- The H-1B visa program was created to fill labor shortages in professional fields and could be a valuable temporary work visa program, but new data show it is being subverted by employers that are not facing labor shortages and by outsourcing firms.
- H-1B use is overly concentrated among a small number of employers. 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 of 85,000.
- The top 30 companies also laid off, or will imminently lay off, at least 85,000 workers in 2022 and the first quarter of 2023.
- Thirteen of the top 30 H-1B employers were outsourcing firms that underpay migrant workers and offshore U.S. jobs to countries where labor costs are much lower.
- Laid-off H-1B workers, who likely number in the thousands, must find a new employer to sponsor their visa within 60 days after their layoff or they may be forced to leave the United States.
- President Biden should use executive authority to fix the H-1B program and implement new rules that raise wages for migrant workers and prevent outsourcing companies from exploiting the H-1B program.
The H-1B program is the largest U.S. temporary work visa program, with a total of approximately 600,000 workers employed by 50,000 employers. The program’s intent is to allow employers to fill labor shortages for jobs that require a college degree, by providing work authorization for migrant workers in fields like accounting, journalism, health and medical, and teaching. Most H-1B workers, however, are employed in occupations like computer systems analysis and software development.
Visas for new workers are capped at 85,000 per year, but many employers are exempt from that annual cap, including universities and their affiliated nonprofit entities, nonprofit research organizations, and government research organizations. Approximately 130,000 temporary migrant workers will receive new H-1B visas each fiscal year to begin new employment for capped and cap-exempt employers, with another 300,000 receiving renewals (which are not subject to the cap). Every April 1, the government decides, via lottery, which employers will receive the 85,000 new visas subject to the cap.
The H-1B program has many flaws that have become especially evident in light of recent mass layoffs in the tech sector. Instead of being used to fill genuine labor shortages in skilled occupations without negatively impacting U.S. workers’ wages and working conditions, the latest data show that the H-1B’s biggest users are companies that have laid off tens of thousands of workers in 2022 and the first quarter of 2023. The rest of the companies that dominate the program have an outsourcing business model that exploits the program by underpaying skilled migrant workers and offshoring U.S. jobs. President Biden can and should implement regulations and policy guidance to prevent misuse of the program, stop the exploitation of college-educated migrant workers, and ensure the program is consistent with congressional intent.
The top 30 H-1B employers hired more than 34,000 new H-1B workers in 2022 and laid off 85,000 employees
The H-1B program was created with the intent to attract skilled and talented workers to the United States to fill labor shortages in professional fields—a sensible goal that has widespread support. But its implementation has been bungled by the U.S. Departments of Labor and Homeland Security. Since employers aren’t required to test the U.S. labor market to see if any workers are available before hiring an H-1B worker or pay their H-1B workers a fair wage, employers have exploited the program. Rather than turning to the H-1B program as a last resort when U.S. workers cannot be found, most employers hire H-1B workers because they can be underpaid and are de facto indentured to the employer. This is evidenced by government data showing that technology companies continue to hire H-1B workers in large numbers while significantly reducing the sizes of their workforces.
Table 1 at the end of this post illustrates this by showing the top 30 H-1B employers that are subject to the annual cap according to the number of approved petitions for initial employment (i.e., for hiring new H-1B workers, not extensions for existing H-1B workers) for fiscal year 2022. In 2022, 48,000 employers registered with United States Citizenship and Immigration Services (USCIS) in hopes of hiring at least one H-1B worker, and nearly 30,000 employers ultimately hired at least one new H-1B worker. However, visa use is and has been highly concentrated among a small number of employers: The top 30 H-1B employers—representing 0.001% of employers that hired a new H-1B worker—hired more than 34,000 new H-1B workers, accounting for 40% of the new H-1B visas available under the annual limit for cap-subject companies.
