic: a 38.6% drop in eligible registrations.

What Would Actually Fix This?

Across the political spectrum, serious reform proposals tend to converge on a few key principles:

Require real recruitment of American workers first. Currently, H-1B employers are not required to demonstrate they tried to hire domestically before turning to foreign labor. Most other countries’ skilled worker visa programs include this requirement. The AFL-CIO has pushed for this for over a decade.

Set wage floors at or above the local median. The fundamental flaw enabling wage arbitrage is that DOL allows two of its four prevailing wage levels to fall well below local median wages. The City Journal’s March 2026 analysis proposed an “Experience Benchmarking” system that would set prevailing wages based on the specific qualifications of the foreign candidate — their actual degree, years of experience, and occupation — rather than on a vaguely worded job description that employers can strategically game downward.

Close the outsourcing loophole. When an outsourcing firm places an H-1B worker at a client company’s office, only the outsourcing firm currently files the labor condition application. Requiring both the staffing firm and the end-user company to attest to compliance with H-1B wage rules would fundamentally disrupt the business model that drives most program abuse.

Decouple visa status from a single employer. Giving H-1B workers true labor mobility — the ability to change employers without risking deportation — would eliminate the captive-labor dynamic that enables both wage suppression and workplace exploitation. It would also make H-1B workers more competitive with Americans (by commanding market wages), which would paradoxically make the program less threatening to domestic workers.

Enforce the existing law. The EPI has documented that DOL has done “virtually nothing” to ensure program integrity by enforcing wage rules. Debarment from the program for proven violators should become standard. Penalties must be scaled to the profitability of the abuse they’re meant to deter.

The Bottom Line

The H-1B visa program is not inherently broken. The principle — that America benefits from attracting global talent — is sound and supported by extensive economic research. The Congressional Budget Office projects that immigration inflows between 2021 and 2026 will add $8.9 trillion to nominal GDP over the 2024–2034 period. Skilled immigration generates complementary demand for American workers, funds payroll taxes, and drives innovation.

But the implementation of the H-1B program has devolved into something that serves none of its intended beneficiaries. American workers face displacement and wage depression. Foreign workers face exploitation and indentured servitude. The economy loses talent to offshoring. And a small class of outsourcing firms and their corporate clients extract billions in value from the gap between what workers are worth and what the system allows them to be paid.

The program needs more than tweaks. It needs structural reform that aligns incentives — raising the wage floor, closing the outsourcing loophole, empowering worker mobility, and building an enforcement apparatus with real teeth.

Until then, the H-1B will remain what critics on both sides of the aisle have called it for years: the outsourcing visa — a program that fails American workers, exploits foreign workers, and enriches the corporations gaming the system.

Sources & References

CSIS, “Practical H-1B Reforms to Serve U.S. Economic Interests” (February 2026)
American Immigration Council, “The H-1B Visa Program and Its Impact on the U.S. Economy” (September 2025)
Federal Reserve Bank of Richmond, Economic Brief №25–39 (October 2025)
KFF, “Potential Impacts of Trump Administration H-1B Visa Policies on the Health Care and Social Assistance Industries” (February 2026)
Pew Research Center, “What We Know About the U.S. H-1B Visa Program” (March 2025)
Congressional Research Service, “Measuring the Impacts of the H-1B Visa Program on U.S. Labor Markets” (February 2025)
Economic Policy Institute, “H-1B Visas and Prevailing Wage Levels,” “New Evidence of Widespread Wage Theft in the H-1B Visa Program,” and “Tech and Outsourcing Companies Continue to Exploit the H-1B Visa Program”
Heritage Foundation, “Rethinking the H-1B Visa Program: A Data-Driven Look at Structural Failures”
Bloomberg, “How Thousands of Companies Are Gaming the H-1B Visa Lottery” (July 2024) and “Insiders Tell How IT Giant Favored Indian H-1B Workers Over U.S. Employees” (December 2024)
The White House, “Restriction on Entry of Certain Nonimmigrant Workers” Presidential Proclamation (September 2025)
Britta Glennon, “How Do Restrictions on High-Skilled Immigration Affect Offshoring?” Management Science (2023)
NBER Digest, “Restricting Visas for Skilled Workers Leads to Offshoring”
City Journal, “An Opportunity to Protect American Workers from H-1B Abuse” (March 2026)
AFL-CIO DPE, “The Case for Reform of the H-1B and L-1 Visa Programs” (March 2026)
Rest of World, “How H-1B Visa Changes Are Fueling Tech Hiring in India” (February 2026)
Sen. Bernie Sanders, “H-1B Visas Hurt One Type of Worker and Exploit Another” (January 2025)
USCIS, “Combating Fraud and Abuse in the H-1B Visa Program”
U.S. DOJ, “Justice Department Files Lawsuit Against Facebook for Discriminating Against U.S. Workers” (December 2020) and Settlement Announcement (October 2021)
Palmer v. Cognizant Tech. Solutions Corp., 17-cv-06848, U.S. District Court, Central District of California — Jury Verdict (October 2024) and Disparate Impact Ruling (December 2025)
Rajaram v. Meta Platforms, Inc., 3:22-cv-02920, N.D. Cal. — Motion to Dismiss Denied (February 2025)
Duane Morris LLP, “IT Firm Found Liable for Intentional Discrimination Against a Class of Terminated Non-Indian and Non-South Asian Employees” (October 2024)
Computerworld, “Federal Jury Finds That Cognizant Discriminated Against American IT Workers” (October 2024)
CNN, “Disney Sued for Replacing American Workers with Foreigners” (January 2016)
The New York Times, “Lawsuits Claim Disney Colluded to Replace U.S. Workers With Immigrants” (January 2016)

If you found this analysis valuable, share it. The conversation around H-1B reform is one of the few truly bipartisan issues in American politics — and it affects millions of workers on both sides of the visa equation.

Brian James Curry is an Enterprise AI Strategist, Data and Marketing Scientist, and Applied Researcher. He is the founder of Vector1 Research, an independent research lab focused on marketing economics, causal systems, cognitive AI architecture, and the economic implications of intelligent systems. He also founded KC AI Lab, a data science community and incubator for applied machine learning education.