Wage gap keeps hiring H-1B workers attractive despite $100,000 visa fees, says report. Here’s why

The $100,000 fee imposed on H-1B workers may not significantly hinder the hiring of H-1B workers, the National Bureau of Economic Research said in a study by economist George Borjas. Titled, ‘THE H-1B WAGE GAP, VISA FEES, AND EMPLOYER DEMAND‘, the paper highlighted the significant pay disparity between American workers and H-1B workers and investigated whether the new laws are sustainable.

Borjas, who is often dubbed as the brain behind Trump’s immigration fees, found that “the average H-1B worker earns about 16 percent less than a US-born worker in the same locality and with the same education, age, gender, and occupation.”The paper analysed how this affects employers’ desire to hire high-skilled H-1B workers in-spite of the newly imposed $100,000 fee and noted that since these high-skill workers typically earn more than $100,000 annually, the employer would still find it advantageous to hire them since “the average payroll savings resulting from a single H-1B hire nears $100,000 over the term of the six-year visa term.”The Cuban-born Harvard educated economist claimed that “imposing a visa fee between $150,000 and $200,000 may not change the number of H-1B workers hired all that much”, since the wage gap would make employers willing to pay a substantial fee for the “privilege” of hiring such a worker, New India Abroad reported.Additionally, as per Borjas’ calculations, such a fee “will generate revenues totaling between $10 billion and $20 billion annually and change the skill composition of the H-1B workforce, making it more skilled.”He pointed out that the economic benefits from immigration are larger when the immigrant flow consists of high-skill workers.Additionally, he argued that since firms have to request permission for the temporary employment of a specific worker, employers gain some market power, which likely reduces the wage of the H-1B workforce. This is further cemented by the number of H-1B visas available to for-profit firms being legislatively capped at 85,000 new visas per year which makes the H-1B visa a precious and scarce commodity.