We then looked to see how many of the top 30 H-1B employers had announced layoffs of their workers in the United States, and how many of those workers were laid off in 2022 and the first quarter of 2023. To compile these data, we referred to Layoffs.fyi, an open source website tracking tech industry layoffs from publicly available news reports. (Layoffs.fyi has been widely cited by the media, due to the fact that the federal government does not track layoffs with specificity in terms of individual firms.) For firms on the list that did not appear in Layoffs.fyi, we did basic internet searches for news articles and included the citations in the source section of Table 1. Because of the limited nature of available data on layoffs by employer, as well as the Layoffs.fyi website and our searches, the number of layoffs reported in Table 1 should be considered a minimum of layoffs at the top 30 H-1B employers.
As Table 1 shows, 13 of the top 30 H-1B employers announced layoffs in 2022 and the first quarter of 2023. The layoffs at those companies totaled nearly 85,000, the same number as the H-1B annual numerical limit for cap-subject employers.
Amazon was at the top of the list in terms of both new H-1B workers and layoffs. Amazon hired 6,400 new H-1B workers in 2022, and hired the most new H-1B workers in 2021 as well, when it hired nearly 6,200 workers. Amazon has either recently laid off or plans to lay off 27,150 of its employees, more than twice the number of H-1B workers it hired in 2021 and 2022 combined.
Google and Meta (the latter formerly named Facebook) are both long-time top H-1B employers, together hiring over 3,100 new H-1B workers last year. Meta employs so many H-1B workers that for years it has declared itself an “H-1B dependent” firm in government filings because more than 15% of Meta’s total U.S. workforce is made up of H-1B workers. Together, Google and Meta laid off 33,000 employees, almost 11 times the number of new H-1B workers they hired in 2022. For more than a decade, top Google and Meta executives have been at the forefront of industry’s public calls for large increases in the H-1B cap, with Meta creating a lobby group, FWD.US, almost exclusively to push for more visas.
Four other leading tech companies on the list have announced mass layoffs. Microsoft, Intel, Qualcomm, and Cisco are the 13th-, 15th-, 18th-, and 28th-largest H-1B employers, respectively. Microsoft founder Bill Gates himself has testified before the U.S. Congress to decry the cap on H-1B visas, arguing for raising the cap significantly, even in the midst of the Great Recession in 2008. Together, these firms hired 2,735 new H-1B workers in 2022, but collectively they laid off close to 14,900 employees, nearly five and a half times the number of H-1B workers they hired.
Two nontech firms in the top 30 also announced significant layoffs: Goldman Sachs—the world’s second-largest investment bank which operates a services subsidiary—and McKinsey & Company—the well-known management consulting firm. Together, the two hired just over 1,000 new H-1B workers while laying off 5,200 employees.
Mass tech layoffs have left migrant workers vulnerable
It is important to note that no information source is available that reveals whether laid-off employees were migrant workers on an H-1B or other temporary visa, or if they were permanent residents, or U.S. citizens. We do know anecdotally—thanks to various news reports—that many H-1B workers were dismissed as part of recent layoffs, including at least 300 at Meta.
Because H-1B visas are tied to a specific employer, H-1B workers are in a precarious position if they are terminated. If they want to remain in the United States, they must find a new employer to sponsor their visa within 60 days—no easy task during a time of mass layoffs in the tech industry.
This is especially heartbreaking considering many H-1B workers have deep ties to the United States and their local communities. Many are married and have children who are U.S.-born, and own homes. This is to be expected, given that H-1B visas are valid for up to six years, and many workers remain in H-1B status well beyond that because their visas can be extended for longer if they are waiting for a permanent immigrant visa to become available while they remain in the green card “backlog.” If a laid-off H-1B worker can’t find a new job within the time allotted or adjust to another valid immigration status, they will have to leave the country, along with any family members who are also on a temporary visa.
While all H-1B workers have little power to bargain with employers because of their temporary visa status, laid-off workers are in an extraordinarily weak bargaining position. With the 60-day clock ticking and massive layoffs in their industry sectors and occupations, they will feel pressure to accept a job offer that pays substandard wages and offers poor working conditions just to remain in the country.
