When Vice President JD Vance argued that H-1B visas should not exist to replace American workers with lower-wage foreign hires, he touched a nerve that has split corporate boardrooms, tech campuses, and labor economists for decades. The core dispute is straightforward on paper and messy in practice. Washington created the H-1B program to let employers bring in specialized foreign talent when domestic supply falls short, yet critics argue that companies routinely use the visa to lower labor costs or backfill roles right after laying off U.S. staff. Turning that argument into durable policy requires looking past slogans at wage formulas, corporate hiring structures, and federal courtrooms.
Statements from the White House signal an aggressive push to steer H-1B visas toward higher-paid specialists and tighter oversight of companies conducting layoffs. Still, rhetoric alone does not rewrite immigration statute. Anyone trying to judge whether the program helps or hurts domestic workers has to look at how wages are actually priced on paper.
How Wage Tiers Turn an Exception Into a Pricing Strategy
Ask a casual observer how H-1B pay works, and they will usually assume the law forces employers to match whatever top dollar a domestic specialist commands. That is not how the prevailing wage framework operates. Before sponsoring an H-1B worker, an employer files a Labor Condition Application attesting that it will pay at least the prevailing wage for that occupation in that geographic area or the actual wage paid to similarly situated employees at the firm, whichever is higher.
The catch sits inside the Department of Labor's four-tier wage structure. Level I corresponds to entry-level workers with basic understanding who work under close supervision, Level II reflects qualified employees with moderate experience, and Levels III and IV cover more experienced or senior specialists. Because entry-level and lower-tier benchmarks sit well below an occupation's overall median pay, an employer can comply with the letter of a lower-tier wage floor while paying substantially less than the broader market median for the job title.
Data compiled in The State of the H-1B Program: 2026 Report underscores how heavily filings cluster toward the lower tiers. Across 4,215,630 certified Labor Condition Applications analyzed from FY2020 through FY2026, 56.6% (2,384,880 filings) were at Wage Level I or Level II—both defined below the occupational median—while software developers alone accounted for roughly one in three certified applications. For software developers (SOC 15-1252) in FY2023 and FY2024, the report notes a median offered wage of $89,253 at Level I and $108,992 at Level II, compared with a May 2023 Bureau of Labor Statistics national median of $130,160.
Consider a hypothetical example to see how this plays out during budgeting season. Suppose a mid-sized U.S. enterprise needs six application engineers and has a choice between hiring domestic mid-career engineers at market rate or filing for lower-tier sponsored roles where the local Level I or Level II threshold is cheaper. Even when a company follows every technical filing rule, the math of labor economics creates a strong financial incentive to test the lowest permissible wage tier unless rules raise the cost of doing so.
Layoffs, Outsourcing, and the Corporate Playbook
Watch enough corporate restructuring cycles, and a familiar pattern starts jumping off the page. A company announces thousands of layoffs to cut costs and appease shareholders, then turns around and petitions for foreign workers in overlapping technical roles. Vance captured that frustration bluntly when questioning how firms that lay off thousands of workers can simultaneously claim they cannot find talent domestically.
Historically, IT outsourcing and consulting firms drew intense scrutiny for building high-volume models around H-1B placement, sometimes contracting workers out to client companies while domestic staff were displaced. A 2023 Economic Policy Institute analysis found that the top 30 H-1B employers in fiscal year 2022 accounted for 40% of the annual 85,000 cap while laying off at least 85,000 workers across 2022 and early 2023, with thirteen of those top 30 firms classified as outsourcing companies.
Yet the picture is shifting beneath the surface. The State of the H-1B Program: 2026 Report shows that while overall filing volume remained large—reaching 666,228 certified Labor Condition Applications in the first three quarters of FY2026 compared with 545,621 in FY2020—the share filed by eight major IT outsourcers fell from 13.2% in FY2020 to 5.3% in FY2026. Over the full FY2020–FY2026 window, the top 100 employers accounted for 32.9% of certified filings, led by firms such as Cognizant Technology Solutions US Corp, Amazon.com Services, Google, EY, and Microsoft.
Financial institutions also show distinct hiring patterns at the entry end of the ladder. In the 2026 report, major banks and advisory firms recorded high shares of certified titles carrying entry-level markers—such as 67.0% at Goldman Sachs and Citibank, 64.5% at BlackRock, and 54.0% at McKinsey—compared with 4.9% at Google.
Blaming a single industry misses the point. Different sectors use the H-1B visa for different reasons: high-volume staffing arbitrage, long-term career pipelines, or specialized engineering slots inside giant tech and finance balance sheets.
Courts, Fees, and the Limits of Executive Action
Whenever Washington tries to overhaul the H-1B system quickly, two walls tend to go up at once. The first is statutory law; the second is federal court.
The H-1B classification exists under the Immigration and Nationality Act, meaning sweeping structural changes or outright elimination cannot be achieved by interview talk alone. Instead, administrations lean on executive proclamations, agency enforcement, and regulatory shifts such as replacing a purely random selection lottery with a wage-weighted lottery or tightening scrutiny around recent layoffs.
Those moves immediately collide with litigation. Reporting on 2025 and 2026 actions highlights a $100,000 fee requirement tied to presidential proclamations—later accompanied by a separate proposed $103,265 fee—that ran into court challenges and an injunction from U.S. District Judge Haywood S. Gilliam Jr. blocking enforcement while litigation continues.
For employers, international students, and workers, that legal tug-of-war creates whiplash. A policy announced in a speech or proclamation can be enjoined, revised, or appealed within weeks, leaving companies unsure which costs or compliance rules will actually stick.
Where Blunt Restrictions Hit Unintended Targets
Hard-line critiques of H-1B visas often treat every foreign worker on the program as a low-wage substitute for an American engineer. Anyone who has worked inside universities, teaching hospitals, or specialized labs knows the reality is far more uneven.
White House data cited in recent coverage pointed to 6.1% unemployment among recent computer science graduates and 7.5% among computer engineering graduates prior to the 2025 proclamation, alongside a 92% drop in H-1B registrations from the largest IT outsourcing firms after it took effect. Those numbers explain why lawmakers and labor advocates feel urgency around entry-level and mid-level tech hiring.
At the same time, raw wage figures can mislead if stripped of sector context. The State of the H-1B Program: 2026 Report notes that universities and medical institutions pay lower median certified wages on H-1B filings—such as $66,837 at the University of Michigan, $71,448 at Johns Hopkins, and $75,000 at Yale—compared with $167,000 at Google. A postdoctoral researcher, clinical fellow, or university lab specialist is not a Wall Street trader or a big-tech staff engineer, even though all of them may appear in the same visa dataset.
Overly blunt fees or sweeping freezes can also squeeze smaller domestic firms that lack deep legal budgets, while leaving offshore work untouched. If a company decides not to hire an H-1B engineer in the United States, it does not always hire an American instead; sometimes it shifts the work to an overseas office or automates it away.
Tracing the Money Before Judging the Talent
Solving the H-1B dispute requires separating genuine skill bottlenecks from wage undercutting. A foreign specialist earning top-of-market pay to build complex systems looks nothing like a worker brought in at a discounted wage tier right after domestic layoffs.
Policymakers who want enforceable standards have to look closely at actual payroll records, layoff histories, and prevailing wage methodology rather than relying solely on headline rhetoric or courtroom battles that stall in appeals. Follow the wage floor and the layoff ledger first, and the real incentives behind every H-1B filing become unmistakable.
