Four Tiers, Two Below the Line
Before an employer can hire on an H-1B visa, it files a Labor Condition Application with the Department of Labor and attests that it will pay at least the prevailing wage for the occupation in that location.[2] The prevailing wage is not a single number. It is split into four levels, and the employer chooses which one applies.
Level 1 is set for entry-level positions. Level 2 is for qualified workers. Both are defined below the local median wage for the occupation. Level 3 sits at the median, and Level 4 above it. The system is built so that the two lowest tiers are lawful pay for skilled work, and those two tiers are where most H-1B positions are filed.
The Four Prevailing-Wage Levels
Source: U.S. Department of Labor, Office of Foreign Labor Certification, prevailing wage levels[2]
The choice of level is the employer's. A company can classify an experienced software engineer as a Level 1 entry-level worker if the job posting is written to fit that tier. Nothing in the application requires the wage level to match the worker's actual experience, and the resulting figure can be well under what the same role commands on the open market.
A Legal 17-34% Discount
The distribution is lopsided. Roughly 60% of H-1B positions are certified at Level 1 or Level 2,[2] which means the majority of the program runs on wages the rules themselves place below the local median. Analysis of the certified wages finds H-1B workers paid an estimated 17-34% below market rates for comparable work.[3]
Why This Suppresses Everyone's Wages
When most workers in an occupation are hired at a legally discounted rate, that rate becomes the reference point for the whole labor market. Employers have less reason to raise pay to attract domestic candidates when a below-median tier is available. The 17-34% discount does not stay with the visa holder. It pulls down the going rate for the occupation.[3]
The Scale of the Demand
The wage-level discount would matter less if the program were small. It is not. In FY2024, employers filed 758,994 H-1B registrations for roughly 85,000 available slots, about nine times the cap.[1] More than 600,000 H-1B workers are active in the United States today.[1][4] Demand at that scale, filed mostly at below-median wage levels, sets the pay floor across entire technical occupations.
FY2024 H-1B Registrations vs. the Annual Cap
Source: U.S. Citizenship and Immigration Services, H-1B Employer Data Hub[1]
Who Files the Most
The heaviest users of the program are a mix of large technology firms and outsourcing companies. The top four employers by FY2024 approvals account for tens of thousands of positions between them.[1]
| Rank | Employer | FY2024 Approvals |
|---|---|---|
| 1 | Amazon | 10,044 |
| 2 | Infosys | 8,140 |
| 3 | Cognizant | 6,321 |
| 4 | Tata Consultancy | 5,765 |
Source: USCIS H-1B Employer Data Hub[1]
Policy Connection
The below-median wage tier is the specific engine of H-1B wage suppression. Policy 3 of the Affordability and Immigration Act targets it directly by ending the current H-1B program and restoring a stricter H-1 standard:
- -Market-rate wages. Eliminate the Level 1 and Level 2 tiers so a visa cannot be filed below the local median wage for the occupation.
- -Direct employment only. Bar staffing and outsourcing firms, which have the strongest incentive to file at the lowest wage tier.
- -Genuine specialty occupations. Reserve the visa for roles that cannot be filled domestically, ending its use as a routine cost-cutting tool.
Sources
- U.S. Citizenship and Immigration Services: H-1B Employer Data Hub - FY2024 registrations, approvals by employer, and active-worker figures
- U.S. Department of Labor, Office of Foreign Labor Certification - Prevailing wage levels and the share of positions certified at Level 1 and Level 2
- Economic Policy Institute: H-1B Wages Research - Analysis finding H-1B workers paid an estimated 17-34% below market rates
- Pew Research Center: H-1B Visa Program - Background on program scale, demand, and the H-1B workforce