The H-1B workers who remain employed face other substantial pressures. For those workers, the very real threat of a future layoff will make them less likely to complain about longer hours, cuts to benefits and pay, and other forms of workplace exploitation—which in turn will degrade labor standards for all similarly situated workers. And their prospects for becoming permanent residents have now diminished greatly, because some tech companies like Google have decided to pause their efforts to obtain green cards for their H-1B workers in light of recent layoffs.
Outsourcing companies were again the biggest beneficiaries of the H-1B visa in 2022
In addition to employers exploiting the H-1B program while laying off tens of thousands of employees, outsourcing firms once again dominated the H-1B visa program in 2022, even among the top 30 H-1B employers. For more than 15 years, leading lawmakers from both parties have criticized outsourcing firms’ exploitation of H-1B and offered bipartisan fixes, yet the abuse continues unabated. Thirteen of the top 30 H-1B employers were outsourcing firms, and they were issued a total of 17,534 visas for new H-1B workers (21% of the total annual cap).
As we discussed in depth last year, this continues to be problematic because outsourcing companies—which have a fissured business model, do not make a product, and are staffing firms that resell labor to other firms—have been associated with paying their H-1B workers the lowest wages permitted by law, much lower than the U.S. market rate. Wages account for the vast majority of information technology service firms’ operating costs, but the outsourcing firm business model is viable only if it cuts the customers’ labor costs substantially while also earning profits for its shareholders. After cutting costs in the United States by using the H-1B visa, the outsourcers realize further cost savings and profits by shipping as many of the U.S. jobs and tasks as possible to their overseas operations where wages for tech workers are substantially lower.
In addition, we recently published evidence that at least one outsourcing firm is likely stealing tens of millions of dollars in wages from its H-1B employees, something we hope the Wage and Hour Division at the U.S. Department of Labor (DOL) will investigate. It is also notable that one of the major outsourcing firms was hit with the largest-ever civil fine for a violation of U.S. visa laws.
And finally, among the top outsourcing firms, only one—IBM—announced layoffs, with 3,900 workers laid off after hiring 1,239 new H-1B workers. Over the years, however, there have been countless shocking revelations in the press about how outsourcing companies have used the H-1B program to help U.S. companies subvert the law to lay off hundreds of their well-paid employees at a time. U.S. companies do this by contracting with major outsourcing firms like Infosys (#2 on the top 30), Tata (#3), Cognizant (#4), and HCL (#7)—and replacing their employees with H-1B workers paid tens of thousands of dollars less. Some of the documented cases were with clients like Disney, Southern California Edison, and even the University of California.
DOL could end this shocking abuse of the program by closing the outsourcing loophole through new policy guidance that simply requires the end-user companies like Disney that contract with outsourcers to file an H-1B Labor Condition Application (LCA). In the LCA, companies would have to attest that their use of the H-1B program will not “adversely affect the working conditions” of their employees, and DOL would be able to enforce that promise.
H-1B needs major reforms to prevent the degradation of labor standards and exploitation of migrant workers
While the H-1B visa program has become a common pathway for attracting skilled migrants to the U.S. labor market, it has been usurped by employers that are not facing real labor shortages and by outsourcing firms, and all employers remain allowed to pay H-1B workers less than the local rate for the jobs they fill. These problems are well known and well documented but most members of Congress and presidents from both parties have taken no lasting action to fix it.
The good news is that as a candidate, President Biden explicitly supported reforms to U.S. work visa programs—and now as president, he has the authority to make them a reality. President Biden can issue new regulations, policy guidance, and other rules that would preserve and create good middle-class jobs, increase productivity by attracting skilled migrant workers who complement the U.S. labor force, and ensure migrant workers are paid fairly according to U.S. standards. Last year, the Congressional Progressive Caucus reminded him of this by calling on the president to fix the H-1B program using his executive powers.
In the remainder of his term, President Biden should implement these essential reforms to restore integrity and fairness to the H-1B program:
- Fix the outsourcing loophole by issuing policy guidance from DOL that requires secondary employers of H-1B workers (the companies that hire outsourcing firms to provide contract workers) to file labor condition applications. Guidance to require this was recently considered but never finalized, which would have prevented firms like Disney from replacing their U.S. employees with contracted H-1B workers.
- Implement DOL’s delayed H-1B prevailing wage methodology rule, so that H-1B workers are paid a fair wage and employers are prevented from undercutting U.S. wage standards. The rule currently appears on the White House’s regulatory agenda but it is unclear whether a rule will ever be proposed.
- Issue an updated version of USCIS’s H-1B visa allocation rule, which would distribute H-1B visas by wage level rather than random lottery. A rule like this would ensure that the highest-skilled H-1B workers are awarded visas and it also has bipartisan support.
- Direct the Wage and Hour Division to enforce the requirement in the H-1B labor condition application for employers to pay the “actual wage” rate they pay to other employees with similar experience and qualifications. Particular attention should initially be focused on firms that continue to hire large numbers of H-1B workers after conducting mass layoffs.
Top 30 H-1B employers in 2022 accounted for at least 85,000 layoffs in 2022 and early 2023: Top 30 H-1B employers subject to the annual cap by number of approved petitions for initial employment, fiscal year 2022, number of outsourcing firms in top 30, and layoffs in 2022 and the first quarter of 2023
|Rank||Employer name||H-1B petition approvals for initial employment, FY 2022||Outsourcing/offshoring business model?||Layoffs in 2022 and Q1 of 2023|
|3||Tata Consultancy Services||2,854||Yes||–|
|16||Ernst & Young||701||Yes||–|
|22||McKinsey & Company||481||2,000|
|24||JP Morgan Chase||420||–|
|Top 30 share of total H-1B annual numerical limit of 85,000||40%||21%||–|
Notes: H-1B petition approvals include approved petitions for initial employment (i.e. for new employment, not visa extensions). Petitions are approved by U.S. Citizenship and Immigration Services (USCIS), a subagency of the U.S. Department of Homeland Security. Layoffs are according to Layoffs.fyi as listed on March 21, 2023, and as reported in listed news sources.
Source: Authors’ analysis of USCIS H-1B Employer Data Hub, data for fiscal year 2022 and Layoffs.fyi. Mark Gurman and Debby Wu, “Intel Plans to Lay Off Thousands of Employees As the Chipmaker Looks to Trim Costs,” Time, October 12, 2022; Lauren Hirsch, “Goldman Sachs Begins Large Round of Layoffs,” NY Times, January 10, 2023; Mike Freeman, “Qualcomm lays off more workers in San Diego amid smartphone sales slump,” The San Diego Union-Tribune, March 6, 2023; Jennifer Surane, “Citigroup Cuts Hundreds of Jobs, Including in Investment Banking and Mortgage Units,” Bloomberg, March 2, 2023; Sridhar Natarajan, “McKinsey Plans to Eliminate About 2,000 Jobs in One of Its Biggest Rounds of Cuts,” Bloomberg, February 21, 2023; Hannah Levitt, “JPMorgan Cuts Hundreds More Mortgage Workers Amid Housing Woes,” Bloomberg, February 8, 2023; Leada Gore, “Walmart layoffs 2022: Retailer cuts employees, lowers profit forecasts amid inflation woes,” AL.com, August 4, 2022; Samrhitha Arunasalam, Akash Sriram, and Akanksha Khushi, “Tesla says it laid off 4% New York employees before union campaign,” Reuters, February 16, 2023.
Stanford University ranked 29th in fiscal year 2022 according to the number of H-1B petitions approved for new H-1B workers but was excluded from Table 1 because, as a university, it is exempt from the 85,000 annual cap. Stanford was the only cap-exempt employer in the top 30.
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